CompoSecure, Inc. Q2 FY2025 earnings call

• Strong top-line growth in Q2 with non-GAAP net sales up 10% to $119.6 million, driven by robust domestic demand from traditional banks and fintechs.
• Pro forma adjusted EBITDA increased 26% to $46.3 million, driven by organic revenue growth and early operational efficiencies from the CompoSecure Operating System.
• High-profile customer program launches during the quarter, including Chase Sapphire Reserve, Coinbase One Card, etc.
• Progress with the CompoSecure Operating System, rolled out across all functional areas, establishing structure and discipline.
• Investment in talent and manufacturing capabilities to support long-term growth and sustained execution.
• Arculus showing growing momentum as a secure multifunction platform for digital authentication and asset protection.

In Q2 2025, non-GAAP net sales increased 10% year-over-year to $119.6 million. Domestic net sales of CompoSecure Holdings grew 22% to $104.3 million, while international net sales declined 35% to $15.3 million. Pro forma adjusted EBITDA increased 26% to $46.3 million for the quarter. Non-GAAP gross margin was 57.5% of net sales compared to 51.6% for the same quarter of the prior year. Year-to-date operating cash flow was approximately $52 million on a non-GAAP basis.

• Raised full-year guidance for 2025: now expects non-GAAP net sales to be approximately $455 million and pro forma adjusted EBITDA to be approximately $158 million, up from prior mid-single-digit growth guidance.
• Reflects continued commercial and operational momentum in the second half of the year and ongoing foundational investments.

Forward-looking statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of these risks and other important factors, refer to the company's 10-K, 10-Qs, and other SEC filings available on the Investor Relations section of the website and the SEC's website.

Q: Moshe Orenbuch asked about Citi Strata card launch timing and factors driving increased confidence in the investment.

A: Jonathan C. Wilk responded that card launch timing depends on the issuer (1-2 quarters ahead for larger programs) and that the increased confidence is due to market opportunity, organic growth, and progress on the operations side.

Q: Brian Vieten asked about back half momentum and margin profile of newer launches.

A: Jonathan C. Wilk stated there's continued momentum, not a pull forward, and that the operating system work is contributing to margin improvements.

Q: Reggie Smith asked about operational changes and M&A pipeline.

A: Jonathan C. Wilk discussed operational improvements across functions and that the M&A pipeline is robust with core criteria for evaluating deals, but didn't specify details on M&A diligence or Resolute valuation.

Q: Jacob Stephan asked about card relaunch pipeline and crypto card drivers.

A: Jonathan C. Wilk mentioned healthy competition in the premium card market driving growth, and that crypto card growth is driven by revenue growth in Arculus.

Q: Moshe Orenbuch followed up on Arculus contribution.

A: Jonathan C. Wilk stated revenue growth is the main driver of Arculus's positive contribution.