Usio, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Q4 Highlights: Total revenue up 3% excluding interest income, margins up sequentially, GAAP net income $600,000 ($0.02 per share) including a $1.5 million ERC benefit. Record total dollars processed in Q4 ($1.9 billion, +36% y-o-y) and full year ($7.1 billion, +33% y-o-y). Positive cash flow with $2.9 million operating cash flow in Q4, cash position over $8 million at year-end.
• Usio One Initiative: Uniting products/services under one brand, new client onboarding system, proprietary checkout page tool, consolidated risk and compliance teams, AI adoption for fraud protection, marketing/sales efficiency, and plan to test a biometrics AI-driven application by year-end. Greg Carter named Chief Revenue Officer.
• Card Segment: PayFac growth, 15 new ISVs in implementation, PracticeSuite and ISV clients in association/legal vertical adding ACH capability.
• ACH/Output: ACH in full growth mode, Output Solutions with strong growth, higher-margin revenue, and cost reduction.
• Card Issuing: Backfilling COVID incentive revenue, new client partners, prepaid volume records, margin improvement.

Segment Performance

• Card: Total card processing dollars were up 15% in the quarter, with record full-year processing volume over $1.5 billion (+10% from fiscal 2023). PayFac dollars processed were up 44% in the quarter, revenue up 29% for the full year, and now accounts for approximately 54% of total card activity. There are 15 new ISVs in various stages of implementation.
• ACH: For the 3 months ending December 31, 2024, ACH electronic transactions volumes were up 34% (fifth consecutive quarter of growth). Electronic check transaction volume was up 18% for the full year, return check transactions processed up 17%, and electronic check dollars processed up 42%.
• Output Solutions: Electronic documents processed were up 86% in the quarter, with a record year as electronic documents processed and delivered more than doubled, and electronic-only documents processed and delivered exceeded 80 million.
• Card Issuing: Added nearly 70 new client partner agreements in 2024, over 75 new card programs. Prepaid dollars loaded were over $100 million for the sixth consecutive quarter, up 35% for the full year, transaction volume up 45%, and purchase volume up 26%, both being all-time yearly records. Margins continue to improve.

Guidance

• Organic revenue expected to increase 14% to 16% in 2025.
• Board approved a new share repurchase program, adding $4 million to the original authorization for share purchases in the open market, private transactions, etc.

Risks

• No specific risks discussed in detail in the transcript.

Question and Answer

Q: Curious what your visibility looks like through 2025? And how should we think about revenue cadence through the year? Do we build to a stronger second half? Or is the strength kind of spread throughout the year?

A: It's definitely in loaded as these implementations start to come live. And our visibility for 2025 has changed a little bit, but we're still expecting great growth.

Q: Are we relying on a single or maybe two large customers to meet that 14% to 16% growth? Or is it more widespread?

A: Widespread.

Q: Just curious if you guys are seeing any change in your kind of sales conversations with maybe local or state governments, just given the change in the administration at the federal level.

A: From a PayFac side, not -- really not affected. But from the potential in the disbursement space, I think that might open some doors. But nothing -- I mean, nothing that we can really comment on now.