Q2 2022 Usio Inc Earnings Call
[music].
Okay.
Good morning, everyone and welcome to the U C O earnings conference call for the second quarter ended June 30th 2022.
All participants will be in a listen only mode.
After todays presentation, there will be an opportunity to ask questions.
Can I ask a question you May press Star and then one using a telephone keypad to withdraw your questions you May press star into.
Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is being recorded for playback purposes.
A replay will be available shortly after the end of the call through August 18 2022.
At this time I'd like to turn the floor over to Joe Hassett Investor Relations. Sir. Please go ahead.
Thank you Jamie and thank you everyone for participating today.
Welcome to <unk> second quarter fiscal 2022 financial results conference call.
The earnings release, which you see O U C O issued yesterday after market closed is available on the company's Investor Relations website at U C O dotcom investors on the news.
If you can't find it there please contact me and I'll be able to access for Ya.
On this call today are Louis Hoch, President and CEO , Tom Jewell Senior Vice President and Chief Financial Officer, Greg Carter Executive Vice President of payment acceptance 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 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 of 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 in the forward looking statements, including risks related to the COVID-19 pandemic and its effect on the economy, the realization and the opera.
Attunity 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 stock price the loss of key personnel growing competition in electronic commerce market the security of.
The company's software hardware and information compliance with complex federal state and local laws and regulations and other risks detailed in the company's filings with the FTC. These.
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.
<unk> expressly disclaims any obligations or undertaking to update or revise any forward looking statements made today to reflect any change in UC is expectations with regard thereto 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 Lewis Lewis.
Thank you Jeremy and welcome everyone I'm pleased to report another great quarter for Ucs, our eighth consecutive quarter of year over year revenue growth and our highest card processing quarter in the history of the company.
It was also another quarter in which we undertook decisive actions to build value for our shareholders.
In May we announced the share report repurchase agreement.
And in the second quarter.
We purchased nearly a half a million dollars of their stock in the open market.
We also strengthened and expanded our board with the addition of a very accomplished financial professional Michelle Miller.
All of our business lines grew over the first half of 2022.
And with a strong pipeline of new business opportunities and the potential of substantial spoilage and prepaid cards, beginning in the third quarter and with the flexibility afforded by our strong unlevered balance sheet. We are optimistic that this will be another record revenue year for us yet.
Considering the ongoing uncertainty of the voyage or digital.
Exiting from bankruptcy quickly and continuing in <unk>.
Customer of UCL revising our expectations for the full year 2022 revenue growth to 12 to 18 per cent conditioned on their continued enthusiasm and the fintech lending industry and favorable economic conditions.
For the quarter revenues were $16 $2 million, a 6% increase from a year ago, while adjusted EBITDA was a $600000 loss.
Revenues in card processing prepaid card issuing output solutions were all up for the quarter and year over year.
While <unk> was up for the first six months of the year It was down from a year.
Year ago quarter, when crypto currency market was at its peak.
In the first quarter, we called out our expectations, whereas the age for this quarter crypto also distorted our year over year total dollars processed comparisons in the quarter, but on a sequential basis total dollars processed $2 4 billion in the second quarter was up sequentially from the first quarter.
This quarter was a clear illustration of the value of our strategy of being diverse.
Fintech payments processor of delivering our services.
A variety of end markets with a mixture of electronic payment channels. Despite challenges in crypto currency that affected one of their most valuable customer relationships, we were able to grow revenues now.
Now, let me offer some high level comments by business lines.
H and complementary services was $3 $9 million in revenue.
Down slightly from a year ago, when we realized record ACTH volumes and transactions as the cryptocurrency market.
Electronic transactions and dollars processed in return.
Check transactions process were all up sequentially from the first quarter.
There were no expectations there are no expectations of any material contribution from the cryptocurrency market for the balance of the year.
We're seeing increased activity from our lending accounts in other verticals as the economy cools and inflation rises.
Previously stated our crypto currency customer that accounted for approximately 8% of our revenue, which is which most of which was a C. H D. A C. H business has been through challenges before so the next.
Quarter or two we believe.
C H transactions will be down 25% to 30% as compared to the same period a year ago over the long term, we believe our value proposition not just certification synergies with.
Our other electronic payment products and more aggressive marketing will grow the business. We also expect return transactions to be up as much as 50% in the third and fourth quarters of <unk>.
22, as compared to the same periods in 2021.
As always ACTH continues to board new customers and just recently, we were named to be among the first of just a handful of technology firms to be chosen to participate in the Mastercard engaged partner network. This program sponsored by net Mastercard is designed to help busy.
As in Centex quickly deploy open banking solutions for payment.
Lending decisions at scale. This is quite an honor and one that we think that can lead to many exciting new opportunities and should lead to growth in our revenues.
We are the only provider that selected that isn't not just certified.
Card had a record second quarter total dollars processed exceeding 3300 $32 million with $2 8 million transactions process.
The fact remains cards growth engine.
And payback revenue was up again strongly in the second quarter, even more impressive when considering growth was over the highest revenue base of any of our business lines.
With over $650 million and volume already process. This year and several exciting large opportunities on the doorstep card is on pace for another record year.
On a percentage basis prepaid was our fastest growing business line, both for the quarter and for the first half of 2022 with revenues up 29% in the quarter and 112% year to date transactions processed in the quarter nearly tripled from a year ago, while load volumes and purchase.
Dollars.
Both increased by more than 75% prepaid continues to have a very active pipeline of new opportunities.
From a financial perspective, many of the original Covid relief in older card programs are indeed, beginning in the third quarter and continuing somewhat steady from that point forward. We expect this to lead to a stable stream of expiring cards appoint exploration, we will be able to realize any brokerage or spoilage.
<unk> from or unused cards remain friends on these.
Any breakage or spoilage from unused funds.
On these cards, which could potentially account for millions in revenue Houston Frost will talk more about this and other new prepaid card programs in just a minute.
Finally outfit solutions had a strong quarter with revenues up 12% as they process $2 1 million transactions.
Transactions are pieces.
Although down somewhat sequentially for the first quarter much of the second quarter consisted of more reoccurring are repeating business are much more valuable revenue stream than some of the.
One time programs such as tax notices voter registration cards recognized in the first quarter again. The addition of dedicated sales organization and the synergies with our other businesses has been a real benefit to us but solutions, we expect to see output solutions continued to make a valuable contribution to our.
Our revenue growth.
Profits and it's and it is outperforming management's.
Patients.
Let me take a minute to talk about margin and expenses.
Well continue to work.
Reflect the relative contribution of our various business lines in the quarter.
As each have a different margin profile in the second quarter margins were impacted by the slowdown in the Bay C. H, our highest margin business and a larger contribution from our other business lines for us since output solution, which has which has a lower margin profile going forward, we're working on.
The efficiency and productivity improvements that we believe will raise margin in each of our businesses and UCL as a whole expenses reflect spending that was that was needed to catch up with our growth as well as maintaining our growth momentum again weird looking closely at our cost structure for instance.
Some of the investments we made in anticipation of adding a large.
Card program in the second half of the year, while some of those hard some of those costs were contingent.
Some of that.
Such as some call center outsourcing, we're already unwinding some unnecessary spending.
C. L is dedicated to optimizing the leverage in our business. So we can continue to contribute more to the bottom line from our strong strong topline growth.
This was another growth quarter for US here, we demonstrated the resilience of our diverse diversification strategy, serving a variety of end markets with a mixture of electronic payments and related solutions. We expect the second half of the year to be exciting time at UCL as we continued to introduce.
New products into large and rapidly growing markets. Our balance sheet is strong and we are committed to creating shareholder value not only through continued strong growth, but also through shareholder friendly actions such as our shareholder repurchase program.
Tom will talk more about the remainder of the year, but we expect to be back to adjusted positive EBITDA in the fourth quarter due to increased revenue and lower SG&A.
On a final note our sales pipeline is stronger than ever one of our large Isps that services government governmental entities for tax.
Fees and find payments has alerted us that they will be boarding Los Angeles County on our platform in September for the for payment processing and print and mail for the counties.
These findings and notices and their pay associated payments.
L. A county is a home for over 10 million residents.
With that I'd like to conclude my opening remarks ill turn the call over to Houston Frost, our senior Vice President of prepaid services.
Thank you Louis thank.
Thank you everyone for participating in our call. This morning.
Prepaid strong year over year growth carried into the second quarter, where card transactions processed nearly tripled load volume was up 81% and prepaid card purchase dollars processed were up 76%.
Compared to the first quarter of 2022, however, revenue and card load volumes were down.
The first quarter included over 600000 of onetime revenue from printing cards for Voyager digital as well as elevated hard orders in load volumes.
From New York city's Covid incentive program.
N Y six program began winding down in February .
And while we had another substantial albeit short lived disbursement program boost volumes in March and April April actually setting a record as our largest car load volume month ever the revenues from this program in March and April fell below expectations as most of the bonds where access to cash at eight.
Yes.
This led to a deep dislike decreased interchange revenue in the second quarter as compared to the first.
Since may pandemic relief or and then center related card volumes have been down.
And while May and June load volumes were down compared to the first part of 'twenty to 2022. It is important to mention that monthly card load volumes in May June and July are still it's still up nearly tenfold from the volumes we processed in the months prior to the pandemic.
This activity is for more sustainable programs, including corporate incentive and promotional cards as well as nonprofit and government general assistance and guaranteed income programs.
It's important to note that while the pandemic related card volume spikes, we experienced in the past few years may now be over a substantial portion of the revenue from these programs is just beginning to be recognized as card accounts expire or become dormant.
We expect to recognize these revenues over the second half of this year and well into 2023.
As such we remain on track to achieve our revenue growth objectives for the year with substantial fee revenue projected for the last quarter of this.
This year.
This fee related revenues should also lead to improved gross margins for our division in the third and fourth quarters.
The extended time over which we collect revenue from our services will help to smooth out our financial results and 2022. Despite the volatility we have experienced with card loan volumes. It also provides us the time to continue to grow our base of programs that generate sustained load volumes as opposed to the more short term, but sizeable cashless.
As far as their programs, we managed in 2020 in 2021.
The primary driver of card volume in May and June of the second quarter was our position as the premier provider of car disbursement programs for a variety of guaranteed income and civic assessed programs.
We're supporting new programs in Chicago, Denver, and Arlington, which had been added to our growing list of communities employing the company's prepaid card solutions for funds disbursement.
We have also expanded our efforts into the commercial market, we're particularly excited about our partnership with Denmark, where we are supporting the promotional rebate programs and we expect to see substantial growth from their programs. This year as they continue to migrate payment volumes to our platform.
Steve Peters at our SVP of emerging markets has opened several doors to us in the health care vertical since his arrival in late 'twenty, one 2021.
We have two new health care clients that are currently integrating with our API and leveraging our virtual commercial card solution to facilitate discount rebate coupon programs.
This is a large market, where we see great opportunity to increase the volume on our corporate data product, which generates 60% to 65% more interchange revenue per dollar transacted that our consumer programs.
Finally, let me follow up on a couple of Louis' comments about Voyager digital in the first quarter, we did dedicate significant resources to prepare for this program launch while this did not slow or delay any client or program implementations. It did delay some platform enhancements and other development work that could've bolstered revs.
And reduce costs in the second and third quarters this year.
There are no additional costs being incurred are related to voyage or at this point and we do expect several platform enhancements to be ready by the end of the year that will increase our operational efficiency gross margins and provide better service to our customers.
We believe the rapid growth of prepaid over the last couple of years is just the beginning the fintech prepaid and debit card market generate several billion dollars a year in revenue in the U S and continues to grow at a rapid pace, we have a lot of room to scale. This business.
We are on track for another year of exceptional growth and continued to build momentum for success in 2023 and beyond.
With that I'll conclude my remarks, and turn the call over to Greg Carter.
Executive Vice president of payment acceptance.
Thank you Houston and good morning, everyone. The card business continues to generate exceptional growth led by paybacks increasing market penetration.
<unk> revenue was up nearly 8% in the second quarter as volumes were up 23% year over year. This led to a 5% quarter over quarter growth in total card revenue as total dollars processed were a quarterly record of $332 million with $2 8 million transactions processed also a record.
Relative to the quarter a year ago dollars processed were up 10% and transactions decreased by 14% card operations. We're also profitable for the fifth consecutive quarter.
Payback remains our growth engine in the second quarter, we signed five new ISP agreements. Our pipeline also remains robust, including a sizeable opportunity in the health care industry, we feel confident will contract onboard soon.
Let me provide some color. Another success story that shows how you feel is winning in the market.
We got in on the ground floor of an ISP that provides a solution for schools to raise money from literally a standing start they're on their way to becoming a multi million dollar account in the next several months they are growing and deploying more terminals every week.
It's really rewarding to work with the startup educating them on best practices, what works and what doesn't with respect to technology and marketing is really a bright spot. That's the heart of youth Joe on what really sets us apart we have our own proprietary technology, we're flexible we're nimble and our customer service team is unparalleled so that we can work.
With <unk> in all stages of their lifecycle.
When we onboard new merchants every single day from both legacy and new Isps.
We do have employees, who watch customer counts on a daily basis, but when I look back to see how we performed for the quarter I see that our total merchant count is significantly increased.
Just a quick update on some other metrics that are of value to you.
Nutrition, and our penetration of the ISP customer basis remains far better than industry averages.
A R. S. These were still getting the majority of the net new merchants they bring on whether that is mandated or otherwise while continuing to work hard to increase our penetration of their existing merchant base.
Sorry for Pesach business remains a three legged stool.
We continue to add new Isps, those Isps continue to grow their customer base and the individual merchants continue to grow as well as a true picture of our leverage distribution model and in an inflationary economy as prices go up just naturally increases dollars process as well as our revenues as we continue to earn the same proportion of these.
Dollar values going through our network.
We are integrating two new products into our marketing and sales strategies or funds disbursement solution, we're calling consumer choice and point of sale lending also known as buy now pay later. These are just a couple of examples of how we continue to broaden our products and solutions to respond to emerging market trends and enhance our value proposition as a one stop shop.
We increased our revenue streams, both solutions have already begun to garner much excitement.
And we continue to iterate refined enhance and expand our sales and marketing efforts. Most recently, we made some tweaks to our website that it meet immediately resulted in a greater than 50% increase to our lead conversion rate.
This has led to higher qualified leads from which we've already seen some wins.
Also strengthened our business development team keeping.
Keep in mind in many instances the Paypal business development team can often be the catalyst for other new business opportunities that you see of concluding ACTH prepay and output solutions, which have limited business development resources.
Often the hub around which an enterprise has various payment needs to resolve.
This gives us a unique perspective window and insight to the needs of these customers. So our efforts not only to cover pesach opportunities, but generates leads and cross selling opportunities for the entire <unk> enterprise is well taken.
Take away from the first half of the year. So we continue to execute adding new Isps merchants and opportunities, but keep in mind, we are growing compared to a consistently bigger numbers from a year ago.
Nevertheless, as shown by this quarter's record performance, we are on pace to meet our commitment to use shows full year 2022 revenue growth objective.
Let me conclude once again by recognizing the hard work and outstanding performance performance with the many new Seo employees across the organization.
You see it was growing rapidly and without their commitment and dedication we wouldn't be able to provide the level of service that delights our customers with.
I'd like to 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, Greg and welcome everyone. Thanks for joining our call today and your interest in Ucs I'm going to conclude today's prepared remarks with a brief recap of our second quarter financial results before opening the call to questions.
Revenues for the quarter ended June 30th 2022 were $16 2 million up 6% compared to $15 2 million in same period last year all of our growth was organic.
C H and complementary service revenues were $3 9 million down 3% from a year ago, but up sequentially from $3 8 million in the first quarter as Louis mentioned the year ago quarter benefited from record cryptocurrency transactions revenues from output solutions were $4 million up 12% from $3 8 million.
A year ago, all of which was organic growth total pieces processed in the quarter were very strong output solutions continues to run ahead of our expectations.
Prepaid had another quarter of strong growth with revenues up 29% to one point for me.
We continue to support this growth by investing in more engineering and customer service resources to further enhance our reputation for providing innovative new technologies and a high level of customer satisfaction on a sequential basis prepaid revenues down from first quarter, when we bought $600000 or even zero margin.
Prepaid card sales and had no comparable revenues in Q2.
Revenues in our credit card line were up 5% to $6 9 million at both dollar.
Yahoo volume and transactions processed in the quarter were a record for the quarter our card business with prop.
Gross profit in the quarter were $3 4 million gross profit margin in the quarter was 21% sequentially from 19, 4% in the first quarter, but down from the year ago quarter in the second quarter, we saw faster growth in our lower margin products, while revenues and are most profitable.
A C H products were down year over year.
For the quarter total selling general and administrative costs were $3 8 million flat sequentially with the first quarter. We are focused on optimizing SG&A, we built up our cost structure in anticipation of new growth opportunities and we recognize our cost structure needs to be reassessed we will.
Taking action quickly to review all costs.
For the quarter, our operating loss was $1 9 billion with adjusted EBIT was a loss of.
590000, both primarily due to the increase in expenses being incurred to strengthen the organization and invest in our growth initiatives, coupled with lower gross profits as Louis mentioned, we expect to be back to positive adjusted EBITDA for Q4.
The net loss for the quarter was $1 9 million or 10 cents per share compared to income of one said.
Per share in the prior year period, there were $20 3 million outstanding shares used in the EPS calculation.
Recapping our results for the first half of the year revenues were $34 3 million up 20% for the first half of 2021 gross profit was $6 8 million down three 8% versus $7 million in the prior year period Apo.
Operating income for the first six months of 2020 was a loss of $3 4 million versus a loss of <unk> 4 million for the same year ago period, primarily due to increases in operating expenses, which I previously mentioned were represented too.
Actions to strengthen our infrastructure and maintain our rapid revenue growth, especially in prepaid and <unk> business lines.
Adjusted cash used by operating activities was.
$1 2 million for the six months ended June 32022.
Adjusted cash used by operating activities excludes merchant reserves prepaid card load assets customer deposits and lease right of use assets and liabilities.
Bold with our purchases of property plant and equipment in Treasury stock our first half cash usage was two.
To me it.
Which still positions us in solid financial condition with cash balances at June 30 of $5 1 million and no significant debt.
After the first two quarters of the year, we're on pace to meet our 12% to 18% revenue growth objectives for the year and as Louis mentioned, we're working on some exciting new business opportunities.
With much of our business recurring in nature. These new opportunities can be incremental to our ongoing run rate of recurring revenue. In addition in the third quarter, we will began recognizing breakage and spoilage from the unused balances on prepaid cards, we have issued for the various programs we've managed it.
Again, we have over $5 1 billion in cash and virtually no debt, which provides resources to fuel our growth initiatives. This should all add up to another record revenue year for Ucs.
That concludes our prepared remarks for today, we would now like to open up the call for any questions.
Ladies and gentlemen at this time well begin the question and answer session to ask a question you May Press Star and then one using a telephone keypad. If you are using a speaker phone. We do ask you. Please pick up your handset prior suppressing the keys to ensure the best sound quality.
To withdraw your question you May Press Star then two.
Once again that is starting and wanted to ask a question, we'll pause momentarily to assemble the roster.
And our first question today comes from Barry Sine from Spartan Capital Securities. Please go ahead with your question.
Hey, good morning, gentlemen, I'm, you know I know the stock's down quite a bit but my perspective, I see strength in all of the diversity of their businesses and customers. Maybe it's just the liquidity on the stock on a voyage or obviously, that's the elephant in the room.
A three part question. If you don't mind first of all if you look at the voyage of relationship in hindsight would you do it again you got a lot of very profitable revenue. Obviously, you didn't last but you structured it so that there's no write off and if a buyer comes in in an auction you may actually continue that secondly.
Maybe you could discuss the transition process a bit more I'm not sure if I heard that your you backed out all of the expenses people cost Center Telecom what is the process and how long will it take and then thirdly from a consolidated standpoint, you talked about the new Los Angeles Contra.
Jack you talked about a number of contracts for ISP that Greg has talked about and you've talked about getting back to EBITDA positive by fourth quarter, maybe you could provide a little more visibility on how we recover from Voyager and get back to growing and profitability. So I know that's a lot, but three part question on Voyager.
It is a lot, but I mean, it's great questions. The first one is yes, we would gladly take Voyager over again in any customer like it I mean Voyager was a great example of the value that we provide to a customer we had voyager since they were startup.
And we integrated our systems with theirs in a way that allowed them to grow from zero revenues too.
Either they remember what your latest revenues were last quarter.
168 million they are you know.
Grew rapidly and we like to think that we help them grow.
By providing them you know first class services.
And you know, they're a great customer for us and.
Unfortunate that they are in the situation. They are is great. We believe there are great management team.
You know.
We're hopeful that they exited out of bankruptcy in a way that we can continue.
The relationship obviously, that's very uncertain and we are operating that.
In a manner that.
That that's not going to happen a weird.
We're not planning on that happening.
We did you know we had high hopes for their card program.
And we thought it was going to come live in June .
So we geared up for that and in mostly in our customer service area Telecom, we took lease space.
And then we're gonna have to scale that back and you know, it's you know al sourced call Center.
Lease space.
That's not going to go away.
You know head count we can adjust.
But you know it was going to be a huge huge program.
Kind of give your idea of the scale you know we had about 800 card holders wide in all four of those 800 cardholders in one month, we earned $13000 in interchange. So if you can kind of extrapolate that to you know the scale of customers that they had.
Over a million cards and also potential cardholders.
Would have been a substantial deal for us.
And this would have been you know.
Substantial growth for us this year and so that's why we geared up and now we're gearing down for that prepaid has tons of opportunities.
You know.
On the horizon.
Very excited about prepaid.
But Voyager was a you know.
What is going to be important to us this year on prepay.
The good news is we had only projected and are planning only a million dollars in revenue for that account, even though we once we got into it we knew it was much larger than that.
And then.
L a county.
Which came to us from one of our I S vs.
L. A county is obviously very very huge 10 million residents.
Alright, I should be.
Uh huh.
Our software manages all of the counties fees fines.
And the fees are parking tickets and.
Speeding tickets court finds those types of.
Items.
And not only we're gonna be processing the payments for those but we're also going to be printing the notices them. So it's you know hitting two divisions for a company.
And it should be substantial volume.
And you know, it's very likely that you know obviously, we haven't seen any new volume.
But based upon you know 10 million residents that one deal alone probably could replace voyagers revenue and income.
And then pay for that pipeline is also very rich so.
We like our position you know theres nothing wrong with our business model.
And.
You know the Voyager.
As just kind of a bump in the road for us, but it has nothing to do with our business. You know it was it is a great customer that.
You know going through hard times in the head.
They didn't leave us because they didn't like us they love us.
So hopefully that answers your question.
No that's fantastic if I could squeeze in one more on a card spoilage, maybe you can kind of educate us because it sounds like they.
There's a big pilot revenue just sitting there waiting to start to get recognized later this year and that will continue so I just want to confirm that cash is already there you're just waiting for the clock to run down and maybe you could talk about your visibility on how you determine what spoilage is likely to be in the future and maybe put some numbers.
It was around that and then how investors.
Can get some predictability on that if I look at let's say card load volume from six to eight quarters ago is that predictive or how should we think about that card spoilage and that revenue to come.
Well the first thing is the money is already sitting on the cards and so it's not like we have to go collect that from somebody.
You know so it's already there and it's just the matter of recognizing it through C. In the cards.
So we have great visibility into it.
And you know these cards start to expire in September .
And there will continue to expire.
From September on and.
The funds are taken off in the form of a monthly fee.
And as long as Theres funds, there will capture them.
Until there's no more funds on the cards.
We know the balances on the programs that spoil or potential to spoil.
Our significant.
And you know we have you know the way we look at it as kind of through a waterfall.
In a waterfall analysis, and we're able to determine with some amount of certainty.
What the what the revenue will be and.
We're pretty confident what's going to occur.
End of this quarter and.
The fourth quarter and the balances are huge.
And so the revenue will come off quicker than in the beginning and slower in the end because the balances will decrease.
And there is no way for you to with the data we give you for you to know exactly.
And to predict what future spoilage is because the numbers. We give you don't don't help you there.
So okay. So it's low dollar low dollars are a mixture of.
Reloadable cards versus that have no spoilage versus cards that are that do have storage.
Thank you Louis that answers my question, just now I know who to call to get out of a speeding ticket in L. A county.
Yeah, Yeah yeah.
No.
[laughter].
And one of them together.
Once again, if you would like to ask a question. Please press star and then one.
Our next question comes from Jon Hickman from Ladenburg. Please go ahead with your question.
Yeah.
I was wondering if you could elaborate a little bit on this mastercard relationship.
What's it called again.
What's it going to do for you exactly.
So.
Mastercard has this program called the engage program and it's their open banking platform.
And.
They invited.
A handful I believe there was three or four a C. H companies to provide services to their end clients.
And you know these are larger clients.
And we're the only one that is not just certified.
So their clients get to choose among those lists the preferred providers, who they want to use.
And we believe that we will stick out as the preferred provider.
We also as you know have an amazing relationship with Mastercard.
And we think it was a great honor to be chosen and we're already integrated.
No.
Yeah, we haven't seen any revenue from there yet, but mastercard did announcement about us.
A few weeks ago.
So how would that like.
You can find one of mastercard's clients and I need they see terraces and you're on the list and I pick you.
And what happens after that.
And your integrator with Mastercard to just all of a sudden transactions start occurring across your network.
No no no I mean, obviously, we get contacted.
And we would contract with them, but yeah through the Mastercard engage.
The network is how those transactions would flow to us.
But yeah, we would contract with the.
The end customer.
Okay.
Okay, and then I was wondering if you could.
It was great to hear about L. A county.
In your pipeline and the fact that it's closed is there.
Or any other.
Near term.
I dunno contracts.
Maybe not that size, but you could.
Yeah.
You know mention or elaborate on.
Yeah, Yeah. The one that Greg was talking about the health care account on payback is pretty substantial is actually potentially worth $6 million a year in annualized revenue.
It is a card accounts, so it's lower margin than.
Then the La County, one which will be higher margin.
But that.
That one is likely to close in the near future.
And that's a copay card like.
I used to know it's not a car.
It's it's actually.
[noise] payback as credit card processing.
But it's for a co pay.
<unk>.
Customers are a co pay user type.
John we're doing some other work on the prepaid card side that I mentioned in the health care space, but these are just to make sure you're talking about unrelated.
Solutions here between what you know greg's team doing all the banks that side and what we're doing on the pretty bank side. So I don't know if you're getting mixed up with us yeah definitely.
Health care opportunities just billing for health care Health care services via the Oh, Okay. It was just a straight okay.
It's an ISP that's.
Okay.
And you more business I got it Okay and then on the prepaid side you are getting involved in co pay type.
Products.
Our services yeah. It is.
I don't.
Okay, usually her first two insurance et cetera. These are more kind of rebate of shuttle PE aspects of that.
Our broad purchases, so youre close there, but yes it's.
Related to kind of like clients.
Yeah related to using our virtual card platform to facilitate.
Yeah.
A similar type of pay back to what's out there I guess, if you will but more like a coupon take it to the farm promotional game day.
Not that much.
Okay.
Thank you for that my other questions have been answered thanks.
Thanks, John .
And our next question comes from Michael Diana from Maxim Group. Please go ahead with your question.
Thank you.
So Greg mentioned, a tweak that they made to the website, but they had a big impact.
Could you I mean, it sounds fascinating because you could you just tell us a little more about that.
Sure Jim.
The way that we had label of our solutions and products was differentiating between mainly just terminology was was instrumental when people come to the website or prospective customers come to the website and they're looking for a solution versus a product. So we massaged the way that that's presented and we did a comparison from the.
Previous version next to this changed or amended version and we saw an increased click through with higher quality leads. So it was really more stylistic and terminology versus you know net new but it did have a positive impact as you can probably appreciate we get lots of interest.
Through the website and significant amount of that as noise.
So we're now able to get more qualified leads that we can pursue and.
As I said some of those have led to new complex.
Okay. Great. Thanks also you mentioned.
I don't see that related to schools.
Is that like universities or public schools or.
Well, it's a good question, it's primarily elementary high school, it's not at the University level, yet and.
There are service addresses not only tickets, but no booster type fund raising events, whether that's concessions at a volleyball game or a football game or fundraising events for the teams themselves and the <unk>.
Rate at which this entity is growing is it was really impressive.
That was before school started so we're seeing tremendous pickup in out of the school year and started and a lot of areas.
Okay, great. Thank you very much.
Thanks.
Okay.
And ladies and gentlemen, with that and showing no additional questions. We'll end today's question and answer session as well as today's conference call.
We do thank you for attending today's presentation.
You may now disconnect your lines.