CoreCard Corporation

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 percent for the full year which is above our previously guided range of 10 to 15 percent 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 of 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 24.4% compared to 24.8% in the second quarter of 2023. Earnings for diluted share for the quarter was 11 cents compared to 22 cents for Q2 2023. Adjusted diluted EPS for the quarter excluding stock compensation expense was $0.15 compared to $0.23 for Q2 2023. Adjusted EBITDA was $2.5 million compared to $4.8 million for the second quarter of 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 license 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 15% and 20% for the full year, which is above our previously guided range of 10% to 15%. Within services, we continue to expect strong growth in 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 $6.2 to $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. Don't pay attention to what anybody says. I think the numbers are about what we expected. We're happy with them. They'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 uh the other side of the business other than our largest customer it's steady uh could it be a little little faster and bigger would i like that yeah but uh you can't have 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 um the new the new uh what we call core file or core affinity platform we're building is coming along fine also i'll 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. We're using parts of what we've done already in our current environment. So that's an investment. It's an 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 a cutter. So if you fly to Cutter or to India through Cutter and when I 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 come online in late 2025. That is the nature of what we do. You have to work on it a year in advance, typically, and we have two or three that we believe at least one of those will go live, maybe all of them, in the third, fourth quarter of next year, first quarter of 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 we're on now. Operator, you can open it for questions. Be happy to take a few questions either from Matt or I. Thank you.

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