CoreCard Corporation

You can see cabbage business, as we've detailed in prior quarters, was 34% in the second quarter on a year over year basis, is expected to be 15 to 20% for the full year, which is above our previously guided range of 10 to 15%. We continue to onboard new customers, both directly and through various partnerships we have with program managers. As in previous quarters, we currently have multiple implementations of progress with new customers that we expect to go live in the coming months. Processing and maintenance revenues were mostly flat in the second quarter of 2024 compared to the second quarter of 2023, primarily due to the revenue decline from the legacy cabbage business that I mentioned previously. Turning to some additional highlights on our income statement for the second quarter of 2024. Income from operations was $1.1 million for the second quarter of 2024 compared to income from operations of $2.7 million for the same time last year. Our operating margin for the second quarter of 2024 was 8% compared to an operating margin of 17% for the same time last year. The decrease is primarily driven by lower license revenue, continued investments in our new platform and lower professional services revenue. The income statement impact of our new platform build was $0.7 million in the second quarter 2024 compared to $0.4 million for the prior year period. We reduced our headcount slightly in India and expect related cost savings starting in the third quarter of 2024. We will continue to look for cost savings as needed to remain profitable given the lower revenues we are currently receiving from our largest customer. Our second quarter 2024 tax rate was .4% compared to .8% in the second quarter of 2023. Earnings per diluted share for the quarter was 11 cents compared to 22 cents for Q2 2023. Adjusted diluted UPS for the quarter excluding stock compensation expense was 15 cents compared to 23 cents for Q2 2023. Adjusted EBITDA was $2.5 million compared to $4.8 million for the second quarter 2023. We have over $22 million of cash on our balance sheet as of June 30, 2024 and we expect to continue generating operating cash flow in 2024. We plan to use this excess cash and cash generated from operations to continue our investments in our new platform and to continue buying back shares. We repurchased 134,650 shares in the first quarter of 2024 for $1.6 million and 147,040 shares in the second quarter for $2.1 million. For the full year 2024, we continue to expect services revenue to be approximately flat. We expect licensed revenue to be approximately $1.4 million in either the fourth quarter of 2024 or the first quarter of 2025. As mentioned earlier, we expect growth from customers excluding our largest customer in addition to the impact of ParkMobile, the legacy cabbage business and the $0.5 million of accelerated revenue recognized in Q1 2024 to be between -20% for the full year, which is above our previously guided range of 10-15%. Within services, we continue to expect strong growth and processing and maintenance as our customers continue to grow and as we continue to onboard new customers. We anticipate professional services revenue in the third quarter of 2024 to be likely in the range of $6.5 million. And with that, I'll turn it over to Leland.

Thanks, Matt. You didn't leave me much to say. I think you're pretty comprehensive in covering the business and even where we're headed now. I guess I often say just look at the numbers and don't pay attention to what anybody says. I think the numbers are about what we expected. We're happy with them. We're probably a little higher than what we expected from the standpoint of professional services and I wouldn't expect that to stay up, but I've been surprised several times in the past few years on them and they may still stay up. Generally, our growth is good as far as the other side of the business, our largest customer is steady. Could it be a little faster and bigger? Would I like that? Yeah, but you can't handle a lot of You couldn't handle it if it was growing a whole lot faster. So we're pretty happy with the continued growth. The new, what we call core power core identity platform we're building is coming along fine also. Just remind everybody that's not expected to be finished until the end of the fourth quarter, let's say of 2025. But we're making good progress and we're using parts of what we've done already in our current environment. So that's the investment. It's the investment we think is really good for the company and the shareholders over the long term. Other than that, there's not a lot to say. We've added I could name a lot of cards and things, but we don't tend to do that. I will mention that one of our customers has got Cutter. So if you fly to Cutter or to India through Cutter and want to earn bonus points, you'll end up with the Cutter Airlines card and that's being processed by core card. We're still doing well in the Middle East. So generally business is just steady, steadily growing as far as the current business, steadily growing as far as adding some new ones. And we are working on several other good size potential business that would be that would come online in late 2025. That is the nature of what we do. If you have to work on it. We have two or three that we're we believe at least one of those will go live. Maybe, maybe all of them in the third, fourth quarter of next year. First quarter 2026. So generally, I just have to say, we're pleased with the numbers that we reported this quarter. We're pleased with the way business is going and we're just going to continue to To stay on the path world now. Operator, you can open it for questions. We have to take a few questions either for Matt or I.

Thank you, ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on your telephone keypad or confirmation tone will indicate your line is in the question queue. You may press star and two. If you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key. Ladies and gentlemen, we will wait for a moment while we pull for question. Our first question is from the line of how go with be Riley securities. Please go ahead.

And how we can hear you. How are you there.

Yeah, in the in the Thank you. I'm sorry I was on mute. The, the, the tone of business this time a year ago we were in the midst of a little bit of a banking crisis for small banks and large banks as well. A year has gone by and you mentioned the tone of business is steady and it's just, you know, is the tone of like RFPs or inquiries that still steady or that is that lifting from maybe a year ago or six months ago or what's the tone of like

Yeah, Yeah, I would say there's been a chain in the sense that less Fed Tech activity a little bit more from the smaller banks. It's not it's not my big, but it has improved some From the from what we're getting for the smaller banks. It is slow. Of course, we still get so but I'm just trying to give you the sort of the sense of what I see in the landscape, a little, a little better from the smaller banks and a little less from the Fed Tech side of the business.

Okay. And question for Matt. Was there any buyback activity in the quarter and you had been buying back. Yes, yeah, we bought back

around 147,000 shares at 2.1 million dollars. So, and then again, buyback activity for

Q. Okay. Okay. And final question is, you know, you mentioned like Two to three large at least one or all could hit maybe in the back half of 2025 like when could you give us like a kind of a range or a feel for what large is for you guys like in terms of your cards. Sure. Yeah,

sure. Yeah, that's, that's a good question. Now, I'm going to place your large in the two. I'm going to give you a pretty wide range two to $8 million a year. Type revenue. So over two is is, you know, it's a small large, but it's a medium and age is a big part for us. And I'm talking about annual revenue. So, two, three, four, five, six, I make type annual revenue, maybe in common. Well, no reason to combination. You either have it. You don't have it. But, But let me just add to that though. What's important in this kind of business is That it that is a snowball a little bit. You know, if you add a couple of more decent size financial institutions that tends to Lower the risk for the next guy to make the decision. So that helps you. Now we believe it's very low risk. We have got a lot of experience with conversions. We've never had a problem. We do not think there'll be a problem, but it doesn't matter what we believe what matters is what I board of directors or a risk officer believes. And of course, we can do all we can to show them that it's not much risk, but risk is taken away based on historical performance. So that's what that's kind of the way we're growing the business.

All right. Thank you. Appreciate that perspective. Thank you.

Any other questions.

No, there are no questions in the queue. Ladies and gentlemen,

Yeah, we thank everyone for taking the time to listen to our call. And as always, if you have any individual questions, men are always available to talk. So thank you very much.

Thank you. The conference of core card has now concluded. Thank you for your participation. You may now disconnect your lines.