Usio Inc (USIO) 2024 Q3 法說會逐字稿

Hello, and welcome to the Usio third quarter fiscal 2024 earnings conference call. (Operator Instructions) Please note, this event is being recorded.

您好，歡迎參加 Usio 2024 財年第三季財報電話會議。（操作員說明）請注意，正在記錄此事件。

Now I would like to turn the conference over to your host, Paul Manley. Please go ahead, sir.

現在我想把會議交給主持人保羅·曼利。請繼續，先生。

Thank you, operator, and thank you, everyone, for joining our call today. Welcome to Usio's third quarter fiscal 2024 conference call. The earnings release, which we issued today after the market closed, is available on our website at usio.com under the Investor Relations tab.

謝謝接線員，也謝謝大家今天加入我們的通話。歡迎參加 Usio 2024 財年第三季電話會議。我們今天在收盤後發布的收益報告可在我們網站 usio.com 的「投資者關係」標籤下查看。

On this call today with me are Louis Hoch, our Chairman and CEO; and Greg Carter, Executive Vice President of Payment Acceptance. Michael White, Senior Vice President and Chief Accounting Officer; Jerry Uffner, Head of Card Issuing; and our Chief Product Officer, Houston Frost, will also be available during the question-and-answer.

今天與我一起參加這次電話會議的是我們的董事長兼執行長 Louis Hoch；卡特（Greg Carter），支付受理執行副總裁。麥可懷特，資深副總裁兼首席會計官； Jerry Uffner，發卡主管；我們的首席產品長休斯頓·弗羅斯特 (Houston Frost) 也將出席問答環節。

Let me remind our listeners that certain statements made during the call today constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities and Litigation Act of 1995 as amended and as more fully discussed in our press release and in our filings with the SEC.

讓我提醒我們的聽眾，今天電話會議中所做的某些陳述構成前瞻性陳述，這些陳述是根據經修訂的1995 年《私人證券和訴訟法》的安全港條款做出的，並在我們的新聞稿和向我們提交的文件中進行了更充分的討論。

Let me start off with some great highlights from this afternoon's release. Momentum remains strong with results in the third quarter generally in line with expectations and with GAAP earnings significantly better than expected. GAAP earnings this quarter include an income tax benefit as we increased our deferred tax asset, reflecting our projections for higher taxable income. For the quarter, total payment dollar processing volume growth accelerated to 46% from 24% last quarter, while transactions processed were up an equally impressive 31%. And once again, all of our electronic transaction processing businesses grew with prepaid setting new all-time records for card loads, processing and transaction volumes.

讓我先介紹一下今天下午發布的一些精彩亮點。動能依然強勁，第三季業績基本上符合預期，且 GAAP 收益明顯優於預期。本季度公認的會計原則收益包括所得稅優惠，因為我們增加了遞延稅資產，反映了我們對更高應稅收入的預測。本季度，總支付金額處理量成長從上季度的 24% 加速至 46%，而處理的交易量同樣成長了 31%，令人印象深刻。我們所有的電子交易處理業務再次隨著預付費的成長而成長，創下了卡片加載、處理和交易量的新的歷史記錄。

In addition, we have the strongest pipeline of signed deals and the largest backlog of pending implementations in the company's history. While revenue growth was modest, it is important to note that we are replacing nearly $12 million in annualized revenue from the New York City COVID incentive program, which ended earlier this year, with new stable recurring revenue.

此外，我們還擁有公司史上最強大的已簽署交易管道和最大的待執行實施積壓。雖然收入成長不大，但值得注意的是，我們將用新的穩定經常性收入取代今年稍早結束的紐約市新冠肺炎激勵計畫中近 1,200 萬美元的年化收入。

Including the income tax benefit, we reported positive GAAP net income and earnings per share for the second consecutive quarter, and we are on pace for a profitable full year on a GAAP basis. Furthermore, we reported nearly $800,000 of adjusted EBITDA for the quarter, more than double that of a year ago, highlighting the ongoing improvement in our operational profitability.

包括所得稅優惠在內，我們連續第二個季度公佈了正的 GAAP 淨利潤和每股收益，並且我們預計將在 GAAP 基礎上實現全年盈利。此外，我們報告本季調整後 EBITDA 接近 80 萬美元，是去年同期的兩倍多，凸顯了我們營運獲利能力的持續改善。

Notably, cash was up again this quarter, even after buying back approximately $200,000 of our stock as we continue to utilize our share repurchase authorization to the fullest extent possible. Our cash position was powered by $2.4 million of adjusted operating cash flows over the first nine months of 2024. Operating -- adjusted operating cash flow is defined in our press release.

值得注意的是，即使在回購了約 20 萬美元的股票之後，本季現金仍再次增加，因為我們繼續盡可能充分地利用我們的股票回購授權。我們的現金部位由 2024 年前 9 個月 240 萬美元的調整後營運現金流提供支援。營運－調整後的營運現金流在我們的新聞稿中進行了定義。

Margins have typically remained a function of revenue mix, but with initiatives both at output solutions and prepaid driving efficiencies, their improved margins are now contributing as well. Together with the renewed growth of our ACH, which is our most profitable segment, we expect margins to gradually improve as we move into the fourth quarter of this year and into 2025.

利潤率通常仍然是收入組合的函數，但透過輸出解決方案和預付費驅動效率的舉措，他們的利潤率提高現在也做出了貢獻。隨著我們獲利能力最強的 ACH 業務的重新成長，我們預計隨著今年第四季和 2025 年的到來，利潤率將逐步提高。

SG&A was down in the quarter and is now up only $200,000 through the first nine months of the year. We believe our ability to drive costs down while improving revenues higher this quarter is a strong testament to our commitment to improving the overall profitability at Usio.

本季的 SG&A 有所下降，今年前 9 個月僅增加了 20 萬美元。我們相信，本季度我們在降低成本的同時提高收入的能力有力證明了我們致力於提高 Usio 整體盈利能力的承諾。

To conclude, we are GAAP net income positive, generating cash to invest in our growth initiatives, buying back our own stock and have the largest signed backlog of pending implementations and strongest pipeline in the company's history. We are unquestionably very well positioned in each business unit for the long-term growth now more than ever before.

總而言之，我們的 GAAP 淨利潤為正，產生現金投資於我們的成長計劃，回購我們自己的股票，並擁有公司歷史上最大的已簽署待實施專案積壓和最強大的管道。毫無疑問，我們在每個業務部門都處於非常有利的地位，比以往任何時候都更有利於長期成長。

At this time, I'd like to turn the call over to Greg Carter.

此時，我想將電話轉給格雷格·卡特。

Thank you, Paul, and good afternoon, everyone. Card had another solid quarter. Transactions processed were up a very healthy 22%, dollars processed up 7%, and we recorded another quarter of significant PayFac revenue growth, up 27%. Keep in mind that while we continue to support our legacy portfolios, all of our efforts are focused on PayFac so that revenues for the card segment are net of the natural anticipated attrition of a service we no longer market. In contrast, we are experiencing virtually no attrition in the PayFac portfolio.

謝謝保羅，大家下午好。卡德又一個季度表現強勁。處理的交易量增長了 22%，處理的美元增長了 7%，PayFac 收入又一個季度顯著增長，增長了 27%。請記住，雖然我們繼續支持我們的傳統產品組合，但我們所有的努力都集中在 PayFac 上，以便卡部門的收入不包括我們不再銷售的服務的自然預期損失。相較之下，我們的 PayFac 產品組合幾乎沒有出現任何損耗。

Let me start with a quick update on the large leading web-based ERP ISV recently signed. We continue to make progress with their non-franchisee merchants, and those are getting boarded, with several already processing reasonable volume. The largest opportunity is with their franchisees where they continue to push out the start of their pilot. So while implementations have been slower than anticipated, we continue to make progress and support their efforts for a wider implementation.

首先讓我快速介紹一下最近簽署的大型領先網路 ERP ISV 的最新情況。我們繼續與他們的非特許經營商戶取得進展，這些商家正在上船，其中一些已經處理了合理的數量。最大的機會在於他們的特許經營商，他們可以繼續推動試點計畫的啟動。因此，儘管實施速度比預期慢，但我們將繼續取得進展並支持他們為更廣泛實施所做的努力。

More importantly, we've had a very robust onboarding quarter with respect to legacy or existing ISVs with our merchant conversion from the entire ISV base remaining very strong. Right now, there are over 20 new ISVs that are working with us in some stage of implementation.

更重要的是，對於傳統或現有的 ISV，我們的入會季度非常強勁，整個 ISV 群體的商家轉換仍然非常強勁。目前，有超過 20 個新的 ISV 正在與我們合作進行某些實施階段。

One of the most encouraging is an association management software company that has extensive customers in the legal space. What has me excited about this new customer is the rapid pace at which they've implemented and the unbelievable relationship we've already developed with them. They've already provided their customer list, and we're bringing on their customers much sooner than is typical. This is an excellent case study. They chose Usio for many of the same reasons we see with all of our ISV clients. Our economic solution was attractive. They appreciated our general responsiveness. They met our Chief Architect, who designed the system. They met the Director of Sales Operations and the Vice President of Client Services.

其中最令人鼓舞的是一家協會管理軟體公司，該公司在法律領域擁有廣泛的客戶。讓我對這個新客戶感到興奮的是他們實施的速度之快以及我們與他們建立的令人難以置信的關係。他們已經提供了客戶名單，我們比平常更快地吸引他們的客戶。這是一個很好的案例研究。他們選擇 Usio 的原因與我們選擇所有 ISV 客戶的原因相同。我們的經濟解決方案很有吸引力。他們對我們的整體反應表示讚賞。他們會見了我們設計該系統的首席架構師。他們會見了銷售營運總監和客戶服務副總裁。

In contrast to competitors who automate the process or tier it depending on your size, we inundate our prospects with resources and expertise, and I think they like that. They know we care. In fact, they were so pleased with the process, they've already expanded our relationship to include ACH, which is a big part of their business. So I'm very optimistic that this is going to have an impact to our revenue stream going forward.

與根據您的規模實現流程自動化或分層的競爭對手相比，我們用資源和專業知識淹沒了我們的潛在客戶，我認為他們喜歡這樣。他們知道我們關心。事實上，他們對這個流程非常滿意，他們已經將我們的關係擴展到了 ACH，這是他們業務的重要組成部分。因此，我非常樂觀地認為這將對我們未來的收入流產生影響。

We are also seeing an increase in the rate at which merchants from our existing portfolio are boarding. From only a handful just a few years back, we are now seeing 20 new merchants boarded every week. You've heard me talk about BoosterHub before. When we brought them on, they were just a start-up. Today, through this constant onboarding of more of their merchants, they are now among our top 10 ISVs. This illustrates the potential from our growing portfolio of ISVs.

我們也看到我們現有產品組合中的商家登機率增加。幾年前，我們只有少數商戶，現在每週都會有 20 個新商家加入。您以前聽過我談論過 BoosterHub。當我們引進他們時，他們還只是一家新創公司。如今，透過不斷吸引更多商家，他們現已躋身我們的十大 ISV 行列。這說明了我們不斷成長的 ISV 產品組合的潛力。

In today's competitive market, our success starts with these legacy ISVs who we brought on and bring us business now and into the future. I believe that had we started PayFac in 2024, we could never have achieved the success we are now experiencing. We were early adopters, and today, we're getting rewarded as the ISVs signed two, three and four years ago are still producing results.

在當今競爭激烈的市場中，我們的成功始於我們聘請的這些傳統 ISV，他們為我們帶來了現在和未來的業務。我相信，如果我們在 2024 年啟動 PayFac，我們永遠不可能取得現在所經歷的成功。我們是早期採用者，如今，我們獲得了回報，因為兩年、三年和四年前簽署的 ISV 仍在產生成果。

I'm also excited that the marketing groundwork of the past few years is paying dividends. We've implemented a three pronged marketing strategy. In addition to a direct sales effort, we've got a referral model, and we have our newest channel, a software development referral model. These are firms that ISVs use for technical assistance. We are making significant inroads with these software development companies. We now have four or five of these development firms sending us referrals.

我還很高興過去幾年的行銷基礎工作正在取得成效。我們實施了三管齊下的行銷策略。除了直接銷售工作之外，我們還有推薦模型，我們有最新的管道，即軟體開發推薦模型。這些是 ISV 用來提供技術援助的公司。我們正在與這些軟體開發公司取得重大進展。現在有四、五家開發公司寄推薦給我們。

In conclusion, card continues to pound out solid quarters while building a record backlog of potential new business and growing our pipeline of exciting new opportunities. Now I'd like to turn the call over to Louis Hoch, Chief Executive Officer, to talk about our other businesses.

總而言之，卡片繼續取得穩健的業績，同時建立了創紀錄的潛在新業務積壓，並擴大了我們令人興奮的新機會的管道。現在我想把電話轉給執行長 Louis Hoch，談談我們的其他業務。

Thank you, Greg, and welcome, everyone. I just want to reiterate what you heard from Paul and Greg. While the quarter's results were basically in line with expectations, the real story is the increasing strength of our organization, the steady improvement in our financial condition and most importantly, the record backlog of pending implementations and the sales pipeline we have built through the introduction of innovative new products and the care we exercise in assuring the success of our customers.

謝謝你，格雷格，歡迎大家。我只是想重申一下你從保羅和格雷格那裡聽到的。雖然本季的業績基本上符合預期，但真正的情況是我們組織的實力不斷增強，財務狀況穩步改善，最重要的是，待實施的積壓記錄創紀錄，以及我們通過引入創新的新產品以及我們為確保客戶成功所付出的關懷。

So let me quickly conclude today's prepared remarks with some high-level observations on the business, starting with ACH. ACH revenues were up 22% in the quarter and are now up 10% for the year, our fifth consecutive quarter of recovery. Performance is now approaching that of our previous participation in the cryptocurrency industry. But in this case, it is comprised primarily of reoccurring revenue from less volatile industries.

因此，讓我以對業務的一些高層觀察（從 ACH 開始）快速結束今天準備好的發言。ACH 營收本季成長 22%，今年全年成長 10%，這是我們連續第五個季度實現復甦。現在的業績已經接近我們之前參與加密貨幣產業的業績了。但在這種情況下，它主要由波動性較小的行業的經常性收入組成。

Volumes were very strong. Electronic check transaction volume was up 25%. Check dollars processed was up 61% and returned checks processed up 18%. All of these growth rates once again accelerated from the preceding quarter, and October was just our highest ever ACH processing month.

成交量非常強勁。電子支票交易量增加了 25%。處理的支票金額增加了 61%，處理的退票增加了 18%。所有這些成長率都較上一季再次加速，而 10 月只是我們有史以來最高的 ACH 處理月。

As our highest margin business segment, this recovery continues to favorably impact operational profitability. I will note that ACH has been one of our main beneficiaries of our integrated sales and marketing approach. Both mobile money and more recently, Greg's new association software ISV have added ACH to Usio services that they already use. In fact, we estimate that the association's ISV alone should increase our ACH volumes by more than 10%. And as we announced during the quarter, ClassWallet has also added Usio ACH to payment solutions that they offer to their customers.

作為我們利潤率最高的業務部門，這種復甦持續對營運獲利能力產生有利影響。我要指出的是，ACH 是我們綜合銷售和行銷方法的主要受益者之一。行動貨幣和最近 Greg 的新關聯軟體 ISV 都已將 ACH 新增至他們已經使用的 Usio 服務。事實上，我們估計僅該協會的 ISV 就應該使我們的 ACH 數量增加 10% 以上。正如我們在本季宣布的那樣，ClassWallet 也將 Usio ACH 添加到他們向客戶提供的支付解決方案中。

We continue to invest in real-time payments initiatives as we await the widespread adoption. With solutions for both the clearinghouse and the FedNow, we feel we will be a major beneficiary of this innovative new technology. And as part of our record sales pipeline, ACH has many exciting opportunities, which is working.

在等待廣泛採用的過程中，我們將繼續投資於即時支付計劃。憑藉清算所和 FedNow 的解決方案，我們認為我們將成為這項創新技術的主要受益者。作為我們唱片銷售管道的一部分，ACH 有許多令人興奮的機會，而且正在發揮作用。

Output solutions revenues were up 2% in the quarter, a nice turnaround after being down over the first half of the year. Comparison would have been better if not for a large onetime deal in last third quarter. More importantly, output had another quarter of strong sales success, signing seven new agreements and three renewals, including a five year deal with one of our largest clients.

本季輸出解決方案營收成長了 2%，在上半年下降後實現了良好的轉變。如果不是去年第三季的一筆大型一次性交易，比較結果會更好。更重要的是，Output 又一個季度取得了強勁的銷售成功，簽署了七項新協議和三項續約，其中包括與我們最大的客戶之一簽訂的五年協議。

Deals were primarily our typical mix of new governmental entities and electric utilities. Included in these new clients was a start-up electric company for whom we are doing payments, ACH, bill presentment, print and mail, basically all of our services. This is another illustration of increasing success of our integrated approach to the market.

交易主要是新政府實體和電力公司的典型組合。這些新客戶中包括一家新創電力公司，我們為他們提供付款、ACH、帳單出示、列印和郵件，基本上是我們所有的服務。這是我們的綜合市場方法日益成功的另一個例證。

The addition of the new equipment earlier this year is having a positive effect on our sale of digital solutions. And while this does have a tendency to reduce our per unit revenues, those pressures are being more than offset by improvements in productivity and efficiency. Consequently, while revenues were up only modestly in this quarter, output recorded a nice expansion in margins. We are confident our strategy will yield significant results over the long-term as output continues to leverage its capabilities and integrate with all of our businesses. Once again, this quarter, output produced more electronic documents than paper documents, a trend that should continue and will result in expansion of our margins for output.

今年稍早新增的新設備對我們的數位解決方案銷售產生了積極影響。雖然這確實會降低我們的單位收入，但生產力和效率的提高足以抵消這些壓力。因此，雖然本季營收僅小幅成長，但產量和利潤率卻出現了良好的成長。我們相信，隨著產出繼續利用其能力並與我們所有的業務相整合，我們的策略將在長期內產生顯著的成果。本季度，電子文檔的產出再次多於紙本文檔，這一趨勢應該持續下去，並將導致我們的產出利潤率擴大。

Card issuing continued its momentum in the third quarter. Total dollars loaded on cards was over $140 million, up 21% and the fifth consecutive quarter exceeding $100 million. Meanwhile, the purchase volume increased 23%, and the total transactions processed increased 58%. The company also set another record for active cards on our system. In addition, profitability meaningfully increased as margins significantly expanded.

第三季發卡持續維持成長動能。卡內儲值總額超過 1.4 億美元，成長 21%，連續第五個季度超過 1 億美元。同時，採購量增加了 23%，處理的總交易量增加了 58%。該公司還在我們的系統上創下了另一項有效卡的記錄。此外，隨著利潤率顯著擴大，獲利能力顯著增加。

As a result, over the course of the year, card issuing has effectively backfilled essentially a $12 million gap in annual revenues that was created with the conclusion of the New York City COVID program. If you look at revenues, excluding New York City, card issuing has generated a very attractive growth rate this year. One reason for our success is the organic growth of many of our accounts, such as mobile money, where the launch of a general purpose reloadable card has been extremely successful.

因此，在這一年中，發卡業務實際上有效地彌補了紐約市新冠疫情計畫結束造成的 1,200 萬美元的年收入缺口。如果你看一下收入（不包括紐約市），今年發卡業務的成長率非常有吸引力。我們成功的原因之一是我們許多帳戶的有機成長，例如行動貨幣，其中通用可充值卡的推出非常成功。

We're also adding new accounts such as a large health care client that processes insurance claims. They plan to start using Usio for all their payments needs this month. And we added another governmental program in the state of California for energy-efficient cars. In total, during the quarter, we implemented over 30 new programs, including more than 10 new programs with existing clients, and these implementations have better margins.

我們還新增了帳戶，例如處理保險索賠的大型醫療保健客戶。他們計劃本月開始使用 Usio 來滿足所有付款需求。我們還在加州增加了另一個針對節能汽車的政府計畫。總的來說，本季我們實施了 30 多個新項目，其中包括 10 多個與現有客戶合作的新項目，這些實施的利潤率更高。

While we build a presence in targeted verticals where we are finding some success such as corporate disbursements and health care, we're still focusing a lot of effort on our core nonprofit business. It's a market in which we are well known and we have a great reputation. It generates a ton of referral business. To build on those strengths, we are growing relationships with platform providers from whom we expect big growth.

雖然我們在企業支出和醫療保健等目標垂直領域取得了一些成功，但我們仍在核心非營利業務上投入大量精力。我們在這個市場上享有很高的知名度並享有很高的聲譽。它產生了大量的推薦業務。為了發揮這些優勢，我們正在與平台提供者發展關係，我們期望平台提供者能夠實現大幅成長。

Two other exciting developments. We signed a merchant-funded offer deal with Mastercard and have also put more of their fraud and risk management security on each transaction we process. Every transaction is now scrubbed by another source to detect potential fraud and stop high-risk transactions, ensuring that we have some of the strongest security protection in the industry. Merchant-funded offers enables cash back features on spend on cards we issue, adding more value and increasing the stickiness of our cardholders. Again, we want to continue to enhance our offerings as a means to improve our service offerings to clients and expand our market opportunity. We're clearly excited about the future prospects for card issuing over the next few years.

另外兩個令人興奮的進展。我們與萬事達卡簽署了一項由商家資助的優惠協議，並在我們處理的每筆交易中都提供了更多的詐欺和風險管理保障。現在，每筆交易都會由另一個來源進行清理，以檢測潛在的詐欺行為並阻止高風險交易，確保我們擁有業內最強大的安全保護。商家資助的優惠可以為我們發行的卡片消費提供現金回饋功能，從而增加更多價值並提高持卡人的黏性。同樣，我們希望繼續增強我們的產品，以此作為改善我們為客戶提供的服務並擴大我們的市場機會的一種手段。我們顯然對未來幾年發卡的前景感到興奮。

So a lot of good things are happening and with even better things to come. Implementation backlog and the sales pipeline are at all-time records. Significant GAAP net income and EPS this quarter and also expected to be positive for the year. Of course, the degree of success in the near term is still dependent on the timing of various implementations.

因此，許多美好的事情正在發生，甚至更好的事情即將到來。實施積壓和銷售管道創歷史新高。本季公認會計準則淨利潤和每股收益顯著，預計全年也將呈正值。當然，短期內的成功程度仍取決於各種實施的時機。

Consequently, the fourth quarter is expected to look much like the third quarter, unless we see further slippage from some of our ISV implementations. That would result in a flat year compared to fiscal 2023, which would still be a notable achievement given that we replaced the large onetime revenue in 2023 from the conclusion of the New York City program, but we have greater aspirations.

因此，預計第四季度將與第三季度非常相似，除非我們看到一些 ISV 實施進一步下滑。與2023 財年相比，這將是一個持平的年份，考慮到我們在2023 年取代了紐約市計劃結束後的一次性巨額收入，這仍然是一項顯著的成就，但我們有更大的抱負。

Beyond this year, fiscal 2025 is shaping up to be potentially one of our greatest years ever. Given its strong margins, we plan to reinvigorate our ACH efforts, especially throughout the Usio family, where we already have existing clients with large ACH requirements. There will be more disciplined and combined sales approach to better leverage our integrated capabilities. And Houston, in his new role as Chief Product Officer, will be evaluating new technologies such as AI to see how they can fit into our existing solution and improve our competitive advantages.

今年之後，2025 財年將有可能成為我們有史以來最偉大的年份之一。鑑於其強勁的利潤，我們計劃重振我們的 ACH 工作，特別是在 Usio 家族中，我們已經擁有大量 ACH 需求的現有客戶。我們將採取更規範和組合的銷售方法，以更好地利用我們的綜合能力。休士頓在擔任首席產品長後，將評估人工智慧等新技術，看看它們如何融入我們現有的解決方案並提高我們的競爭優勢。

I'm very optimistic about 2025 with our existing business, what we have in the pipeline and the people we have to get the job done. I think it will be a year in which the hard work we have put in and the challenges we have overcome will be richly rewarded. With that, I'd like to turn the call back to the operator to conduct our question-and-answer session.

我對 2025 年我們現有的業務、我們正在開發的業務以及完成工作所需的人員非常樂觀。我認為這將是我們付出的辛勤工作和克服的挑戰將得到豐厚回報的一年。這樣，我想將電話轉回給接線員以進行我們的問答環節。

(Operator Instructions)

（操作員說明）

Scott Buck, H.C. Wainwright.

巴克 (Scott Buck)，H.C.溫賴特。

Hi, good evening guys. Thanks for taking my questions. Louis, I'm curious, when do you guys start to anniversary the COVID spoilage from New York? Is that in the first quarter of next year?

嗨，大家晚上好。感謝您回答我的問題。路易斯，我很好奇，你們什麼時候開始慶祝紐約的新冠病毒破壞週年紀念日？是明年第一季嗎？

When does it end? Is that what you're saying?

什麼時候結束？你是這麼說的嗎？

No. When does it anniversary? When do the comps start to look easier?

不。週年紀念日是什麼時候？比較什麼時候開始看起來比較容易？

It's going to be second quarter of next year.

這將是明年第二季。

Okay. All right. That's helpful. And then I wanted to ask about the gross margin difference between electronic and paper in Output Solutions. You highlighted the kind of shift there. I'm curious what that could mean over time in terms of margin improvement.

好的。好的。這很有幫助。然後我想問Output Solutions中電子版和紙本版的毛利率差異。您強調了那裡的轉變。我很好奇隨著時間的推移，這對利潤率的提高意味著什麼。

Well, electronic is almost pure margin, right, when we create a PDF and deliver it electronically, and paper is about 20% gross margin. So you can see that the opportunity to increase gross margin is great by producing more electronic.

好吧，當我們創建 PDF 並以電子方式交付時，電子版幾乎是純利潤，對吧，而紙本的毛利率約為 20%。因此，您可以看到，透過生產更多電子產品來提高毛利率的機會很大。

Yeah. No, that makes a ton of sense. And then last, you guys are really starting to stack some cash on the balance sheet. How are you feeling about potential acquisition or just general thoughts on capital allocation?

是的。不，這很有道理。最後，你們真的開始在資產負債表上累積一些現金。您對潛在收購有何看法，或對資本配置的一般看法如何？

Well, it's good to have cash. It's good to be continuing to generate cash. So we're excited about that. The M&A market these last two years has not been great. We've looked at numerous deals, and we haven't found one that had our criteria of having synergies and that we can buy it right and it's able to take care of itself. And so we continue to look. We're hopeful that the M&A market is going to get more exciting after the election is now concluded, and we'll continue to look.

嗯，有現金就好。繼續產生現金是件好事。所以我們對此感到興奮。近兩年的併購市場並不景氣。我們研究了許多交易，但沒有找到一項符合我們的標準，即具有協同效應，而且我們可以正確購買它，並且它能夠自我照顧。所以我們繼續尋找。我們希望選舉結束後併購市場將變得更加令人興奮，我們將繼續關注。

Great. That's it for me guys. I appreciate the color.

偉大的。對我來說就是這樣。我很欣賞它的顏色。

(Operator Instructions)

（操作員說明）

Jon Hickman, Ladenburg.

喬恩希克曼，拉登堡。

Hi, Louis, could you -- the margin on output solutions used to be like 20%, 21% when you kind of were giving us that number. With the new equipment and more electronic, what's a better number for that going forward, that division?

嗨，Louis，您可以嗎？有了新設備和更多的電子設備，對於該部門來說，未來更好的數字是多少？

24% to 25%, so mid-20s.

24% 到 25%，也就是 20 多歲。

Mid-20s now?

現在20多歲了？

Yes.

是的。

Okay. Then I have another question. So sequentially, the gross margin was down about 1% this quarter from Q2, whereas you talked about Output Solutions being better, more ACH number. Where did the decline in gross margins come from?

好的。那我還有一個問題。因此，本季的毛利率比第二季下降了約 1%，而您談到產出解決方案更好，ACH 數量更多。毛利率下降從何而來？

So a lot of it had to do with the spoilage in New York City that we talked about that's no longer -- we're no longer receiving the benefit of that. So the margins on that revenue decreased as the year went on in 2023. But overall, that's really the biggest change there in our overall gross margins.

因此，這很大程度上與我們談論的紐約市的腐敗有關，我們不再從中受益。因此，隨著 2023 年的過去，該收入的利潤率有所下降。但總的來說，這確實是我們整體毛利率的最大變動。

No, I'm talking about sequentially from June to September.

不，我說的是從六月到九月的順序。

Excuse me. So that is really just a mix in product lines, really. So it's a mix on where our revenues are coming from. Specifically in prepaid, we can have big cardholders that have less margins versus revenue coming off on spend, which is higher margin. So it's really just due to the mix in revenues.

打擾一下。所以這其實只是產品線的混合。所以這是我們收入來源的混合。特別是在預付費領域，大持卡人的利潤率較低，而支出收入則利潤率較高。所以這實際上只是由於收入的混合所造成的。

Okay. Thank you.

好的。謝謝。

Thanks Jon.

謝謝喬恩。

There are no further questions at this time. This concludes our question-and-answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

目前沒有其他問題。我們的問答環節到此結束。會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。