Evertec (EVTC) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01If we are unable to maintain our merchant relationships and our alliance with Popular, our business may be materially adversely affected
2. 02merchants and we may experience the loss of additional merchants if Banco Popular itself enters the merchant acquiring business or agrees to sponsor another independent sales organization. Any of these events may negatively impact our financial condition and results of operations
3. 03Our inability to renew or continue to maintain client contracts on favorable terms or at all may materially adversely affect our results of operations and financial condition
4. 04We rely on our information technology systems, employees and certain suppliers and counterparties, and certain failures or disruptions in those systems or chains could materially adversely affect our operations
5. 05result, we may be unable to detect, investigate, remediate, or recover from future attacks or incidents, or to avoid a material adverse impact to our IT Systems, data, or business
6. 06We are subject to security breaches or other confidential data theft from our systems, which can adversely affect our reputation and business
7. 07Our ability to recruit, retain and develop qualified personnel is critical to our success and growth
8. 08Failure to comply with federal, state and foreign laws and regulations relating to data privacy and security, or the expansion of current, or the enactment of new, laws or regulations relating to data privacy and security, could adversely affect our business, financial condition and operating results79% rewritten
9. 09become, subject to various laws, regulations, standards, and contractual obligations relating to data privacy and security in the jurisdictions in which we operateNew
10. 10Fraud by merchants or others could adversely affect our business, financial condition or results of operations
11. 11We are subject to the credit risk that our merchants will be unable to satisfy obligations for which we may also be liable
12. 12Our ability to adopt technology to changing industry and customer needs or trends may affect our competitiveness or demand for our products, which may adversely affect our results of operations
13. 13Our use of artificial intelligence and machine learning tools may subject us to additional risks and may adversely impact our reputation and the performance of our products, service offerings and business
14. 14The regulatory framework governing the use of AI and machine learning technology is rapidly evolving, and we cannot predict how future legislation and regulation will impact our ability to offer products or services that we develop which leverage artificial intelligence and machine learning technology
15. 15There may be a decline in the use of cards as a payment mechanism for consumers or adverse developments with respect to the card industry in general
16. 16Changes in payment card network or other network rules, standards or mandates could adversely affect our business
17. 17Changes in interchange fees charged by payment card networks could increase our costs or otherwise materially adversely affect our business
18. 18We are subject to extensive government regulation and oversight. Failure to comply with existing and future rules and regulations in the jurisdictions in which we operate could materially adversely affect the operations of one or more of our businesses in those jurisdictions
19. 19Privacy and Data Protection
20. 20Puerto Rico’s fiscal crisis could have a material adverse effect on our business and the trading price of our common stock
21. 21We are exposed to risks associated with our presence in international markets, including global political, social and economic instability
22. 22Failure to protect our intellectual property rights and defend ourselves from potential intellectual property infringement claims may diminish our competitive advantages or restrict us from delivering our services, which could result in a material and adverse impact on our business operations21% rewritten
23. 23Assertions by third parties of infringement or other violations by us of their intellectual property rights, whether or not correct, could result in significant costs and harm our business and operating results49% rewritten
24. 24We incorporate technology and components from third parties into our products, and our inability to obtain or maintain rights to such technology could harm our business
25. 25Our use of "open source" software could subject our proprietary software to general release, negatively affect our ability to offer our products and subject us to possible litigation
26. 26Confidentiality arrangements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information70% rewritten
27. 27EVERTEC Group has a preferential tax exemption grant from the Government of Puerto Rico. If EVERTEC fails to renew or extend such grant or fails to comply with its terms, we could have a material adverse effect on our financial condition, results of operations and our stock priceNew
28. 28The enactment of legislation implementing changes in tax legislation or policies in different geographic jurisdictions including the United States could materially impact our business, financial condition and results of operations72% rewritten
29. 29The OBBBA includes provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates beginning in 2025New
30. 30The OBBBA and Pillar Two did not have a material effect on our financial statements for the year ended December 31, 2025, and we are continuing to evaluate the potential effect on future periodsNew
31. 31Exposure to foreign exchange fluctuations and capital controls may adversely affect our costs, earnings and the value of some of our assets
32. 32We are exposed to fluctuations in inflation, which could negatively affect our business, financial condition and results of operations
33. 33Acquisitions, strategic investments, partnerships, or alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute shareholder value, and adversely affect our business, financial condition and results of operations

Risks Related to Our Securities, Corporate Structure and Governance

1. 34Future sales or the possibility of future sales of a substantial amount of our common stock may depress the price of shares of our common stock
2. 35Purchases of our common stock pursuant to our stock repurchase plan may affect the value of our common stock, and there can be no assurance that our stock repurchase plan will enhance stockholder value
3. 36We are a holding company and rely on dividends and other payments, advances, and transfers of funds from our subsidiaries to meet our obligations and pay any dividends
4. 37Our organizational documents may impede or discourage a takeover, which could deprive our investors of the opportunity to receive a premium for their shares
5. 38The market price of our common stock may be volatile
6. 39From time to time we are subject to various legal proceedings which could adversely affect our business, financial condition or results of operations
7. 40Short sellers of our stock may be manipulative and may drive down the market price of our common stock

Risks Related to Our Indebtedness

1. 41Further, borrowings under our secured credit facilities are at variable rates of interest and are exposed to market risk due to the floating interest rates. Our results of operations, cash flows and financial position could be affected adversely by significant fluctuations in interest rates from current levels
2. 42If we are unable to comply with covenants in our debt instruments that limit our flexibility in operating our business or obligate us to take action such as deliver financial reports, we may default under our debt instruments and our indebtedness may become due
3. 43We are also required under the secured credit facilities to maintain compliance with a maximum total net leverage ratio at the end of each fiscal quarter