Usio, Inc. Q3 FY2024 earnings call

• Momentum strong with third quarter results generally in line with expectations, GAAP earnings better than expected. Total payment dollar processing volume growth accelerated to 46% from 24% last quarter, transactions processed up 31%. - Card segment had solid quarter with transactions processed up 22%, dollars processed up 7%, PayFac revenue up 27%; robust onboarding with ISVs. - ACH revenues up 22% in the quarter, 10% for the year, volumes strong; recovery favorably impacting operational profitability. - Output Solutions revenues up 2% in the quarter, margins expanded; produced more electronic documents than paper. - Card issuing had momentum with total dollars loaded on cards over $140 million, up 21%, purchase volume up 23%, transactions processed up 58%, set record for active cards, profitability increased.

Card Segment: Transactions processed up 22%, dollars processed up 7%, PayFac revenue up 27%. ACH: Revenues up 22% in the quarter, 10% for the year; electronic check transaction volume up 25%, check dollars processed up 61%, returned checks processed up 18%. Output Solutions: Revenues up 2% in the quarter, margins expanded, produced more electronic documents than paper. Card Issuing: Total dollars loaded on cards over $140 million, up 21%; purchase volume up 23%; transactions processed up 58%; set record for active cards; profitability increased, backfilled $12M revenue gap from NYC COVID program.

• Fiscal 2024 expected to be profitable on a GAAP basis. - Fourth quarter expected to look much like the third quarter unless there is further slippage from some ISV implementations. - Fiscal 2025 potentially one of the greatest years ever; plan to reinvigorate ACH efforts, have more disciplined sales approach, evaluate AI technologies.

Q: When do the comps start to look easier regarding the COVID spoilage from New York?

A: Louis Hoch said it's going to be the second quarter of next year.

Q: About the margin on Output Solutions, with new equipment and more electronic, what's the expected margin going forward?

A: Louis Hoch said mid-25s, around 24% to 25%.

Q: Sequentially, the gross margin was down about 1% this quarter from Q2, where did the decline in gross margins come from?

A: Louis Hoch said a lot had to do with the spoilage in New York City that's no longer receiving the benefit of, and also mix in product lines.