- Total Payment Dollar Processing Volume Growth: 24% increase.
- GAAP Net Income: Positive for the quarter.
- Cash: Increased, even after spending $105,000 to repurchase 65,519 shares at an average price of $1.60.
- Revenue: Slight year-over-year decrease due to the planned wind-down of the New York City COVID program.
- Margins: Improved sequentially; impacted by the New York City COVID initiative program.
- SG&A: Slight increase due to higher employee compensation and incremental marketing investment.
- Adjusted EBITDA Guidance: Raised to a range of $4.25 million to $5.0 million for the full year.
- Card Processing Volumes: Up 10%, with transaction volumes up 19%.
- Electronic Check Transaction Volume: Up 10% year-over-year.
- Return Check Transaction Processing Volume: Up 13% year-over-year.
- Electronic Check Dollars Processed: Up 36% year-over-year.
- Electronic Documents Delivered: Exceeded 20.7 million, a quarterly record, up 6% sequentially.
- Total Dollars Loaded on Prepaid Cards: Exceeded $133 million, an all-time record.
- Prepaid Card Transaction Volume: Increased 58% year-over-year.
- Purchase Volume: Increased 39% year-over-year.
- Total Card Load Volume: Up 55% year-over-year.
- Cash Balance: Added $400,000 in cash, totaling $10.5 million available.
- Full-Year Revenue Growth Guidance: Expected between 3% and 7% for 2024.
- Full-Year Earnings Per Share: Expected between $0 and $0.03 per share.
Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total payment dollar processing volume growth accelerated to 24%, with all electronic transaction processing businesses generating double-digit growth.
- Reported positive GAAP net income and earnings per share for the quarter.
- Cash reserves increased despite repurchasing $105,000 worth of stock.
- Raised full-year adjusted EBITDA guidance to a range of $4.25 million to $5.0 million.
- Card issuing segment set an all-time quarterly record for transactions processed and achieved significant growth in transaction volumes.
Negative Points
- Slight year-over-year revenue decrease due to the planned wind-down of the New York City COVID program.
- SG&A expenses increased slightly due to higher employee compensation and incremental marketing investments.
- Revenue growth for 2024 is expected to be somewhat below initial guidance, projected between 3% and 7%.
- Implementation of new ISV partnerships is progressing slower than anticipated, affecting short-term revenue forecasts.
- Output solutions segment experienced a decrease in per unit revenue for electronic delivery compared to mail.
Q & A Highlights
Q: On PayFac, I understand the slower implementation. Is that due to Usio's capacity or the client's side?
A: (Louis Hoch, CEO) We are ready to go, and our systems are very standard. The delay is on the client's side, not ours.
Q: Is there a risk of losing any of the volume from the delayed PayFac implementation?
A: (Louis Hoch, CEO) No, we have already signed those deals. The volume will come over eventually, but the timing varies due to different verticals and client services.
Q: There was a nice step-up in gross margin. Can we expect gross margins to regularly be in the 25% plus range as the business matures?
A: (Louis Hoch, CEO) Yes, that is definitely a goal for us. We are working towards achieving economies that will help us reach that target by 2024 or 2025.
Q: It sounds like there will be more marketing spend. Can you give us a sense of how much and where the incremental dollars are going?
A: (Louis Hoch, CEO) We don't plan to spend significantly more money. Instead, we are leveraging relationships with partners like MasterCard and participating in seminars to maximize our marketing efforts.
Q: Can you provide more details on the ACH and complementary services growth?
A: (Louis Hoch, CEO) It was our best quarter since Q3 2022, with electronic check transaction volume up 10%, return check transaction processing volume up 13%, and electronic check dollars processed up 36% year-over-year. This growth is driven by closing more stand-alone ACH deals and our unique PINless debit solution.
Q: How is the real-time payments initiative progressing?
A: (Louis Hoch, CEO) We boarded our first real-time payment customer using the Clearing House and expect to go live with FedNow shortly. Both channels are integrated into a single tech stack, and we anticipate strong adoption once debiting of accounts is allowed.
Q: What is the status of the large ISV implementation announced earlier this year?
A: (Louis Hoch, CEO) The implementation is progressing but slower than anticipated. We expect it to ramp significantly in 2025, with some early adopters coming on board later this year.
Q: Can you elaborate on the output solutions growth and new equipment investment?
A: (Louis Hoch, CEO) We added seven new cities for municipal billing services and invested in new equipment, allowing us to bid on larger jobs. This has already landed us a sizable program for printing and distributing 500,000 checks for bankruptcy distribution.
Q: How is the card issuing segment performing?
A: (Louis Hoch, CEO) Card issuing continued its momentum with total dollars loaded on prepaid cards exceeding $133 million, an all-time record. Prepaid card transaction volume increased 58%, and purchase volume increased 39% year-over-year.
Q: What are the financial expectations for the rest of 2024?
A: (Louis Hoch, CEO) We are raising our full-year adjusted EBITDA guidance to a range of $4.25 million to $5.0 million. We expect full-year earnings per share to be between $0 and $0.03.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
