EVERTEC, Inc. (EVTC): Business Model Canvas [11-2024 Updated]

In today's fast-paced digital economy, understanding the business model of key players like EVERTEC, Inc. (EVTC) is crucial for investors and industry professionals alike. This company excels in transaction processing and payment solutions, leveraging strategic partnerships and proprietary technology to deliver tailored services. Dive into the components of EVERTEC's Business Model Canvas, which outlines its key activities, resources, and revenue streams, providing a clear picture of how it creates value in the marketplace.

EVERTEC, Inc. (EVTC) - Business Model: Key Partnerships

Collaborations with banks and financial institutions

EVERTEC collaborates with various banks and financial institutions to enhance its payment processing services. A significant partnership is with Popular, Inc., which accounted for approximately 31% of EVERTEC's total revenues for the nine months ended September 30, 2024. This collaboration facilitates access to the ATH debit network and provides essential services such as authorization, processing, management, and monitoring of ATM and point-of-sale transactions.

As of September 30, 2024, accounts receivable from Popular amounted to $42.1 million, reflecting the deep integration and reliance on this partnership for revenue generation.

Joint ventures in merchant acquiring

In the merchant acquiring space, EVERTEC has established joint ventures aimed at expanding its market reach. The Merchant Acquiring segment reported revenues of $133.9 million for the nine months ended September 30, 2024, representing an increase of $11.7 million compared to the previous year. This growth is attributed to improved sales volumes and strategic partnerships with merchants across various sectors.

Adjustments to the revenue-sharing agreements have also been noted, impacting the operational costs associated with these joint ventures.

Partnerships with technology providers

Technological partnerships are crucial for EVERTEC's operations, particularly in enhancing its software and hardware capabilities. In 2024, EVERTEC invested approximately $69.8 million in capital expenditures, primarily directed towards hardware and software development. These investments are vital for maintaining competitive service levels and integrating new technologies into their existing frameworks.

Additionally, EVERTEC entered into a non-interest-bearing financing agreement amounting to $10.1 million in September 2023 for software purchases, which reflects their ongoing commitment to leveraging technology through strategic partnerships.

Alliances with payment networks

EVERTEC maintains strategic alliances with major payment networks to facilitate broader transaction capabilities. The company benefits from these alliances by gaining access to a wider array of payment solutions, which enhances its service offerings to clients. For instance, the Latin America Payments and Solutions segment reported revenues of $224.9 million for the nine months ended September 30, 2024, significantly boosted by these alliances.

Moreover, the company’s operational flexibility is supported by a $200 million revolving credit facility, providing liquidity to support ongoing partnerships and network expansions.

Partnership Type	Partner/Network	Contribution to Revenue	Investment Amount	Notes
Bank Collaboration	Popular, Inc.	31% of total revenue	N/A	Accounts receivable: $42.1 million
Joint Ventures	Various Merchants	$133.9 million	N/A	Increased sales volume
Technology Providers	Software Vendors	N/A	$10.1 million	Non-interest bearing financing for software
Payment Networks	Various Networks	$224.9 million	$200 million	Revolving credit facility for liquidity

EVERTEC, Inc. (EVTC) - Business Model: Key Activities

Processing electronic transactions

EVERTEC is a leader in processing electronic transactions in Latin America and the Caribbean. For the nine months ended September 30, 2024, the company reported total revenues of $629.1 million, reflecting a significant increase compared to $500.1 million in the same period of 2023. This growth is attributed to increased transaction volumes and efficiencies in processing operations, particularly in their Payment Services - Puerto Rico & Caribbean segment, which generated revenues of $160 million in 2024, up from $150.8 million in 2023.

Providing payment solutions and technology services

As part of its core activities, EVERTEC provides a wide range of payment solutions and technology services. The Business Solutions segment generated revenues of $181.6 million for the nine months ended September 30, 2024, compared to $169.2 million in 2023. The company’s technology services include software development and systems integration, which have become vital as they expand their service offerings across various markets.

Managing merchant acquiring operations

Merchant acquiring operations are crucial for EVERTEC, contributing significantly to its revenue stream. In the nine months ending September 30, 2024, merchant acquiring revenues reached $133.9 million, an increase from $122.2 million in the same period of 2023. This segment's adjusted EBITDA was reported at $52.7 million, reflecting an adjusted EBITDA margin of 39.4%, up from 38.1% in the previous year. The growth in this segment is driven by improvements in transaction processing and an expanding customer base.

Offering business process management

EVERTEC also focuses on business process management (BPM), providing clients with outsourced services that enhance operational efficiency. The company reported an adjusted EBITDA of $78.3 million for its Business Solutions segment, which includes BPM services, marking an increase from $66.9 million in the prior year. This segment’s adjusted EBITDA margin improved to 43.1% in 2024 from 39.5% in 2023, signifying better cost management and service delivery efficiencies.

Key Activity	2024 Revenue (in thousands)	2023 Revenue (in thousands)	Adjusted EBITDA (in thousands)	Adjusted EBITDA Margin
Processing Electronic Transactions	$629,091	$500,088	N/A	N/A
Payment Solutions and Technology Services	$181,567	$169,188	$78,312	43.1%
Merchant Acquiring Operations	$133,855	$122,152	$52,695	39.4%
Business Process Management	N/A	N/A	$78,312	N/A

EVERTEC, Inc. (EVTC) - Business Model: Key Resources

Proprietary technology platforms

EVERTEC operates several proprietary technology platforms that facilitate payment processing and transaction management across Latin America and the Caribbean. The company’s flagship product is the ATH network, a prominent personal identification number debit network, which underpins a significant portion of its transaction services.

As of September 30, 2024, EVERTEC reported total revenues of $211.8 million for the third quarter, with a notable increase in transaction volumes due to the expansion of its digital payment solutions.

Established customer relationships

EVERTEC maintains strong relationships with various financial institutions, merchants, and government agencies. Notably, approximately 31% of the company's revenues in the nine months ended September 30, 2024, were generated from its relationship with Popular, Inc., which continues to be the largest customer.

The company has also extended its commercial agreements with Popular, including a 10-year extension of the Merchant Acquiring Independent Sales Organization Agreement.

Skilled workforce in technology and finance

EVERTEC's workforce comprises skilled professionals specializing in technology and finance. The company invested approximately $69.8 million in capital resources during the nine months ended September 30, 2024, which includes investments in training and development for its employees.

As of September 30, 2024, the company’s total assets amounted to $1.45 billion, indicating robust operational capacity supported by its workforce.

Regulatory licenses for payment processing

EVERTEC holds various regulatory licenses necessary for operating its payment processing services. These licenses are crucial for compliance with local and international regulations, enabling the company to offer services across multiple jurisdictions. The company’s ongoing compliance with these regulations is reflected in its operational stability and growth in transaction volumes.

As of September 30, 2024, the company had cash and cash equivalents of $275.4 million, which supports its operational and regulatory commitments.

Key Resource	Description	Financial Impact
Proprietary Technology Platforms	ATH network and other digital payment solutions	$211.8 million in Q3 2024 revenues
Established Customer Relationships	Long-term contracts, primarily with Popular, Inc.	31% of revenues from Popular in 2024
Skilled Workforce	Professionals in technology and finance	$69.8 million invested in workforce development
Regulatory Licenses	Licenses for payment processing operations	$275.4 million in cash and equivalents for compliance

EVERTEC, Inc. (EVTC) - Business Model: Value Propositions

Comprehensive transaction-processing services

EVERTEC provides a wide range of transaction-processing services, primarily focused on the Puerto Rico and Caribbean markets. For the nine months ended September 30, 2024, the Payment Services - Puerto Rico & Caribbean segment generated revenues of $159.985 million, an increase from $150.824 million in the same period in 2023. This revenue growth is attributed to the expansion of services such as card processing and digital payment solutions including ATH Movil.

Scalable and reliable payment solutions

The company offers scalable payment solutions that cater to various customer segments, including financial institutions and merchants. The Merchant Acquiring segment reported revenues of $133.855 million for the nine months ended September 30, 2024, compared to $122.152 million in the previous year. This reflects a strong demand for reliable payment processing capabilities, which are essential for businesses in the region.

High operational efficiency with low capital requirements

EVERTEC maintains a high operational efficiency, as evidenced by an adjusted EBITDA margin of 56.3% in the Payment Services - Puerto Rico & Caribbean segment for the nine months ended September 30, 2024. The company has been able to manage operational costs effectively, allowing it to achieve significant profit margins with relatively low capital expenditures, which were approximately $69.8 million for the nine months ended September 30, 2024.

Tailored services for diverse customer needs

EVERTEC's ability to tailor its services to meet diverse customer needs is a key value proposition. The Business Solutions segment reported revenues of $181.567 million for the nine months ended September 30, 2024, up from $169.188 million in the same period in 2023. This growth is largely driven by customized solutions that address specific requirements of clients across various industries, enhancing customer satisfaction and loyalty.

Segment	Revenues (2024, in thousands)	Revenues (2023, in thousands)	Adjusted EBITDA Margin
Payment Services - Puerto Rico & Caribbean	$159,985	$150,824	56.3%
Merchant Acquiring	$133,855	$122,152	39.4%
Business Solutions	$181,567	$169,188	43.1%

EVERTEC, Inc. (EVTC) - Business Model: Customer Relationships

Dedicated account management teams

The dedicated account management teams at EVERTEC facilitate personalized interactions with clients, ensuring tailored service delivery. This approach is evident in the company's revenue growth, with total revenues increasing by 22% to $211.8 million for the three months ended September 30, 2024, compared to $173.2 million in the same period of 2023.

Long-term contracts with clients

EVERTEC has established long-term contracts that enhance customer retention. For instance, the Payment Services - Puerto Rico & Caribbean segment reported revenues of $52.8 million for the three months ended September 30, 2024, an increase of $1.2 million compared to the previous year. Such contracts are often structured to provide stability in revenue and ensure ongoing service relationships.

Customer support and training services

Customer support and training services are integral to EVERTEC’s customer relationship strategy. The company invests significantly in these areas, with selling, general and administrative expenses increasing by 12% to $34.1 million for the three months ended September 30, 2024. This investment reflects the commitment to enhance customer experience and operational efficiency.

Engagement through feedback mechanisms

EVERTEC employs various feedback mechanisms to engage with customers actively. This includes monitoring service performance and soliciting customer input to refine service offerings. The company’s adjusted EBITDA for the nine months ended September 30, 2024, was $251.6 million, indicating an effective engagement strategy that drives operational improvements and customer satisfaction.

Metric	Q3 2024	Q3 2023	Change (%)
Total Revenues	$211.8 million	$173.2 million	22%
Payment Services - Puerto Rico & Caribbean Revenues	$52.8 million	$51.6 million	2.3%
Selling, General and Administrative Expenses	$34.1 million	$30.4 million	12%
Adjusted EBITDA	$251.6 million	Not specified	Not applicable

EVERTEC, Inc. (EVTC) - Business Model: Channels

Direct sales force for service distribution

The direct sales force of EVERTEC plays a critical role in the distribution of its services, particularly in the Payment Services and Business Solutions segments. As of September 30, 2024, the company reported revenues of $52.8 million from the Payment Services - Puerto Rico & Caribbean segment, which reflects a year-over-year increase attributed to the effectiveness of the sales team in driving transaction volumes.

Online platforms for digital transactions

Digital transactions are a significant component of EVERTEC's business model. The ATH Movil platform, which facilitates person-to-person and person-to-merchant transactions, has seen substantial growth. For the three months ended September 30, 2024, revenues from digital transactions contributed to an overall increase in the Payment Services segment, amounting to $52.8 million.

Platform	Revenue (Q3 2024)	Growth Rate (YoY)
ATH Movil	$52.8 million	2.3%
Business Solutions	$61.1 million	8.1%

Strategic partnerships for market access

Strategic partnerships are vital for EVERTEC to expand its market reach. Notably, the company has established relationships with key financial institutions and technology providers. For the nine months ended September 30, 2024, revenues from the Latin America Payments and Solutions segment reached $224.9 million, largely due to growth from partnerships and acquisitions such as paySmart.

Marketing campaigns targeting specific segments

EVERTEC employs targeted marketing campaigns to reach specific customer segments effectively. In the most recent quarter, the company invested in marketing initiatives that helped increase visibility and adoption of its services, particularly in the digital payment sector. The Business Solutions segment reported revenues of $61.1 million for the third quarter of 2024, reflecting the success of these targeted campaigns.

EVERTEC, Inc. (EVTC) - Business Model: Customer Segments

Financial Institutions and Banks

EVERTEC serves a diverse range of financial institutions and banks, providing payment processing and transaction solutions. In the nine months ended September 30, 2024, the segment revenues from Payment Services - Puerto Rico & Caribbean were $159.985 million, representing a year-over-year increase from $150.824 million in 2023. The EBITDA for this segment was $90.062 million, with an adjusted EBITDA margin of 56.3%.

Merchants Across Various Industries

Merchants in sectors such as retail, hospitality, and e-commerce utilize EVERTEC's services for payment processing and acquiring. The Merchant Acquiring segment generated revenues of $133.855 million for the nine months ended September 30, 2024, up from $122.152 million in 2023. The adjusted EBITDA for this segment was $52.695 million, reflecting a margin of 39.4%.

Segment	2024 Revenues (in thousands)	2023 Revenues (in thousands)	Adjusted EBITDA (in thousands)	EBITDA Margin
Payment Services - Puerto Rico & Caribbean	$159,985	$150,824	$90,062	56.3%
Merchant Acquiring	$133,855	$122,152	$52,695	39.4%

Government Agencies for Payment Solutions

Government agencies utilize EVERTEC's expertise in payment solutions for various public sector needs. The company has established contracts with government entities, which contribute to its revenue streams. The Business Solutions segment, which includes services to governmental agencies, reported revenues of $181.567 million for the nine months ended September 30, 2024, compared to $169.188 million in the prior year. The adjusted EBITDA for this segment was $78.312 million, with a margin of 43.1%.

Corporations Needing IT Outsourcing Services

Corporations seeking IT outsourcing solutions are served through EVERTEC’s Business Solutions segment. This segment's revenue includes IT services, software development, and support. For the nine months ended September 30, 2024, the Business Solutions segment generated revenues of $181.567 million, up from $169.188 million in 2023. The adjusted EBITDA for this segment was $78.312 million, reflecting a margin of 43.1%.

EVERTEC, Inc. (EVTC) - Business Model: Cost Structure

Operating expenses related to technology maintenance

For the nine months ended September 30, 2024, EVERTEC reported a cost of revenues (exclusive of depreciation and amortization) of $302.4 million, which reflects a significant increase of $64.3 million or 27% compared to the same period in 2023. This increase is largely attributed to heightened personnel costs and an expansion in cloud services and professional fees.

Customer acquisition and marketing costs

Selling, general and administrative expenses amounted to $107.9 million for the nine months ended September 30, 2024, marking an increase of $24.1 million or 29% year-over-year. This rise is primarily driven by increases in marketing and personnel costs, reflecting the company's focus on expanding its customer base and enhancing service delivery.

Employee salaries and benefits

Employee compensation and benefits across various segments totaled approximately $23.2 million for the nine months ended September 30, 2024. This figure includes share-based compensation and severance payments, which contribute significantly to the overall employee expenses. The increase in salaries and benefits is consistent with the company's growth strategy and the integration of new acquisitions, which necessitate higher staffing levels.

Costs associated with compliance and regulation

Compliance and regulatory costs are included within the broader category of selling, general and administrative expenses, which reached $107.9 million. These costs are influenced by the necessity to adhere to various local and international regulations, which have become more stringent. This includes expenses related to audits, legal fees, and compliance training.

Cost Category	Amount (in millions)	Year-over-Year Change
Cost of Revenues	$302.4	+27%
Selling, General and Administrative Expenses	$107.9	+29%
Employee Compensation and Benefits	$23.2	N/A
Compliance and Regulatory Costs	Included in SG&A	N/A

EVERTEC, Inc. (EVTC) - Business Model: Revenue Streams

Transaction Processing Fees

For the nine months ended September 30, 2024, EVERTEC reported transaction processing fees of approximately $159.99 million from its Payment Services - Puerto Rico & Caribbean segment, reflecting an increase from $150.82 million in the same period of 2023. This segment's revenue growth was driven by increased transaction volumes and enhanced service offerings.

Subscription Fees for Software Services

The Business Solutions segment generated approximately $181.57 million in revenues for the nine months ended September 30, 2024, up from $169.19 million in the previous year. This segment comprises subscription fees for software services, including project completions and ongoing maintenance contracts.

Merchant Acquiring Discount Fees

Merchant acquiring revenues for the nine months ended September 30, 2024, amounted to $133.86 million, an increase from $122.15 million in 2023. This revenue increase can be attributed to improved sales volume and enhanced merchant services.

Consulting and Professional Service Charges

Consulting and professional service charges contributed approximately $90.06 million to the overall revenue for the nine months ended September 30, 2024, compared to $87.41 million in the same period of the previous year.

Revenue Stream	2024 Revenue (in millions)	2023 Revenue (in millions)	Increase (in millions)
Transaction Processing Fees	$159.99	$150.82	$9.17
Subscription Fees	$181.57	$169.19	$12.38
Merchant Acquiring Discount Fees	$133.86	$122.15	$11.71
Consulting and Professional Services	$90.06	$87.41	$2.65

Updated on 16 Nov 2024

Resources:

1. EVERTEC, Inc. (EVTC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of EVERTEC, Inc. (EVTC)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View EVERTEC, Inc. (EVTC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.