USIO Usio Inc

Usio, Inc: (Nasdaq:USIO), a leading FinTech integrated payment solutions provider, today announced financial results for the first quarter of  2021, which ended March 31, 2021.

Louis Hoch, President and Chief Executive Officer of Usio, said, “The new year is off to a terrific start, with first quarter revenues growing at the fastest rate in the Company's history, leading to all-time record quarterly revenues and a significant improvement in profitability.  Once again, results illustrate that our multi-channel distribution strategy is successfully capitalizing on the vast opportunities in the fast-growing electronic payments and related industries with over 100% growth in the Company's operating performance metrics (Key Performance Indicators or KPIs) in our ACH, Card and Prepaid Businesses.  Given the significant increase in the sequential rate of revenue growth compared to the fourth quarter of 2020, we are extremely confident our business is gaining momentum.  We remain on pace to achieve, or exceed, our 50% revenue growth goal for this year.

“Revenue growth in the quarter accelerated to 73%, with strong year-over-year performance in our ACH, Credit Card Processing and Prepaid lines of business and the addition of a full quarter of Usio Output Solutions (fka IMS) results.  After battling headwinds in the wake of the onset of COVID, our ACH business is strongly rebounding, with revenues up 38% in the quarter versus the same period in the prior year, as our relationships with leading organizations in fast-growing industries like cryptocurrency and Fintech lending drive growth in our most profitable line of business. This led to a better than $400,000 improvement in Adjusted EBITDA.  Though we continue to invest in our growth initiatives and strengthen our infrastructure, operating leverage is expected to improve over the year.  We have now reported two consecutive quarters of positive Adjusted EBITDA, and, as previously articulated, we expect to maintain our strong financial condition throughout the year.

“Coming on the heels of four consecutive years of revenue growth, we are extremely excited with the prospects created for this year by a first quarter that was the best revenue quarter in the Company's history.  Our focus is on sustaining our momentum by flawless execution of our strategy and investing in our innovative technology and unparalleled service to build value for our shareholders."

First Quarter 2021 Financial Summary

Revenues for the quarter ended March 31, 2021 increased 73% to $13.5 million, reflecting growth in each of our ACH, Credit Card and Prepaid lines of business as well as a full quarter of Usio Output Solutions revenues, which was acquired in December 2020.  Excluding the results of Usio Output Solutions revenues, organic growth was 24.6% versus the same period last year.

		Three Months Ended March 31,
		2021			2020			$ Change			% Change
ACH and complementary service revenue		$	3,078,456		$	2,237,746		$	840,710			37.6	%
Credit card revenue			5,723,709			4,982,658			741,051			14.9	%
Prepaid card services revenue			886,576			551,275			335,301			60.8	%
Output solutions revenue			3,772,809			—			3,772,809			100.0	%
Total Revenue		$	13,461,550		$	7,771,679		$	5,689,871			73.2	%

Gross profits increased 51% to $2.9 million on gross margins of 21.6%, incrementally lower due to product mix.

Other selling, general and administrative expenses were $2.7 million for the quarter ended March 31, 2021, increasing from the same period in the prior year.  The increase is primarily due to a full quarter of Output Solutions operating costs.  Expense increases were also due to incremental investments in our Prepaid and PayFac integrated payments growth initiatives.   

The operating loss for the quarter improved $0.2 million to $0.7 million versus the $0.9 million in the prior year period.

The Company has been increasingly moving towards positive Adjusted EBITDA results and ultimately cash flow breakeven. As stated previously, the Company reported positive Adjusted EBITDA for the two most recent two quarters.  Adjusted EBITDA was a positive $0.2 million in the quarter, an improvement of $0.4 million compared to an adjusted EBITDA loss of $0.2 million in the same period a year ago.

The Company reported a net loss of $0.7 million for the quarter ended March 31, 2021 ($0.04 per share) compared to a net loss of $0.8 million ($0.06 per share) for the same period in the prior year.

Usio continues to be in solid financial condition with $4.3 million in cash and cash equivalents at March 31, 2021, a slight decrease from year end due to cash used for certain capital expenditures and a large increase in accounts receivable.  The Company's only debt is a term loan used in the first quarter to fund a large Output Solutions capital investment. 

Conference Call and Webcast

Usio, Inc.'s management will host a conference call Friday, May 14, 2021, at 11:00 am Eastern time to review financial results and provide a business update.  To listen to the conference call, interested parties within the U.S. should call +1-844-883-3890. International callers should call + 1-412-317-9246. All callers should ask for the Usio conference call. The conference call will also be available through a live webcast, which can be accessed via the company’s website at www.usio.com/investors.

A replay of the call will be available approximately one hour after the end of the call through May 28, 2021. The replay can be accessed via the Company’s website or by dialing +1-877-344-7529 (U.S.) or 1-412-317-0088 (international). The replay conference playback code is 10156027.

About Usio, Inc.

Usio, Inc. (Nasdaq:USIO), a leading FinTech integrated payment solutions provider, offers a wide range of payment solutions to merchants, billers, banks, service bureaus, crypto exchanges and card issuers. The Company operates credit, debit/prepaid, and ACH payment processing platforms to deliver convenient, world-class payment solutions and services to their clients. With the acquisition of the assets of IMS in December 2020, the Company now offers additional services relating to electronic bill presentment, document composition, document decomposition and printing and mailing services. The strength of the Company lies in its ability to provide tailored solutions for card issuance, payment acceptance, and bill payments as well as its unique technology in the prepaid sector. Usio is headquartered in San Antonio, Texas, and has offices in Austin, Texas and Franklin, Tennessee, just outside of Nashville.  Websites: www.usio.com, www.singularpayments.com, www.payfacinabox.com, www.akimbocard.com and www.usiooutput.com.  Find us on Facebook® and Twitter.

About Non-GAAP Financial Measures

This press release includes non-GAAP financial measures, EBITDA and adjusted EBITDA, as defined in Regulation G of the Securities and Exchange Act of 1934, as amended. The Company reports its financial results in compliance with GAAP, but believes that also discussing non-GAAP measures provides investors with financial measures it uses in the management of its business. The Company defines EBITDA as operating income (loss), before interest, taxes, depreciation and amortization of intangibles. The Company defines adjusted EBITDA as EBITDA, as defined above, plus non-cash stock option costs and certain non-recurring items, such as acquisitions. These measures may not be comparable to similarly titled measures reported by other companies. Management uses EBITDA and adjusted EBITDA as indicators of the Company's operating performance and ability to fund acquisitions, capital expenditures and other investments and, in the absence of refinancing options, to repay debt obligations.

Management believes EBITDA and adjusted EBITDA are helpful to investors in evaluating the Company's operating performance because non-cash costs and other items that management believes are not indicative of its results of operations are excluded. EBITDA and adjusted EBITDA are supplemental non-GAAP measures, which have limitations as an analytical tool. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures do not reflect a comprehensive system of accounting, may differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. For a description of our use of EBITDA and adjusted EBITDA, and a reconciliation of EBITDA and adjusted EBITDA to operating income (loss), see the section of this press release titled "Non-GAAP Reconciliation."

FORWARD-LOOKING STATEMENTS DISCLAIMER

Except for the historical information contained herein, the matters discussed in this release include forward-looking statements which are covered by safe harbors. Those statements include, but may not be limited to, all statements regarding management's intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. These forward-looking statements are identified by the use of words such as "believe," "intend," "look forward," "anticipate," "schedule,” and "expect" among others. Forward-looking statements in this press release are subject to certain risks and uncertainties inherent in the Company's business that could cause actual results to vary, including such risks related to an economic downturn as a result of the COVID-19 pandemic, the realization of opportunities from the IMS acquisition, the management of the Company's growth, the loss of key resellers, the relationships with the Automated Clearinghouse network, bank sponsors, third-party card processing providers and merchants, the security of our software, hardware and information, the volatility of the stock price, the need to obtain additional financing, risks associated with new legislation, and compliance with complex federal, state and local laws and regulations, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission including its annual report on Form 10-K for the fiscal year ended December 31, 2020. One or more of these factors have affected, and in the future, could affect the Company’s businesses and financial results in the future and could cause actual results to differ materially from plans and projections. The Company believes that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to management. The Company assumes no obligation to update any forward-looking statements, except as required by law.

Contact:

Joe Hassett, Investor Relationsjoeh@gregoryfca.com484-686-6600

USIO, INC.CONSOLIDATED BALANCE SHEETS

		March 31, 2021				December 31,2020
		(Unaudited)
ASSETS
Cash and cash equivalents		$	4,284,360			$	5,011,132
Accounts receivable, net			3,597,928				2,863,638
Settlement processing assets			36,792,386				43,558,442
Prepaid card load assets			18,555,474				7,610,242
Customer deposits			1,357,242				1,305,296
Inventory			180,927				176,466
Prepaid expenses and other			524,665				301,755
Current assets before merchant reserves			65,292,982				60,826,971
Merchant reserves			8,317,462				8,265,555
Total current assets			73,610,444				69,092,526
Property and equipment, net			3,226,152				3,105,926
Other assets:
Intangibles, net			5,567,794				6,035,761
Deferred tax asset			1,394,000				1,394,000
Operating lease right-of-use assets			2,750,346				2,671,266
Other assets			353,815				368,078
Total other assets			10,065,955				10,469,105
Total Assets		$	86,902,551			$	82,667,557
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	493,348			$	851,349
Accrued expenses			1,971,192				1,463,944
Operating lease liabilities, current portion			427,609				346,913
Equipment loan, current portion			53,135				-
Settlement processing obligations			36,792,386				43,558,442
Prepaid card load obligations			18,555,474				7,610,242
Customer deposits			1,357,242				1,305,296
Deferred revenues			57,353				66,572
Current liabilities before merchant reserve obligations			59,707,739				55,202,758
Merchant reserve obligations			8,317,462				8,265,555
Total current liabilities			68,025,201				63,468,313
Non-current liabilities:
Equipment loan, non-current portion			112,861				—
Operating lease liabilities, non-current portion			2,494,135				2,495,883
Total liabilities			70,632,197				65,964,196
Stockholders' equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at March 31, 2021 (unaudited) and December 31, 2020, respectively			—				—
Common stock, $0.001 par value, 200,000,000 shares authorized; 26,314,460 and 26,260,776 issued, and 25,013,557 and 24,974,995 outstanding at March 31, 2021 (unaudited) and December 31, 2020, respectively			194,745				194,692
Additional paid-in capital			89,740,284				89,659,433
Treasury stock, at cost; 1,300,903 and 1,285,781 shares at March 31, 2021 (unaudited) and December 31, 2020, respectively			(2,215,175	)			(2,165,721	)
Deferred compensation			(5,671,077	)			(5,926,872	)
Accumulated deficit			(65,778,423	)			(65,058,171	)
Total stockholders' equity			16,270,354				16,703,361
Total Liabilities and Stockholders' Equity		$	86,902,551			$	82,667,557

USIO, INC.CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended March 31,
		2021				2020
Revenues		$	13,461,550			$	7,771,679
Cost of services			10,554,313				5,843,395
Gross profit			2,907,237				1,928,284
Selling, general and administrative:
Stock-based compensation			327,715				287,710
Other expenses			2,660,034				2,122,106
Depreciation and amortization			622,207				387,795
Total operating expenses			3,609,956				2,797,611
Operating (loss)			(702,719	)			(869,327	)
Other income:
Interest income			2,467				11,156
Other income (expense)			—				688
Other income and (expense), net			2,467				11,844
(Loss) before income taxes			(700,252	)			(857,483	)
Income tax expense (benefit)			20,000				(22,474	)
Net (Loss)		$	(720,252	)		$	(835,009	)
Earnings (Loss) Per Share
Basic earnings (loss) per common share:		$	(0.04	)		$	(0.06	)
Diluted earnings (loss) per common share:		$	(0.04	)		$	(0.06	)
Weighted average common shares outstanding
Basic			19,931,935				13,127,229
Diluted			19,931,935				13,127,229

USIO, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS

		Three Months Ended
		March 31, 2021				March 31, 2020
Operating Activities
Net (loss)		$	(720,252	)		$	(835,009	)
Adjustments to reconcile net (loss) to net cash provided (used) by operating activities:
Depreciation			154,240				137,795
Amortization			467,967				250,000
Bad debt			15,046				—
Non-cash stock-based compensation			327,715				287,710
Amortization of warrant costs			8,985				8,985
Changes in operating assets and liabilities:
Accounts receivable			(749,336	)			191,693
Prepaid expenses and other			(222,910	)			(58,844	)
Operating lease right-of-use assets			(79,080	)			56,727
Other assets			(4,461	)			—
Inventory			14,263				(20,694	)
Accounts payable and accrued expenses			149,247				(165,975	)
Operating lease liabilities			78,948				(54,767	)
Prepaid card load obligations			10,945,232				53,141
Merchant reserves			51,907				(1,492,000	)
Customer deposits			51,946				—
Deferred revenue			(9,219	)			(13,235	)
Net cash provided (used) by operating activities			10,480,238				(1,654,473	)
Investing Activities
Purchases of property and equipment			(274,467	)			(152,654	)
Net cash (used) by investing activities			(274,467	)			(152,654	)
Financing Activities
Proceeds from equipment loan			165,996				—
Purchases of treasury stock			(49,454	)			(26,629	)
Net cash provided by financing activities			116,542				(26,629	)
Change in cash, cash equivalents, prepaid card loads, customer deposits and merchant reserves			10,322,313				(1,833,756	)
Cash, cash equivalents, prepaid card loads, customer deposits and merchant reserves, beginning of year			22,192,225				12,682,918
Cash, Cash Equivalents, Prepaid Card Loads, Customer Deposits and Merchant Reserves, End of Period		$	32,514,538			$	10,849,162
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest		$	—			$	—
Income taxes			—				—
Non-cash transactions:
Issuance of deferred stock compensation			—				—

USIO, INC.STATEMENT OF CHANGES in STOCKHOLDERS' EQUITY

		Common Stock								Additional Paid- In				Treasury				Deferred				Accumulated				Total Stockholders'
		Shares				Amount				Capital				Stock				Compensation				Deficit				Equity
Balance at December 31, 2020			26,260,776			$	194,692			$	89,659,433			$	(2,165,721	)		$	(5,926,872	)		$	(65,058,171	)		$	16,703,361
Issuance of common stock under equity incentive plan			51,000				51				120,484				—				—				—				120,535
Warrant compensation costs			—				—				8,985				—				—				—				8,985
Cashless warrant exercise			19,795				19				(19	)			—				—				—				—
Reversal of deferred compensation amortization that did not vest			(17,111	)			(17	)			(48,599	)			—				5,994				—				(42,622	)
Deferred compensation amortization			—				—				—				—				249,801				—				249,801
Purchase of treasury stock costs			—				—				—				(49,454	)			—				—				(49,454	)
Net (loss) for the period			—				—				—				—				—				(720,252	)			(720,252	)
Balance at March 31, 2021			26,314,460			$	194,745			$	89,740,284			$	(2,215,175	)		$	(5,671,077	)		$	(65,778,423	)		$	16,270,354
Balance at December 31, 2019			18,224,577			$	186,656			$	77,055,273			$	(1,885,452	)		$	(5,636,154	)		$	(62,151,988	)		$	7,568,335
Issuance of common stock under equity incentive plan			51,000				51				59,440				—				—				—				59,491
Warrant compensation costs			—				—				8,985				—				—				—				8,985
Deferred compensation amortization			—				—				—				—				228,219				—				228,219
Purchase of treasury stock costs			—				—				—				(26,629	)			—				—				(26,629	)
Net (loss) for the period			—				—				—				—				—				(835,009	)			(835,009	)
Balance at March 31, 2020			18,275,577			$	186,707			$	77,123,698			$	(1,912,081	)		$	(5,407,935	)		$	(62,986,997	)		$	7,003,392

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

		Three Months Ended March 31,
		2021				2020
Reconciliation from Operating (Loss) to Adjusted EBITDA:
Operating (Loss)		$	(702,719	)		$	(869,327	)
Depreciation and amortization			622,207				387,795
EBITDA			(80,512	)			(481,532	)
Non-cash stock-based compensation expense, net			327,715				287,710
Adjusted EBITDA		$	247,203			$	(193,822	)
Calculation of Adjusted EBITDA margins:
Revenues		$	13,461,550			$	7,771,679
Adjusted EBITDA			247,203				(193,822	)
Adjusted EBITDA margins			1.8	%			(2.5	)%