Revenues up 35% in the Quarter Driven by Continued Strong Growth in Processing Volumes
Cash Balances Increase $300,000 over First Three Months of Year
Seventh Consecutive Quarter of Year-over-Year Revenue Growth
SAN ANTONIO, May 11, 2022 (GLOBE NEWSWIRE) -- Usio, Inc. (Nasdaq: USIO), a leading FinTech integrated payment solutions provider, today announced financial results for the first quarter of 2022, which ended March 31, 2022.
Louis Hoch, President and Chief Executive Officer of Usio, said, “I am pleased to report another quarter of record revenue, our seventh consecutive quarter of year-over-year revenue growth. Revenues were up 35% in the quarter as we set new all-time quarterly records in credit card dollars and transactions processed, total dollars loaded on prepaid cards and total transaction/pieces processed at Output Solutions. This quarter was another great example of our diversification strategy as all of our growth was organic and was accomplished despite weakness in one of our end markets, cryptocurrency. At the same time, we significantly strengthened our infrastructure to not only support current growth, but to prepare for additional growth, especially in the highly anticipated roll out of Voyager Digital's debit card to its estimated 3.5 million customers. These are exciting times at Usio as we continue to introduce new, innovative solutions to the electronic payments market that has enabled us to consistently outpace market growth over the past several years."
"Revenues grew in each of our business lines, led by prepaid, where revenues more than tripled from a year ago as the strong relationships developed in key markets have enabled a steady, significant increase in the number of programs served, cards in circulation, and load volume. Revenues in Output Solutions and ACH and complementary services were both up 25% in the quarter. Output Solutions has grown to be our second largest business and is now generating consistent organic growth, including record results this quarter. ACH remains our most profitable line of business. Credit card revenues were up 18%, with the increase in the fast-growing PayFac business, where our three-pronged strategy enables us to benefit not only from adding new Integrated Software Vendor (ISV) customers but also by penetrating the ISV's merchants and participating in those merchants' own growth in electronic payments. This strategy has led to record transactions and volumes in the quarter."
"In the first quarter, to support current, and prepare for future growth, our overall results reflect a number of unique circumstances. As part of the rollout of the Voyager Digital debit card, we printed several hundred thousand physical cards, on which we recognize revenue, but are issued at cost, thereby reducing margins. In addition, there were a number of one-time expenses that similarly impacted quarterly profitability. We expect this program to become more generally available during the second half of the year."
"The new year is off to a great start with 35% organic growth and record activity levels across many of our businesses" concluded Hoch. "There are many exciting growth opportunities on the horizon, including the Voyager Digital debit card, where we have already started issuing cards. In prepaid services, we anticipate growing from 200 relationships at the beginning of the year to as many as 300 relationships by the end of the year. While we made the decision to invest a bit ahead of this growth, we expect to quickly achieve scale benefits as these new programs roll out over the course of the year. We have achieved steady momentum that is enabling us to leverage our existing infrastructure while continuing to reinvest into our business to further drive growth. The first quarter results together with the growth opportunities in each of our businesses have us believe we are on pace to achieve our full year growth expectations. Our goal is to continue to build on our established franchise to capitalize on the vast opportunities arising across the electronic payment transaction landscape and to deliver value to our shareholders."
Fiscal 2022 Guidance
Management expects strong 18-20% growth in revenue in 2022 while also anticipating continued positive operating cash flows and adjusted EBITDA. This guidance is conditioned on the continued enthusiasm in the fintech lending and cryptocurrency industries as well as no appreciable deterioration in economic conditions.
First Quarter 2022 Financial Summary
Revenues for the quarter ended March 31, 2022 increased 35% to $18.1 million, reflecting growth in the ACH, Credit Card, Prepaid and Usio Output Solutions lines of business.
| Three Months Ended March 31, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| ACH and complementary service revenue | $ | 3,843,316 | $ | 3,078,456 | $ | 764,860 | 25 | % | ||||||||
| Credit card revenue | 6,768,222 | 5,723,709 | 1,044,513 | 18 | % | |||||||||||
| Prepaid card services revenue | 2,768,447 | 886,576 | 1,881,871 | 212 | % | |||||||||||
| Output solutions revenue | 4,731,358 | 3,772,809 | 958,549 | 25 | % | |||||||||||
| Total Revenue | $ | 18,111,343 | $ | 13,461,550 | $ | 4,649,793 | 35 | % | ||||||||
Gross profits increased 21% to $3.5 million while gross margins were 19.4%, consistent with the quarter's business mix and largely impacted by the issuance of several hundred thousand debit cards with zero margin in anticipation of large transaction related revenue to be generated in the future from the cards.
Other selling, general and administrative expenses were $3.8 million for the quarter ended March 31, 2022, up 43% compared to $2.7 million in the prior year period. The increase reflects continued investments in our ACH, PayFac, Prepaid and Output Solutions business lines, a substantial portion of which represents an investment in strengthening our infrastructure to not only support our current growth, but specifically to assure we can provide the service levels in customer support for the anticipated new cardholders. Included in first quarter selling, general and administrative expenses include approximately $200,000 of one-time non-recurring items.
The Company reported an operating loss of $1.6 million for the quarter, a $0.8 million decrease from the $0.7 million loss in the prior year period.
Adjusted EBITDA was a negative $0.3 million in the quarter, a decrease of $0.5 million compared to an Adjusted EBITDA of positive $0.2 million in the same period a year ago. Adjusted Operating Cash Flows (excluding merchant reserve funds, prepaid card load assets, customer deposits and net operating lease assets and obligations) was $0.5 million for the three-month period ended March 31, 2022. Cash flows used by operating activities was ($7.2) for the quarter, compared to cash flows provided by operating activities of $10.5 in the same period a year ago.
The Company reported a net loss of $1.6 million, or ($0.08) per share, for the quarter ended March 31, 2022 compared to a net loss of $0.7 million, or ($0.04) per share, for the same period in the prior year.
Usio continues to be in solid financial condition with $7.6 million in cash and cash equivalents on March 31, 2022, a $0.3 million improvement from December 31, 2021.
Conference Call and Webcast
Usio, Inc.'s management will host a conference call on Thursday, May 12, 2022, at 11:00 am Eastern time to review financial results and provide a business update. To listen to the conference call, interested parties within the U.S. should call +1-844-883-3890. International callers should call +1-412-317-9246. All callers should ask for the Usio conference call. The conference call will also be available through a live webcast, which can be accessed via the company’s website at http://www.usio.com/investors.
A replay of the call will be available approximately one hour after the end of the call through May 26, 2022. The replay can be accessed via the Company’s website or by dialing +1-877-344-7529 (U.S.) or 1-412-317-0088 (international). The replay conference playback code is 2596195.
About Usio, Inc.
Usio, Inc. (Nasdaq: USIO), a leading FinTech integrated payment solutions provider, offers a wide range of payment solutions to merchants, billers, banks, service bureaus, crypto exchanges and card issuers. The Company operates credit, debit/prepaid, and ACH payment processing platforms to deliver convenient, world-class payment solutions and services to their clients. With the acquisition of the assets of IMS in December 2020, the Company now offers additional services relating to electronic bill presentment, document composition, document decomposition and printing and mailing services. The strength of the Company lies in its ability to provide tailored solutions for card issuance, payment acceptance, and bill payments as well as its unique technology in the prepaid sector. Usio is headquartered in San Antonio, Texas, and has offices in Austin, Texas and Franklin, Tennessee, just outside of Nashville. Websites: www.usio.com, www.payfacinabox.com, www.akimbocard.com and www.usiooutput.com. Find us on Facebook® and Twitter.
About Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, EBITDA and adjusted EBITDA, as defined in Regulation G of the Securities and Exchange Act of 1934, as amended. The Company reports its financial results in compliance with GAAP, but believes that also discussing non-GAAP measures provides investors with financial measures it uses in the management of its business. The Company defines EBITDA as operating income (loss), before interest, taxes, depreciation and amortization of intangibles. The Company defines adjusted EBITDA as EBITDA, as defined above, plus non-cash stock option costs and certain non-recurring items, such as acquisitions. These measures may not be comparable to similarly titled measures reported by other companies. Management uses EBITDA and adjusted EBITDA as indicators of the Company's operating performance and ability to fund acquisitions, capital expenditures and other investments and, in the absence of refinancing options, to repay debt obligations.
Management believes EBITDA and adjusted EBITDA are helpful to investors in evaluating the Company's operating performance because non-cash costs and other items that management believes are not indicative of its results of operations are excluded. EBITDA and adjusted EBITDA are supplemental non-GAAP measures, which have limitations as an analytical tool. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures do not reflect a comprehensive system of accounting, may differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. For a description of our use of EBITDA and adjusted EBITDA, and a reconciliation of EBITDA and adjusted EBITDA to operating income (loss), see the section of this press release titled "Non-GAAP Reconciliation."
FORWARD-LOOKING STATEMENTS DISCLAIMER
Except for the historical information contained herein, the matters discussed in this release include forward-looking statements which are covered by safe harbors. Those statements include, but may not be limited to, all statements regarding management's intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. These forward-looking statements are identified by the use of words such as "believe," "intend," "look forward," "anticipate," "continue,” and "expect" among others. Forward-looking statements in this press release are subject to certain risks and uncertainties inherent in the Company's business that could cause actual results to vary, including such risks related to an economic downturn as a result of the COVID-19 pandemic, or overall economic challenges, supply chain disruptions, risks related to retaining and hiring qualified employees, the realization of opportunities from the IMS acquisition, the management of the Company's growth, the loss of key resellers, the relationships with the Automated Clearinghouse network, bank sponsors, third-party card processing providers and merchants, the security of our software, hardware and information, the volatility of the stock price, the need to obtain additional financing, risks associated with new legislation, and compliance with complex federal, state and local laws and regulations, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission including its annual report on Form 10-K for the fiscal year ended December 31, 2021. One or more of these factors have affected, and in the future, could affect the Company’s businesses and financial results in the future and could cause actual results to differ materially from plans and projections. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to management. The Company assumes no obligation to update any forward-looking statements, except as required by law.
Contact:
Joe Hassett, Investor Relations
joeh@gregoryfca.com
484-686-6600
USIO, INC.
CONSOLIDATED BALANCE SHEETS
| March 31, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 7,590,951 | $ | 7,255,321 | ||||
| Accounts receivable, net | 4,176,494 | 4,979,493 | ||||||
| Settlement processing assets | 50,591,364 | 63,824,646 | ||||||
| Prepaid card load assets | 28,846,980 | 36,590,893 | ||||||
| Customer deposits | 1,391,465 | 1,364,193 | ||||||
| Inventory | 430,285 | 434,532 | ||||||
| Prepaid expenses and other | 681,470 | 426,963 | ||||||
| Current assets before merchant reserves | 93,709,009 | 114,876,041 | ||||||
| Merchant reserves | 6,386,153 | 6,381,153 | ||||||
| Total current assets | 100,095,162 | 121,257,194 | ||||||
| Property and equipment, net | 3,432,256 | 3,607,157 | ||||||
| Other assets: | ||||||||
| Intangibles, net | 3,695,927 | 4,163,894 | ||||||
| Deferred tax asset, net | 1,504,000 | 1,504,000 | ||||||
| Operating lease right-of-use assets | 2,683,394 | 2,802,113 | ||||||
| Other assets | 345,357 | 345,357 | ||||||
| Total other assets | 8,228,678 | 8,815,364 | ||||||
| Total Assets | $ | 111,756,096 | $ | 133,679,715 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,181,275 | $ | 1,400,100 | ||||
| Accrued expenses | 2,844,210 | 2,325,665 | ||||||
| Operating lease liabilities, current portion | 498,286 | 504,027 | ||||||
| Equipment loan, current portion | 55,303 | 54,760 | ||||||
| Settlement processing obligations | 50,591,364 | 63,824,646 | ||||||
| Prepaid card load obligations | 28,846,980 | 36,590,893 | ||||||
| Customer deposits | 1,391,465 | 1,364,193 | ||||||
| Deferred revenues | 4,412 | 17,647 | ||||||
| Current liabilities before merchant reserve obligations | 85,413,295 | 106,081,931 | ||||||
| Merchant reserve obligations | 6,386,153 | 6,381,153 | ||||||
| Total current liabilities | 91,799,448 | 112,463,084 | ||||||
| Non-current liabilities: | ||||||||
| Equipment loan, non-current portion | 57,403 | 71,434 | ||||||
| Operating lease liabilities, non-current portion | 2,359,438 | 2,476,291 | ||||||
| Total liabilities | 94,216,289 | 115,010,809 | ||||||
| Stockholders' equity: | ||||||||
| Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at March 31, 2022 (unaudited) and December 31, 2021, respectively | — | — | ||||||
| Common stock, $0.001 par value, 200,000,000 shares authorized; 26,868,745 and 26,807,145 issued, and 25,517,835 and 25,473,453 outstanding at March 31, 2022 (unaudited) and December 31, 2021, respectively | 195,297 | 195,235 | ||||||
| Additional paid-in capital | 93,376,970 | 93,100,129 | ||||||
| Treasury stock, at cost; 1,350,910 and 1,333,692 shares at March 31, 2022 (unaudited) and December 31, 2021, respectively | (2,470,952 | ) | (2,404,458 | ) | ||||
| Deferred compensation | (6,559,433 | ) | (6,842,195 | ) | ||||
| Accumulated deficit | (67,002,075 | ) | (65,379,805 | ) | ||||
| Total stockholders' equity | 17,539,807 | 18,668,906 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 111,756,096 | $ | 133,679,715 | ||||
USIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenues | $ | 18,111,343 | $ | 13,461,550 | ||||
| Cost of services | 14,602,214 | 10,554,313 | ||||||
| Gross profit | 3,509,129 | 2,907,237 | ||||||
| Selling, general and administrative: | ||||||||
| Stock-based compensation | 550,682 | 327,715 | ||||||
| Other SG&A expenses | 3,795,146 | 2,660,034 | ||||||
| Depreciation and amortization | 714,935 | 622,207 | ||||||
| Total operating expenses | 5,060,763 | 3,609,956 | ||||||
| Operating (loss) | (1,551,634 | ) | (702,719 | ) | ||||
| Other income and (expense): | ||||||||
| Interest income | 581 | 2,467 | ||||||
| Interest expense | (1,217 | ) | 0 | |||||
| Other income and (expense), net | (636 | ) | 2,467 | |||||
| (Loss) before income taxes | (1,552,270 | ) | (700,252 | ) | ||||
| Income tax expense | 70,000 | 20,000 | ||||||
| Net (Loss) | $ | (1,622,270 | ) | $ | (720,252 | ) | ||
| (Loss) Per Share | ||||||||
| Basic (loss) per common share: | $ | (0.08 | ) | $ | (0.04 | ) | ||
| Diluted (loss) per common share: | $ | (0.08 | ) | $ | (0.04 | ) | ||
| Weighted average common shares outstanding | ||||||||
| Basic | 20,280,575 | 19,931,935 | ||||||
| Diluted | 20,280,575 | 19,931,935 | ||||||
USIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended | ||||||||
| March 31, 2022 | March 31, 2021 | |||||||
| Operating Activities | ||||||||
| Net (loss) | $ | (1,622,270 | ) | $ | (720,252 | ) | ||
| Adjustments to reconcile net (loss) to net cash provided by operating activities: | ||||||||
| Depreciation | 246,968 | 154,240 | ||||||
| Amortization | 467,967 | 467,967 | ||||||
| Bad debt | — | 15,046 | ||||||
| Non-cash stock-based compensation | 550,682 | 327,715 | ||||||
| Amortization of warrant costs | 8,985 | 8,985 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 802,999 | (749,336 | ) | |||||
| Prepaid expenses and other | (254,507 | ) | (222,910 | ) | ||||
| Operating lease right-of-use assets | 118,719 | (79,080 | ) | |||||
| Other assets | 4,247 | (4,461 | ) | |||||
| Inventory | — | 14,263 | ||||||
| Accounts payable and accrued expenses | 299,720 | 149,247 | ||||||
| Operating lease liabilities | (122,594 | ) | 78,948 | |||||
| Prepaid card load obligations | (7,743,913 | ) | 10,945,232 | |||||
| Merchant reserves | 5,000 | 51,907 | ||||||
| Customer deposits | 27,272 | 51,946 | ||||||
| Deferred revenue | (13,235 | ) | (9,219 | ) | ||||
| Net cash provided (used) by operating activities | (7,223,960 | ) | 10,480,238 | |||||
| Investing Activities | ||||||||
| Purchases of property and equipment | (72,069 | ) | (274,467 | ) | ||||
| Net cash (used) by investing activities | (72,069 | ) | (274,467 | ) | ||||
| Financing Activities | ||||||||
| Proceeds from equipment loan | — | 165,996 | ||||||
| Payments on equipment loan | (13,488 | ) | — | |||||
| Purchases of treasury stock | (66,494 | ) | (49,454 | ) | ||||
| Net cash (used) provided by financing activities | (79,982 | ) | 116,542 | |||||
| Change in cash, cash equivalents, prepaid card loads, customer deposits and merchant reserves | (7,376,011 | ) | 10,322,313 | |||||
| Cash, cash equivalents, prepaid card loads, customer deposits and merchant reserves, beginning of year | 51,591,560 | 22,192,225 | ||||||
| Cash, Cash Equivalents, Prepaid Card Loads, Customer Deposits and Merchant Reserves, End of Period | $ | 44,215,549 | $ | 32,514,538 | ||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 1,217 | $ | — | ||||
| Income taxes | — | — | ||||||
| Non-cash transactions: | ||||||||
| Issuance of deferred stock compensation | 12,330 | — | ||||||
USIO, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
| Common Stock | Additional Paid- In | Treasury | Deferred | Accumulated | Total Stockholders' | |||||||||||||||||||||
| Shares | Amount | Capital | Stock | Compensation | Deficit | Equity | ||||||||||||||||||||
| Balance at December 31, 2021 | 26,807,145 | $ | 195,235 | $ | 93,100,129 | $ | (2,404,458 | ) | $ | (6,842,195 | ) | $ | (65,379,805 | ) | $ | 18,668,906 | ||||||||||
| Issuance of common stock under equity incentive plan | 61,600 | 62 | 267,856 | — | (12,330 | ) | — | 255,588 | ||||||||||||||||||
| Warrant compensation costs | — | — | 8,985 | — | — | — | 8,985 | |||||||||||||||||||
| Deferred compensation amortization | — | — | — | — | 295,092 | — | 295,092 | |||||||||||||||||||
| Purchase of treasury stock costs | — | — | — | (66,494 | ) | — | — | (66,494 | ) | |||||||||||||||||
| Net (loss) for the period | — | — | — | — | — | (1,622,270 | ) | (1,622,270 | ) | |||||||||||||||||
| Balance at March 31, 2022 | 26,868,745 | $ | 195,297 | $ | 93,376,970 | $ | (2,470,952 | ) | $ | (6,559,433 | ) | $ | (67,002,075 | ) | $ | 17,539,807 | ||||||||||
| Balance at December 31, 2020 | 26,260,776 | $ | 194,692 | $ | 89,659,433 | $ | (2,165,721 | ) | $ | (5,926,872 | ) | $ | (65,058,171 | ) | $ | 16,703,361 | ||||||||||
| Issuance of common stock under equity incentive plan | 51,000 | 51 | 120,484 | — | — | — | 120,535 | |||||||||||||||||||
| Warrant compensation costs | — | — | 8,985 | — | — | — | 8,985 | |||||||||||||||||||
| Cashless warrant exercise | 19,795 | 19 | (19 | ) | — | — | — | — | ||||||||||||||||||
| Reversal of deferred compensation amortization that did not vest | (17,111 | ) | (17 | ) | (48,599 | ) | — | 5,994 | — | (42,622 | ) | |||||||||||||||
| Deferred compensation amortization | — | — | — | — | 249,801 | — | 249,801 | |||||||||||||||||||
| Purchase of treasury stock costs | — | — | — | (49,454 | ) | — | — | (49,454 | ) | |||||||||||||||||
| Net (loss) for the period | — | — | — | — | — | (720,252 | ) | (720,252 | ) | |||||||||||||||||
| Balance at March 31, 2021 | 26,314,460 | $ | 194,745 | $ | 89,740,284 | $ | (2,215,175 | ) | $ | (5,671,077 | ) | $ | (65,778,423 | ) | $ | 16,270,354 | ||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Reconciliation from Operating (Loss) to Adjusted EBITDA: | ||||||||
| Operating (Loss) | $ | (1,551,634 | ) | $ | (702,719 | ) | ||
| Depreciation and amortization | 714,935 | 622,207 | ||||||
| EBITDA | (836,699 | ) | (80,512 | ) | ||||
| Non-cash stock-based compensation expense, net | 550,682 | 327,715 | ||||||
| Adjusted EBITDA | $ | (286,017 | ) | $ | 247,203 | |||
| Calculation of Adjusted EBITDA margins: | ||||||||
| Revenues | $ | 18,111,343 | $ | 13,461,550 | ||||
| Adjusted EBITDA | (286,017 | ) | 247,203 | |||||
| Adjusted EBITDA margins | (1.6 | )% | 1.8 | % | ||||
