Revenue of $21.4 million, up 18%; 11th
Consecutive Quarter of Revenue Growth
Second Consecutive Quarter of More than $1
Million of Adjusted EBITDA1
Record Gross Profits
Usio, Inc: (Nasdaq:USIO), a leading FinTech company that
operates a full stack of integrated, cloud-based electronic payment
and embedded financial solutions, today announced financial results
for the first quarter, which ended March 31, 2023.
Louis Hoch, President and Chief Executive Officer of Usio, said,
“I am extremely pleased to report that we have started the new year
with the highest revenue quarter in the history of the Company,
with revenue up 18% in the quarter as compared to the same quarter
in 2022. More importantly, this growth led to record gross profits,
over $1 million in adjusted EBITDA1 for the second consecutive
quarter, over $1 million in adjusted operating cash flow1 as well
as positive net income and earnings per share. Momentum has been
building, and I believe this will enable us to not only achieve our
financial objectives for the year, but open new growth markets and
establish new relationships that will set the stage for success
over the long-term.”
First quarter results were led by a 74% increase in Prepaid
revenues, on pace to almost double in 2023 compared to 2022 as we
anticipate generating approximately $10-12 million of revenue in
2023 from spoilage fees from expired card programs. In addition,
Prepaid remains a leader in guaranteed income programs, is
expanding its footprint in corporate expense and healthcare markets
and has established a relationship with Movie Pass in an exciting
new opportunity to grow with a dynamic company. Revenues in Output
Solutions were up 26%, all organic, and the fastest quarter of
revenue growth since the business was acquired. Output Solutions
continues to add new clients, expand with existing clients and
benefit from new business opportunities with other Usio clients,
especially clients in need of efficient and effective disbursement
solutions. Card revenues continue to grow, led by a 27% increase in
our flagship PayFac business, where transactions in the quarter
were up 30% as compared to the first quarter of 2022. Card’s new
integration with Suite Engine is an exciting new opportunity to
expand into their primarily larger enterprise customers who can now
access our payments technology directly from Microsoft's Dynamics
365 Business Central system. The ACH business is ramping up after
experiencing disruption to what was otherwise strong momentum in
2022. Excepting Voyager volume, ACH volumes would have been up in
the quarter, and it is expected that ACH revenues, which carry our
highest margins, will grow in the second half of this year.
Gross profits for the first three months of fiscal 2023 were a
quarterly record $4.9 million and gross margins expanded over 3.7%
from the first quarter of 2022. Margins were driven by a favorable
sales mix, including higher margin residual revenues in Prepaid as
well as efficiency and productivity enhancements across the
company. Selling, general and administrative expenses in the
quarter were up just 2% from a year ago while revenues were up 18%,
reflecting the Company’s disciplined cost control efforts. GAAP
profitability in the quarter increased significantly compared to a
year ago, with positive net income of $14,833 compared to a net
loss of over $1.6 million in the first quarter of fiscal 2022.
Adjusted EBITDA1 was $1.0 million, a $1.3 million improvement from
the negative $0.3 million in Adjusted EBITDA1 a year ago, and the
second consecutive quarter in which the Company has reported over
$1 million in quarterly Adjusted EBITDA1. The Company’s financial
position also continued to improve, with $1.1 million in cash added
to the balance sheet over the first three months of the year.
Mr. Hoch continued, "In addition to our outstanding results, in
the first quarter we made significant progress building out our
franchise with potentially transformative new opportunities and
programs. Output Solutions is ramping up their large L.A. County
program, the success of which is attracting interest from similar
entities around the country. This communication, disbursement and
payment processing program is an example of how we can weave our
various businesses together to provide a comprehensive solution in
one place. Card just announced an agreement with Suite Engine,
which will integrate our proprietary PayFac technology into their
Microsoft CRM solution that is being used by numerous Fortune 500
and similar large enterprises. Fortunately, we operate primarily in
recession resistant markets and our sales pipeline remains very
strong - factors which strengthen our confidence in achieving our
financial objectives for the year. The team has worked hard to
achieve the progress to date, and we look forward to building on
that momentum to drive value for our shareholders."
Quarterly Processing and Transaction
Volumes
Total payment transactions processed in the first quarter of
2023 were 8.6 million, a decrease of 18% over the same quarter of
last year. Total payment dollars processed through all payment
channels in the first quarter of 2023 were $1.23 billion, down
compared to last year’s first quarter, mainly attributable to our
exit from the crypto currency market.
In our Card segment, dollars processed were up 8% and
transactions processed were up 24% from a year ago. Prepaid Card
Load Volume was down 19%, transactions processed were down 46% and
purchase dollars processed were down 10% from the same quarter a
year ago, as government assistance programs for the COVID-19
pandemic have begun to wind down from their record high's a year
ago. ACH electronic check transaction volume was down 25%,
electronic check dollars processed were down 54% and return check
transactions processed were down by 8% compared to a year ago.
First Quarter 2023 Revenue Detail
Revenues for the quarter ended March 31, 2023 increased 18% to
$21.4 million, reflecting growth in the Prepaid, Usio Output
Solutions, and Credit Card lines of business.
Three Months Ended March
31,
2023
2022
$ Change
% Change
ACH and complementary service revenue
$
3,340,722
$
3,843,316
$
(502,594
)
(13
)%
Credit card revenue
7,339,898
6,768,222
571,676
8
%
Prepaid card services revenue
4,807,404
2,768,447
2,038,957
74
%
Output solutions revenue
5,958,220
4,731,358
1,226,862
26
%
Total Revenue
$
21,446,244
$
18,111,343
$
3,334,901
18
%
Gross profits for the quarter were $4.9 million while gross
margins were 22.9%, up over 3.7% from the same period a year ago.
This rise in gross profits reflects an increase in margins in our
prepaid business from residual revenues and in Output Solutions as
a result of revenue growth.
Other selling, general and administrative expenses were $3.9
million for the quarter ended March 31, 2023, up just 2% compared
to the prior year period despite an 18% increase in revenues
reflecting a focus on expense control.
We reported an operating income of $5,993 for the quarter and
Adjusted EBITDA1 of $1.0 million in the quarter, an improvement of
$1.3 million from an Adjusted EBITDA1 loss of $0.3 million a year
ago. Net income for the quarter was $14,833, or $0.00 per share,
compared to a net loss of $1.6 million, or ($0.08) per share, for
the same period in the prior year. Operating income, Adjusted
EBITDA1, net income and earnings per share in the quarter all
improved from the same quarter a year ago due to increased
revenues, record gross profits and disciplined expense control.
Adjusted Operating Cash Flows1 (excluding merchant reserve
funds, prepaid card load assets, customer deposits and net
operating lease assets and obligations) was $1.3 million for the
three months ended March 31, 2023. Cash flows used by operating
activities was $0.2 million for the three months ended March 31,
2023, compared to cash flows used by operating activities of $7.2
million in the same period a year ago.
We continue to be in solid financial condition with $6.8 million
in cash and cash equivalents on March 31, 2023 reflecting a $1.1
million improvement in cash balances as of March 31, 2023.
1 Please see reconciliation of GAAP to Non-GAAP Financial
Measures
Conference Call and
Webcast
Usio, Inc.'s management will host a conference call on
Wednesday, May 3, 2023 at 4:30 pm 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 17, 2023. 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 4947465.
About Usio, Inc.
Usio, Inc. (Nasdaq: USIO), is a leading Fintech that operates a
full stack of proprietary, cloud-based integrated payment and
embedded financial solutions in a single ecosystem to a wide range
of merchants, billers, banks, service bureaus and card issuers. The
Company operates credit/debit and ACH payment processing platforms,
as well as a turn-key card issuing platform to deliver convenient,
world-class payment solutions and services to their clients. The
company, through its Usio Output Solutions division offers 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 a development office
in Austin, Texas.
Websites: www.usio.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, as
defined in Regulation G of the Securities and Exchange Act of 1934,
as amended of EBITDA, adjusted EBITDA, adjusted EBITDA margins and
adjusted operating cash flows. The Company reports its financial
results in compliance with GAAP, but believes that also discussing
non-GAAP financial 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 costs related
to acquisitions. The Company defines adjusted EBITDA margins as the
adjusted EBITDA, as defined above, divided by total revenues. The
Company defines adjusted operating cash flow as net cash provided
(used) by operating activities, less changes in prepaid card load
obligations, customer deposits, merchant reserves and net operating
lease assets and obligations. These adjustments to net cash
provided (used) by operating activities are not inclusive of any
regular expense items, and only include changes in our assets and
liabilities accounts on our consolidated balance sheet. These
measures may not be comparable to similarly titled measures
reported by other companies. Management uses EBITDA, adjusted
EBITDA, adjusted EBITDA margins and adjusted operating cash flows
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, adjusted EBITDA, adjusted EBITDA
margins and adjusted operating cash flows 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, adjusted EBITDA, adjusted EBITDA margins and adjusted
operating cash flow should be considered in addition to, not as a
substitute for, or superior to, financial measures calculated in
accordance with GAAP. They are not measurements of our financial
performance under GAAP and should not be considered as alternatives
to revenue, net income, or cash provided (used) by operating
activities, as applicable, or any other performance measures
derived in accordance with GAAP and may not be comparable to other
similarly titled measures of other businesses. EBITDA, adjusted
EBITDA, adjusted EBITDA margins and adjusted operating cash flow
have limitations as analytical tools and you should not consider
these Non-GAAP measures in isolation or as a substitute for
analysis of our operating results as reported under GAAP.
1 See reconciliation of non-GAAP financial measures below
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," "should," "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, 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, 2022.
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.
USIO, INC.
CONSOLIDATED BALANCE
SHEETS
March 31, 2023
December 31, 2022
(Unaudited)
ASSETS
Cash and cash equivalents
$
6,763,813
$
5,709,117
Accounts receivable, net
5,218,249
4,371,640
Settlement processing assets
42,586,985
49,737,068
Prepaid card load assets
18,812,954
20,170,761
Customer deposits
1,575,075
1,554,122
Inventory
494,457
507,355
Prepaid expenses and other
461,005
450,389
Current assets before merchant
reserves
75,912,538
82,500,452
Merchant reserves
4,744,615
4,909,501
Total current assets
80,657,153
87,409,953
Property and equipment, net
3,139,932
3,222,816
Other assets:
Intangibles, net
2,407,393
2,625,360
Deferred tax asset, net
1,504,000
1,504,000
Operating lease right-of-use assets
2,826,942
2,795,483
Other assets
355,358
355,357
Total other assets
7,093,693
7,280,200
Total Assets
$
90,890,778
$
97,912,969
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
851,824
$
858,622
Accrued expenses
4,856,157
3,721,108
Operating lease liabilities, current
portion
537,034
617,319
Equipment loan, current portion
57,380
56,429
Settlement processing obligations
42,586,985
49,737,068
Prepaid card load obligations
18,812,954
20,170,761
Customer deposits
1,575,075
1,554,122
Current liabilities before merchant
reserve obligations
69,277,409
76,715,429
Merchant reserve obligations
4,744,615
4,909,501
Total current liabilities
74,022,024
81,624,930
Non-current liabilities:
Equipment loan, non-current portion
-
14,994
Operating lease liabilities, non-current
portion
2,423,780
2,338,947
Total liabilities
76,445,804
83,978,871
Stockholders' equity:
Preferred stock, $0.01 par value,
10,000,000 shares authorized; -0- shares outstanding at March 31,
2023 (unaudited) and December 31, 2022, respectively
—
—
Common stock, $0.001 par value,
200,000,000 shares authorized; 28,466,150 and 27,044,900 issued,
and 26,514,903 and 25,097,963 outstanding at March 31, 2023
(unaudited) and December 31, 2022, respectively
196,892
195,471
Additional paid-in capital
96,687,132
94,048,603
Treasury stock, at cost; 1,951,247 and
1,946,937 shares at March 31, 2023 (unaudited) and December 31,
2022, respectively
(3,757,556
)
(3,749,027
)
Deferred compensation
(7,833,278
)
(5,697,900
)
Accumulated deficit
(70,848,216
)
(70,863,049
)
Total stockholders' equity
14,444,974
13,934,098
Total Liabilities and Stockholders'
Equity
$
90,890,778
$
97,912,969
USIO, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
Three Months Ended March 31,
2023
2022
Revenues
$
21,446,244
$
18,111,343
Cost of services
16,544,429
14,602,214
Gross profit
4,901,815
3,509,129
Selling, general and administrative:
Stock-based compensation
504,574
550,682
Other SG&A expenses
3,873,219
3,795,146
Depreciation and amortization
518,029
714,935
Total selling, general and administrative
expenses
4,895,822
5,060,763
Operating income (loss)
5,993
(1,551,634
)
Other income and (expense):
Interest income
92,928
581
Interest expense
(662
)
(1,217
)
Other income and (expense), net
92,266
(636
)
Income (Loss) before income taxes
98,259
(1,552,270
)
Income tax expense
83,426
70,000
Net income (Loss)
$
14,833
$
(1,622,270
)
Income (Loss) Per Share
Basic income (loss) per common share:
$
0.00
$
(0.08
)
Diluted income (loss) per common
share:
$
0.00
$
(0.08
)
Weighted average common shares
outstanding
Basic
20,122,972
20,280,575
Diluted
26,508,872
20,280,575
USIO, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
2023
2022
Operating Activities
Net income (loss)
$
14,833
$
(1,622,270
)
Adjustments to reconcile net income (loss)
to net cash (used) by operating activities:
Depreciation
300,061
246,968
Amortization
217,968
467,967
Stock-based compensation
504,574
550,682
Amortization of warrant costs
—
8,985
Changes in operating assets and
liabilities:
Accounts receivable
(846,609
)
802,999
Prepaid expenses and other
(10,616
)
(254,507
)
Operating lease right-of-use assets
(31,459
)
118,719
Other assets
(1
)
4,247
Inventory
12,898
—
Accounts payable and accrued expenses
1,128,251
299,720
Operating lease liabilities
4,548
(122,594
)
Prepaid card load obligations
(1,357,807
)
(7,743,913
)
Merchant reserves
(164,886
)
5,000
Customer deposits
20,953
27,272
Deferred revenue
—
(13,235
)
Net cash (used) by operating
activities
(207,292
)
(7,223,960
)
Investing Activities
Purchases of property and equipment
(217,735
)
(72,069
)
Net cash (used) by investing
activities
(217,735
)
(72,069
)
Financing Activities
Payments on equipment loan
(13,488
)
(13,488
)
Purchases of treasury stock
(8,529
)
(66,494
)
Net cash (used) by financing
activities
(22,017
)
(79,982
)
Change in cash, cash equivalents, prepaid
card loads, customer deposits and merchant reserves
(447,044
)
(7,376,011
)
Cash, cash equivalents, prepaid card
loads, customer deposits and merchant reserves, beginning of
period
32,343,501
51,591,560
Cash, Cash Equivalents, Prepaid Card
Loads, Customer Deposits and Merchant Reserves, End of Period
$
31,896,457
$
44,215,549
Supplemental disclosures of cash flow
information
Cash paid during the period for:
Interest
$
662
$
1,217
Income taxes
13,426
—
Non-cash transactions:
Issuance of deferred stock
compensation
2,444,054
12,330
USIO, INC.
STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
(UNAUDITED)
Common Stock
Additional Paid- In
Treasury
Deferred
Accumulated
Total Stockholders'
Shares
Amount
Capital
Stock
Compensation
Deficit
Equity
Balance at December 31, 2022
27,044,900
$
195,471
$
94,048,603
$
(3,749,027
)
$
(5,697,900
)
$
(70,863,049
)
$
13,934,098
Issuance of common stock under equity
incentive plan
1,421,250
1,421
2,638,529
—
(2,444,054
)
—
195,896
Deferred compensation amortization
—
—
—
—
308,676
—
308,676
Purchase of treasury stock costs
—
—
—
(8,529
)
—
—
(8,529
)
Net income for the period
—
—
—
—
—
14,833
14,833
Balance at March 31, 2023
28,466,150
$
196,892
$
96,687,132
$
(3,757,556
)
$
(7,833,278
)
$
(70,848,216
)
$
14,444,974
Balance at December 31, 2021
26,807,145
$
195,235
$
93,100,129
$
(2,404,458
)
$
(6,842,195
)
$
(65,379,805
)
$
18,668,906
Issuance of common stock under equity
incentive plan
61,600
62
267,856
—
(12,330
)
—
255,588
Warrant compensation costs
—
—
8,985
—
—
—
8,985
Deferred compensation amortization
—
—
—
—
295,092
—
295,092
Purchase of treasury stock
costs
—
—
—
(66,494
)
—
—
(66,494
)
Net (loss) for the period
—
—
—
—
—
(1,622,270
)
(1,622,270
)
Balance at March 31, 2022
26,868,745
$
195,297
$
93,376,970
$
(2,470,952
)
$
(6,559,433
)
$
(67,002,075
)
$
17,539,807
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three Months Ended March 31,
2023
2022
Reconciliation from Operating income
(Loss) to Adjusted EBITDA:
Operating income (Loss)
$
5,993
$
(1,551,634
)
Depreciation and amortization
518,029
714,935
EBITDA
524,022
(836,699
)
Non-cash stock-based compensation expense,
net
504,574
550,682
Adjusted EBITDA
$
1,028,596
$
(286,017
)
Calculation of Adjusted EBITDA
margins:
Revenues
$
21,446,244
$
18,111,343
Adjusted EBITDA
1,028,596
(286,017
)
Adjusted EBITDA margins
4.8
%
(1.6
)%
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
March 31, 2023
March 31, 2022
Reconciliation from net cash (used) by
operating activities to Non-GAAP Adjusted Operating Cash Flow
(used):
Net cash (used) by operating
activities
$
(207,292
)
$
(7,223,960
)
Operating cash flow (used)
adjustments:
Prepaid card load obligations
1,357,807
7,743,913
Customer deposits
(20,953
)
(27,272
)
Merchant reserves
164,886
(5,000
)
Operating lease right-of-use assets
31,459
(118,719
)
Operating lease liabilities
(4,548
)
122,594
Total adjustments to net cash (used) by
operating activities
$
1,528,651
$
7,715,516
Adjusted operating cash flows (used)
$
1,321,359
$
491,556
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230503005835/en/
Paul Manley Senior Vice President, Investor Relations
paul.manley@usio.com 612-834-1804
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