Usio (NASDAQ:USIO) reported a third consecutive quarter of positive net income as revenue growth and restrained operating costs helped expand profitability in the third fiscal quarter of 2026.
Revenue rose 12% from a year earlier, while gross profit increased 18%, Senior Vice President and Chief Accounting Officer Michael White said on the company’s earnings call. Adjusted EBITDA climbed 222% to approximately $1.2 million, and the adjusted EBITDA margin expanded to 5% from 1.7%.
The company reiterated its forecast for full-year revenue growth of 14% to 16% and said it expects record adjusted EBITDA. Revenue rose 15% in the first nine months, White said.
Margins Expand as Costs Grow More Slowly Than Revenue
Usio’s consolidated gross margin increased to 24.1% from 23% a year earlier. Revenue grew across all four business lines in the third quarter, with double-digit gains in Card and Output Solutions and a return to growth in Card Issuing, White said.
Total selling, general and administrative costs, including stock-based compensation and depreciation, rose approximately $125,000, or 2%, from a year earlier. White said the company generated approximately $817,000 in additional adjusted EBITDA on about $2.6 million of incremental revenue, although he cautioned that the conversion rate can vary with product mix and investment timing.
Usio processed approximately $2.7 billion in payments during the quarter, up 25%, while total transactions rose approximately 27%. Operating cash flow for the first nine months more than doubled to approximately $3.3 million. The company ended September with $7.3 million in cash and $1.5 million in outstanding equipment debt.
Card, ACH and Output Businesses Grow
Card revenue increased 18% to a quarterly record of approximately $8.7 million, said Greg Carter, executive vice president of Payment Acceptance and chief revenue officer. Payment facilitation revenue rose 29% and accounted for roughly 75% of Card revenue. Card transactions increased 17%, while processing dollars grew 7%.
ACH and complementary services revenue rose 9%. Chairman and CEO Louis Hoch said e-check transactions increased 39% and ACH dollars processed grew 26%. He attributed the difference between transaction and revenue growth to the broader revenue category, tiered pricing for established customers and product mix.
Card Issuing revenue increased approximately 1% year over year after facing pressure earlier in 2026. The business signed 15 clients and launched 16 card programs during the quarter, Hoch said. Purchase volumes rose 17%, while card load volumes increased 6%.
Output Solutions revenue grew 14%, supported by higher volume, production improvements and pricing, according to Hoch. The business mailed 5.8 million pieces, up 7%, and delivered 25.5 million electronic documents, up 28%. It also added four cities and two utility customers during the quarter.
Ion and Harris Partnership Are Longer-Term Opportunities
Hoch identified Usio Ion and a new relationship with Harris Computer as potential growth drivers. An initial version of Ion went live in the third quarter, combining business account functions with corporate expense management. Usio’s next step is to allow customers to settle payment-processing funds into Ion rather than external bank accounts.
The company believes retaining more eligible customer balances could generate additional interest revenue. White said interest revenue associated with customer balances was approximately $358,000 in the third quarter, compared with $343,000 a year earlier.
Hoch told analysts that Usio plans to select a customer to begin settling funds through Ion this quarter and hopes to start adding groups of customers in the first quarter of 2027. He said the company is proceeding carefully and is not yet at the point of mandating the service for its customer base.
Harris selected Usio as a preferred provider of payment and print-and-mail services for relevant utility and government software customers, Hoch said. He cautioned that procurement, integration and conversion cycles in those markets can be lengthy. Asked about timing, he said one or two implementations in 2027 would be a good outcome, but he did not specify when they might occur.
Hoch also noted that Usio facilitated approximately $1.3 billion in school voucher disbursements across 37 states over the preceding 12 months, primarily through ACH. Five programs have been set up for Card Issuing capabilities, although he said none had yet put funds on cards.
About Usio (NASDAQ:USIO)
Usio, Inc. (NASDAQ: USIO) is a financial technology company that provides electronic payment and money-movement services. Its platform supports payment acceptance and processing through methods such as credit cards, debit cards and automated clearing house (ACH) transactions. The company offers services for businesses, financial institutions, government organizations and other entities seeking to collect, disburse or manage payments. Its solutions include electronic bill payment, card processing, ACH payments and prepaid card programs, with an emphasis on integrated payment technology and related processing services.
