Breaking Down Usio, Inc. (USIO) Financial Health: Key Insights for Investors

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Understanding Usio, Inc. (USIO) Revenue Streams

Understanding Usio, Inc.’s Revenue Streams

Usio, Inc. generates revenue through various integrated electronic payment services, which include credit and debit card processing, Automated Clearing House (ACH) transaction processing, and prepaid card program management. Additionally, the company provides Output Solutions such as electronic bill presentment and document composition services.

Revenue Breakdown by Source

Revenue Source Q3 2024 Revenue Q3 2023 Revenue Change ($) Change (%)
ACH and complementary services $4,302,510 $3,528,133 $774,377 22%
Credit card $7,197,362 $7,169,066 $28,296 0%
Prepaid card services $4,017,153 $4,685,212 $(668,059) (14%)
Output Solutions $5,253,388 $5,138,030 $115,358 2%
Interest - ACH and complementary services $201,545 $212,691 $(11,146) (5%)
Interest - Prepaid card services $309,131 $239,413 $69,718 29%
Interest - Output Solutions $40,389 $10,216 $30,173 295%
Total Revenue $21,321,478 $20,982,761 $338,717 2%

Year-over-Year Revenue Growth Rate

For the nine months ended September 30, 2024, total revenue was reported at $62,371,752, which represents a 2% decrease compared to $63,935,603 for the same period in 2023. This decline was largely attributed to lower revenues from the prepaid card services, which saw a 25% drop year-over-year.

Segment Contribution to Overall Revenue

The contribution of various segments to the overall revenue for the nine months ended September 30, 2024, is as follows:

Segment 2024 Revenue 2023 Revenue Change ($) Change (%)
ACH and complementary services $12,078,574 $10,948,012 $1,130,562 10%
Credit card $22,019,364 $21,624,848 $394,516 2%
Prepaid card services $11,031,795 $14,710,084 $(3,678,289) (25%)
Output Solutions $15,478,180 $15,945,447 $(467,267) (3%)
Interest Revenues $1,069,983 $671,000 $398,983 59%

Significant Changes in Revenue Streams

Notable changes in revenue streams included a strong performance in the ACH and complementary services segment, which grew by 22% in Q3 2024 due to an increase in transaction volumes and customer acquisition efforts. Conversely, the prepaid card services segment faced challenges, experiencing a 14% decline in Q3 2024, primarily due to the winding down of COVID-related incentive programs that had previously boosted revenues in this category.

The overall revenue growth was significantly influenced by the company's strategic focus on expanding its ACH services, which saw a 41% increase in check dollar volume and a 25% increase in transaction counts during the same period.




A Deep Dive into Usio, Inc. (USIO) Profitability

Profitability Metrics

Gross profit for the quarter ended September 30, 2024, was $4.9 million, representing an increase of 5% from $4.7 million in the same quarter of the previous year. The gross profit margin was 23.0% for the quarter, up from 22.2% year-over-year.

For the nine months ended September 30, 2024, gross profit decreased by 2% to $14.5 million compared to $14.8 million in the prior year. The gross profit margin for this period was 23.3%, slightly up from 23.2% in the previous year.

Metric Quarter Ended September 30, 2024 Quarter Ended September 30, 2023 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023
Gross Profit $4.9 million $4.7 million $14.5 million $14.8 million
Gross Margin 23.0% 22.2% 23.3% 23.2%

The operating profit for the nine months ended September 30, 2024, was reported as a loss of $867,548, compared to a loss of $443,576 for the same period in the previous year. This reflects challenges in managing operational costs and declining revenues in certain business lines.

Net income for the quarter ended September 30, 2024, was $2.9 million, a significant improvement from a net loss of $0.7 million in the same quarter of the previous year. For the nine months ended September 30, 2024, net income stood at $2.7 million, compared to a net loss of $0.5 million in the prior year.

In terms of profitability ratios, the net profit margin for the quarter ended September 30, 2024, was approximately 13.6% (net income divided by total revenue of $21.3 million), compared to a net loss margin of -3.4% in the prior year quarter.

The company has shown improvements in operational efficiency, particularly in managing selling, general, and administrative (SG&A) expenses, which were $5.3 million for the quarter ended September 30, 2024, down from $5.4 million in the previous year. This reduction in SG&A reflects efforts to streamline operations and reduce costs.

Expense Category Quarter Ended September 30, 2024 Quarter Ended September 30, 2023
SG&A Expenses $5.3 million $5.4 million

Comparatively, the company’s profitability ratios have been analyzed against industry averages. The average gross profit margin in the payment processing industry is approximately 30%, indicating that the company is currently below this benchmark. However, improvements in revenue streams, particularly from ACH and complementary services, are expected to enhance profitability moving forward.

In summary, the company has made strides in enhancing profitability, evidenced by improved gross profit margins and a shift from net losses to net income. Continued focus on operational efficiency and revenue growth will be crucial in sustaining this positive trend.




Debt vs. Equity: How Usio, Inc. (USIO) Finances Its Growth

Debt vs. Equity: How Usio, Inc. Finances Its Growth

As of September 30, 2024, Usio, Inc. reported total debt of $1.5 million, which includes both long-term and short-term debt. The breakdown of debt consists of $0.5 million in short-term obligations and $1.0 million in long-term debt.

In terms of financing structure, Usio's debt-to-equity ratio stands at 0.08, significantly lower than the industry average of approximately 0.5. This indicates a conservative approach to leverage compared to its peers in the financial services sector.

Recently, the company engaged in a refinancing activity for its equipment loan, initially taken out for $165,996 in March 2021. This loan was fully paid off by March 2024, and a new loan was secured on October 1, 2023, amounting to $811,819 at an annual interest rate of 6.75%, with monthly payments of $16,017.

Usio balances its financing between debt and equity effectively. Over the past year, it raised funds through equity financing, with $1.6 million generated from the issuance of common stock under its equity incentive plan. The company also repurchased $393,766 worth of its stock during the nine months ended September 30, 2024, as part of its buyback program.

Debt Type Amount ($) Interest Rate (%) Maturity Date
Short-term Debt 500,000 N/A N/A
Long-term Debt 1,000,000 6.75 April 5, 2029

Overall, as of September 30, 2024, Usio, Inc. had a total stockholders' equity of $18.9 million, reflecting a solid capital base to support its operations and growth initiatives. The company's accumulated deficit amounted to $68.7 million, indicating historical losses that the company aims to offset with future profitability.




Assessing Usio, Inc. (USIO) Liquidity

Assessing Usio, Inc.'s Liquidity

Current and Quick Ratios

As of September 30, 2024, Usio, Inc. reported a current ratio of 1.60, calculated from current assets of $14.5 million and current liabilities of $9.0 million. The quick ratio stands at 0.80, indicating the company's ability to meet its short-term obligations without relying on inventory, with quick assets totaling $8.4 million against the same current liabilities of $9.0 million.

Working Capital Trends

Working capital increased to $9.6 million as of September 30, 2024, compared to $8.0 million at December 31, 2023. This 20% increase reflects improved operational efficiency and cash management practices within the company.

Cash Flow Statements Overview

The cash flow statement for the nine months ended September 30, 2024, indicates a net cash used in operating activities of $7.6 million, a significant decline from the $41.5 million cash provided in the same period of 2023. This shift is attributed to a larger decrease in prepaid card load obligations and lower accounts payable. The cash flow from investing activities showed a net outflow of $0.7 million, primarily for capital expenditures, while cash used in financing activities was $0.4 million for treasury stock purchases.

Cash Flow Component 2024 (9 Months) 2023 (9 Months)
Net Cash Provided by Operating Activities $(7,622,320) $41,506,374
Net Cash Used in Investing Activities $(698,271) $(587,451)
Net Cash Used in Financing Activities $(393,766) $(500,000)

Potential Liquidity Concerns or Strengths

Despite a reported net income of $2.7 million for the nine months ended September 30, 2024, the significant cash outflow from operations raises potential liquidity concerns. With an accumulated deficit of $68.7 million, the company must closely monitor its cash reserves, which stood at $8.4 million as of the same date. The reliance on cash from operations and potential equity financing may pose risks if cash flow does not stabilize.




Is Usio, Inc. (USIO) Overvalued or Undervalued?

Valuation Analysis

To evaluate whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, and analyst consensus.

Price-to-Earnings (P/E) Ratio

The P/E ratio for the company as of September 30, 2024, was $13.2. The earnings per share (EPS) for the nine months ended September 30, 2024, was $0.10, compared to a loss of $0.02 for the same period in the previous year.

Price-to-Book (P/B) Ratio

The P/B ratio stands at 1.2, calculated using the book value per share of $1.67.

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio

The enterprise value is approximately $38 million, and the EBITDA for the trailing twelve months is $3 million, resulting in an EV/EBITDA ratio of 12.7.

Stock Price Trends

The stock price has fluctuated over the past 12 months, starting at $2.00 in September 2023 and reaching a high of $3.50 in June 2024. As of September 30, 2024, the stock price was $2.58, representing a 29% increase from the previous year.

Dividend Yield and Payout Ratios

The company does not currently pay dividends, and therefore the dividend yield is 0%. The payout ratio is also 0% as there are no dividends to distribute.

Analyst Consensus on Stock Valuation

Analysts have a consensus rating of "Hold" for the stock, with 40% recommending a buy, 50% a hold, and 10% a sell.

Valuation Metric Value
P/E Ratio $13.2
P/B Ratio $1.2
EV/EBITDA Ratio 12.7
Stock Price (Sept 30, 2024) $2.58
Dividend Yield 0%
Payout Ratio 0%
Analyst Consensus Hold



Key Risks Facing Usio, Inc. (USIO)

Key Risks Facing Usio, Inc.

Usio, Inc. operates within a competitive landscape that presents various internal and external risks impacting its financial health. Key risks include:

Industry Competition

The payment processing industry is highly competitive, with numerous players vying for market share. In the third quarter of 2024, Usio reported an increase in credit card transactions processed by 22% compared to the prior year, reflecting its efforts to maintain competitiveness. However, the legacy credit card base has experienced attrition, which poses a risk to revenue stability.

Regulatory Changes

New regulations, such as the 1% excise tax on corporate stock repurchases introduced by the Inflation Reduction Act, may impact future buyback strategies. In 2024, Usio repurchased $393,766 of stock, which could trigger additional tax liabilities if it exceeds the $1 million threshold.

Market Conditions

Fluctuations in the macroeconomic environment, including inflation rates and interest rates, create uncertainty. The Federal Reserve's actions have led to increased interest income of $0.9 million for the nine months ended September 30, 2024. However, potential future rate cuts could diminish this income stream.

Operational Risks

Operational risks include technology and transaction-processing system maintenance. As of September 30, 2024, Usio had cash and cash equivalents of $8.4 million, which is critical for ongoing operational expenditures. The company reported cash used in operations of $7.6 million for the same period.

Financial Risks

Usio's accumulated deficit stood at $68.7 million as of September 30, 2024. This raises concerns regarding sustainability and the ability to achieve profitability. Net cash used in operating activities was significantly lower than the previous year, with a cash outflow of $7.6 million compared to a cash inflow of $41.5 million in the prior year.

Strategic Risks

Strategically, the company must continue to grow its customer base and adapt to competitive pressures. The company has to implement successful marketing strategies and enhance technology offerings to attract and retain customers.

Risk Type Description Impact Current Data
Industry Competition High competition in payment processing Revenue fluctuations 22% increase in credit card transactions
Regulatory Changes Excise tax on stock repurchases Increased tax liabilities $393,766 repurchased stock in 2024
Market Conditions Inflation and interest rate fluctuations Revenue uncertainty $0.9 million interest income for 2024
Operational Risks Technology maintenance Operational disruptions $8.4 million cash and equivalents
Financial Risks High accumulated deficit Profitability concerns $68.7 million accumulated deficit
Strategic Risks Need for customer growth Market share loss Ongoing marketing and technology enhancements required



Future Growth Prospects for Usio, Inc. (USIO)

Future Growth Prospects for Usio, Inc.

Analysis of Key Growth Drivers

Usio, Inc. is positioned to capitalize on several key growth drivers, including product innovations, market expansions, and strategic partnerships. The company has reported a 22% growth in its ACH and complementary services business line for the quarter ended September 30, 2024, driven by a 61% increase in ACH check dollar volume and a 25% increase in transactions.

Future Revenue Growth Projections and Earnings Estimates

Revenue for the nine months ended September 30, 2024, was $62.4 million, a 2% decrease from $63.9 million in the same period of the previous year. However, the company's strategic focus on expanding its customer base and enhancing service offerings is expected to result in revenue growth that outpaces expenses, leading to continued taxable income.

Strategic Initiatives or Partnerships That May Drive Future Growth

The company has been actively involved in enhancing its service capabilities through technology upgrades and strategic partnerships. This includes the successful implementation of new equipment in its Output Solutions line, which has shown improvements in efficiency and profitability. Furthermore, Usio's PayFac division has been a significant contributor to growth, with revenues up 27% in the nine months ended September 30, 2024.

Competitive Advantages That Position the Company for Growth

Usio's competitive advantages include a diversified service portfolio and a robust infrastructure that supports electronic payment processing. The company reported a 46% increase in total dollar volumes processed across all business lines in the third quarter of 2024 compared to the same period in 2023. This growth is attributed to the company's strong foothold in the corporate expense and healthcare markets, alongside government assistance programs.

Key Metrics Q3 2024 Q3 2023 Change (%)
Total Revenue $21.3 million $21.0 million +2%
ACH and Complementary Services Revenue $4.3 million $3.5 million +22%
Credit Card Revenue $7.2 million $7.2 million 0%
Prepaid Card Revenue $4.0 million $4.7 million -14%
Output Solutions Revenue $5.3 million $5.1 million +2%

In summary, Usio's proactive approach in enhancing its service offerings, coupled with a focus on strategic market expansions and partnerships, positions the company favorably for future growth despite the recent revenue challenges in specific segments. The projected increase in ACH transaction volumes and the success of the PayFac division are critical indicators of Usio's potential for sustained growth moving forward.

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Resources:

  1. Usio, Inc. (USIO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Usio, Inc. (USIO)' financial performance, including balance sheets, income statements, and cash flow statements.
  2. SEC Filings – View Usio, Inc. (USIO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.