Financial Data and Key Metrics Changes - Third quarter net sales increased by 11%, primarily driven by the addition of ROI and growth in the instant issuance business, partially offset by a decline in prepaid sales [15][19] - Adjusted EBITDA decreased by 7% to $23.4 million, with margins declining from 20.1% to 17% due to unfavorable sales mix and tariffs [18][19] - Gross profit margin decreased from 35.8% in the prior year to 29.7%, driven by lower average selling prices and increased production costs, including $1.6 million in tariff expenses [17][18] Business Line Data and Key Metrics Changes - Debit and Credit segment sales increased by 16%, with ROI contributing $15 million, while contactless card sales were flat compared to a strong prior level [15][16] - Prepaid sales declined by 7%, largely due to timing and comparisons to large sales in the prior year [17][19] - The instant issuance business is expected to have a record year with growth in new verticals and additional financial institution penetration [9][10] Market Data and Key Metrics Changes - Cards in circulation in the U.S. increased at a 7% CAGR over the three years ended June 30, indicating healthy card issuance [24] - The company continues to gain market share in the Debit and Credit segment as contactless card volumes increased [6][15] Company Strategy and Development Direction - The company is focused on customer-centric strategies, quality, efficiency, innovation, and diversification to become a trusted partner for payment technology solutions [9] - Strategic initiatives include expanding addressable markets, enhancing growth, and entering closed loop prepaid solutions [11][14] - A strategic relationship with Carta, an Australian prepaid program manager, was established to enhance digital card validation solutions [12][13] Management's Comments on Operating Environment and Future Outlook - Management expects strong year-on-year growth in the fourth quarter for both net sales and adjusted EBITDA, significantly higher than the third quarter [7][8] - The full-year outlook was updated to low double-digit to low teens net sales growth and flat to low single-digit adjusted EBITDA growth due to ongoing margin impacts [7][25] - Management remains confident in core business growth and the positive impact of strategic initiatives [27] Other Important Information - The company has invested $10 million to acquire a 20% stake in Carta, with $2.5 million paid upfront and the remainder expected to be settled through commercial arrangements [21][22] - The company has been proactive in managing inventory levels in anticipation of potential semiconductor tariffs [62] Q&A Session Summary Question: Impact of tariffs on EBITDA - Management noted $1.6 million in tariff expenses for Q3, with an updated expectation of $4 million to $5 million for the year [32][33] Question: Changes in prepaid segment sales - Management explained that the prepaid business has evolved beyond gift cards, with increased complexity in packaging and new initiatives in closed loop prepaid [37][41] Question: Timing of prepaid shipments - Management clarified that delays in prepaid orders are related to timing rather than cancellations, with expectations for some orders to shift into early 2026 [50][51] Question: Details on Carta's technology - Management highlighted that Carta's technology enables chip functionality in prepaid cards, significantly reducing fraud risk and enhancing market value [53][55] Question: Semiconductor tariffs and inventory positioning - Management expressed confidence that their suppliers may be exempt from potential semiconductor tariffs and mentioned a proactive approach to maintaining higher inventory levels [60][62] Question: Growth of the instant issuance business - Management confirmed that the instant issuance business is growing faster than the overall company, with plans to expand into new markets [66][67]