CPI Card Group Inc. (Nasdaq: PMTS) reported first‑quarter 2026 results that showed revenue of $147.1 million, a 20% increase from the $122.8 million earned in Q1 2025. The growth was driven largely by a 35% rise in Secure Card Solutions revenue to $109.9 million, while Prepaid Solutions revenue fell 17% year‑over‑year.
Net income declined 57% to $2.1 million, down from $4.8 million in the prior year. The drop was largely attributable to $3 million of one‑time integration costs related to the Arroweye acquisition, but other factors—higher production costs, including depreciation and tariffs, and lower margins in the Prepaid Solutions segment—also contributed to the compression.
Adjusted EBITDA rose 9% to $23.2 million, up from $21.4 million in Q1 2025. The increase was supported by stronger sales of contactless cards and personalization services, offsetting the impact of the integration expense. Gross profit margin contracted to 30.0% from 33.2% year‑over‑year, reflecting the combined effect of lower Prepaid Solutions margins and higher production costs.
Free cash flow improved markedly to $10.1 million, up from $0.3 million in Q1 2025, indicating stronger operational efficiency and improved working‑capital management.
Management reaffirmed its full‑year 2026 guidance, projecting high‑single‑digit revenue growth and low‑to‑mid‑single‑digit adjusted EBITDA growth. The company expects integration costs to decline in the second half of the year, which should support margin recovery.
"We delivered solid first‑quarter results and are on track to achieve our full‑year outlook," said President and CEO John Lowe. "We generated strong revenue growth in the quarter, led by contribution from Arroweye and increased sales of our other secure card solutions, while continuing to invest for long‑term growth and diversification," he added.
"We expect Q2 revenue to be similar to Q1 levels, and adjusted EBITDA is expected to be slightly lower than prior year due to timing of investment spending," said Interim CFO Terra Grantham.
The earnings per share of $0.17 missed consensus estimates of $0.24 to $0.36, a miss of $0.07 to $0.19. Investors focused on the EPS miss as the key driver of negative sentiment, despite the revenue beat and reaffirmed guidance.
The market reaction was tempered by the EPS miss, which highlighted the impact of integration costs and margin compression on profitability, even as the company’s revenue growth and strategic shift toward higher‑margin payment‑technology solutions remain positive signals for the long‑term trajectory.
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