CCRD - Earnings call 3 2023 | CoreCard Corporation

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Operator

Greetings. Welcome to CoreCard's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. At this time, I'll turn the conference over to Matt White, CFO. Mr. White, you may now begin.

Matthew White

morning, good and you, everyone. Thank the With Chairman is Strange, today CEO me of on and CoreCard Leland call Corporation. He will conclusion remarks. the answer questions add some additional of comments my and at prepared

the included to to statements you factors, could from involve understand business affect everyone like filings. a certain its that factors help XX-K cause I'd filings and These start, be are making I that our Before uncertainties future during environment. Factors call, other CoreCard to Form materially number actual SEC, we'll forward-looking risk and remind statements differ the may expectations. that operations XXXX including in with results our subsequent and of

and We services release, revenue. XXXX compared from a third we existing primarily Goldman. customers. $X.X of The recognize revenue to are not increase the due third year-over-year revenue The sequential revenue professional results of million, million, third of revenue million. demand of and of our a X% and was $XX.X quarter $X.X lower development quarter in offset and professional was in line XX%, That in from revenue continued the XX% live now did of from decrease Total third growth any decline in driven maintenance XXXX. XXXX. for personnel by quarter the processing with of As press year-over-year third-party of $X.X was were recently and maintenance third added growth who revenue and processing revenue revenue a components year-over-year continued customers in growth growth license processing and noted for consisted maintenance services our with the our in our quarter for to quarter million, expectations of

first on estimate the license in the sometime is the of best XXXX. timing next half Our tier of

new the customers, through XX% basis. continue to of which excluding through and various continued has This both have growth come growth on with in see from nice year-over-year customers, quarter managers. onboarding partnerships third we was all Goldman, We directly a program

currently that go multiple and coming we As customers months. in implementations expect with to quarters, new progress previous have live in the we

highlights XXXX third Turning income income $X.X to same XXXX, to of from was of the the quarter million million operations for quarter last some of compared for from time for the third additional year. operations $X.X

of Colombia operating third opened Our same in for margin costs in the addition India of decrease X% lower we to October higher and environment. last infrastructure in The for by margin office year. the an processing that was continued quarter our operating from compared XXXX primarily hiring in XXXX our time in driven revenue and investments is XX% to

the on costs the are new As costs. rules under to discussed capitalized. associated platform. development the Anything we accounting are not previously, A of capitalizable with expensed working is a portion project this development of

We expenses project. quarter have and XXXX $X.X $X.X through this pretax million third to incurred X million of the XXXX development related of of months the in first

recorded that cost to method was loss in third for XXXX XXXX. of quarter Our a to was quarter XXXX. XXXX. of to that of on compared of in third the of a third quarter quarter XXXX diluted diluted And the third impairment earnings the adjustment an the quarter Earnings share XX.X% third $X.XX third the $X.XX per for compared $X.XX tax the of quarter for share XXXX of XX.X% rate per of impact adjusted the was for and investment quarter $X.XX compared income we excludes

and this growth, September was the year for share period. potential cash future plan flow to repurchases. We $XX.X million XXXX through cash acquisitions operating XX, million for Our use $XX.X compared XXXX, the to for

any XXXX. in The parking This approximately revenue press and our release the be customer basis and has lower quarter of parent loss services flat revenues acquired now in their of the revenues year manager fourth We to revenue compared $XX,XXX related as quarterly a services the from and processing to program for XXXX, this program gross company. We full the customer. were by this periods. expected integrated from $X.X costs revenue or we customer in space. costs revenue cost expect of recorded impacts XXXX revenue professional their recently on growth approximately this as in larger generated quarter to in $XX,XXX expect to any driven this We generated future noted into As services. and million been are customer for the in interchange therefore, fourth from costs approximately customer revenue app of of morning Goldman primarily do fully by Park and a and the the third-party competitor not by or a Mobile from was related XXXX

we professional professional We anticipate we fourth continue onboard maintenance grow, The in the be the continue to of a as expect our customers, strong fixed processing growth services XXXX services to professional to $X.X new customers and in portion as quarter and lower $X revenue from the of to million to continue the change to services converting and in revenue to lower of reflects range development a our revenue Goldman. expected million. Goldman monthly contract, fee

a turn to it structure rate the beneficial million, services $X lower converted approximately perspective, from revenue it Goldman As the in and first recurring of while to fee visibility than conversion lower partial is the a for over revenue that, of the Leland. to for remainder revenue months from received services slightly will result the year. With I'll X monthly of the XXXX a fixed reminder, managed we we run

James Strange

have over new If Matt. said a are wanted Matt questions and the a to probably professional ought I'll it just to of other lot growing those, emphasize those, the turn was Well, to term. The we and things we've look again, several revenues. then company, there just the we lower by a us not growing at grow revenues. probably customer, in lower the revenues, the did would their growing then let's you and future then things Okay. about. Investors keep Goldman we growth that's did are by ] and [Indiscernible] way talk got other from the should not because but way times, it are cutback we I I've couple and there we said revenue them concentration a Thanks, long part growing problems. like, to it, we simply great [ the of our keeping services cutting. stop If [ always ] cost of of that's

try get everywhere the Platform they're hard they've Division the to earnings If money, very, very down, their profitable you very to listen to just call, clear, can. quit they've just Solutions losing expenses you made all and cut way dictated it going and

as good sense the in and that. we So the would of do managed to services some services, in say We what they we're are I I we've cash. right market but and the Goldman up And position can a happens be good variable, getting apparently, they fintech We're both cut -- our can back. It's $XX in a professional longer-term of with think And shakeout, have that X-year million as X-, fintech generally. a those private we're part in for as they well [Indiscernible] those wish. up back ended are look that contract for those or might ramp not a to that. for got environment, at cut at immune almost

Our cash flow is [Indiscernible].

outlook. of back next market we [Indiscernible]. that we of ] I the -- was the bought of to stock Goldman pretty would we'll prices had [ in what additional the first and just some happen comfortable be better back, to doing. Again, the have big to going guess have business. I and a continue issues services, X the mentioned back doing, what comments. we'll we're worth business stock don't the is if in through hit Goldman what we're may have probably If months. have I professional [Indiscernible] it mid-XXs processing We settle because which much at the our So with very month of we known our long-term in billion the of we outside lot a this here, takes just pickers been think, in bought due doing then the we're growing the Goldman continue it with December, $X.X in

Matt covered revenue. Maybe third-party everything. I had on we that I mentioned will about think He focus one thing.

many said very into but you services. about expand going and is Park $X.X think entered million do profit, -- it probably little was that requires top Mobile, us I very, accounting and It's wanted that revenue. highly years profitable, that was to the going from completely. on GAAP our That ago to it to be to as put not we we but line away knew

who much part what care own us because left bought that not to us, the with has goes they take that ability in done a have of were didn't away, platform they us company were little this the by their but because with they So couldn't they doing like past. bigger they of

this not no to employees to at we're not to will profit. I in continue not result because fewer to of it a but will that as at that going be a So we're the say of a be growing extra we point well, we're hit hit but Goldman, will base. expanding terms revenue, longer -- have resources really using

as way working you've previous the had with ] with as October employees that, ] to questions. along we're there don't We those month. customers of we expect because more to down to have, of time reports if the India We always other I a the once go any we're think, and in see very other just ] the I'll adjust X,XXX use [ that [ can questions. open few And we the [ much that have and queue the than are end that had with. And usual, that

turn to So it operator, let's over questions.

Operator

with first Securities. Our Goetsch B. the is Hal Instructions] Riley question [Operator from

Harold Goetsch

new the kind questions. start with additional banks, to of maybe had that platform my of side to banking first is wanted pipeline? customers And is environment coming I That's it the what -- next your platform with kind in we've come our done to year, out that the as relates questions. with One out. turmoil that, prospective to X waiting for sector is the

James Strange

more the want -- to no be gets to question, going is one done Yes. and [Indiscernible]. that something thanks The platform. But work on done. that -- platform to get -- to out it, They the the And other one emphasize platform. that for will we're so on I've waiting year the growing of just before another continue else, the fact I the add waiting at it but will part it resources job completely. no and the is least for on we're

Harold Goetsch

is month, reach Goldman, of roughly to a X- you Okay. you guys a contract that kind here right what of out, say just could just minutes kind $X Yes. said And you at ago? contracts, the did now on few X-year million

Matthew White

Yes.

For portion agreement the XX, managed the through years services on a professional million is around run that that piece X month part which license June a of of the then is maintenance $X rate. the And a more which contract, goes XXXX. it, years of -- X

James Strange

what's professional So services been variable and... is

Matthew White

development. [Indiscernible] the

James Strange

Which up month being from be see they related is other a to things standpoint, that million development might done. $XXX,XXX platform their a $X things end want that And to month. and from can

So variable. it's very of a much

done they on want lower the it now. keep So side to

Harold Goetsch

Okay.

James Strange

necessarily getting so just using to by it fewer of cost. and the doing for more not done, part slow things of not And resources but -- it's use you you're date pure to something resources extend the getting you is done down, request a what

Harold Goetsch

Okay.

Okay. like digit continue it's single to grow at year-over-year. Amex, is card And issue. even I to in cardholders look giant these if mean mid- high general, Visa, you platforms right. All Mastercard,

issuance appetite the globally issuing what's good. So time the the the card appears in credit to risk thoughts of get really just I that is banks kind be this you're right backdrop And your period? for really, wanted on to serving in

James Strange

cars a I that I've and mean, issuing is bad the And number you before card right, decrease. said increase see of economy, still you're growing. in may

paid card, and delinquencies, lines, cards. you you see and typically if a maybe a get you're see simply of number on we more a don't credit smaller see You but

chance that's that decrease to onboarding this, dollar active Apple that that long space, about shifted -- kind had have our slowing debit that mean numbers appreciate into I But [ What problem process all from on in has different concerned will the question slowed the [ any the of way concerned is as that of more does I don't cards, They we've about and about have definitions a of And cards. we're already down. the But is folks card the are the they which, that. that the numbers, [Indiscernible] year, about this doesn't number the take down our We're to about there's, cards. to But again, not an of business. that of getting that card any since talk see And And opportunity and license people in active we've course, more in that anyone has think quarter only in that's slowing are terms profit. to we of not get it first more value goes has something there some programs. the our General the not down. a different not else. see impact customers we cards, who do fact delinquency to people ] program ] lot and side. Goldman manage we since card away concerned in the that they're cards license I revenue credit are had the or no thinking because as of X fact have we that we're number So what ] in reason you the they Apple are space, because for guess, story. credit issue of the paid [ increase Remember, be don't and revenue Motors. card want

is you a cards. may for with you're also definition Goldman. you this cards. a But one deal inactive system, But If for global licensed paid get have then active

So we get for cards. don't paid active inactive get We cards. for paid

still card I'm months, purchase, really to be they a active change says that went active credit doesn't a that's by period. to be a you it to to hit Now a certain is months, limit, X but not not do with could to make X X months, have open-to-buy the went definition, system, something. going limit, somebody or meaning address, if card it went months change some they purchase, a let's it change the month define month, if say X the

discovered million hit an that need didn't cards, they with and things active a hitting were were or talking they with cards they So for and really API, still of them that they to more cards. I'm keeping lot on therefore, about

make they or well, been buying did And so when they we active can manage those so they look years, cards say, their how cost that. [Indiscernible] since well, they some haven't not anyway in and anything

So a up. therefore, that it's while for taken catch to

year go people it's the because the back really could the As expect doing I [Indiscernible] Hopefully, sort well Matt half explanation, said, on that of we we make I to again. the it's simply get has is license good year the of to we'll that with growing, this next quarter, caught it added cleanup up and Goldman get to felt growing, gone there's card -- program well, don't really push to very is that in first But continues not growing grow track well. bank first I your so revenue up program with question once to next second. and [Indiscernible] need inactive cards of now. have like that and wrong

Harold Goetsch

their sure So costs to inactive by they're to looking whole they also make save portfolio growing card but and new money. still that taking to really that for cards, then watching they're group some paying they're things not summarize, [ ] the within they're cards closely an there's status inactive

James Strange

can as That's a right. cleanup. almost But of think you really onetime it

that a onetime but mostly, Of continue big [Indiscernible] again. course, cleanup won't happen it very you'll still was

Harold Goetsch

the QX that? Okay. was And of that

Matthew White

Oh, impact, That that's right. yes. yes,

James Strange

Yes.

but one it in ], ] [ here. it term and yet so dang we about cleanup it talking cut office the these then couple mean longer looks way like fine revenue I that and whatever We're came had said, it the the us professional like have term, but And Part cards. [ going we're of a service good. ], the we've growth next Mobile the this As hit longer of And bad. looks good, says in things so [ morning looks Matt good. see looks year and

So those [Indiscernible] the comfortable that things are rest with the short-term business we're of

Operator

Next Fisher Avi line with from question Advisers. the Cast is of Long

Avram Fisher

XQ called marketing it what's Can you for? sort see spend. that on much, from will possibly at how the payoff a some offer XX-Q long some out The some that, expectations color What's last, Why now? of expectation appropriate around that?

James Strange

they'll competitor, I so got be and finally will. we Yes, a the in on from financial focused who selling institutions. business, salesperson a came experience have

So They'll will banks, have or many program. [ unions a -- it else smaller our credit or [Indiscernible] who like one national who of the be them somebody calling be will credit or not ] of institutions, on be short either term. credit

expected all try a [ you're a you I'll lot tell than more but me, other faster environment looking And do business have So long, of and they'll free in and [ these Leland, changed, put We process. have Again, us on that it of be ]. ] based sense ]. that, it. the to in [ people to too I that think, economic on That banking went lot to Fed the I a that. generate through sent expect expect a didn't I of folks, any things hold

institution partnerships, reality, and a So FI Vice President the we we recognize have Partnerships. now of national

Avram Fisher

near don't All right. that? And it's is a on expect what anything saying you're long-term the in term investment,

James Strange

very in XXXX, be be we I get surprised would to surprised. that love from if but I would anything

Avram Fisher

Right.

A other quick questions. Okay. few

XX% gross are apparently. if margins how the on sort Or profit to it just of out, margin that out non-Goldman blended? called You break that? revenues, does million $X.X you the can't roughly the What compare

Matthew White

break business that's scale at in that that's a don't mind out. yes, keep But yet. not Well, we that

going the given on to drag lot little -- a bit margins revenue a smaller the margins of overall a it's are So that it's be going to just base.

James Strange

That's be... revenues to pretty small

Matthew White

They're shared resources.

or like just works not it's everyone that So just this part part. on just

work both. are that there resources on some So

it is to not And size. something that too at hard it's So kind look we allocate closely of this at that.

Avram Fisher

what the out What what the did to expectations, think, guide you be ex-Goldman it. gave next your is said growth I in -- should -- I -- it, guidance. you revenue And missed I quarter? What you some apologize, if

Matthew White

about be talk There'll it and next didn't takes. quarter. some We puts

the that. about Park revenue away related that will Mobile the talked and You go cost to

But caveats. is would number will some So what But there'll digits high single say, be, that quarter. specific expect. didn't give the it be we we fourth I for

Avram Fisher

Okay. in revenues? And on which finally, hit, Can there et just disclose tends was a balance sheet, you revenue or Does jump future well. does that When little that around to lead deferred cetera? to the bit discuss that? bode a

Matthew White

for, over next some It within most paying will is just to earlier the invoices hit but haven't customers And months. little payments, the services yet we've for related XX invoiced next timing of that so -- provided. that of a bit

So that a XXXX. a lot it some of will be in most will it -- that in the of lot of fourth come will come but of quarter, --

Avram Fisher

is existing timing is issues? that customers or And customers, just and new there

Matthew White

just timing. customers, Existing

Operator

we no Instructions] additional closing this And At for have questions. [Operator to time, the I'll management remarks. turn floor

James Strange

I term, out. our even point we're the questions. headed some in have happy added And All please we've either thank long you, say now way disappointed to what We're the at we're ]. But keep just the right. with numbers we're doing free end, if we're And even going person as myself. said always doing, you to [ the way, to we're your of sales the where though in for pleased though continued matter very I that other interest answer company. contact feel want to questions, Well, everyone,

we'll Thanks. everyone, be thank to your talking So for later. you and you, attention,

Operator

This will today's conference. conclude

this your We disconnect at for participation. lines your you may thank You time.

CoreCard (CCRD) 1 Nov 232023 Q3 Earnings call transcript