Q2 2024 Usio Inc Earnings Call
Speaker Change: [inaudible]
Operator: Hello, and welcome to the UCO second quarter fiscal 2024 earnings conference call. All participants will be in a listen only mode.
Operator: Hello and welcome to the Usio 2nd quarter fiscal 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance? Please signify conference specialists by pressing the star key followed by zero.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star, then 2.
Speaker Change: Hello and welcome.
Speaker Change: to the Usio, Paul Manley, Unknown Executive, David
Speaker Change: 2nd quarter, fiscal 2024 earnings conference call, all participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Operator: After today's presentation, there will be an opportunity to ask questions to ask a question. You may press star, then one, on a touch-tone phone to withdraw your question. Please press star, then two.
Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on a touch-tone phone. To withdraw your question, please press star, then two. Please note today's event is being recorded.
Operator: Please note today's event is being recorded.
Paul Manley: Now I would like to turn the conference over to your host, Paul Manley. Please go ahead, sir.
Operator: Please note, today's event is being recorded. Now, I would like to turn the conference over to your host, Paul Manley. Please go ahead.
Paul Manley: Now, I would like to turn the conference over to your host, Paul Manley. Please go ahead, sir. Thank you, operator, and thank you everyone for joining our call today. Welcome to UCO's second quarter fiscal 2024 conference call.
Paul Manley: Thank you, operator, and thank you everyone for joining our call today. Welcome to UCO's second quarter fiscal 2024 conference. The earnings release which we issued today after the market closed is available on our website at usio.com under the investor relations tab. On this call today, our Louis Hoch, our chairman and CEO, and Greg Carter, Executive Vice President of Payment and Accept. Michael White, Senior Vice President and Chief Accounting Officer, Gary Upner, Head of Cardishing, and newly named Chief Product Officer Houston Frost will be available during the Q&A. I would remind our listeners that certain statements made during the call today constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities and Litigation Act of 1995 as amended.
Paul Manley: Thank you, operator, and thank you, everyone, for joining our call today.
Paul Manley: Welcome to Usio's 2nd quarter fiscal 2024 conference call. The earnings release which we issued today after the market closed is available on our website at usio.com under the Investor Relations tab. On this call today are Lewis Hoke, our chairman and CEO, Greg Carter, Executive Vice President of Payment and Acceptance, Michael White, Senior Vice President and Chief Accounting Officer, Jerry Uffner, Head of Cardation, and newly named Chief Product Officer, Houston Frost will be available during the Q&A.
Speaker Change: The earnings release, which we issued today after the market closed, is available on our website at uco.com under the Investor Relations tab.
Speaker Change: On this call today are Louis Hoch, our Chairman and CEO, Greg Carter, Executive Vice President of Payment and Acceptance.
Speaker Change: Michael White, Senior Vice President and Chief Accounting Officer, Jerry Uffner, Head of the Cardician and Newly named Chief Product Officer, Houston Frost, will be available during the Q&A.
Paul Manley: Let me remind our listeners that certain statements made during the call today constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities and Litigation Act of 1995, as amended. Let me start off with some highlights from this afternoon's release. Momentum remains strong into the 2nd quarter with total payment dollar processing volume growth accelerating to 24%. As all of our electronic transaction processing businesses generating double digit growth across all their key processing metrics. Once again, 2nd quarter results were in line with our expectations. Reflushing on our profit prioritization mandate, re-reported positive gap net income and earnings per share for the quarter.
Speaker Change: Let me remind our listeners that certain statements made during the call today constitute forward looking statements made pursuant to the safe harbor provisions of the private securities and litigation act of 1995 as amended.
Paul Manley: Let me start off with some highlights from this afternoon's release. Momentum remains strong into the second quarter, with total payment dollar processing volume growth accelerating to 24%. As all of our electronic transaction processing businesses generated double digit growth across all their key processing metrics. Once again, second quarter results were in line with our expectations.
Speaker Change: Let me start off with some highlights from this afternoon's release.
Speaker Change: Momentum remains strong into the second quarter with total payment dollar processing volume growth accelerating to 24 percent.
Speaker Change: as all of our electronic transaction processing businesses generated, generating double-digit growth across all their key processing metrics. Once again, second quarter results were in line with our expectations.
Paul Manley: Flushing on our profit prioritization mandate, we re-reported positive gap net income and earnings per share for the quarter. Additionally, cash was up this quarter, even after expanding $105,000 to repurchase $65,519 shares of our stock at an average price of $1.6. In keeping with a practice being adopted in the payments industry, as noted in a press release, interest earned on merchant funds held for payment processing and reserves is now classified as revenue. This change recognizes that interest income is a key component of our company's core operation. The interest earned on our corporate cash account continues to be classified as interest income below the line.
Speaker Change: Reflecting on our profit prioritization mandate, we reported positive gap net income and earnings per share for the quarter.
Paul Manley: Additionally, cash was up this quarter even after expanding $105,000 to repurchase $65,519 shares of our stock at an average price of $1.60. In keeping with a practice being adopted in the payments industry, as noted in our press release, interest earned on merchant fund, merchant fund, help for payment processing, and reserves are now classified as revenue. This change recognizes that interest income is a key component of our company's core operations. The interest earned on our corporate cash account continues to be classified as interest income below the line. So we are gap net income positive, generating cash to continue to invest in our growth initiatives, buy back our own stock, and building a backlog, all great signs of a healthy, thriving enterprise.
Speaker Change: Additionally, cash was up this quarter even after expending $105,000 to repurchase 65,519 shares of our stock at an average price of $1,6.
Speaker Change: In keeping with a practice being adopted in the payments industry, as noted in a press release, interest earned on merchant funds held for payment processing and reserves are now classified as revenue.
Speaker Change: This change recognizes that interest income is a key component of our company's core operations.
Speaker Change: The interest earned on our corporate cash account continues to be classified as interest income below the line.
Paul Manley: So we are gap net income positive, generating cash to continue to invest in our growth initiatives, buying back our own stock, and building a backlog. All great signs of a healthy, thriving enterprise. Just a few more comments on our financials. The slight year over year revenue decrease was due to the planned winding down of the New York City COVID program. Without this contract, revenues would have shown an increase.
Speaker Change: So, we are gap net income positive, generating cash to continue to invest in our growth initiatives, buying back our own stock, and building a backlog. All great signs of a healthy, thriving enterprise.
Paul Manley: Just a few more comments on our financial results. The slight year-over-year revenue decrease was due to the planned wind down of the New York City COVID program. Without this contract, revenues would have shown an increase. Margins continue to reflect the changes in our revenue mix, and second quarter margins primarily reflect the impact of the New York City COVID initiative program, which were better than a year. However, the renewed growth of our most profitable segment, ACH, as well as significant improvement in the profitability of prepaid, are certainly encouraging developments. We expect to help buoy margins. Additionally, on a sequential basis, a more accurate comparison since the New York City program was winding down in both quarters; margins have improved.
Speaker Change: Just a few more comments on our financial results.
Speaker Change: The flight year over year, revenue decreased, was due to the planned wind down of the New York City COVID program. Without this contract, revenues would have shown an increase.
Paul Manley: Margins continue to reflect the changes in our revenue mix, and second quarter margins primarily reflect the impact of the New York City COVID initiative program, which was better than a year ago. However, the renewed growth of our most profitable segment, ACH, as well as significant improvement in the profitability of prepaid, are certainly encouraging developments. We expect to help believe March. Additionally, on a sequential basis, a more accurate comparison since the New York City program was winding down in both quarters, margins have improved.
Speaker Change: Margins continue to reflect the changes in our revenue mix and second quarter margins primarily reflect the impact of the New York City COVID initiative program which were better than a year ago.
Speaker Change: However, the renewed growth of our most profitable segment, ACH, as well as significant improvement in the profitability of prepaid are certainly encouraging developments we expect to help buoy margins.
Speaker Change: Additionally, on a sequential basis, a more accurate comparison since the New York City program was winding down in both quarters, margins have improved.
Paul Manley: SGNA was up slightly due to an increased employee compensation and some incremental marketing investment. I'd like to reiterate that our goal for 2024 is to keep our overhead spending growth rate below that of revenue, and we fully expect to meet this objective. This is an integral element of our strategy to increase operating leverage to improve UCOs' overall profitability. In summary, another fundamentally solid quarter that did not benefit from any individual large programs. We continue to be optimistic as our base of recurring business is growing and represents a solid foundation on which to layer some recently signed new business that we expect to ramp, potentially representing a step change for UCO.
Paul Manley: SG&A was up slightly due to increased employee compensation and some incremental marketing. I'd like to reiterate that our goal for 2024 is to keep our overhead spending growth rate below that, and we fully expect to meet this. This is an integral element of our strategy to increase operating leverage to improve UCO's overall profitability. In summary, another fundamentally solid quarter that did not benefit from any individually large programs.
Speaker Change: SG&A was up slightly due to an increased employee compensation and some incremental marketing investment. I'd like to reiterate that our goal for 2024 is to keep our overhead spending growth rate below that of revenue, and we fully expect to meet this objective.
Speaker Change: This is an integral element of our strategy to increase operating leverage to improve UCO's overall profitability.
Speaker Change: In summary, another fundamentally solid quarter that did not benefit from any individually large programs.
Paul Manley: We continue to be optimistic as our base of recurring business is growing and represents a solid foundation on which to layer some recently signed new business that we expect to ramp, potentially representing a step change for UCO. Due to the success of our profitability-focused initiatives, we are raising our full-year adjusted EBITDA guidance to a range of $4.25 to $5.0 million and expect continued improvements in our liquidity. We believe we will increase full year 2024 bottom-line profitability compared to 2023, and that has been our top priority while setting the table for even greater future performance. Now, with that, I'd like to turn the call over to Greg Carter.
Speaker Change: We continue to be optimistic as our base of recurring business is growing and represents a solid foundation on which to layer some recently signed new business that we expect to ramp, potentially representing a step change for UCO.
Paul Manley: Due to the success of our profitability focused initiatives, we are raising our full year adjusted EBITDA guidance to arrange a $4.25 to $5.00 million and expect continued improvements in our liquidity. We believe we will increase full year 2024 bottom line profitability compared to 2023, and that has been our top priority while setting the table for even greater future performance.
Speaker Change: Due to the success of our profitability-focused initiatives, we are raising our full-year adjusted EBITDA guidance to a range of $4.25 to $5.0 million and expect continued improvements in our liquidity.
Speaker Change: We believe we will increase full year 2024 bottom line profitability compared to 2023 and that has been our top priority while setting the table for even greater future performance.
Greg Carter: Now, with that, I'd like to turn the call over to Greg Carter. Thank you, Paul, and good afternoon to everyone. Cards, once again, set an all-time quarterly record for transactions processed and achieved our second highest all-time records with processing volumes, which were up 10% with transaction volumes up 19%. All of our growth is in payback, as our legacy non-ISB portfolio continues to a trip in line with our overall card strategy. We continue to grow organically, and there are a number of ISBs currently in implementation. For instance, we just implemented a company that provides operating software for independent headhunters.
Speaker Change: Now, with that, I'd like to turn the call over to Greg Carter.
Gregory Carter: Thank you Paul and good afternoon to everyone. Card once again set an all-time quarterly record for transactions processed and achieved our second highest all-time record for processing volumes, which were up 10% with transaction volumes up 19.. All of our growth is in payback as our legacy non-ISV portfolio continues to grow in line with our overall card strategy. We continue to grow organically, and there are a number of ISPs currently in implementation. For instance, we just implemented a company that provides operating software for independent heads.
Greg Carter: Thank you, Paul, and good afternoon to everyone.
Greg Carter: Card once again set an all-time quarterly record for transactions processed and achieved our second highest all-time record for processing volumes, which were up 10%, with transaction volumes up 19%.
Speaker Change: All of our growth is in PayPak, as our legacy non-ISV portfolio continues to attrit in line with our overall card strategy.
Speaker Change: We continue to grow organically and there are a number of ISVs currently in implementation.
Speaker Change: For instance, we just implemented a company that provides operating software for independent headhunters.
Greg Carter: This gets us into a new industry vertical, and I feel very optimistic that this will be a meaningful account, not just for cards, but in this case for ACH as well, another illustration of our cross-selling success. Another ISB that has been implemented and is up and running is a company that is similar to our current client, Fitley. They provide software management systems for gems and fitness facilities. In all, there are 20 ISBs that are at various stages of implementation that will contribute to future revenues. I should also note that payback continues to see virtually no attrition.
Gregory Carter: This gets us into a new industry vertical, and I feel very optimistic that this will be a meaningful account, not just for CARD, but, in this case, for ACH as well, another illustration of our cross-selling success. Another ISV that has been implemented and is up and running is a company that is similar to our current client, Fit. They provide software management systems for gyms and fitness facilities. In all, there are 20 ISVs that are in various stages of implementation that will contribute to future revenue. I should also note that payback continues to see virtually no attrition.
Speaker Change: This gets us into a new industry vertical, and I feel very optimistic that this will be a meaningful account, not just for CARD, but in this case for ACH as well, another illustration of our cross-selling success.
Speaker Change: Another ISV that has been implemented and is up and running is a company that is similar to our current client, Fitly. They provide software management systems for gyms and fitness facilities. In all, there are 20 ISVs that are in various stages of implementation that will contribute to future revenues.
Greg Carter: That supports our organic growth strategy, and that as this stable portfolio of merchants grows, our processing volume naturally grows with them. I'm also pleased with the progress and improvements we are achieving in our marketing activities. We remain strong on social media, we revamped our website, and we've added some new marketing resources. As a result, the pipeline remains strong. Last quarter, we announced that we signed an agreement with a leading web-based ERP ISV whose customers process over $1 billion in annual credit card volume. That program is live and moving through the implementation and integration process. Right now we are making progress with our non-franchise emergence.
Gregory Carter: That supports our organic growth strategy. And that is because this stable portfolio of merchants grows, our processing volume naturally grows with it. I'm also pleased with the progress and improvements we are achieving in our marketing activities. We remain strong on social media. We've revamped our website, and we've added some new marketing resources. As a result, the pipeline remains strong.
Speaker Change: I should also note that payback continues to see virtually no attrition.
Speaker Change: That supports our organic growth strategy, in that, as this stable portfolio of merchants grow, our processing volume naturally grows with them.
Speaker Change: I'm also pleased with the progress and improvements we are achieving in our marketing activities.
Speaker Change: We remain strong on social media. We've revamped our website, and we've added some new marketing resources as a result The pipeline remains strong
Gregory Carter: Last quarter, we announced that we signed an agreement with a leading web-based ERP ISV whose customers process over $1 billion in annual credit card purchases. That program is live and moving through the implementation and integration process. Right now, we are making progress with our non-francized humor.
Speaker Change: Last quarter, we announced that we signed an agreement with a leading web-based ERP ISV whose customers process over $1 billion in annual credit card volume.
Speaker Change: That program is live and moving through the implementation and integration process.
Gregory Carter: Two of these merchants have completed the enrollment process and are awaiting the integration phase with the ISD. And we are in the process of boarding a janitorial sanitation supply company, which we expect to be our first customer officially processing with us through this ISD. Continue to operate and execute towards the plan. This program should ramp up over time, but it's rolling out a little slower than they indicated it would. For some perspective, one of our larger ISV customers, practice, went through a similar digestion period and is now in our top five highest performing ISPs. It's an integration, and it takes time, so we'll provide additional information as it becomes available. Payback has been growing at a double-digit rate without a single large account.
Greg Carter: Two of these merchants have completed the enrollment process and are awaiting the integration phase with the ISV, and we are on the process of boarding a janitorial sanitation supply company, which we expect to be our first customer officially processing with us through this ISV. We continue to operate and execute towards the plan. This program should ramp over time, but it's rolling out a little slower than they indicated it would. For some perspective, one of our larger ISV customers, Practice Suite, went through a similar digestion period and has provided additional information as it becomes available. Payfac has been growing at a double-digit rate without a single large account, and we believe our activity levels support our goal to sustain our growth with the expectation that when this ISV ramps, it will contribute significant incremental processing volume.
Speaker Change: Right now we are making progress with our non-franchisee merchants.
Speaker Change: Two of these merchants have completed the enrollment process and are awaiting the integration phase with the ISV. And we are in the process of boarding a janitorial sanitation supply company, which we expect to be our first customer officially processing with us through this ISV.
Speaker Change: We continue to operate and execute towards the plan. This program should ramp over time, but it's rolling out a little slower than they indicated it would.
Speaker Change: For some perspective, one of our larger ISV customers practically went through a similar digestion period and is now in our top five highest performing ISVs. It's an integration and it takes time. So we'll provide additional information as it becomes available.
Louis Hoch: And we believe our activity levels support our goal to sustain our growth with the expectation that when this ISD ramps up, it will contribute significant incremental processing volume. Now I'd like to turn the call over to Louis Hoch, Chief Executive Officer, to talk more about our other businesses. Thank you, Greg, and welcome, everyone.
Speaker Change: PAYFAC has been growing at a double-digit rate without a single large account and we believe our activity levels support our goal to sustain our growth with the expectation that when this ISV ramps it will contribute significant incremental processing volume.
Louis Hoch: Now I'd like to turn the call over to Louis Hoch, Chief Executive Officer, to talk more about our other businesses. Thank you, Greg, and welcome everyone. It was another solid quarter that was in line with our expectations and one that enabled us to raise our guidance for 2024 for adjusted EBITDA, increasing the top end of the range to $5 million.
Speaker Change: Now I'd like to turn the call over to Louis Hoch, Chief Executive Officer, to talk more about our other businesses.
Louis Hoch: It was another solid quarter that was in line with our expectations and one that enabled us to raise our guidance for 2024 for adjusted EBITDA, increasing the top end of the range to $5 million. Since Paul provided many of our key financial metrics and Greg provided an update on card, let me quickly go through our other business lines and additional corporate highlights. Starting with ACH and complimentary services, it was our best quarter since the third quarter of 2020. 2022 and our fourth consecutive quarter of recovery.
Louis Hoch: Thank you, Greg, and welcome, everyone.
Speaker Change: It was another solid quarter that was in line with our expectations and one that enabled us to raise our guidance for 2024 for adjusted EBITDA, increasing the top end of the range to 5 billion.
Louis Hoch: Since Paul provided many of our key financial metrics and Greg provided an update on card, let me quickly go through our other business lines and additional corporate highlights. Starting with ACH and complimentary services, it was our best quarter since the third quarter of 2022 and our fourth consecutive quarter of recovery. Electronic check transaction volume was up 10 percent. Return check transaction processing volume was up 13 percent, and electronic check dollars process was up 36 percent, all as compared to the second quarter of 2023. Also, all these growth rates accelerated sequentially compared to the first quarter of this year.
Speaker Change: Since Paul provided many of our key financial metrics and Greg provided an update on CARD, let me quickly go through our other business lines and additional corporate highlights.
Speaker Change: Starting with ACH and Complementary Services, it was our best quarter since the third quarter of 2022 and our fourth consecutive quarter of recovery.
Louis Hoch: Electronic check transaction volume was up 10%, return check transaction processing volume was up 13%, and electronic check dollars processed was up 36%, all as compared to the second quarter of 2023. Also, all these growth rates are increasing sequentially compared to the first quarter of this year. Since this is our highest-margin business segment, it is encouraging to see the momentum building. One of the reasons for our success is that we are not only closing more stand-alone ACH deals, but we're also closing deals that require a penless debit solution since we are among a few providers in this space that have this highly complex technology.
Speaker Change: Electronic Check Transaction Volume was up 10%, Return Check Transaction Processing Volume was up 13%, and Electronic Check dollars process was up 36%.
Speaker Change: All as compared to the second quarter of 2023. Also, all these growth rates accelerated sequentially compared to the first quarter of this year.
Louis Hoch: Since this is our highest margin business segment, it is encouraging to see the momentum building. One of the reasons for our success is that we are not only closing more stand-alone ACH deals, but we are also closing deals that require a penless debit solution since we are among a few providers in this space that have this highly complex technology. This capability, along with the growing number of ISVs incorporating ACH, is helping us secure more deals and achieve significant growth. Last quarter, I mentioned our real-time payments initiative with Clearinghouse and FedNow. This quarter I'm pleased announced that we boarded our first real-time payment customer using the We expect to also go live with Fed Now shortly.
Speaker Change: Since this is our highest margin business segment, it is encouraging to see the momentum building.
Speaker Change: One of the reasons for our success is that we are not only closing more stand-alone ACH deals.
Speaker Change: but we're also closing deals that require a penless debit solution.
Speaker Change: Since we are among a few providers in this space that have this highly complex technology.
Louis Hoch: This capability, along with the growing number of ISVs incorporating ACH, is helping us secure more deals and achieve significant growth. Last quarter, I mentioned our real-time payments initiative with Clearinghouse and Thedna. This quarter, I'm pleased to announce that we have boarded our first real-time payment customer using the clearing out process. We expect to also go live with FedNow shortly. Both real-time payment channels are integrated into a single tech stack, and it is already available for most of our existing merchants.
Speaker Change: This capability, along with the growing number of ISVs incorporating ACH, is helping us secure more deals and achieve significant growth.
Speaker Change: Last quarter I mentioned our real-time payments initiative with Clearinghouse and FedNow. This quarter I'm pleased to announce that we boarded our first real-time payment customer using the Clearinghouse.
Louis Hoch: Both real-time payment channels are integrated into a single tech stack, and it is already available for most of our existing merchants, integrations. Both of these payment channels should have a strong adoption once the channels allow for debiting of accounts in addition to the current ability of credit in their accounts. The HCH sales pipeline remains full of additional opportunities. For instance, last month in July, HCH reported its best month since August of 2022, up 28% on transactions, 29% on returns, and 82% on dollars' processed. So you can see the momentum has not slowed.
Speaker Change: We expect to also go live with FedNow shortly. Both real-time payment channels are integrated into a single tech stack, and it is already available for most of our existing mergents integrations.
Louis Hoch: Unknown Speaker 5, Both of these payment channels should have a strong adoption once the channels allow for debiting of accounts in addition to the current ability to credit accounts. The ACH sales pipeline remains full of additional opportunities. For instance, last month in July, ACH recorded its best month since August of 2022, up 28% on transactions, 29% on returns, and 82% on dollars processed. So you can see the momentum has not slowed.
Speaker Change: Both of these payment channels should have a strong adoption once the channels allow for debiting of accounts in addition to the current ability of crediting accounts.
Speaker Change: The ACH sales pipeline remains full of additional opportunities.
Speaker Change: For instance, last month, in July, ACH recorded its best month since August of 2022, up 28% on transactions, 29% on returns, and 82% on dollars processed, so you can see the momentum has not slowed.
Louis Hoch: In output solutions, we continue our strategic growth initiatives with electronic documents delivered exceeding 20.7 million, a quarterly record, and up 6% sequentially from the first quarter of this year. Once again, we delivered more documents electronically than by mail. Per unit revenue for electronic delivery is below that of mail, and it's contributing to a year-over-year decrease in output revenues. Output continues to add new accounts. In the quarter, we added seven new cities where we will be providing services for either water, electric, sewer, energy, or other municipal buildings. So the business is fundamentally growing. Last year, we invested in new equipment.
Louis Hoch: [inaudible] In output solutions, we continue our strategic growth initiatives with electronic documents delivered exceeding 20.7 million, a quarterly record and up 6% sequentially from the first quarter of this year. Once again, we delivered more documents electronically than by mail. However, per unit revenue for electronic delivery is below that of mail and is contributing to a year over year decrease in output revenue. Output continues to add new accounts.
Speaker Change: In output solutions, we continue our strategic growth initiatives.
Speaker Change: with electronic documents delivered exceeding $20.7 million, a quarterly record.
Speaker Change: and up 6% sequentially from the first quarter of this year. Once again, we delivered more documents electronically than by mail.
Speaker Change: Per unit revenue for electronic delivery is below that of mail and is contributing to a year-over-year decrease in output revenues.
Louis Hoch: In the quarter, we added seven new cities where we will be providing services for either water, electric, sewer, energy, or other municipal buildings. So the business is fundamentally growing. Last year we invested in new equipment that gives us the opportunity to bid on jobs that we could not previously execute due to either reconciliation or volume requirements that exceeded our capacities. Our new equipment has already landed us a sizable program to handle the printing and distribution of 500,000 checks for a bankruptcy distribution that started in late July.
Speaker Change: Output continues to add new accounts in the quarter. We added seven new cities where we will be providing services for either water, electric, sewer, energy. Gary Prestopino, Scott Buck, Jon Hickman,
Speaker Change: or other municipal buildings.
Speaker Change: So, the business is fundamentally growing.
Louis Hoch: It gives us the opportunity to bid on jobs that we could not previously execute due to either reconciliation or volume requirements that exceeded our capacity. Our new equipment has already landed as a sizable program to handle the printing and distribution of 500,000 checks for bankruptcy distribution that started in late July. There is another sizable opportunity virtually on the doorstep that we could only contemplate by having this equipment. While these big jobs, until a longer sales cycle, they represent the opportunity to raise output solutions to a new level and better leverage our fixed investment to improve profitability, which is our number one strategic priority.
Speaker Change: Last year we invested in new equipment that gives us an opportunity to bid on jobs that we could not previously execute due to either reconciliation or volume requirements that exceeded our capacities.
Speaker Change: Our new equipment has already landed us a sizable program to handle the printing and distribution of 500,000 checks for a bankruptcy distribution that started in late July.
Louis Hoch: There is another sizable opportunity virtually on the doorstep that we could only contemplate by having this equipment. While these big jobs entail a longer sales cycle, they represent the opportunity to raise output solutions to a new level and better leverage our fixed investment to improve profitability, which is our number one strategic priority. Card issuing continued its momentum in the second quarter. Total dollars loaded on prepaid cards exceeded $133 million, which was an all-time record, and was also the fourth consecutive quarter exceeding $100 million in loads.
Speaker Change: There is another sizable opportunity virtually on the doorstep.
Speaker Change: that we could only contemplate by having this equipment.
Speaker Change: While these big jobs entail a longer sales cycle, they represent the opportunity to raise output solutions to a new level and better leverage our fixed investment to improve profitability, which is our number one strategic priority.
Louis Hoch: Card issuing continued its momentum in the second quarter. Total dollars loaded on prepaid cards exceeded 133 million, which was an all-time record and was also the fourth consecutive quarter exceeding 100 million in loads. In addition, prepaid card transaction volume increased 58%, purchase volume increased 39%, while total card load volume was up 55% all compared to the second quarter a year ago. We now have more active cards in our system than ever. Carter. Card loads are an important forward-looking metric, and we expect this accelerated load volume to continue in the third and fourth quarters. We continue implementing our strategy to build a portfolio of corporate expense, general purpose, reloadable, GPR, cards, and other long-term programs with the intention of increasing our recurring revenue and, in keeping with Usio's overall top strategic priority, profitability increased dramatically in the quarter.
Louis Hoch: In addition, pre-paid card transaction volume increased 58%, purchase volume increased 39%, while total card load volume was up 55% compared to the second quarter a year ago. We now have more active cards in our system than ever. Card loads are an important forward-looking metric, and we expect this accelerated load volume to continue in the third and fourth quarters. We continue implementing our strategy to build a portfolio of corporate expense, General Purpose Reloable, GPR, Cards, and other long-term programs with the intention of increasing our returning revenue. And in keeping with UCO's overall top strategic priority, profitability increased dramatically in the quarter.
Speaker Change: Card issuing continued its momentum in the second quarter. Total dollars loaded on prepaid cards exceeded $133 million, which was an all-time record, and was also the fourth consecutive quarter exceeding $100 million in loads.
Speaker Change: In addition, prepaid card transaction volume increased 58%, purchase volume increased 39%, while total card load volume was up 55%, all compared to the second quarter a year ago.
Speaker Change: We now have more active cards in our system than ever.
Speaker Change: Card loads are an important forward-looking metric and we expect this accelerated load volume to continue in the third and fourth quarters.
Speaker Change: We continue implementing our strategy to build a portfolio of corporate expense, general purpose reloadable GPR cards, and other long-term programs with the intention of improving the economy.
Speaker Change: increasing our recurring revenue and in keeping with Usio's overall top strategic priority, profitability increased dramatically in the quarter.
Louis Hoch: Our relationship with mobile money continued to expand with their successful launch of a new instant issue, general purpose, reloadable card program at hundreds of the amusement parks, water parks, and resorts through the reverse ATM Kios technology. We also saw continued growth with our card issuing customer class wallet, which recently expanded the relationship with the mental agencies, nonprofits, and related organizations. Additionally, we have intensified our marketing efforts, including recently co-sponsoring a successful webinar with MasterCard. Our card issuing team completed over 20 implementations in the second quarter and are working on several more, including nonprofit, GPR, and funds distribution programs. We are continuing implementations of unique and key gift card clients in the third and fourth quarters of this year.
Louis Hoch: Our relationship with Mobile Money continued to expand with their successful launch of a new instant issue general purpose Reloadable Car Program at hundreds of amusement parks, water parks, and resorts through their reverse ATM kiosk technology.
Speaker Change: Our relationship with Mobile Money continued to expand with their successful launch of a new instant issue
Speaker Change: General Purpose Reloadable Car Program at hundreds of amusement parks, water parks and resorts through their reverse ATM kiosk technology.
Louis Hoch: We also saw continued growth with our card issuing customer class wallet, which recently expanded the relationship with Usio by adding our ACH service. We remain committed to expanding our partnerships with governmental agencies, nonprofits, and related organizations. Additionally, we have intensified our marketing efforts, including recently co-sponsoring a successful webinar with MasterCard. Our card issuing team completed over 20 implementations in the second quarter and is working on several more, including non-profit, GPR, and funds distribution programs, implementations of unique and key gift card clients in the third and fourth quarters of this year.
Speaker Change: We also saw continued growth with our card-issuing customer, Class Wallet, which recently expanded the relationship with Usio by adding our ACH services.
Speaker Change: We remain committed to expanding our partnerships with governmental agencies, non-profits, and related organizations.
Speaker Change: Additionally, we have intensified our marketing efforts, including recently co-sponsoring.
Speaker Change: A successful webinar with MasterCard.
Speaker Change: Our card issuing team completed over 20 implementations in the second quarter.
Speaker Change: and are working on several more, including non-profit, GPR, and funds distribution programs. We are continuing implementations of unique and key gift card clients in the third and fourth quarter of this year.
Louis Hoch: We are also working on new functionality and features, including upgrading our client portal, and expanding our relationship with MasterCard by adding additional fraud protection and other MasterCard services to our reloadable products. I'm very pleased with the progress. Finally, Usio continues to strengthen its financial position, having added $400,000 in cash to our balance sheet in the second quarter of 2024.
Louis Hoch: We are also working on new functionality and features, including upgrading to our client portal, expanding our relationship with MasterCard by adding additional fraud protection and other MasterCard services to our reloadable products. I'm very pleased with the progress.
Speaker Change: We are also working on new functionality and features, including upgrading to our client portal, expanding our relationship with MasterCard by adding additional fraud protection and other MasterCard services to our reloadable products.
Louis Hoch: Finally, Usio continues to strengthen its financial position, having added $400,000 in cash to our balance sheet in the second quarter of 2024. We now have $7.5 million available to support our growth initiatives, and we believe that balance should grow throughout the year. I also want to echo great sentiments that remain very excited and essentially on track with the large ISV that we announced earlier this year. This is a large implementation and takes time. We indicated that it was expected to seriously ramp in 2025, with some prospects that early adopters would come on board later this year.
Speaker Change: I'm very pleased with the progress.
Speaker Change: Finally, UCO continues to strengthen its financial position, having added $400,000 in cash to our balance sheet in the second quarter of 2024.
Louis Hoch: We now have $7.5 million available to support our growth initiatives, and we believe that balance should grow throughout the year. I also want to echo Greg's sentiments that we remain very excited and essentially on track with the large ISV that we announced earlier this year. This large, and this is a big implementation and takes time. We indicated it would be in the future, and it was expected to seriously ramp up in 2025 with some prospects that early adopters would come on board later this year. Those rollouts have been a little slower than anticipated. But otherwise, nothing has changed. Since it's merely a matter of window ramp processing, forecasting revenues over the short term is challenging.
Speaker Change: We now have $7.5 million available to support our growth initiatives, and we believe that balance should grow throughout the year.
Speaker Change: I also want to echo Greg's sentiments that remain very excited and essentially on track with the large ISV that we announced earlier this year. This large, this is large implementation and takes time. We indicated it would. [inaudible]
Speaker Change: was expected to seriously ramp in 2025 with some prospects that early adopters would come on board later this year.
Louis Hoch: Those robots have been a little slower than anticipated. Otherwise, nothing has changed. Since it's merely a matter of when, the ramp processing forecasting revenues over the short term is challenging. Also, in addition to the $500,000 check order currently in process, our output solutions team has an understanding with a prestigious bankruptcy administration firm that Usio will be handling the issuing and mailing of a potentially significant number of checks associated with a much larger bankruptcy distribution. Again, the timing is uncertain, but if the deal is closed, it will create a significant revenue opportunity for output solutions. If any of this work ramps in the near term, there's still time to meet or exceed our initial 2024 revenue guidance.
Speaker Change: Those rollouts have been a little slower than anticipated. Otherwise, nothing has changed.
Louis Hoch: Also, in addition to the 500,000 check order currently in process, our output solutions team has an understanding with a prestigious bankruptcy administration firm that UCO will be handling the issuing and mailing of potentially a significant number of checks associated with a much larger bankruptcy distribution. Again, the timing is uncertain, but if the deal is closed, it will create a significant revenue opportunity for output solutions. If any of this works.
Speaker Change: Since it's merely a matter of when they'll ramp processing, forecasting revenues over the short term is challenging.
Speaker Change: Also, in addition to the $500,000 check order currently in process,
Speaker Change: Our output solutions team.
Speaker Change: has an understanding with a prestigious bankruptcy administration firm that UCO will be handling the issuing and mailing of potentially significant number of checks associated with a much larger bankruptcy distribution.
Speaker Change: Again, the timing is uncertain, but if the deal is closed, it will create a significant revenue opportunity for output solutions.
Louis Hoch: Ramps in the near term, there's still time to meet or exceed our initial 2024 revenue guidance. However, we're not counting on that. So correspondingly, it looks like revenue growth will come in somewhat below our initial guidance of between 3% and 7% for 2024. But more importantly, adjusted EBITDA for the year will be equal to or even potentially better than the originally anticipated 4 to 4.5 million. We also expect full-year earnings per share to be between zero and three cents a share.
Speaker Change: If any of this worked,
Speaker Change: ramps in the near term, there's still time to meet or exceed our initial 2024 revenue guidance. However, we're not counting on that.
Louis Hoch: However, we're not counting on that. So correspondingly, it looks like revenue growth will come in somewhat below our initial guidance at between 3 and 7% for 2024. But more importantly, adjusted EBITDA for the year will be equal to or even potentially better than they originally anticipated for the 4.25 million. We also expect full year earnings per share to be through zero and three cents a share.
Speaker Change: So correspondingly, it looks like revenue growth will come in somewhat below our initial guidance.
Speaker Change: at between 3% and 7% for 2024. But more importantly, adjusted EBITDA for the year will be equal to or even potentially better than the originally anticipated 4 to 4.5 million.
Speaker Change: We also expect full year earnings per share to be between zero and three cents a share. With that, I would like to turn the call back to the operator to conduct our question and answer session.
Operator: With that, I would like to turn the call back to the operator to conduct our question-and-answer session. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed, and you would like to withdraw your question, please press star, then two.
Operator: With that, I would like to turn the call back to the operator to conduct our question and answer session. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question, you may press star, then one on your telephone keypad.
Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.
Operator: At this time, we will pause momentarily to assemble our roster.
Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily. Assemble. The first question comes from Scott Buck with H.C. Wainwright.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Scott Bach: The first question comes from Scott Bach with HC Wainwright. Please go ahead. Good afternoon, guys. Thanks for taking my questions. Louis, on payback, I understand the slower implementation. I'm assuming that is on them, not a capacity issue on UCI's ability to onboard, is that correct? No, that is correct. We would like to do that. Our system is very standard, so we have to mention it. Not only our new large audience, but also a new development, I think, that would be the same. I think it's very easy to do this. It's very rare. It's hard. It's just not needed.
Speaker Change: The first question comes from Scott Buck with H.C. Wainwright.
Scott Buck: Please go ahead. Hi, good afternoon, guys. Thanks for taking my questions. Louis, on payback, I understand the slower implementation.
Speaker Change: Please go ahead.
Scott Bock: Hi, good afternoon guys. Thanks for taking my questions. Louis, on payback, I understand the slower implementation. I'm assuming that is on them, not a capacity issue on UCO's ability to onboard. Is that correct?
Louis Hoch: I'm assuming that is on... it's not a capacity issue on us using here's ability to onboard, is that correct? Oh, that is the way we're going to be going. And our system is very standard, so it's here at Martial Day.
Speaker Change: We're ready to go. Our systems are very stable. We're at the mercy of it.
Louis Hoch: Not only our new, large ISD, but also a group of other ones that we saved during the year during the pandemic. So the group is there, it's ours, and it's just not really what I intended to name. Okay, and I think you touched on it there in your prepared remarks, but it's not, you're not at risk of losing any of that volume, right? I mean, it's all coming over at some point.
Speaker Change: Not only our new large ISD, but also a group of other ones that we have saved during the year. So the business is there, it's ours, and it's just not new.
Louis Hoch: Okay, and I think you touched on it there in your prepared remarks, but you're not at risk of losing any of that volume. I mean, it's all coming over at some point. Yeah, it's already signed with deals. Some of you guys did flash cuts, or they just announced that all their whole customer base may look searching. That's obviously their performance. But more of our lives is implementing segments. It's going to get the variables that they may be providing services. And that's what we're experiencing now.
Speaker Change: Okay, and I think you touched on it there in your prepared remarks, but it's not, you're not at risk of losing any of that volume, right? I mean, it's all coming over at some point.
Unknown Speaker: Unknown Speaker Yeah, he's already signed these deals. Unknown Speaker Yeah. Unknown Speaker Some of these guys did flash cuts, or they just announced that their whole customer base, and they're switching. That's obviously their preference.
Speaker Change: Yeah, it's already signed these deals and you know, some of these guys did flash cuts where they just announced that all their home customer base ended up switching. That's obviously their preference, but...
Unknown Speaker: But more of our eyes are on implementing segments, based on the different verticals that they may be providing services to, or, you know, different levels of customers. And that's what we're experiencing now. It's huge.
Speaker Change: More lies in implementing segments based on the different verticals that they make, the providing services being on different levels of customers. And that's what we're experiencing now, is roots.
Unknown Speaker: Unknown Speaker. Okay, that's helpful. And then you guys have a nice step up in gross margin. I mean, I understand mix can drive very different quarter to quarter gross margins.
Louis Hoch: Okay, that's helpful. And then you guys have a nice step up in Gross Margin. I mean, I understand mix can drive very different quarter-quarter gross margins. But as we think longer term and as a business continues to mature, do you think there's some room to push gross margin, you know, kind of regularly in that 25% plus range? It's definitely a goal for us to try to get there. There are some economies that we haven't achieved yet. So yeah, 24.25. Okay, perfect. That's great.
Speaker Change: Right.
Speaker Change: Okay, that's helpful. And then, you guys have a nice step up in gross margin. I mean, I understand mix can drive very different quarter-to-quarter gross margins, but...
Unknown Speaker: But as we think longer term, and as the business continues to mature, do you think there's some room to push gross margin, you know, kind of regularly in that 25% plus range? That is definitely a goal for us. We're trying to get there. There are some economies that we haven't achieved yet. So yeah, 24, 25.
Speaker Change: As we think longer term and as the business continues to mature, do you think there's some room to push gross margin, you know, kind of regularly in that 25% plus range?
Speaker Change: That is definitely a goal for us. We're trying to get there. There are some economies that we haven't achieved yet, that we can achieve. So yeah, 24, 25, let's get them.
Unknown Speaker: Unknown. Okay, perfect. That's great. And then last one, for me, it sounds like there's going to be a little bit more marketing spend. Could you give us a sense, kind of percentage wise, how much your increasing spend there and maybe where some of those incremental marketing dollars are going? Yeah, well, personally, I don't think we're really spending any more money. We're leveraging relationships, we're leveraging tools that already exist out there. We've been in, you know, our existing advertising, but we're not changing it.
Louis Hoch: And then last one for me, it sounds like there's going to be a little bit more marketing spend. Could you give us a sense, you know, kind of percentage-wise, how much you're increasing spend there and maybe where some of those incremental marketing dollars are going? Yeah, well, personally, I don't think we're going to extend any of these. There's a lot of energy relationships. There's other things that are going to exist out there. We've been, you know, our existing advertising business. We've been sending ours, and you're not working with the ask the product recently. So it's about the estimates of the analysts.
Speaker Change: Okay, perfect, that's great. And then last one for me, it sounds like there's gonna be a little bit more marketing spend. Could you give us a sense, you know, kind of percentage wise, how much you're increasing spend there and maybe where some of those incremental marketing dollars are going?
Speaker Change: Yeah, well, personally, I don't think we're going to spend any more money on staff. We're leveraging relationships, we're leveraging tools that already exist out there. And we're going to leave here and we're going to end.
Unknown Speaker: It's through seminars, and we're not working with the last record. Recently, some of our customers, panelists, Unknown Speaker, Unknown Speaker, Unknown Speaker, Okay, great. That's helpful. I appreciate the added color, guys.
Speaker Change: You know, our existing advertising, but we're not changing it. It's through seminars, and we've been working with MasterCard recently, with some of our customers and panelists.
Louis Hoch: And so that's not really expected. It's something that's happening again.
Speaker Change: [inaudible]
Scott Bach: Okay, great. That's helpful. I appreciate the added color, guys. Thanks again.
Operator: Again, if you have a question, please press star, then one. There are no further questions. This concludes our question and answer session.
Scott Buck: Thanks again. Again, if you have a question, please press star then 1. There are no further questions. This concludes our question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: Again, if you have a question, please press star then one.
Speaker Change: There are no further questions.
Operator: The conference has now concluded. Thank you for attending today's presentation.
Speaker Change: This concludes our question and answer session.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: You may now disconnect.
Operator: Hello and welcome to the Usio 2nd quarter fiscal 2024 earnings conference call. All participants will be in a listen only mode. Should you need assistance? Please signify conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question. You may press star then one on a touch tone phone to withdraw your question. Please press star then two.
Operator: Please note today's event is being recorded.
Paul Manley: Now I would like to turn the conference over to your host, Paul Manley. Please go ahead sir. Thank you operator and thank you everyone for joining our call today.
Paul Manley: Welcome to usio's 2nd quarter fiscal 2024 conference call. The earnings release which we issued today after the market closed is available on our website at usio.com under the investor relations tab. On this call today are Lewis Hoke, our chairman and CEO, Greg Carter, Executive Vice President of Payment and Acceptance, Michael White, Senior Vice President and Chief Accounting Officer, Jerry Uffner, Ted of Cardation, and newly named Chief Product Officer, Houston Frost will be available during the Q&A. Let me remind our listeners that certain statements made during the call today constitute forward-looking statements made pursuant to the safe harbor provisions of the private securities and litigation act of 1995 as amended.
Paul Manley: Let me start off with some highlights from this afternoon's release. Momentum remains strong into the 2nd quarter with total payment dollar processing volume growth accelerating to 24%. As all of our electronic transaction processing businesses generating double digit growth across all their key processing metrics. Once again, 2nd quarter results were in line with our expectations. Reflushing on our profit prioritization mandate, re-reported positive gap net income and earnings per share for the quarter.
Paul Manley: Additionally, cash was up this quarter even after expanding $105,000 to repurchase $65,519 shares of our stock at an average price of $1.60. In keeping with a practice being adopted in the payments industry, as noted in our press release, interest earned on merchant fund, merchant fund, help for payment processing and reserves are now classified as revenue. This change recognizes that interest income is a key component of our company's core operations. The interest earned on our corporate cash account continues to be classified as interest income below the line. So we are gap net income positive generating cash to continue to invest in our growth initiatives by and back our own stock and building a backlog, all great signs of a healthy, thriving enterprise.
Paul Manley: Just a few more comments on our financial results. The slight year over year revenue decrease was due to the planned wind down of the New York City COVID program. Without this contract, revenues would have shown an increase. Margins continue to reflect the changes in our revenue mix and second quarter margins primarily reflect the impact of the New York City COVID initiative program, which were better than a year. However, the renewed growth of our most profitable segment, ACH, as well as significant improvement in the profitability of prepaid are certainly encouraging development.
Paul Manley: We expect to help buoy margins. Additionally, on a sequential basis, a more accurate comparison since the New York City program was winding down in both quarters, margins have improved. SGNA was up slightly due to an increased employee compensation and some incremental marketing investment. I'd like to reiterate that our goal for 2024 is to keep our overhead spending growth rate below that of revenue, and we fully expect to meet this objective. This is an integral element of our strategy to increase operating leverage to improve UCOs' overall profitability.
Paul Manley: In summary, another fundamentally solid quarter that did not benefit from any individual large programs. We continue to be optimistic as our base of recurring business is growing and represents a solid foundation on which to layer some recently signed new business that we expect to ramp, potentially representing a step change for UCO. Due to the success of our profitability focused initiatives, we are raising our full year adjusted EBITDA guidance to arrange a $4.25 to $5.00 million and expect continued improvements in our liquidity. We believe we will increase full year 2024 bottom line profitability compared to 2023, and that has been our top priority while setting the table for even greater future performance.
Greg Carter: Now, with that, I'd like to turn the call over to Greg Carter. Thank you, Paul, and good afternoon to everyone. Cards, once again, set an all-time quarterly record for transactions process and achieved our second highest all-time records with processing volumes, which were up 10% with transaction volumes up 19%. All of our growth is in payback, as our legacy non-ISB portfolio continues to a trip in line with our overall card strategy. We continue to grow organically, and there are a number of ISBs currently in implementation.
Greg Carter: For instance, we just implemented a company that provides operating software for independent headhunters. This gets us into a new industry vertical, and I feel very optimistic that this will be a meaningful account, not just for cards, but in this case for ACH as well, another illustration of our cross-selling success. Another ISB that has been implemented and is up and running is a company that is similar to our current client, Fitley. They provide software management systems for gems and fitness facilities.
Greg Carter: In all, there are 20 ISBs that are at various stages of implementation that will contribute to future revenues. I should also note that payback continues to see virtually no attrition. That supports our organic growth strategy, and that as this stable portfolio of merchants grow, our processing volume naturally grows with them. I'm also pleased with the progress and improvements we are achieving in our marketing activities. We remain strong on social media, we revamped our website, and we've added some new marketing resources.
Greg Carter: As a result, the pipeline remains strong. Last quarter, we announced that we signed an agreement with a leading web-based ERP ISV whose customers process over $1 billion in annual credit card volume. That program is live and moving through the implementation and integration process. Right now we are making progress with our non-franchise emergence. Two of these merchants have completed the enrollment process and are awaiting the integration phase with the ISV and we are on the process of boarding a janitorial sanitation supply company which we expect to be our first customer officially processing with us through this ISV.
Greg Carter: We continue to operate and execute towards the plan. This program should ramp over time, but it's rolling out a little slower than they indicated it would. For some perspective, one of our larger ISV customers, practice suite, went through a similar digestion period and has provided additional information as it becomes available. Payfac has been growing at a double digit rate without a single large account and we believe our activity levels support our goal to sustain our growth with the expectation that when this ISV ramps it will contribute significant incremental processing volume.
Louis Hoch: Now I'd like to turn the call over to Louis Hoch, Chief Executive is officer to talk more about our other businesses. Thank you Greg and welcome everyone. It was another solid quarter that was in line with our expectations and one that enabled us to raise our guidance for 2024 for adjusted EBITDA, increasing the top end of the range to 5 million.
Louis Hoch: Since Paul provided many of our key financial metrics and Greg provided an update on card, let me quickly go through our other business lines and additional corporate highlights. Starting with ACH and complimentary services, it was our best quarter since the third quarter of 2022 and our fourth consecutive quarter of recovery. Electronic check transaction volume was up 10 percent. Return check transaction processing volume was up 13 percent and electronic check dollars process was up 36 percent all as compared to the second quarter of 2023.
Louis Hoch: Also all these growth rates accelerated sequentially compared to the first quarter of this year. Since this is our highest margin business segment it is encouraging to see the momentum building. One of the reasons for our success is that we are not only closing more stand-alone ACH deals but we are also closing deals that require a penless debit solution since we are among a few providers in this space that have this highly complex technology.
Louis Hoch: This capability along with the growing number of ISVs incorporating ACH is helping us secure more deals and achieve significant growth. Last quarter I mentioned our real-time payments initiative with clearinghouse and FedNow. This quarter I'm pleased announced that we boarded our first real-time payment customer using the We expect to also go live with Fed now shortly. Both real-time payment channels are integrated into a single tech stack, and it is already available for most of our existing merchants, integrations.
Louis Hoch: Both of these payment channels should have a strong adoption once the channels allow for debiting of accounts in addition to the current ability of credit in their accounts. The HCH sales pipeline remains full of additional opportunities. For instance, last month in July, HCH reported its best month since August of 2022, up 28% on transactions, 29% on returns, and 82% on dollars' process. So you can see the momentum has not slowed. In output solutions, we continue our strategic growth initiatives with electronic documents delivered exceeding 20.7 million, a quarterly record, and up 6% sequentially from the first quarter of this year.
Louis Hoch: Once again, we delivered more documents electronically than by mail. Per unit revenue for electronic delivery is below that of mail and it's contributing to a year over year decrease in output revenues. Output continues to add new accounts. In the quarter, we added seven new cities where we will be providing services for either water, electric, sewer, energy, or other municipal buildings. So the business is fundamentally growing. Last year, we invested in new equipment.
Louis Hoch: It gives us the opportunity to bid on jobs that we could not previously execute due to either reconciliation or volume requirements that exceeded our capacity. Our new equipment has already landed as a sizable program to handle the printing and distribution of 500,000 checks for bankruptcy distribution that started in late July. There is another sizable opportunity virtually on the doorstep that we could only contemplate by having this equipment. While these big jobs until a longer sales cycle, they represent the opportunity to raise output solutions to a new level and better leverage our fixed investment to improve profitability, which is our number one strategic priority.
Louis Hoch: Card issuing continued its momentum in the second quarter. Total dollars loaded on prepaid cards exceeded 133 million, which was an all-time record and was also the fourth consecutive quarter exceeding 100 million in loads. In addition, prepaid card transaction volume increased 58%, purchase volume increased 39% while total card load volume was up 55% all compared to the second quarter a year ago. We now have more active cards in our system than ever.
Louis Hoch: Carter. Card loads are an important forward looking metric, and we expect this accelerated load volume to continue in the third and fourth quarters. We continue implementing our strategy to build a portfolio of corporate expense, general purpose, reloadable, GPR, cards, and other long-term programs with the intention of increasing our recurring revenue and in keeping with Usio's overall top strategic priority, profitability increased dramatically in the quarter. Our relationship with mobile money continued to expand with their successful launch of a new instant issue, general purpose, reloadable card program at hundreds of the amusement parks, water parks, and resorts through the reverse ATM Kios technology.
Louis Hoch: We also saw continued growth with our card issuing customer class wallet, which recently expanded the relationship with the mental agencies, nonprofits, and related organizations. Additionally, we have intensified our marketing efforts, including recently co-sponsoring a successful webinar with MasterCard. Our card issuing team completed over 20 implementations in the second quarter and are working on several more, including nonprofit, GPR, and funds distribution programs. We are continuing implementations of unique and key gift card clients in the third and fourth quarter of this year.
Louis Hoch: We are also working on new functionality and features, including upgrading to our client portal, expanding our relationship with MasterCard by adding additional fraud protection and other MasterCard services to our reloadable products. I'm very pleased with the progress. Finally, Usio continues to strengthen its financial position, having added $400,000 in cash to our balance sheet in the second quarter of 2024. We now have $7.5 million available to support our growth initiatives, and we believe that balance should grow throughout the year.
Louis Hoch: I also want to echo great sentiments that remain very excited and essentially on track with the large ISV that we announced earlier this year. This is a large implementation and takes time. We indicated that it was expected to seriously ramp in 2025, with some prospects that early adopters would come on board later this year. Those robots have been a little slower than anticipated. Otherwise, nothing has changed. Since it's merely a matter of when the ramp processing forecasting revenues over the short term is challenging.
Louis Hoch: Also, in addition to the $500,000 check order currently in process, our output solutions team has an understanding with a prestigious bankruptcy administration firm that Usio will be handling the issuing and mailing of potentially significant number of checks associated with a much larger bankruptcy distribution. Again, the timing is uncertain, but if the deal is closed, it will create a significant revenue opportunity for output solutions. If any of this work ramps in the near term, there's still time to meet or exceed our initial 2024 revenue guidance.
Louis Hoch: However, we're not counting on that. So correspondingly, it looks like revenue growth will come in somewhat below our initial guidance at between 3 and 7% for 2024. But more importantly, adjusted EBITDA for the year, will be equal to or even potentially better than they originally anticipated for the 4.25 million. We also expect full year earnings per share to be through zero and three cents a share.
Operator: With that, I would like to turn the call back to the operator to conduct our question and answer session. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed, and you would like to withdraw your question, please press star, then two.
Operator: At this time, we will pause momentarily to assemble our roster.
Scott Bach: The first question comes from Scott Bach with HC Wainwright. Please go ahead. Good afternoon, guys. Thanks for taking my questions. Louis, on payback, I understand the slower implementation. I'm assuming that is on them, not a capacity issue on UCI's ability to onboard, is that correct? No, that is correct. We would like to do that. Our system is very standard, so we have to mention it. Not only our new large audience, but also a new development, I think, that would be the same.
Scott Bach: I think it's very easy to do this. It's very rare. It's hard. It's just not needed. Okay, and I think you touched on it there and you're prepared remarks, but you're not at risk of losing any of that volume. I mean, it's all coming over at some point. Yeah, it's already signed with deals. Some of you guys did flash cuts or they just announced that all their whole customer base may look searching. That's obviously their performance. But more of our lives is implementing segments. It's going to get the variables that they may be providing services. And that's what we're experiencing now.
Louis Hoch: Okay, that's helpful. And then you guys have nice step up in Gross Margin. I mean, I understand mix can drive very different quarter quarter gross margins. But as we think longer term and as a business continues to mature, do you think there's some room to push Gross Margin, you know, kind of regularly in that 25% plus range? It's definitely a goal for us to try to get there. There are some economies that we haven't achieved yet. So yeah, 24.25. Okay, perfect.
Louis Hoch: That's great. And then last one for me, it sounds like there's going to be a little bit more marketing spend. Could you give us a sense, you know, kind of percentage wise, how much you're increasing spend there and maybe where some of those incremental marketing dollars are going? Yeah, well, personally, I don't think we're going to extend any of these. There's a lot of energy relationships. There's other things that are going to exist out there.
Louis Hoch: We've been, you know, our existing advertising business. We've been sending ours and you're not working with the ask the product recently. So it's about the estimates of the analysts. And so that's not really expected. It's something that's happening again.
Operator: Okay, great. That's helpful. I appreciate the added color, guys. Thanks again. Again, if you have a question, please press star than one. There are no further questions. This concludes our question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.