EVO Payments, Inc.

Q2 adjusted net revenue was $2.06 billion, up 6% from the prior year and 8% on a constant-currency basis. Adjusted EPS was $2.36, up 16% year over year and 19% constant currency. Adjusted operating income rose 14% constant currency, and adjusted operating margin was 43.8%, up 200 basis points year over year; excluding acquisitions, margin improvement was about 250 basis points. Merchant Solutions adjusted net revenue was $1.43 billion, up 11% year over year and 14% constant currency, with 50.2% margin. Issuer Solutions adjusted net revenue was $459 million, up 6% constant currency, with 43.5% margin excluding MineralTree. For the full year, on a constant-currency basis, management kept adjusted net revenue guidance at $8.48 billion to $8.55 billion and adjusted EPS at $9.53 to $9.75, while raising adjusted operating margin expansion to up to 150 basis points. On a reported basis, adjusted net revenue guidance was $7.9 billion to $8 billion and adjusted EPS was $9.45 to $9.67, reflecting about 200 to 250 basis points of FX headwind for the year and the reclassification/sale of Netspend consumer assets.

Jeff Sloan struck an upbeat, strategic tone, saying the quarter was the best in company history across key metrics despite macro and FX headwinds. He framed the EVO acquisition, the Netspend consumer sale, and Silver Lake’s $1.5 billion investment as evidence that the company is simplifying the model, deepening its moat, and sharpening its focus on software, omnichannel, faster-growth geographies, and B2B at scale. He repeatedly emphasized confidence in the company’s raised cycle targets and said the post-transaction mix would shift to roughly 75% merchant and 25% issuer/B2B.

Josh Whipple led with the hard financials: $2.06 billion of adjusted net revenue, $2.36 of adjusted EPS, 43.8% adjusted operating margin, and $432 million of adjusted free cash flow. He said the company invested $168 million in capex in the quarter and still expects about $600 million for 2022, while targeting roughly 100% conversion of adjusted earnings to adjusted free cash flow for the full year. He also noted $2.5 billion of liquidity, 2.9x net-debt leverage at quarter end, and expected leverage of about 3.9x at close after the EVO and Netspend transactions, with a path back to current leverage by year-end 2023.

Analysts focused on whether the EVO deal changes the company’s strategy, the size and durability of the $125 million synergy target, and how the Netspend restructuring affects guidance. Management said the core priorities do not change: they will still look for software, new geographies, and deeper penetration of existing markets, while EVO adds B2B ERP integrations and international scale. They also said the $125 million of run-rate EBITDA synergies should flow through to EBIT, and clarified that the full-year revenue and EPS guide largely still reflects the year’s mix of FX headwinds, Russia, and the Netspend consumer sale. On operations, management said July volumes were tracking as expected, with no material sign of consumer weakness and continued strength in merchant and issuer trends.