Revenue Grows 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 $56 and $59 Million, 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 of 2021, 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 $1.9 million 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 $59 million, 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 PayFac's 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.

It's 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 Quarter 2021 Financial Summary

Revenues for the quarter ended June 30, 2021 increased 119% to $15.2 million, 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 and complementary service revenue	$	4,001,897	$	1,779,245	$	2,222,652		125	%
Credit card revenue		6,558,076		4,588,199		1,969,877		43	%
Prepaid card services revenue		1,077,531		593,109		484,422		82	%
Output solutions revenue		3,595,637		—		3,595,637		100	%
Total Revenue	$	15,233,141	$	6,960,553	$	8,272,588		119	%

	Six Months Ended June 30,
	2021		2020		$ Change		% Change

ACH and complementary service revenue	$	7,080,353	$	4,016,991	$	3,063,362		76	%
Credit card revenue		12,281,785		9,570,857		2,710,928		28	%
Prepaid card services revenue		1,964,107		1,144,384		819,723		72	%
Output solutions revenue		7,368,446		—		7,368,446		100	%
Total Revenue	$	28,694,691	$	14,732,232	$	13,962,459		95	%

Gross profits increased 221% to $4.1 million on gross margins of 27.1%, incrementally higher due to product mix and the scaling of the ACH and PayFac business lines.

Other selling, general and administrative expenses were $2.8 million for the quarter ended June 30, 2021, as compared to $1.9 million in the prior year period up 53%. The increase reflects a 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 $5.5 million compared to $4.0 million for same prior year period, up 38%, again reflecting incremental Output Solutions costs plus investments in our ACH, PayFac and Prepaid initiatives.

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

Adjusted EBITDA was positive $1.3 million in the quarter, an improvement of $1.9 million compared to an Adjusted EBITDA loss of $0.6 million in the same period a year ago. This was the third consecutive quarter of positive Adjusted EBITDA. For the six months ended June 30, 2021, Adjusted EBITDA was a positive $1.5 million versus a loss of $0.8 million 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 $1.1 million for the six-month period ended June 30, 2021.

The Company reported net income of $0.2 million for the quarter ended June 30, 2021 for income of $0.01 per share compared to a net loss of $1.3 million for a loss of $0.10 per share for the same period in the prior year. For the six-month period, the net loss was $0.5 million for a loss of $0.03 per share compared to a net loss of $2.1 million for a loss of $0.16 per share for the prior year period, a net loss improvement of $1.6 million or $0.13 per share.

Usio continues to be in solid financial condition with $5.6 million in cash and cash equivalents on June 30, 2021, a $0.6 million improvement from December 31, 2020 and a $1.3 million 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 time to review financial results and provide a business update. To listen to the conference call, interested parties within the U.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 company's website at www.usio.com/investors.

A replay of the call will be available approximately one hour after the end of the call through August 27, 2021. The replay can be accessed via the Company's website or by dialing +1-877-344-7529 (U.S.) or 1-412-317-0088 (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 relating to 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 and www.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 Company's 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 Relations

joeh@gregoryfca.com

484-686-6600

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 portion		487,410			346,913
Equipment 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 obligations		49,161,310			55,202,758
Merchant 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 portion		2,733,343			2,495,883
Total liabilities		60,094,908			65,964,196

Stockholders' equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at June 30, 2021 (unaudited) and December 31, 2020, respectively		—			—
Common stock, $0.001 par value, 200,000,000 shares authorized; 26,261,016 and 26,260,776 issued, and 24,954,529 and 24,974,995 outstanding at June 30, 2021 (unaudited) and December 31, 2020, respectively		194,691			194,692
Additional paid-in capital		89,662,665			89,659,433
Treasury stock, at cost; 1,306,487 and 1,285,781 shares at June 30, 2021 (unaudited) and December 31, 2020, respectively		(2,244,985	)		(2,165,721	)
Deferred 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 services		11,105,696			5,674,887			21,660,009			11,518,282
Gross profit		4,127,445			1,285,666			7,034,682			3,213,950

Selling, general and administrative:
Stock-based compensation		317,285			348,393			645,000			636,103
Other expenses		2,845,213			1,856,924			5,505,247			3,979,030
Depreciation and amortization		627,149			382,244			1,249,356			770,039
Total operating expenses		3,789,647			2,587,561			7,399,603			5,385,172

Operating income (loss)		337,798			(1,301,895	)		(364,921	)		(2,171,222	)

Other income:
Interest income		2,169			1,487			4,636			12,643
Other income (expense)		(1,484	)		38			(1,484	)		726
Other income and (expense), net		685			1,525			3,152			13,369

Income (loss) before income taxes		338,483			(1,300,370	)		(361,769	)		(2,157,853	)
Income tax expense (benefit)		120,000			(12,201	)		140,000			(34,675	)

Net Income (Loss)	$	218,483		$	(1,288,169	)	$	(501,769	)	$	(2,123,178	)

Earnings (Loss) Per Share
Basic earnings (loss) per common share:	$	0.01		$	(0.10	)	$	(0.03	)	$	(0.16	)
Diluted earnings (loss) per common share:	$	0.01		$	(0.10	)	$	(0.03	)	$	(0.16	)
Weighted average common shares outstanding
Basic		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, 2021			June 30, 2020
Operating 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 card loads, customer deposits and merchant reserves		2,091,756			16,821,966
Cash, cash equivalents, prepaid card loads, customer deposits and merchant reserves, beginning of year		22,192,225			12,682,918

Cash, Cash Equivalents, Prepaid Card Loads, Customer Deposits and Merchant Reserves, End of Period	$	24,283,981		$	29,504,884

Supplemental disclosures of cash flow information
Cash 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 IN STOCKHOLDERS' EQUITY

	Common Stock						Additional Paid- In			Treasury			Deferred			Accumulated			Total Stockholders'
	Shares			Amount			Capital			Stock			Compensation			Deficit			Equity

Balance at December 31, 2020		26,260,776		$	194,692		$	89,659,433		$	(2,165,721	)	$	(5,926,872	)	$	(65,058,171	)	$	16,703,361

Issuance of common stock under equity incentive plan		51,000			51			120,484			—			—			—			120,535
Warrant compensation costs		—			—			8,985			—			—			—			8,985
Cashless warrant exercise		19,795			19			(19	)		—			—			—			—
Reversal of deferred compensation amortization that did not vest		(17,111	)		(17	)		(48,599	)		—			5,994			—			(42,622	)
Deferred compensation amortization		—			—			—			—			249,801			—			249,801
Purchase of treasury stock costs		—			—			—			(49,454	)		—			—			(49,454	)
Net (loss) for the period		—			—			—			—			—			(720,252	)		(720,252	)

Balance at March 31, 2021		26,314,460		$	194,745		$	89,740,284		$	(2,215,175	)	$	(5,671,077	)	$	(65,778,423	)	$	16,270,354

Issuance of common stock under equity incentive plan		61,556			61			150,481			—			—			—			150,542
Warrant compensation costs		—			—			8,985			—			—			—			8,985
Reversal of deferred compensation amortization that did not vest		(115,000	)		(115	)		(237,085	)		—			158,096			—			(79,104	)
Deferred compensation amortization		—			—			—			—			245,847			—			245,847
Purchase of treasury stock costs		—			—			—			(29,810	)		—			—			(29,810	)
Net income for the period		—			—			—			—			—			218,483			218,483

Balance at June 30, 2021		26,261,016		$	194,691		$	89,662,665		$	(2,244,985	)	$	(5,267,134	)	$	(65,559,940	)	$	16,785,297

Balance at December 31, 2019		18,224,577		$	186,656		$	77,055,273		$	(1,885,452	)	$	(5,636,154	)	$	(62,151,988	)	$	7,568,335

Issuance of common stock under equity incentive plan		51,000			51			59,440			—			—			—			59,491
Warrant compensation costs		—			—			8,985			—			—			—			8,985
Deferred compensation amortization		—			—			—			—			228,219			—			228,219
Purchase of treasury stock costs		—			—			—			(26,629	)		—			—			(26,629	)
Net (loss) for the period		—			—			—			—			—			(835,009	)		(835,009	)

Balance at March 31, 2020		18,275,577		$	186,707		$	77,123,698		$	(1,912,081	)	$	(5,407,935	)	$	(62,986,997	)	$	7,003,392

Issuance of common stock under equity incentive plan		1,500,544			1,500			1,641,304			—			(1,559,520	)		—			83,284
Warrant compensation cost		—			—			8,988			—			—			—			8,988
Deferred compensation amortization		—			—			—			—			267,207			—			267,207
Purchase of treasury stock		—			—			—			(55,819	)		—			—			(55,819	)
Net (loss) for the period		—			—			—			—			—			(1,288,169	)		(1,288,169	)

Balance at June 30, 2020		19,776,121		$	188,207		$	78,773,990		$	(1,967,900	)	$	(6,700,248	)	$	(64,275,166	)	$	6,018,883

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020

Reconciliation from Operating Income (Loss) to Adjusted EBITDA:
Operating Income (Loss)	$	337,798		$	(1,301,895	)	$	(364,921	)	$	(2,171,222	)
Depreciation and amortization		627,149			382,244			1,249,356			770,039
EBITDA		964,947			(919,651	)		884,435			(1,401,183	)
Non-cash stock-based compensation expense, net		317,285			348,393			645,000			636,103
Adjusted EBITDA	$	1,282,232		$	(571,258	)	$	1,529,435		$	(765,080	)


Calculation of Adjusted EBITDA margins:
Revenues	$	15,233,141		$	6,960,553		$	28,694,691		$	14,732,232
Adjusted EBITDA		1,282,232			(571,258	)		1,529,435			(765,080	)
Adjusted EBITDA margins		8.4	%		(8.2	)%		5.3	%		(5.2	)%

Usio Announces Record Second Quarter 2021 Financial Results