San Antonio-based fintech company Usio Inc. (Nasdaq: USIO) sent a letter to shareholders Tuesday announcing that New Jersey partner Voyager Digital is hitting the brakes on trading, deposits and withdrawals — which could cause Usio's revenue to take a hit.
Despite this, Usio — which focuses on cloud-based integrated payments — projects an estimated growth of 16% to 20% for 2022 over 2021. CEO Louis Hoch said the long-term impact of the slowdown is expected to be minimal.
Voyager Digital announced Friday it would temporarily suspend trading, deposits, withdrawals and loyalty rewards effective 2 p.m. July 1. Usio provides payment processing service for Voyager.
"We expect to continue processing transactions as requested by Voyager," wrote Hoch. But, he added, the volume of transactions processed for Voyager — and Usio's revenue — could be affected unless Voyager "resumes full operations."
Hoch noted Voyager represented 8% of Usio's total revenue for 2021 and 8% of Usio's revenue from January 1 to May 31 of this year.
"Voyager is independent from Usio and we can't predict when, or if, Voyager will resume operations," Hoch said.
Usio only anticipated $1 million in revenue from Voyager's prepaid card program services this year, and revenue from those services had already hit $670,000 by May 31. Voyager's accounts receivable balances with Usio are also "minimal" as of July 5 according to Hoch.
The company plans to replace any potential revenue shortfall from the suspended Voyager proceedings with new relationships with payment facilitators and merchant services companies that have a lower margin, he said. Usio also has $15 million in potential card spoilage revenue — revenue derived from unused cards — recognized starting in September for 12 to 18 months. These can carry margins up to 50 to 80%.
Hoch said the company is well poised to offset any impact on revenue since, as of March 30, it has a cash balance of $7.6 million and less than $115,000 in debt. It's also purchased more than $400,000 of Usio stock in the open market as part of a previously announced share buyback plan.
Usio, headquartered in San Antonio with additional offices in Austin and Franklin, Tennessee, was founded in 1998 by Louis Hoch, Michael Long and David Jones. It was originally founded as an electronic bill payment and presentment company, according to Hoch. In 2003 it sold the EBPP and refocused on payments processing.
