CoreCard(US:CCRD)2019-11-01 18:19Financial Data and Key Metrics Changes - Revenue for Q3 2019 was $9.522 million, a 76% increase compared to $5.415 million in Q3 2018 [2] - Income from operations for Q3 2019 was $4.200 million, up from $1.736 million in Q3 2018, resulting in an operating margin of 44% compared to 32% in Q3 2018 [7][8] - Earnings per diluted share for Q3 2019 was $0.34, compared to $0.21 in Q3 2018 [8] Business Line Data and Key Metrics Changes - License revenue for Q3 2019 was $2.225 million, driven by the retail launch of a new product related to the largest customer [2][3] - Professional services revenue was $4.579 million, expected to decrease as a percentage of total revenue over time [5] - Processing and maintenance revenue was $2.235 million, with maintenance revenue increasing as customers reach new license tiers [4] Market Data and Key Metrics Changes - The company reported a year-to-date tax rate of 24.7% compared to 4.6% in the comparable 2018 period due to the utilization of net operating loss carryforwards [8] - The company anticipates that the fourth quarter will not be as strong as the third quarter but still expects good performance [23] Company Strategy and Development Direction - The company is focused on building a solid infrastructure to enable growth and serve larger clients in the industry [16] - There is an expectation of new competition from prepaid card processors entering the credit card space, which may lead to challenges for early customers [18] - The company plans to continue hiring new employees to support growth, with at least 30 new hires expected in the second half of 2019 [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of professional services and the growth of the underlying business from existing customers [21] - The company expects continued growth in 2020 but at a slower pace compared to 2019 [24] - Management noted that license revenue is difficult to project and may be lumpy, with significant revenue expected in 2020 but uncertain quarterly breakdowns [30] Other Important Information - Legal matters are ongoing, with no material updates reported, but management believes there is no substance to the claims [11][12] - The company is experiencing increased insurance costs due to legal actions and higher revenues [13] Q&A Session Summary Question: License revenue expectations for 2020 and 2021 - Management indicated that license revenue will be lumpy and difficult to project, but significant revenue is expected in 2020 [30] Question: Contribution of major new customer to Q3 license revenue - Management could not disclose specific percentages but indicated that most of the license revenue came from the major new customer [31] Question: Professional services revenue expectations - Management expects professional services revenue to be less in Q4 compared to Q3, despite a higher than expected Q3 [32][34] Question: Recurring revenue growth potential - Management stated that as the company grows, recurring revenue could increase, but current percentages are not relevant due to the company's size [36] Question: Interest from processing clients - Management noted ongoing conversations with clients but could not provide specific numbers or details [37][39] Question: Investment in a domestic company - Management clarified that the investment is in a domestic company, not an Indian one, and expects a decent return but not as closely aligned with their core business [47][48]