CoreCard(US:CCRD)2025-05-08 11:00Part I Item 1. Financial Statements This section presents CoreCard Corporation's unaudited consolidated financial statements for Q1 2025, detailing balance sheets, operations, cash flows, and notes, highlighting strong revenue and net income growth Consolidated Balance Sheets The consolidated balance sheet as of March 31, 2025, shows increased total assets to $64.4 million, driven by cash, with liabilities decreasing and equity growing to $54.1 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $22,068 | $19,481 | +$2,587 | | Total current assets | $41,315 | $40,174 | +$1,141 | | Total assets | $64,394 | $62,338 | +$2,056 | | Total current liabilities | $8,334 | $8,452 | -$118 | | Total liabilities | $10,336 | $10,641 | -$305 | | Total stockholders' equity | $54,058 | $51,697 | +$2,361 | Consolidated Statements of Operations For Q1 2025, total net revenue increased 27.6% to $16.7 million, with net income rising substantially to $1.9 million and diluted EPS reaching $0.24 Q1 2025 vs Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total net revenue | $16,688 | $13,076 | +27.6% | | Income from operations | $2,807 | $527 | +432.6% | | Net income | $1,906 | $430 | +343.3% | | Diluted EPS | $0.24 | $0.05 | +380.0% | Consolidated Statements of Cash Flows Net cash from operating activities significantly increased to $4.6 million in Q1 2025, with cash used for investing at $2.0 million and a $2.6 million overall cash balance increase Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,600 | $552 | | Net cash used for investing activities | $(1,996) | $(1,781) | | Net cash used for financing activities | $0 | $(1,631) | | Net increase (decrease) in cash | $2,587 | $(2,862) | | Cash at end of period | $22,068 | $24,056 | Notes to Consolidated Financial Statements The notes detail accounting policies, revenue disaggregation, and investments, highlighting significant customer concentration and a new employee retention program with a $14.3 million maximum liability - Revenue is heavily concentrated, with a single customer, "Customer A", accounting for 65% of consolidated revenue in Q1 2025, up from 59% in Q1 202428 Revenue Disaggregation by Type (in thousands) | Revenue Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Professional services | $8,702 | $5,826 | | Processing and maintenance | $6,343 | $6,152 | | Third party | $1,643 | $1,098 | | Total | $16,688 | $13,076 | - The company's investment in a privately held FinTech company, accounted for using the equity method, resulted in a loss of $516,000 for Q1 2025, more than double the $239,000 loss in Q1 202430 - On May 7, 2025, the Board approved a new cash retention program for long-term employees with a maximum potential liability of approximately $14,325,00052 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management attributes Q1 2025 revenue growth to increased professional services from Goldman Sachs, noting improved cost of revenue, rising operating expenses, strong liquidity, and significant customer concentration risk - Revenue increased by 28% in Q1 2025 compared to Q1 2024, primarily due to higher professional services revenue from its largest customer, Goldman Sachs Group, Inc71 - Cost of revenue as a percentage of total revenue decreased to 55% in Q1 2025 from 73% in Q1 2024, driven by higher rates for professional services and increased managed services revenue from Goldman71 - The company's agreement with Goldman Sachs was extended through December 31, 2030, with increased monthly fees starting January 2025, though Goldman can terminate the agreement as early as January 1, 202765 - A key risk is the potential exit of Goldman Sachs from the credit card business, seen as more likely following their announced transition of the General Motors co-branded credit card to a new issuer6784 Item 3. Quantitative and Qualitative Disclosures About Market Risk CoreCard Corporation is not required to provide disclosures for this item as it qualifies as a smaller reporting company - Disclosure under this item is not required as the company qualifies as a smaller reporting company86 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective with no material changes identified during the quarter - Based on an evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures are effective87 Part II Item 1. Legal Proceedings The company is not currently a party to any legal proceedings expected to have a material adverse effect on its business or financial condition - There are no pending or threatened legal proceedings that are expected to have a material adverse effect on the company5388 Item 1A. Risk Factors CoreCard Corporation is not required to provide disclosures under this item as it qualifies as a smaller reporting company - Disclosure under this item is not required as the company qualifies as a smaller reporting company89 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company's share repurchase program has approximately $7.1 million remaining authorized as of March 31, 2025, with no repurchases made in Q1 2025 - The company has approximately $7.1 million remaining under its authorized share repurchase program as of March 31, 202590 - No shares were repurchased during the three months ended March 31, 202580 Item 5. Other Information This section discloses no Rule 10b5-1 trading plan changes by directors or officers and details a new employee retention program approved on May 7, 2025 - On May 7, 2025, the Board of Directors approved a retention program for employees with more than five years of service94 - The program guarantees a cash payment if an employee's 2024 base salary exceeds the value of their vested 2024-2025 restricted stock grants as of December 31, 202894 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 202593 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - The report includes required certifications from the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act98 - Inline XBRL data files are furnished as exhibits with this report95101