CPI Card's Q2 2025: Unraveling Key Contradictions in Arroweye's Market Strategy and Growth Prospects

Arroweye's market position and CPI's customer overlap, Arroweye's EBITDA margin expectations, metal cards and market opportunities, Arroweye's performance and expectations, Indiana facility operational timing are the key contradictions discussed in CPI Card's latest 2025Q2 earnings call.



Revenue Growth and Arroweye Acquisition:
- CPI Card Group reported a revenue increase of 15% in the first half of 2025, with the acquisition of Arroweye contributing nearly $10 million in revenue in less than two months.
- The growth was primarily driven by the integration of Arroweye's diverse market segments and the financial backing provided by CPI, enhancing customer confidence.

Segment Performance and Tariff Impact:
- The Debit and Credit segment grew by 16%, while the Prepaid segment declined by 19% in the second quarter, with an accounting change affecting $8 million in revenue.
- Decreased gross margins are attributed to sales mix shifts, increased production costs, and $1 million in tariff expenses, which are expected to reach $5 million for the year.

Arroweye's Performance and Strategic Benefits:
- Arroweye exceeded expectations by achieving nearly $10 million in revenue in less than two months, surpassing management's forecasts for both revenue and profitability.
- The integration aligns with CPI's strategy to expand into new markets and provide complementary services, leading to potential future sales synergies and market expansion.

Investments and Market Expansion:
- CPI has invested in expanding its Card@Once solution into nonfinancial institution verticals, such as government disbursement, and has secured commitments for deliveries in closed-loop prepaid markets.
- These efforts are part of CPI's strategic focus on market expansion and long-term growth, leveraging its existing customer base and new technology investments.