CoreCard (CCRD) Q3 Earnings call transcript Oct 31, 2024
AInvestFriday, Nov 1, 2024 2:10 am ET
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In the recent third quarter earnings call, CoreCard Corporation, a leading player in the financial technology sector, provided insights into its financial health, strategic moves, and future prospects. The call, led by Chief Financial Officer Matthew White and Chairman and CEO Leland Strange, offered valuable insights into the company's performance, challenges, and growth opportunities.

Financial Highlights and Strategic Moves

CoreCard reported a strong financial performance in the third quarter, with total revenue increasing by 17% year-over-year, driven by higher license revenue, professional services revenue, and processing and maintenance revenue. The company's revenue growth, excluding its largest customer and the impact of ParkMobile and the legacy Kabbage business, was a significant 30% on a year-over-year basis. This robust growth is a testament to the company's strategic focus on expanding its client base and delivering innovative solutions.

The call also revealed that CoreCard is in the process of onboarding new customers and implementing multiple partnerships with program managers. This strategic move is expected to further boost the company's revenue and market presence. Additionally, the company's cash position remains strong, with over $28 million in cash and marketable securities on its balance sheet, underscoring its financial stability and capacity for strategic investments.

Strategic Partnerships and Future Outlook

One of the key highlights of the call was the renewal of CoreCard's agreements with Goldman Sachs, extending the partnership through December 2030. This extension is expected to bring increased managed services fees and greater visibility into revenues from Goldman for the next 2-plus years. The company also shared its expectations for the Apple program, predicting that it will be moved to another bank, possibly JPMorgan, and will likely continue to be processed on the CoreCard platform for a significant period.

In terms of future outlook, CoreCard expects total revenue to be approximately flat for the full year 2024, with strong growth in processing and maintenance services. The company also announced its intention to continue investing in its new platform, CoreFinity, which is expected to be ready for production by the end of 2025. This investment underscores CoreCard's commitment to innovation and staying ahead of the competition.

Challenges and Future Directions

The call also touched upon the challenges faced by the company, including the decision by its auditor not to stand for reappointment, leaving the company to find a new auditor. Additionally, the company acknowledged the impact of regulatory fines on its clients, Goldman Sachs and Apple, and expressed confidence in their ability to address these issues and maintain customer satisfaction.

Looking ahead, CoreCard's strategic focus on expanding its client base, investing in innovation, and maintaining strong partnerships positions the company well for future growth. The company's commitment to delivering high-quality services and maintaining customer satisfaction is a testament to its strong leadership and strategic vision.

Investor Interactions and Market Perception

The call also provided insights into the interactions between the company and its investors. Analysts' questions revolved around the impact of strategic partnerships, revenue growth, and future outlook. The company's responses highlighted its confidence in its strategic moves and its focus on delivering value to its shareholders. The market's perception of CoreCard remains positive, with many analysts viewing the company's financial performance and strategic moves favorably.

Conclusion

CoreCard Corporation's third quarter earnings call painted a picture of a company in a strong financial position, with a clear focus on growth and innovation. The company's strategic partnerships, robust financial performance, and commitment to delivering high-quality services are key factors that position it for future success. As CoreCard continues to navigate the complex landscape of the financial technology sector, its strategic moves and focus on innovation are expected to drive its growth and maintain its competitive edge.

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