Q4 2020 Usio Inc Earnings Call
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Good day and welcome to <unk> earnings Conference call for the fourth quarter ended December 31st 2020, all participants will be in a listen only mode. After today's presentation, there will be and opportunity to ask questions to ask a question. You May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two parts.
It's been said this call are advised that the audio of this conference call is being broadcast live over the Internet and it's also being recorded for playback purposes, a replay will be available. Shortly after the end of the call through April 12, 2021 I would like now to turn the conference over to Joe Hassett Investor Relations. Please go ahead.
Thanks, Matt and thank you everyone for participating today welcome to the <unk> fourth quarter and full year 2020 financial results Conference call. The earnings release, which you see Oh issued yesterday after market closed is available and the company's Investor Relations website, and you see O dot com ex blocks of investors under news.
On this call today are Louis Hoch, President and CEO, Greg Carter Senior Vice President of payment Facilitation, Tom Jewell Senior Vice President and Chief Financial Officer, and Houston Frost Senior Vice President of prepaid services.
Management will provide prepared remarks, and then we will open the call to your questions.
Before we begin please remember that comments on today's call include forward looking statements.
We're looking statements can be identified by the use of such words as estimate anticipate expect believe intend may will should seek approximate or plan or the negative these words and other similar words and phrases.
Forward looking statements by their nature involve estimates projections goals forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed and the forward looking statements, including risks related to the COVID-19 pandemic and its effect on the economy, the realization and the opportunities from the IMS.
Acquisition management of the company's growth the loss of key resellers the relationships with the automated clearing House network Bank sponsors third party card processing providers and merchants the volatility of the stock price and the loss of key personnel growing competition and the electronic commerce market. The security of the company's software hardware and information.
And compliance with complex federal state and local laws and regulations and other risks detailed in the Companys filings with the SEC. These forward looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events, you see all of expressly disclaims any obligation or undertaking to update or revise any forward looking.
Made today to reflect any change you see owes ex.
The patients with regard there to or any other changes and the events conditions or circumstances on which any such statement is based except as required by law. Please refer to the company's SEC filings, whether it's the Investor Relations website for additional information with that I would now like to turn the call over to Lewis Lewis.
Thank you Joe and welcome everyone.
And I am pleased to report all time record revenues for both the fourth quarter and the full year of 2020.
Revenues were up a very strong, 27% and the fourth quarter, leading to positive cash flow.
We also reported positive net income and earnings per share and the quarter revenues for the year were a record 32 million a 14% increase over fiscal 2020 with double digit growth achieved despite the dip in the second quarter due to COVID-19.
2020 was our fourth consecutive year of revenue growth.
Over the second half of the year, we had very.
We had a very strong recovery and are headed into the new year with tremendous momentum.
Revenue growth is being driven by strong transaction volumes with an all time record $4 processed and the fourth quarter of $920 million pre.
Prepaid volumes more than doubled and card transactions nearly doubled and the fourth quarter as compared to the same period and in 2019.
And bouncing back with strong sequential growth compared to the third quarter and we'll be back to year over year growth and Q1 of 2021.
The fourth quarter also included one month of IMS revenue, which we acquired in December and is performing to expectations.
<unk> clearly demonstrates the strength of our diverse payments channel strategy, offering and <unk> prepaid card processing services and now output solutions to the.
The growing the electronics payment market. This year, we've been we began providing segment and revenue to the.
The improved transparency, so let me offer some high level comments by segment.
And our AC H business, we're seeing a continued recovery from the low point in the second quarter of 2020.
We have taken proactive steps to expand our product offerings, which is offsetting the weakness that we had the experience from our non bank lending market, which unlike many of our markets.
And have still not fully recovered from the pre pandemic levels.
For instance, pin less debit has been growing very rapidly. Most recently, we introduced the account inquiry as a means to help our customers comply with the new <unk>.
<unk> and know your customer compliance rules, which went into effect in March of this year of 2021. Additionally, we are taking <unk> into new markets, such as crypto and we're bundling with other services like our prepaid card products for example.
The net result is we expect <unk> to have its best quarter ever and the first three months of 2021 with with the potential of the record year <unk> remains our most profitable business business segment. Our card segment is also gaining momentum is great and what we view the <unk>.
APAC business has inflicted with growth from all three revenue streams, and new Isd partners, new merchants from existing and Isps and organic growth at the merchant level the.
The new implementation process recently introduced are not only resulting in more activations, but they are bringing on more volume at a record pace and in fact and the first quarter of 2021, we began the board merchants from ISC that is now our largest card accounts potentially representing over $100 million and annualized process.
And volume.
Our focus on developing vertical expertise has also paid off with two of the three largest bankruptcy law software vendor.
Vendors now being the <unk> accounts with similar successes being experienced in other verticals such as property management franchisee parking management and others, we continue to invest and our card business to capitalize on this momentum by strengthening our infrastructure and integrating our.
The the PPE products and further building out our sales organization.
We expect 2021 to be of great year for our card business.
Prepaid.
Doubled in 2020, UCL was now a leading provider of prepaid cards.
To government entities and other organizations providing.
Support.
Including support for Covid and other and other.
The government disbursement activities again, and Houston will go through the results in more detail, but it's clear that our unique and innovative prepaid programs are finding growth opportunities that leverage our proprietary technology and our commitment to high levels of service.
Finally, let me say I could not be more pleased with the seamless integration of IMS, which we acquired in December and.
Subsequently rebranded as Eusebio output solutions.
The fact of over the past four months they have been.
On board.
They have performed flawlessly, even beyond our expectations cross selling was seen as the growth opportunity and we've already sold.
Output solutions into legacy <unk> accounts and output solutions has like likewise sold UCL of electronic payment solutions part of the expansion of payback sales team.
It will be the bundle our services, including outputs solutions for sales of the enterprise level, where we will develop a robust <unk> solution on the output solutions platform, which will play an integral integral part and we remain optimistic about output solutions and.
Will be accretive to our 2020 one earnings the fourth quarter was a strong finish to a tremendous.
Year of tremendous progress and growth more importantly, it was another quarter of sequential improvement the stretches back to 2019 interrupted only by the Covid affected second quarter.
Consequently business momentum has never been better.
Already and the first quarter. We have noted several important developments that we expect to help to sustain if not accelerate that momentum.
Prepaid continues to sign new agreements and card transactions and volume growth have inflicted as activations improved output solutions is growing but probably the most exciting development has been and AC H, where our penetration into the crypto currency.
Vertical is leading to exponential growth in particular, our exclusive agreement with Voyager.
And so on pace to set another record for quarterly dollars processed volume the.
The could top of our previous best quarter by more than 50%.
This would provide a tremendous start to a year and which we believe our revenues.
We'll achieve $50 million and yield positive cash flow for 2021.
And the fuel that growth growth, we ended up the year and a strong financial position, which will enable us to continue to invest and our technology sales and marketing initiatives.
With $5 million and.
The $5 million and cash and cash equivalents and no debt.
December 31, 2020, we believe we can self fund the operations for the next 12 months.
As always our comments are based upon no further deterioration and the economic conditions persist precipitated by the Corona virus pandemic.
Conversely, we should should we see conditions improve this would aid and the and some of the implementation process as potentially have a beneficial impact on our non bank lending customers.
So we're extremely excited about the upcoming year through the hard work and dedication of many commit at UCL employees, we have positioned ourselves to capitalize on the increasing adoption of electronic payments.
We've stuck to our plan and now the goal is to leverage our investment and to above market growth and create value for our shareholders.
With that I'd like to conclude my opening remarks, and turn the call over to Houston Frost, Our senior Vice President of the prepaid services.
Thank you Louis and welcome everyone.
It was both an outstanding quarter and year, and which we basically doubled the size of our prepaid business.
The strong growth experienced over the first three quarters of fiscal 2020 carried over into the fourth quarter card load volumes were up 95% and transaction volumes were up and even stronger.