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CoreCard(CCRD) - 2024 Q3 - Earnings Call Transcript
CCRDCoreCard(CCRD)2024-10-31 20:05
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Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was 15.7million,a1715.7 million, a 17% increase year-over-year, driven by higher license revenue, professional services revenue, and processing and maintenance revenue [7] - Income from operations was 2.8 million for Q3 2024 compared to 0.4millionforthesameperiodlastyear,withanoperatingmarginof180.4 million for the same period last year, with an operating margin of 18% compared to 3% [10] - Earnings per diluted share for the quarter was 0.27 compared to a loss per share of 0.03forQ32023,withadjusteddilutedEPSof0.03 for Q3 2023, with adjusted diluted EPS of 0.30 compared to 0.09forQ32023[11]BusinessLineDataandKeyMetricsChanges−LicenserevenueforQ32024was0.09 for Q3 2023 [11] Business Line Data and Key Metrics Changes - License revenue for Q3 2024 was 1.4 million, professional services revenue was 7million,processingandmaintenancerevenuewas7 million, processing and maintenance revenue was 6.1 million, and third-party revenue was 1.2million[7]−Revenuegrowthexcludingthelargestcustomerwas71.2 million [7] - Revenue growth excluding the largest customer was 7% year-over-year, while growth excluding the largest customer and the impact from Park Mobile and Legacy Cabbage was 30% [8][9] Market Data and Key Metrics Changes - The company expects total revenue for the full year 2024 to be approximately flat, with growth from customers excluding the largest customer projected to be between 25% and 30% [13] - For Q4 2024, total revenues are expected to be between 13.3 million and 13.7million,withearningspersharebetween13.7 million, with earnings per share between 0.07 and 0.09[14]CompanyStrategyandDevelopmentDirection−ThecompanyhasrenewedagreementswithGoldmanSachs,extendingthemthroughDecember31,2030,whichprovidesincreasedmanagedservicesfeesandhigherfixedrevenue[15]−Thecompanyisfocusedoncontinuingtogrowitsnon−Goldmanbusinessata300.09 [14] Company Strategy and Development Direction - The company has renewed agreements with Goldman Sachs, extending them through December 31, 2030, which provides increased managed services fees and higher fixed revenue [15] - The company is focused on continuing to grow its non-Goldman business at a 30% compounded annual growth rate over the next three years [24][30] Management's Comments on Operating Environment and Future Outlook - Management noted that the recent decision by the auditor not to stand for reappointment is a business decision and the company will seek a new auditor [6] - Management expressed confidence in the growth of non-Goldman revenue and indicated that license revenue is not a primary focus for future growth [36] Other Important Information - The company has over 28 million in cash and marketable securities as of September 30, 2024, and plans to use excess cash for investments in the new platform and share buybacks [12] - The company is developing a new cloud-native platform called Corefinity, expected to be ready for production by the end of 2025 [27] Q&A Session Summary Question: Can you help bridge the change in non-Goldman revenue growth from the prior guidance? - Management indicated that new programs and higher-than-expected third-party revenues contributed to the upward revision of guidance from 15-20% to 25-30% [34] Question: How much of next year's guidance is expected to come from license revenue? - Management stated it is too soon to provide guidance on license revenue due to uncertainties surrounding the timing of the GM program deconversion [35] Question: What are the thoughts on the potential transition of the Apple program to JP Morgan? - Management speculated that while it makes sense for JP Morgan to take the program in-house, it could also be less disruptive to continue working with CoreCard [37]