Executive Summary

Q4 2024 revenue was $20.56M, up 2% year over year but down 4% sequentially; it missed S&P Global consensus of $21.10M by ~2.5%. Diluted EPS was $0.02, beating consensus of -$0.00, aided by a ~$1.5M Employee Retention Credit (ERC) benefit recognized in the quarter .
Mix drove margin pressure: gross margin fell to 24.6% (vs 26.1% in Q4’23; vs 23.0% in Q3’24). Adjusted EBITDA was $0.52M (2.5% margin) vs $1.06M in Q4’23 and $0.78M in Q3’24 .
FY25 guidance maintained: revenue growth +14–16% and Adjusted EBITDA margin 5–7%; new “One Usio/Usio One” integration initiative and AI/fraud tools highlighted as growth/efficiency levers .
Positive cash trajectory: year-end cash rose to $8.1M; Board extended and increased buyback authorization with an additional $4M through May 2028, signaling confidence and a capital return lever alongside organic growth .
Processing momentum continued: Q4 total dollars processed exceeded $1.9B (+36% YoY); PayFac volumes +44% YoY; prepaid loads >$111M (sixth straight quarter >$100M); ACH volumes and dollars up strongly YoY .

What Went Well and What Went Wrong

What Went Well
- ACH & Complementary Services revenue +17% YoY in Q4; strong volume momentum (electronic check transactions +34%, dollars processed +44%) and cross-sell success into Card/Prepaid clients .
- Card PayFac strength: PayFac revenue +29% YoY in Q4; PayFac now ~54% of total card activity; continued ISV onboarding with 15 new ISVs in stages of implementation .
- Output Solutions inflected: revenue +13% YoY; electronic documents processed +86% YoY in Q4; electronification raising profitability as more profitable digital mix expands .
- Quote: “We are delivering on our commitments as profitability improved, cash flow was strong, and revenue grew...” — CEO Louis Hoch .
- Quote: “Usio One will unite and integrate all of our products…supported by a seamless…onboarding process.” — CEO Louis Hoch .
What Went Wrong
- Revenue missed consensus; gross margins compressed on mix and lower interest revenues vs prior-year rates (24.6% vs 26.1% YoY), and Adjusted EBITDA declined YoY .
- Prepaid revenue fell 24% YoY as COVID incentive program runoff continued, though loads/transactions were robust, indicating underlying activity strength not fully translating to revenue yet .
- Q4 EPS benefited from a non-recurring ~$1.5M ERC; FY EPS also benefited from a ~$3.1M federal tax benefit (non-operational), tempering quality of beats .
- The large ERP ISV signed in 2024 will not move forward after buyer’s sale; minimal 2024 financial impact, but removes a potential 2025 tailwind (management still expects broad-based growth) .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($)	$20,130,642	$21,321,478	$20,560,088
Gross Profit ($)	$5,259,435	$4,896,157	$5,064,778
Gross Margin (%)	26.1%	23.0%	24.6%
Operating Income ($)	$(3,788)	$(376,650)	$(602,797)
Net Income ($)	$25,935	$2,851,267	$628,926
Diluted EPS ($)	$0.00	$0.10	$0.02
Adjusted EBITDA ($)	$1,063,855	$776,840	$517,084
Adjusted EBITDA Margin (%)	5.3%	3.6%	2.5%
Interest Revenue ($)	$0.80M (Q4’23 interest components)	$0.48M (Q3’24 interest components)	$0.50M (Q4’24 interest components)

Consensus (S&P Global)*	Q4 2023	Q3 2024	Q4 2024
Revenue Consensus Mean ($)			21,096,930*
Primary EPS Consensus Mean ($)			-0.0033*

Segment revenue (Q4 2024 vs Q4 2023):

Segment	Q4 2023 ($M)	Q4 2024 ($M)	YoY %
ACH & Complementary Services	3.9	4.6	+17%
Credit Card	6.9	7.2	+6%
Prepaid Card Services	4.0	3.0	-24%
Output Solutions	4.6	5.1	+13%
Interest – ACH	0.2	0.2	-22%
Interest – Prepaid	0.5	0.3	-41%
Interest – Output	0.0	0.0	+73%
Total Revenue	20.1	20.6	+2%

KPIs (processing/activity)

KPI	YoY Q4’24	Seq vs Q3’24	Notes
Total $ processed	+36%	—	>$1.9B in Q4; FY $7.1B (+33%)
PayFac $ processed	+44%	Accelerated	Card dollars +15% YoY; PayFac revenue +29% YoY
Prepaid loads	>$111M	—	6th straight quarter >$100M
Prepaid transactions	+36%	-24%	YoY strong; sequentially lower
ACH e-check txn	+34%	+15%	5th consecutive YoY growth quarter
ACH $ processed	+44%	-6%	Strong YoY; volatile sequentially
Output electronic docs	+86%	+6%	>20M in Q4; >80M FY

Note: Beginning Q2’24, interest on merchant/reserve funds is classified in operating revenue by segment; interest on corporate cash remains below the line .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue Growth (%)	FY 2025	+14–16% (1/28/25)	+14–16% (3/26/25)	Maintained
Adjusted EBITDA Margin (%)	FY 2025	5–7% (1/28/25)	5–7% (3/26/25)	Maintained

Additional capital allocation: Board extended/increased share repurchase program by $4M through May 2028 .

Earnings Call Themes & Trends

Topic	Q-2 (Q2’24)	Q-1 (Q3’24)	Current (Q4’24)	Trend
PayFac/ISV momentum	20 ISVs in implementation; ERP ISV rollout slower than planned	Record backlog; 20+ ISVs; minimal attrition	PayFac revenue +29% YoY; 15 ISVs in implementation	Improving
ACH recovery & cross-sell	Best since Q3’22; e-check txns +10%, $ +36% YoY; PINless debit wins	ACH revenue +22% YoY; volumes accelerating; Oct best month	e-check txns +34%, $ +44% YoY; cross-sell into Card/Prepaid	Improving
Output Solutions electronification	Electronic-only docs 20.7M; new equipment broadens scope	Margins rising; mix to digital; mid-20% target margins	Electronic docs +86% YoY; profitability tailwind	Improving
Prepaid transition post-COVID	Loads record ($133M) despite revenue decline	Loads >$140M; +21% YoY; profitability improved	Loads >$111M (sixth straight >$100M); revenue -24% YoY	Mixed (activity up, revenue down)
“One Usio”/AI initiatives	FedNow/Real-time payments live; product upgrades	Integrating capabilities; pipeline peak	Usio One announced; AI for fraud/conversion; single onboarding	Improving
Capital allocation	Buybacks ongoing; positive cash	Cash up; buybacks; M&A disciplined	New $4M buyback authorization	Supportive

Management Commentary

“Usio One will unite and integrate all of our products, services and resources under one brand…a single universal application…to improve cross-selling success.” — CEO Louis Hoch .
“Card remains on its growth trajectory, led by PayFac…dollars processed up 44%…revenue up 29% [YoY].” — CRO Greg Carter .
“Electronic documents processed were up 86%…electronic-only documents…exceeded 20 million in the quarter…more profitable than print and mail.” — CEO Louis Hoch .
“Board…approved a new share repurchase program, adding another $4 million…We believe it will lead to further growth in 2025 with organic revenue expected to increase 14% to 16%.” — CEO Louis Hoch .

Q&A Highlights

Cadence/visibility: 2025 growth “loaded” later in the year as implementations go live; visibility changed “a little,” but still expecting strong growth .
Customer concentration: Growth not dependent on one or two large customers; expected to be widespread .
Capital allocation: Authorized up to $4M repurchases; will balance buybacks with selective, criteria-driven M&A; continued cash generation supports flexibility .
Public sector sales: No meaningful changes on PayFac side; disbursement space could open doors; nothing to disclose yet .

Estimates Context

Q4 2024 vs S&P Global consensus: Revenue $20.56M vs $21.10M (miss); EPS $0.02 vs -$0.00 (beat). Beat quality tempered by ~$1.5M ERC in Q4 . FY 2024: Revenue $82.93M vs $83.05M (in line/slight miss); EPS $0.12 vs $0.10 (beat) with ~$3.1M tax benefit .
Potential estimate revisions: Likely modest downward adjustments to near-term gross margin and Adjusted EBITDA given mix; revenue outlook anchored by maintained +14–16% FY25 guide and strong ACH/PayFac momentum .

Note: Consensus values marked with an asterisk are from S&P Global. Values retrieved from S&P Global.*

Key Takeaways for Investors

Mix matters: ACH and PayFac strength is positive, but prepaid revenue runoff and segment mix lowered gross margin; watch the pace of electronification in Output and PayFac mix within Card for margin recovery .
Quality of EPS beat was boosted by non-recurring tax items (ERC in Q4; deferred tax benefit for FY), so core profitability trends are better gauged via Adjusted EBITDA and segment margins .
2025 setup intact: Guidance maintained (+14–16% revenue, 5–7% Adj EBITDA margin) with broad-based contribution across units; cadence weighted to implementations ramping through the year .
Usio One could be a structural catalyst: unified onboarding, cross-sell, and AI-driven fraud/marketing should lift conversion, operating leverage, and stickiness over time .
Capital return and balance sheet: $8.1M cash, extended $4M repurchase authorization, and ongoing cash generation provide downside support and optionality for targeted M&A .
Activity indicators remain strong: Q4 processed >$1.9B (+36% YoY), PayFac +44% YoY, Output digital volumes surged; these are leading indicators for revenue despite segment-specific lags .
Risk checks: Implementation/timing remains a swing factor; ERP ISV cancellation removes a potential upside driver, but management stresses diversified growth drivers and pipeline breadth .

Usio, Inc. (USIO)·Q4 2024 Earnings Summary