10-K: Usio, Inc. 2025 Annual Report: Revenue Growth Amidst Challenges

Sentiment:

Annual Report 18 March 2026 4:00 PM

Usio, Inc. reported a 3% revenue increase to $85.4 million in 2025, driven by strong ACH and complementary services growth, despite a net loss of $2.5 million and declines in prepaid card services.

Delay expectedReplacement of lost prepaid card services revenue has been delayed, with many meaningful new programs anticipated to start in mid to late 2026.The new Output Solutions printer, purchased in September 2025, is expected to be installed and operational in the first half of 2026.

Worse than expectedThe company reported a net loss of $2.5 million in 2025, a significant deterioration from the net income of $3.3 million in 2024.Adjusted EBITDA decreased to $1.3 million in 2025 from $2.9 million in 2024, indicating reduced operational profitability.Prepaid card services revenue declined 22% due to the loss of a key customer, impacting a previously strong segment.Interest revenues decreased 33% due to lower interest rates and reduced cash balances, impacting a source of income.Selling, General and Administrative (SG&A) expenses increased 10%, contributing to the overall operating loss.

Summary

Total revenues increased 3% to $85.4 million in 2025 from $82.9 million in 2024.
The company reported a net loss of $2.5 million in 2025, compared to net income of $3.3 million in 2024.
Total payment volume processed increased 19% to $8.4 billion in 2025 from $7.1 billion in 2024.
Total transactions processed increased 30% to 60.8 million in 2025.
ACH and complementary service revenue grew 33% to $22.2 million.
Credit card revenue increased 3% to $30.0 million.
Prepaid card services revenue declined 22% to $11.0 million due to the loss of a key downstream customer.
Output Solutions revenue remained flat at $20.6 million.
Interest revenues decreased 33% across all sectors due to lower interest rates and reduced cash balances.
Operating loss increased to $2.36 million in 2025 from $1.47 million in 2024.
SG&A expenses increased 10% to $18.4 million in 2025 from $16.7 million in 2024.
Adjusted EBITDA decreased to $1.3 million in 2025 from $2.9 million in 2024.
Cash and cash equivalents decreased to $7.4 million at December 31, 2025, from $8.1 million at December 31, 2024.
The Triple Pay Play lawsuit was settled for $115,000, recorded as a reduction of SG&A expense in 2025.
The KDHM, LLC lawsuit was settled for $120,000, to be recorded as a reduction of SG&A expense in 2026.
The company acquired PostCredit assets in November 2025 to enter the expense management space.
The "Usio One" strategy was adopted and implemented throughout 2025 to unify brand, sales approach, and payment offerings.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed report with strong underlying transaction growth and strategic initiatives for future expansion, but a significant decline in profitability and key revenue streams, indicating operational challenges and a need for successful execution of new strategies.

Positives

Total payment volume processed increased 19% to $8.4 billion in 2025, demonstrating strong underlying business activity.
Total transactions processed increased 30% to 60.8 million in 2025, indicating higher customer engagement.
ACH and complementary service revenue grew significantly by 33% to $22.2 million, driven by organic growth and new client acquisitions.
Credit card revenue increased 3% to $30.0 million, with the PayFac platform successfully driving growth and offsetting attrition in legacy portfolios.
The company successfully settled the Triple Pay Play lawsuit for $115,000, reducing SG&A expense in 2025.
The KDHM, LLC lawsuit was favorably settled for $120,000, which will reduce SG&A expense in 2026.
The acquisition of PostCredit assets in November 2025 provides an entry point into the expense management space and opens new sales channels.
The "Usio One" strategy is designed to unify offerings, enhance client onboarding, and improve cross-selling, with early success already realized.
Output Solutions business line achieved higher mail quantity in the first two months of 2026 than any other two-month period in company history, following investments in new equipment and labor cost reductions.
The company maintains a strong cybersecurity posture with SOC 2 Type 2 and PCI certifications, and is working towards ISO 27001 compliance.

Negatives

The company reported a net loss of $2.5 million in 2025, a significant decline from net income of $3.3 million in 2024.
Prepaid card services revenue decreased 22% to $11.0 million due to the loss of a key downstream customer.
Interest revenues decreased 33% across all sectors due to lower interest rates and reduced cash balances.
Operating loss increased to $2.36 million in 2025 from $1.47 million in 2024.
SG&A expenses increased 10% to $18.4 million in 2025, driven by investments in staffing, salary increases, and IT infrastructure.
Adjusted EBITDA decreased to $1.3 million in 2025 from $2.9 million in 2024, reflecting increased SG&A and reduced gross profit.
Cash and cash equivalents decreased to $7.4 million at December 31, 2025, from $8.1 million at December 31, 2024.
Gross profit margins slightly declined from 23.7% in 2024 to 23.1% in 2025, due to lower margin business mix and reduced interest revenues.
Output Solutions revenue was flat, indicating challenges in growing this segment despite investments.
The company may incur an excise tax of approximately $11,000 in 2026 and future years on stock repurchases due to the Inflation Reduction Act.

Risks

Loss of key resellers could reduce revenue growth.
Market conditions, including slower growth, recession, changes in interest rates, inflation, international conflicts, and tariffs, could negatively impact business, results of operations, cash flows, and financial condition.
Breaches of security applications by cyberattacks or inadequacy of security measures could lead to significant losses, liability, fines, and inability to sell services.
Efforts to expand the product portfolio and market reach, including through acquisitions, may not succeed or maintain profitability.
Unauthorized disclosure of cardholder data could expose the company to liability and protracted and costly litigation.
Failure to comply with applicable requirements of card networks could result in fines, suspension, or termination of registrations.
Failure to adapt to rapid technological change, including as a result of AI, could lead to business failure.
Fraud by merchants or others could have an adverse effect on operating results and financial condition.
The company has incurred substantial losses in the past and may incur additional losses in the future, potentially requiring additional financing on unfavorable terms or being unable to obtain it.
Business interruptions or systems failures may impair the availability of websites, applications, products, or services.
Reliance on the Automated Clearing House (ACH) network means changes in Federal Reserve rules could adversely affect the business.
Loss of key personnel or inability to attract, recruit, retain, and develop qualified employees could adversely affect business.
Third-party card processing providers or bank sponsors failing to comply with card association requirements or cancelling contracts could increase costs.
Inability to obtain and maintain sufficient insurance coverage (D&O, cyber) could expose the company to significant financial impact.
The company might never realize the full value of its significant deferred tax assets, which would result in a charge against earnings.
Prepaid card revenues are dependent upon continued Mastercard registration and financial institution sponsorship.
Software failures or warranty claims could increase costs.
The company will be liable for significant separation payments to Louis A. Hoch in case of change in control, termination without cause, non-renewal, death, or disability.
Risks associated with reduced levels of consumer spending could adversely affect revenues and earnings.
The company is subject to risks and write-offs resulting from fraudulent activities and losses from overdrawn cardholder accounts.
Inability to successfully integrate acquisitions into the company could limit growth.
Failure to manage credit risks related to merchant accounts could result in significant losses.
The electronic commerce market evolving or growing slower than anticipated could negatively impact the business.
Inability to compete successfully in the industry could lead to loss of market share and increased costs.
Failure to comply with payments and other financial services-related regulations and oversight could materially harm the business.
As an agent of, and third-party service provider to, issuing banks, the company is subject to indirect regulation and direct audit and examination by federal banking regulators.
The company is subject to U.S. laws, regulations, rules, standards, policies, contractual obligations, and other legal obligations, particularly those related to privacy, data protection, and information security, and failure to comply could harm the business.
The company is subject to the CARD Act, which could subject it to civil and criminal liabilities.
The business is subject to U.S. federal anti-money laundering (AML) laws and regulations, including the Bank Secrecy Act (BSA).
Regulations relating to prepaid card programs could further increase compliance costs.
The use of AI could make the company subject to evolving regulatory risks.
The company's stock price is volatile, and investors may not be able to sell shares at a price higher than what they paid.
Negative reports from security or industry analysts, or cessation of coverage, could depress the stock price.
Additional stock issuances could result in significant dilution to stockholders.
The company may issue additional equity securities or engage in other transactions that could dilute book value or affect the priority of common stock.
The company may issue shares of preferred stock with greater rights than common stock.
No cash dividends have been paid in the past, and there are no plans to pay cash dividends in the future, which could cause the common stock to have a lower value.
Shares eligible for future sale may depress the stock price.
Directors and officers have substantial control over the company.
Certain measures adopted by the company may make it more difficult for a third party to acquire control.

Future Outlook

The company anticipates continuing to develop the PostCredit technology and integrating it into existing products, with phased implementation expected by the end of 2026. Material new business for prepaid card services is projected to commence in mid to late 2026. The "Usio One" strategy is expected to lead to a consolidated platform that eliminates the need for distinct contracts, dashboards, funding accounts, and support teams per product, aiming to increase product stickiness and customer retention. The new Output Solutions printer is expected to be operational in the first half of 2026, enhancing capacity and competitiveness.

Management Comments

"We believe that our expectations are reasonable, we can give no assurance that such expectations will prove to be correct."
"We believe that our success in 2026 and beyond will continue to depend in large part on our ability to (a) scale recurring revenues and deepen partner relationships, (b) expand our product offerings, (c) pursue disciplined, accretive opportunities, (d) enhance shareholder value via operational execution and capital allocation, and (e) assimilate current and future acquisitions of companies and customer portfolios."
"We believe this strategy will help better position our merchant services and Output Solutions business segments to customers and the broader payments related market as a more cohesive service offering."
"In turn, we anticipate being able to better leverage our resources, reduce friction in new customer acquisition, and drive more meaningful cross-selling opportunities, which we anticipate will help increase our products' stickiness and customer retention."
"We believe this reduction has better positioned the business line to pursue and successfully generate much larger opportunities than we previously were able to through the increase in capacity and automation." (referring to Output Solutions labor cost reduction)
"Management continues to monitor its financial position and believes that existing cash balances, along with these credit facilities, are sufficient to meet operational needs and legal obligations."

Industry Context

StockSavvy.ai notes that Usio's focus on expanding electronic payment processing aligns with broader industry trends of increasing non-cash payments, mobile phone payments, and e-commerce growth, as highlighted by the Federal Reserve Payments Study. The decline in cash payments (14% of total payments in 2024, down from 31% in 2016) and the rise of credit/debit card payments (65% of U.S. consumers' total payments per month in 2024, up from 51% in 2018) indicate a favorable macro environment for Usio's core business. The company's investment in Real Time Payments (RTP) and wearable payment technology positions it to capitalize on emerging payment methods and evolving consumer preferences for faster and more convenient transactions.

Comparison to Industry Standards

Usio is one of only nine companies holding the prestigious NACHA certification for Third-Party Senders and was the second company to receive this certification, making it the most tenured. This indicates a strong, established competitive position in ACH processing compared to industry peers.
The company's proprietary systems and ability to create corporate-branded card programs in shorter timeframes than competitors suggest a competitive advantage in prepaid card offerings, allowing it to compete effectively with much larger companies.
Usio's connectivity and ability to process via contactless networks such as Apple Pay, Samsung Pay, and Google Pay are competitive advantages in the evolving digital payment landscape, aligning with increasing consumer adoption of mobile wallet payments (14.4 billion transactions in 2022, up from 2.9 billion in 2018).
The significant barrier in obtaining bank sponsorships for prepaid card program management and processing provides a competitive advantage over potential new entrants into the prepaid industry.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Technology Officer	NA	Current CTO (unnamed)	NA	The current CTO has served in this role for 18 years and more than 22 years with the Company, indicating stability in this key position.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Structure	The board of directors is divided into three classes, with directors serving staggered three-year terms, which may discourage proxy contests or takeover bids.	NA	This structure expands the time required to change the composition of the majority of directors, potentially making it more difficult for a third party to acquire control without Board approval.
Director Election and Removal	A majority of directors then in office may fill any vacancy, and directors may be removed only for cause by the affirmative vote of a majority of the combined voting power of outstanding capital stock.	NA	These provisions may discourage third parties from voting to remove incumbent directors and simultaneously gaining control of the board by filling vacancies with their own nominees.
Anti-takeover Provisions (Nevada Law)	The company is subject to Nevada Revised Statutes Sections 78.411 to 78.444 (business combinations with interested stockholders) and 78.378 to 78.3793 (control share acquisitions), which can prohibit or delay mergers or other takeover attempts.	NA	These statutory provisions could limit the price that investors might otherwise pay for the company's securities and discourage attempts to acquire the company, even if such transactions were favorable to stockholders.
Authorized but Unissued Capital Stock	The company's articles of incorporation authorize the issuance of up to 200,000,000 shares of common stock and 10,000,000 shares of preferred stock without stockholder approval.	NA	This enables the board of directors to issue shares to persons friendly to current management or to issue preferred stock with terms that could make it more difficult for a third party to acquire a controlling interest, potentially diluting the interests of existing common stockholders.
Blank Check Preferred Stock	The board of directors has the authority, without stockholder approval, to issue preferred stock with rights superior to the rights of common stockholders.	NA	This could impair the rights of common stockholders and be used to delay or prevent a change in control or make the removal of management more difficult.
Cybersecurity Oversight	The Board has established a Risk and Cybersecurity Committee with specific responsibility for overseeing cybersecurity threats. The Chief Technology Officer (CTO) leads the cybersecurity organization and reports to the CEO, CAO, Legal team, and the Risk and Cybersecurity Committee at least quarterly.	NA	This structure enhances the company's oversight and management of material risks from cybersecurity threats, integrating it into overall enterprise risk management.

Legal Proceedings

**BEN KAUDER, NINA PIOLETTI, & TRIPLE PAY PLAY, INC.**: Usio filed suit against former executives for breach of contract and misappropriation of trade secrets. The lawsuit was settled on September 29, 2025, for $115,000, which was recorded as a reduction of SG&A expense for the year ended December 31, 2025.
**KDHM, LLC**: KDHM, LLC sued Usio Output Solutions, Inc. for breach of an asset purchase agreement, claiming improper transfer of $317,000 in customer deposits. Usio counterclaimed for misrepresentations and undisclosed additional customer deposits of $305,000. After a series of court decisions and appeals, the Fourth Court of Appeals reversed the trial court's judgment in favor of KDHM on April 2, 2025, and KDHM's subsequent petition to the Supreme Court of Texas was denied on January 30, 2026. The lawsuit was settled on February 6, 2026, for $120,000, which will be recorded as a reduction of SG&A expense in 2026. The company will not renew the related line of credit or letter of credit upon their maturity.

Related Party Transactions

The company purchased $27,124 in 2025 (and $21,900 in 2024) of corporate imprinted sportswear, promotional items, and caps from Angry Pug Sportswear. Louis Hoch, Chairman, President, Chief Executive Officer, and Chief Operating Officer, is a 50% owner of Angry Pug Sportswear.

Stakeholder Impact

**Shareholders**: Face potential dilution from future stock issuances under the 2025 Equity Incentive Plan and Employee Stock Purchase Plan (ESPP). The absence of cash dividends and the substantial control by directors and officers may influence investment decisions. Anti-takeover measures could limit acquisition premiums.
**Employees**: Benefit from equity-based compensation plans (restricted stock, RSUs) as a tool for recruitment and retention. The company provides a 401(k) plan with matching contributions and mandatory training programs focusing on anti-harassment and anti-discrimination.
**Customers/Merchants**: Will benefit from enhanced product offerings like the Consumer Choice product and the PostCredit acquisition, as well as improved onboarding, reporting, fraud monitoring, and security through the "Usio One" strategy. However, they face risks of service disruption, data breaches, and fraud liability.
**Creditors**: The company maintains equipment loans, an unsecured revolving line of credit, and an irrevocable letter of credit, which are managed to meet operational needs and legal obligations. The settlement of the KDHM lawsuit means the line of credit and letter of credit will not be renewed.

Next Steps

Continue developing and integrating PostCredit technology into existing products, with phased implementation expected by the end of 2026.
Install and make operational the new Output Solutions printer in the first half of 2026 to increase capacity and speed.
Continue to invest in the sales force and technology platforms to drive revenue growth, particularly in ACH merchants and new software integrators.
Leverage and optimize business infrastructure to expand payment processing and mail and printing capabilities without significantly increasing operating costs.
Continue to enhance the Consumer Choice product to accommodate additional methods of disbursement, such as PayPal and Venmo integration, and PIN4 network for cardless ATM withdrawals.
Continue expansion into the Real Time Payments (RTP) market vertical.
Refine the wearable device program for prepaid card services, anticipating it will enhance marketability and diversity.
Continue to build out onboarding, funding, and management technology for the consolidated "Usio One" platform to accelerate client acquisition and cross-selling.
Monitor Federal Reserve's monetary policy decisions and manage cash balances with bank partners to optimize interest revenues.
Comply with NACHA's new risk assessment and bank account verification standards by June 2026.

Key Dates

Date	Description
December 14, 2020	Asset purchase agreement executed with Information Management Solutions, LLC (IMS).
December 15, 2020	Acquisition of substantially all assets of Information Management Solutions, LLC (IMS).
March 20, 2021	Entered into a debt arrangement to finance the purchase of an Output Solutions sorter.
April 1, 2021	Lease amendment commenced for an additional 2,734 square feet of office space in San Antonio, Texas.
September 1, 2021	KDHM, LLC sued PDS Acquisition Corp (now Usio Output Solutions, Inc.) for breach of asset purchase agreement.
September 28, 2021	Usio filed an answer generally denying KDHM's allegations.
October 5, 2021	Usio filed a counterclaim and third-party petition against KDHM and its principals.
December 25, 2021	Detected a ransomware attack that accessed and encrypted a small portion of information technology systems.
April 1, 2022	Second lease amendment commenced for an additional 6,628 square feet of office space in San Antonio, Texas.
July 2022	Nina Pioletti resigned from Usio.
August 18, 2023	Judge granted a summary motion in the KDHM lawsuit.
October 1, 2023	Entered into a debt arrangement to finance the purchase of an Output Solutions folder and inserter.
December 1, 2023	Amended and Restated By-laws became effective.
January 31, 2024	Entered into a lease amendment for the Austin technology organization office space.
February 1, 2024	Lease amendment for Austin office space commenced.
March 4, 2024	Court granted KDHM's Supplemental Rule 166(G) Motion.
March 19, 2024	Usio filed a motion for reconsideration of the order granting KDHM's Supplemental Rule 166(g).
March 20, 2024	Maturity date of the Output Solutions sorter loan.
March 28, 2024	Court heard Usio's Motion for Reconsideration of Order Granting Plaintiffs Supplemental Rule 166(g).
May 2, 2024	Court denied Usio's motion for reconsideration in the KDHM lawsuit.
May 3, 2024	Kauder, Pioletti, and Triple Pay Play filed a Motion to Dismiss Usio's Complaint in Tennessee.
May 29, 2024	Unsecured revolving line of credit with a maximum borrowing capacity of $475,000 was established.
June 3, 2024	Irrevocable letter of credit in the amount of $474,229 was issued.
June 21, 2024	Granted 966,000 shares of restricted common stock and 277,200 restricted stock units (RSUs) to officers, employees, and non-employee directors.
July 12, 2024	Usio filed an appeal on the lower court's decision in the KDHM lawsuit.
August 5, 2024	Motion to Dismiss in the Triple Pay Play lawsuit was heard.
September 16, 2024	Entered into a lease amendment for Output Solutions employees and warehouse operations, extending the term for 60 months.
September 30, 2024	Original lease for Output Solutions employees and warehouse operations expired.
October 1, 2024	Lease amendment for Output Solutions employees and warehouse operations commenced.
December 2024	Partnered with an outsourced presorting company to further automate print and mail systems.
March 14, 2025	Motion to Dismiss in the Triple Pay Play lawsuit was denied.
March 24, 2025	Board authorized a renewal of the share buyback program with a limit up to $4 million.
April 1, 2025	NACHA amendments became effective, requiring all ACH Network participants (other than consumers) to implement base-level payment monitoring processes.
April 2, 2025	The Fourth Court of Appeals reversed the trial court's judgment in the KDHM lawsuit.
April 11, 2025	KDHM filed a Motion for Reconsideration with the appellate court.
May 5, 2025	KDHM's Motion for Reconsideration was denied by the appellate court.
June 1, 2025	WithumSmith+Brown, P.C. acquired certain assets of Pannell Kerr Forster of Texas, P.C. and became the company's new independent registered public accounting firm.
June 30, 2025	Aggregate market value of voting stock held by non-affiliates was $26,468,698.
July 11, 2025	Usio attended a deposition with Kauder and Triple Pay Play in Nashville, Tennessee.
August 8, 2025	KDHM filed a Petition for Review in the Supreme Court of Texas.
August 21, 2025	Granted 920,000 shares of restricted common stock and 457,800 restricted stock units (RSUs) to officers, employees, and non-employee directors.
September 18, 2025	Renewed the lease for San Antonio, Texas executive offices and operations.
September 19, 2025	Entered into a debt arrangement to finance $1,017,954 for the purchase of an Output Solutions printer.
September 29, 2025	Kauder, Pioletti, and Triple Pay Play agreed to Usio's settlement.
October 10, 2025	Joint Notice of Voluntary Nonsuit with Prejudice filed in The Chancery Court of Maury County Tennessee for the Triple Pay Play lawsuit.
October 2025	Demonstrated a new wearable device program for prepaid card services.
November 2025	Acquired substantially all of the assets of PostCredit.
November 15, 2025	Louis Hoch's Prior 10b5-1 trading plan expired.
December 12, 2025	Louis Hoch entered into a new 10b5-1 trading plan.
December 31, 2025	Fiscal year ended.
January 30, 2026	KDHM's Petition for Review from the Fourth Court of Appeals at San Antonio, Texas, was denied by the Supreme Court of Texas.
February 6, 2026	KDHM agreed to Usio's settlement in the KDHM lawsuit.
March 16, 2026	Number of outstanding shares of common stock was 27,746,208.
March 18, 2026	Date of the Annual Report on Form 10-K.
March 20, 2026	NACHA enhanced risk-based fraud monitoring programs become effective for large-volume ACH originators and third-party service providers.
June 5, 2026	Maturity date of the unsecured revolving line of credit.
June 9, 2026	Anticipated date for the 2026 Annual Meeting of Stockholders.
June 19, 2026	NACHA enhanced risk-based fraud monitoring programs become effective for all other non-consumer originators and third-party participants.
November 30, 2026	Louis Hoch's new 10b5-1 trading plan expires.
December 15, 2026	ASU 2024-03 effective date for annual periods.
January 1, 2027	ASU 2025-03 effective date for annual reporting periods.
January 31, 2027	Lease for the Austin technology organization expires.
December 15, 2027	ASU 2024-03 effective date for interim periods.
December 15, 2028	ASU 2025-10 effective date for annual periods.
April 5, 2029	Maturity date of the Output Solutions folder and inserter loan.
September 30, 2029	Lease for Output Solutions employees and warehouse operations expires.
December 31, 2030	Lease for San Antonio executive offices and operations expires.
March 19, 2031	Maturity date of the Output Solutions printer loan.

Recommendation

hold

The company shows mixed results with revenue growth in key segments and strategic initiatives for future expansion, but also reported a net loss and declining adjusted EBITDA in 2025. While legal proceedings have been favorably settled, and the company is investing in technology and acquisitions, the decline in prepaid card revenue and overall profitability, coupled with increased SG&A expenses, warrants a cautious approach. The stock price volatility and potential for dilution also suggest a "hold" position until there is clearer evidence of sustained profitability and successful integration of new acquisitions and strategies.

Keywords

Fintech, payment processing, ACH, credit card processing, prepaid cards, electronic billing, cybersecurity, risk management, corporate governance, SEC filing, 10-K, financial services, e-commerce, Nasdaq, stock buyback, PostCredit acquisition, Usio One strategy, fraud prevention, data privacy, regulatory compliance

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