Usio (USIO) Q3 2024 earnings summary

Executive summary

• Third quarter net income was $2.9 million ($0.10 per share), reversing a net loss in the prior year, driven by a $3.2 million federal tax benefit and strong operational performance.

• Q3 2024 revenue increased 2% year-over-year to $21.3 million, led by 22% growth in ACH and complementary services, offsetting a decline in prepaid card services as COVID programs ended.

• Payment processing volume grew 46% year-over-year to $2.0 billion, with transaction counts up 31% to 12.7 million, and all electronic transaction businesses expanding.

• The company replaced $10–12 million in annualized prepaid card revenue lost from COVID incentive programs with new, higher-margin recurring revenue.

• Record backlog of signed deals and pending implementations positions all business units for long-term growth.

Financial highlights

• Gross profit for Q3 2024 rose 5% to $4.9 million, with gross margin improving to 23.0% from 22.2% in Q3 2023.

• Adjusted EBITDA for Q3 2024 was $0.8 million, more than double the prior year, with a margin of 3.6%.

• Cash and cash equivalents at September 30, 2024 were $8.4 million, up from $7.2 million at year-end 2023.

• Adjusted operating cash flow for the first nine months was $2.4 million, flat year-over-year.

• SG&A expenses were down for the quarter and up only $200,000 year-to-date.

Outlook and guidance

• Management expects to exceed a $100 million annual revenue run rate in 2025, supported by a robust pipeline and signed contracts.

• Margins are expected to gradually improve into Q4 2024 and 2025, driven by efficiency initiatives and renewed ACH growth.

• Revenue growth in ACH and PayFac is expected to continue, with prepaid card revenues stabilizing as new programs replace COVID incentives.

• SG&A expenses are anticipated to remain relatively flat year-over-year, with slight sequential increases in Q4 2024.

• Timing of revenue ramp from large new deals remains uncertain, but the company is positioned for continued profitability and growth.