Earnings call transcript: CoreCard Corp’s Q1 2025 revenue surges, stock climbs

Published 08/05/2025, 16:42
 Earnings call transcript: CoreCard Corp’s Q1 2025 revenue surges, stock climbs

CoreCard Corp (CCRD) reported a strong financial performance for the first quarter of 2025, with a notable increase in revenue and earnings per share (EPS). The company’s revenue reached $16.7 million, marking a 28% year-over-year increase. The adjusted diluted EPS was $0.28, significantly up from $0.07 in the same quarter last year. Following these results, CoreCard’s stock price jumped 12.78% in pre-market trading, reflecting positive investor sentiment. According to InvestingPro analysis, CCRD currently appears undervalued, with strong financial health metrics including a current ratio of 4.75 and minimal debt-to-equity of just 0.05.

Key Takeaways

  • CoreCard reported a 28% increase in Q1 2025 revenue.
  • Adjusted diluted EPS rose to $0.28 from $0.07 in Q1 2024.
  • Stock surged 12.78% in pre-market trading post-earnings announcement.
  • Strong performance driven by growth in professional services and processing revenue.
  • Full-year revenue projection set at $65-$69 million.

Company Performance

CoreCard Corp demonstrated impressive growth in the first quarter of 2025, driven by a robust performance across its service segments. The company reported total revenue of $16.7 million, a 28% increase compared to the same period last year. Income from operations reached $2.8 million, a significant improvement from zero in the previous year, highlighting the company’s operational efficiency. The company maintains impressive profitability metrics, with a gross profit margin of 39.08% and a return on equity of 10% over the last twelve months.

Financial Highlights

  • Revenue: $16.7 million, up 28% year-over-year
  • Professional services revenue: $8.7 million
  • Processing and maintenance revenue: $6.3 million
  • Third-party revenue: $1.6 million
  • Adjusted diluted EPS: $0.28, up from $0.07 in Q1 2024
  • Operating margin: 16.8%, up from 4% in the previous year
  • Adjusted EBITDA: $4 million, up from $1.7 million in Q1 2024

Earnings vs. Forecast

CoreCard’s Q1 2025 earnings per share of $0.28 met the company’s guidance range, while total revenue slightly exceeded expectations. This performance reflects the company’s ability to deliver consistent growth, aligning with its projected EPS of $0.23-$0.28 and revenue projection of $16.2-$16.9 million for the quarter.

Market Reaction

Following the earnings announcement, CoreCard’s stock price rose by 12.78%, trading at $19.59 compared to the previous close of $17.37. This surge positions the stock closer to its 52-week high of $24.97, indicating strong investor confidence in the company’s growth trajectory. InvestingPro data shows the stock has demonstrated resilience with a relatively low beta of 0.54, suggesting lower volatility compared to the broader market. Despite recent gains, the stock remains attractively valued with a PEG ratio of 0.37, indicating potential upside relative to its growth prospects.

Outlook & Guidance

CoreCard has set a positive outlook for the remainder of 2025, with full-year revenue projected between $65 million and $69 million. For deeper insights into CoreCard’s valuation and growth prospects, including 10 exclusive ProTips and comprehensive financial analysis, check out the detailed Pro Research Report available on InvestingPro. The company anticipates continued growth in its professional services and processing segments, aiming for a full-year EPS of $1.10-$1.18. The Q2 2025 guidance includes revenue of $16.2-$16.9 million and EPS of $0.23-$0.28.

Executive Commentary

CEO Leland Strange expressed optimism, stating, "We had a good quarter. We expect to continue that result the rest of the year." CFO Matt White highlighted the company’s customer acquisition strategy, noting, "We continue to onboard new customers both directly and through various partnerships."

Risks and Challenges

  • Potential headwinds from the sale of Deserve to Intuit, which represents less than 3% of CoreCard’s total revenues.
  • Industry consolidation, such as the Global Payments/FIS spin-off, could impact market dynamics.
  • Macroeconomic pressures could affect customer spending and investment decisions.

Q&A

During the earnings call, analysts inquired about the impact of industry consolidation and the Intuit/Deserve acquisition. CoreCard clarified that the acquisition’s impact would be minimal. Additionally, questions about the company’s strategy for employee retention and the increase in Goldman Sachs revenue were addressed, highlighting CoreCard’s focus on maintaining a stable workforce and expanding its financial services partnerships. With an impressive Altman Z-Score of 10.89 and Piotroski Score of 8, InvestingPro analysis suggests strong financial stability and operational efficiency, supporting the company’s growth initiatives.

Full transcript - CoreCard Corp (CCRD) Q1 2025:

Conference Operator: Greetings. Welcome to CoreCard’s Q1 twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.

I will now turn the conference over to our host, Matt White, ScoreCard’s Chief Financial Officer. Thank you, Mr. White. You may begin.

Matt White, Chief Financial Officer, CoreCard Corporation: Thank you. Good morning, everyone. With me on the call today is Leland Strange, Chairman and CEO of CoreCard Corporation. He will add some additional comments and answer questions at the conclusion of my prepared remarks. Before I start, I’d like to remind everyone that during the call, we will be making certain forward looking statements to help you understand CoreCard Corporation and its business environment.

These statements involve a number of risk factors, uncertainties and other factors that could cause actual results to differ materially from our expectations. Factors that may affect future operations are included in our filings with the SEC, including our 2024 Form 10 ks and subsequent filings. We’ll also discuss certain non GAAP financial measures, including adjusted diluted EPS and adjusted EBITDA, which is adjusted for certain items that affect the comparability of our underlying operational performance. These non GAAP measures are detailed in reconciliation tables included within our earnings release. As we noted in our press release, our first quarter results exceeded our expectations with higher than expected professional services revenue, primarily from our largest customer, Goldman Sachs.

Our revenue growth excluding Goldman was in line with our expectations. Total revenue for the first quarter was $16,700,000 a 28% increase year over year, driven by higher professional services revenue, as I mentioned previously. The components of our revenue for the first quarter consisted of professional services revenue of $8,700,000 processing and maintenance revenue of $6,300,000 and third party revenue of $1,600,000 As expected, we did not have any license revenue for the quarter and did not expect any license revenue for the year. The higher professional services from Goldman were a function of higher managed services rates from the contract amendment we signed last October and continued high levels of development professional services from Goldman. Processing and maintenance revenue grew 3% year over year.

One of our customers was acquired a couple of years ago and subsequently terminated their contract, resulting in approximately $500,000 of accelerated revenue in the first quarter of twenty twenty four. Excluding this one time item and the impact of Q1 twenty twenty four legacy CABG revenues, processing and maintenance growth was 16. Revenue growth excluding our largest customer was 8% in the first quarter on a year over year basis. Revenue growth excluding our largest customer and the impact from the legacy CABG business and the $05,000,000 of accelerated revenue in the first quarter of twenty twenty four that I previously mentioned was 23% in the first quarter on a year over year basis and is expected to be 30% to 35% for the full year. This is in line with our expectations for the first quarter as we expect revenue growth ex COLEN to accelerate as we move through 2025 as existing customers increase the number of accounts on file and new customers go live.

We do have a potential headwind from the sale of one of our customers, Deserve, to Intuit. Deserve represented less than 3% of our total revenues in 2024, and we expect just over 2% for 2025 with a lot of that already recognized in the first quarter for which payment was received in May 2025. We continue to onboard new customers both directly and through various partnerships we have with other program managers such as Fervent and Cardless. As in previous we currently have multiple implementations in progress and new customers we expect to go live in the coming months. Turning to some additional highlights on our income statement for the first quarter of twenty twenty five.

Income from operations was $2,800,000 compared to $0 for the same period last year. Our operating margin was 16.8% compared to an operating margin of 4% for the same period last year. The year over year increase in our operating margin was primarily driven by higher professional services revenue. The income statement impact of our new platform build was $800,000 in the first quarter of twenty twenty five compared to $700,000 for the prior year period. We have kept our headcount steady and expect to continue growing our revenues without significant increases in costs.

Our Q1 twenty twenty five tax rate was 24% compared to 25.7% in Q1 twenty twenty four. We expect our ongoing tax rate to be between 2427%. Earnings per diluted share for the quarter was $0.24 compared to $05 for Q1 twenty twenty four. Adjusted diluted EPS for the quarter, excluding stock compensation expense, was $0.28 compared to $07 for Q1 twenty twenty four. Adjusted EBITDA was $4,000,000 compared to $1,700,000 for the first quarter of twenty twenty four.

For the full year 2025, we now expect revenues to be between $65,000,000 and $69,000,000 and earnings per share between 1.1 and $1.18 As mentioned earlier, we expect growth from customers excluding our largest customer and the impact of the legacy CABG business and the $500,000 of accelerated revenue in the first quarter of twenty twenty four to be between 3035% for the full year. For the second quarter of twenty twenty five, we expect total revenues between $16,200,000 and $16,900,000 and earnings per share between $0.23 and $0.28 We expect professional services revenue to be between $8,400,000 and $8,800,000 for the second quarter of twenty twenty five. And with that, I’ll turn it over to Leland, who has warned me that his comments will will be pretty short this quarter.

Leland Strange, Chairman and CEO, CoreCard Corporation: Yeah. Thanks, Matt. For those of you that read my letter that went out with the shareholder, over the proxy, I said I was tempted to start the 2025 letter as just more of the same, and then I did that. Well, this morning, I pulled up the transcript of our last earnings call. And after reading it, I’m tempted to say, even for this call, just more of the same.

You can only say the same thing so many ways. Our quarter was good. We expect the rest of the year to be equally as good or better, and that really summarizes the business. The two questions that we get most often are about succession or company acquisition and about our largest customer. I’ll repeat what I said in the last call and in the shareholder’s letter.

First, about succession and acquisition. We get up and go to work every day and run the company as if it’s going to be independent forever. We make every decision under that light. But we do work for shareholders, and we’ll always try to do what we feel is in their best interest. As a part of that equation, we may not be independent forever, and we’re constantly evaluating opportunities.

The board of directors is active in those discussions as well as things about my successor if we should choose to stay independent, which, frankly, both options are good, and they’re actually on the table. And on to the risk with our largest customer, I really have nothing new to report. I’ve speculated in the past and continues and can continue speculating. And, frankly, if I had information that would preempt my speculation, I’d be unable to talk about it. I referenced this in my shareholder letter, and nothing has changed.

Of course, if there was a material event, we would report it as required under SEC rules. So today, from what we know, nothing to report. We would hope to continue being a part of the most successful new card program in history for a very long time. That really concludes my more of the same remarks. We had a good quarter.

We expect to continue that result the rest of the year, and I can say I wish I personally own more stock. With that, we’re happy to take any questions you might have.

Conference Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Hal Bouchiat with B. Riley. Please proceed with your question.

Hal Bouchiat, Analyst, B. Riley: Hey. Thank you, guys. Solid quarter and pretty cool progress. You know, I wanted to get your thoughts on the card issuing industry with the, the global payments spin off of their card issuing business, the FIS, and deal will maybe close next year. But it looks to be like some serious consolidation.

I was wondering if you give us your thoughts on the disruption that might cause maybe new issuers to work with them or what that might how that might benefit you. If you if you could share with your thoughts on that, that’d be great. Thanks.

Leland Strange, Chairman and CEO, CoreCard Corporation: I’d be happy to, Hal. I think it’s probably a good move on the part of both parties. They’ve they’ve found natural homes. In terms of disruption, I expect it not to be major. Now I do expect a little bit, but I don’t expect it to be major disruptions.

I think that, you know, I I I think it’s, pretty much, business as usual. So I’m so, again, I think it’s a good a good move. I expect us to find a little opportunity there, but I wouldn’t overplay it and expect to have a whole lot of opportunity.

Hal Bouchiat, Analyst, B. Riley: Okay. Terrific. Alright. Matt, can you just I guess, look. For some reason, the conference call was a little garbled on my end.

Could you could you share with us the make sure I got the number right, the expected growth x goal then this year? I just wanna

Matt White, Chief Financial Officer, CoreCard Corporation: Yeah. Make sure I heard that. To 35%.

Hal Bouchiat, Analyst, B. Riley: Okay.

Matt White, Chief Financial Officer, CoreCard Corporation: To 35%. So pretty consistent with our previous guidance.

Hal Bouchiat, Analyst, B. Riley: Okay. Good. Alright. Thank you. Thanks very much, guys.

Matt White, Chief Financial Officer, CoreCard Corporation: Thank

Conference Operator: you. Our next question comes from the line of Avi Fisher with Long Cast Advisers. Please proceed with your question.

Avi Fisher, Analyst, Long Cast Advisers: Hi. Good morning. Thanks for taking my question. I wonder if you could elaborate a little bit on the Intuit purchase of Deserve. Press release that Intuit put out was a little bit opaque.

But everything they described about what they were buying seemed to describe what you’ve offered to Deserve. So just kind of did you have any color on you know, are you gonna be work doing any work for Intuit anymore, or you’re is your relationship with Deserve kind of over? Just elaborate a little bit on that, please.

Leland Strange, Chairman and CEO, CoreCard Corporation: Sure. We have no more information than what you described as an opaque press release, which we also we would also agree with that, description. I suspect that that our business will deserve will will really roll off over a period of time. We’re not in discussions with We don’t expect to have any relationship with Intuit.

Avi Fisher, Analyst, Long Cast Advisers: K. And and and this is already incorporated into your guidance for the rest of the year?

Leland Strange, Chairman and CEO, CoreCard Corporation: Yes. It is.

Matt White, Chief Financial Officer, CoreCard Corporation: Yes. It is. Okay. That’s right. We kinda described that as a potential headwind.

So it’s a little bit of an unknown at this point given the lack of clarity as to how that relationship will look going forward. So we’re being a little cautious potentially, but we did bring down our forecast for that customer in particular given the uncertainty.

Avi Fisher, Analyst, Long Cast Advisers: Okay. Got it. I I two just two other quick questions. I I was a little surprised at the strength of Goldman revenues. I’m just like, how much of that is the repriced contract?

And how much of that is they’re using more hours than they had in the past?

Matt White, Chief Financial Officer, CoreCard Corporation: Well, some of the some of it is the comparison of the first quarter of last year out of the first quarter of this of this year. So, you know, if you compare it to q four of last year, it’s pretty consistent in terms of the the amount of hours, you know, the or the the revenues where they’re paying us by the hour. So a lot of the increase, you know, is just the the q one last year versus q one this year, and then the rest of it is the higher managed services rates. So it’s a combination.

Avi Fisher, Analyst, Long Cast Advisers: So is this

Matt White, Chief Financial Officer, CoreCard Corporation: But for q four last year versus q one this year, it’s all managed services rates.

Avi Fisher, Analyst, Long Cast Advisers: So is it, like is this the run rate expected going forward sort of?

Matt White, Chief Financial Officer, CoreCard Corporation: This is what we expect for the rest of 2025. Okay. And

Avi Fisher, Analyst, Long Cast Advisers: then finally, there was a little new note in the quarter about employee retention pay with a particular call out about, you know, there’s an acquisition been put for 2028 at the company with this billion dollar market cap. It seems oddly specific. I wonder I wonder if there’s any if you could offer just any color around that.

Leland Strange, Chairman and CEO, CoreCard Corporation: Yeah. It’s it’s it’s simply affected. You you go well, I mean, we we wanted to keep our employees, so we we put a retention plan in. And what are the concerns of employees? It’s just our size.

You know, we’re we’re a small company, and we’ve had some of the larger companies coach our employees. And, each of those companies are are larger than a billion dollars. And so we ended up, saying, hey, guys. You’ll you’ll be pretty safe if we were to be bought by one of those companies that we’re losing employees to. So but we’re gonna give you stock to try to keep you, but we don’t think it’s necessary to continue to do that, you know, for bought by a certain company.

So that that’s all that’s all it was.

Avi Fisher, Analyst, Long Cast Advisers: Alright. Appreciate the color. Look forward to seeing you at the annual meeting. Thank you.

Leland Strange, Chairman and CEO, CoreCard Corporation: Take care. Thank you.

Conference Operator: Thank you. We have no further questions at this time. This does conclude today’s teleconference. Thank you for your participation, and have a wonderful day.

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