What CPI Card Group (PMTS) Said on Its Q3 Earnings Call

Key Points

• Record Q3 performance: Revenue rose 15% to a company-record $158 million, with double-digit growth across all three segments; adjusted EBITDA increased 17% to $27 million.
• Outlook improved: CPI raised its full-year revenue growth forecast to low double digits and free cash flow guidance to $50 million–$55 million. Year-to-date free cash flow reached a record $46 million, and net leverage fell to 2.6 times.
• Growth initiatives: Integrated Paytech revenue climbed 20%, and CPI expects its Q4 growth rate to more than double. The company also cited new customer wins and partnerships as it invests in digital capabilities and production efficiency.

CPI Card Group NASDAQ: PMTS reported third-quarter revenue of $158 million, up 15% from the prior-year period and representing the highest quarterly revenue in the company’s history, executives said on its earnings call. Growth was supported by double-digit increases across Secure Card Solutions, Prepaid Solutions and Integrated Paytech.

Gross profit rose 23% to $50 million, while gross margin expanded about 200 basis points to 31.7%. Adjusted EBITDA increased 17% to $27 million, with adjusted EBITDA margin rising approximately 30 basis points to 17.3%. Net income more than doubled to $5 million, which Chief Financial Officer Terra Grantham attributed primarily to higher operating income, lower interest expense and a lower effective tax rate than a year earlier.

Cash Flow and Updated Outlook

The company generated $10 million in third-quarter free cash flow and a record $46 million during the first nine months of 2026, compared with $6 million in the comparable prior-year period. Cash flow from operations totaled $57 million year to date, up from $20 million a year earlier.

At quarter-end, CPI had $15 million in cash, $15 million drawn on its asset-based lending revolver and $74 million of remaining borrowing capacity. The company had $238.5 million of senior notes outstanding. Its net leverage ratio declined to 2.6 times, from 3.6 times at the same point last year.

Based on its results through nine months and its current outlook, CPI increased its full-year outlook for revenue growth and free cash flow for the second consecutive quarter. The company now expects:

• Low-double-digit revenue growth, raised from prior guidance of high-single-digit to low-double-digit growth.
• Low- to mid-single-digit adjusted EBITDA growth, unchanged from prior guidance.
• Free cash flow of $50 million to $55 million, raised from $45 million to $50 million.
• A year-end net leverage ratio toward the low end of its 2.5 times to 3.0 times range.

Grantham said CPI intends to continue balancing debt reduction with investments in the business. She said the company expects to consider refinancing its senior notes after the call premium declines to 102.5 in July of next year, barring outside market developments or other changes.

Segment Performance

Secure Card Solutions revenue increased 13% to $112 million, driven by continued contactless-card volume growth. Grantham also cited demand for premium metal cards, which contributed to a more favorable mix of higher-value offerings.

Prepaid Solutions revenue grew 15% to $27 million. The segment benefited from increased closed-loop prepaid sales and seasonal demand for higher-value open-loop packages ahead of the holiday season. However, CPI expects normal seasonal moderation in the fourth quarter, with Prepaid Solutions revenue closer to $20 million as customer ordering patterns normalize.

Integrated Paytech revenue rose 20% to $23 million, reflecting contributions from the late-June acquisition of TRISM and continued momentum in CPI’s cloud-based Card@Once instant issuance offering. The segment’s gross margins were above 55%, according to President and Chief Executive Officer John Lowe.

CPI expects Integrated Paytech’s fourth-quarter revenue growth rate to be more than double its third-quarter growth rate. Lowe said the outlook reflects continued Card@Once momentum, contributions from TRISM, growth in digital solutions and favorable comparisons with the prior-year fourth quarter.

Investments, Acquisitions and Customer Wins

Lowe said the company continued to invest in technology, digital capabilities, automation and production optimization. Selling, general and administrative expenses increased to $34 million from $28 million a year earlier, reflecting digital and technology investment, compensation and personnel costs, as well as acquisition-related expenses.

Integration and transaction-related costs were approximately $1 million in the third quarter, primarily related to TRISM, with a smaller contribution from Arroweye. Grantham said the vast majority of Arroweye integration work is complete and that future TRISM integration costs are expected to be lower than Arroweye-related expenses had been.

The company said its Indiana facility, which began production more than a year ago, is providing additional capacity and production flexibility. Executives cited automation, network optimization, supplier negotiations, acquisition synergies and growth in higher-margin products as potential avenues for further margin improvement.

Arroweye, acquired in May of the prior year, has delivered more than 30 new customer wins, Lowe said. Its latest customer win was Navy Federal Credit Union, which CPI described as the world’s largest credit union and a top-15 U.S. card issuer. Lowe said the relationship creates an opportunity to provide Navy Federal with other CPI offerings beyond Arroweye’s initial solution.

CPI also announced a partnership with digital banking provider Bankjoy, enabling Bankjoy’s more than 85 community bank and credit union clients to offer CPI’s Push Provisioning capabilities. The company said its second-stage pilot with a large U.S. national retailer for Karta’s chip-embedded payment technology is progressing.

Shareholder Base and Capital Strategy

During the quarter, Parallel49 completed a secondary offering of its remaining CPI shares. Lowe said the offering broadened the company’s shareholder base and increased its public float. He added that CPI’s chairman, other board members and Tricor Pacific Capital increased their investments in the company.

Management said its strategy remains focused on expanding its proprietary technology platform, growing its customer base and developing payment solutions across physical cards, digital credentials and instant issuance.

About CPI Card Group (NASDAQ:PMTS)

CPI Card Group Inc is a payment technology company that designs, manufactures and distributes payment cards and related services in North America. Its customers include banks, credit unions, fintech companies and other financial institutions that issue credit, debit, prepaid and commercial payment cards.

The company's products and services include EMV chip cards, contactless and dual-interface cards, prepaid cards, card personalization, fulfillment and packaging. CPI Card Group also provides instant-issuance solutions that allow financial institutions to produce payment cards at branch locations, along with digital and physical card programs designed to support modern payment experiences.

Founded in 1995, CPI Card Group serves customers across the United States and Canada through manufacturing, personalization and service operations.

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