Usio Inc (USIO) Q3 2024 Earnings Call Highlights: Surging Payment Processing Volume and ...

GuruFocus.com2024-11-07
  • GAAP Earnings: Significantly better than expected, including an income tax benefit.
  • Payment Processing Volume Growth: Accelerated to 46% from 24% last quarter.
  • Transactions Processed: Increased by 31%.
  • Adjusted EBITDA: Nearly $800,000 for the quarter, more than double that of a year ago.
  • Cash Position: Increased, powered by $2.4 million of adjusted operating cash flows over the first nine months of 2024.
  • SG&A Expenses: Down in the quarter, up only $200,000 through the first nine months of the year.
  • ACH Revenues: Up 22% in the quarter, now up 10% for the year.
  • Electronic Check Transaction Volume: Up 25%.
  • Check Dollars Processed: Up 61%.
  • Card Issuing Dollars Loaded: Over $140 million, up 21%.
  • Purchase Volume: Increased by 23%.
  • Total Transactions Processed: Increased by 58%.
  • Warning! GuruFocus has detected 3 Warning Signs with USIO.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Usio Inc (NASDAQ:USIO) reported positive GAAP net income and earnings per share for the second consecutive quarter, indicating improved financial performance.
  • The company achieved a significant increase in total payment dollar processing volume, which accelerated to 46% growth from the previous quarter.
  • Usio Inc (NASDAQ:USIO) has the strongest pipeline of signed deals and the largest backlog of pending implementations in its history, suggesting future growth potential.
  • Adjusted EBITDA for the quarter was nearly $800,000, more than double that of the previous year, highlighting operational profitability improvements.
  • The company successfully replaced nearly $12 million in annualized revenue from the concluded New York City COVID incentive program with new stable recurring revenue.

Negative Points

  • Revenue growth was modest, partly due to the need to replace the significant revenue from the New York City COVID incentive program.
  • Implementations with a large web-based ERP ISV have been slower than anticipated, potentially delaying revenue realization.
  • Sequential gross margin declined by about 1% from the previous quarter, attributed to product line mix and revenue sources.
  • The M&A market has not been favorable, with Usio Inc (NASDAQ:USIO) unable to find suitable acquisition opportunities that meet their criteria.
  • The timing of various implementations could impact near-term success, with potential slippage affecting quarterly performance.

Q & A Highlights

Q: When do you start to anniversary the COVID spoilage from New York, and when do the comps start to look easier? A: The comps will start to look easier in the second quarter of next year. - Louis Hoch, Chairman, President, CEO, COO

Q: What is the gross margin difference between electronic and paper in Output Solutions, and what could this mean for margin improvement over time? A: Electronic is almost pure margin, while paper is about 20% gross margin. The opportunity to increase gross margin is significant by producing more electronic documents. - Louis Hoch, Chairman, President, CEO, COO

Q: With the increasing cash on the balance sheet, what are your thoughts on potential acquisitions or capital allocation? A: It's good to have cash and continue generating it. The M&A market hasn't been great recently, but we continue to look for deals that meet our criteria. We hope the market will improve post-election. - Louis Hoch, Chairman, President, CEO, COO

Q: What is the expected margin for Output Solutions going forward with the new equipment and more electronic processing? A: The margin is expected to be in the mid-20s, around 24% to 25%. - Louis Hoch, Chairman, President, CEO, COO

Q: Why was there a sequential decline in gross margin from Q2 to Q3? A: The decline was due to a mix in product lines and revenue sources, particularly in prepaid, where big cardholders have less margin compared to higher-margin revenue from spend. - Louis Hoch, Chairman, President, CEO, COO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment