CPI Card Group Reports Strong Sales Growth Amid Margin Pressures

CPI Card Group Inc reported a 15% increase in sales growth in the first half of 2025, excluding a one-time non-cash accounting change. The company's Card at Once instant issuance solution grew 20% and exceeded expectations from the AOI acquisition. CPI is expanding into new markets, such as healthcare and government disbursement, and investing in automation and new facilities to bring efficiencies and additional capabilities. However, the company is facing negative cost impacts, including unexpected tariffs and margin pressures due to sales mix and increased production costs.

CPI Card Group Inc. (Nasdaq: PMTS) reported a 15% increase in sales growth in the first half of 2025, excluding a one-time non-cash accounting change. The company's Card@Once® instant issuance solution grew by 20%, exceeding expectations from the AOI acquisition. CPI is expanding into new markets, such as healthcare and government disbursement, and investing in automation and new facilities to bring efficiencies and additional capabilities.

However, the company is facing negative cost impacts, including unexpected tariffs and margin pressures due to sales mix and increased production costs. Net income decreased 91% to $0.5 million in the second quarter, primarily due to lower gross profit, Arroweye acquisition and integration costs, and restructuring and other charges. Adjusted EBITDA increased 3% to $22.5 million, as benefits from sales growth, including the addition of Arroweye, were partially offset by lower gross margins, including the impact of sales mix and increased tariff expenses [1].

CPI updated its 2025 full year outlook, projecting low double-digit to mid-teens net sales growth, compared to the previous outlook of mid-to-high single-digit growth. The change from prior outlook primarily reflects the addition of Arroweye. The Adjusted EBITDA outlook of mid-to-high single-digit growth is unchanged from the prior outlook, with expected benefits from the addition of Arroweye offset by increased tariffs and unfavorable sales mix [1].

The company believes long-term growth trends for the U.S. card market remain strong, led by ongoing consumer card growth. Based on figures released by the networks, Visa and Mastercard® U.S. debit and credit cards in circulation increased at a compound annual growth rate of 8% for the three-year period ending March 31, 2025 [1].

References:
[1] https://www.businesswire.com/news/home/20250808331078/en/CPI-Card-Group-Inc.-Reports-Second-Quarter-2025-Results