Usio, Inc. Q2 FY2025 earnings call

• Usio ONE Initiative: Immersing sales team in product offerings to be proficient in all businesses; existing clients using multiple products across industries like healthcare and financial services.
• ACH Growth: Sustained strong growth with revenues up 32%, PINLess debit doubling, and a card processing client becoming a Usio ACH user.
• Output Solutions: Steady performance with mail pieces and electronic documents, margins boosted by more electronic processing; closed new business deals including utility bill handling.
• Card Issuing: Refining organization to reduce costs and improve productivity, closing new agreements, and product upgrades like wearable prepaid and payroll product.

ACH and Complementary Services: Revenues up 32% in Q2, with electronic check transaction volume up 33%, electronic check dollars processed up 19%, return check transactions up 32%, and PINLess debit virtually doubling. Output Solutions: Total mail pieces processed and delivered in Q2 exceeded 5.4 million, electronic-only documents delivered exceeded 20 million, transactions pieces processed mailed up 3%, electronic documents slightly down year-over-year but margins improved due to more electronic processing. Card Issuing: Revenue down in the quarter, but margins and adjusted EBITDA improved year-over-year, closed 15 new agreements in Q2, with upgrades to consumer choice product, wearable prepaid live, payroll product expected, and merchant funding offers in partnership with Mastercard by end of year.

• Adjusted revenue guidance to 5% to 12% growth this year with continued positive adjusted EBITDA due to customer caused implementation delays at large national accounts.

• Customer caused implementation delays at large national accounts impacting revenue guidance.
• Loss of a client's large account affecting card issuing revenue in the quarter, with the effect spilling over into the third quarter.

Q: Zero in on a sentence about more new programs in implementation. How many programs? Expand on Usio ONE and new programs across board.

A: Card issuing programs in implementation are 20; Usio ONE has big wins like check processing and ACH deals for card issuing clients, with opportunities to cross-sell.

Q: Improvement in gross margins. Attribute to mix, efficiency gains.

A: Biggest gain from ACH growth, PINLess debit ramp, electronic documents boosting Output margins, and focus on tight expenses.

Q: OpEx cuts. Granular on adjustments and savings.

A: Savings in SG&A from output division efficiencies, focus on card issuing efficiencies, and negotiating better deals due to increased volume.

Q: Difference between low and high end of new guide.

A: Due to timing of implementations largely on customers' timeline; loss of time on a large building supply client affected guide.

Q: Loss of amusement park revenue. Amount.

A: Approximately $2 million in the quarter revenue.

Q: Operating expense one-time items. Carry over.

A: About 1/4 of the increase carried over