GlobeNewswire Inc | Aug 12, 2021 04:00PM EDT

August 12, 2021

RevenueGrows 119%in the Quarter as Compared to the Same Period in 2020, the Fastest Growth Rate in the Company's History,

a Significant Acceleration in Revenue Growth Rate from 73% in the First Quarter

Generates Net Income of$218,000, $1.3 Million in Adjusted EBITDA and Positive Operating Cash Flow

Raises Guidance: Fiscal 2021 Revenue Expected to Between $56and $59Million, up 98% to 109% from Fiscal 2020

SAN ANTONIO, Aug. 12, 2021 (GLOBE NEWSWIRE) -- Usio, Inc: (Nasdaq:USIO), a leading FinTech integrated payment solutions provider, today announced financial results for the second quarter of2021, which ended June 30, 2021.

Louis Hoch, President and Chief Executive Officer of Usio, said, "I am pleased to report another record quarter with revenue growth accelerating to 119%, the fastest ever rate of revenue growth. Profitability also continues to significantly improve, with Adjusted EBITDA up $1.9million from a year ago as we achieved our third consecutive quarter of positive Adjusted EBITDA. Processing volumes in the quarter were a record $2.7 billion, up 389% from a year ago and up 46% sequentially from our previous record quarter just achieved in the first quarter of this year. Across the board, we are experiencing outstanding performance as we leverage our multi-channel distribution strategy and strong relationships to penetrate attractive markets with our industry-leading technology.

As a result, we are raising our annual revenue guidance for the year to an expected range between $56 million and$59million, which would represent increases of between 73% and 83% above fiscal 2020 revenues, while also anticipating positive operating cash flows and Adjusted EBITDA. All of which are conditioned on the continued enthusiasm in the fintech lending and cryptocurrency industries.

Growth was strong in each of our businesses, led by ACH, where revenues were up 125% due to a focus on penetrating fast-growing industries like cryptocurrency and Fintech. ACH remains our most profitable line of business. Card revenue growth also accelerated, reflecting PayFacs increasing market momentum. Prepaid had another strong quarter, increasing its penetration of the governmental, municipal, charitable and related markets where they have become a leading provider of electronic payments solutions. Usio Output Solutions continues to exceed expectations and is now beginning to realize the anticipated cross selling synergies.

Its been an extremely strong first half of the year. We are intent on building on this strong momentum through continued flawless execution of our strategy and investing in our innovative technology and unparalleled service to build value for our shareholders. This quarter was a testament to the scalability of our systems and associated products and services."

Second Quarter2021 Financial Summary

Revenues for the quarter endedJune 30, 2021 increased 119%to$15.2million, reflecting growth in each of our ACH, Credit Card and Prepaid lines of business as well as a full quarter of Usio Output Solutions revenues, which was acquired in December 2020. Excluding the results of Usio Output Solutions revenues, organic growth was 67%versus the same period last year. For the six months ended June 30, 2021, revenues increased 95%with year over year growth in all lines of business.Excluding the results of Usio Output Solutions revenues for the six-month period, organic growth was 45%versus the same period last year.

Three Months Ended June 30, 2021 2020 $ Change % Change ACH andcomplementary $ 4,001,897 $ 1,779,245 $ 2,222,652 125 %service revenueCredit card revenue 6,558,076 4,588,199 1,969,877 43 %Prepaid card 1,077,531 593,109 484,422 82 %services revenueOutput solutions 3,595,637 ? 3,595,637 100 %revenueTotal Revenue $ 15,233,141 $ 6,960,553 $ 8,272,588 119 %

Six Months Ended June 30, 2021 2020 $ Change % Change ACH andcomplementary $ 7,080,353 $ 4,016,991 $ 3,063,362 76 %service revenueCredit card 12,281,785 9,570,857 2,710,928 28 %revenuePrepaid card 1,964,107 1,144,384 819,723 72 %services revenueOutput solutions 7,368,446 ? 7,368,446 100 %revenueTotal Revenue $ 28,694,691 $ 14,732,232 $ 13,962,459 95 %

Gross profits increased221%to$4.1 million on gross margins of 27.1%, incrementally higherdue to product mix and the scaling of the ACH and PayFac business lines.

Other selling, general and administrative expenses were$2.8million for the quarter ended June 30, 2021, as compared to$1.9million in the prior year period up53%. The increase reflectsa full quarter of Output Solutions operating costs and continued investments in our ACH, PayFac and Prepaid business line. For the six-month period ended June 30, 2021, other selling, general and administrative expenses were$5.5million compared to$4.0million for same prior year period, up38%, again reflecting incremental Output Solutions costs plus investments in our ACH, PayFac and Prepaid initiatives.

The Company reported operating income of$0.3million for the quarter, a$1.6million improvement from the$1.3million loss in the prior year period. For the six months ended June 30, 2021, operating income was a loss of$0.5million versus a prior period loss of$2.1million, an improvement of$1.6million.

Adjusted EBITDA was positive$1.3million in the quarter, an improvement of$1.9million compared to an Adjusted EBITDA loss of$0.6million in the same period a year ago.This was the third consecutive quarterof positive Adjusted EBITDA. For the six months ended June 30, 2021, Adjusted EBITDA was a positive$1.5million versus a loss of$0.8million in the prior year period, an improvement of$2.3 million.Operating Cash Flows (excluding merchant reserve funds, prepaid card load assets, customer deposits and net operating lease assets and obligations)was $1.1million for the six-month period endedJune 30, 2021.

The Company reported net income of $0.2million for the quarter ended June30, 2021 for income of$0.01per sharecompared to a net loss of $1.3million for a loss of$0.10per sharefor the same period in the prior year. For the six-month period, the net loss was$0.5million for a loss of$0.03per sharecompared to a net loss of$2.1million for a loss of$0.16per sharefor the prior year period, a net loss improvementof$1.6million or$0.13per share.

Usio continues to be in solid financial condition with $5.6million in cash and cash equivalents onJune 30, 2021, a$0.6million improvement from December 31, 2020 and a$1.3million improvement from March 31, 2021.

Conference Call and Webcast

Usio, Inc.'s management will host a conference call Friday, August 13, 2021 at 11:00 am Eastern timeto review financial results and provide a business update. To listen to the conference call, interested parties within theU.S.should call +1-844-883-3890. International callers should call+1-412-317-9246. All callers should ask for the Usio conference call. The conference call will also be available through a live webcast, which can be accessed via the companys website atwww.usio.com/investors.

A replay of the call will be available approximately one hour after the end of the call through August27, 2021. The replay can be accessed via the Companys website or by dialing+1-877-344-7529 (U.S.) or1-412-317-0088(international). The replay conference playback code is 10156027.

About Usio, Inc.

Usio, Inc. (Nasdaq: USIO), a leading FinTech integrated payment solutions provider, offers a wide range of payment solutions to merchants, billers, banks, service bureaus, crypto exchanges and card issuers. The Company operates credit, debit/prepaid, and ACH payment processing platforms to deliver convenient, world-class payment solutions and services to their clients. With the acquisition of the assets of IMS in December 2020, the Company now offers additional services relatingto electronic bill presentment, document composition, document decomposition and printing and mailing services.The strength of the Company lies in its ability to provide tailored solutions for card issuance, payment acceptance, and bill payments as well as its unique technology in the prepaid sector. Usio is headquartered in San Antonio, Texas, and has offices in Austin, Texas and Franklin, Tennessee, just outside of Nashville.Websites:www.usio.com,www.payfacinabox.com,www.akimbocard.com andwww.usiooutput.com. Find us on Facebook and Twitter.

About Non-GAAP Financial Measures

This press release includes non-GAAP financial measures, EBITDA and adjusted EBITDA, as defined in Regulation G of the Securities and Exchange Act of 1934, as amended. The Company reports its financial results in compliance with GAAP, but believes that also discussing non-GAAP measures provides investors with financial measures it uses in the management of its business. The Company defines EBITDA as operating income (loss), before interest, taxes, depreciation and amortization of intangibles. The Company defines adjusted EBITDA as EBITDA, as defined above, plus non-cash stock option costs and certain non-recurring items, such as acquisitions. These measures may not be comparable to similarly titled measures reported by other companies. Management uses EBITDA and adjusted EBITDA as indicators of the Company's operating performance and ability to fund acquisitions, capital expenditures and other investments and, in the absence of refinancing options, to repay debt obligations.

Management believes EBITDA and adjusted EBITDA are helpful to investors in evaluating the Company's operating performance because non-cash costs and other items that management believes are not indicative of its results of operations are excluded. EBITDA and adjusted EBITDA are supplemental non-GAAP measures, which have limitations as an analytical tool. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures do not reflect a comprehensive system of accounting, may differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. For a description of our use of EBITDA and adjusted EBITDA, and a reconciliation of EBITDA and adjusted EBITDA to operating income (loss), see the section of this press release titled "Non-GAAP Reconciliation."

FORWARD-LOOKING STATEMENTS DISCLAIMER

Except for the historical information contained herein, the matters discussed in this release include forward-looking statements which are covered by safe harbors. Those statements include, but may not be limited to, all statements regarding management's intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. These forward-looking statements are identified by the use of words such as "believe," "intend," "look forward," "anticipate," "continue, and "expect" among others. Forward-looking statements in this press release are subject to certain risks and uncertainties inherent in the Company's business that could cause actual results to vary, including such risks related to an economic downturn as a result of the COVID-19 pandemic, the realization of opportunities from the IMS acquisition, the management of the Company's growth, the loss of key resellers, the relationships with the Automated Clearinghouse network, bank sponsors, third-party card processing providers and merchants, the security of our software, hardware and information, the volatility of the stock price, the need to obtain additional financing, risks associated with new legislation, and compliance with complex federal, state and local laws and regulations, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission including its annual report on Form 10-K for the fiscal year ended December 31, 2020.One or more of these factors have affected, and in the future, could affect the Companys businesses and financial results in the future and could cause actual results to differ materially from plans and projections. The Company believes that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to management. The Company assumes no obligation to update any forward-looking statements, except as required by law.

Contact:

Joe Hassett, Investor Relationsjoeh@gregoryfca.com484-686-6600

USIO, INC.CONSOLIDATED BALANCE SHEETS

June 30, 2021 December 31, 2020 (Unaudited) ASSETS Cash and cash equivalents $ 5,614,702 $ 5,011,132 Accounts receivable, net 3,160,449 2,863,638 Settlement processing assets 35,515,375 43,558,442 Prepaid card load assets 9,157,519 7,610,242 Customer deposits 1,410,607 1,305,296 Inventory 214,918 176,466 Prepaid expenses and other 432,417 301,755 Current assets before merchant reserves 55,505,987 60,826,971 Merchant reserves 8,101,153 8,265,555 Total current assets 63,607,140 69,092,526 Property and equipment, net 3,326,356 3,105,926 Other assets: Intangibles, net 5,099,828 6,035,761 Deferred tax asset 1,394,000 1,394,000 Operating lease right-of-use assets 3,038,920 2,671,266 Other assets 413,961 368,078 Total other assets 9,946,709 10,469,105 Total Assets $ 76,880,205 $ 82,667,557 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 645,224 $ 851,349 Accrued expenses 1,847,384 1,463,944 Operating lease liabilities, current 487,410 346,913 portionEquipment loan, current portion 53,673 - Settlement processing obligations 35,515,375 43,558,442 Prepaid card load obligations 9,157,519 7,610,242 Customer deposits 1,410,607 1,305,296 Deferred revenues 44,118 66,572 Current liabilities before merchant reserve 49,161,310 55,202,758 obligationsMerchant reserve obligations 8,101,153 8,265,555 Total current liabilities 57,262,463 63,468,313 Non-current liabilities: Equipment loan, non-current portion 99,102 ? Operating lease liabilities, non-current 2,733,343 2,495,883 portionTotal liabilities 60,094,908 65,964,196 Stockholders' equity: Preferred stock, $0.01 par value,10,000,000 shares authorized; -0- sharesoutstanding at June 30, 2021 ? ? (unaudited) and December 31, 2020,respectivelyCommon stock, $0.001 par value, 200,000,000shares authorized; 26,261,016 and26,260,776 issued, and 194,691 194,692 24,954,529 and 24,974,995 outstanding atJune 30, 2021 (unaudited) and December 31,2020, respectivelyAdditional paid-in capital 89,662,665 89,659,433 Treasury stock, at cost; 1,306,487 and1,285,781 shares at June 30, 2021 (2,244,985 ) (2,165,721 )(unaudited) and December 31, 2020, respectivelyDeferred compensation (5,267,134 ) (5,926,872 )Accumulated deficit (65,559,940 ) (65,058,171 )Total stockholders' equity 16,785,297 16,703,361 Total Liabilities and Stockholders' Equity $ 76,880,205 $ 82,667,557

USIO, INC.CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Revenues $ 15,233,141 $ 6,960,553 $ 28,694,691 $ 14,732,232 Cost of 11,105,696 5,674,887 21,660,009 11,518,282 servicesGross profit 4,127,445 1,285,666 7,034,682 3,213,950 Selling,general and administrative:Stock-based 317,285 348,393 645,000 636,103 compensationOther expenses 2,845,213 1,856,924 5,505,247 3,979,030 Depreciationand 627,149 382,244 1,249,356 770,039 amortizationTotal operating 3,789,647 2,587,561 7,399,603 5,385,172 expenses Operating 337,798 (1,301,895 ) (364,921 ) (2,171,222 )income (loss) Other income: Interest income 2,169 1,487 4,636 12,643 Other income (1,484 ) 38 (1,484 ) 726 (expense)Other incomeand (expense), 685 1,525 3,152 13,369 net Income (loss)before income 338,483 (1,300,370 ) (361,769 ) (2,157,853 )taxesIncome taxexpense 120,000 (12,201 ) 140,000 (34,675 )(benefit) Net Income $ 218,483 $ (1,288,169 ) $ (501,769 ) $ (2,123,178 )(Loss) Earnings (Loss) Per ShareBasic earnings(loss) per $ 0.01 $ (0.10 ) $ (0.03 ) $ (0.16 )common share:Dilutedearnings (loss) $ 0.01 $ (0.10 ) $ (0.03 ) $ (0.16 )per commonshare:Weightedaverage common sharesoutstandingBasic 19,993,387 13,173,009 19,962,661 13,150,119 Diluted 24,962,389 13,173,009 19,962,661 13,150,119

USIO, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30, June 30, 2021 2020Operating Activities Net (loss) $ (501,769 ) $ (2,123,178 )Adjustments to reconcile net (loss) to net cash provided by operating activities:Depreciation 313,423 270,038 Amortization 935,933 500,001 Bad debt 86,402 ? Non-cash stock-based compensation 645,000 636,103 Amortization of warrant costs 17,970 17,973 Changes in operating assets and liabilities: Accounts receivable (383,213 ) 149,794 Prepaid expenses and other (130,662 ) (4,039 )Operating lease right-of-use assets (367,654 ) 114,127 Other assets (38,452 ) ? Inventory (45,883 ) (24,568 )Accounts payable and accrued expenses 177,315 (139,748 )Operating lease liabilities 377,957 (110,725 )Prepaid card load obligations 1,547,277 18,752,859 Merchant reserves (164,402 ) (1,586,565 )Customer deposits 105,311 ? Deferred revenue (22,454 ) (26,470 )Net cash provided by operating activities 2,552,099 16,425,602 Investing Activities Purchases of property and equipment (533,854 ) (334,688 )Net cash (used) by investing activities (533,854 ) (334,688 ) Financing Activities Proceeds from PPP Loan Program ? 813,500 Proceeds from equipment loan 165,996 ? Payments on equipment loan (13,221 ) ? Purchases of treasury stock (79,264 ) (82,448 )Net cash provided by financing activities 73,511 731,052 Change in cash, cash equivalents, prepaid cardloads, customer deposits and merchant 2,091,756 16,821,966 reservesCash, cash equivalents, prepaid card loads,customer deposits and merchant reserves, 22,192,225 12,682,918 beginning of year Cash, Cash Equivalents, Prepaid Card Loads,Customer Deposits and Merchant Reserves, $ 24,283,981 $ 29,504,884 End of Period Supplemental disclosures of cash flow informationCash paid during the period for: Interest $ 1,484 $ ? Income taxes 92,850 ? Non-cash transactions: Issuance of deferred stock compensation ? 1,559,520

USIO, INC.STATEMENT OF CHANGES INSTOCKHOLDERS' EQUITY

Common Stock Additional Treasury Deferred Accumulated Total Paid- In Stockholders' Shares Amount Capital Stock Compensation Deficit Equity Balance atDecember 31, 26,260,776 $ 194,692 $ 89,659,433 $ (2,165,721 ) $ (5,926,872 ) $ (65,058,171 ) $ 16,703,361 2020 Issuance ofcommon stockunder equity 51,000 51 120,484 ? ? ? 120,535 incentiveplanWarrantcompensation ? ? 8,985 ? ? ? 8,985 costsCashlesswarrant 19,795 19 (19 ) ? ? ? ? exerciseReversal ofdeferredcompensation (17,111 ) (17 ) (48,599 ) ? 5,994 ? (42,622 )amortizationthat did notvestDeferredcompensation ? ? ? ? 249,801 ? 249,801 amortizationPurchase oftreasury ? ? ? (49,454 ) ? ? (49,454 )stock costsNet (loss)for the ? ? ? ? ? (720,252 ) (720,252 )period Balance atMarch 31, 26,314,460 $ 194,745 $ 89,740,284 $ (2,215,175 ) $ (5,671,077 ) $ (65,778,423 ) $ 16,270,354 2021 Issuance ofcommon stockunder equity 61,556 61 150,481 ? ? ? 150,542 incentiveplanWarrantcompensation ? ? 8,985 ? ? ? 8,985 costsReversal ofdeferredcompensation (115,000 ) (115 ) (237,085 ) ? 158,096 ? (79,104 )amortizationthat did notvestDeferredcompensation ? ? ? ? 245,847 ? 245,847 amortizationPurchase oftreasury ? ? ? (29,810 ) ? ? (29,810 )stock costsNetincomefor ? ? ? ? ? 218,483 218,483 the period Balance atJune 30, 26,261,016 $ 194,691 $ 89,662,665 $ (2,244,985 ) $ (5,267,134 ) $ (65,559,940 ) $ 16,785,297 2021 Balance atDecember 31, 18,224,577 $ 186,656 $ 77,055,273 $ (1,885,452 ) $ (5,636,154 ) $ (62,151,988 ) $ 7,568,335 2019 Issuance ofcommon stockunder equity 51,000 51 59,440 ? ? ? 59,491 incentiveplanWarrantcompensation ? ? 8,985 ? ? ? 8,985 costsDeferredcompensation ? ? ? ? 228,219 ? 228,219 amortizationPurchase oftreasury ? ? ? (26,629 ) ? ? (26,629 )stock costsNet (loss)for the ? ? ? ? ? (835,009 ) (835,009 )period Balance atMarch 31, 18,275,577 $ 186,707 $ 77,123,698 $ (1,912,081 ) $ (5,407,935 ) $ (62,986,997 ) $ 7,003,392 2020 Issuance ofcommon stockunder equity 1,500,544 1,500 1,641,304 ? (1,559,520 ) ? 83,284 incentiveplanWarrantcompensation ? ? 8,988 ? ? ? 8,988 costDeferredcompensation ? ? ? ? 267,207 ? 267,207 amortizationPurchase oftreasury ? ? ? (55,819 ) ? ? (55,819 )stockNet (loss)for the ? ? ? ? ? (1,288,169 ) (1,288,169 )period Balance atJune 30, 19,776,121 $ 188,207 $ 78,773,990 $ (1,967,900 ) $ (6,700,248 ) $ (64,275,166 ) $ 6,018,883 2020

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Reconciliationfrom OperatingIncome (Loss) to AdjustedEBITDA:Operating $ 337,798 $ (1,301,895 ) $ (364,921 ) $ (2,171,222 )Income (Loss)Depreciationand 627,149 382,244 1,249,356 770,039 amortizationEBITDA 964,947 (919,651 ) 884,435 (1,401,183 )Non-cashstock-based 317,285 348,393 645,000 636,103 compensationexpense, netAdjusted $ 1,282,232 $ (571,258 ) $ 1,529,435 $ (765,080 )EBITDA Calculation ofAdjusted EBITDAmargins:Revenues $ 15,233,141 $ 6,960,553 $ 28,694,691 $ 14,732,232 Adjusted 1,282,232 (571,258 ) 1,529,435 (765,080 )EBITDAAdjusted 8.4 % (8.2 )% 5.3 % (5.2 )%EBITDA margins