Q2 2020 Usio Inc Earnings Call
[music].
Good day and welcome to <unk> earnings Conference call for the second quarter ending June $32 20, all participants will be in listen only mode.
After today's presentation, there will be an opportunity to ask questions to ask your question. You know press Star then one thing your telephone keypad.
All your question. Please press Star then too.
This call our advice that the audio this conference call is being broadcast live over the Internet is also being recorded for playback purposes.
Replay will be available shortly after the call and ended the call through November 28 2000.
I'd now like to go in corporate every teacher.
Investor Relations. Please go ahead.
Hi, Thanks, Colin Thank you everyone for participating today, well could do you see a second quarter 2020 financial results conference call.
The earnings release, which you see <unk> issued yesterday after market close is available on the company's Investor Relations website, USIO Dot com flashing the best there on the news on the call today are those hope president and CEO, great quarter, Senior Vice president of payments facilitation.
Jewel Senior Vice President and Chief Financial Officer, and Houston, Ross see senior Vice President of prepaid services management will provide prepared remarks, and then well open the call your question.
Before we begin please remember the comments on todays call include forward looking statements forward looking statements can be identified but the use of such words as we anticipate expect Oh, even and May will should seek approximate we're playing what does negative those words and other similar words and phrases forward.
Forward looking statements by their nature involve estimates projections goals forecasts and assumptions are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward looking statements, including risks related to the cobot Nike pandemic and its effect on the economy.
The realization the opportunities from the Singapore acquisition.
Management of the company's growth the loss of key resellers the relationship with the automated clearing House network Bank sponsors third party card processing providers and merchants the volatility of stock price well also key personnel growing competition in electronic commerce market, the security company software or hardware and information.
Points was complex federal state and local laws and regulations and other risks detailed in the company's filings with the FCC.
These forward looking statements speak only as of the data. This conference call. It should not be relied upon that's predictions of future rebate you see all express.
Okay sounds are undertaking to update or revise any forward looking statements made today, it's real black any change and you see those expectations with regard there too or any other changes in the events conditions or circumstances, which any such statements based except as required by law. Please refer to the company's FCC Follies, one is investor relations website for this.
All information with that I would now like to turn the call over the Louis Lewis.
Thank you Joe and welcome everyone.
Second quarter was much as it as expected with a krona virus temporarily impacted our growth momentum, but with performance progressively improving as we move from April to June and even into July.
In the process the second quarter demonstrated that our strategy to offer broad portfolio a payment solutions to diversified end markets. What's what was much more resilient, but other business models throughout much of our industry with companies suffering.
Fairly significant revenue decreases because of that are more concentrated portfolio portfolios as single payment channels.
While our consolidated revenues were down about 3% and the worst economic quarter in recent memory revenues at our two growth initiatives Payfac and prepaid were actually up.
These two fast growing business life's demonstrates that our innovative technology is.
In high demand as it all first leashes to make payments simple.
We also worked hard to control costs with our total overhead down nearly 300000 or 10% from a year ago.
With overall expenses. This decrease were still investing and the growth of our prepaid as a card businesses.
As we have added operational resources to each of these business units over the past three months.
For the quarter, our net loss was unchanged for the second quarter of 2019 and for the six months.
The bottom line is running ahead of the year, though.
In the first quarter, we'd the good.
Provided segment reporting in our effort to improved transparency in our revenue disclosure. So let me offer some high level comments by segment.
Despite reports of widespread second quarter payments industry weakness, our credit card transactions at a second quarter were up 26% in fact, the number of transactions was the highest sort of the company's history.
And the dollars process was the second highest in the company's history.
The card card results.
Our <unk>, particularly very impressive as they achieve.
Despite a decline of over $20 million a combined.
April and May processing volume, primarily attributable to the mandate at closing of.
Our dental offices, a veterinarian office players.
Card revenues were up again this quarter on a year over year basis and profitability continues to improve.
In a minute Greg will talk about the exciting developments in card, including the creation of a new implementation team. The addition of additional business development professionals and other policy changes, we believe will be.
We'll accelerate near term growth.
Overall, our age transaction.
Transactions and processing volumes were down from year ago.
The volume was tied to the disbursement a collection of consumer loans.
One of our largest industry concentrations.
Which has been extremely soft consumer lending is slowly recovery and the business remains strong with all all of the decrease in the volume strictly attributed to less usage.
As we continue not only to retain existing clients, but add the warrants.
And as we continue to grow our product set.
With RCC of Pinless debit products growing very strongly.
And.
On hampered by the Covitz shutdown.
Part of our expanding portfolio of products that leverage or not just certification tier one processing designation, which includes direct access to the federal reserve at a dedicated bank routing number.
We're confident that consumer level will bounce back and what it does our AC age will be back at or above record setting levels achieved earlier.
The real standout in the quarter and for the first half of this year has been our prepaid business for the second quarter card load volume was up 64% transactional volumes were up 47% and revenues were up 58%. This follows a 69%.
Revenue increase in revenues in the first quarter I want still in the Houston Thunder, but I do want to know that we believe the best is yet to come.
Our prepaid program supporting government, it's terrible ordered it organizations are there so.
Their effort to provide governance assistance and relief has been particularly successful and it has been adopted by five of the 10 largest cities in the United States.
Note that also.
That all of the anticipated revenue for lease programs is not recognized in the current period.
So these programs are expected to contribute to both our top and bottom lines over the next few quarters as follows revenue to occur in 12 to 24 months in the future.
And our view load and transaction volumes and even readily far understate prepaid success.
Card loads of actually tribble triple over the past few months, which we believe is far more indicative of prepaids growth heading into the second half of this year, we believe.
Much of the worst is behind us our card and prepaid business businesses have already rebounded to pretty cold bid or even better levels.
It's just a matter of time until consumer lending fully recovers to support our growth strategy and it provides the resources. The fuel operations, we completed a $3 million create private placement with a single institutional investor that has a long term vision on their best was the funded demonstrated their law.
Long term commitment by purchasing unregistered shares from the company.
As a result, our balance sheet is strong and we have the resources needed to implement our strategy as support operations as we continue to invest in our growth initiatives and work our way back to positive operating cash flow from operations.
Let me conclude my.
My remarks.
With.
Statement about growth.
Virus, which continues to affect our daily lives our operations and the economy you.
You see I was quick that back to ensure that the health and safety of our employees as as we have implemented policies to achieve social distances and other safety measures. However, the economic consequences of the pandemic really after an awful April business businesses improved sequentially throughout the quarter.
As well into July.
Wildcard in prepaid revenues, a card and prepaid have returned to.
Two or exceeded their pretty tobin levels consumer lending with all these segment of our business that has recovered slope.
Thus, we expect it to be a drag or they CHS third quarter.
But every other segment of our business is expected to be up indicates a prepaid the growth to be dramatic.
However, once the economy is back a full swing, we feel very well position to resume the strong growth momentum, we achieve heading into the second quarter leveraging that into potentially even better returns for our shareholders over to local.
With that I'd like to conclude my opening remarks, it's hard to call over the Houston Frost, our senior VP of prepaid services talk a little more about that segment.
[noise]. Thank you Louis a prepaid had a solid quarter with revenue up 8% sequentially from the first quarter or this year and 58% compared to the same period last year.
Oh it should be noted the card load activity experienced a significant uptick in June growing 123% as compared to May and then we saw carloads increased again substantially in July.
By a 120% as compared to June so a lot of growth in June and then even more growth in July.
The growth related to our new municipal a nonprofit clients was concentrated in the last month of the quarter and we expect to report substantially larger load and transaction volumes in the third quarter. All told we have signed 55, new clients and 2020.
These clients are actually working with hundreds of additional.
Community organizations, and we have several more in the pipeline.
Most of the client programs became active in June July and accordingly, as I say before we expect continued growth in the second half of 2020.
It is important to note and Louis mentioned this as well, but because of the structure of the programs more than 50% of the revenue from this activity will be realized after 12 months from the time a card accounts for loaded. This is when we receive income from cardholder fees of funds expiration.
Such we expect the activity in 2020 to fuel revenue growth not just through the end of the year, but in 2021 as well.
Depending what the catalyst for much of our recent growth many of the organizations. We partnered with haven't need for money just first on solutions for a number of other programs not related to the pandemic.
In addition, many of these organizations have internet access to other cities and or nonprofits and so while we do believe it or load volumes related to these programs may slow a bit in the fourth quarter.
We do feel strongly that we should be able to maintain a substantial portion of the elevated load.
Transaction volumes or <unk> in the quarters I follow most valuable thing we built this year, our new relationships and if we stay focused on those and we continue to execute well the prepaid lineup as well I continue to grow and prosper.
With that I'd like to conclude my opening remarks, and turn the call over to Tom Jones, Our Chief Financial Officer to discuss financial results in greater detail.
Welcome everyone and thanks for joining our call today and your interest in USIO I'm going to provide a brief review of our financial results before turning the call over to Greg.
Looking at the quarter ended June Thirtyth did.
2020 in 2019 revenues for the quarter decreased 3% to $7 million versus $7.2 million into comparable period.
This decrease is significantly less than the revenue decreases being widely reported throughout the industry two of our three reporting segments, representing both growth initiatives reported second quarter growth revenues in revenues were up 58% if in the prepaid category and 4% and our credit card category.
Including 167% growth in our Payfac business associates revenues were down approximately 25% due to the weakness in the consumer lending industry as Louis mentioned.
Gross profit decreased 18% to $1.3 million versus $1.6 million in the prior period and gross margins were down 340 basis points to 18.5% from 21.9% in the prior period.
Gross margins reflect a shift in product mix as a result of the growth of the credit card in prepaid categories and a decrease in are highly profitable AC age category.
Selling general and administrative expenses were 1.9 million down 6% from to me in the prior period. Despite the decrease versus the prior period, we continue to invest wisely in our growth initiatives to enhance capabilities to fuel future growth our operating loss was 1.3 million.
Unchanged from the <unk> unchanged from the prior period adjusted EBITDA loss was approximately 571000 compared to a loss of 405000, an incremental losses of 166000.
We reported a net loss of one point threemillion or 10 cents per share unchanged from the prior period net loss and loss per share.
Going on to the six month results year to date revenues were 14.7 million up 7% or a million dollars from 13.7 million in the prior period.
Gross profits were 3.2 million up 11% from 2.9 million.
Gross margins were 21.8% or.
70 basis points better than the 21.1% gross margins recorded in the prior period.
Other SGN a expenses.
Were 4 million up 21% from 3.6 million in the prior period.
The six month adjusted EBITDA was a loss of 765000 flat to a loss of 731000 in the prior year.
The net loss was 2.1 million or 16 cents per share compared to 2.3 million or 18 cents per share for the year ago period.
As Louis mentioned, we continue to have a solid balance sheet with a cash balance of $1.8 million at June Thirtyth 2020.
We received gross proceeds of $3 million from private placement in the quarter.
Rolling forward to the end of July our cash balances were approximately 4.6 million.
The company's only debt is a PPP long.
The company's loan forgiveness documents have been submitted a request in full forgiveness alone and are in the process of being filed with the small business administration through our lender.
We believe we have the liquidity and financial strength to support both the continued investment in our growth initiatives and to fund operations.
Although the momentum built up over the past year, it's been interrupted by the Cobot 19.
Both credit card and prepaid experience sequentially better quarters. After a tough April and May enter now back to pre code activity levels. A C. H is experiencing a slower recovery our emerge our emerging new products RCC in Finland.
David are gaining traction as we continue to work our way through these unprecedented times. We are fortunate we have a solid balance sheet that we believe will support our plans until operations are completely restored to normal.
At this time I'd like to turn the call over to Greg.
Thank you Tom and welcome everyone I'm pleased to be with you today now having been in this role over the past three months and haven't heading a chance to talk to some of you during that time as I stated last quarter Payfac is making great progress and I can say that more emphatically today.
The card business got off to a great start this year had another growth quarter over the past three months revenues volumes and transactions were all up again in the second quarter, which is even more impressive wouldn't be considered a significant decreases reported across the industry.
We have very little exposure to our larger or insulated largely.
From a large degree from retail restaurant hospitality and similar verticals that have been bearing the brunt of the economic slowdown.
While our dental and veterinary and offers were forced to shut down for a time most are back up and then operation and we expect that business to remain stable if not grow.
So all the Corona virus slowed the momentum that built up over the back half of 2019, we have regained our stride with volumes today essentially back at pre co good levels.
At the same time, there's been no let up in our sales performance for instance, we announced the number of deals and the legal software space, where we are making a concerted effort to become a leader in that large but highly fragmented market.
We are having similar success in parking management software and other verticals, where our technology is truly generating excitement in the I ask you community.
The pieces are in place for significant wrapping our volume and I've seen my job is unlocking about bass potential. So I've been looking very closely for any pinch points that might be limiting our success or for new opportunities, we're adding resources, we're making some changes might accelerate our growth.
Consequently, we've instituted a few changes I believe we'll make a difference at the top that list as a new dedicated implementation team staff with experienced card processing professionals.
Who frequently our teams are trying to where too many hats searching for new opportunities signing new agreements and resolving the client issued as youre.
Implementation was consequently, not the priority. It should have been the result was a conversion rate below expectations. Now we have a team whose sole focus is to help you guys fees, which we've contracted with.
[noise] onboard their merchants as quickly and efficiently as possible, whether its troubleshooting and integration issue, we're helping with the pitches to go out to their customers. Our team is skilled and experienced it providing support needed to get the merchants converted and processing on our platform.
We've also added more structure to the team and implemented more standardized processes throughout the organization. This will help improve our overall efficiency productivity and keep the teams focused finally, we're enhancing our business development efforts. We recently hired a new business development professional was well centered in the card service space and brings with him exist.
The relationships and the IC Chan young.
The opportunity is now we aim to seize upon it by growing our business development development team to quickly capture market share within the highest be segment.
I understand even patient waiting for the business to inflect and wondering what trajectory it will take.
I believe we can inflect did a very steep trajectory for a number of solid reasons for instance, many of our clients or spin it spending significant dollars and allocating meaningful resources on the integration phase expenses I'm sure. They would not have undertaken if they were not intent on making this relationship for success.
No. There are several sizable relationships that we've been working with for months and are literally on the customer going why these are clear indications that there are significant processing volumes to be realized and quickly.
So it is our job of certain them, well and set them up for success and with the changes we've implemented I believe we're now better prepared to help them succeed certainly there are obstacles to overcome for instance, cobot has hampered development at some of our is these but on balance the business is already sound. It is growing and our target markets are continue doing.
Race our technology.
The goal now is to improve conversion rates, which can result in a steep increase in processing volumes. This is one of my priorities and you can be assured we're doing everything on our power to achieve this objective.
That concludes our prepared remarks for today. So we would like now to open the call for questions.
We will now begin the question and answer session to ask a question. They press Star then one of your telephone keypad for using a speakerphone. Please pick up your handset.
Sure John Your question. Please press Star then to at this time your partner entirely too.
Sure.
Your first question today will come from Gary Prestopino with Barrington Research. Please go ahead.
Was there a precedent on your line is that.
Can you guys hear me now I had the damn thing you did.
No water.
Hi.
Several questions.
On page back first the wall or was there any sequential revenue growth in Payfac this quarter.
Yes on a normalized boys basis, there was a 4% growth month over month over month or quarter over quarter, Okay, 4% sequential Okay. And then Greg can you maybe just talk about.
Some of the things that you're going to do different in terms of trying to.
Focus on the East and then focus on merchant boarding I mean, it was this something that had not really been addressed and it's it's a new endeavor, where you are you. Just are you. Your plan of action is to attack it differently and how.
That's great question I as I said in my prepared remarks, there there really wasn't.
So solid planning in place there wasn't an implementation process that was formalize documented and adhered to the result was that is you know there I ask these in various forms of implementation.
We fix that by creating this team and a lot of focused around that.
We have a specific program management software tool that we use that this gantt chart oriented that is.
It requires certain amount of information for the the plan to be moved to the next phase and that's in its resulting in better conversion rates. Most were also working with the highest these.
On a marketing standpoint to develop what works best to get their back book of business, whether that's a call behind Webinars.
You know newsletters, there's a variety of different ways. We can go about that but to sum up that question that just I think there was a lack of.
Structure and discipline around the implementation phase.
Okay and this is just really been put in place. So we'll see things progressed, we get better as we roll wall.
Yes.
Alright, and then.
Question for use than.
You said you got 55, new accounts year to date, how many of those accounts right now we're actually generating revenues.
And you know what at what percentage of.
The Oh.
What you guys think they could generate are they generating revenues.
It's a it's a good question I don't I don't necessarily have an exact percentage for you I mean.
What I'll say is that the contracts are.
Being executed relatively quickly and so there's there's definitely.
A percentage you know, 25%, maybe 30% that haven't even ordered their first batch of car or <unk>.
Maybe we've gotten cards out, but they haven't really started loading them yet.
So you know I mean, one number I can just judge honestly is two weeks ago I asked for the number from my head of sales that I've done number was 48 and I mean that might have even less than two weeks ago. So.
You know as of yesterday, we had 55 side and executed.
And I don't have an exact percentage, but but you're.
The notion is accurate that not all of those have started generating revenue. The other thing you know I really do want to point out and.
I you know I think that's as indicated in a in the earnings but.
Our gross margins decreased obviously, where the company they decreased but repaid yeah. They decrease substantially Q1, Oh, you know in Q2 as compared to Q1.
That is because cars are going out and that's a lower margin.
You know.
Brett source of revenue for us and side when you see all these cars going out and then were invoicing on on the actual physical cars or in some cases virtual cars going out that's the first part of the revenue that we received from a client and then.
Over the next call. It three to 12 months, we get a different chunk of revenue, which as interchange and cardholder transactional fees.
And then post 12 months after that.
A third kind of source of revenue so.
This is why.
Reporting on.
Current help me.
Got it really is a leading indicator first you know first we get cards out then those cars get loaded.
We generate revenue as as money is spent as cards.
And finally 12 to 24 months later, we're generating additional revenues so.
We really solid growth in June and then even more in July.
So.
The revenue is delayed from from that activity.
And so you're you're thinking correctly about kind of that delay out I would say, it's an okay.
Yeah Okay.
Okay, and then just one last question I'll jump ball.
In terms of the Opex for the quarter I mean, obviously you guys have gone into a control expenses because of cold bid.
We expect that to start ticking up as we get through the rest the year or you're going to try and hold it at that it looks like if I back or the envelope I'm talking about 2.6 million Obama opex.
It's Gary is definitely going to pick up where we've made some hires.
We've increased because of those.
Huge uptick in prepaid activities, we've we've hired a lot of call center reps.
The sport to new call volume, which is going through the roof.
So yeah, it's going to go up okay. Thank you.
Next question will come from Jon Hickman Ladenburg. Please go ahead.
Hi.
I was wondering could you tell us what the sequential decline in a statewide.
From Q1 to Q2.
Oh geez.
[noise] just off top of my head about.
I can't even do topped up but let it.
Tell you in revenues lets say.
Yeah.
And revenues is.
$500000.
The French okay.
Yeah.
Okay and then.
So can I, just drill down a little bit more.
So.
You are still you're still.
Kinda projecting.
Softness in the consumer lending through the at least through the end of the of September.
Several you on its true.
So at the edge is it's it's a it's going to continue to be affected by consumer lending the downturn in consumer lending baseball downturns electronically.
Yeah.
We have lost any customer so what's that picks back up we're going to be the leader that we are that space.
But yeah, it's going to affect us in Q3.
And.
Now the good thing is everything every other segment of our business is up.
So.
So Q3 will definitely be better than Q2.
Yeah Okay.
Thanks, that's it for me.
Thanks, John.
Our next question will come from various I named with Barton trapped portal.
Good.
Hey, good morning folks wanted to continue on.
Pretty different results from your different revenue segments and your diversification strategy really shown through this quarter I'm with revenue down only 2.7% easy H. down 25% you. If you only in that business what about terrible water.
Yeah. So you have the strategy is really working on easy age in the queue you talk about a relationship to employment levels and on this call you're talking about more relationship to consumer loans I assume there's some relationship there it's hard to get alone if you're not employed you were on about a 9 million dollar a year.
Revenue run rate on a C. H now you're down to about 7 million and it's hard to grow the entire company. If you've got a boat anchor like that in the near term and I'm guessing that yeah. The macro economy is not going to return we're at 10% on appointment for at least the year if not longer so how do you.
Get that back to 9% and how do you stop that business from being you know a boat anchor and let the strong growth and the other segments really driving results.
But I don't really like boat acres, Barry, but I'd say I would I understand what to me so well AC ages already hit bottom in this quarter. So is this going to go up from there and we didn't lose again, we didn't lose any customers back we've been adding customers.
So you know consumer lending is.
As a segment of that AC age business and it is directly tied to the economy, you're right. If you are unemployed into probably not going to get alone.
And then the lenders are not requiring people to pay back their loans, but they were you know before the pandemic. So they're they're offering deferrals worst is that their started more and more payments being made but its and its recovery, but it's not recovery like the dental office sort of veterinary and office that.
That traffic you know.
In April was down 10 million in May It was down 11 million in July it popped back up to levels above Cove. It is so we're just helping you understand a world understand we're not going to see that type of turned around with Ace Yates, where it just pops back.
But we're confident that it will come back.
And so.
You know that what you call boat anchor is still a very stable forced within the company.
And when you combine that stable forced let's not go is already hit its bottom.
With the growth, it's occurring in card and prepaid.
Q3 is going to be a lot better than Q2.
And we're already experience at July was amazing.
Okay, and then on prepaid pretty incredible numbers and you've given a lot of data points on.
Car loading.
And pretty good.
Tremendous acceleration, obviously continuing into the third quarter.
You had one sentence.
In the script that I wanted to.
Hi, like which was about spoilage I'm trying to size that understand that you talked about 12 to 24 months in terms of recognizing spoilage revenue and I guess that varies by customer agreement.
I don't think you've given any you've given growth rates on the loading, but you never given the dollar amount of a load. So we got to get a sense of that could you give me any more information to help me size, what spoilage revenue from spoilage might look like in that 12 to 24 month timeframe. When you start recognizing it big.
As I'm guessing that could be a material source of revenue.
It's definitely going to be material.
And.
You know, we can't tell you what the conversion rates going to be what the breakage is gonna be all these cards.
You know.
You know, it's definitely going to be a nice percentage.
The card loading as Houston said is the best lead indicator of future revenue in that business segment money has to get on cards before we get paid in either in terms of purchases or in fees generated from ATM.
Or you know they leave 58 cents on a card and the card expires and where it is spoilage revenue.
Some of those card programs or put now you know the spoilage kicks in 12 months some of picks the which is three years later, so what's really great about what's occurring now of the message that we're trying to make sure everybody understands is all this growth its current a prepaid and again you haven't seen it.
All of it yet its the best is yet to come.
It is not only going to help this year, it's helping next year and the year after.
And it's substantial if you look at our balance sheet, you'll see in the prepaid ballots column.
This time last year, there was $500000 on card programs in the card loading database.
Waiting to go on the cards.
Well, we let me close this quarter it was 20 million.
So that's the type of Delta that we're seeing right now.
And you know that's a snapshot right because it's a balance sheet that was what it was on that day.
So more than that is actually going on the carts.
Okay and continue on that I think you've said in the past you've given spoilage rates bomb, which I think our inversely related to the amount that slowed it on a card. So a card with $500 has less spoilage then our $25. For example could you kind of read you know repeat what those numbers are and then on some of these municipal.
Accounts, where I think you're seeing.
Some of this strong growth could you describe what what's the size of the average load Burkart is can you again to help me better under estimate what spoilage revenue might be.
Yes, so I'll, let his that answer about the current programs, but the industry averages or is it kind of a rule of thumb is like a 20 dollar rebate card you know that maybe you get for purchasing some tires is going to spoil you know around.
40%.
Of the time.
Almost one out of two cards are going to go in news.
As compared to like a $200 card, that's going to spoil at less than 5%.
So you're right as there is more money on the card less likely that the coal cards to spoil, but there's still going to be some type of spoilage or what we call break is where they leave a little bit of money, but well like Houston talk about.
Or actual new programs.
Yes, So I mean Lewis is exactly right on kind of those numbers I mean, you have a really wide range, depending on a dollar amount on the card or can be 40% at $20 harm that so that's a good industry average.
Less than 5% you know on off on a $5 card in addition to that several.
You know the municipalities.
You know are going to are going to.
Get back a portion of of spoilage I mean, that's that's one of that's part of the benefits of using a prepaid products, but theres also several clients that.
Yeah, the cards run around a little bit of a different model, where there's an activity fee.
Are there, but there's not direct spoilage and then there's a sheet metric that can happen you know in three years later.
One one way.
Just trying to correlate it and.
Okay, and you know if carloads were up 690% kind of year over year, which is what we reported and a recent press release, you know ultimately that should lead to revenue growth down the road call. It.
Over the next 24 months.
You know somewhat similar no now.
Because the revenue spread out you know you're not you're not going to see that revenue growth necessarily you know kind of a you know comparable from one month to another but if you start looking at revenue over 12 months, you know that may not be the worse estimate or you know if you go back and you look at two.
2019 revenue numbers and you think about what.
You know sort of second half of 2020 and into you know first few quarters 2021 can be it may you know really be fairly close to that kind of growth number in terms of revenue over a 12 month or 18 month timeframe.
So we think that's a good indicator obviously the mix in revenues a little bit.
You know a little bit different.
And.
There was a question I want to go back and answer in terms of what are the values of the cards a lot of these cards are higher dollar value.
There are 600, even $1200. We also have several programs that are actually doing smaller dollar cars and and those are kinda for different purposes.
So I.
I think it really is going to depend a little bit on how that mix sort out works out we're really trying to crunch some numbers to get a better idea on that but the general idea you should be able to look at you know the growth rate in lows and that should correlate fairly well to what the growth rate in revenue was going to be.
Ah you know kind of over the next six to 18 months if you will.
Okay. That's very very helpful. That's really great. One last kind of housekeeping question on calculating the share count with the new share issuances on the cover of the 10-Q as of August 10th you had 20.4 million shares outstanding.
The weighted average diluted shares outstanding for the quarter was 13.2 million.
Can you maybe Tom can you help me for modeling purposes, I understand you know how that number is going to growing impact EPS going forward.
So.
With the private placement, it's going to go up to about a 15 million for EPS calculations.
Okay.
Those are my questions. Thank you.
Thanks there.
[noise] and once again if you like your question. Please press Star then one.
Our next question will come from Brian Kinstlinger with a line Google. Please go ahead.
Great. Thanks, so much for taking my questions can you quantify your installed base for pay back at the end of June maybe compared to March.
2020, and discuss how Kobe and you're not impacting installations during second quarter.
Sure.
Maybe perhaps a better numbers in 2020, we've onboarded 31, master merchants that had subs underneath them. So just kind of <unk> as a reference.
Covance definitely hamper just because of the remoteness of some employees working from home delaying integration implementation phase as I said earlier. There is you know there is the in the initial implementation or Onboarding of a master merchant, but the subsequent loading or boarding of their subscribers has been.
A struggle historically and even to this day. So it's a nice the comes to US we sign and integrate.
Then as a master merchant board them as a submergence and they have use a number of 500 subscribers getting that 500 to convert real time or at the same time has not been the case. So they're in itself lies the the challenge on the opportunity.
Okay, and you mentioned that your eyes fees earned a process of installing paid back in the press release.
First of all our.
Ongoing challenges still today and getting that done is that going to take some time given coded or are they able they do that <unk> are you able to help them remotely and should that be done pretty quickly.
Yes, it should be noted that even before cogan, there's a meaningful amounts of integration decode door ipi. So it's not just a plug and play application that we out so it comes down to the I ask these and I think Baden coined a good phrase paced in priority I mean, they want to do this but when it comes to resource dollar.
Station and or time on the Rightish arts, sometimes it's not a priority for the organization so that inherently delays full implementation and integration.
Nothing to do a code that but cobot is exacerbated it because those resources that may have been allocated may not be available at this point. So its really a challenge on both sides and Cove. It is not helping it but that that challenge existed prior to the pandemic.
Great and then are more for you Greg in building that installation team.
Did you add additional people in cost by adding new resources or did you or did you redeploy people and how much of inflation.
Requires business travel.
So it's been a reallocation of resources with one additional new higher or pending new higher and there's been no travel from our team since the pandemic started for that's all been done online and when I say the redistribution of resources internally it's.
Those individuals that have first hand knowledge of the platform and now we can put a or we have put a program in place that programmatic to go through this implementation phase, but there is one new or pending one new hire for that team and the other individuals that are tasks were redeployed from others.
Great and then one for Houston, you mentioned that 55, new accounts like what did you what was your installed base or customer base of prepaid before that.
You know I don't have that exact number and in front of me.
If we it was over 100 clients at the end of 2019, but in terms of what the number of assets clients that were building 2019, that'd be a better number and that's the number I don't I just don't have.
Uh huh.
You know it make more or less maybe maybe you could ask went there as we probably had about 50 clients still in 2019 and I get you an exact number so maybe maybe we already doubled in the first half of Oh 2020.
Great and then one for Tom and edge in a decline you mentioned that is that cost reduction reduction temporary or permanent or is it some combination.
I would say, it's a combination so the big thing is obviously with covert 19, we you know.
Just didn't have any travel expenses at all and in some as in prior quarters. I think if you remember to last quarter. We had about you know 100000 of a onetime.
That if you're looking at it sequentially and you know, particularly with all the new card loads you know the biggest impact on the organization is there's a lot of calls into the call center. So as we've mentioned you know we're staffing up the call center significantly and you know I guess, we're also.
In the payback business you know adding.
Business development people and you know, we're going to we're going to do the right things to invest properly in the prepaid and payfac growth initiatives and other requirements as needed by the business.
Great. Thanks for taking my question.
That's right.
And our next question will come from Sam Rebotsky with their asset management. Please go ahead.
Good morning Glu is.
Tell me.
Has cove it impacted the acquisitions that you may be looking at and has has this reduced any prices and does it make you want to pull the trigger sooner or just wait longer for any fits are you seeing any fits.
That's kind of a loaded question, we the we did announce.
Last quarter on this conference call that we had terminated a acquisition that we were.
Evolved in Q1, and that's why we brought some expense for where there was one time or almost $200000 worth but.
There are acquisition opportunities out there for us and we continue to look at them and.
You know.
There is there some great opportunities for us so.
Yeah, do you see prices coming down because of covert.
You know.
<unk> is created some distressed properties, but we're not looking at it really to distressed properties.
People were concerned that the capital gains rate's going to go up after the election you know so.
It's causing some some more activity to occur right now.
Again, we're focused on acquisitions.
And Ah Theres, some great opportunities for for us to have.
To add value to our company and.
Through the years is great opportunities for us, okay that sounds good and and.
The it would appear that has the revenue improved in the current no future quarters. After the Covanta or are you seeing good.
The same I mean, you your revenue almost improved in the current corridor the June quarter.
So.
Q3 is definitely going to be better than Q2.
You know July July has been wonderful beginning August has been a wonderful.
So, yes, it's going to continue to improve.
The only everything is back at current levels or or.
Exceeding our expectations.
With exception of one segment of our associates business and.
And the that slowly recover.
Okay, all right. It was nice to meet you.
Virtually [laughter] and good luck.
Thanks Sam.
And ladies and gentlemen, this will conclude our question and answer session also concluding todays call we'd like to thank you for attending today's presentation at the time you may now disconnect.
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