CompoSecure, Inc. (CMPO)·Q2 2025 Earnings Summary

Executive Summary

• Record quarter with non-GAAP net sales up 10% to $119.6M, gross margin expanded ~590 bps to 57.5%, and Pro Forma Adjusted EBITDA up 26% to $46.3M; adjusted diluted EPS was $0.25 while GAAP diluted EPS was $(0.26) due to non-cash revaluation items .
• Management raised FY25 guidance to ~$455M non-GAAP net sales and ~$158M Pro Forma Adjusted EBITDA (from prior “mid-single digit growth”), citing broad-based demand and efficiency gains from the CompoSecure Operating System (COS) .
• Domestic strength led results (Q2 domestic net sales +22% YoY to $104.3M) while international was volatile (-35% YoY to $15.3M); net debt leverage fell to 0.66x from 2.15x a year ago on higher cash and lower debt .
• Arculus delivered another net positive quarter and launched Coinbase OneCard with American Express; management highlighted rising passkey adoption and payments use cases as incremental growth vectors .
• Consensus estimates from S&P Global were unavailable in our data pull; management stated “operating results exceed expectations across all key metrics” but this reflects company commentary, not third-party consensus comparison .

What Went Well and What Went Wrong

• What Went Well
  • Material margin expansion: non-GAAP gross margin rose to 57.5% from 51.6% YoY, attributed to COS-driven manufacturing efficiencies and favorable mix .
  • Demand and program momentum: Q2 non-GAAP net sales +10% YoY to $119.6M with notable launches (Chase Sapphire Reserve, Coinbase OneCard/AmEx, Crypto.com, MGM Rewards, Gemini); CEO: “We achieved record results” .
  • Arculus traction: another net positive quarter with Coinbase OneCard launch; management emphasized revenue growth driving contribution and broader passkey/authentication adoption .
• What Went Wrong
  • International softness/volatility: international net sales fell 35% YoY to $15.3M, with management reiterating that smaller scale drives greater fluctuations .
  • GAAP earnings optics: GAAP diluted EPS was $(0.26) (vs $0.32 prior year) driven by non-cash revaluation of warrant and earnout liabilities, potentially obscuring underlying operating strength .
  • Estimates transparency: S&P Global consensus data were unavailable; management’s “exceed expectations” claim lacks external benchmark corroboration for beat/miss framing .

Financial Results

Segment breakdown (Q2 2025):

Key KPIs (Q2 2025 and YTD context):

Guidance Changes

Note: Pro Forma Adjusted EBITDA guidance includes payment of Resolute Holdings management fee for comparability across periods .

Earnings Call Themes & Trends

Management Commentary

• “We delivered strong top line growth in Q2, with non-GAAP net sales increasing 10% year over year to $119,600,000… Pro forma adjusted EBITDA increased 26% to $46,300,000… early operational efficiencies from the ongoing implementation of the CompoSecure operating system.” — CEO Jon Wilk .
• “We are far and away the leader in metal cards globally… metal cards… represent less than 1% penetration… I have even greater confidence today about what is possible.” — Executive Chairman Dave Cote .
• “We believe we can maintain this strong margin profile and continue to drive additional improvements… reinvest some of that back in seed planting for the future.” — CEO Jon Wilk .
• “Arculus… net positive quarter… Coinbase OneCard… first crypto card on the American Express network… supported by continued operational progress and commercial momentum.” — CEO Jon Wilk .

Q&A Highlights

• No pull-forward in Q2; momentum expected to continue through the year within point guidance framework .
• Margin gains tied to COS across functions (not just manufacturing); management believes strong margin profile is sustainable with further improvement potential .
• Order timing: large issuers typically place orders 1–2 quarters ahead of program launches .
• M&A: pipeline is “robust”; stringent criteria and selectivity; management fee expected to grow alongside EBITDA with significant operating leverage at Resolute Holdings .
• Arculus: positive contribution primarily driven by revenue growth; investment spend flat to slightly up; stablecoin/payments use cases a key opportunity .

Estimates Context

• S&P Global consensus for Q2 2025 and FY 2025 (EPS, revenue, EBITDA) was unavailable in our data pull; as a result, we cannot quantify beat/miss versus Street for this quarter. Management stated “operating results exceed expectations across all key metrics,” which reflects company commentary, not third-party consensus .
• Given raised FY guidance for revenue ($455M) and Pro Forma Adjusted EBITDA ($158M), Street models likely need upward revisions for 2H25 revenue/margins absent prior explicit numerical targets .

Key Takeaways for Investors

• COS-led execution is driving tangible operating leverage: gross margin up ~590 bps YoY to 57.5% with potential for further gains, a key valuation support amid macro noise .
• Demand backdrop remains favorable: domestic strength and premium card refreshes/expansions (e.g., Chase Sapphire Reserve) plus new fintech/crypto programs support 2H25 growth .
• Balance sheet improved: cash to $96.5M, debt to $192.5M, leverage to 0.66x, providing optionality for reinvestment, buybacks, and M&A .
• Arculus is progressing from option to contributor: repeated net positive quarters and expanding use cases (authentication, stablecoins/payments) can add incremental, higher-quality revenue over time .
• Guidance reset is a catalyst: explicit FY25 revenue/EBITDA targets replace qualitative growth language; execution against these targets should drive estimate revisions and narrative momentum .
• Watch items: international volatility, GAAP EPS noise from warrant/earnout revaluations, and the pace/discipline of M&A deployment .
• Near-term: Momentum, raised guidance, and program launches are supportive; medium-term: COS adoption and Arculus monetization expand margin and TAM narratives .

Sources: Q2 2025 earnings call transcript and press releases; prior-quarter materials for context .