NASDAQ:USIO Usio Q2 2023 Earnings Report $1.55 -0.03 (-1.90%) Closing price 05/5/2025 03:54 PM EasternExtended Trading$1.55 0.00 (0.00%) As of 05/5/2025 07:41 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Usio EPS ResultsActual EPS$0.01Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/AUsio Revenue ResultsActual Revenue$21.26 millionExpected Revenue$19.75 millionBeat/MissBeat by +$1.51 millionYoY Revenue GrowthN/AUsio Announcement DetailsQuarterQ2 2023Date8/14/2023TimeN/AConference Call DateMonday, August 14, 2023Conference Call Time4:30PM ETUpcoming EarningsUsio's Q1 2025 earnings is scheduled for Wednesday, May 14, 2025, with a conference call scheduled at 4:30 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Usio Q2 2023 Earnings Call TranscriptProvided by QuartrAugust 14, 2023 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Afternoon, everyone, and welcome to the UCO Earnings Conference Call for the Q2 of Fiscal 2023. All participants will be in a listen only mode. After today's presentation, There will be an opportunity to ask All participants on this call are advised that the audio of the A replay will be available shortly after the call through August 28, 2023. I would now like to turn the conference over to Paul Manley, Senior Vice President, Investor Relations. Please go ahead. Speaker 100:00:53Thank you, and thank you, everyone, for joining our call today. Welcome to UCO's The Q2 fiscal 2023 conference call. The earnings release, which we issued today after the market closed, is available on our website atuc0.com under the Investor Relations tab. On this call today Our Louis Hoch, our Chairman and CEO Tom Jewell, Senior Vice President and Chief Financial Officer Greg Carter, Executive Vice President of Payment Acceptance And Houston Frost, Senior Vice President of Prepaid Services. Let me remind our listeners that certain statements made during the call today Forward looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Act of 1995 as amended. Speaker 100:01:39Such forward looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. These risks and uncertainties are described in our earnings press release and in our filings with the SEC. The forward looking statements made today are as of the date of this call, and we do not undertake any obligation to update these forward looking statements. During today's call, we will refer Non GAAP financial measures such as adjusted EBITDA. Our earnings release includes a reconciliation of adjusted EBITDA to GAAP operating income. Speaker 100:02:12Management will provide prepared remarks, then we'll have a question and answer session. But let me start with some highlights from this afternoon's release. I am pleased to report another quarter of record results with 2nd quarter revenue up 31%, accelerating significantly from the 18% growth rate In the Q1 and our 12th consecutive quarter of revenue growth. And for the 3rd consecutive quarter, We reported over $1,000,000 of positive adjusted EBITDA, which was once again up dramatically from the year ago quarter. These results solidly exceeded expectations from the analysts and have us well on our way to meeting our fiscal 2023 financial guidance. Speaker 100:02:54In addition, we continue to be in excellent financial condition with cash up again this quarter, which we believe is more than sufficient to support our growth objectives for the year. So another record quarter along with strong bottom line results and positive cash flow. What you will further hear on this call from our team are the many opportunities in our pipeline that illustrate how our strategy is working and why we are extremely excited about the future here at UCO. Lastly, I'd like to announce that UCO has initiated a comprehensive ESG process With the goal to issue our inaugural ESG report sometime early next year, reporting on the progress that we will be making in this important area. Now, I will turn the call over to Louis. Speaker 200:03:39Thank you, Paul, and welcome, everyone. I want to begin by reiterating Paul's key points that not only was this a record quarter in terms of current financial performance, But it was also another quarter of significant progress in expanding our franchise and planting the seeds for even a better future Performance. For those reasons, we today are reiterating guidance for revenue growth in the 18% to 20% range this year. Results once again reflect our diversified business strategy, diversified in the markets we serve and the payment channels that we offer. This quarter results We're led by performance at prepaid, where revenues were up 276% And Output Solutions, which had another 20% growth quarter. Speaker 200:04:41Prepaid continues to benefit from growth of the underlying business aided by a growing stream of residual revenues from expiring As Houston will discuss, we are bringing on numerous new accounts with both diverse needs and in diverse end markets, as our reputation and technology within these markets continue to grow. While in this era of high-tech, we are very proud of our advanced technology, not only at prepaid, but across UCO. We are equally, if not proudest of our high touch customer service strategy. In all of our businesses, paying attention to the customer Is a corporate imperative. Output had another great quarter with revenue up 20% and bottom line profitability Significantly improving. Speaker 200:05:39Keep in mind that unlike the Q1 where we had some unique programs such as printed tax documents, The Q2 did not have similar programs, putting that 20% year over year growth in better perspective. The output growth strategy is also customer relationship focused. For instance, a new relationship with FundView, A cloud ERP system that is provided to local governments resulted in the addition of 30 new cities as customers over the past year and 7 in just the last quarter. The relationship we've built with LA County has resulted in the expansion of that relationship and We are now handling their check disbursement needs for fees and fines overpayments. We recently mailed 9,000 checks in one day And because of our strong relationship in these industries, we added another 3 energy providers And 3 electric utilities in the quarter. Speaker 200:06:48We will continue to invest in output as we believe there is potential to grow the business. Consequently, we hired a 30 year seasoned print and mail sales executive to complement our existing sales efforts. Let me add a few more developments that get out, but that are representative of the transformation and integration Transpiring across the organization. Output recently signed a toll road customer for disbursement of toll bills. The bills have a QR code that the recipient scans, which takes them to a payment portal built and operated by Usio, And there's more automation coming. Speaker 200:07:35For instance, our last two new accounts are completely electronic with no print or mail We will create e bills that are emailed to customers who like the Toll World Road Business are directed to a UCO managed payment portal. This should push the proportion of the output's revenues From electronic payments to approximately 40% and climbing. This is much more profitable work and as a result, Expanding Output's gross margins. The story is the same for card, where we're focusing on building relationships That has enabled us to continue to add new ISVs. I would point specifically to an ISV with Strong government ties were penetrating many of their accounts such as toll roads, including The Massachusetts Department of Transportation, Florida Turnpike, Delaware Tolles and other government organizations such as The City of Miami for fees and fines. Speaker 200:08:44Why do ISVs keep on giving us more business? Because of our long tenure in the business, Pioneering PayFac technology and our great customer service. And in ACH, we had a growth quarter despite ongoing tough comparables on the large year ago Voyager volumes. While we will face another tough quarter of comparables in the Q3 when Voyager was still running off, we expect to see performance in the ACH Starting in the Q4 when there was virtually no voyage or volume to speak of. Our strong growth is also leading to better margins as we leverage our fixed direct costs. Speaker 200:09:29In addition, overhead for The Q2 was virtually unchanged from a year ago as we kept a tight lid on costs and continued to focus on improving efficiency and Productivity. So far this year, revenues are up 24% on the top line with only about 1% added overhead, which includes the absorption of significant inflationary pressures. The result is another quarter of more than $1,000,000 in adjusted EBITDA, which is now up $3,000,000 compared to the adjusted EBITDA generated over the first half of fiscal twenty twenty two. In addition, we delivered positive GAAP net income and earnings per share for the 2nd consecutive quarter, which has been an important objective. Consequently, as previously noted, we are reiterating our guidance for the year, although we believe that the second half Will be comprised of somewhat slower third quarter followed by a stronger 4th quarter. Speaker 200:10:41As a result of the first half of the year Art is the best in the company's history, and we expect this to be a record year. Our pipeline is extremely strong, And many of our existing relationships are with fast growing organizations with whom we are growing. We're in great financial condition and we can't wait to get back to work every day. And now, I'd like to turn the call over to Houston Frost. Speaker 300:11:10Thank you, Louis, and thank you to everyone participating on our call this afternoon. As Louis noted, prepaid had an exceptional quarter nearly tripling revenue while growing load volume by 48% and purchase volume by 51%. While revenues benefited from the breakage earned on inactive New York City incentive cards, load and purchase volume trends reflect the strong growth New and existing client card programs. June was our best month ever for both pre funded card loads And transaction volume and early figures show continued growth in July. Importantly, This load and transaction volume is largely coming from longer term programs with recurring and or larger card loads. Speaker 300:11:59These include guaranteed income and other multiple load cash assistance programs as well as corporate expense and other specialty card programs. As UCO's card issuing business matures, we believe it's important to build a base of programs that will generate longer term recurring payment volume. Admittedly, there is a trade off here. Single load card programs, especially with loads of $100 or less, generate higher revenue As a percentage of load volume, they do recurring and larger load programs. And typically, single load program revenue is higher gross margin, although from a net profit perspective, the additional gross margin is partially consumed by higher customer service and operational expense as a percentage of loads. Speaker 300:12:47That said, we're confident that continuing to focus on and shift Toward longer term recurring load programs is the right long term decision. These programs and clients are less Price sensitive and have higher switching costs. Building a business that is more defendable and more stable will ultimately be more valuable. That said, we certainly don't plan to turn away any single load card programs. We see our success as being driven by our operational execution, our execution, our proprietary processing platform with the flexibility and capabilities it offers and our relentless focus on the client relationship. Speaker 300:13:26This bolsters our confidence in our strategy. Focus on clients and programs where these strengths provide true value. Class Wallet is a great example of the Strategy in action. They operate a service that assists academic and government organizations with managing their purchasing and reimbursement process. We first began issuing their cards more than 3 years ago in 2020. Speaker 300:13:51The company's product had a unique need requiring them to be involved in transaction authorization decisions and we had a solution, what we call external authorization. Today, ClassWalt has grown to be one of our top clients by load and transaction volume. MoviePass is a similar example, a long term relationship Also using our novel external authorization solution. And of course, we also continue to build relationships in the local government and non profit space. Among our many newer engagements is a program with the California Department of Social Services, which will be issuing which will be using a UCO card to disperse nearly $100,000,000 to eligible individuals who experienced hardship as a result of storms in that These programs often take advantage of our transaction restrictions and controls, virtual cards And or consumer choice offerings. Speaker 300:14:49But what customers tell us they appreciate most is our partnership, our willingness to jump on a call and troubleshoot an issue, facilitate an improvement or simply be honest about a mistake and work toward an acceptable resolution. In total, we continue to be on pace to add approximately 80 to 100 new clients this year. While we do expect to see card issuing revenue And gross margin declined somewhat over the next few quarters as income generation from the New York City and City of Houston And other vaccine incentive programs lines down. We are thrilled with the programs we manage today and the business we are building. Our June record load and transaction volume indicates UCO's card issuing business is poised for continued growth over the long term. Speaker 300:15:40With that, I'd like to turn the call over to Greg Carver. Speaker 400:15:45Thank you, Houston, and good afternoon, everyone. Card revenues were up once again in the 2nd quarter led by a 26% growth in our PayFac business where virtually all of our efforts and resources are being concentrated. For the quarter, dollars processed were up 2% and transactions processed were up 15% from a year ago. Louis noticed some nice recent wins with governmental entities, all of which are from a very strong ISV relationship. We also added a fitness exercise practice management ISP whose software is being rapidly adopted by gyms and fitness centers. Speaker 400:16:20To illustrate the dynamics Affecting our implementation process and to use one of my dad's analogies, this was way more than the Carpenter's old rule, measure twice and cut once. It was closer to measure 14 times. That's okay. While competitors may have bought and walked away, this is what makes us different and we fully expect This to be a long and mutually beneficial relationship. There was an equally exciting new implementation with an agricultural and ranch supply company. Speaker 400:16:48They're already set up with ACH and are now switching all of their e commerce transactions onto our card platform. Our expectation is that eventually they will move the remainder of their payment needs, primarily on premises to Usio, which could be quite significant. In addition to our strong relationship with this firm, they like the flexibility that UCO provides and of course, we remain price competitive. On the product side, we've made a significant upgrade in our card present transaction device, which we believe will drive incremental revenues. And I think now we have the strongest prospect pipeline we've ever had, including opportunities arising primarily from trade show attendance with organizations in the veterinarian, Fundraising and Waste Industries. Speaker 400:17:31As with all of the UCO business development efforts, our success is primarily a function of the variety of payment channels The strong relationships we are building in the market. For many of our new accounts, we may be their 1st payments platform. In addition, there's a lot of cross selling taking place. For instance, as a result of their relationship with Output Solutions, we were talking to a large player in the printing market about how to provide an electronics payment solution to complement their existing business. And in May, we added Stephanie Gonzalez to spirit our marketing efforts and amplify our various initiatives. Speaker 400:18:06As previously noted, in the short term, results can be impacted by the pace of new ISV implementations as well as the rate at which they ramp. Fortunately, as we grow our pipeline and engage with an ever greater number of ISVs, the rate of implementations continues to improve, so we are optimistic about the second half of the year with revenue growth returning to the strong trajectory for the last several years. With that, I'd like to conclude my remarks and turn the call over to Tom Jewell, our Senior Vice President and Chief Financial Officer to discuss our financial results. Speaker 500:18:39Thanks, Greg, and welcome, everyone. Thanks again for joining our call today and for your interest in UCO. Let me quickly provide some color around this quarter's results before opening the call to questions. Revenues were up 31% to a record $21,300,000 driven by strong growth in prepaid and output solutions. Credit card revenues were up 3%. Speaker 500:19:06ACH and complementary services were up 5% this quarter after being down the last few quarters. Gross profits of $5,000,000 were a quarterly record for the 3rd consecutive quarter and margins expanded 3.40 basis Points from a year ago. The gross margin improvement reflects a higher contribution from breakage and spoilage, Which significantly improved margins in the prepaid segment, growth in our high margin ACH revenues, as well as strong margins at Output Solutions. Selling, general and administrative costs were basically flat with the year ago period and are up just slightly more than 1% for the first half of the year. For the 3rd consecutive quarter, we generated over $1,000,000 in adjusted EBITDA. Speaker 500:19:56For the quarter, we reported $0.01 per share of GAAP EPS, while also reporting $0.01 per share of GAAP EPS for the 1st 6 months of the year. Non GAAP adjusted operating cash flows as As described in our 10 Q and earnings release was $1,500,000 for the 6 months ended June 30, 2023. Our cash position at the end of the quarter was $6,600,000 up approximately $900,000 over the first half of twenty twenty three. For the first half of the year, revenues were up 24.4%, Gross margin has expanded 3.50 basis points. SG and A is up 1% and adjusted EBITDA Was $2,200,000 compared to a loss of $875,000 for the first half of last year. Speaker 500:20:58I do want to call out our efforts to drive interest income where we have employed investment suites to generate over $300,000 of interest income over the first half of the year. In July 2023 alone, interest income was 160,000 As Louis noted, we expect to meet our revenue guidance for the year, but expect to see a slight Slow down in revenue growth and gross profits due to declining breakage and other items. With that, I will turn the call back to the operator to conduct our question and answer session. Operator00:21:40We will now begin the question and answer session. The first question today comes from Scott Buck with H. C. Wainwright. Please go ahead. Speaker 600:22:13Hi, good afternoon guys. Thanks for taking my questions. Speaker 700:22:17First one, I was hoping you could give us a little Speaker 600:22:21bit more color around what You're seeing with MoviePass and maybe how that business has performed versus expectations, granted it's early? Speaker 300:22:33Yes. Hi, Scott. This is Houston Frost. Speaker 600:22:37I think Speaker 300:22:40Generally speaking, MoviePass has performed in line with our expectations. Speaker 600:22:50We've Speaker 300:22:53continually seen their volumes ramp up. Ultimately, they're going to be a fairly significant client of ours. It's hard for me to say, are they going to be number 1, number 2, number 3, number 4, number 5, but they'll be in the top 10. And I think last quarter just by payment volume, they were already in our top 10 clients. It's a long term recurring revenue type client. Speaker 300:23:27It's not a New York City where you're going to Make a ton of revenue in 1 quarter and then we watch it roll off or wait for breakage at the end of it. It's going to provide Revenue month over month and that revenue should continue to grow from here. Speaker 600:23:47Thanks, Houston. That's helpful. Second one, I wanted to ask about gross margin. I know it's mix dependent, but curious, Given the progress you've made so far, where can we expect to see gross margin go over the Speaker 400:23:59next 12 months or so? Speaker 300:24:02Are you referring to prepaid, Specifically, are you referring to company wide? Speaker 600:24:07Company wide. Sorry, company wide. Speaker 300:24:10I'll take that question. Speaker 500:24:15Obviously, the big component is the mix. And the last Few period quarters have been very positive in terms of prepaid breakage. Output Solutions has been pretty consistent. It might Drop a little bit depending really on the pickup in the ACH business. Speaker 600:24:44All right. That's helpful. And then last one, I just want to ask quickly about the acquisition environment. I mean, is there anything out there that Could potentially be interesting for you guys? Or is are you strictly focused on the organic business? Speaker 200:25:02We look at deals all the time. We don't have anything in the hopper, but We're open to acquiring more companies. We have very strict criteria and nobody Lately, it's been able to meet that criteria. Speaker 600:25:22All right. That's helpful. I appreciate the time guys and congrats on the quarter. Thanks. Thanks, Scott. Operator00:25:29The next question comes from Michael Diana with Maxim Group. Please go ahead. Speaker 700:25:35Thank you. My first question is on expenses. So I think Greg mentioned that you hired a senior marketing person So in PayFac, you're obviously adding spending more money for growth and yet The G and A expenses are very flat, which is great. What there must be a were there pluses, there's got to be a minus to Said it somewhere. So what are some of the things maybe you're doing to keep that G and A number low? Speaker 200:26:13Well, the first thing is we hired a new head of marketing for the company and that was a replacement. So that doesn't increase SG and A. And then we hired a new senior salespeople, we're always looking for experienced salespeople across the organization. So you'll see us continue to add sales positions. But we're continuing to scale where we need to scale, but We're definitely at the point where we have operating leverage, where we're leveraging our fixed costs and our volumes are going up. Speaker 200:26:50So that's really helping out with OpEx in general. Speaker 700:26:57Okay, great. And Tom mentioned you're generating interest income, which I noticed went way up from sweeps. Could you Just tell us a little how that works though. Speaker 200:27:11It has a lot to do with inflation And the Fed, and it may be somewhat temporary, but we've been Tom and his team have been really doing well and investing Our deposits in a safe manner that are yielding good interest and we think that interest Amount will even go up this quarter. Speaker 700:27:43All right. So It's not necessarily the sweep screen more efficient, it's the interest rates going up or some combination of both, I don't know. Speaker 500:27:56It's definitely a combination of both. Like we have multiple banks And we basically went through all the banks and are sweeping the money and then you also have the compounding effect of the higher interest rates. And you know, Huston List talks about his load increases, everything we do as we grow business, As business changes, all of that factors into the incremental interest income. Speaker 700:28:28Okay, great. And then Justine, you mentioned again, I mean you mentioned before guaranteed income programs. Can you give us an update And whether that's something that's growing as far as number of programs or individual programs? Speaker 300:28:50Yes. I think broadly speaking, absolutely, it's growing. In fact, I guess it was early June, we were at a conference in Chicago Called the BIG Conference Basic Income Guarantee. And it was almost surprising to me to know that that conference Going on for almost 20 years, I believe, but they were just now discussing You know, high with scale, full fledged guaranteed income programs. So for it was just an interesting context to hear about How they've been talking about these in kind of a theoretical or academic kind of way for well over a decade And we participated in the very first real pilot program, which is the Compton Pledge A couple of years ago. Speaker 300:29:51So what we're seeing are pilot programs turn into Yes, larger programs and also being extended and even just saying that there is no end to those programs. And we continue to add to them both through direct sales as well as by partnering with service providers that are kind of servicing The nonprofit and local government space that covers them. So Speaker 800:30:21very positive trends there Speaker 300:30:24And we absolutely expect it to continue. I think if there's anything on our mind is The continued growth will likely lead to increasing competition in the space. But no, I don't think guaranteed income programs are going away. I don't I think direct cash assistance is only going to continue to go up from here, just broadly speaking. Speaker 700:30:49Okay, great. Thank you. Speaker 200:30:53Thanks, Michael. Operator00:30:56The next question comes from John Hickman with Ladenburg. Please go ahead. Speaker 900:31:02Hello. Can you hear me okay? Speaker 600:31:05Hi, John. Speaker 900:31:07Hey. Luis, would you elaborate on your comments about headwinds for ACH In the coming quarter? Speaker 200:31:18So ACH, absent Voyager, continues to grow. So if we take Voyager out of the mix, we're continuing to add new accounts and those accounts are actually producing more than they would they did last year without Voyager. So ACH is doing well in that aspect. It's the comparables Year over year right now we're tough and they will be for Q3 because we still did a lot of work for Voyager in Q3, but Q4, you'll see the comparables even out and we should do well from there. We do have initiatives. Speaker 200:32:01We're implementing the clearinghouse network. We're implementing the Fed now. We do believe that some of ACH traffic will go to those real time methods. We're early entrant in those 2 payment channels. So because we're early, We'll get some new business out of it. Speaker 200:32:24And all that goes into that ACH And a complementary services bucket. So you're going to see some growth there. Speaker 900:32:38Okay. And then on the PayFac side, You mentioned an ag supply. Was that an ISV or is that a retail chain? Speaker 400:32:53It's actually more of an enterprise account, not a pure play ISV. But given the size and the requirements that they had, it was a good fit for UCO. But To be clear, it's not an ISV. Speaker 900:33:04Okay. And then let's see. I had one more brilliant question. What was it? I guess that's it for me. Speaker 900:33:22Thanks for taking my questions. Speaker 600:33:25Thanks, John. Thank you. Thanks, John. Operator00:33:35The next question Speaker 800:33:44Louis, my questions are all around this Fed now. Is this going to be a positive for you or does this take away from your ACH business? Speaker 200:33:56It's going to pull away some ACH traffic, not much. I mean ACH is still the cheapest method to send the payment. ACH, you can still do same day. So it fits for a lot of different applications. Nobody's going to pay their mortgage real time or their life insurance real time. Speaker 200:34:21It's that same day or next day is fine. So ACH is always going to be around. In fact, ACH globally, the Volume continues to increase and now FedNow, anything with real time Payments is definitely going to grow and we're there and we have a strategy being diverse in the payment channels So we're going to be implementing FedNow. FedNow is opt in program for banks. Even though every bank has access to a Fed terminal, it doesn't mean that they can accept FedNow payments. Speaker 200:35:04So it's going to be a limited rollout just like the clearinghouse has been a limited rollout. So the clearinghouse is a network that Zelle runs on. And I'm sure if you've used that before, you realize that you can't send payments to everybody. The clearinghouse today is primarily just credits in segment FedNow. And For it to be effective payment mechanism, it needs to be credits and debits. Speaker 200:35:33And so we'll see that Once the debit portion rolls out, then it will have more applications available to it. But We're implementing both and we don't care which one wins. We think the margins are going to be similar to ACH And we think our ACH business in itself is going to continue to grow. Speaker 300:35:59Well, that's what I'm kind Speaker 800:36:00of asking. I mean, you kind of danced around it here. I mean, with your ACH business, as I understand it, that is 2 or 3 days payment, like you said, on a mortgage. FedNow is instantaneous. So you are will be capable of doing both ACH and FedNow once you hook up to the I realize FedNow Has not proliferated. Speaker 800:36:22It's just recently come out. But if there's business that's going to be pulled away, what would it be pulled away? What are you doing right now that has to have Same day settlement? Speaker 200:36:34So ACH is we can do same day ACH. We can do next day ACH, that technology exists and we do that every day. We do a lot in real time payments today. We call that the penless debit. That's the same technology that you would use if you're making a Venmo payment with somebody. Speaker 200:36:56That's Tenmo's debit. It goes across the debit rails. So it doesn't really matter. When you're looking at UCO as a company, it doesn't really matter what payment Method is going to win. We're involved in every one of them. Speaker 200:37:11And FedNow And the clearinghouse once they implement debits will become have more applications. Right now, the clearinghouse is good for sending money and it's not good for Somebody receiving a payment, a merchant receiving payment. So Claring House or Zelle is Pretty much person to person payments. So you can see they've limited themselves in the way they're rolling out. But when they get debits, it's going to be important and it will shift. Speaker 200:37:54The payment world shifts all the time. We had big shift in COVID where we went from People willing to insert their card or swipe their card to contact us. Houston's team Before COVID, we'd issue more plastic cards. After COVID, we issue more virtual cards. People really want to touch their card. Speaker 200:38:19So it didn't matter that that shift occurred within prepaid because we were in both channels. And that's important to understand about our company is that we believe that we need to have all channels. And it's Very unlike our competitors. Okay. Thank you. Speaker 200:38:39Thank you, Louis. Speaker 400:38:41You bet. Operator00:38:45This concludes our question and answer session and concludes the conference call. Thank you for attending today's presentation. You may nowRead morePowered by Conference Call Audio Live Call not available Earnings Conference CallUsio Q2 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Usio Earnings HeadlinesUsio to Host First Quarter 2025 Conference Call to Discuss Results and Provide Company Update on May 14, 2025April 23, 2025 | globenewswire.comUsio (USIO) Gets a Hold from BarringtonApril 2, 2025 | markets.businessinsider.comElon Musk is all in on these robots …Robots — built by Nvidia. Forbes says this could be " a $24 trillion opportunity for investors." Huang said, "The ChatGPT moment for robotics is right around the corner." In fact, I believe these robots could impact 65 million Americans lives — this year. And one stock — currently priced around $7 — could be the biggest winner.May 6, 2025 | Weiss Ratings (Ad)Usio Full Year 2024 Earnings: EPS Beats ExpectationsMarch 28, 2025 | finance.yahoo.comI Like Usio's Direction, But Not Enough To Buy Right NowMarch 28, 2025 | seekingalpha.comUsio, Inc.: Usio Increases and Extends Share Repurchase ProgramMarch 27, 2025 | finanznachrichten.deSee More Usio Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Usio? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Usio and other key companies, straight to your email. Email Address About UsioUsio (NASDAQ:USIO), together with its subsidiaries, provides integrated electronic payment processing services to merchants and businesses in the United States. The company offers various types of automated clearing house (ACH) processing; and credit, prepaid card, and debit card-based processing services. Its ACH transaction processing services include Represented Check and Check Conversion for electronic payment facilitation. In addition, the company offers merchant account services for the processing of card-based transactions through the VISA, MasterCard, American Express, Discover, and JCB networks, including online terminal services accessed through a website or retail services accessed through a physical terminal. Further, it provides a proprietary web-based customer service application that allows companies to process one-time and recurring payments through e-checks or credit cards; and an interactive voice response telephone system to companies, which accept payments directly from consumers over the telephone using e-checks or credit cards. Additionally, the company offers prepaid and incentive card issuance services; and operates a prepaid core processing platform, as well as provides additional services, such as electronic bill presentment, document composition, document decomposition, and printing and mailing services for various industry verticals, including utilities and financial institutions. It markets and sells ACH products and services primarily through resellers; and prepaid card program directly to government entities, corporations, and to consumers through the internet. The company was formerly known as Payment Data Systems, Inc. and changed its name to Usio, Inc. in June 2019. Usio, Inc. was incorporated in 1998 and is headquartered in San Antonio, Texas.View Usio ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Is Reddit Stock a Buy, Sell, or Hold After Earnings Release?Warning or Opportunity After Super Micro Computer's EarningsAmazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousRocket Lab Braces for Q1 Earnings Amid Soaring ExpectationsMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback Plan Upcoming Earnings Fortinet (5/7/2025)ARM (5/7/2025)DoorDash (5/7/2025)AppLovin (5/7/2025)MercadoLibre (5/7/2025)Lloyds Banking Group (5/7/2025)Manulife Financial (5/7/2025)Novo Nordisk A/S (5/7/2025)Uber Technologies (5/7/2025)Johnson Controls International (5/7/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 10 speakers on the call. Operator00:00:00Afternoon, everyone, and welcome to the UCO Earnings Conference Call for the Q2 of Fiscal 2023. All participants will be in a listen only mode. After today's presentation, There will be an opportunity to ask All participants on this call are advised that the audio of the A replay will be available shortly after the call through August 28, 2023. I would now like to turn the conference over to Paul Manley, Senior Vice President, Investor Relations. Please go ahead. Speaker 100:00:53Thank you, and thank you, everyone, for joining our call today. Welcome to UCO's The Q2 fiscal 2023 conference call. The earnings release, which we issued today after the market closed, is available on our website atuc0.com under the Investor Relations tab. On this call today Our Louis Hoch, our Chairman and CEO Tom Jewell, Senior Vice President and Chief Financial Officer Greg Carter, Executive Vice President of Payment Acceptance And Houston Frost, Senior Vice President of Prepaid Services. Let me remind our listeners that certain statements made during the call today Forward looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Act of 1995 as amended. Speaker 100:01:39Such forward looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. These risks and uncertainties are described in our earnings press release and in our filings with the SEC. The forward looking statements made today are as of the date of this call, and we do not undertake any obligation to update these forward looking statements. During today's call, we will refer Non GAAP financial measures such as adjusted EBITDA. Our earnings release includes a reconciliation of adjusted EBITDA to GAAP operating income. Speaker 100:02:12Management will provide prepared remarks, then we'll have a question and answer session. But let me start with some highlights from this afternoon's release. I am pleased to report another quarter of record results with 2nd quarter revenue up 31%, accelerating significantly from the 18% growth rate In the Q1 and our 12th consecutive quarter of revenue growth. And for the 3rd consecutive quarter, We reported over $1,000,000 of positive adjusted EBITDA, which was once again up dramatically from the year ago quarter. These results solidly exceeded expectations from the analysts and have us well on our way to meeting our fiscal 2023 financial guidance. Speaker 100:02:54In addition, we continue to be in excellent financial condition with cash up again this quarter, which we believe is more than sufficient to support our growth objectives for the year. So another record quarter along with strong bottom line results and positive cash flow. What you will further hear on this call from our team are the many opportunities in our pipeline that illustrate how our strategy is working and why we are extremely excited about the future here at UCO. Lastly, I'd like to announce that UCO has initiated a comprehensive ESG process With the goal to issue our inaugural ESG report sometime early next year, reporting on the progress that we will be making in this important area. Now, I will turn the call over to Louis. Speaker 200:03:39Thank you, Paul, and welcome, everyone. I want to begin by reiterating Paul's key points that not only was this a record quarter in terms of current financial performance, But it was also another quarter of significant progress in expanding our franchise and planting the seeds for even a better future Performance. For those reasons, we today are reiterating guidance for revenue growth in the 18% to 20% range this year. Results once again reflect our diversified business strategy, diversified in the markets we serve and the payment channels that we offer. This quarter results We're led by performance at prepaid, where revenues were up 276% And Output Solutions, which had another 20% growth quarter. Speaker 200:04:41Prepaid continues to benefit from growth of the underlying business aided by a growing stream of residual revenues from expiring As Houston will discuss, we are bringing on numerous new accounts with both diverse needs and in diverse end markets, as our reputation and technology within these markets continue to grow. While in this era of high-tech, we are very proud of our advanced technology, not only at prepaid, but across UCO. We are equally, if not proudest of our high touch customer service strategy. In all of our businesses, paying attention to the customer Is a corporate imperative. Output had another great quarter with revenue up 20% and bottom line profitability Significantly improving. Speaker 200:05:39Keep in mind that unlike the Q1 where we had some unique programs such as printed tax documents, The Q2 did not have similar programs, putting that 20% year over year growth in better perspective. The output growth strategy is also customer relationship focused. For instance, a new relationship with FundView, A cloud ERP system that is provided to local governments resulted in the addition of 30 new cities as customers over the past year and 7 in just the last quarter. The relationship we've built with LA County has resulted in the expansion of that relationship and We are now handling their check disbursement needs for fees and fines overpayments. We recently mailed 9,000 checks in one day And because of our strong relationship in these industries, we added another 3 energy providers And 3 electric utilities in the quarter. Speaker 200:06:48We will continue to invest in output as we believe there is potential to grow the business. Consequently, we hired a 30 year seasoned print and mail sales executive to complement our existing sales efforts. Let me add a few more developments that get out, but that are representative of the transformation and integration Transpiring across the organization. Output recently signed a toll road customer for disbursement of toll bills. The bills have a QR code that the recipient scans, which takes them to a payment portal built and operated by Usio, And there's more automation coming. Speaker 200:07:35For instance, our last two new accounts are completely electronic with no print or mail We will create e bills that are emailed to customers who like the Toll World Road Business are directed to a UCO managed payment portal. This should push the proportion of the output's revenues From electronic payments to approximately 40% and climbing. This is much more profitable work and as a result, Expanding Output's gross margins. The story is the same for card, where we're focusing on building relationships That has enabled us to continue to add new ISVs. I would point specifically to an ISV with Strong government ties were penetrating many of their accounts such as toll roads, including The Massachusetts Department of Transportation, Florida Turnpike, Delaware Tolles and other government organizations such as The City of Miami for fees and fines. Speaker 200:08:44Why do ISVs keep on giving us more business? Because of our long tenure in the business, Pioneering PayFac technology and our great customer service. And in ACH, we had a growth quarter despite ongoing tough comparables on the large year ago Voyager volumes. While we will face another tough quarter of comparables in the Q3 when Voyager was still running off, we expect to see performance in the ACH Starting in the Q4 when there was virtually no voyage or volume to speak of. Our strong growth is also leading to better margins as we leverage our fixed direct costs. Speaker 200:09:29In addition, overhead for The Q2 was virtually unchanged from a year ago as we kept a tight lid on costs and continued to focus on improving efficiency and Productivity. So far this year, revenues are up 24% on the top line with only about 1% added overhead, which includes the absorption of significant inflationary pressures. The result is another quarter of more than $1,000,000 in adjusted EBITDA, which is now up $3,000,000 compared to the adjusted EBITDA generated over the first half of fiscal twenty twenty two. In addition, we delivered positive GAAP net income and earnings per share for the 2nd consecutive quarter, which has been an important objective. Consequently, as previously noted, we are reiterating our guidance for the year, although we believe that the second half Will be comprised of somewhat slower third quarter followed by a stronger 4th quarter. Speaker 200:10:41As a result of the first half of the year Art is the best in the company's history, and we expect this to be a record year. Our pipeline is extremely strong, And many of our existing relationships are with fast growing organizations with whom we are growing. We're in great financial condition and we can't wait to get back to work every day. And now, I'd like to turn the call over to Houston Frost. Speaker 300:11:10Thank you, Louis, and thank you to everyone participating on our call this afternoon. As Louis noted, prepaid had an exceptional quarter nearly tripling revenue while growing load volume by 48% and purchase volume by 51%. While revenues benefited from the breakage earned on inactive New York City incentive cards, load and purchase volume trends reflect the strong growth New and existing client card programs. June was our best month ever for both pre funded card loads And transaction volume and early figures show continued growth in July. Importantly, This load and transaction volume is largely coming from longer term programs with recurring and or larger card loads. Speaker 300:11:59These include guaranteed income and other multiple load cash assistance programs as well as corporate expense and other specialty card programs. As UCO's card issuing business matures, we believe it's important to build a base of programs that will generate longer term recurring payment volume. Admittedly, there is a trade off here. Single load card programs, especially with loads of $100 or less, generate higher revenue As a percentage of load volume, they do recurring and larger load programs. And typically, single load program revenue is higher gross margin, although from a net profit perspective, the additional gross margin is partially consumed by higher customer service and operational expense as a percentage of loads. Speaker 300:12:47That said, we're confident that continuing to focus on and shift Toward longer term recurring load programs is the right long term decision. These programs and clients are less Price sensitive and have higher switching costs. Building a business that is more defendable and more stable will ultimately be more valuable. That said, we certainly don't plan to turn away any single load card programs. We see our success as being driven by our operational execution, our execution, our proprietary processing platform with the flexibility and capabilities it offers and our relentless focus on the client relationship. Speaker 300:13:26This bolsters our confidence in our strategy. Focus on clients and programs where these strengths provide true value. Class Wallet is a great example of the Strategy in action. They operate a service that assists academic and government organizations with managing their purchasing and reimbursement process. We first began issuing their cards more than 3 years ago in 2020. Speaker 300:13:51The company's product had a unique need requiring them to be involved in transaction authorization decisions and we had a solution, what we call external authorization. Today, ClassWalt has grown to be one of our top clients by load and transaction volume. MoviePass is a similar example, a long term relationship Also using our novel external authorization solution. And of course, we also continue to build relationships in the local government and non profit space. Among our many newer engagements is a program with the California Department of Social Services, which will be issuing which will be using a UCO card to disperse nearly $100,000,000 to eligible individuals who experienced hardship as a result of storms in that These programs often take advantage of our transaction restrictions and controls, virtual cards And or consumer choice offerings. Speaker 300:14:49But what customers tell us they appreciate most is our partnership, our willingness to jump on a call and troubleshoot an issue, facilitate an improvement or simply be honest about a mistake and work toward an acceptable resolution. In total, we continue to be on pace to add approximately 80 to 100 new clients this year. While we do expect to see card issuing revenue And gross margin declined somewhat over the next few quarters as income generation from the New York City and City of Houston And other vaccine incentive programs lines down. We are thrilled with the programs we manage today and the business we are building. Our June record load and transaction volume indicates UCO's card issuing business is poised for continued growth over the long term. Speaker 300:15:40With that, I'd like to turn the call over to Greg Carver. Speaker 400:15:45Thank you, Houston, and good afternoon, everyone. Card revenues were up once again in the 2nd quarter led by a 26% growth in our PayFac business where virtually all of our efforts and resources are being concentrated. For the quarter, dollars processed were up 2% and transactions processed were up 15% from a year ago. Louis noticed some nice recent wins with governmental entities, all of which are from a very strong ISV relationship. We also added a fitness exercise practice management ISP whose software is being rapidly adopted by gyms and fitness centers. Speaker 400:16:20To illustrate the dynamics Affecting our implementation process and to use one of my dad's analogies, this was way more than the Carpenter's old rule, measure twice and cut once. It was closer to measure 14 times. That's okay. While competitors may have bought and walked away, this is what makes us different and we fully expect This to be a long and mutually beneficial relationship. There was an equally exciting new implementation with an agricultural and ranch supply company. Speaker 400:16:48They're already set up with ACH and are now switching all of their e commerce transactions onto our card platform. Our expectation is that eventually they will move the remainder of their payment needs, primarily on premises to Usio, which could be quite significant. In addition to our strong relationship with this firm, they like the flexibility that UCO provides and of course, we remain price competitive. On the product side, we've made a significant upgrade in our card present transaction device, which we believe will drive incremental revenues. And I think now we have the strongest prospect pipeline we've ever had, including opportunities arising primarily from trade show attendance with organizations in the veterinarian, Fundraising and Waste Industries. Speaker 400:17:31As with all of the UCO business development efforts, our success is primarily a function of the variety of payment channels The strong relationships we are building in the market. For many of our new accounts, we may be their 1st payments platform. In addition, there's a lot of cross selling taking place. For instance, as a result of their relationship with Output Solutions, we were talking to a large player in the printing market about how to provide an electronics payment solution to complement their existing business. And in May, we added Stephanie Gonzalez to spirit our marketing efforts and amplify our various initiatives. Speaker 400:18:06As previously noted, in the short term, results can be impacted by the pace of new ISV implementations as well as the rate at which they ramp. Fortunately, as we grow our pipeline and engage with an ever greater number of ISVs, the rate of implementations continues to improve, so we are optimistic about the second half of the year with revenue growth returning to the strong trajectory for the last several years. With that, I'd like to conclude my remarks and turn the call over to Tom Jewell, our Senior Vice President and Chief Financial Officer to discuss our financial results. Speaker 500:18:39Thanks, Greg, and welcome, everyone. Thanks again for joining our call today and for your interest in UCO. Let me quickly provide some color around this quarter's results before opening the call to questions. Revenues were up 31% to a record $21,300,000 driven by strong growth in prepaid and output solutions. Credit card revenues were up 3%. Speaker 500:19:06ACH and complementary services were up 5% this quarter after being down the last few quarters. Gross profits of $5,000,000 were a quarterly record for the 3rd consecutive quarter and margins expanded 3.40 basis Points from a year ago. The gross margin improvement reflects a higher contribution from breakage and spoilage, Which significantly improved margins in the prepaid segment, growth in our high margin ACH revenues, as well as strong margins at Output Solutions. Selling, general and administrative costs were basically flat with the year ago period and are up just slightly more than 1% for the first half of the year. For the 3rd consecutive quarter, we generated over $1,000,000 in adjusted EBITDA. Speaker 500:19:56For the quarter, we reported $0.01 per share of GAAP EPS, while also reporting $0.01 per share of GAAP EPS for the 1st 6 months of the year. Non GAAP adjusted operating cash flows as As described in our 10 Q and earnings release was $1,500,000 for the 6 months ended June 30, 2023. Our cash position at the end of the quarter was $6,600,000 up approximately $900,000 over the first half of twenty twenty three. For the first half of the year, revenues were up 24.4%, Gross margin has expanded 3.50 basis points. SG and A is up 1% and adjusted EBITDA Was $2,200,000 compared to a loss of $875,000 for the first half of last year. Speaker 500:20:58I do want to call out our efforts to drive interest income where we have employed investment suites to generate over $300,000 of interest income over the first half of the year. In July 2023 alone, interest income was 160,000 As Louis noted, we expect to meet our revenue guidance for the year, but expect to see a slight Slow down in revenue growth and gross profits due to declining breakage and other items. With that, I will turn the call back to the operator to conduct our question and answer session. Operator00:21:40We will now begin the question and answer session. The first question today comes from Scott Buck with H. C. Wainwright. Please go ahead. Speaker 600:22:13Hi, good afternoon guys. Thanks for taking my questions. Speaker 700:22:17First one, I was hoping you could give us a little Speaker 600:22:21bit more color around what You're seeing with MoviePass and maybe how that business has performed versus expectations, granted it's early? Speaker 300:22:33Yes. Hi, Scott. This is Houston Frost. Speaker 600:22:37I think Speaker 300:22:40Generally speaking, MoviePass has performed in line with our expectations. Speaker 600:22:50We've Speaker 300:22:53continually seen their volumes ramp up. Ultimately, they're going to be a fairly significant client of ours. It's hard for me to say, are they going to be number 1, number 2, number 3, number 4, number 5, but they'll be in the top 10. And I think last quarter just by payment volume, they were already in our top 10 clients. It's a long term recurring revenue type client. Speaker 300:23:27It's not a New York City where you're going to Make a ton of revenue in 1 quarter and then we watch it roll off or wait for breakage at the end of it. It's going to provide Revenue month over month and that revenue should continue to grow from here. Speaker 600:23:47Thanks, Houston. That's helpful. Second one, I wanted to ask about gross margin. I know it's mix dependent, but curious, Given the progress you've made so far, where can we expect to see gross margin go over the Speaker 400:23:59next 12 months or so? Speaker 300:24:02Are you referring to prepaid, Specifically, are you referring to company wide? Speaker 600:24:07Company wide. Sorry, company wide. Speaker 300:24:10I'll take that question. Speaker 500:24:15Obviously, the big component is the mix. And the last Few period quarters have been very positive in terms of prepaid breakage. Output Solutions has been pretty consistent. It might Drop a little bit depending really on the pickup in the ACH business. Speaker 600:24:44All right. That's helpful. And then last one, I just want to ask quickly about the acquisition environment. I mean, is there anything out there that Could potentially be interesting for you guys? Or is are you strictly focused on the organic business? Speaker 200:25:02We look at deals all the time. We don't have anything in the hopper, but We're open to acquiring more companies. We have very strict criteria and nobody Lately, it's been able to meet that criteria. Speaker 600:25:22All right. That's helpful. I appreciate the time guys and congrats on the quarter. Thanks. Thanks, Scott. Operator00:25:29The next question comes from Michael Diana with Maxim Group. Please go ahead. Speaker 700:25:35Thank you. My first question is on expenses. So I think Greg mentioned that you hired a senior marketing person So in PayFac, you're obviously adding spending more money for growth and yet The G and A expenses are very flat, which is great. What there must be a were there pluses, there's got to be a minus to Said it somewhere. So what are some of the things maybe you're doing to keep that G and A number low? Speaker 200:26:13Well, the first thing is we hired a new head of marketing for the company and that was a replacement. So that doesn't increase SG and A. And then we hired a new senior salespeople, we're always looking for experienced salespeople across the organization. So you'll see us continue to add sales positions. But we're continuing to scale where we need to scale, but We're definitely at the point where we have operating leverage, where we're leveraging our fixed costs and our volumes are going up. Speaker 200:26:50So that's really helping out with OpEx in general. Speaker 700:26:57Okay, great. And Tom mentioned you're generating interest income, which I noticed went way up from sweeps. Could you Just tell us a little how that works though. Speaker 200:27:11It has a lot to do with inflation And the Fed, and it may be somewhat temporary, but we've been Tom and his team have been really doing well and investing Our deposits in a safe manner that are yielding good interest and we think that interest Amount will even go up this quarter. Speaker 700:27:43All right. So It's not necessarily the sweep screen more efficient, it's the interest rates going up or some combination of both, I don't know. Speaker 500:27:56It's definitely a combination of both. Like we have multiple banks And we basically went through all the banks and are sweeping the money and then you also have the compounding effect of the higher interest rates. And you know, Huston List talks about his load increases, everything we do as we grow business, As business changes, all of that factors into the incremental interest income. Speaker 700:28:28Okay, great. And then Justine, you mentioned again, I mean you mentioned before guaranteed income programs. Can you give us an update And whether that's something that's growing as far as number of programs or individual programs? Speaker 300:28:50Yes. I think broadly speaking, absolutely, it's growing. In fact, I guess it was early June, we were at a conference in Chicago Called the BIG Conference Basic Income Guarantee. And it was almost surprising to me to know that that conference Going on for almost 20 years, I believe, but they were just now discussing You know, high with scale, full fledged guaranteed income programs. So for it was just an interesting context to hear about How they've been talking about these in kind of a theoretical or academic kind of way for well over a decade And we participated in the very first real pilot program, which is the Compton Pledge A couple of years ago. Speaker 300:29:51So what we're seeing are pilot programs turn into Yes, larger programs and also being extended and even just saying that there is no end to those programs. And we continue to add to them both through direct sales as well as by partnering with service providers that are kind of servicing The nonprofit and local government space that covers them. So Speaker 800:30:21very positive trends there Speaker 300:30:24And we absolutely expect it to continue. I think if there's anything on our mind is The continued growth will likely lead to increasing competition in the space. But no, I don't think guaranteed income programs are going away. I don't I think direct cash assistance is only going to continue to go up from here, just broadly speaking. Speaker 700:30:49Okay, great. Thank you. Speaker 200:30:53Thanks, Michael. Operator00:30:56The next question comes from John Hickman with Ladenburg. Please go ahead. Speaker 900:31:02Hello. Can you hear me okay? Speaker 600:31:05Hi, John. Speaker 900:31:07Hey. Luis, would you elaborate on your comments about headwinds for ACH In the coming quarter? Speaker 200:31:18So ACH, absent Voyager, continues to grow. So if we take Voyager out of the mix, we're continuing to add new accounts and those accounts are actually producing more than they would they did last year without Voyager. So ACH is doing well in that aspect. It's the comparables Year over year right now we're tough and they will be for Q3 because we still did a lot of work for Voyager in Q3, but Q4, you'll see the comparables even out and we should do well from there. We do have initiatives. Speaker 200:32:01We're implementing the clearinghouse network. We're implementing the Fed now. We do believe that some of ACH traffic will go to those real time methods. We're early entrant in those 2 payment channels. So because we're early, We'll get some new business out of it. Speaker 200:32:24And all that goes into that ACH And a complementary services bucket. So you're going to see some growth there. Speaker 900:32:38Okay. And then on the PayFac side, You mentioned an ag supply. Was that an ISV or is that a retail chain? Speaker 400:32:53It's actually more of an enterprise account, not a pure play ISV. But given the size and the requirements that they had, it was a good fit for UCO. But To be clear, it's not an ISV. Speaker 900:33:04Okay. And then let's see. I had one more brilliant question. What was it? I guess that's it for me. Speaker 900:33:22Thanks for taking my questions. Speaker 600:33:25Thanks, John. Thank you. Thanks, John. Operator00:33:35The next question Speaker 800:33:44Louis, my questions are all around this Fed now. Is this going to be a positive for you or does this take away from your ACH business? Speaker 200:33:56It's going to pull away some ACH traffic, not much. I mean ACH is still the cheapest method to send the payment. ACH, you can still do same day. So it fits for a lot of different applications. Nobody's going to pay their mortgage real time or their life insurance real time. Speaker 200:34:21It's that same day or next day is fine. So ACH is always going to be around. In fact, ACH globally, the Volume continues to increase and now FedNow, anything with real time Payments is definitely going to grow and we're there and we have a strategy being diverse in the payment channels So we're going to be implementing FedNow. FedNow is opt in program for banks. Even though every bank has access to a Fed terminal, it doesn't mean that they can accept FedNow payments. Speaker 200:35:04So it's going to be a limited rollout just like the clearinghouse has been a limited rollout. So the clearinghouse is a network that Zelle runs on. And I'm sure if you've used that before, you realize that you can't send payments to everybody. The clearinghouse today is primarily just credits in segment FedNow. And For it to be effective payment mechanism, it needs to be credits and debits. Speaker 200:35:33And so we'll see that Once the debit portion rolls out, then it will have more applications available to it. But We're implementing both and we don't care which one wins. We think the margins are going to be similar to ACH And we think our ACH business in itself is going to continue to grow. Speaker 300:35:59Well, that's what I'm kind Speaker 800:36:00of asking. I mean, you kind of danced around it here. I mean, with your ACH business, as I understand it, that is 2 or 3 days payment, like you said, on a mortgage. FedNow is instantaneous. So you are will be capable of doing both ACH and FedNow once you hook up to the I realize FedNow Has not proliferated. Speaker 800:36:22It's just recently come out. But if there's business that's going to be pulled away, what would it be pulled away? What are you doing right now that has to have Same day settlement? Speaker 200:36:34So ACH is we can do same day ACH. We can do next day ACH, that technology exists and we do that every day. We do a lot in real time payments today. We call that the penless debit. That's the same technology that you would use if you're making a Venmo payment with somebody. Speaker 200:36:56That's Tenmo's debit. It goes across the debit rails. So it doesn't really matter. When you're looking at UCO as a company, it doesn't really matter what payment Method is going to win. We're involved in every one of them. Speaker 200:37:11And FedNow And the clearinghouse once they implement debits will become have more applications. Right now, the clearinghouse is good for sending money and it's not good for Somebody receiving a payment, a merchant receiving payment. So Claring House or Zelle is Pretty much person to person payments. So you can see they've limited themselves in the way they're rolling out. But when they get debits, it's going to be important and it will shift. Speaker 200:37:54The payment world shifts all the time. We had big shift in COVID where we went from People willing to insert their card or swipe their card to contact us. Houston's team Before COVID, we'd issue more plastic cards. After COVID, we issue more virtual cards. People really want to touch their card. Speaker 200:38:19So it didn't matter that that shift occurred within prepaid because we were in both channels. And that's important to understand about our company is that we believe that we need to have all channels. And it's Very unlike our competitors. Okay. Thank you. Speaker 200:38:39Thank you, Louis. Speaker 400:38:41You bet. Operator00:38:45This concludes our question and answer session and concludes the conference call. Thank you for attending today's presentation. You may nowRead morePowered by