Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CoreCard Corp (CCRD, Financial) reported a 17% year-over-year increase in total revenue for Q3 2024, driven by higher license, professional services, and processing and maintenance revenues.
- Income from operations significantly increased to $2.8 million in Q3 2024 from $0.4 million in the same period last year, with an operating margin improvement from 3% to 18%.
- The company has over $28 million in cash and marketable securities, indicating strong liquidity and the ability to continue investing in its new platform and share buybacks.
- CoreCard Corp (CCRD) renewed its agreements with Goldman Sachs, extending them through December 2030, which provides increased revenue visibility and stability.
- Non-GAAP adjusted diluted EPS improved to $0.30 in Q3 2024 from $0.09 in Q3 2023, reflecting better operational performance and cost management.
Negative Points
- The company's auditor decided not to stand for reappointment, necessitating the search for a new auditor, which could introduce transitional challenges.
- Revenue growth excluding the largest customer was only 7% year-over-year, indicating potential over-reliance on major clients for growth.
- The Legacy Cabbage business continues to decline, negatively impacting overall revenue growth.
- The company expects total revenue for the full year 2024 to be approximately flat, suggesting limited growth prospects in the near term.
- There is uncertainty surrounding the future of the Apple card program, which could impact CoreCard Corp (CCRD)'s revenue if the program transitions to another bank.
Q & A Highlights
Q: Can you explain the increase in non-Goldman revenue growth guidance from the prior range?
A: Matthew White, CFO, explained that the increase from 15-20% to 25-30% is due to new programs and higher-than-expected third-party revenues, which are anticipated to boost future processing revenue.
Q: Can you provide details on next year's guidance, particularly regarding license revenue?
A: Matthew White, CFO, stated it's too early to provide specifics on license revenue for 2025 due to the early realization of license revenue in Q3 and the timing of the GM program's deconversion.
Q: What are your thoughts on the potential sale of the Apple card program, especially if JP Morgan is involved?
A: James Leland Strange, CEO, mentioned that while it makes sense for JP Morgan to take the program in-house, it could also be less disruptive to continue with CoreCard. However, the decision is outside of CoreCard's influence.
Q: How does the new agreement with Goldman Sachs impact CoreCard?
A: James Leland Strange, CEO, highlighted that the amended agreement provides locked-in revenue through 2026 and includes termination fees if canceled before 2030, offering more certainty for CoreCard.
Q: What are CoreCard's plans regarding succession and potential acquisitions?
A: James Leland Strange, CEO, discussed ongoing succession planning and the possibility of acquisitions. He emphasized that CoreCard is open to opportunities but remains cautious about acquiring companies with cash burn and speculative projections.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
