Summary of Usio Conference Call Company Overview - **Company Name**: Usio (Ticker: USIO) - **Industry**: Fintech Payment Processing - **Founded**: 27 years ago, evolved into a growth-oriented company over the last eight years under current CEO Louis Hoch [3][4] Core Business Segments 1. **ACH Processing** - Industry leader in ACH (Automated Clearing House) processing with significant transaction volume - Unique tech stack allows for direct access to the Federal Reserve, providing competitive advantages [7][8][10] - High margin business with approximately 70% gross margin [45] 2. **Payment Facilitation** - Focuses on credit and debit card processing, primarily through integrated software vendors (ISVs) - Unique go-to-market strategy leveraging ISVs as sales extensions, leading to organic growth [14][15][18] - Lower gross margin at about 9% due to the payment ecosystem structure [47][49] 3. **Card Issuing** - Issues branded MasterCard for various use cases, including government payouts and guaranteed income programs - Significant presence in major U.S. cities, with unique programs like "Cash for Trash" [19][21][23] - Gross margin ranges from 30% to 40% depending on spoilage [45] 4. **Output Solutions** - Provides print and mail services, generating electronic documents and statements - Operates with a gross margin around 20%, which is improving as electronic document generation increases [29][35] Financial Performance - **Revenue Generation**: Approximately $20 million per quarter, with expectations for significant growth in Q3 and Q4 [44][51] - **Overall Gross Margin**: Targeting around 24% to 25% across the company [50] Growth Opportunities - Usio aims for a 20% annual growth rate, although current year projections are lower due to implementation delays of large deals [51][52] - Strong pipeline of sold deals, with operating leverage expected to expand adjusted EBITDA margins to at least 10% of sales [53] Future Vision - Plans to innovate and add more payment channels, including stablecoin payments and biometric solutions [56][57] - Aiming for potential acquisition or merger opportunities in the next decade [56] Additional Insights - The company is well-funded and generates its own cash, minimizing the need for external financing [53] - Internal initiative "UCO1" focuses on cross-selling across business lines, enhancing customer engagement and revenue potential [36][41] Conclusion - Usio is positioned for future growth with a diversified product offering, strong market presence, and innovative technology solutions in the fintech space. The company is focused on expanding its customer base and enhancing its service offerings to capitalize on emerging payment trends.

Financial Data and Key Metrics Changes - Total revenue for Q4 2024 increased by 3% compared to the previous quarter, with growth in Card, ACH, and Output Solutions [6] - GAAP net income was reported at $600,000 or $0.02 per share, including a $1.5 million ERC benefit, marking the third consecutive quarter of positive GAAP net income [6][7] - Total dollars processed exceeded $1.9 billion in Q4, representing a 36% increase year-over-year, while total dollars processed for the full year reached $7.1 billion, up 33% [7][8] - Operating cash flow generated in Q4 was $2.9 million, with a year-end cash position exceeding $8 million [8][9] Business Line Data and Key Metrics Changes - Card processing dollars increased by 15% in Q4, with transactions processed up 34%, leading to a record full-year processing volume of over $1.5 billion, a 10% increase from fiscal 2023 [19] - ACH electronic transaction volumes rose by 34% in Q4, marking its fifth consecutive quarter of growth, while electronic check dollars processed increased by 44% [27] - Output Solutions saw electronic documents processed rise by 86%, with total pieces mailed exceeding 5.4 million in Q4, leading to a record year for electronic documents processed [29][30] - Card issuing added nearly 70 new client partner agreements in 2024, with prepaid dollars loaded exceeding $100 million for the sixth consecutive quarter [31][32] Market Data and Key Metrics Changes - PayFac business within Card processing saw a 44% increase in dollars processed in Q4, contributing to a 28% increase in PayFac volume for the full year [19][20] - The company is experiencing a steady flow of new accounts, which has helped offset variability in performance due to implementation timing [21] Company Strategy and Development Direction - The company announced the "Usio One" initiative to unify and integrate all products and services under one brand, aiming to enhance customer understanding and cross-selling opportunities [13][14] - The initiative includes a new client onboarding system and a proprietary checkout page tool, with a focus on leveraging AI for improved efficiency and fraud protection [16][17] - The company is committed to improving profitability through better margins and operating leverage while continuing to fund operations through positive cash flow [10][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving organic revenue growth of 14% to 16% in 2025, supported by a widespread customer base rather than reliance on a few large customers [35][39][40] - The company is actively looking at M&A opportunities while balancing share repurchases and reinvestment in the business [43] Other Important Information - The Board of Directors approved a new share repurchase program, adding $4 million to the original authorization [34][35] Q&A Session Summary Question: What does the visibility look like for 2025 and revenue cadence throughout the year? - Management expects great growth with implementations starting to come live, indicating a loaded growth pattern [39] Question: Is the growth reliant on a single or a few large customers? - Management confirmed that the growth is widespread [40] Question: How is the company prioritizing repurchases versus reinvestment or M&A? - Management stated that they are authorized to repurchase up to $4 million and are always looking at M&A deals while generating cash [42][43] Question: Any changes in sales conversations with local or state governments due to federal administration changes? - Management noted that while the PayFac side is not affected, there may be potential opportunities in the disbursement space [46]