Cpi Card Group 2025 Q2 Earnings Net Income Drops 91.4% Amid Revenue Growth

Cpi Card Group (PMTS) reported mixed results in its fiscal 2025 Q2 earnings, with revenue rising 9.2% to $129.75 million but net income falling sharply by 91.4% to $518,000. The company raised its sales guidance but maintained its adjusted EBITDA outlook, citing increased tariffs and transition costs.

Revenue
Revenue for Cpi Card Group in Q2 2025 increased by 9.2% to $129.75 million, compared to $118.82 million in the same period the previous year. The Debit and Credit segment led the revenue growth, contributing $110.76 million, while the Prepaid Debit segment added $19.22 million. Intersegment eliminations reduced the total by $226,000, with no revenue listed under the "Other" category. The performance reflects strong sales in the Secure Card business, Card@Once digital solution, and open-loop prepaid segments.

Earnings/Net Income
Earnings for Cpi Card Group declined sharply in the second quarter of 2025. The company's EPS dropped by 90.7% to $0.05 from $0.54 in the same period the previous year, while net income fell by 91.4% to $518,000 from $6 million in 2024 Q2. This significant decline highlights the financial pressures the company is experiencing, particularly in light of increased tariffs and transition costs.

Price Action
Following the earnings report, the stock of Cpi Card Group experienced mixed performance in the short term. On the latest trading day, the stock price climbed by 4.58%. However, over the most recent full trading week, it plummeted by 29.31%. On a month-to-date basis, the stock was down 41.91%, indicating investor skepticism and volatility.

Post-Earnings Price Action Review
A strategy of buying Cpi Card Group shares after the company's revenue raised quarter-over-quarter on the earnings report date and holding for 30 days has historically underperformed over the past three years. This strategy yielded a return of -14.69%, significantly lagging the benchmark return of 47.91%. The excess return was -62.60%, and the CAGR was -5.22%, indicating substantial losses. Additionally, the strategy had a high maximum drawdown of 65.53% and a Sharpe ratio of -0.08, reflecting considerable risk and volatility.

CEO Commentary
John Lowe, CEO of Cpi Card Group, emphasized strong first-half sales growth driven by strategic investments and the successful Arroweye acquisition, which exceeded expectations in both revenue and profitability. He highlighted notable growth in key areas, including a 15%+ increase in the Secure Card business, 20% growth in the Card@Once digital solution, and 17% sales growth in the open-loop prepaid business. Lowe outlined strategic priorities such as market diversification, innovation in digital solutions, and expansion into new verticals like government disbursement and healthcare. He acknowledged challenges, including $5 million in unexpected tariffs and transition costs from the Indiana facility, but remained optimistic about long-term growth opportunities and operational efficiencies.

Guidance
Cpi Card Group raised its 2025 net sales guidance to low double-digit to mid-teens growth, reflecting the impact of the Arroweye acquisition and accounting changes. The company maintained its adjusted EBITDA guidance at mid- to high single-digit growth, accounting for increased tariffs and sales mix pressures. Cpi Card Group expects $5 million in 2025 tariff costs and $3 million in incremental costs from the Indiana production facility transition. The company anticipates margin improvement in 2026 and expects Q3 to mirror Q2’s margin pressures before improvement in Q4. The outlook excludes potential impacts from proposed semiconductor chip tariffs.

Additional News
Over the past three weeks from Aug 08th, 2025, key non-earnings related news included the following developments:
1. M&A Activity: Cpi Card Group completed the Arroweye acquisition, which exceeded expectations in revenue and profitability, contributing to first-half growth. The acquisition is a significant strategic move, enhancing the company's capabilities and positioning it for future expansion.
2. C-Level Changes: No significant changes in the executive leadership team were reported, with John Lowe continuing to lead the company and oversee strategic priorities.
3. Dividend/Buyback News: The company did not announce any changes to its dividend policy or new stock buyback programs in the recent period.

These developments underscore Cpi Card Group's ongoing strategic initiatives and its focus on growth through acquisitions and innovation in digital solutions.