Q2 2021 Usio Inc Earnings Call
Okay.
Good afternoon, and welcome to <unk> earnings Conference call for the second quarter ended June 30th 2021, all participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions.
I ask a question you May press Star then one on your telephone keypad to withdraw your question. Please press Star then two.
Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes, a replay will be available. Shortly after the end of the call through May 28.2021.
I would now like to turn the conference over to Joe Hassett Investor Relations. Please go ahead.
Thanks, Matt and just a point of clarification that replay will be available till the end of August and thanks to everyone for participating welcome to you see in the second quarter 2021 financial results Conference call. The earnings release, which you see Oh issued yesterday after market closed is available on the company's Investor Relations website at <unk>.
Dot com slash 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 business development and prepaid products 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 forward 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 that 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 COVID-19 pandemic and its effect on the economy, the realization and the opportunities from the IMS ACA.
<unk> 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 stock price the loss of key personnel growing competition in electronic commerce market. The security of the company's software hardware and information.
With complex federal state and local laws and regulations and other risks detailed in the company's 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 oh expressly disclaims any obligations or undertaking to update or revise any forward looking statements made today.
To reflect any change in <unk> expectations with regard there to or any other changes in 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 on its Investor Relations website for additional information and with that I would now like to turn the call over to Louis Lewis.
Thank you Joe and welcome everyone. The SEC.
Quarter was another record quarter with record processing volumes and record revenue growth.
Revenues for the quarter were up 119% to $15.2 million.
With revenues for a CHF, 125%.
Adjusted EBITDA was $1.3 million for the second quarter, which was our third consecutive quarter of positive adjusted EBITDA.
And our positive operating cash flow increased our cash balance by $1.3 million to $5.6 million at June 30th.
$4.3 million at the end of the first quarter and up 600000 since the end of 2020.
As a result of the strong first half of 2021.
<unk>, our revenue guidance for the year to be in the range of 56 to 59 million, which represents a growth of 73% to 83% over 'twenty 'twenty revenue growth we.
We still expect positive EBITDA adjusted EBITDA for the year.
It was another quarter of record transaction processing volume with total dollars processed.
A record of $2.73 billion topping the previous all time record of 1.87 billion that was set in the first quarter of 2021.
More ACTH transactions were processed in the second quarter of 2021 than any previous quarter in the company's history.
Card processing, including pay fact set another all time quarterly record for both transactions and dollars processed.
In may.
It was our first ever 1 billion dollar processing month.
This was our third consecutive quarter of record electronic payments and transaction processing volume.
In addition output solutions revenue was $3.6 million for the quarter a run rate that is well above the assumptions we made.
For the IMS acquisition.
A rapid growth trajectory fueled by our innovative technology multichannel distribution strategy and our focus on serving as.
Diversity of end markets. The UCL franchise has never been stronger in this quarter was a testament to the scalability of our systems and associated products and services.
We continue to innovate, we recently announced the partnership with Voyager digital the fast growing crypto currency app and platform to enable our merchants to accept electronic payments and as many of 60 crypto currencies via our payment processing gateway.
This exciting solutions should be launched later this year.
We provide business line.
Revenue reporting and so let me offer some high level comments by business line.
<unk> continues to set records with electronic check dollars processed almost quadrupling in this quarter <unk> revenues were up 125% in the quarter and a C. H continues to be one of our most profitable businesses.
While a C. H is broadly growing it's been fueled especially by the rapid expansion of the cryptocurrency market.
Our success in this industry, leading to new opportunities such as with Voyager digital where our relationship keeps expanding.
Together with our newly introduced pin less debit and the accounting acquiree products, we remain one of the Fintech industries, leading innovators.
While we experienced triple digit growth for AC H in comparison to the second quarter of 2020, which was affected.
Mostly by Covid, we expect a C H to continue to grow year over year in the back half of this year.
We see that trend.
<unk> growing over 70% this year to a new record high.
Our card business has also had a record quarter momentum continues to build as growth in dollars processed rose, 55% this quarter accelerating from 30% growth last quarter transactions processed in the quarter doubled after doubling last quarter and card and our card.
The division generated a profit this quarter.
<unk> will review the performance in more detail, but it's clear that card has reached an inflection point in its growth is accelerating. It now appears we were on pace to generate over $1 billion and card processing volume this year, which represents another milestone.
<unk> processing continues to set records and is experiencing sequential growth each quarter.
We expect to see that continue over the balance of the year as we grow card through its three growth channels, new Isps increased penetration of the ISP merchants and organic processing.
Volume growth at the individual merchant level.
Card is also innovating new products with the with the global Voyager Crypto processing agreement also expected to bolster card volume prepay.
Prepaid load volume was up 65% in the quarter, while revenues were up 82% consistent with the expectations established last quarter prepaid continues to further strengthen its position in government municipal charitable and related markets without stealing Houston Thunder I want to <unk>.
We mentioned our recently our recent win with the New York City.
Economic Development Corporation, New Covid vaccination program.
Where the city is dispersed and $100 to eligible residents. They get vaccinated. This highly visible program is a testament to the strength of our relationship with various New York City agencies built through numerous COVID-19 economic relief programs already supported by our prepaid.
Apology. It also recognizes the ability our ability to respond rapidly and provide innovative solutions, which which in this case required both.
Physical and virtual card solutions.
It is this combination of innovative technology and strong relationships that has us confident that prepaid will continue on its pace of record results again for 2021.
Finally output solutions continues to exceed our expectations. There integration continues to progress and now extends to successfully earning business from our card customers that have a need for high quality print and mail solutions. We're also making inroads with electronic Bill Presentment and payment program, which we can now claim a.
Top five credit Union as our latest customer.
As I briefly mentioned, we generated over $1.3 million and adjusted EBITDA, and we're and positive cash flow for the quarter.
With the year to date adjusted EBITDA is now over $1.5 million and is the primary driver over a $600000 increase in our cash balances since the end of 2020.
Consequently, we believe that we are more sufficiently funded to support our current growth initiatives over the next 12 months.
It's been a record first half of the year dollars processed volumes. This year have already surpassed what we did for all of fiscal 2020 with.
We've turn cash flow positive.
Revenue growth is up 95% for the first half of the year versus prior year period, which enabled us to raise guidance for the full year of course. The results are contingent on the continued improvement of the overall economy. It continued excitement in the crypto currency marketplace and the recovery of the <unk>.
[noise] Sumer lending industry.
With that I'd like to conclude my opening remarks, and turn the car call over to Houston Frost, our senior Vice president of prepaid products.
Thank you Louis and thank you to everyone who has joined the call. This morning.
The prepaid business had another great quarter with revenue up 82% as compared to the second quarter last year and this showed continued improvement as we reported 61% growth in Q1 as compared to the first quarter last year.
In the second quarter prepaid load volumes were up 65% and prepaid card transaction volume growth was also strong up 63%.
As discussed in previous quarters, we began to earn additional revenue this quarter in may and June through inactivity fees and breakage on cards that were issued last year in.
In addition, we have continued to earn new business from a nonprofit and government clients from more general civic and community related card programs.
More recently and as Louis mentioned, we've actually seen an uptick in pandemic related card orders as well with the most notable being a recent Wang to support the New York City Economic Development Corporation vaccine incentive program.
Under this program, we are providing the N Y E D C with the ability to issue both physical and virtual cards as their means to disbursed $100 cash award at city residents and employees receive for getting their COVID-19 vaccination. It's.
It's estimated that approximately 41% of the eligible population of New York City qualify for this incentives.
This is an important highly visible program that is a natural outgrowth of the Covid relief related solutions, we've been providing to New York City related entities since last year. It also illustrates how the New York City Mayors office as well as similar organizations across the United States have come to depend on our ability to.
We deploy a solution that provides the convenience simplicity and transparency they require for money disbursement programs.
We are also proud to have been able to support the coral gables community foundation's effort to provide money to the families affected by the condominium building collapse in Miami.
We also continue to make progress on new guaranteed income programs like the condom competent pledge compared to the limited duration of Covid relief and other disaster relief programs. These guaranteed income programs are generally longer term with significantly larger lifetime load amounts.
To date this year, we have added over 50, new programs to the more than 100.
Programs from community civic social nonprofit and government.
Entities, we administered last year our.
Our flexibility responsiveness and technology are the backbone of our success and this backbone is what supports the strong relationships. We continue to build with these organizations as.
As discussed before our clients also greatly value the data and insight we provide them regarding how money loaded to these cards is spent.
This provides feedback they could use to refine and to generate additional support for their programs.
One of the key advantages of a card program compared to other money disbursement methods like check ath or peer to peer services like Paypal venmo.
It's been a good first half of the year and we expect our momentum to continue throughout the balance of 2021, the anticipated lull between the wind down of last year's Covid relief programs and the ramp up of new disbursement programs has just about run its course, and we expect sequential revenue growth moving forward.
So with that I will conclude my remarks, and turn the call over to Tom Jewell, Our senior Vice President and Chief Financial Officer to discuss financial results in greater detail.
Thanks, Houston and welcome everyone. Thanks for joining our call today and your interest in you see Oh I'm going to provide a brief review of our second quarter financial results before turning the call over to Greg.
As Louis mentioned revenues for the quarter ended June 30th 2021 were $15.2 million, an increase of 119% compared to the same period last year.
Over the past few quarters, our rate of revenue growth has been accelerating from 27% in the fourth quarter to 73% last quarter to now a 119% on an organic growth basis revenues increased 67% also accelerating from 25% last quarter.
Revenue growth was led by a C H and complementary services, which was up 125% on the strength of 155% increase in transactions process, while prepaid revenue.
Was up 82% both growth rates accelerated compared to the first quarter.
The news in our credit card line were also up increasing 43% after increasing 15% in the first quarter with card transactions processed in the quarter doubling from a year ago, while dollars processed rose 55%.
Growth was especially strong in pay fact, where revenues were up 111% over year over year and sequentially up 21% from Q1 of this year. In addition to the December 2020 acquisition of output solutions contributed $3.6 million of revenues in the quarter.
Gross profit in the quarter more than tripled to $4.1 million with growth gross margins, expanding 900 basis points to 27% from 18, 5% in the same period a year ago. The improvement in gross margins reflects a more favorable product mix, especially the increase of ACTH.
Revenues, which is our most profitable business segment margins also benefited from an increase in volume, which better leveraged our fixed costs.
For the quarter total other selling general and administrative costs were up 53% from the year ago period to $2.8 million, reflecting the incremental cost of output solutions overhead and our continued investment in prepaid and pay fat growth initiatives. We expect other SG&A expenses to remain at similar.
Our expense levels with moderate increases over the balance of the year as we take advantage of market opportunities to enhance our current staffing for growth opportunities and maintain our high service levels.
Depreciation and amortization in the quarter increased $240000 year over year to <unk> 6 million, primarily due to the additional costs associated with the amortization of the customer list acquired in the purchase of IMS.
We had positive operating income of $338000 in the quarter, which is an improvement of $1.6 million from the same quarter a year ago.
Justice EBITDA as Louis mentioned was $1.3 million in the quarter and nearly $1.9 million dollar improvement over the second quarter of 2000.22020. This is our third consecutive quarter of positive adjusted EBITDA. We also recorded positive offering operating cash flow of $1.1 million or.
The first half of 2021.
And my definition of operating cash flow excludes the changes in merchant reserve funds prepaid card loads customer deposits and net operating lease assets and liabilities that are included in the cash flow statement.
For the quarter, we reported GAAP net income of $220000 or <unk> per share compared to a net loss of $1.3 million or <unk> 10 per share in the second quarter of last year.
We'll add that net income for the quarter includes the diluted share calculation, which includes our invested shares.
The company remains in strong financial position cash and cash equivalents at June 32021 totaled $5.6 million and it's Louis I'm alluding to rising $1.3 million from the $4.3 million at March 31, 2021 and.
And <unk> 6 million over the December 31, 2020 balance of $5 million or only that is a small equipment loan taken on in the first quarter to finance, a new posted shorter output solutions.
Providing a quick snapshot of year to date results revenues were $28.7 million up 95% from the $14.7 million from the prior period nearly doubling all lines of business were up double digits on top of the incremental revenues from output solutions for $7.4 million organic growth excludes.
Output solutions is 45% for the six months period.
Gross profit were 7 million up 119% from $3.2 million in the prior year gross margins for the first half were 24, 5% versus 21, 8% in the prior year adjusted EBITA as Louis mentioned was a positive $1.5 million versus prior year loss of <unk>.
8 million an improvement of $2.3 million operating income for the first half was a loss of <unk> 4 million compared to a loss of $2.2 million in prior period.
Another improvement of 1.8 million and on a net income or loss basis. The net loss for the first half of the year was <unk> 5 million compared to a prior year loss of $2.1 million results.
Our results over the first half of 2021 had been strong we are growing at an exponential rate and we're increasing profitability. This should provide the liquidity and financial strength to support investment in our growth initiatives to fund operations and unchanged and undertake selective accretive acquisitions.
With our growth strategy in 2021, a great start to the first half of the year at this time I'd like to turn the call over to Greg.
Thank you Tom and good morning, everyone. It was another record quarter for the card segment our growth continues to accelerate.
Total dollars processed were up 55% in the quarter falling growth of 30% last quarter and 17% in the fourth quarter of last year.
Transactions processed also doubled for the second consecutive quarter, leading to a 43% increase in revenues I'm also pleased to report segment profitability this quarter.
Strong performance. So far this year card is on pace to exceed $1 billion in annual transaction processing volume for the first time clearly growth is accelerating and we believe it will continue to accelerate for the balance of this year.
Since its inception, our paper business has been highly successful penetrating the ISP market based on our innovative technology and compelling value proposition, what we call pay back in a box. So the real key to our success has been our improved ability to help these Isps board an increasingly larger number of their merchants onto the UCL.
Lessing platform.
Initially I view my role as modifying our organization implementing new strategies and tactics and adding skilled resources to do just that consequently, I'm happy to report that conversion rates continue to increase in the second quarter, 52% Onboarding merchants are processing, which is up from 20% a year ago.
We expect that proportion to continue to rise over the balance of this year as we believe there are still low hanging fruit to be harvested in the billions of dollars and electronic payments available to us simply through increased penetration.
What makes our business so dynamic.
We essentially have three growth engines, we can add new Isps those Isps can increase the penetration of their merchant base and those merchants can organically grow year over year automatically increasing our volume.
Our growth this year has been along all three dimensions. After a challenging 2020 most of our merchants are back on our feet and scaling their businesses. This is particularly true of our long term legacy clients, where attrition remains virtually nonexistent and growth has rebounded after suffering throughout much of 2020.
Besides increasing penetration in organic merchant processing volume growth, we continue to grow by adding new Isps.
Let me provide some examples.
Listing ISP gross processing volume by more than 40% between the first and second quarters as a result of new call behind efforts. Another convergence strategy, we've helped them implement.
Previously mentioned, how we are getting smarter of conversions and this is a classic example of putting our knowledge and best practices to work.
A church software providers, a new ISP client about 90% of its boarded merchants are processing on the <unk> platform the.
Volume was up 37% sequentially in the first quarter and up even a more impressive 57% in the second quarter all at very attractive margins.
We are continuing to add new wife's visa UC platform, including several in the second quarter.
This includes new Greenfield opportunity customers, new organizations with no preexisting payments processing relationship as a result, we get 100% of their merchants and 100% of the merchant volume.
These types of success stories are happening throughout the organization. So you can appreciate how our hard work has been rewarded with tremendous growth and why we're so excited about our future potential.
We are very pleased with our progress and we are leveraging our momentum to further penetrate our markets.
We're refreshing our client portal, including a tool where our perspective is these can calculate exactly how much more they could earn through our relationship with Youtube.
Marketing is continuing to improve our SCO inbound lead generation and outbound productivity. The professional business development team continues to expand the network and create new opportunities and we continue to nurture relationships with are less active biopsies for instance, the legal vertical Isps, especially our bankruptcy law software Isps.
Our currently somewhat slowed due to widespread forbearance is but we believe they have the potential to rebound with a vengeance and generate exponential growth once government assistance programs.
Perhaps one of the most exciting developments is the introduction of crypto currency as a form of payment through our numerous platforms, making us the first payback to be able to enable merchants and Isps to crypto.
Crypto currency as a form of payment on a global scale.
Growing out of our expanding relationship with Voyager digital.
And emerging technology is just another example of how far we go to serve our customers, which in this case as a potential game changer will be rolling out our criminal product later this year, so stay tuned for further updates.
Finally, we remain encouraged by the progress being achieved in the new electronic Bill Presentment.
Presentment and payment solution, we have developed in conjunction with UCL output solutions sales.
Our sales professionals recently hired to target enterprise level opportunities are uncovering strong interest before concluding I want to remind everyone that while we certainly feel good about our position we recognize the ongoing risk COVID-19 represents.
Third consecutive quarter of accelerating growth, we are confident growth in the card segment is on a steep trajectory and we are on pace for a record year momentum is building and the bottom line is seeing meaningful improvement, we are introducing new products and new capabilities and strengthening the organization to leverage our success and we are all looking forward to the rollout of our new crypto.
Currency solution that concludes our prepared remarks for today. So now we'd like to open up the call for any questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the case.
If at any time your question that's been addressed and you would like to withdraw. Your question. Please press Star then two at this time, we will pause momentarily to assemble our RASK.
Our first question will come from Gary <unk> with Barrington Research. Please go ahead.
Good morning, everyone.
Several questions here first of all.
Yes.
I think it's safe to assume a lot of what happened in the quarter.
It was probably driven on a margin basis by the CH business.
So.
What I'm trying to figure out here is that.
On the a C. H is wireless card as well as prepaid.
It seems to me the card and prepaid we're going to continue to have sequential growth.
Over the next couple of quarters, but Louis you mentioned something about a slowdown in the crypto.
So we won't be seeing that at least based.
Based on what I think.
In the next two quarters and how does that impact the margin metrics of the company as.
As we look at it for the back half of the year.
Well, firstly as crypto peaked in may and.
June and July were down compared to May.
But there is still great.
In our comments, we talked about.
We expect a C H to grow year over year 70 plus percent.
And that's what we will experience this current quarter.
This last quarter Q2 was comparing against.
The highly affected quarter of 2020.
From Covid.
Play this out.
Though it's still very strong and if you follow crypto you can see last week. Some magic is starting to happen again in that.
Hey, Matt.
So <unk>.
We will not be as large as it was last quarter.
But it will still be significant.
So.
Okay.
And then.
Again, the AC H really drives a lot of.
It is a big contributor to the overall margin metrics then.
It is and you know so last year, we averaged 23% gross margins for the year.
We're going to exceed that for this year.
So.
Again, I'll give you idea of what we expect for margins.
Okay, and then Greg could you.
You said youre going to do over $1 billion in processing volume in the card segment. This year do you have what you did last year.
I don't have an idea of are.
I don't have that number in front of me, but I can certainly get that for you.
Okay, but just don't have thank you I'll, let somebody else jump in.
Okay.
Our next question will come from Barry Sine with Spartan Capital Securities. Please go ahead.
Hey, good morning, gentlemen, I also wanted to ask a bit about ACTH. It was kind of a where some people even call. It a rocket ship the way it grew this quarter.
If you could help us I know, there's kind of two factors driving that growth one is.
A return to normalcy some of your customers like Doctors' offices were closed last year. So that's one aspect and then you've also called out.
Some new businesses like crypto.
And then on crypto it sounds like there's a couple of different aspects to the growth contribution. One I guess you are processing U S dollar payments in and out for.
Crypto companies and then the the new relationship I guess has not kicked off with wage or digital where they will handle the crypto payments and I guess you guys are going to have some type of a revenue sharing if Europe payments wonder if your customers want to accept a crypto payment so a lot of points there.
On a T H, but if you could please address that.
Yeah, I mean, if you were kind of mixing divisions up in that question, but.
So crypto payment acceptance.
We're going to perform all the settlement to the merchant like we do today.
So when we have a merchant that wants to get paid in crypto will send a request the Voyager and they'll tell us how much that coin.
Needs to be provided to affect the payment and then and then we'll move the money directly to the merchant.
Sure.
That's not a C. H that'll go on our card part of our business our payment acceptance as part of our business cards.
And.
A C. H this quarter was driven a lot by.
Crypto it was driven by some fintech lending as well.
Crypto is down a little bit again it peaked in may.
But it's still very strong in fact.
The volumes are still very strong.
And we remain very excited about that.
It is starting to recover just last week as well.
And also a question on output solutions, if I may.
If I recall correctly.
Part of the rationale for doing that acquisition was cross selling between customers I know you've mentioned you mentioned that you want to top five.
Credit Union.
Well are you doing selling their services into legacy <unk> customers and vice versa, selling UCL payment processing services into legacy their legacy customers.
It's been very interesting, we've been able to sell more print into our existing payment customer base.
We've been able to sell a card or electronic.
But we're excited about both channels. It just seems that the print.
So when we call them and say Hey, we're now doing print.
Easy decision for them and it happens pretty quick.
And so that's been easier for us to do and.
We like that.
So we're going to continue to sell in both ways.
But the point is is that we are.
We're growing that company as you can see you know when we bought them they were doing like $13 million in sales.
They are on a run rate much higher than that for this year and that's from increased sales.
Okay. Thank you very much.
Thanks Barry.
Our next question will come from Jon Hickman with Ladenburg. Please go ahead.
Hey, Thanks, and congratulations on the quarter.
My number handily.
Could you explain a little bit about this crypto processing.
The merchant at once.
Sept, crypto theyre going to need a crypto wallet.
And youre going to have to have access to that to move money in and out.
Is that how that's going to work.
No.
So if we just kind of go through example.
I don't know what type of merchants would be a good example, but let's just say you're at a website and you're buying something from one of our merchants and you can youre going to see payment options you know pay by a C H pay by credit card.
But now you're also going to have if the merchant accepts it pay by Crypto and then if you do that then you're going to have multiple coins that that merchant might accept.
Yeah. Initially initially we're going to turn all coins into cash.
So so that if you want to pay somebody 100 Bucks, we're going to come back to you and tell you how much.
Bill.
<unk>, how much point you need to provide us.
And at that point Youre going to present your wherever your crypto is in a wallet or.
Et cetera, and we're going to draft it from there.
At Voyager will actually pull it from there.
And then Voyager will return to us the $100 and when they return to when they returned a $100 to US it'll end up in the daily settlement to that merchant and all of those transactions will flow through our system just like another payment type trade.
Credit card debt cards. So do you get paid a couple of times there to do that take the payment and do the training.
Maybe the Asia transaction.
No. It will just be for clearing the the crypto and will go okay.
Will receive a percentage of that transaction.
Okay.
A question on prepaid.
Since you're anniversarying the Covid a lot of the big Covid thing.
Our accounts that you got last year are you starting to get some breakage revenue Sir.
Yeah. So we saw some breakage.
And in May a little bit more so in June and that's been accelerating.
Last month and this month.
<unk> going to see that.
Yeah.
The good news is it does it is fairly spread out I think because we didn't have.
About two or three quarters.
Issuance that was pretty high volume and to be honest with you.
While we may have kind of Q.
Q3, maybe slightly more in breakage or inactivity fees.
By Q1 or Q2 of next year, I mean, we're really going to be in a steady state because we've been issuing cards and loading cars at a pretty good clip.
Yeah.
Since the beginning of this year so.
Yes.
What that is going to do that and I'll mention this take the margin question was brought up earlier is.
Hopefully that will level out of prepaid contribution to the margins because we had seen a little lumpiness in that.
We're months, where we had a lot of carbs go out would be lower margin lines for the prepaid division and then months, where we had fee income like in activity fees or breakage, what would lead to larger margins.
So what I'm really hoping to see over the next couple of quarters is that our margins really kind of level out and we removed that lumpiness there.
Okay.
Thank you appreciate it.
Thanks, John.
Our next question will come from Bryan Kipp Linger with Alliance Global Partners. Please go ahead.
Hey, great. Thanks for taking my questions and really great EBITDA.
I think the question that every.
Lines right now.
I asked it is can you quantify how much of HCA and <unk>, we generated from crypto.
We haven't released that number but it was as we said that our <unk> growth was driven by growth in crypto currency and growth in Fintech lending.
Okay.
As you think about the payments business.
How does this contemplate or how does that factor in the tax consequences I mean, if I have a huge gain in bitcoin.
And.
Trading gains for cash like I'm, making a trade and theres going to be tax consequences consequences, one way or another so is that for Voyager to handle is that gonna be inhibitor in the near term for mass usage of this how do you think about that.
Well you know.
Yeah.
I don't even know how tax crypto is what IRS is made up their minds.
On that or not but I can tell you what our.
Our company wont be involved in the taxation of that.
If it does prevent people from using it because they are converting it.
Then you know they could potentially use it less.
Yeah, but.
I think just uncertainty in the whole regulatory market for crypto and we'll.
We will see what happens we can tell you that we wouldn't have done. This if we didn't know there was demand for it.
Yeah, Brian.
And Glenn one thing ill mention one thing on the crypto.
There is an increasing use of stable clients.
So what youre actually seeing more and more so as individuals wanting to spend stable point with an all day meeting.
They're fixed to the dollar et cetera, right. So that would still be a driver for payments being accepted right.
And youre not going to deal with tax consequences, there because it's you're just dealing with a different.
Type of dollar.
That's a great point, if you follow voyage or theyre paying 9% annual interest rate on.
On the U S. D C stable coin yep. So you can write any people.
Pain, and the balance there and using it kind of like a checking account.
Okay I want to ask a question on the gross margin I seem to do that every quarter, sorry, but and in.
In the fourth quarter, you had a blow out gross margin and and it was a result of output solutions, having a unusually high contribution margin a couple of things happened I believe.
And then here again, you have a very high gross margin.
Though <unk> has a stronger mix I'm curious if there was anything in output solutions. This quarter similar to the fourth quarter that drove upside temporarily to the margin or if anything's changed given you're talking about growing faster that it's driving a better margin for that business.
Well output did have some electronic business as we've talked about with the top five credit Union this quarter.
Which should continue.
But I mean the growth in the gross margin was primarily related to a C. H.
But we had continued growth in card business I mean, the the card business continues to set records sequentially. So you know.
It's it's kind of offsetting but again you know we experienced 23% gross margin last year.
We're going to beat that number this year.
Right, but if you reported 22% each of the next two quarters, you would get above 23% for the year. So my point really is if you had the same mix, which you're not going to but if you did because crypto came back and deposits came back with you again have a 27% margin or were there other one time factors or may.
Be less recurring factors and output that helped you.
No if everything was equal would be 27.
If everything was equal with last year.
Lastly on payback, it's great to hear about the growth.
Can you talk about if there are any impediments to Onboarding for example, our.
The I S needs as well as the merchant while more merchants.
Are they more receptive and it is creating a faster sales cycle or are they still taking time pushing back and it's it's a long sales cycle.
With respect to the Isps that are bringing on new customers net new to their portfolio almost a 100% of those are boarding with UCL.
It's the back or the existing.
Merchants within those Isps that we've been paying particular attention on the call behind campaigns with Webinars and certain marketing activities. So we are seeing an increased adoption from those I guess call them legacy merchants on those Isps, but.
When we when I talk about the Greenfield opportunities, we've got a new IFC.
Centered around.
Bond raising at schools and they never had a payment relationship before so in that case, we get 100% of that business right out of the gate, but to.
To be clear our focus day on their everyday is that existing subscriber base within our.
Isps that we've executed.
Contracts with.
Okay, Alright, great. Thanks for taking my questions.
And then just.
I wanted to I think answered Gary's question, just so we're all everybody knows last year, we did $776 million in transaction processing volume on the card segment.
And we anticipate that to be over $1 billion. This year.
Yes.
Our next question will come from Michael Diana with Maxim Group. Please go ahead. Thank.
Thank you.
So.
Houston mentioned that your.
Prepaid performance this quarter.
Reflected somewhat of a wind down and Covid related revenues. So a broader question about all four of your lines of business. It seems.
Is it true that or would you characterize your performance this quarter is more of a normalized.
Performance as opposed to a COVID-19.
Impacted performance.
Well I think every division was very normalized and I think that.
Also shows you how we were prepared for this with the scalability of our systems there was.
As Brian was alluding to there was no one time type of helping hands this quarter.
And you know.
The business model for prepaid.
It continues to be the same and we're receiving income from multiple.
Multiple ways.
Yeah.
Spoilage interchange and it's all about getting cards out there getting low LOE dollars onto cards and we've been very successful with that.
<unk> continues to just grow crazily and.
One day pay back will be the biggest part of our business.
We can see that.
And it happened in the near future. So again, there was no one time type of activities that helped us get to where we're at today.
Okay, great. Thanks.
Thank you.
Our next.
<unk> will come from Kevin Pearson, a private investor. Please go ahead.
Pardon me Mr. Peterson your line might be muted gentlemen, this is Kevin Pearson.
A longtime investor.
Okay, and just had a quick question I'm, a little first of all congratulations on the quarter.
Hum.
Holding stock since but yeah.
Just after the IPO.
And a little bit along the way, but I'm a little confused about that.
The.
The messaging here because there there's been a lot of discussion over the last nine months.
About growth an exponential growth.
But the forecast for full year revenue suggests that the back half of the year is going to be.
Flat to down as far as revenue is concerned so I'm just looking for a little color on that and trying to understand what's your.
What's your what's your messaging here.
Okay.
I think we were pretty clear I mean, we started the year with $50 million as are our guidance and then we went to <unk> 53 to 56, and we just went to <unk> 56 to 59, if you have taken or are revenues and just sequentially growing it.
And then your.
Youre getting to 59.
And.
So.
We our guidance is pretty clear that for us to achieve those numbers.
Crypto needs to stay current.
And.
Growth in the Fintech lending needs to stay current and that also.
Economy needs to approve.
We'd also like some of these government subsidies to go away.
But.
So we're giving you the best information we have we can also tell you and you. Obviously are aware of this our original projections have been blown away this year.
And blown away for good and so.
We continue to be excited about about the year and where we're going to end up.
Again, if you have a question. Please press Star then one our next question is a follow up from Gary pressed the piano. Please go ahead.
Hey, Louis can you remind us what your original projections were for output solutions for revenues for this year.
13 million and over $1 billion in EBITDA.
Okay, and youre going to exceed that right.
Yes.
Okay, I just want to make sure. Thank you.
You bet Thanks, Gary.
This concludes our question and answer session, which also concludes today's conference. Thank you for attending today's presentation. You may now disconnect.