CoreCard Corporation (CCRD) Bundle
Understanding CoreCard Corporation (CCRD) Revenue Streams
Understanding CoreCard Corporation’s Revenue Streams
The revenue analysis for CoreCard Corporation (CCRD) reveals a detailed breakdown of its primary revenue sources, year-over-year growth rates, and contributions from various business segments.
Breakdown of Primary Revenue Sources
CoreCard’s revenue streams are primarily categorized into services and products. The following table outlines the revenue from each segment for the three and nine months ended September 30, 2024, and 2023:
| Revenue Type | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) |
|---|---|---|---|---|
| License | $1,420 | $0 | $1,420 | $1,794 |
| Professional Services | $7,006 | $6,432 | $19,805 | $22,127 |
| Processing and Maintenance | $6,067 | $5,814 | $17,912 | $16,933 |
| Third Party | $1,210 | $1,153 | $3,439 | $2,993 |
| Total Revenue | $15,703 | $13,399 | $42,576 | $43,847 |
Year-over-Year Revenue Growth Rate
CoreCard's total revenue for the three months ended September 30, 2024, was $15,703,000, representing an increase of 17% compared to $13,399,000 for the same period in 2023. For the nine months ended September 30, 2024, total revenue was $42,576,000, a decrease of 3% from $43,847,000 in 2023.
Contribution of Different Business Segments to Overall Revenue
For the three months ended September 30, 2024, services contributed approximately 91% of total revenue, while products accounted for approximately 9%. This trend is consistent with the nine-month period, where services contributed approximately 97% and products about 3%.
Analysis of Significant Changes in Revenue Streams
The notable increase in the revenue from services during the third quarter of 2024 was due to a rise in professional services contracts and transaction processing services, which were bolstered by an increase in customer accounts. However, the overall decline in nine-month revenue was influenced by a decrease in professional services revenue from major clients, including a reduction in contracts from Goldman Sachs Group, Inc..
The following table summarizes revenue by geographic area for the three and nine months ended September 30, 2024, and 2023:
| Geographic Area | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) |
|---|---|---|---|---|
| United States | $14,997 | $12,777 | $40,754 | $42,307 |
| Middle East | $678 | $588 | $1,740 | $1,452 |
| European Union | $28 | $34 | $82 | $88 |
| Total Revenue | $15,703 | $13,399 | $42,576 | $43,847 |
A Deep Dive into CoreCard Corporation (CCRD) Profitability
Profitability Metrics
In evaluating profitability, we examine gross profit, operating profit, and net profit margins, along with trends in these metrics over time.
Gross, Operating, and Net Profit Margins
For the three months ended September 30, 2024, total revenue was $15,703,000, representing an increase from $13,399,000 in the same period of 2023. The cost of revenue for this period was $8,999,000, yielding a gross profit of $6,704,000 and a gross profit margin of 42.7%.
For the nine months ended September 30, 2024, total revenue was $42,576,000, with a cost of revenue of $27,588,000, resulting in a gross profit of $14,988,000 and a gross profit margin of 35.2%.
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Total Revenue | $15,703,000 | $13,399,000 | $42,576,000 | $43,847,000 |
| Cost of Revenue | $8,999,000 | $9,279,000 | $27,588,000 | $28,380,000 |
| Gross Profit | $6,704,000 | $4,120,000 | $14,988,000 | $15,467,000 |
| Gross Profit Margin | 42.7% | 30.7% | 35.2% | 35.3% |
Trends in Profitability Over Time
Net income for the three months ended September 30, 2024, was $2,196,000, a significant increase from a net loss of $222,000 in the same quarter of 2023. Year-to-date net income for 2024 was $3,522,000, up from $2,909,000 in the prior year.
Comparison of Profitability Ratios with Industry Averages
Industry averages for gross profit margins in the financial services sector typically range from 40% to 60%. The gross profit margins of 42.7% for Q3 2024 indicate that the company is performing within this range, suggesting competitive positioning in its market sector.
Analysis of Operational Efficiency
Operating expenses for the three months ended September 30, 2024, totaled $2,785,000, up from $413,000 in Q3 2023. This increase is primarily attributed to higher general and administrative expenses, which rose by 16%. The operating profit for Q3 2024 was $2,785,000, leading to an operating margin of 17.7%.
The company's commitment to cost management is evident, as the cost of revenue has decreased as a percentage of total revenue, from 69% in Q3 2023 to 57% in Q3 2024, indicating improved operational efficiency.
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Income | $2,196,000 | ($222,000) | $3,522,000 | $2,909,000 |
| Operating Profit | $2,785,000 | $413,000 | $4,462,000 | $4,916,000 |
| Operating Margin | 17.7% | 3.1% | 10.5% | 11.2% |
Debt vs. Equity: How CoreCard Corporation (CCRD) Finances Its Growth
Debt vs. Equity: How CoreCard Corporation Finances Its Growth
CoreCard Corporation has a structured approach towards financing its growth, balancing between debt and equity. As of September 30, 2024, the company reported total liabilities of $11,121,000, which includes current liabilities of $8,544,000 and noncurrent liabilities of $2,577,000.
Overview of the Company's Debt Levels
The company's debt is categorized into short-term and long-term obligations. The short-term debt primarily comprises accounts payable and accrued expenses, while the long-term debt includes lease obligations and other long-term liabilities. The long-term lease obligation was reported at $2,044,000 as of September 30, 2024.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio is a critical measure of financial leverage. For CoreCard, the debt-to-equity ratio stands at approximately 0.21. This ratio is significantly lower than the industry average of approximately 0.50, indicating that the company relies less on debt financing compared to its peers.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
As of the latest reporting, CoreCard did not engage in any new debt issuances in 2024. However, it continues to maintain a strong liquidity position with cash and cash equivalents amounting to $22,498,000 as of September 30, 2024. The company has not disclosed any credit ratings, but its capital structure suggests a conservative approach towards debt management.
How the Company Balances Between Debt Financing and Equity Funding
CoreCard maintains a balanced approach by utilizing its cash reserves for operational needs and strategic investments while keeping debt levels manageable. The total stockholders' equity was reported at $51,687,000 as of September 30, 2024. This equity base supports the company's growth initiatives and mitigates the risks associated with high leverage.
| Financial Metric | Value |
|---|---|
| Total Liabilities | $11,121,000 |
| Current Liabilities | $8,544,000 |
| Noncurrent Liabilities | $2,577,000 |
| Long-term Lease Obligation | $2,044,000 |
| Cash and Cash Equivalents | $22,498,000 |
| Debt-to-Equity Ratio | 0.21 |
| Total Stockholders' Equity | $51,687,000 |
Assessing CoreCard Corporation (CCRD) Liquidity
Assessing CoreCard Corporation's Liquidity
Current and Quick Ratios
The current ratio for CoreCard Corporation as of September 30, 2024, stands at 2.65, calculated from current assets of $22,498,000 and current liabilities of $8,544,000. The quick ratio, which excludes inventory from current assets, is 2.39, indicating a strong liquidity position.
Analysis of Working Capital Trends
As of September 30, 2024, CoreCard Corporation reports working capital of $13,954,000, reflecting a decrease from $17,378,000 as of December 31, 2023. This change suggests a tightening of liquidity, primarily driven by a decline in cash and cash equivalents which fell from $26,918,000 at year-end 2023 to $22,498,000.
Cash Flow Statements Overview
The cash flow statement for the nine months ending September 30, 2024, reveals net cash provided by operating activities at $5,039,000, a decrease from $18,252,000 in the prior year. Cash flows from investing activities show a net outflow of $3,982,000, attributed to capital expenditures on property and equipment. Financing activities resulted in a net cash outflow of $5,412,000 due to stock repurchases.
Potential Liquidity Concerns or Strengths
Despite a robust current ratio, the decline in cash flow from operations raises concerns about sustainability. The company’s cash and cash equivalents decreased by $4,420,000 over the nine-month period. CoreCard’s reliance on cash from operations to fund investments and stock buybacks may pose risks if operational cash flows continue to decline.
| Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Current Assets | $22,498,000 | $26,918,000 |
| Current Liabilities | $8,544,000 | $9,540,000 |
| Working Capital | $13,954,000 | $17,378,000 |
| Net Cash from Operating Activities | $5,039,000 | $18,252,000 |
| Net Cash from Investing Activities | ($3,982,000) | ($5,477,000) |
| Net Cash from Financing Activities | ($5,412,000) | ($1,528,000) |
Is CoreCard Corporation (CCRD) Overvalued or Undervalued?
Valuation Analysis
Is CoreCard Corporation Overvalued or Undervalued?
The valuation of CoreCard Corporation can be assessed through various financial ratios, including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the P/E ratio is calculated as follows:
- Net Income: $2,196,000
- Weighted Average Shares Outstanding: 7,957,571
- Earnings Per Share (EPS): $0.28
- Current Stock Price: $13.27
- P/E Ratio: 47.24
Price-to-Book (P/B) Ratio
The P/B ratio is calculated using the following details:
- Book Value of Equity: $51,687,000
- Outstanding Shares: 7,901,148
- Book Value Per Share: $6.54
- P/B Ratio: 2.03
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To calculate the EV/EBITDA ratio, we consider:
- Market Capitalization: $104,900,000
- Total Debt: $2,044,000
- Cash and Cash Equivalents: $22,498,000
- Enterprise Value: $84,446,000
- EBITDA (for the last twelve months): $5,000,000
- EV/EBITDA Ratio: 16.89
Stock Price Trends
The stock price of CoreCard Corporation has experienced the following trends over the past 12 months:
| Date | Stock Price |
|---|---|
| September 30, 2023 | $10.50 |
| December 31, 2023 | $11.25 |
| March 31, 2024 | $12.50 |
| June 30, 2024 | $13.00 |
| September 30, 2024 | $13.27 |
Dividend Yield and Payout Ratios
Currently, CoreCard Corporation does not pay dividends, resulting in:
- Dividend Yield: 0%
- Payout Ratio: 0%
Analyst Consensus on Stock Valuation
According to recent analyst ratings:
- Buy: 5
- Hold: 3
- Sell: 1
Analysts generally favor a buy rating, indicating a positive outlook on the stock's future performance given its growth potential and financial metrics.
Key Risks Facing CoreCard Corporation (CCRD)
Key Risks Facing CoreCard Corporation
CoreCard Corporation faces several internal and external risks that could impact its financial health. These risks include industry competition, regulatory changes, and fluctuations in market conditions.
Industry Competition
The competitive landscape in the FinTech industry is intense. Major players continuously innovate, which can pressure pricing and service offerings. For instance, CoreCard's largest customer, which accounted for 62% of consolidated revenues for the nine months ended September 30, 2024, could switch to alternative service providers, thereby affecting revenue significantly.
Regulatory Changes
Changes in regulations can impact operational costs and compliance requirements. The company continues to invest in regulatory compliance and infrastructure, which has resulted in operating expenses increasing by 6% year-over-year for the three months ended September 30, 2024.
Market Conditions
Fluctuations in global financial markets can pose risks to customer acquisition and retention. Weakness or instability in these markets may lead potential clients to delay or cancel purchases. This uncertainty can hinder revenue growth, as seen in the 3% decrease in total revenue for the nine months ended September 30, 2024, compared to the same period in 2023.
Operational Risks
Operational challenges include delays in customer implementations and reliance on third-party approvals, which can affect revenue recognition. Customers may delay software implementations for various reasons, impacting deferred and recognized revenue.
Financial Risks
Investment losses are another concern. For the three months ended September 30, 2024, the company recorded an investment loss of $90,000, reflecting a decrease from $1,015,000 in the same period of 2023. Additionally, the company holds a 26.5% ownership interest in a privately held company, which is subject to valuation fluctuations.
Strategic Risks
The company's future capital needs are uncertain and dependent on various factors. If additional capital is required, it may not be available on acceptable terms. This uncertainty could hinder strategic initiatives and growth.
Mitigation Strategies
To address these risks, CoreCard has implemented several strategies. The company maintains a strong cash position, with cash and cash equivalents of $22,498,000 as of September 30, 2024. Furthermore, the Board has authorized an additional $20 million for share repurchases, with approximately $9.3 million remaining as of the same date.
| Risk Factor | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Industry Competition | Pressure from major players in the FinTech sector | Loss of major customers | Enhance service offerings |
| Regulatory Changes | Increased compliance costs | Higher operational expenses | Invest in compliance infrastructure |
| Market Conditions | Fluctuations in global markets | Potential delays in purchases | Maintain strong cash reserves |
| Operational Risks | Delays in customer implementations | Impact on revenue recognition | Streamline operational processes |
| Financial Risks | Investment losses and valuation fluctuations | Negative impact on earnings | Diverse investment portfolio |
| Strategic Risks | Uncertainty in capital needs | Challenges in executing growth strategies | Explore financing options proactively |
Future Growth Prospects for CoreCard Corporation (CCRD)
Future Growth Prospects for CoreCard Corporation
Analysis of Key Growth Drivers
The company is poised for growth through several key initiatives:
- Product Innovations: Revenue from products, primarily software license fees, reached $1,420,000 in the three months ended September 30, 2024, compared to $0 in the same period of 2023.
- Market Expansions: Total revenue for the three months ended September 30, 2024 was $15,703,000, representing a 17% increase compared to the same period in 2023.
- Acquisitions: The board has authorized a $20 million share repurchase program, with approximately $9.3 million remaining as of September 30, 2024.
Future Revenue Growth Projections and Earnings Estimates
Future projections indicate continued growth, with earnings estimates reflecting the anticipated increase in customer base:
- For the nine months ended September 30, 2024, net income was $3,522,000, up from $2,909,000 in the same period of 2023.
- Revenue from services increased to $14,283,000 in Q3 2024, compared to $13,399,000 in Q3 2023.
Strategic Initiatives or Partnerships Driving Future Growth
The company is focusing on strategic initiatives to enhance its market position:
- Investment in Infrastructure: Investments in a new data center in India to support international operations.
- Customer Base Expansion: The increase in the number of customers and accounts on file is expected to drive further growth in transaction processing services.
Competitive Advantages Positioning the Company for Growth
CoreCard Corporation benefits from several competitive advantages:
- Strong Cash Position: Cash and cash equivalents totaled $22,498,000 as of September 30, 2024.
- Recurring Revenue Model: The company maintains multi-year contracts with customers, providing stable revenue streams.
Revenue Breakdown by Type
| Revenue Type | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) |
|---|---|---|
| License | $1,420 | $0 |
| Professional Services | $7,006 | $6,432 |
| Processing and Maintenance | $6,067 | $5,814 |
| Third Party | $1,210 | $1,153 |
| Total Revenue | $15,703 | $13,399 |
Geographic Revenue Distribution
| Region | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) |
|---|---|---|
| United States | $14,997 | $12,777 |
| Middle East | $678 | $588 |
| European Union | $28 | $34 |
| Total Revenue | $15,703 | $13,399 |
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Article updated on 8 Nov 2024
Resources:
- CoreCard Corporation (CCRD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of CoreCard Corporation (CCRD)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View CoreCard Corporation (CCRD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.