Introduction

CoreCard Corporation is a true pioneer in the financial technology industry, with a rich history spanning over five decades. Founded in 1973, the company has evolved from its humble beginnings to become a leading provider of innovative credit technology solutions and processing services to the FinTech market.

History and Evolution

The company's foundational success can be attributed to its relentless focus on developing cutting-edge technology and fostering long-lasting partnerships with industry leaders. CoreCard's journey began as a software development firm, creating custom applications for clients. In the 1990s, the company made a strategic shift towards the FinTech market, developing specialized credit card processing software. This pivotal move allowed CoreCard to capitalize on the growing demand for such technology solutions, setting the stage for its future success.

Core Products and Global Presence

CoreCard's flagship product, the CoreCard software platform, has become a game-changer in the realm of credit card management, offering unparalleled flexibility, scalability, and real-time processing capabilities. As the company expanded its product offerings and client base, it also established a global footprint with offices in the United States, Romania, India, the United Arab Emirates, and Colombia. This international presence has enabled CoreCard to leverage talent and resources across multiple regions, enhancing its ability to deliver innovative solutions to clients worldwide.

Industry Reputation and Client Base

Throughout its history, CoreCard has successfully navigated the challenges of a rapidly evolving industry while maintaining a strong reputation for technical expertise and customer service. The company has accumulated a diverse client base, ranging from large financial institutions to emerging FinTech startups, including prominent names such as Goldman Sachs, American Express, and Gemini.

Financials

CoreCard's financial performance has demonstrated consistent growth and profitability. In the fiscal year 2023, the company reported total revenue of $56.00 million, with a net income of $3.40 million. Operating cash flow for 2023 stood at $16.81 million, while free cash flow reached $11.56 million.

The company's most recent quarter (Q3 2024) showed significant improvement, with revenue of $15.70 million, representing a 17% increase year-over-year. Net income for Q3 2024 was $2.20 million, with operating cash flow of $5.87 million and free cash flow of $4.27 million. The increase in revenue was driven by higher license revenue, increased professional services revenue, and growth in processing and maintenance revenue compared to Q3 2023.

CoreCard primarily generates revenue from two main segments: Services Revenue and Products Revenue. Services Revenue, which includes professional services, processing services, and software maintenance and support services, accounted for $41.16 million in the first nine months of 2024, a slight 2% decrease compared to the same period in 2023. This decrease was primarily due to lower professional services revenue from CoreCard's largest customer, Goldman Sachs Group, Inc. However, processing services and software maintenance and support services revenue grew during this period as the company's customer base and number of active accounts increased.

Products Revenue, primarily derived from software license fees, was $1.42 million in both the three and nine-month periods ended September 30, 2024, compared to $0 and $1.79 million in the respective comparable periods of 2023. The increase in product revenue in 2024 was primarily due to higher software license sales.

In terms of geographic markets, CoreCard primarily sells in the United States, generating $40.75 million (95.7%) of revenue in the first nine months of 2024 from the US market. The company also has some international revenue, with $1.74 million (4.1%) from the Middle East and $82,000 (0.2%) from the European Union in the first nine months of 2024.

Innovation and Research & Development

One of the key drivers of CoreCard's success has been its unwavering commitment to innovation. The company's research and development efforts have resulted in the development of the CoreFi platform, a cloud-native, active-active, and real-time credit platform that promises to redefine the industry. With a focus on delivering cutting-edge features and the lowest maintenance and operating costs, CoreFi is poised to solidify CoreCard's position as a market leader.

Additionally, CoreCard is investing in a new cloud-native credit processing platform called Corefinity, which it expects to be ready for production by the end of 2025. Management believes this new platform will be highly competitive in the market.

Strategic Partnerships and Acquisitions

The company's strategic partnerships and acquisitions have played a crucial role in expanding its capabilities and client base. In recent years, CoreCard has forged alliances with various FinTech companies, enabling it to offer a comprehensive suite of services and solutions to its customers.

Resilience During COVID-19

Despite the challenges posed by the COVID-19 pandemic, CoreCard has demonstrated remarkable resilience, adapting its operations to ensure uninterrupted service delivery. The company's agile approach and dedication to supporting its clients during this unprecedented time have further reinforced its reputation as a trusted partner in the FinTech ecosystem.

Liquidity and Future Outlook

CoreCard's financial position remains strong, with a debt-to-equity ratio of 0 as of December 31, 2023. The company had $22.50 million in cash and cash equivalents as of September 30, 2024. CoreCard's current ratio and quick ratio both stood at 4.90 as of September 30, 2024, indicating a robust liquidity position.

Looking ahead, CoreCard remains well-positioned to capitalize on the growing demand for innovative credit technology solutions. The company has provided guidance for the future, expecting total revenue to be approximately flat for the full year 2024. However, revenue growth excluding the largest customer, as well as the impact from Park Mobile and Legacy Cabbage, is expected to be between 25-30% for the full year 2024, above their previous guidance of 15-20%.

For Q4 2024, CoreCard expects total revenues to be between $13.3 million and $13.7 million, with earnings per share between $0.07 and $0.09. Looking further ahead to 2025, the company has provided guidance of total revenue between $60 million and $64 million, and earnings per share between $0.88 and $0.94. CoreCard also expects revenue growth excluding Goldman to be 30-40% in 2025.

Key Customer Agreement

The recent extension of CoreCard's agreements with its largest customer, Goldman Sachs, through 2030 has further bolstered the company's revenue visibility and long-term stability. This landmark deal underscores the trust and confidence that industry leaders place in CoreCard's capabilities. The renewed agreement includes increased managed services fees starting in January 2025, providing CoreCard with more certainty around future revenue from this key customer.

Business Overview

CoreCard is the leading provider of innovative credit technology solutions and processing services to the financial technology and services market. The company has over 1,000 employees with offices in the US, Romania, India, Colombia, and the UAE. CoreCard's largest customer, Goldman Sachs Group, Inc., represented 62% of consolidated revenue in the first nine months of 2024.

Overall, CoreCard has seen steady growth in its processing services business, adding new customers both directly and through partnerships. The company's focus on innovation, strategic partnerships, and customer service continues to drive its success in the competitive FinTech landscape.

Conclusion

In conclusion, CoreCard Corporation has established itself as a true powerhouse in the FinTech industry, consistently delivering cutting-edge solutions and exceptional customer service. With its robust financial position, innovative product pipeline, and strategic partnerships, the company is well-poised to continue its trajectory of growth and cement its position as a driving force in the rapidly evolving financial technology landscape. The recent guidance and key customer agreement extensions further reinforce CoreCard's promising outlook for the coming years.