PMTS · CPI Card Group Inc.

CPI Card Group delivered strong Q1 2026 results with revenue surging 20% to $147.1 million, exceeding expectations due to the Arroweye acquisition contributing $16 million and robust demand for contactless cards including metal variants and personalization services. The Secure Card Solutions segment led growth at 35% to $109.9 million, while Prepaid Solutions declined 17% to $22.0 million amid tough prior-year packaging comparisons, and Integrated Paytech edged up 1% to $19.4 million with gross margins expanding over 100 basis points to above 55%. Gross profit rose 8% to $44.1 million but margins contracted to 30.0% from 33.2% due to Prepaid weakness, higher depreciation, tariffs, and production costs. Net income dropped 57% to $2.1 million ($0.17 diluted EPS) primarily from $3 million in Arroweye integration expenses, though Adjusted EBITDA grew 9% to $23.2 million, highlighting underlying operational resilience. CEO John Lowe noted solid execution on track for full-year targets, advancing growth pillars like proprietary tech platform, customer relationships, and evolving solutions including SaaS instant issuance (20% growth in 2025 across 2,500+ institutions), closed-loop prepaid, and mobile wallet integrations. Balance sheet strengthened with $10.1 million Free Cash Flow enabling $10 million ABL paydown, cash at $19.3 million, and Net Leverage improving to 3.0x from 3.1x year-end. Full-year outlook affirmed for high single-digit revenue growth across segments (15%+ in Integrated Paytech), low-to-mid single-digit Adjusted EBITDA growth, Free Cash Flow conversion akin to 2025, and year-end Net Leverage 2.5x-3.0x, signaling confidence amid ongoing Arroweye integration and strategic investments.