Usio, Inc. (USIO) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This summary covers the quarterly period ended June 30, 2026. Usio, Inc. is a cloud-based fintech payment processor operating two primary segments: Merchant Services (ACH, credit card, and prepaid card processing) and Output Solutions (electronic bill presentment, printing, and mailing). The company is classified as a non-accelerated filer and a smaller reporting company.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | YTD 2026 (6 Months) | Q2 2025 (3 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Total Revenue | $23.68 million | $49.14 million | $19.96 million | $41.97 million |
| Gross Profit | $5.73 million | $10.86 million | $5.14 million | $9.95 million |
| Gross Margin | 24.2% | 22.1% | 25.8% | 23.7% |
| Operating Income | $0.38 million | $0.60 million | ($0.40 million) | ($0.64 million) |
| Net Income (Loss) | $0.28 million | $0.40 million | ($0.37 million) | ($0.60 million) |
| Adjusted EBITDA | $1.15 million | $1.93 million | $0.50 million | $1.17 million |
| Cash & Equivalents | $6.39 million (as of June 30, 2026) | |||
| Working Capital | $9.70 million (as of June 30, 2026) | |||
| Debt Obligations | $1.25 million total principal due (Equipment loans) |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 19% in Q2 2026 and 17% YTD compared to 2025. Growth was driven by ACH services (+21% Q2), Credit Card (+28% Q2), and Output Solutions (+22% Q2).
- Prepaid Card Decline: Prepaid card services revenue decreased 10% in Q2 2026 due to the loss of a key client's downstream customers in the prior year period.
- Interest Income: Interest revenue declined significantly (49% in Q2) due to lower federal funds rates and reduced interest-bearing deposits.
- Profitability: The company returned to profitability, reporting net income of $0.28 million in Q2 2026 compared to a net loss of $0.37 million in Q2 2025. Operating income turned positive ($0.38 million) from a loss of $0.40 million.
- Margin Compression: Gross margin decreased slightly (24.2% vs 25.8% prior year) due to a revenue mix shift toward lower-margin lines (ACH, Credit Card) and a decline in high-margin interest income.
- Cash Flow: Net cash provided by operating activities decreased to $0.25 million YTD 2026 from $1.11 million YTD 2025, primarily due to increases in accounts receivable and lower merchant reserves.
Guidance, Outlook, and Risks
- Strategic Initiatives: Management is executing the "Usio One" strategy to unify branding and sales, aiming to increase cross-selling and customer retention. The company is integrating the PostCredit acquisition (expense management) into its platform, with a live version targeted for the second half of 2026.
- Operational Improvements: A new printer installed in Q2 2026 has significantly increased Output Solutions capacity, resulting in record mail piece volumes.
- Stock Repurchases: The company repurchased $370,932 of stock YTD 2026 under a $4 million program. Future repurchases may be subject to a 1% excise tax under the Inflation Reduction Act if the $1 million annual threshold is met.
- Risks:
- Interest Rate Sensitivity: Continued lowering of federal funds rates will reduce interest income on customer deposits.
- Customer Concentration: While no single customer exceeds 10% of revenue, the loss of a key prepaid card client previously impacted results significantly.
- Macroeconomic Factors: Risks include global recession, inflation, and trade disputes affecting consumer spending and merchant solvency.
Investor Verification Checklist
- Verify the sustainability of the 19% revenue growth in Q2 2026, specifically the contribution from new client onboarding in ACH and Credit Card segments.
- Monitor the Prepaid Card segment for signs of recovery or further decline following the loss of the key client mentioned in the filing.
- Assess the impact of declining interest rates on future interest income, which currently offsets some revenue growth.
- Review the PostCredit integration timeline and the expected revenue contribution from the expense management vertical in H2 2026.
- Confirm the cash burn rate relative to the $6.4 million cash balance, noting the decrease in operating cash flow YTD.