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spk02: Good afternoon, everyone, and welcome to the Evertech second quarter 2024 earnings conference call. Today's conference call is being recorded. At this time, I would like to turn the conference over to Ms. Beatrice Brown-Signs of Investor Relations. Please go ahead, ma'am.
spk09: Thank you, and good afternoon. With me today are Max Schuessler, our President and Chief Executive Officer, and Joaquin Castrillo, our Chief Financial Officer. Before we begin, I would like to remind everyone that this call may contain forward-looking statements and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC report. During today's call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules, such as adjusted EBITDA, adjusted net income, and adjusted earnings per common share. Reconciliations to GAAP measures and certain additional information are also included in today's earnings release and related supplemental slides, which are available in the investor relations section of our company website at www.evertechinc.com. I will now hand the call over to Max.
spk04: Thanks, Beatriz, and good afternoon, everyone. We're pleased to announce second quarter results that reflect solid revenue growth across all our segments and strong overall margins. Revenue continues to benefit from strong transactional growth in Puerto Rico and Latin America, complemented by the contribution from the Syncia acquisition, as well as higher-than-expected revenue in our Business Solutions segment. I will begin today's call with a summary of our second quarter 2024 financial results, followed by a discussion of our Puerto Rico segments, and concluding with an update on Latin America, including progress we are making with Sync in Brazil. I will then turn the call over to Joaquin, who will provide additional details on both our Q2 results and our updated 2024 outlook. Beginning on slide four, let's start with some highlights from our second quarter results. We reported $212 million in revenue, a 27% increase over the prior year. Revenue growth in our Puerto Rico payment segment was driven by strong sales volume growth, improved net spread, and continued growth in ATH and ATH mobile business. Latin America revenue benefited from the CINCIA contribution, as well as continued organic growth across the region. Business Solutions revenue benefited from a one-time impact from a project in the quarter. Adjusted EBITDA for the quarter was $86.1 million, up approximately 16% when compared with the prior year, driven largely by the revenue increase and the effect of the CINCIA acquisition. Adjusted EBITDA margin was 40.6%, down from a year ago, driven by the lower margin profile of the CINCIA business. However, the margin was above last quarter due to the revenue growth driven by the payment segments and the effect of the one-time impact in business solutions. Adjusted EPS for the quarter was $0.83, up 17% year-over-year and above our expectations, with a higher revenue, strong margins, and lower-than-expected tax rate all contributing to the upside. EPS was partially offset by higher operating depreciation and amortization expense and higher cash interest expense as a result of the incremental debt raised for the CINCIA acquisition. We continue to actively manage our cost of debt, and as announced back in May, we completed the successful repricing of our term loan B, which was leveraged neutral and effectively reduced our interest rate by 25 basis points. We are pleased with the resulting future interest cost savings and believe this reflects the high confidence level that debt holders have in Evertec. We generated operating cash flow of approximately $131 million during the first half of the year, and we returned significant cash to shareholders, approximately $6 million through dividends and $70 million through the accelerated share repurchase program. We completed the ASR on July 9 and retired a total of approximately 1.9 million shares through the program. Our liquidity remains strong at $452 million as of June 30th. Turning now to our Puerto Rico update on slide 5. Just like in the first quarter, all of our Puerto Rico segments generated strong growth. Merchant acquiring led the way with approximately 10% growth on a year-over-year basis, benefiting from sales volume growth and a higher spread. Payments Puerto Rico revenue grew approximately 7% year-over-year. The business solution segment delivered strong performance, up approximately 9% year-over-year, due mainly to the one-time revenue impact to the segment, which was 100% margin accretive. The Puerto Rico macro environment continues to be supportive for Evertech as we move through 2024. As we have noted on other calls, there continues to be a significant amount of federal funds committed, and we're beginning to see the disbursement of these funds accelerate. The employment picture remains strong, with total employed up 1.8% year-over-year and the unemployment rate at 5.8%, still near the lows of the past decade. Tourism remains a positive factor, with arrivals to the International Airport in San Juan approximately 18% year-to-date, and non-resident hotel registrations are up 4.4% year-over-year through April. In sum, the macro backdrop continues to be supportive of continued organic growth for Evertech. Turning to Latin America on slide six, LATAM revenue was up 91% year-over-year in the quarter with the acquisition of Syncia being the major driver of growth. and we continue to see organic growth from our legacy business that remains in line with historical growth trends. In Brazil, we have seen some softness in the software market that has impacted Syncia as well as other technology providers. However, we continue to focus and have made progress on the five areas that we laid out last quarter, which we are confident will increase Syncia's growth rate. We continue to be excited by the prospects of this business. As we interact with more clients, the strength of Syncia's position in the market and the strength of their franchise remains clear. Additionally, we are starting to see progress from the combination of Evertech and Syncia as conversations with clients, both new and existing, begin to get broader in terms of potential service offerings that include Evertech assets, which is also encouraging. Let me conclude by emphasizing that we are very pleased with the overall performance we delivered in the first half of the year. We remain enthusiastic about our long-term prospects throughout Latin America and believe the Puerto Rico economy will continue to support our growth in this market. With that, I will now turn the call over to Joaquin.
spk03: Thank you, Mac, and good afternoon, everyone. Turning to slide eight, I'll begin by reviewing the second quarter results for Evertech. Total revenue for the second quarter was $212 million, up approximately 27% compared to the prior year. Our Latin America segment benefited from both the Zinke acquisition and organic growth in our legacy business, and our Puerto Rico segments reflected good organic growth that benefited from an improvement in overall spread, high transactions volumes, continued growth from our DHM Oil business, and the project-related one-time impact in business solutions. Adjusted EBITDA for the quarter was 86.1 million, an increase of approximately 16% from the prior year. and adjusted EBITDA margin was 40.6%, down approximately 400 basis points from the prior year. The declining margin is primarily the result of the Sinqia business, which has lower margins. Adjusted net income was $53.8 million, an increase of approximately 15% year-over-year, and adjusted EPS was 83 cents, an increase of approximately 17% from the prior year. This growth was driven by the higher adjusted EBITDA and a lower than expected tax rate partially offset by higher interest expense resulting from the increased debt raised to finance the Sinqia acquisition, as well as higher operating depreciation and amortization. The adjusted effective tax rate for the quarter was 4.4%, which is below our original guidance and mainly driven by tax benefits related to the Sinqia acquisition. Moving to slide nine, I will now cover the second quarter results by segment, beginning with merchant acquiring. Net revenue increased approximately 10% year-over-year to $45.3 million, driven by increased volumes and an improvement in the overall spread. We experienced mid-single-digit sales volume growth in the quarter, with growth across most major categories in our portfolio, as we have signed new merchants combined with strong consumer trends. We also continue to actively manage our overall spread through several initiatives as well as repricing certain key relationships. Adjusted EBITDA for the segment was $18.2 million and adjusted EBITDA margin was 40.3% of approximately 230 basis points from the prior year. The margin increase was primarily due to the higher revenues partially offset by increased expenses, particularly higher processing costs driven by the effect of a declining average ticket. On slide 10 are the results for the payment services Puerto Rico and Caribbean segment. Revenue in the quarter was $54.2 million, an increase of approximately 7% from the prior year. The revenue increase was driven by high Teams growth in ADH and mobile business, a 5% growth in POS transactions, and higher transaction processing and monitoring services provided to the Latam segment. Adjusted EBITDA was $31.4 million, up approximately 7% from the prior year, and adjusted EBITDA margin was 57.8%, up approximately 40 basis points over the prior year. The increase in margin was due primarily to the increase in revenue, partially offset by higher infrastructure and programming expenses and personal costs. On slide 11 are the results for Latin America payments and solutions. Revenue in the quarter was $74.7 million, up approximately 91% year-over-year. Normalizing for the effects of foreign currency, this quarter growth would have been 93%. The biggest driver of the increase was the addition of revenue from the Sinqia acquisition and growth in our legacy LATAM business, which was low double digits. Adjusted EBITDA was $17.5 million, up approximately 24% from the prior year, with the adjusted EBITDA margin of 23.4%, down approximately 13 percentage points from the prior year. The decline in margin is mostly a result of CINCIA, which has lower overall margins when compared to the segment average, and the positive impact to margin in the prior year from the reversal of a one-time provision for operational losses. Margin for the segment was also negatively impacted by higher salary expense related to both headcount increases and currency movements in certain countries. Turning to slide 12, you will see the results of our business solution segment. Revenue was $62.3 million, an increase of approximately 9% from the prior year. The revenue increase was primarily driven by a one-time impact of a multiyear project in the quarter. Adjusted EBITDA was $29.8 million, up approximately 27% from a year ago, and adjusted EBITDA margin was 47.8%, up approximately 670 basis points from the prior year. The strongest unexpected margin was due to the one-time revenue impact, which was highly accretive, as well as lower expenses. Moving to slide 13, you will see a summary of our corporate and other expenses. Corporate and other adjusted EBITDA was $10.8 million in the quarter, or 5.1% of total revenue, up $2.6 million from the prior year, in part due to higher personnel, legal and professional services, and other operating expenses, but still within our expectation of 5% of total revenues. Moving on to our cash flow overview for the first half of 2024 on slide 14, net cash from operating activities in the first half was $131 million. Capital expenditures were $56 million through the second quarter as we had front-loaded capex spend driven by key projects being developed and key infrastructure refresh that took place during the first half of the year. We now expect our total capex for the year to be closer to $85 million. We paid down approximately $19 million in debt during the first half and returned approximately $76 million to shareholders through share repurchases and dividends. As Mike noted earlier, on July 9th, we completed the $70 million ASR that we had announced in the first quarter, retiring approximately 2 million shares as part of that plan. Recall that we entered into the ASR to offset the dilution from shares issued as part of the Zinke acquisition. We currently have $150 million available for future use on the company's share repurchase program through December of 2025. Our ending cash balance for June 30 was $282 million, a decrease of $36.5 million from the year end 2023. Moving to slide 15, our net debt position at year end was $735 million, comprised of $993 million in total long and short-term debt, offset by $258 million of unrestricted cash. Our weighted average interest rate was approximately 7.2%, higher than a year ago due to the debt issues related to the CINCH acquisition, but lower than recent quarters, due in part to the repricing of the term B loan that Mac mentioned earlier, which reduced our spread by 25 basis points. Our net debt to trailing 12-month adjusted EBITDA was approximately 2.28 times, up from 0.86 times a year ago, but still well within our target range of two to three times. As of June 30, our total liquidity, which excludes restricted cash and includes our borrowing capacity, was $451.7 million, up $66 million from a year ago. Now I'll turn to slide 16 for commentary on our updated 2024 outlook. For 2024 revenue, we are keeping the same expected range of $846 million to 854 million or growth of approximately 22% to 23% over the prior year. On adjusted EBITDA, we now expect our margin to be around 39% for the full year. Adjusted EPS is now expected to be in a range of $2.98 to $3.07, which represents growth of 5.7% to 8.9% compared to the $2.82 reported for 2023. This updated range considers our Q2 results, lower interest expense driven by the TLB repricing, an overall lower adjusted tax rate of approximately 5% for the full year, which is down from our prior target of 6% to 7%. As a reminder, the lower tax rate has been mostly driven by the effect of amortizing goodwill for tax purposes in Brazil, which has reduced our tax liability. In terms of the segments, we now expect our merchant acquiring segment to be in the mid to high single-digit range, as we expect the second half of the year to have growth more aligned with our first quarter results, and our payments Puerto Rico segment to be in the mid single-digit growth range. For Latin America payments and solutions, we now expect growth in the high 60s to the low 70s percent, taking into consideration the effects of foreign currency, which continue to impact year-over-year growth, mainly as a result of the Brazilian REI. We expect business solutions revenue growth of low to mid-single digits for the full year. We are pleased with our results thus far in 2024, and we believe Evertech is well positioned for growth in 2024 and beyond. The integration of Syncia will remain a major focus, and we continue to be excited by the long-term opportunity in both Brazil and the rest of Latam. We look forward to updating you on our progress in the coming year and hope to see some of you at conferences over the next few months. With that, operator, please open the line for questions.
spk02: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Jamie Friedman with Susquehanna. Please go ahead.
spk07: Thank you and congratulations good results here. I just want to ask first about the Puerto Rico update Mac You know you're calling out improved spreads and transaction growth I'm wondering in terms of this spread narrative How sustainable do you see that? What's that due to and are you anticipating it will continue?
spk03: Hey Jamie this Joaquin. I'll take that one. I So look, I think we've been consistently saying that we're very focused on the pricing in our merchant portfolio, and this is something that we've been actively doing. What I would say is This started, or some of these initiatives started last quarter. We're starting to see some of the impacts this quarter. So we are expecting to see some of that, let's say, benefit from pricing throughout the end of this year, and then we'll anniversary that as we get into next year. And this is something that we do both looking at different segments in the portfolio, specific relationships within the portfolio that maybe don't have the level of profitability that we want, and also making sure we're optimizing the cost that we get from some of the brands. So this is something that we'll continue to do, but these specific initiatives we expect will run through at least the end of this year. And in terms of impact, which I think is also something that we usually give some color around, it's about a third of the impact to growth is from pricing, about a third is coming from sales volume growth, and about a third is really coming from some non-transactional fees that are kind of cyclical, so those we don't necessarily expect on a quarter-to-quarter basis.
spk07: Awesome. Thanks for unpacking that. And then for my follow-up, how is legacy LATAM doing, Joaquin? I know you say that the organic growth and legacy business was in line with the historical – make sure I'm looking at the right thing. Yeah, that's what it says. But then I thought that you had said in your prepared remarks that You gave a number. It seemed like it was lower than what I had remembered. Anyway, any context about legacy LATAM would be helpful.
spk03: Sure, Jamie. We said it continues to grow low double digits, and we've historically said we want that segment to be in that low double digits to low teens, which is kind of the base at which some of those markets are growing at, and that continues to be our focus.
spk04: Yeah, and to be clear, we're not breaking out Senkia and LATAM because we don't manage the business that way. But to Joaquin's point, the legacy business is growing at the same rate it has historically in the most recent quarters. And that's how it performed in this quarter as well.
spk07: Got it. Thanks, guys. I'll drop back in the queue.
spk04: Thanks, Simon.
spk02: The next question will come from Vasu Govil with KVW. Please go ahead.
spk01: Hi. Thanks for taking my questions. I guess I wanted to start off with St. John a little bit. Mac, I heard you mentioned some softness in the software market in Brazil. Just can you provide an update on sort of what type of growth you were expecting in that asset and how meaningful of an impact you're seeing in the market and if there are things that you can do to offset that in the near term? And I know Joaquin gave us some LATAM guidance for the third quarter as well, which seemed a little bit softer. So is that because of the software weakness or is it all FX related?
spk04: So it's partially and factually. Let me walk you through a little bit about what we're seeing in the industry. So when we look at public companies that are in this sector, and we also look at private companies, both through our CVC and through our M&A pipeline, we have seen a slowdown in their growth rates. And it's really attributed to sort of the political situation as it relates to the Lula administration and sort of concerns around populism and increasing fiscal spending without being sort of, you know, and raising the deficit. And that's what you've seen in the impact in the real. You've also seen the impact in inflation, and then you've seen impact in corporate spending. So when you look at our service lines within Syncia is where we've seen that the most pronounced. People are sort of buckling up and holding, you know, they're spending down to see what's going to happen. We are optimistic that Lula realizes, you know, he can't have the real depreciate as much as it's done, and that he can't have inflation go up. He's even, his administration has made commitments for 24 and 25. I mean, for 24 and then going into 25 to cut, I think next year, like 26 billion Rai in expenses to try and get the budget balanced. So we have seen that, like I said, in other companies, both private and public, and that has slowed down in spending with some of our customers. That being said, we also, as we said on the previous call, are very focused on executing well and making sure that we can re-accelerate the growth rate based on our own initiatives. So, you know, we've spent a lot of time with customers, making sure we're staying close to customers, resolving issues quickly so that we can cross-sell them new business, also modernizing our platforms and moving them to the newer versions. And what I would say is it's early, but we are seeing very promising signs that customers are willing to do more with us if we modernize the platforms, if we solve their problems on the existing platforms and SLAs. And we think this is one of the best assets in the country. It would be very difficult to replicate the stability of the services they provide, the strength of the software across different lines within a bank or financial institution. So we're very focused on making sure we have operational excellence as we've done with the rest of Avertac.
spk01: That's super helpful. Thank you for that, Collar. And just my quick follow-up. The business solutions outperformance related to that one-time project, was that expected to fall in the quarter? And if not, I'm just trying to put that with the unchanged revenue guide.
spk03: So it wasn't. It's a timing issue, really. We knew somewhere it was going to fall this year, but we weren't sure in which quarter or if there is some delivery attached to when that one-time hit. And in this case, it was this quarter.
spk01: Got it. Thank you.
spk02: The next question will come from Chris Kennedy with William Blair. Please go ahead.
spk06: Good afternoon. Thanks for taking the question. Mac, is there any way to give a timeline on the modernization efforts at Syncia? When do you think you'll have the platform ready?
spk04: Yeah, so look, I would say we're seeing the immediate benefits of the investments we're making now. I mean, I've had some calls with custom customers this week, and they already see a difference in our ability – deliver and our ability to provide better services and our ability potentially to displace some of our competitors with some of our products. The modernization is going to be a multi-year project, but we're already in the process of modernizing our receivables platform, our funds platforms, and delivering those this year to some of our biggest customers. So it's already in progress. We're just prioritizing those that have the best financial impact and are the most meaningful to our most important customers, so we get to those first. Secondly, we're also looking at pricing. Some of these contracts with these customers are very old. So just like we've done with the merchant business that we talked about earlier, is there a better way to price some of these contracts as we've added new features? So there's a lot of different things that we're doing, just like we've done at Evertech, to make sure we deliver on the modernization with good business cases and time the most important ones sooner. But we're also looking at margin optimization and other revenue synergies, whether it's pricing, Or again, we're already in the process of finding some new payments opportunities now that we have the Syncia Rolodex, but looking at selling other payment products into the existing Syncia customers. So it's a broad range of things that we're very focused on, not just the modernization, but we have a plan that should impact next year, the back half of this year and next year, and into the future.
spk06: Great, thank you. And then just for the follow-up, can you talk about the M&A pipeline for Sinqia? Is that kind of on hold or is that you still moving forward with that? Thank you.
spk04: Yeah, so what I would say is we're very optimistic about the M&A pipeline. We look at the pipeline across the entire geography, not just singularly Brazil. We're focused on where we can pick up potentially new products, where we can expand the depth in some other markets even outside of Brazil. and where we think we can get the best growth rate and the best return. So we do have a good pipeline, but we're not just focused on Brazil. We're focused on the other markets as well.
spk06: Thank you.
spk02: The next question will come from Nate Severson with Deutsche Bank. Please go ahead.
spk08: Hey, guys. Thanks for the question. Kind of a two-parter maybe on the acquiring business. So there's obviously been a lot of focus in the payment space the last few weeks on the trajectory of volume growth into the back half of the year. So I think you called out mid-single-digit growth in your acquiring business this quarter. So maybe you can give an update on what you've seen so far in July and any call-outs with regards to the cadence of growth as you move through the rest of the year. And then the follow-up there is you did raise the acquiring segment guide from mid-single-digits to high-single-digits. And I think some of your back half assumptions were a little higher than we had previously been modeling. So, any more color there would be helpful.
spk03: Sure. I mean, I think that the guidance takes into consideration the performance of this quarter. which was certainly a little bit higher than what we expected as well. I think that if we look at kind of trends in July, July sales volume is slightly slower than the trend that we saw for the second quarter. But that is somewhat expected if you look at some of the trends that we at least had, for example, Year and that's in part because we have tax season here during the second quarter and there's a lot of volume that flows through our systems as a result of that and So look in general, I think it's pretty stable What we're seeing in terms of that slight slowdown is somewhat expected Got it appreciate the color there and for the follow-up I guess maybe you talk about margin leverage you have going forward so like if you exclude flat-term which is obviously impacted by CKIA and
spk08: Every other segment showed really healthy year-over-year margin expansion. Maybe business solutions benefited from the one time. But beyond that, there was really good margin expansion across the business. And I know you've kind of alluded to it a few times on this call about your margin optimization efforts. So maybe you can give us an update on how you think about your ability to continue expanding margins in the legacy Evertech business, leaving aside the Syncia integration impacts and then how that's kind of changed from maybe 12, 18 months ago and how you see that going forward.
spk03: I think that we have always been very focused on our margins, right? And we have very strategically taken certain actions, right, that have impacted our margin, like the popular deal in 2022, last year, and so I think that this is a constant for us where we're trying to identify where we can find some efficiencies. Obviously, our payment segments in Puerto Rico are very scalable, so to the extent that we can drive good growth through those, including some of the pricing initiatives which are highly accretive to margin, that certainly helps. In business solutions, look, the margin that we had this quarter is certainly above the norm, and that's why we continue to expect the margin for business solution to come back to that low 40s margin because we had this one time impact that was highly accretive. But as we've also said with Latin America, and as Mac mentioned in the last call in terms of the five hours of focus, margin optimization as a whole continues to be a focus for LATAM. And so if we're able to start to drive over time some improvements in margin there, that would be very helpful as well.
spk08: Thanks for the call, Joaquin.
spk02: The next question will come from John Davis with Raymond James. Please go ahead.
spk05: Good afternoon, guys. Actually, Joaquin did want to follow up on the margin question. So it looks like on an absolute basis, second half margins are going to be a touch below first half margins. I know you called out average tickets. Anything else? maybe some conservatism or, you know, just the fact that you did get that one-time project and business solutions, which I'm assuming came with pretty high margins in 2Q. Just trying to think about first half versus back half margins.
spk03: No, I think you hit it on the head. It's basically if you normalize the margin for the impact of the contract, which is about a full point of margin, by the way. So if you normalize for that, the second half of the year actually looks pretty aligned to the first half. So there's nothing really there to call out, John. Again, this is an ongoing effort.
spk05: Okay, no, that's helpful. And then, Max, just taking a step back, With Syncia, I think results have been a little bit softer than you probably expected when you acquired it. And I'm just curious if you'd help us think about what's macro. I know you talked about softness amongst peers and kind of software spending with the government and everything else that's going on in Brazil versus some micro issues, I think. you've called out some of the integration and stuff initially didn't go quite as, you know, as you would hope. So just help us think if we just take a step back, you know, we're six months or so or a little bit more into this deal, I guess at this point, you know, help us just kind of parse out like without necessarily numbers, think about how, what's macro versus micro with SyncU and kind of how you think about that changing as we go forward into the back half of this year and into the 25th.
spk04: Yeah, so, I mean, I think there's – the macro has an impact, obviously, and it has an impact across the peer group. But we do have the opportunity regardless, even if the macro remains challenged. Again, we're optimistic that IT spending will return. But even without that, we think there's an opportunity going into the back half of this year and into next year to accelerate growth. What we have done, and I'm going to repeat a little bit of what I said earlier, is The time that I've spent with the customers and the team is spending with customers, we are one of the most reliable software companies in Brazil. There's a lot of localization required because of regulation, because of taxation. And we are one of the largest software companies there. And we're even more reliable because they're now part of Evertech. We service US banks, which gives them a certain level of comfort. We have a strong information security capability. The conversations we're having about, okay, we need to improve some of our SLAs and the current things that we do. We need to modernize these platforms. And when we do that, we should be able to charge them more and eliminate costs as we consolidate some of these platforms. But they're also interested in, okay, as you do these things, and they've already – some clients have expressed to me they've already seen a noticeable difference in our level of execution. Then they're interested in us potentially doing other things, right, because we have the other platforms that we can provide to them that potentially – They're using a competitor. So I do believe it would be helpful, right, to have the macro as a tailwind. But even barring that, I believe we can reaccelerate growth into the back half of this year and then really into next year for the business. It is, like I said, it is a very unique asset. We do business with the largest institutions in the country, and we're still incredibly optimistic.
spk07: Okay. Appreciate all the color. Thanks, guys.
spk02: The next question will come from James Fautet with Morgan Stanley. Please go ahead.
spk00: Hi, this is Shabali Samaskar asking a question on behalf of James. Thank you for taking my question. So it was good to hear you mention that you're already seeing the immediate benefits from Syncia and hearing positive feedback from customers, while also mentioning some Brazil softness. So I wanted to understand how the competitive landscape and intensity may differ in Brazil relative to Puerto Rico. if that might change your go-to-market strategy at all with the bigger presence in LATAM?
spk04: Yeah, so what I would tell you is Brazil is a complicated market, and one of the reasons we made a big acquisition in Brazil is because we wanted to have a management team that had depth and breadth. We wanted to have a Rolodex of committed customers with a lot of experience, and we wanted to buy a portfolio of products where we actually own the intellectual property that was already operational. And when you look at the competitive landscape, as I said a little bit earlier, a lot of several of our customers that we're talking to are interested in doing business with us on the other platforms as they see us improve on the current platforms that they're running on. So I would say it's similar to Puerto Rico. Puerto Rico, we have more of a U.S. presence with some of the ISOs coming in here. But again, because they don't have the local capability and scale that we have in Puerto Rico, we're able to to win and grow market share here. It's a very similar phenomena there. We have a very unique asset that has scale, that has presence, that has IP, that has experienced management team and software on the ground that is unique to the Brazilian market. And so it's similar in that way. They're both unique assets that have competitive advantages in their own markets.
spk01: Thank you.
spk02: This concludes our question and answer session. I would like to turn the conference back over to Mr. Max Huchler for any closing remarks. Please go ahead.
spk04: Thank you. Again, I want to thank everyone for joining the call today, and we look forward to seeing you at conferences over the coming months. Good night.
spk02: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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