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Usio, Inc. (USIO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $22.01M (+5% YoY) with gross margin 21.9%; EPS was ($0.01), and Adjusted EBITDA was $0.67M as processing volumes surged but mix and lower interest income constrained margins .
  • Against S&P Global consensus, revenue was essentially in line at ~$22.01M vs ~$22.05M, while EPS missed ($0.01) vs $0.02; management reiterated FY25 revenue growth guidance of 14–16%, framing H2 as the acceleration phase as implementations ramp * .
  • ACH remained the growth engine (check dollars +42%, transactions +36% YoY), PayFac revenue grew 25% and is ~59% of card revenue, and Output Solutions saw strong electronic-only document volumes; prepaid loads were $98M as COVID-era spoilage/breakage fully wound down, pressuring YoY interest and mix .
  • Cash rose to $8.7M with $1.37M positive operating cash flow and $350K buybacks; management emphasized operating leverage, disciplined SG&A, and M&A optionality; key near-term stock catalysts are implementation timing, sustained ACH/PayFac momentum, and proof-points from the new Usio ONE cross-sell motion .

What Went Well and What Went Wrong

  • What Went Well

    • Record Q1 revenue ($22.01M) with strong processing growth: total transactions 13.7M (+41% YoY) and $2.0B processed (+34% YoY) .
    • ACH led performance: check dollars +42%, transactions +36%, with complementary services (PINless debit, RCC) contributing; PayFac revenue +25% YoY and ~59% of card revenue, improving card mix .
    • Management reiterated FY25 revenue growth of 14–16%; cross-sell “Usio ONE” officially launched in April, with early wins and unified sales process (“one voice, one effort”) .
    • Quote: “We are generating strong processing volume growth... and remain very comfortable with our expectation for 14% to 16% top line revenue growth this year.” – Paul Manley .

  • What Went Wrong

    • EPS missed vs consensus (reported ($0.01) vs $0.02 est.) and gross margins declined ~120 bps YoY to 21.9% on lower interest income and mix; Adjusted EBITDA ($0.67M) declined YoY * .
    • Prepaid revenue fell YoY (-13%) and interest income on prepaid fell (-55%) following the full wind-down of COVID-related programs; prepaid loads were $98M but pricing/recurring focus tempers near-term revenue contribution .
    • Analyst concerns on the gap between +36% processing dollar growth and +5% revenue were addressed: ACH revenues are transaction-based (not dollar-based), while PayFac earns on dollars .

Financial Results

Consolidated Results (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($)$21,321,478 $20,560,088 $22,009,050
Gross Profit ($)$4,896,157 $5,064,778 $4,809,143
Gross Margin (%)23.0% 24.6% 21.9%
Operating Income (Loss) ($)($376,650) ($602,797) ($239,584)
Net Income (Loss) ($)$2,851,267 $628,926 ($234,970)
Diluted EPS ($)$0.10 $0.02 ($0.01)
Adjusted EBITDA ($)$776,840 $517,084 $666,248
Adjusted EBITDA Margin (%)3.6% 2.5% 3.0%

Segment Revenue – Q1 2025 vs Q1 2024

SegmentQ1 2024 ($)Q1 2025 ($)YoY
ACH & Complementary Services$3,881,734 $5,044,517 +30%
Credit Card$7,560,734 $7,878,694 +4%
Prepaid Card Services$3,341,224 $2,907,451 (13%)
Output Solutions$5,537,923 $5,732,867 +4%
Interest – ACH & Comp.$211,640 $224,129 +6%
Interest – Prepaid$402,741 $182,661 (55%)
Interest – Output Solutions$34,390 $38,731 +13%
Total Revenue$20,970,386 $22,009,050 +5%

KPIs and Operating Metrics

KPIQ1 2025YoY Commentary
Total transactions processed13.7M +41% YoY
Total dollars processed$2.0B +34% YoY
Credit card dollars processed—+17% YoY
Credit card transactions—+65% YoY
ACH check transactions—+36% YoY
ACH check dollars—+42% YoY
Return check transactions—+24% YoY
Prepaid loads$98M (15%) YoY
Output: pieces mailed6.7M —
Output: electronic-only documents20.5M —

Results vs. S&P Global Consensus

MetricConsensusActualSurprise
Revenue ($)$22,049,490*$22,009,050 Slight miss (~$40K)*
EPS ($)$0.02*($0.01) Miss (~$0.03)*

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue growthFY 2025+14–16% (1/28 & 3/26/25) +14–16% reiterated on Q1 call Maintained
Adjusted EBITDA marginFY 20255–7% (3/26/25) Not updated in Q1 materials (prior stands) No update
Share repurchase authorization2025$4M reauthorized (3/26/25) $350K repurchased in Q1 Active execution

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Usio ONE cross-sellIntroduced as “One Usio” strategy (Q4) Official launch in April; unified CRM/process; early cross-sell wins Accelerating
ACH growthDollars +61%, txns +25% (Q3) Dollars +42%, txns +36% Sustained robust
PayFac scaling+27% (Q3) +25% YoY; ~59% of card revenue Consistent double-digit
Prepaid normalizationCOVID wind-down; loads record (Q3/Q4) Loads $98M; revenue down; focus on recurring programs Stabilizing mix
Output Solutions+2% (Q3), +13% (Q4); efficiency gains 6.7M pieces mailed; 20.5M e-only docs Shift to electronic improves margins
Interest incomeHelped 2024 results Lower interest income hurt gross margin Headwind
AI/biometrics—Biometrics AI-driven payments demo upcoming New initiative
Macro/tariffs—Diversified exposure; insulated from tariffs/recession Watchful but confident

Management Commentary

  • “We are generating strong processing volume growth, consistently cash flow positive… we remain very comfortable with our expectation for 14% to 16% top line revenue growth this year.” – Paul Manley .
  • “ACH revenues were up 33%… PINless debit and RCC remain strong contributors… Output Solutions… electronic-only documents delivered exceeding 20.5 million… Card issuing… volume is positioned to ramp significantly.” – Louis Hoch .
  • “We’re moving closer to a demonstration of our biometrics AI-driven application… uses AI to automatically select the payment method that delivers the greatest value.” – Louis Hoch .
  • “PayFac… dollars processed were up 33%… revenue up 25%… 17 new ISVs in various stages of implementation.” – Greg Carter .
  • “Our goal is 25% gross margins… long-term EBITDA margins 8% to 10%.” – Louis Hoch (Q&A) .

Q&A Highlights

  • Organic growth: Adjusting for >$1M spoilage/breakage in Q1’24, organic growth was >10% (management affirmed the ~$1M figure and that it was the last comp quarter) .
  • Gross margin drivers: Decline due to lower interest income on customer funds; ACH growth offsets but mix matters; interest income is essentially 100% margin .
  • Operating leverage: Infrastructure can support “tons” more transactions; incremental headcount tied to revenue; management emphasized leverage .
  • M&A criteria: Must have clear synergies, be acquired below USIO’s multiple, and be self-sustaining post-acquisition .
  • Revenue vs processing growth: ACH revenues are transaction-based (not dollar-based), while PayFac is dollar-based, explaining 36% processing growth vs 5% revenue growth .
  • Sales motion: 12 quota-carrying reps; moving to one CRM (HubSpot) and “one voice” cross-sell under Usio ONE .

Estimates Context

  • Q1 2025 results vs S&P Global consensus: revenue ~$22.01M vs ~$22.05M; EPS ($0.01) vs $0.02; modest top-line shortfall and a more notable EPS miss, largely explained by lower interest income and mix shift *.
  • Street models may need to lower interest income run-rate assumptions and reflect continued mix toward ACH/complementary services and PayFac within card; management reiterated FY revenue growth (14–16%), which should anchor revenue estimates despite Q1 EPS variance .
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • H2 is the focus: management reiterated FY25 +14–16% revenue growth, citing a “never stronger” implementation queue across ACH, PayFac, issuing, and Output; timing of large implementations is the near-term swing factor .
  • Mix, not demand, drove the EPS miss: margins dipped on lower interest income and revenue mix, while volumes were strong; monitor interest income sensitivity and ACH/complementary mix in models .
  • ACH and PayFac are compounding: ACH dollars +42% and transactions +36%; PayFac revenue +25% and now ~59% of card revenue – both support medium-term margin expansion as scale and mix improve .
  • Operating leverage intact: SG&A was flat YoY in Q1 and management highlighted capacity to onboard meaningful volume with limited incremental cost; cash grew to $8.7M with positive operating cash flow .
  • Capital allocation optionality: $350K in Q1 buybacks; $4M repurchase authorization; management also seeing more M&A opportunities under strict criteria .
  • Emerging tech optionality: biometrics/AI-driven payments demo upcoming—an upside narrative if commercial traction develops, though not in FY25 guidance .
  • Prepaid normalization continues: loads at $98M, with revenue headwinds from COVID-era wind-down; strategy prioritizes recurring programs and cross-sell of ACH/PINless to issuing clients .

Appendix: Additional Operating and Balance Sheet Notes

  • Operating cash flow: $1.37M (Q1); Cash & equivalents: $8.72M; treasury buybacks: $350K during Q1 .
  • Balance sheet steady: Total assets $109.6M; stockholders’ equity $18.99M as of March 31, 2025 .