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 (USIO, Financial) 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 (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 (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.
