CPI Card Group Reports 9.2% Revenue Growth but 91.4% Decline in Net Income in Q2 2025

CPI Card Group Inc. reported its financial results for the second quarter of 2025, revealing a total net sales of $129.8 million, a 9.2% increase from $118.8 million in the same period last year. The growth was primarily driven by a 26.8% rise in product sales, which reached $80.9 million, while service sales decreased by 11.2% to $48.8 million. For the first half of 2025, total net sales amounted to $252.5 million, up 9.4% from $230.8 million in the prior year. However, the company experienced a decline in profitability, with net income falling to $518,000, a 91.4% decrease compared to $6 million in the second quarter of 2024.

The financial performance reflects significant changes from the previous fiscal period, particularly in gross profit, which decreased to $40.1 million from $42.4 million year-over-year. The gross profit margin also declined from 35.7% to 30.9%, attributed to increased production costs and a negative sales mix. Operating expenses rose by 11.7% to $30.7 million, largely due to higher professional service fees related to the acquisition of Arroweye Solutions, Inc., which was completed on May 6, 2025, for $45.6 million. This acquisition is expected to enhance CPI's capabilities in on-demand payment card solutions.

Operationally, CPI Card Group reported an increase in its customer base and engagement metrics, with a notable rise in the production of contactless cards and Card@Once printer sales. The company’s total assets increased to $399.8 million as of June 30, 2025, up from $349.7 million at the end of 2024, driven by the acquisition and investments in plant and equipment. The company’s long-term debt also rose to $310.9 million, reflecting the financing of the Arroweye acquisition and increased borrowings under its asset-based revolving credit facility.

Looking ahead, CPI Card Group anticipates continued challenges due to macroeconomic factors, including inflation and supply chain disruptions. The company is focused on leveraging its recent acquisition to drive growth in its Debit and Credit segment while managing costs and improving operational efficiencies. The management expressed optimism about future cash flows, supported by a combination of operating cash generation and available credit facilities, which they believe will be sufficient to meet ongoing operational needs and debt service requirements.