CompoSecure Q1 2025 slides: International sales jump 28% as Arculus turns profitable

Introduction & Market Context

CompoSecure, Inc. (NASDAQ:CMPO) presented its Q1 2025 earnings results on May 12, showing flat overall sales but significant international growth and improved profitability metrics. The company’s stock traded up 2.61% in after-hours trading at $12.20, suggesting a positive market reception following the presentation.

The quarter marked a significant corporate restructuring with the February 28th spin-off of Resolute Holdings Management , Inc. (NASDAQ:RHLD), which now provides management services to CompoSecure under a new fee arrangement. This change has altered the company’s financial reporting structure, with results now presented under equity method accounting.

Executive Summary

CompoSecure reported consolidated net sales of $103.9 million for Q1 2025 on a non-GAAP basis, essentially flat compared to $104.0 million in Q1 2024. While domestic sales declined 4% to $89.5 million, international sales surged 28% to $14.4 million, demonstrating the company’s expanding global footprint.

Pro Forma Adjusted EBITDA decreased slightly to $33.7 million, down 2% from $34.5 million in the prior year period, with margins contracting by 74 basis points to 32.4%. The company attributed this decline to higher SG&A investments in organic growth initiatives and the implementation of the CompoSecure Operating System.

A significant milestone was achieved with the Arculus digital authentication business generating a net positive contribution for the first time in Q1, validating the company’s diversification strategy beyond traditional payment cards.

As shown in the following chart of high-profile customer programs:

CompoSecure continues to expand its client base with new and expanding metal payment card programs for both traditional banks and fintech companies. Notable new partnerships include Citibank/American Airlines, Robinhood (NASDAQ:HOOD) Gold, WealthSimple, MetaMask, Karta, Koho, and Scotia Bank.

Quarterly Performance Highlights

The company’s financial performance showed mixed results across key metrics. While sales remained flat, adjusted net income increased 21% to $28.4 million, and adjusted diluted EPS rose to $0.25 from $0.24 in Q1 2024.

The following chart illustrates recent favorable trends in the payment card industry that support CompoSecure’s business:

The company noted that its largest customers continue to report year-over-year purchase volume growth, with American Express (NYSE:AXP) acquiring 3.4 million new cards in Q1 2025 while maintaining robust customer acquisition investments.

CompoSecure’s Q1 operating results summary shows the impact of the new accounting presentation:

The company’s balance sheet strengthened considerably, with cash increasing to $71.7 million from $55.1 million a year earlier, while total debt decreased to $195.0 million from $335.6 million.

The following charts detail the company’s non-GAAP highlights for Q1 2025:

Gross margin declined slightly to 52.5% from 53.1% in Q1 2024, a decrease of 58 basis points. The company’s Pro Forma Adjusted EBITDA margin also contracted by 74 basis points to 32.4%, which management attributed to strategic investments in future growth.

Strategic Initiatives

A key development in the quarter was the continued progress of Arculus, CompoSecure’s digital authentication and cold storage solution. The following image illustrates Arculus’ capabilities:

Arculus offers two main product lines: Arculus Authenticate, a hardware-bound PassKey authenticator for secure login and account protection, and Arculus Cold Storage, a crypto and NFT hardware wallet with advanced three-factor authentication. The business achieved profitability in Q1, with new vertical industry successes including MetaMask, MoneyGram, and Circular.

The February 28th spin-off of Resolute Holdings Management has created a new corporate structure, with CompoSecure now paying a quarterly management fee to Resolute representing 2.5% of last twelve months’ adjusted EBITDA minus stock compensation expense. This arrangement is designed to optimize operational efficiency while maintaining strategic focus.

Forward-Looking Statements

CompoSecure reiterated its full-year 2025 guidance, projecting mid-single-digit growth in both consolidated net sales and Pro Forma Adjusted EBITDA. Management expects sales momentum to build throughout the year.

The following slide outlines the company’s guidance and strategic position:

For 2025, CompoSecure has established four key objectives: accelerating organic growth, driving results through the CompoSecure Operating System, continuing Arculus traction, and delivering accretive M&A.

The company highlighted its position of strength, including established market leadership, a focused growth strategy, favorable industry backdrop, and Arculus optionality. However, management also acknowledged ongoing challenges, including growing global political and economic tensions, competition from digital wallets, rising labor costs, and inflationary concerns.

After a challenging Q4 2024 where CompoSecure missed both EPS and revenue forecasts, the Q1 2025 results suggest a stabilization in performance with promising growth in international markets and the Arculus business line. Investors appear to be responding positively to these developments, as reflected in the after-hours stock price increase.

Full presentation:

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