INS - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the earnings release and investors conference call. [Operator Instructions]. I would now like to hand the conference over to Chairman and CEO of Intelligent Systems, Leland Strange. Thank you. Please go ahead, sir.

James Strange

welcome quarterly and conference everyone, morning, to earnings our call. Good joining us. for Thanks

Before business that might remind include I'll morning speculate we started, get call this you that will We this the on in call, businesses how SEC results differ the unknown about forward-looking list our factors the latest our of it in spoke affect available actual as as that even cause this disruption we to and we probably as morning. world. materially filings On around might statements. our our will well comments last economic

employees, more issues I we safety the and suggestions impact obviously the partners our the their are we have and it put and bringing also this hope our by to they're be to with but speak concerned these specifically point, about and some for would of later. think facing. that families, down doesn't providing all COVID, customers support in health I'll With helping measures that appear financial place challenges our of happened.

period. that Top our even even comps in were expect the expectations, minute. quarter which all earlier cash revenue growth released very I last this a stated to last the I add that for But But the was earnings over year results results in of related of discuss from though the and we more later. And our the year quarter second we with strong. positive the happy positive, XXXX, will little as individual considerable buckets this same our should don't morning. also more a half we the with as half done I'm release, press for in year-over-year, to discuss partners second line lockdowns. have second Wirecard, those thinking. in and we that here, to will delivered declining were line both with significant solidly very the Turning different from we've growth growth year-over-year than a X-month we were end -- Matt challenges continue detail

intro, turn White, our further Matt I CFO it I'll over with Matt? think that commentary. for to

Matthew White

everyone. Thanks, morning, Good Leland.

our XXXX the of second an recur components agreement with of the of consisted from revenue performed $X,XXX,XXX, $X,XXX,XXX a expectations business services Leland us XXXX. The revenue second quarter a services XXXX, customers' with and evolving second which of of timing second products helped but demand, to was quarter of the the revenue did noted, impacted increase X%. and for $XXX,XXX in adapting professional as for and in of maintenance quarter of benefited compared quarter amidst the line of revenue pandemic environment. our $X,XXX,XXX successful quarter innovative to impacts. of the model in revenue professional of of XXXX The customer, mitigate Similar our has not second quarter of services our needs second aided first have European the the for our $XXX,XXX. $X,XXX,XXX, to challenging As delivery third-party Revenue processing COVID-XX our XXXX quarter the

As expected, XXXX. we receive in license second quarter the not did revenue any of

of quarter from the first and income largest second of from customer, not The margin second XXXX. some large program operations but by statement to same of operations benefited the additional from now stimulus of the customer, the resulting by in new to the the Income quarter for sequential quarter lower of for efforts. the margin XXXX primarily in of of time litigation. revenue last offerings XXXX highlights XX% margin quarter ongoing XXXX costs turning income XX% associated for was year in time was XXXX. with last operating processing to improvement $X,XXX,XXX Our second first to compared securities a legal our same $X,XXX,XXX And from operating operating the of for an compared XX% driven related for our second government an on quarter quarter to year,

cost We us in continue to the maintain times. a structure, needed uncertain lean these allowing flexibility

development quarter now of rate share update to on XXXX to to compared per for our the provide tax like second the compared of a in was position. the research diluted period, to was timing quarter $X.XX primarily the second for XXXX. quarter Our I'd XX.X% XXXX XX.X% due Earnings quick liquidity $X.XX and credits.

at XXXX $XX,XXX,XXX Our December cash was XX, XX, balance June ended compared $XX,XXX,XXX the XXXX. to at quarter

ended to period. compared the more to year growth-focused This by For significant with cash the June months the both importantly, current us right. XXXX, and, provided cash our operations capital provided of by comparable time prior to provides when $X,XXX,XXX XX, crisis is deploying X for reserves the in operations weather future by was invest $X,XXX,XXX areas

impact over The XXXX. the related million the processing slowdown our for invested of quarter to $X muted as infrastructure example, XXXX. today, economic For in we've of be continued second COVID-XX of in

our to loans mitigated the Paycheck Protection for revenue in platform, quickly enabling Program. participate declines through modify a originating ability our We to have large customer

these While to by duration, needs. we programs further limited our adapt business are client nimble model in are encouraged to

work been since employees required have our remotely mid-March. Additionally, in India to

key have functions been to and maintain business We able continuity.

negatively likely revenues. impact continuance and will which operations work the of impact could remote productivity, However,

As impacts impacts beyond not stimulus the may forward, year. could and look future due which mentioned statutory work we on previously initial results of more term X to remote continue programs, experience full we negative of year significant

potential with able I'll Leland. Our back to to it pandemic the visibility turn that, as to continues impact the And evolve. remains and highly restricted, not we're quantify

James Strange

questions left between am questions. call, Matt. open to conference I state at the have for generally going still been of questions us. the about on There's answer terms in the Thanks, at of way will our in guess, shareholders up call, a call business, try the end not -- previously And to last of addition Okay. given change business operating. of the the obviously some talking is I to we lot that if And we have this

about for asked Wirecard third first customer XXXX, largest be for or customer. of third main probably fourth the still to is the us full XXXX, we're I largest was people our But they think services, half the In guarantees no one largest were second the year of expect have continuing as they'll they'll In XXXX, our we customer. pay they provide those services. the have and situation. questions that Wirecard

indicated business will group. the know, the As they bankruptcy, our Asia comes you revenue Pacific parts in from that have of sold. Most of be

segment Asia Pacific group. for revenues payments a is that that smallest Remember, of revenues are -- Wirecard acquirer, they issuing and While may provide so, be issuing software. the primarily we

and So don't envision, than before. project of under bottom that ultimate we business. can We that this outcome we future line, know any be our revenues from circumstances know them smaller the will

to impact future the a unknown, in is simply do to that factor about our pandemic. talk big revenue I best but on And getting in the the it of it be us, important point at not and is we'll thing to material probably, the guess is next I plans. continue that's can an While from them, time. this

senior The on inability who and do lockdown is work to of definitely our The the think a to to stepped it we up There's lockdown. estimate, team senior members meetings the team have we've all office employees to without Atlanta still in from in impacts work home, hire would be that there where level we customers terms your here mostly person there's every XX% India, good limited the our delivered XX/X. in I prospects. and at, dedicated our management with ability their business us the although train is and compared my then and is factors. in X are really of day. employees. Lockdown due home. to leaves can in on are site. office work But efficiently I day, from of has every team level and also It and and continued Matt helping

impact has office. Atlanta in very little there So the been

fact, employees a last XX% starting increased we with of have weeks. the designer XXXX, about X of small several the As size in new team by matter the

we advancing have the business because the obviously, So of not stopped pandemic.

that the are because conversation, and that is way. in slowing so Zoom lockdown it large does the way not So of makes and for travel effect you the a on new one-on-one not, slowed need that a face-to-face thing talk, in conversations connect implying you Lack big potential of does. in the or do we opportunities But give am really business Teams, I happening. business second of to is has but to still does hard continue business. no customers There way

the impact pandemic. the that's in terms of So

couple other things. Let's of talk a about

I think Matt mentioned investments.

how building much did bit We of used? have we cash a for infrastructure, our planning Matt, good in really mention still had you good used year XXXX. a this cash that

Matthew White

of as million $X over It's today.

James Strange

that's million $X in our year. As Suwanee over invested and of and in And in centers. typically software hardware this installed that's QTS We use Richmond. today, primarily in data licenses

we So year. we where need but We're anticipate for that money the right or gone. most business that that's the using those next now customer, not has for build of that investment for facilities as

of that So we're in in that's something on software. a terms working on the investments. make rewriting my letter about I did our project

companies? that, out by we because Now as important there's Well, how legacy systems. as we there, we think thought potential asked to as lot are of always anybody today, but relate a than customers, a about better I the other whole to talking downside was all good we're it we we're relate

good very software have now. we So

years this senior years management to XX ago software from about ago. -- team, system Cabal rewrote XX our XX team, Our a

someone of So technologies better the they is terms that before system taking does better and and yourself you putting else lot experience it. But existing even using an in my that view obsolete have in an system. of a then newest

in by whatever every licensee part on the the Cloud. So absolutely new X, we X that's a so years in, adaptable again, uses that and still available software the were best Cloud. licenses some our means, way. actually, couple What started in mean? the another currently that the coming that licensees it business. that, on runs employees uses there team, Amazon we It will And way, of And with an software the of obviously, fully Amazon the where to of and it's from rewrite to innovation the use X, does have are on now, it a project Microsoft Cloud, cloud

totally pipe, in It's down But at want cloud-ready look we down but technologies, the light, so path. up that teams heavier. it not to it's we continue look now. future really, now, that we're the micro to setting are make coming the services newest ones but that So much the to those out

continue main concern the even building is that money will spend business. we in system. a guess for to regard I better on So folks some new, future

then Let's talk and we'll that, questions. about take

the up you pops, ramping have customers in be We will half see year. not that processing of grow not large steadily. the will are they so latter customers, will that These big but

are to a This with know pay means over in business level their work business. very our in and on business. keep customer who and -- they to product a still of a they we want our to want is get this sale, with product experiences. senior strategies. commission, not with the directly steeped the as are who business managers kind premium on help as We their value premium folks them could take selective to the make them we grow business We reputation That than up want as customer of we relationship the who do customers offering relationships executives customers with unusual better our is norm turn keep the and the relationships lower

our We force. Our of customers. current of future sales on a license success business lot as think customers our also the our depends

a processing it from at customers. of expecting way customer? license professional a as get more Now licensed growth them customer increases this look gotten questions sales They look all. at our add size that as XXXX don't services, customer customers maintenance get revenues. lot we well, we us. for and in license, in dependent good more I'm we've the We at on current well We and customers, at often or force as you're we of look about, current license that more get that

but our but We my grow. of of in we of is simply should it's to we believe not X. next to we I'm that aim customers. care saying to not I'm if XXXX, saying, in know I view. have the rate opinion, some XX% right more for expect X that the what think take want more method, to all is not that good we a on large I that XX% is you than That expect absolutely capacity, growth to license year. take long-term But grow customer

very a going consolidation, be I We're our perspective, for we of a expectations on be And think about next are a where would if XXXX from are. growth we year year bullish for XXXX. business year. what bullish ago, you'll on getting again So ready we're to recall, in said

to didn't with had and expect next of that plan, XXXX think through continue I a we to certainly that make generally through go we've as Now plan same the pandemic but navigated to we're able growth spurt. the well, start of I part

I We'll stop take time there you think to I'll questions. and give a few. ask

hold questions. for it So operator, let's

Operator

[Operator Instructions].

first Palmer of Mark question from is Your BTIG.

Mark Palmer

approached could take in been the that questions. fill that A now XXXX. just any just couple large you that with customers potentially Have One, conversations who capacity slot? one about to Have on by you had could of comment customer license slot? companies your fill on more potential

James Strange

yes. is answer The

Mark Palmer

Okay. in they how compare? those largest comparable current size would those be magnitude would they And programs, in to terms of customers customer? of the of your the Or

James Strange

a to, could if a over -- might Again, one folks, be you of all we're let's customer might sense, several would we're at larger. also. larger take and at talking terms if It different. it yes, other you years, in in similar. awfully that and they're processing, guess, one. because at articulate any obviously look size, to possibility say, X It's I But we get They're hard is to opportunities look don't one there it those. looking be be on that of a would But talking little this be we

X a normally situation those current take be in it Remember, looking a RFPs, It are license, their be. years. now, out big. putting might not as out that exploring big they RFQs they're will from where years and several Another depends ends X where on conversations, would be for you They're contract they're all too. and ones where and or those

-- to there people So are Yes, for to is it's interested that. really that, they quantify me answer The hard size. comparable and could of it's that. talking be hard to yes, we're people really like in

Mark Palmer

program and second And just the PPP business obviously government stimulus, tuck-in thinking half the in program the was to the if stimulus the one was The the impact continued. like. would that the look in We the What second about that of tailwind There's is your what from did see related PPP could program about some XXXX? I quarter. third a D.C. more. debate during quarter

James Strange

still Well, I good. think be it has potential to

cases, our On replaced, hand, loans. some other were loan were who business and that the remember the this loan actually it. the away other -- went customers in replaced business, that making businesses In

level some customer And start I nearly business see. to coming is think same expecting that and Obviously, the before. a to that it's of not back. was wait really it loan

don't way I that. So really have articulate to a

back I some to think it -- to comes that business we If great. get we're loan we'll will degree, of get some will pickup. going think will, it if I be comes, the that -- and

think X any to in is quarter what hopefully, So I be between those things. that happened negative that, of we're thinking comp won't the hopefully, there what

Operator

Your Company. next is Faruk & Sidoti question Ishfaque of from

Ishfaque Faruk

A a first questions Matt, on maybe going side. elaborate on And this, is of of the first -- stimulus from of couple what the of And was programs. that? in benefited the briefly this impact maybe government you little that be, the was me. by half Could some the bit year? back touched processing and more to you processing all on is And

James Strange

Yes.

revenues, that? game. Obviously, I and And other Let that any really increased but it. I'll the also just not on how other processing Matt, sure revenues, we're Matt will we've the question, last our and talk on just that not me is let government answered some something, let first state I'll about happen, thoughts

Matthew White

Nothing from extent, normal a bit said to negative earlier. to to that us. think add from offset not of really loans their a We business. that little you making what customer it's under do a There's that benefit

us, QX. the in So for the certainly be that's it a second awash of probably pickup half nice year, for kind been will but of

Ishfaque Faruk

Got it.

follow there. to And on Okay. up

You see they guys call, up? last in Or added, are ramping getting them they you Where Are fintech do the board? still in the customers months. several on process? I'll

James Strange

all But guys, on they're new they're these But customers. -- all when Well, have the have fact going board. fintech of they're think getting so XXX,XXX to going start. they they to is XX,XXX,

So really nobody really, initially. is going to be big

the these guys year the up, the we same comment really have comps some earlier year. I I So second though to do expect half. Even we revenues said good in the that? that second year to pick you had of are nice first don't to on on, license had of half going Matt, the last the half want

Matthew White

Sure. think revenue I'll QX. in we at QX is just add of the expect our potential QX. in license that license estimate this in XXXX, likely point, with most revenue I see we that do But best

James Strange

are our have Matt for -- And to squeezes QX. as there's with happen some going this more it's huge license happening, But certainly year. into in but possible certainly it's to will comps going said, unless almost we revenue other year, last tough QX. happen it pandemic It's

to our pay get year out current at and are more revenue have we'll customers and some of license customers also We believe continue have next as us good more looking licenses. to

Ishfaque Faruk

it. Got

Wirecard. on briefly fourth or Leland, that Wirecard was customer. obviously, like lastly, And Okay. largest third you said your

very that's helpful think I disclosure.

APAC of of are they you Wirecard. respect did with maybe taking revenue business. they're you they what terms say some the for steps said to -- -- generate region guys that from the In primarily Are -- the

selling the You business of pieces mentioned the off to bankruptcy. they're due

James Strange

trying the it all not we're to And Wirecard folks. a to for been that portion that's -- But to of former And huge trying sell to It's probably off. got APAC There the a of different portion, different business -- the business. all not part a There'll U.S. it's off prepaid. business. are processing they've will probably something bought. buyers sell go that bankers Citi X as of the X sell that be There's they trying be off Well, business. to buyer They're different they'll business. It's of investment the X Wirecard. not U.S. pieces.

Operator

no other questions. are telephone There

James Strange

Matt any you thank you time hope plans a Okay. as We And continue the as and to be say, you. But end are for want question, to I further for for both loyalty today. our company always taking and the available. have thank you your to always, able shareholder, I to it listen to to if and grow we

thank you, So everyone. a day. Have good

Operator

Ladies and gentlemen, you today's Thank conference call. your participation. this concludes for

disconnect. now may You

CoreCard (CCRD) 4 Aug 202020 Q2 Earnings call transcript