Usio — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for the quarter ended September 30, 2026, was $23.8 million, an increase of 12% year-over-year from $21.2 million; nine-month revenue was $72.9 million, up 15% from $63.2 million.
• GAAP net income for the quarter was $217,000 ($0.01 per share), compared to a net loss of $415,000 ($0.02 per share) in the prior-year quarter; nine-month net income was $620,000 ($0.02 per share) versus a loss of $1.0 million ($0.04 per share).
• Adjusted EBITDA for the quarter was $1.2 million, a 222% increase from $0.4 million in the prior-year quarter; nine-month Adjusted EBITDA was $3.1 million, more than doubling from $1.5 million.
• Adjusted EBITDA margin expanded to 5.0% for the quarter, up from 1.7% in the prior year; nine-month margin was 4.3%, up from 2.4%.
• Gross profit was $5.7 million for the quarter, up 18% from $4.9 million, with gross margins expanding to 24.1% from 23.0%; nine-month gross profit was $16.6 million, up 12%, with margins at 22.8% versus 23.5%.
• Operating cash flow for the first nine months increased 133% to $3.3 million, compared to $1.4 million in the prior period, excluding a one-time $1.5 million employee retention tax credit benefit in the prior year.
• Cash and cash equivalents were $7.3 million at September 30, 2026, an increase of approximately $900,000 over the prior three months.
• The Company reported minimal long-term debt.

Guidance and Future Outlook:

• The Company re-iterated its full-year guidance of 14-16% revenue growth versus the prior year alongside record Adjusted EBITDA.
• Management highlighted "Usio Ion" and a strategic partnership with Harris Computer as key catalysts expected to contribute to long-term growth and operating leverage in 2027.
• Usio Ion is expected to deepen customer relationships, expand the third-party owned deposit base, and generate incremental high-margin interest revenue.
• The Harris Computer partnership is expected to expand reach into the utility market as a preferred payments provider.

Business Segments and Product Lines:

• Credit card revenues increased 18%, driven by a 29% increase in PayFac revenues, which now account for more than 75% of total credit card revenues.
• ACH and complementary services revenue grew 9%, supported by a 39% increase in ACH transaction volume, setting a new quarterly record for the sixth consecutive quarter.
• Output Solutions revenue grew 14%, with electronic documents processed and delivered up 28% and total pieces printed and mailed up 7%.
• Prepaid card services revenues increased for the first time this year, with purchase volume up 17%, though transaction volume was down 2%.
• Total payment dollars processed increased 25% to $2.73 billion, and total payment transactions grew 27% to 20.7 million.

Market and Competitive Landscape:

• The education market showed strong volume growth contributing to ACH business performance.
• The Company is expanding into the utility market through its partnership with Harris Computer.
• The Company operates a full stack of integrated, cloud-based electronic payment and embedded financial solutions.

Risks and Challenges:

• Forward-looking statements note risks including economic conditions, realization of benefits from the PostCredit acquisition, and the ability to manage growth.
• Potential risks include loss of key resellers, relationships with the ACH network, bank sponsors, and third-party card processing providers.
• Risks also encompass software and information system security, stock price volatility, the need for additional financing, new tax legislation, and compliance with complex regulations.

Management Commentary and Tone:

• CEO Louis Hoch described the quarter as "strong," citing sustained transaction growth and improving operating leverage.
• Management expressed confidence that growth is translating into meaningful bottom-line improvement, noting the third consecutive quarter of positive GAAP net income.
• The tone regarding future initiatives was "exciting," with expectations for Usio Ion and the Harris partnership to drive organic growth and operating leverage.

Other Key Points:

• The Company repurchased 327,000 shares of common stock for approximately $499,000 during the nine months ended September 30, 2026.
• Cash was utilized for capital expenditures, primarily for Output Solutions equipment.
• Total SG&A expenses for the quarter increased only 2% year-over-year to $5.5 million, while declining for the first nine months of 2026 compared to the prior period.
• The Company delivered its third consecutive quarter of positive GAAP net income.