Core Insights - CompoSecure, Inc. is showcasing its Arculus direct onchain tap-to-pay capability at the Stablecoin Conference LATAM 2025, highlighting advancements in integrating crypto payments with traditional commerce [1][5] Group 1: Arculus Solution Overview - The Arculus direct onchain tap-to-pay solution bridges the crypto economy with real-world commerce, facilitating seamless transactions at traditional point-of-sale (POS) terminals [2] - This solution allows multifunctional capabilities on a single chip, enabling tap-to-pay transactions across both blockchain networks and traditional payment systems [2] Group 2: Benefits for Stakeholders - For POS providers, Arculus offers direct integration with existing systems without requiring new hardware, allowing them to accept crypto payments alongside traditional card payments [3] - Merchants can accept crypto payments instantly through existing contactless infrastructure, reducing friction at checkout and attracting a growing base of crypto users [3] - Onchain payments can lower transaction costs and settlement times compared to legacy payment networks, providing additional value to merchants [3] Group 3: Consumer and Wallet Provider Advantages - Arculus's wallet integration enables wallet providers to offer a tap-to-pay experience, allowing consumers to spend digital assets easily while maintaining self-custody and security [4] Group 4: Conference Presentation - Tom D'Eletto, Head of Arculus Products, will discuss the importance of security and user experience in the adoption of digital assets at the Stablecoin Conference LATAM [5][8]

Financial Data and Key Metrics Changes - Non-GAAP net sales increased by 10% year-over-year to $119.6 million, driven by strong domestic demand from traditional banks and fintechs [12][21] - Pro forma adjusted EBITDA rose by 26% to $46.3 million for the quarter, reflecting organic revenue growth and early operational efficiencies from the Composecure operating system [12][22] - Non-GAAP gross margin improved to 57.5% compared to 51.6% in the prior year, attributed to better manufacturing efficiencies and a favorable product mix [21][22] - Adjusted net income was $28.4 million, up from $24.2 million in the previous year, with adjusted diluted EPS increasing to $0.25 from $0.23 [24] Business Line Data and Key Metrics Changes - Domestic net sales for Composecure Holdings grew by 22% to $104.3 million, while international net sales declined by 35% to $15.3 million [24] - The company is seeing strong activity around premium upgrade cycles and card program refreshes, indicating a robust demand for metal cards [13][14] Market Data and Key Metrics Changes - Metal cards represent less than 1% penetration of the total payment card market, indicating significant growth potential [7] - The market for payment cards is estimated at over 4 billion cards shipped annually, with increasing consumer demand for premium offerings [16][56] Company Strategy and Development Direction - The company is focused on building a high-performance culture through the implementation of the Composecure operating system, which aims to enhance operational efficiency and accountability [14][15] - Investments in talent and manufacturing capabilities are prioritized to support long-term growth and scalability [15] - The company is optimistic about the future, believing that the addressable market opportunity for premium payment products and digital asset solutions is substantial [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of metal cards and the effectiveness of the Composecure operating system in driving performance improvements [8][9] - The company raised its full-year guidance for non-GAAP net sales to approximately $455 million and pro forma adjusted EBITDA to about $158 million, reflecting ongoing commercial momentum [12][26] Other Important Information - The company is undergoing a transition in accounting due to the spin-off of Resolute Holdings, which affects how financial results are reported [5][20] - The management fee paid to Resolute Holdings is included in the non-GAAP financial measures, which are used for better understanding of operational performance [5][22] Q&A Session Summary Question: Inquiry about new and refreshed products and their impact on results - Management indicated that the timing of orders for new products typically ranges from one to two quarters ahead, depending on the size of the program [29][30] Question: Factors driving confidence in investment and market conditions - Management highlighted organic growth and operational improvements as key factors contributing to increased confidence in the investment [32][34] Question: Commercial momentum and expectations for the second half of the year - Management does not view the strong Q2 results as a pull forward but expects continued momentum throughout the year [38][39] Question: Margin profile of new launches - Management noted that improvements in gross margin are attributed to the operational efficiencies from the Composecure operating system [40][41] Question: Operational changes and future efficiency potential - Management discussed ongoing operational improvements across all functions, emphasizing the potential for further efficiency gains in the coming months [46][48] Question: M&A pipeline and valuation of Resolute Holdings - Management confirmed a robust M&A pipeline but did not disclose specific details on ongoing diligence [50][51] Question: Pipeline for relaunches of existing metal card offerings - Management expressed optimism about the competitive landscape in the premium card market, which is expected to drive future growth [56][57] Question: Opportunities in the crypto space - Management highlighted the exciting opportunities presented by major exchanges rolling out card offerings and the integration of stablecoins [58][59]

Financial Data and Key Metrics Changes - Consolidated net sales for Q1 2025 were essentially flat at $103.9 million compared to the prior year [16] - Consolidated gross margin decreased to 52.5% from 53.1% in the same quarter of the prior year [16] - Pro forma adjusted EBITDA decreased by 2% to $33.7 million, driven by higher general and administrative expenses [17] - Adjusted net income increased by 21% to $28.4 million, with adjusted diluted EPS rising to $0.25 from $0.24 [18] Business Line Data and Key Metrics Changes - The Payment Card and Arculus business started the year in line with expectations, with program activity remaining strong [10] - Arculus delivered record results for the quarter, contributing positively with new vertical industry wins [10][14] - Domestic net sales decreased by $3.3 million or 4%, while international net sales increased by $3.1 million or 28% [18] Market Data and Key Metrics Changes - The metal payment card market continues to show strong issuer adoption and end-user preference, with demand strengthening in Q2 [13] - The company is seeing momentum building in both Payment Cards and Arculus, anticipating sustained growth through the remainder of the year [11] Company Strategy and Development Direction - The company is focused on organic growth through the implementation of the CompoSecure Operating System (COS) to enhance operational excellence [11][24] - The strategy includes evaluating M&A opportunities that align with the company's growth profile and create long-term value [25] - The company aims to maintain a disciplined approach to capital allocation, balancing organic growth, M&A, and potential buybacks [84] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the company's positioning and growth trajectory despite macroeconomic headwinds such as rising labor costs and economic uncertainty [25] - The company is reaffirming its full-year 2025 guidance, expecting mid-single-digit growth in both consolidated net sales and pro forma adjusted EBITDA [24] Other Important Information - The company is now required to report results using the equity method of accounting following the spin-off of Resolute Holdings, which affects how financial results are presented [19] - Non-GAAP financial measures are provided to help investors understand the underlying economics of the business [4][19] Q&A Session Summary Question: Is the guidance maintained due to macro environment conservatism? - Management indicated that the guidance reflects expected mid-single-digit growth, with momentum building into Q2 and beyond [30] Question: What areas are the biggest focus for acquisition? - The company is looking at opportunities within its current space and along the value chain, maintaining a broad remit for potential acquisitions [32] Question: How is the remainder of the year expected to unfold in terms of revenue growth? - Management expects growth to tick up in Q2 and continue building through Q3 and Q4, with no signs of macroeconomic impacts affecting client activity [39][42] Question: What traction is being seen with Arculus among legacy issuers? - The company is seeing traction in traditional banks, fintechs, and gaming sectors, with a focus on moving towards passkey technology [75] Question: How is the M&A pipeline looking amid recent tariffs? - The M&A pipeline remains healthy, with the company positioned as an attractive acquirer in the market [77]

Financial Performance - Consolidated Net Sales基本持平，Q1 2025为1.039亿美元，Q1 2024为1.04亿美元[7, 37] - Pro Forma Adjusted EBITDA略有下降，Q1 2025为3370万美元，Q1 2024为3450万美元，降幅为2%[7, 45] - 国际净销售额增长28%，Q1 2025达到1440万美元，高于Q1 2024的1120万美元[40, 42] - 调整后的每股收益(Adjusted Diluted EPS)略有增长，从Q1 2024的0.24美元增至Q1 2025的0.25美元[33, 48] - 现金储备为7170万美元[33, 57] Business Operations - 剥离Resolute Holdings Management, Inc[7] - 多个知名客户项目正在进行中，包括Citibank, Robinhood, Karta, Koho, WealthSimple和Scotia Bank[7, 14, 17, 20] - Arculus业绩创纪录，第一季度实现净正贡献[7] Guidance and Outlook - 公司重申了2025财年全年指导，预计Consolidated Net Sales和Pro Forma Adjusted EBITDA都将实现中等个位数增长[7, 67] Accounting Change - 由于Resolute Holdings的剥离，会计方法变更为权益法[7, 49, 50]