Business Overview and History
CoreCard Corporation (CCRD) is a leading provider of innovative credit technology solutions and processing services to the financial technology and services market. Since its inception in 1973, the company has established itself as a pioneering force in the fintech industry, offering comprehensive and scalable credit management platforms that cater to the evolving needs of financial institutions, retailers, and accounts receivable businesses.
CoreCard Corporation, a Georgia corporation, has been in operation since 1973, with its securities publicly traded since 1980. The company's primary focus is providing technology solutions and processing services to the financial technology and services market. CoreCard's operations are conducted through its subsidiaries located in Romania, India, the United Arab Emirates, and Colombia, as well as the corporate office in Norcross, Georgia, which provides significant administrative, human resources, and executive management support.
The company designs, develops, and markets a comprehensive suite of software solutions to program managers, accounts receivable businesses, financial institutions, retailers, and processors. These solutions help manage credit and debit cards, prepaid cards, private label cards, fleet cards, buy now pay later programs, loyalty programs, and accounts receivable and loan transactions.
CoreCard's journey has been marked by various challenges and milestones. In 2003, the company established a subsidiary in Romania for software development and testing activities. This was followed by the establishment of a subsidiary in India in 2006 for additional software development, testing, and support for processing operations. In 2020, CoreCard expanded its reach by opening an office in Dubai, United Arab Emirates, to support the expansion of processing services into new markets. The company further strengthened its global presence in 2021 by opening a new location in Bogotá, Colombia, where it has technical personnel to support existing customers and continued growth.
Throughout its history, CoreCard has maintained a strong focus on innovation. The company has developed and licensed products to customers in the prepaid, fleet, private label, retail, and credit markets. Facing the ongoing challenge of adapting its software solutions to changing customer and market requirements, CoreCard has continually enhanced and upgraded its existing software solutions and developed additional modules to meet evolving needs.
CoreCard's comprehensive suite of software solutions includes CoreCREDIT, CoreENGINE, CoreISSUE, CoreFRAUD, and CoreCOLLECT, enabling clients to manage a wide range of financial transactions, from credit and debit cards to prepaid cards, private label cards, and fleet cards. Additionally, the company's CoreAPP, CoreMONEY, and CoreACQUIRE modules provide clients with a robust platform for accounts receivable management and loan transactions.
One of CoreCard's key strengths lies in its ability to provide both licensed software solutions and processing services to its clients. This flexibility allows the company to cater to the diverse needs of its customer base, ranging from financial institutions and retailers to accounts receivable businesses. Furthermore, the company's CoreCard Software subsidiaries in Romania, India, Dubai, and Colombia enable it to leverage a global talent pool and deliver innovative solutions tailored to local market requirements.
Financial Performance and Liquidity
In the fiscal year ended December 31, 2024, CoreCard reported total revenue of $57.40 million, a 2% increase compared to the previous year. The company's services revenue, which includes processing, maintenance, and professional services, accounted for $54.56 million, a 1% year-over-year increase. Product revenue, primarily from software license fees, was $2.84 million, a 58% increase from the prior year.
The company's operating income for the fiscal year 2024 was $6.54 million, with an operating margin of 11.40%. Net income for the year was $5.45 million, translating to diluted earnings per share of $0.67. CoreCard's balance sheet remained strong, with cash and cash equivalents of $19.48 million as of December 31, 2024, and a current ratio of 4.75, indicating a robust liquidity position.
CoreCard's performance in the fourth quarter of 2024 was particularly strong, with revenue reaching $14.82 million, a 22% increase year-over-year. Net income for the quarter was $1.93 million. The increase in revenue was driven by unexpected license revenue in the quarter. Services revenue, excluding license revenue, increased 10% year-over-year.
For the full year 2024, CoreCard reported diluted earnings per share of $0.67, compared to $0.40 in 2023. Adjusted diluted earnings per share was $0.79 in 2024, compared to $0.53 in 2023. The company's operating cash flow for 2024 was $5.80 million, while free cash flow was $0.89 million.
In terms of geographic markets, CoreCard operates primarily in the United States, generating $54.89 million (96%) of its 2024 revenue from the US market. The company also has some international presence in Europe ($0.11 million) and the Middle East ($2.40 million).
CoreCard's liquidity position remains strong, with a debt-to-equity ratio of 0.035 as of December 31, 2024. The company has no outstanding credit facilities or credit lines disclosed. Both the current ratio and quick ratio stand at 4.75, further underlining the company's solid financial position.
Transformative Initiatives and Growth Opportunities
In recent years, CoreCard has made significant investments in developing its next-generation processing platform, CoreFINITY (CoreFI), which aims to leverage the latest technologies and cloud-native architecture. This strategic initiative is designed to enhance the company's scalability, flexibility, and time-to-market for innovative credit programs, positioning CoreCard as a formidable competitor in the evolving fintech landscape.
Furthermore, the company has been actively exploring partnership and acquisition opportunities to expand its reach and capabilities. In 2023, CoreCard entered into a strategic alliance with a leading identity and professional services company, strengthening its position in the fintech ecosystem. The company has also been evaluating potential acquisition targets that could further bolster its technological prowess and market share.
One of CoreCard's key growth drivers is its ability to onboard new customers, both directly and through various partnerships with program managers. The company has seen a steady influx of new clients, particularly in the prepaid, fleet, private label, and revolving credit segments, which are expected to contribute to its long-term revenue growth.
CoreCard has been focusing on building its processing services business, which has been steadily growing. The company continues to add new customers, both directly and through partnerships, to this line of business. Excluding the impact of the Goldman Sachs relationship, the company's revenue grew 29% in Q4 2024 and 33% for the full year 2024 on a year-over-year basis, demonstrating strong growth in its core business.
The company's largest customer, Goldman Sachs Group, Inc., represented 62% of its 2024 consolidated revenue. CoreCard has extended its managed services contract with Goldman through 2030, with a higher monthly rate starting in 2025, which should contribute to future revenue growth.
CoreCard continues to invest in the development of its financial technology software in response to market requirements and trends, as well as changes in and new government regulations. The company spent $8.90 million on software development in 2024, up from $8.50 million in the prior year. CoreCard maintains a workforce of approximately 1,000 employees in its offshore operations for software development, testing, and operations support.
Risks and Challenges
While CoreCard's growth prospects remain promising, the company faces several key risks and challenges that investors should be aware of. The fintech industry is highly competitive, with larger, well-established players such as FIS, Global Payments, and Fiserv vying for market share. CoreCard's ability to maintain its competitive edge and continue to innovate its product offerings will be crucial to its long-term success.
Additionally, the company's reliance on a small number of large customers, such as Goldman Sachs Group, Inc., which represented 62% of its consolidated revenue in 2024, exposes it to concentration risk. Any material changes or termination of these key customer relationships could have a significant impact on CoreCard's financial performance.
Regulatory compliance and data security are also critical concerns for the company, as it operates in a highly regulated industry. Failure to maintain compliance with evolving industry standards and data protection regulations could result in financial penalties, reputational damage, and loss of customer trust.
Future Outlook and Guidance
Looking ahead to 2025, CoreCard has provided guidance for its financial performance. The company expects revenues to range between $60 million and $64 million, with earnings per share projected to be between $0.88 and $0.94. Notably, CoreCard anticipates revenue growth, excluding their largest customer, to be in the range of 30% to 40% in 2025.
For the first quarter of 2025, CoreCard expects total revenue to be between $14.4 million and $15 million, with earnings per share ranging from $0.15 to $0.19. The company does not expect any license revenue in 2025, with growth expected to come primarily from processing and maintenance, and professional services revenues.
These projections reflect CoreCard's confidence in its continued growth trajectory and the success of its strategic initiatives. The company's focus on expanding its processing services business and developing its next-generation platform is expected to drive sustainable growth in the coming years.
Conclusion
CoreCard Corporation has established itself as a pioneering force in the fintech industry, offering innovative credit technology solutions and processing services to a diverse client base. The company's flexible business model, comprehensive product suite, and strategic investments in its next-generation processing platform position it for continued growth in the rapidly evolving credit technology landscape.
With a strong financial position, growing customer base, and clear strategic direction, CoreCard is well-positioned to capitalize on the opportunities in the fintech market. The company's focus on expanding its processing services business and developing cutting-edge technologies like CoreFINITY demonstrates its commitment to long-term growth and innovation.
However, investors should carefully consider the competitive landscape, customer concentration risks, and regulatory compliance challenges that CoreCard faces. As the company continues to navigate these dynamics and execute on its transformative initiatives, its ability to maintain its competitive edge and deliver sustainable long-term value for shareholders will be crucial. The positive guidance for 2025 and the extended contract with Goldman Sachs provide optimism for CoreCard's future performance, but ongoing vigilance and adaptation to market changes will be essential for continued success in the dynamic fintech industry.