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Despite increasing its automated clearing house volume in June, Usio Inc.’s overall processing volume is taking a temporary hit as one of its clients, digital-asset broker Voyager Digital LLC, announced it is suspending all buying and selling of cryptocurrency though its platform. San Antonio-based Usio made the announcement about the Voyager development and its ACH volume in a letter to shareholders Tuesday.
By temporarily suspending its trading operations July 1, Voyager becomes the latest casualty of the cryptocurrency meltdown. While Usio chief executive Louis Hoch says the company will continue to provide payment-processing services to Voyager, the loss of the broker’s volume will adversely affect Usio’s operations and revenues until it resumes full operations. Voyager accounted for 8% of Usio’s total revenue in 2021.
“Of the 8% of revenue generated from Voyager in 2022, 2% represented revenue derived from blank card orders for Voyager’s prepaid card program, on which Usio earned no margin because we sold those cards to Voyager at cost in anticipation of future transactional revenue from cardholder usage,” Hoch wrote.
In addition, Usio’s fiscal 2022 guidance assumed $1 million in revenue derived from Voyager’s prepaid card program services for 2022. Through May 31, revenues from prepaid card services totaled $670,000. “Thus, we expect the impact of a slowdown or end to this prepaid card program on our bottom line to be minimal,” Hoch said. “Voyager’s accounts-receivable balances with Usio are minimal as of July 5, 2022.”
Looking ahead, Hoch said Usio expects to replace any potential revenue shortfall from the loss of Voyager’s processing volume, given the strength of its sales pipeline. As a result, Usio is reiterating its fiscal 2022 revenue guidance, but widening the range of revenue growth to 16%-20% for 2022 over 2021. “As always, the revenue guidance is conditioned on favorable economic conditions,” Hoch said.
On a more positive note, Hoch told shareholders that Usio processed more returned-check transactions via the ACH than it had in any month the past 11 years. “Returned checks are the highest margin sub-business of our ACH offering, with gross margins exceeding 80%,” Hoch said. “We expect to report both sequential and year-over-year growth in ACH returned-check processing for the second quarter of 2022. Additionally, we expect to report sequential growth in total ACH transactions processed.”
Hoch added that Usio expects a year-over-year decline in the number of ACH transactions processed because of the cryptocurrency sell-off. During the second quarter of 2021, cryptocurrency transactions were booming, Hoch noted. “We were pleased to report that we expect the decline to be mild and the resulting revenues for ACH similar to [the second quarter] of 2021,” Hoch added.
