Usio(US:USIO)2020-08-14 18:05Financial Data and Key Metrics Changes - Consolidated revenues decreased by approximately 3% to $7 million compared to $7.2 million in the same period last year, which is significantly less than the revenue decreases reported across the industry [34][35] - Gross profits decreased by 18% to $1.3 million, with gross margins down 340 basis points to 18.5% from 21.9% in the prior period, reflecting a shift in product mix [36] - Net loss remained unchanged at $1.3 million or $0.10 per share, consistent with the prior period [38] Business Line Data and Key Metrics Changes - Prepaid revenues increased by 58% year-over-year, with card load volume up 64% and transaction volumes up 47% [20][28] - Credit card revenues were up 4%, including a 167% growth in the PayFac business [35] - ACH revenues decreased by approximately 25% due to weakness in the consumer lending industry [35] Market Data and Key Metrics Changes - Credit card transactions increased by 26%, with the number of transactions reaching the highest in the company's history [15] - The prepaid business has seen significant growth, particularly in government and charitable organization programs, with five of the ten largest U.S. cities adopting their prepaid solutions [21][22] Company Strategy and Development Direction - The company aims to leverage its broad portfolio of payment solutions across diversified end markets, which has proven more resilient during economic downturns [11] - A $3 million private placement was completed to support growth initiatives and strengthen the balance sheet [24] - The company is focused on enhancing its prepaid and PayFac business lines, with plans to improve operational efficiency and conversion rates [45][49] Management's Comments on Operating Environment and Future Outlook - Management noted that while the second quarter was impacted by COVID-19, performance improved progressively from April to June and into July [10] - The company expects consumer lending to recover slowly, which will continue to affect ACH in the near term, but anticipates growth in other segments [26][76] - Management expressed confidence in the company's positioning for strong growth once the economy fully recovers [27] Other Important Information - The company reported a cash balance of $1.8 million at June 30, 2020, which increased to approximately $4.6 million by the end of July [40] - The company has signed 55 new clients in 2020, with expectations for substantial growth in load and transaction volumes in the third quarter [29][32] Q&A Session Summary Question: Was there any sequential revenue growth in PayFac this quarter? - Yes, there was a 4% growth month-over-month or quarter-over-quarter [58] Question: Can you discuss the focus on ISVs and merchant boarding? - There was a lack of structure and discipline around the implementation phase, which has now been addressed by creating a dedicated implementation team [60] Question: How many of the new accounts are generating revenues? - Approximately 25% to 30% of the new accounts have not yet started generating revenue [62] Question: What is the expected OpEx for the quarter? - OpEx is expected to increase due to new hires and increased call center support [69] Question: What is the sequential decline in ACH from Q1 to Q2? - The decline in ACH revenues was approximately $500,000 [72][73] Question: How does the company plan to address the ACH business challenges? - Management believes ACH has already hit its bottom and expects it to recover alongside the economy [81] Question: What is the spoilage revenue expected from prepaid programs? - Spoilage revenue is expected to be material, with significant growth anticipated over the next 12 to 24 months [85][86]