CPI Card Group Reports 9.7% Revenue Growth in Q1 2025, Acquires Arroweye Solutions

CPI Card Group Inc. reported its financial results for the first quarter of 2025, revealing a total net sales of $122.8 million, a 9.7% increase from $111.9 million in the same period last year. The growth was primarily driven by a significant rise in product sales, which increased by 18.9% to $69.2 million, while service sales remained relatively stable at $53.6 million. Despite the increase in sales, the company experienced a slight decline in gross profit, which fell to $40.7 million from $41.5 million, resulting in a gross profit margin decrease from 37.1% to 33.2%. Net income for the quarter was $4.8 million, down 12.5% from $5.5 million in the prior year, leading to basic and diluted earnings per share of $0.42 and $0.40, respectively.

Comparatively, CPI's operating expenses decreased to $26.6 million from $27.4 million, attributed to lower compensation-related expenses, including costs associated with a previous CEO's retention agreement. However, interest expenses rose significantly to $7.7 million, reflecting higher interest rates and increased borrowing on the company's Senior Secured Notes. The effective tax rate also improved to 25.8% from 28.7%, primarily due to enhanced deductibility of stock-based compensation.

In terms of operational developments, CPI Card Group has been actively expanding its market presence. The company recently completed the acquisition of Arroweye Solutions, a provider of on-demand payment card solutions, for $45.6 million, which is expected to enhance its offerings in the Debit and Credit segment. This acquisition, funded through cash reserves and available capacity under the ABL Revolver, is anticipated to contribute positively to future revenue streams.

As of March 31, 2025, CPI reported total assets of $351.9 million, a slight increase from $349.7 million at the end of 2024. The company’s long-term debt remained stable at $280.7 million, with no outstanding borrowings on its ABL Revolver. The company’s cash and cash equivalents decreased to $31.5 million from $33.5 million, reflecting cash used in operations and capital expenditures, which totaled $5.3 million for the quarter.

Looking ahead, CPI Card Group remains cautious about macroeconomic conditions, including potential impacts from tariffs and inflation on its supply chain and customer demand. The company is focused on leveraging its recent acquisition and enhancing its product offerings to navigate these challenges. Management expressed optimism about future growth opportunities, contingent on effective integration of Arroweye and continued demand for its payment solutions.