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01/15 02:11
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents several concerns: a significant revenue decline, high dependency on Goldman Sachs, and reduced operating margins. Despite share repurchases and some growth in non-Goldman revenues, the overall financial health appears strained. The Q&A section reveals vague responses, adding to uncertainties. The strategic partnership with Bank of California and new platform development may not offset short-term risks. Given these factors, the stock is likely to react negatively in the short term, potentially falling between -2% and -8%.
Total Revenue $13.8 million, a 12% decrease year-over-year, driven by lower license revenue and lower professional services revenue from Goldman Sachs.
Professional Services Revenue $7 million, ahead of previously guided range.
Processing and Maintenance Revenue $5.7 million, mostly flat year-over-year, primarily due to revenue decline from the legacy CABG business.
Income from Operations $1.1 million, compared to $2.7 million for the same time last year.
Operating Margin 8%, compared to 17% for the same time last year, primarily driven by lower license revenue and continued investments in the new platform.
Earnings per Diluted Share $0.11, compared to $0.22 for Q2 2023.
Adjusted Diluted EPS $0.15, compared to $0.23 for Q2 2023.
Adjusted EBITDA $2.5 million, compared to $4.8 million for the second quarter of 2023.
Cash on Balance Sheet Over $22 million as of June 30, 2024.
Share Repurchases 134,650 shares for $1.6 million in Q1 2024 and 147,040 shares for $2.1 million in Q2 2024.
New Platform Development: The Corfinity platform is under development and is expected to be completed by the end of 2025. Progress is being made, and parts of the platform are already being utilized in the current environment.
New Customer Acquisition: CoreCard is onboarding new customers directly and through partnerships with program managers, with multiple implementations expected to go live in the coming months.
New Product Launch: A new card for Qatar Airlines is being processed by CoreCard, indicating expansion into the Middle East market.
Market Positioning: Goldman Sachs represented 63% of revenues in Q2 2024, down from 70% in Q2 2023, indicating a diversification of revenue sources.
Revenue Growth Excluding Major Customer: Revenue growth excluding Goldman Sachs was 7% year-over-year, with expectations of 15% to 20% growth for the full year.
Operational Efficiency: Headcount was slightly reduced in India, with expected cost savings starting in Q3 2024.
Revenue Performance: Total revenue for Q2 2024 was $13.8 million, a 12% decrease year-over-year, primarily due to lower license and professional services revenue.
Strategic Focus: CoreCard is focusing on investments in the new platform and share buybacks, with over $22 million in cash on hand.
Revenue Dependence: 63% of total revenue in Q2 2024 came from Goldman Sachs, indicating a high dependence on a single customer, which poses a risk if that relationship deteriorates.
Revenue Decline: Total revenue decreased by 12% year-over-year, primarily due to lower license and professional services revenue, which could impact future profitability.
Operating Margin: Operating margin decreased from 17% in Q2 2023 to 8% in Q2 2024, driven by lower revenues and increased investments in the new platform, indicating potential financial strain.
Investment in New Platform: Continued investment in the new Corfinity platform is expected to impact short-term profitability, with costs rising to $0.7 million in Q2 2024.
Customer Growth: While there is growth in revenues excluding the largest customer, the overall growth rate may not be sufficient to offset risks associated with reliance on Goldman Sachs.
Market Competition: The company faces competitive pressures in the market, which could affect its ability to attract and retain customers.
Economic Factors: Economic uncertainties may impact customer spending and investment in services, potentially affecting revenue growth.
Regulatory Issues: Potential regulatory changes could impact operations and compliance costs, posing a risk to business continuity.
Revenue Growth Excluding Largest Customer: Revenue growth, excluding our largest customer, was 7% in Q2 2024 year-over-year, and is expected to be 15% to 20% for the full year, above the previously guided range of 10% to 15%.
New Platform Development: The new Corfinity platform is progressing well, with completion expected by the end of 2025. This is viewed as a long-term investment for the company.
Customer Onboarding: CoreCard continues to onboard new customers and has multiple implementations in progress expected to go live in the coming months.
Cost Management: The company has reduced headcount slightly in India and anticipates related cost savings starting in Q3 2024.
Share Repurchase: CoreCard repurchased 134,650 shares for $1.6 million in Q1 2024 and 147,040 shares for $2.1 million in Q2 2024.
Professional Services Revenue Guidance: Professional services revenue for Q3 2024 is expected to be in the range of $6.2 million to $6.5 million.
License Revenue Guidance: License revenue is expected to be approximately $1.4 million in either Q4 2024 or Q1 2025.
Full Year Services Revenue Guidance: For the full year 2024, services revenue is expected to be approximately flat.
Operating Cash Flow: CoreCard expects to continue generating operating cash flow in 2024.
Share Repurchase Program: CoreCard Corporation repurchased 134,650 shares in Q1 2024 for $1.6 million and 147,040 shares in Q2 2024 for $2.1 million. The company plans to continue buying back shares using excess cash and cash generated from operations.
The earnings call presents mixed signals. Strong financial performance with increased revenue and EPS is positive, but risks like auditor reappointment, concentration with Goldman Sachs, and platform development challenges are concerning. Unclear management responses in the Q&A add uncertainty. Share repurchases are a positive, but overall, the sentiment is neutral given the balance of positive financials against significant risks.
The earnings call presents several concerns: a significant revenue decline, high dependency on Goldman Sachs, and reduced operating margins. Despite share repurchases and some growth in non-Goldman revenues, the overall financial health appears strained. The Q&A section reveals vague responses, adding to uncertainties. The strategic partnership with Bank of California and new platform development may not offset short-term risks. Given these factors, the stock is likely to react negatively in the short term, potentially falling between -2% and -8%.
The earnings call reveals several negative aspects: declining total revenue and EPS, reduced operating margin, and significant revenue loss from a major customer. Although there is a share repurchase program, the economic uncertainty and unclear responses regarding future opportunities, coupled with lower immediate growth expectations, contribute to a negative sentiment. The positive aspect of potential strategic customers is offset by the delay in revenue realization until 2025. Overall, the negative elements outweigh the positives, leading to a likely negative stock price reaction over the next two weeks.
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