Today, it’s a very different culture and environment, because Bernardo had to step aside for personal reasons. I would say we anticipated that he would probably leave in a year or 2. That got accelerated given some things you needed to focus on. And then we put Claudio in his place now, who has clear objectives for each of the team members to ensure that the sales people are spending more times with clients, make sure that we’re tracking the pipeline. They we’re resolving operational issues so they want to buy more from us. So there’s — we’re much, much closer to the clients, starting with me, but actually, the organization at Sinqia is better organized and better managed from a client perspective. Also, once a deal is sold, is making sure the implementation teams can convert that to revenue, get the new system in, get the new customization, so that they can actually book the revenue.
So the discipline around executing and operating the current organization, there’s a much more significant focus on that from an organizational perspective and from a goal perspective. The other thing is clients want us to keep investing in these platforms. We can’t keep buying just new platforms. We actually have to make sure the ones we bought that were great when we bought them. They were keeping those current, they were keeping those updated so they can push more volume through it, that they’ll continue to add features. So we’ve come up with a plan that gives our clients comfort that we’re going to invest in this platform. And we prioritize those where we think we can get the most return in the shortest period of time. But we’re coming up with a multiyear plan to make sure we invest within these great companies that we thought.
And then the other piece that I’ve talked about is pricing. Like we are going through all of the contracts seeing who’s not as profitable as others and how do we better manage the pricing initiatives to get the margin where we want it to be. So what I would say, John, is that we’re trying to take the operational sort of excellence that we believe we have at EVERTEC and apply that now to Sinqia. If you look at our historical deals, this is what we did with PayGroup, right? So we bought PayGroup, because we need a platform and technology. And that is now the platform that we’ve rolled throughout the region. We brought up some of the biggest names in the region, but it took EVERTEC working with PayGroup to accomplish that, because we used our expertise in a processing business and applied it to their [indiscernible] business and rolled it out across Latin America.
Same thing we did with Place2Pay, right? Place2Pay was a small gateway operating in 2 countries. Now it operates in over 9 and some of our biggest customers are running on it. So that’s what we see at Sinqia is when you do a deal, you always have surprises, right? The great surprises. It’s a very important franchise in Brazil, and people want to do more business because they rely. And they even look now that it’s part of EVERTEC. The strength we have around information security, the strength we have around compliance, because we operate for big banks in the U.S. It’s making the value proposition even stronger in Brazil to do business with us. But the operational excellence, making sure you’re staying close to customers, making sure you have stable operations, making sure you’re continuing to investing in products.
That discipline is what we’re now applying to the business. And I feel very confident that Claudio is the right person to lead us through that. And I mean, the team will tell you, I’m spending a lot of time there myself to help accomplish that as well.
John Davis : I appreciate the color, Mac. Joaquin just a bigger picture question on margins. Obviously, you had very high margins and still have relatively high margins, but they’ve been coming down consistently even if you were to kind of exclude some of the M&A transactions for a while. Do you feel like with Sinqia accretion and kind of synergies that were at a good kind of baseline margin this year, and that, again, I’m not asking for ’25 guidance, but any reason why you shouldn’t start to see some operating leverage? Your payments businesses typically have pretty high incremental margins. Just as we think about longer term, like should this business — should margins improve from here, I guess, is the key question.
Joaquín Castrillo: I mean what I would say, John, is if you look at our slides from last quarter, with Sinqia specifically, we actually had a little box that said margin optimization. So we are certainly focused on maximizing margin from our current baseline. What I would say historically is that the reasons why margin has come down has been very specific to actions that we have taken. One, with the popular deal, we sold off some assets. And we took on a revenue share on our Merchant Acquiring business that we knew was going to bring margin or put pressure on the margin as we exited that deal, but that gave us extended relationships with the bank, a renewed relationship with the bank and got us out of the bank holding company that allowed us to do more M&A.
We did Sinqia now, which is as we knew coming in at a slower contribution margin, because it doesn’t have obviously the same scale that we necessarily have in Puerto Rico. And as we said, as we become more and more successful in Latin America, that will continue to put pressure on the margin. So I think that when we look at historically how we’ve gotten to where we are today, it hasn’t been really operationally driven. It’s been very specific and purposeful actions that we have taken. And now we’re focused on margin optimization and efficiencies across the board, as Mac just mentioned. So our goal would be to certainly focus on margin going forward.
Mac Schuessler: Let me just add to that, John, is as Joaquin said, the margin declines, you’ve seen in the overall company, have been strategic decisions, right? The Popular deal and the Sinqia deal. If you look at — so it hasn’t been a lack of operational focus and leverage, it’s been strategic decisions to continue to change and evolve the company. If you look at when we have bought other companies, like the PayGroup, like Place2Pay and we tuck those into LATAM. Over time, we do increase the margin as we operate it. But the margins, as Joaquin said, the step downs we’ve taken have been a strategy to continue to grow the company.
Operator: The next question comes from Vasu Govil with KBW.
Vasu Govil : Mac, 2 quick ones for you on Sinqia first. I got your comments about the debt modernization and investment in the platform. Just wanted to understand if you think that’s going to be a prerequisite for you to be able to take the pricing changes that you’re hoping in that business? Or could pricing changes happen? I’m just trying to get a sense for whether pricing can be an upside driver relative to expectations for this year or is it more of a longer-term upside driver? And then a quick follow-up on that is just the tech spending and demand environment in Brazil from a macro perspective. If you could give us some color on that?
