Usio Announces Record Second Quarter 2021 Financial Results

Revenue Grows 119% in the Quarter as Compared to the Same Period in 2020, the Fastest Growth Rate in the Company's History,

a Significant Acceleration in Revenue Growth Rate from 73% in the First Quarter

Generates Net Income of $218,000, $1.3 Million in Adjusted EBITDA and Positive Operating Cash Flow

Raises Guidance:  Fiscal 2021 Revenue Expected to Between $56 and $59 Million, up 98% to 109% from Fiscal 2020

SAN ANTONIO, Aug. 12, 2021 (GLOBE NEWSWIRE) -- Usio, Inc: (Nasdaq:USIO), a leading FinTech integrated payment solutions provider, today announced financial results for the second quarter of  2021, which ended June 30, 2021.

Louis Hoch, President and Chief Executive Officer of Usio, said, "I am pleased to report another record quarter with revenue growth accelerating to 119%, the fastest ever rate of revenue growth.  Profitability also continues to significantly improve, with Adjusted EBITDA up $1.9 million from a year ago as we achieved our third consecutive quarter of positive Adjusted EBITDA. Processing volumes in the quarter were a record $2.7 billion, up 389% from a year ago and up 46% sequentially from our previous record quarter just achieved in the first quarter of this year. Across the board, we are experiencing outstanding performance as we leverage our multi-channel distribution strategy and strong relationships to penetrate attractive markets with our industry-leading technology. 

As a result, we are raising our annual revenue guidance for the year to an expected range between $56 million and $59 million, which would represent increases of between 73% and 83% above fiscal 2020 revenues, while also anticipating positive operating cash flows and Adjusted EBITDA. All of which are conditioned on the continued enthusiasm in the fintech lending and cryptocurrency industries.

Growth was strong in each of our businesses, led by ACH, where revenues were up 125% due to a focus on penetrating fast-growing industries like cryptocurrency and Fintech. ACH remains our most profitable line of business. Card revenue growth also accelerated, reflecting PayFac’s increasing market momentum. Prepaid had another strong quarter, increasing its penetration of the governmental, municipal, charitable and related markets where they have become a leading provider of electronic payments solutions. Usio Output Solutions continues to exceed expectations and is now beginning to realize the anticipated cross selling synergies. 

It’s been an extremely strong first half of the year. We are intent on building on this strong momentum through continued flawless execution of our strategy and investing in our innovative technology and unparalleled service to build value for our shareholders. This quarter was a testament to the scalability of our systems and associated products and services."

Second Quarter 2021 Financial Summary

Revenues for the quarter ended June 30, 2021 increased 119% to $15.2 million, reflecting growth in each of our ACH, Credit Card and Prepaid lines of business as well as a full quarter of Usio Output Solutions revenues, which was acquired in December 2020. Excluding the results of Usio Output Solutions revenues, organic growth was 67% versus the same period last year.  For the six months ended June 30, 2021, revenues increased 95% with year over year growth in all lines of business.  Excluding the results of Usio Output Solutions revenues for the six-month period, organic growth was 45% versus the same period last year.

		Three Months Ended June 30,
		2021				2020				$ Change				% Change
ACH and complementary service revenue		$	4,001,897			$	1,779,245			$	2,222,652				125	%
Credit card revenue			6,558,076				4,588,199				1,969,877				43	%
Prepaid card services revenue			1,077,531				593,109				484,422				82	%
Output solutions revenue			3,595,637				—				3,595,637				100	%
Total Revenue		$	15,233,141			$	6,960,553			$	8,272,588				119	%

		Six Months Ended June 30,
		2021				2020				$ Change				% Change
ACH and complementary service revenue		$	7,080,353			$	4,016,991			$	3,063,362				76	%
Credit card revenue			12,281,785				9,570,857				2,710,928				28	%
Prepaid card services revenue			1,964,107				1,144,384				819,723				72	%
Output solutions revenue			7,368,446				—				7,368,446				100	%
Total Revenue		$	28,694,691			$	14,732,232			$	13,962,459				95	%

Gross profits increased 221% to $4.1 million on gross margins of 27.1%, incrementally higher due to product mix and the scaling of the ACH and PayFac business lines.

Other selling, general and administrative expenses were $2.8 million for the quarter ended June 30, 2021, as compared to $1.9 million in the prior year period up 53%. The increase reflects a full quarter of Output Solutions operating costs and continued investments in our ACH, PayFac and Prepaid business line. For the six-month period ended June 30, 2021, other selling, general and administrative expenses were $5.5 million compared to $4.0 million for same prior year period, up 38%, again reflecting incremental Output Solutions costs plus investments in our ACH, PayFac and Prepaid initiatives.  

The Company reported operating income of $0.3 million for the quarter, a $1.6 million improvement from the $1.3 million loss in the prior year period. For the six months ended June 30, 2021, operating income was a loss of $0.5 million versus a prior period loss of $2.1 million, an improvement of $1.6 million.

Adjusted EBITDA was positive $1.3 million in the quarter, an improvement of $1.9 million compared to an Adjusted EBITDA loss of $0.6 million in the same period a year ago. This was the third consecutive quarter of positive Adjusted EBITDA.  For the six months ended June 30, 2021, Adjusted EBITDA was a positive $1.5 million versus a loss of $0.8 million in the prior year period, an improvement of $2.3 million.  Operating Cash Flows (excluding merchant reserve funds, prepaid card load assets, customer deposits and net operating lease assets and obligations) was $1.1 million for the six-month period ended June 30, 2021.

The Company reported net income of $0.2 million for the quarter ended June 30, 2021 for income of $0.01 per share compared to a net loss of $1.3 million for a loss of $0.10 per share for the same period in the prior year.  For the six-month period, the net loss was $0.5 million for a loss of $0.03 per share compared to a net loss of $2.1 million for a loss of $0.16 per share for the prior year period, a net loss improvement of $1.6 million or $0.13 per share.

Usio continues to be in solid financial condition with $5.6 million in cash and cash equivalents on June 30, 2021, a $0.6 million improvement from December 31, 2020 and a $1.3 million improvement from March 31, 2021. 

Conference Call and Webcast

Usio, Inc.'s management will host a conference call Friday, August 13, 2021 at 11:00 am Eastern time to review financial results and provide a business update.  To listen to the conference call, interested parties within the U.S. should call +1-844-883-3890. International callers should call + 1-412-317-9246. All callers should ask for the Usio conference call. The conference call will also be available through a live webcast, which can be accessed via the company’s website at www.usio.com/investors.

A replay of the call will be available approximately one hour after the end of the call through August 27, 2021. The replay can be accessed via the Company’s website or by dialing +1-877-344-7529 (U.S.) or 1-412-317-0088 (international). The replay conference playback code is 10156027.

About Usio, Inc.

Usio, Inc. (Nasdaq: USIO), a leading FinTech integrated payment solutions provider, offers a wide range of payment solutions to merchants, billers, banks, service bureaus, crypto exchanges and card issuers. The Company operates credit, debit/prepaid, and ACH payment processing platforms to deliver convenient, world-class payment solutions and services to their clients. With the acquisition of the assets of IMS in December 2020, the Company now offers additional services relating to electronic bill presentment, document composition, document decomposition and printing and mailing services. The strength of the Company lies in its ability to provide tailored solutions for card issuance, payment acceptance, and bill payments as well as its unique technology in the prepaid sector. Usio is headquartered in San Antonio, Texas, and has offices in Austin, Texas and Franklin, Tennessee, just outside of Nashville.  Websites: www.usio.com, www.payfacinabox.com, www.akimbocard.com and www.usiooutput.com.  Find us on Facebook® and Twitter.

About Non-GAAP Financial Measures

This press release includes non-GAAP financial measures, EBITDA and adjusted EBITDA, as defined in Regulation G of the Securities and Exchange Act of 1934, as amended. The Company reports its financial results in compliance with GAAP, but believes that also discussing non-GAAP measures provides investors with financial measures it uses in the management of its business. The Company defines EBITDA as operating income (loss), before interest, taxes, depreciation and amortization of intangibles. The Company defines adjusted EBITDA as EBITDA, as defined above, plus non-cash stock option costs and certain non-recurring items, such as acquisitions. These measures may not be comparable to similarly titled measures reported by other companies. Management uses EBITDA and adjusted EBITDA as indicators of the Company's operating performance and ability to fund acquisitions, capital expenditures and other investments and, in the absence of refinancing options, to repay debt obligations.

Management believes EBITDA and adjusted EBITDA are helpful to investors in evaluating the Company's operating performance because non-cash costs and other items that management believes are not indicative of its results of operations are excluded. EBITDA and adjusted EBITDA are supplemental non-GAAP measures, which have limitations as an analytical tool. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures do not reflect a comprehensive system of accounting, may differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. For a description of our use of EBITDA and adjusted EBITDA, and a reconciliation of EBITDA and adjusted EBITDA to operating income (loss), see the section of this press release titled "Non-GAAP Reconciliation."

FORWARD-LOOKING STATEMENTS DISCLAIMER

Except for the historical information contained herein, the matters discussed in this release include forward-looking statements which are covered by safe harbors. Those statements include, but may not be limited to, all statements regarding management's intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. These forward-looking statements are identified by the use of words such as "believe," "intend," "look forward," "anticipate," "continue,” and "expect" among others. Forward-looking statements in this press release are subject to certain risks and uncertainties inherent in the Company's business that could cause actual results to vary, including such risks related to an economic downturn as a result of the COVID-19 pandemic, the realization of opportunities from the IMS acquisition, the management of the Company's growth, the loss of key resellers, the relationships with the Automated Clearinghouse network, bank sponsors, third-party card processing providers and merchants, the security of our software, hardware and information, the volatility of the stock price, the need to obtain additional financing, risks associated with new legislation, and compliance with complex federal, state and local laws and regulations, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission including its annual report on Form 10-K for the fiscal year ended December 31, 2020. One or more of these factors have affected, and in the future, could affect the Company’s businesses and financial results in the future and could cause actual results to differ materially from plans and projections. The Company believes that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to management. The Company assumes no obligation to update any forward-looking statements, except as required by law.

Contact:

Joe Hassett, Investor Relations
joeh@gregoryfca.com
484-686-6600

USIO, INC.
CONSOLIDATED BALANCE SHEETS

		June 30, 2021				December 31, 2020
		(Unaudited)
ASSETS
Cash and cash equivalents		$	5,614,702			$	5,011,132
Accounts receivable, net			3,160,449				2,863,638
Settlement processing assets			35,515,375				43,558,442
Prepaid card load assets			9,157,519				7,610,242
Customer deposits			1,410,607				1,305,296
Inventory			214,918				176,466
Prepaid expenses and other			432,417				301,755
Current assets before merchant reserves			55,505,987				60,826,971
Merchant reserves			8,101,153				8,265,555
Total current assets			63,607,140				69,092,526
Property and equipment, net			3,326,356				3,105,926
Other assets:
Intangibles, net			5,099,828				6,035,761
Deferred tax asset			1,394,000				1,394,000
Operating lease right-of-use assets			3,038,920				2,671,266
Other assets			413,961				368,078
Total other assets			9,946,709				10,469,105
Total Assets		$	76,880,205			$	82,667,557
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	645,224			$	851,349
Accrued expenses			1,847,384				1,463,944
Operating lease liabilities, current portion			487,410				346,913
Equipment loan, current portion			53,673				-
Settlement processing obligations			35,515,375				43,558,442
Prepaid card load obligations			9,157,519				7,610,242
Customer deposits			1,410,607				1,305,296
Deferred revenues			44,118				66,572
Current liabilities before merchant reserve obligations			49,161,310				55,202,758
Merchant reserve obligations			8,101,153				8,265,555
Total current liabilities			57,262,463				63,468,313
Non-current liabilities:
Equipment loan, non-current portion			99,102				—
Operating lease liabilities, non-current portion			2,733,343				2,495,883
Total liabilities			60,094,908				65,964,196
Stockholders' equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at June 30, 2021   (unaudited) and December 31, 2020, respectively			—				—
Common stock, $0.001 par value, 200,000,000 shares authorized; 26,261,016 and 26,260,776 issued, and   24,954,529 and 24,974,995 outstanding at June 30, 2021 (unaudited) and December 31, 2020, respectively			194,691				194,692
Additional paid-in capital			89,662,665				89,659,433
Treasury stock, at cost; 1,306,487 and 1,285,781 shares at June 30, 2021 (unaudited) and December 31, 2020,   respectively			(2,244,985	)			(2,165,721	)
Deferred compensation			(5,267,134	)			(5,926,872	)
Accumulated deficit			(65,559,940	)			(65,058,171	)
Total stockholders' equity			16,785,297				16,703,361
Total Liabilities and Stockholders' Equity		$	76,880,205			$	82,667,557

USIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Revenues		$	15,233,141			$	6,960,553			$	28,694,691			$	14,732,232
Cost of services			11,105,696				5,674,887				21,660,009				11,518,282
Gross profit			4,127,445				1,285,666				7,034,682				3,213,950
Selling, general and administrative:
Stock-based compensation			317,285				348,393				645,000				636,103
Other expenses			2,845,213				1,856,924				5,505,247				3,979,030
Depreciation and amortization			627,149				382,244				1,249,356				770,039
Total operating expenses			3,789,647				2,587,561				7,399,603				5,385,172
Operating income (loss)			337,798				(1,301,895	)			(364,921	)			(2,171,222	)
Other income:
Interest income			2,169				1,487				4,636				12,643
Other income (expense)			(1,484	)			38				(1,484	)			726
Other income and (expense), net			685				1,525				3,152				13,369
Income (loss) before income taxes			338,483				(1,300,370	)			(361,769	)			(2,157,853	)
Income tax expense (benefit)			120,000				(12,201	)			140,000				(34,675	)
Net Income (Loss)		$	218,483			$	(1,288,169	)		$	(501,769	)		$	(2,123,178	)
Earnings (Loss) Per Share
Basic earnings (loss) per common share:		$	0.01			$	(0.10	)		$	(0.03	)		$	(0.16	)
Diluted earnings (loss) per common share:		$	0.01			$	(0.10	)		$	(0.03	)		$	(0.16	)
Weighted average common shares outstanding
Basic			19,993,387				13,173,009				19,962,661				13,150,119
Diluted			24,962,389				13,173,009				19,962,661				13,150,119

USIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

		Six Months Ended
		June 30, 2021				June 30, 2020
Operating Activities
Net (loss)		$	(501,769	)		$	(2,123,178	)
Adjustments to reconcile net (loss) to net cash provided by operating activities:
Depreciation			313,423				270,038
Amortization			935,933				500,001
Bad debt			86,402				—
Non-cash stock-based compensation			645,000				636,103
Amortization of warrant costs			17,970				17,973
Changes in operating assets and liabilities:
Accounts receivable			(383,213	)			149,794
Prepaid expenses and other			(130,662	)			(4,039	)
Operating lease right-of-use assets			(367,654	)			114,127
Other assets			(38,452	)			—
Inventory			(45,883	)			(24,568	)
Accounts payable and accrued expenses			177,315				(139,748	)
Operating lease liabilities			377,957				(110,725	)
Prepaid card load obligations			1,547,277				18,752,859
Merchant reserves			(164,402	)			(1,586,565	)
Customer deposits			105,311				—
Deferred revenue			(22,454	)			(26,470	)
Net cash provided by operating activities			2,552,099				16,425,602
Investing Activities
Purchases of property and equipment			(533,854	)			(334,688	)
Net cash (used) by investing activities			(533,854	)			(334,688	)
Financing Activities
Proceeds from PPP Loan Program			—				813,500
Proceeds from equipment loan			165,996				—
Payments on equipment loan			(13,221	)			—
Purchases of treasury stock			(79,264	)			(82,448	)
Net cash provided by financing activities			73,511				731,052
Change in cash, cash equivalents, prepaid card loads, customer deposits and merchant reserves			2,091,756				16,821,966
Cash, cash equivalents, prepaid card loads, customer deposits and merchant reserves, beginning of year			22,192,225				12,682,918
Cash, Cash Equivalents, Prepaid Card Loads, Customer Deposits and Merchant Reserves, End of Period		$	24,283,981			$	29,504,884
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest		$	1,484			$	—
Income taxes			92,850				—
Non-cash transactions:
Issuance of deferred stock compensation			—				1,559,520

USIO, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

		Common Stock								Additional Paid- In				Treasury				Deferred				Accumulated				Total Stockholders'
		Shares				Amount				Capital				Stock				Compensation				Deficit				Equity
Balance at December 31, 2020			26,260,776			$	194,692			$	89,659,433			$	(2,165,721	)		$	(5,926,872	)		$	(65,058,171	)		$	16,703,361
Issuance of common stock under equity incentive plan			51,000				51				120,484				—				—				—				120,535
Warrant compensation costs			—				—				8,985				—				—				—				8,985
Cashless warrant exercise			19,795				19				(19	)			—				—				—				—
Reversal of deferred compensation amortization that did not vest			(17,111	)			(17	)			(48,599	)			—				5,994				—				(42,622	)
Deferred compensation amortization			—				—				—				—				249,801				—				249,801
Purchase of treasury stock costs			—				—				—				(49,454	)			—				—				(49,454	)
Net (loss) for the period			—				—				—				—				—				(720,252	)			(720,252	)
Balance at March 31, 2021			26,314,460			$	194,745			$	89,740,284			$	(2,215,175	)		$	(5,671,077	)		$	(65,778,423	)		$	16,270,354
Issuance of common stock under equity incentive plan			61,556				61				150,481				—				—				—				150,542
Warrant compensation costs			—				—				8,985				—				—				—				8,985
Reversal of deferred compensation amortization that did not vest			(115,000	)			(115	)			(237,085	)			—				158,096				—				(79,104	)
Deferred compensation amortization			—				—				—				—				245,847				—				245,847
Purchase of treasury stock costs			—				—				—				(29,810	)			—				—				(29,810	)
Net income for the period			—				—				—				—				—				218,483				218,483
Balance at June 30, 2021			26,261,016			$	194,691			$	89,662,665			$	(2,244,985	)		$	(5,267,134	)		$	(65,559,940	)		$	16,785,297
Balance at December 31, 2019			18,224,577			$	186,656			$	77,055,273			$	(1,885,452	)		$	(5,636,154	)		$	(62,151,988	)		$	7,568,335
Issuance of common stock under equity incentive plan			51,000				51				59,440				—				—				—				59,491
Warrant compensation costs			—				—				8,985				—				—				—				8,985
Deferred compensation amortization			—				—				—				—				228,219				—				228,219
Purchase of treasury stock costs			—				—				—				(26,629	)			—				—				(26,629	)
Net (loss) for the period			—				—				—				—				—				(835,009	)			(835,009	)
Balance at March 31, 2020			18,275,577			$	186,707			$	77,123,698			$	(1,912,081	)		$	(5,407,935	)		$	(62,986,997	)		$	7,003,392
Issuance of common stock under equity incentive plan			1,500,544				1,500				1,641,304				—				(1,559,520	)			—				83,284
Warrant compensation cost			—				—				8,988				—				—				—				8,988
Deferred compensation amortization			—				—				—				—				267,207				—				267,207
Purchase of treasury stock			—				—				—				(55,819	)			—				—				(55,819	)
Net (loss) for the period			—				—				—				—				—				(1,288,169	)			(1,288,169	)
Balance at June 30, 2020			19,776,121			$	188,207			$	78,773,990			$	(1,967,900	)		$	(6,700,248	)		$	(64,275,166	)		$	6,018,883

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Reconciliation from Operating Income (Loss) to Adjusted EBITDA:
Operating Income (Loss)		$	337,798			$	(1,301,895	)		$	(364,921	)		$	(2,171,222	)
Depreciation and amortization			627,149				382,244				1,249,356				770,039
EBITDA			964,947				(919,651	)			884,435				(1,401,183	)
Non-cash stock-based compensation expense, net			317,285				348,393				645,000				636,103
Adjusted EBITDA		$	1,282,232			$	(571,258	)		$	1,529,435			$	(765,080	)
Calculation of Adjusted EBITDA margins:
Revenues		$	15,233,141			$	6,960,553			$	28,694,691			$	14,732,232
Adjusted EBITDA			1,282,232				(571,258	)			1,529,435				(765,080	)
Adjusted EBITDA margins			8.4	%			(8.2	)%			5.3	%			(5.2	)%