Usio, Inc. (USIO) Q4 2021 Earnings Report, Transcript and Summary

Good morning. And welcome to the Usio earnings conference call for the Fourth Quarter Ended December 31, 2021 [Operator Instructions]. Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A replay will be available shortly after the end of the call through April 1, 2022. I would now like to turn the conference over to Mr. Joe Hassett, Investor Relations. Please go ahead.

Thanks, operator, and thank you, everyone, for participating today. Welcome to Usio's Fourth Quarter and Fiscal 2021 Financial Results Conference Call. The earnings release, which Usio issued yesterday after market close, is available on the company's Investor Relations Web site at usio.com/investor, under News. On this call today are Louis Hoch, President and CEO; Tom Jewell, Senior Vice President and Chief Financial Officer; Greg Carter, Executive Vice President of Payment Acceptance; and Houston Frost, Senior Vice President of Prepaid Services. Management will provide prepared remarks, and then we will open the call to your questions. Before we begin, please remember that comments on today's call include forward-looking statements. Forward-looking statements can be identified by the use of such words as estimate, anticipate, expect, believe, intend, may, will, should, seek, approximate or plan or the negative of these words and other similar words and phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements, including risks related to the COVID-19 pandemic and its effect on the economy, the realization and the opportunities from the IMS acquisition, management of the company's growth, the loss of key resellers, the relationships with the automated clearinghouse network, bank sponsors, third-party card processing providers and merchants, the volatility of stock price, the loss of key personnel, growing competition in the electronic commerce market, the security of the company's software, hardware and information, compliance with complex federal, state and local laws and regulations and other risks detailed in the company's filings with the SEC. These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. Usio expressly disclaims any obligation or undertaking to update or revise any forward-looking statements made today to reflect any change in Usio's expectations with regard thereto or any other changes in the events, conditions or circumstances on which any such statement is based, except as required by law. Please refer to the company's SEC filings on its Investor Relations website for additional information. And with that, I would now like to turn the call over to Louis. Louis, please begin. Thank you.

Thank you, Joe, and welcome, everyone. I'm pleased to report it was another record quarter that led to another record year for Usio. For the quarter, revenues were a record $17.4 million, an 86% increase from a year ago, and we achieved our fifth consecutive quarter of positive adjusted EBITDA of $1.3 million. We ended the year with record revenues up 92% to $62 million, exceeding our recent and most recent guidance, and leading to adjusted EBITDA of $4 million, which is an increase of nearly $5 million from fiscal 2020. We concluded the year with one of the strongest balance sheets ever, with cash over $7.2 million, representing an increase of over $2 million in 2021. Once again, we experienced outstanding growth across all our business segments: ACH, card processing, prepaid card issuing and output solutions. As a result, total dollars processed in the fourth quarter was $2.9 billion, up 215% compared to the same period last year, while total transactions were $11.3 million. Both transactions and dollars processed achieved new quarterly records. For the year, total dollars processed nearly tripled, up 184% to $9.5 billion, while transactions were up 94% to $35.3 million. Again, both transactions and dollars processed are annual records for our company. We have onboarded a lot of new clients this year, and by layering these newly acquired processing customers on top of our existing recurring revenues, we are achieving scale and better leveraging our leading technology and efficient operational infrastructure. Our strategy remains to build strong relationships and lever our multichannel distribution strategy, to serve diverse end markets to expand the Usio franchise and build value for our shareholders. We have a strategy of being diverse in the industries we serve as well as in the payment channels we provide, and that strategy has generated a lot of growth and has served us very well and has also created a strategic advantage over other payment companies that serve specific industries or have less payment channels. Additionally, we're nimble. We executed at a high level and we are focused on customer relationships. Our target segments are those where we can add value and develop lasting long-term relationships, primarily in industries with nondiscretionary spending and reoccurring revenue. So in addition to scale, we've picked up momentum. Let me offer some high-level comments by business line. ACH had a record year on the strength of sequential recovery in volumes in the fourth quarter as the cryptocurrency market rebounded. We added many new accounts and we saw uptick in our activity in our consumer-lending industry segment. ACH revenues in the quarter were up 93% compared to the same period last year, with ACH electronic transaction volume up 108% and returned transactions processed up 94%. The electronic check dollars processed 271%. For the year, ACH revenue was up 82% as our electronic check volume was up 93%, with the return check transactions processed up 81% and electronic check dollars processed up 238%. We expect another strong year in 2022 on the strength of our penetration of the cryptocurrency market, new accounts and steady recovery in the consumer lending industry, especially in the first quarter of this year. Quarterly growth could be a little uneven, especially in the second quarter when comparing versus a very strong quarter of a year ago, which was fueled by tremendous enthusiasm in the cryptocurrency industry. Our PayFac business fueled another record quarter and year in our card business, as we achieved our first $1 billion plus year of card processing volume. In the fourth quarter, overall credit card revenue was up 33% as dollars processed were up 41% on a 47% increase in transactions. PayFac, our card growth engine, was up 106% for the quarter. And for the year, overall credit card revenues were up 29% as dollars processed were up 42% on 76% increase in transactions. We expect to see continued growth in our PayFac business as we continually add new ISVs and those integrated software vendors bring on new merchants and those merchants continue to grow their individual businesses. Prepaid continues to double. Revenue was up 151% for the quarter and 107% for the year. For the quarter, card load volume for prepaid was up 32% on an increase of 205% in transaction volume and a 55% increase in card purchase volume. Total dollars loaded on prepaid cards exceeded $65 million. For the year, card load volume was up 32% on a 135% increase in transaction volume and a 41% increase in card purchase volume. Total dollars loaded on prepaid cards exceeded $184 million, all record results for our company. Prepaid continues to engage with growing number of various government, municipal, nonprofit and related entities to support programs ranging from cash for trash to the comp and pledge and similar guaranteed income programs. We are now the processor and program manager for well over 200 of these card programs. On the horizon, there's a very exciting new card program with Voyager Digital, which has just announced the introduction of their prepaid debit card. Today, we process their ACH payments, and we're on the cusp of launching the Voyager prepaid card for them, and Mastercard that actually settles in USDC, which is the cryptocurrency stable coin. Currently, Voyager has 3 million active users with [dollars] on their account, and we're overlaying a prepaid Mastercard on all those customers, so they can move money in and out of their crypto accounts and be utilized to make purchases and interact with ATMs anywhere in the world Mastercard is accepted. Houston Frost will talk about this and other new prepaid card programs in just a minute. Finally, Output Solutions had another strong quarter, leading to a record year in which they far exceeded our internal expectations. We continue to integrate Output Solution services into our electronic payment capabilities as we look to leverage our ability to provide customers with a full suite of payment capabilities from paper to electronic. More recently, we've been successful in capturing a lot of large onetime print jobs, including printing new voter registration cards for the state of Texas, and we are driving this growth to the bottom line. Margins in the quarter and the year were up from the comparable years a year ago. While overhead was up in both periods, we're investing in our organization to support both our current and anticipated growth. In 2022, we intend to keep the rate of our overhead below that of revenue. And keep in mind that our customer acquisition costs are very low. And as most of these costs are incurred by our customers, such as the integrated software vendors we serve. By maintaining low customer acquisition costs, we're investing in these savings in human capital and technology needed to strengthen our infrastructure. And currently, we are investing in our growth and strategically adding to our cash position so we remain more than sufficiently funded to support various ongoing initiatives. In the fourth quarter Voyager, an innovative, fast-growing company and a great partner of Usio, reinforced our relationship with a $1 million direct stock investment in Usio. Together with our own positive cash flow, we have increased our cash position to over $7 million, the highest in recent history with virtually no debt. This should provide sufficient capital to implement our growth plans for 2022. Our growing portfolio of recurring revenue provides an incredible amount of visibility into 2022, primarily due to our diversification strategy and large balances on prepaid cards where we have visibility into future spoilage revenue. Therefore, after raising guidance throughout 2021, the company continues to expect strong 18% to 20% growth in revenue in 2022, while anticipating continued positive operating cash flows and adjusted EBITDA. Guidance is conditioned on the continued enthusiasm in the fintech lending and cryptocurrency industries and a favorable economy. These are exciting times in Usio, reflecting the success of our hard work and entrepreneurial spirit that has enabled us to rise to a new level of performance, built the foundation for even greater future success. We have now shown together two very strong years of growth and improving profitability with positive adjusted EBITDA and cash flow for this past year. Most of our revenue was reoccurring. This illustrates not only how we are generating sustainable growth, but also that we reached scale and we can expect earnings to closely follow with our growth. I would like to now turn over the call to Houston Frost, our Senior Vice President of Prepaid Services.

Thank you, Louis, and thanks, everyone, for participating in our call this morning. The Prepaid business had another great quarter, with revenue up 151% compared to the same period last year. Revenue growth sequentially accelerated each quarter this year from 61% in the first quarter to 82% in the second, 101% in the third and now 151% in the fourth quarter. Current purchase volumes were up 55% in the fourth quarter, while card transactions more than tripled. And total dollars loaded on prepaid cards in the fourth quarter exceeded $65 million, a new quarterly record. For the year, loan volumes were up 32%, card transaction volume up 135% and card purchase volume up 41%. Total dollars loaded on prepaid cards exceeded $184 million for the year, and revenue more than doubled in fiscal 2021. Growth continues to be driven by our position as the leader in supporting various fund disbursement needs of governmental, municipal, social, charitable and related entities. To date, we have been the prepaid program manager on approximately 200 of these types of programs, which we believe could be over 300 by the end of the year. Earlier, growth was driven by COVID relief programs, and then those have now shifted to COVID vaccine incentive programs such as in New York City. While there may be some more vaccines in the programs coming our way, we are continuing to add new programs that are not related to COVID, many of which are potentially larger and of longer duration. While COVID vaccine programs drove a lot of the fourth quarter growth, it is exciting to see that the growth in early 2022 is being driven by guaranteed income programs, as well as programs sponsored by for-profit entities. Vaccine incentive programs are generally comprised of large number of small denomination card loads with limited duration. In contrast, these guaranteed income programs tend to have fewer cards of potentially unlimited duration with larger loads, sometimes 10 to 20x as much as a vaccine incentive card. Consequently, the management of an operation for these programs is much less complicated. These programs include some that we have previously not mentioned in major metropolitan areas such as Phoenix and the City of Oakland, as well as Washington, DC, where our prepaid cards are being used by [Let's Go D&V] a five year pilot to provide guaranteed income of $1,000 per month with 75 hospitality workers in the region who lost jobs due to COVID-19. As I mentioned last quarter, we recently added some sales professionals as part of our growth efforts. We've been successfully adding new for-profit customers that are driving volume and diversifying our end markets. For instance, [Inmar] as a new client, a leader in the ad tech space with the Fortune 5000 clientele. Currently, they track several million rebate checks each year. We are working with them to begin to convert check disbursements to virtual prepaid cards that allow for a variety of funds withdrawn methods, including check and ACH. Another example is [Click Global], which has a platform that delivers streamlined outbound B2C payments. They were -- we are dispersing incentive funds on both physical and virtual prepaid cards on behalf of their clients. And in the continuing evolution of our Mastercard relationship, we are involved in their Civic Assist Program, which is developed jointly with Oracle to provide choice, flexibility and convenience to [Technical Difficulty] recipients can select their preferred [Technical Difficulty] into the payment. Our multichannel electronic plant strategy is ideally suited for the disbursement aspect of this program, which can be used for scholarships, unemployment, food subsidies as well as potentially pension and health care payments. As an example using the Mastercard platform, San Bernadino County created a micro business COVID-19 relief program to award eligible businesses with less than five employees, a $2,500 award to help offset the negative business impacts of the pandemic. Usio is handling these disbursements, again, whether through virtual or physical prepaid cards or to the recipient debit cards via Mastercard [Technical Difficulty]. The Voyager program has yet to officially launch, but we are very close to the initial beta release. Based on the early adopters who have signed up to receive a Voyager Mastercard upon launch, we expect substantial activity and volume driven by that program in the second half of this year. To support our growth, we've been strengthening our engineering, customer service and operations teams. This has enabled us to both manage our existing growth as well as prepare for the growth we anticipate this year. Despite this investment, prepaid profitability is on the rise. There is another year of strong growth in the prepaid business, not only on the top line but throughout the entire organization. We continue to deepen our penetration of the government, municipal, social, charitable and related markets while diversifying into the core profit markets. Our success is based on the strong relationships we have built with these organizations as well as the innovative products and services we are delivering to the market. I'm confident 2022 will be another year of growth in the prepaid business. With that, I'll go and conclude my remarks and turn the call over to Greg Carter, Executive Vice President of Payment Acceptance.

Thank you, Houston, and let me begin by echoing Louis' earlier comments. 2021 was a breakout year for our PayFac business line. This drove a record year for our card business with total processing volume of $1.2 billion, our first year of 1-plus billion processed, and we expect many more. In fact, PayFac revenue doubled in the fourth quarter, leading to 33% quarter-over-quarter growth in total card revenue as growth in dollars processed increased 41% and transactions were up 47%. Card operations were also profitable for the third consecutive quarter. For the year, card revenues were up 29% as dollars processed were up 42% on a 76% increase in transactions. Going into 2022, we expect to see continued growth in our PayFac business. We are continuing to sign new ISVs with several agreements already executed in 2022. I anticipate a solid spring with these new ISVs onboarding. Attrition in our portfolio has continued to remain well below industry averages, reflecting our strong value proposition. We provide an elegant solution to a common challenge with the added bonus of an incremental revenue stream. I've talked about the success of our efforts to improve the penetration of our ISVs customer base, which continues to progress. Currently, we are closing in on the 60% mark in an industry that considers 20% a resounding success. Over the past month, we've distributed partner scorecards, what I've previously described as a tool to track the number of an ISV merchants we have boarded and our processing to their entire merchant universe. This tool clearly demonstrates to our ISVs the revenue they are leaving on the table in an underpenetrated merchant portfolio. With the opportunity squarely presented to them, our ISVs work with us to craft communication campaigns that increases merchant penetration and yields incremental revenue. We expect more ISVs to engage with us for these campaigns as we prove our best practices are effective. There are several key initiatives now in place or planned throughout 2022 to further drive card growth. We've implemented a new account management strategy in both sales and support. While it may not seem obvious, a very strong infrastructure is one key to growth. And we've been investing in our infrastructure to not only support our existing portfolio but with the strategy to enhance our sales efforts with a team that is responsible for onboarding new ISVs and helping them increase the number of merchants on the platform. In addition, there's now multiple levels of support at our San Antonio office, so an ISV or a merchant has a personal contact whom they can trust. We believe this will build even greater loyalty and continue to drive down our already industry-leading attrition rates, something that our competitors really discuss but one that plagues the industry. Our organic product development activity continues as we look to introduce complementary Blue Ocean products that utilize our resources and expertise across the entire payments ecosystem. As an example, we are developing a consumer choice disbursement initiative that can serve many different vertical markets. Think about the settlement of class action lawsuits where there are potential disbursements to hundreds, if not thousands of individuals. Usio will be able to disperse funds to this group through either ACH, a virtual or plastic prepaid card or even a printed check if desired. We plan to launch a point-of-sale credit options for our PayFac merchants that can extend buy now, pay later instant credit to their customers. This will be an exciting extension to the PayFac services we offer through our ISVs. We are in the early stages of rolling out a beta test. We are returning to attending in-person industry events in 2022. I personally attended the American Bar Association Technology Show a few weeks ago, and the Energy Marketing Conference in Houston is coming up shortly. We plan to have an in-person presence at close to 20 shows over the course of the year. It's an opportunity for our sales team to get out there again, start pounding the pavement and really have an opportunity to meet people and put a face with the name, which has historically been our best source of new business. Echoing that same theme, we're meeting face-to-face with many of the ISVs and partners that we've signed over the pandemic that we haven't yet met in person to establish a strong and lasting relationship. Our new account management focus will also help giving our ISVs and merchants a trusted point of contact. Finally, we continue to enhance our technology. While many other purported PayFacs are simply fronts for technology they purchase or license, we own and control all of our own technology. This is a competitive differentiator for us in so many ways from the standpoint of just being nimble being able to be responsive to the customer needs to functionality we can quickly build. We can serve the customer in ways our competition can't. As a result, we are winning business from some large incumbents. In the end, we continue to do what we do day in and day out. This disciplined commitment to our growth strategy is showing results. And now we're making the mousetrap even better with new features and functionality, creating even greater growth opportunities. It's about accessibility, service and our agility and ability to meet deadlines. That's the key differentiator that we continue to leverage. I also want to recognize the hard work of the many Usio employees and how they've been a primary reason for our success. We still think we are in the early days of an industry that rewards innovation, service and responsiveness. We look forward to continuing to aggressively growing the business with the white glove service for which we are becoming known. With that, I'd like to conclude my remarks and turn the call over to Tom Jewell, Senior Vice President and Chief Financial Officer.

Thank you, Greg, and welcome, everyone. Thanks for joining our call today and your interest in Usio. I'm going to conclude today's prepared remarks with a brief review of our fourth quarter and annual financial results before opening the call to questions. Revenues for the quarter ended December 31, 2021 were up $17.4 million, up 86% compared to $9.4 million in the same period last year. On an organic basis, revenues increased 65%. We had a great quarter of growth in ACH and complementary services where revenue was up $2.2 million or 93% on the strength of a rebound in both cryptocurrency and consumer-lending markets where we have the highest gross margin percentage. Within ACH and complementary services, ACH revenues were up 118% for the quarter, and our PINLess debit product revenues were up 72%. Revenues from our Output Solutions business line added an incremental $2.7 million of revenues versus the same period last year. Prepaid had an outstanding quarter with revenues up $1.5 million at an outstanding 151% growth rate from the same period a year ago quarter, driven by of more than tripling in the transaction volume as well as strong card loan and purchase volume growth. Revenues in our credit card line were up $1.6 million or 33%, led by a 106% increase in PayFac revenues. Growth in both volume and transactions processed continued to show steady improvement and drive credit card revenue growth. Gross profits in the quarter were up $2.1 million or 87% to $4.6 million as gross margins expanded to 26.2%, up from 26% in Q4 2020, primarily reflecting an increase in the proportion of revenues from our ACH and complementary services businesses and overall profit improvement within all business lines. For the quarter, total other selling, general and administrative costs were $3.3 million versus $2.2 million in the prior year period, reflecting incremental output solutions overhead, continued investment in our prepaid and PayFac growth initiatives, growth in customer service costs and payroll increases as we both added staff and made other compensation adjustments commensurate with current employment conditions, especially in our highly competitive tech community. You can expect to see further overall cost increases in SG&A expenses as we continue to stack up to handle continuing revenue growth and customer service requirements in 2022. As Louis stated previously, we intend to keep the rate of overhead growth below the rate of revenue growth. The year-over-year increase in depreciation and amortization continues to reflect the amortization of customer list acquired in the purchase of Output Solutions plus other capital expenditures in 2021. For the quarter, our operating loss was $1,500 versus an operating loss of approximately $700,000 in the same period last year. Adjusted EBITDA was a positive $1.3 million in the quarter versus a positive $300,000 last year, an improvement of over $1 million. This led to an adjusted EBITDA margin of 7.2%. This was our fifth consecutive quarter of positive adjusted EBITDA. The company generated positive net income of approximately $40,000 for the fourth quarter compared to $153,000 a year ago, with earnings per share in the current period at flat zero per share compared to $0.01 per share for the same period last year. In the year-ago quarter, the company recognized a onetime $800,000 financial benefit from the forgiveness of our PPP loans. Usio continues to be in solid financial condition with over $7.2 million in cash and cash equivalents and no significant debt at December 31, 2021. Jumping for a second to annual cash flow results, we recorded positive adjusted operating cash flow in the quarter and generated $2.6 million of positive adjusted operating cash flows in 2021 compared to net cash used by operating activities of $400,000 in the prior year period. The adjusted operating cash flows exclude nonoperational changes in merchant reserve funds, prepaid card load assets, settlement processing funds, customer deposits and net operating lease assets and liabilities. Looking quickly at the results for the full year of 2021, it was our fifth consecutive year of revenue growth. Revenues were $61.9 million, up $29.7 million or 92% over the same period last year. Organic growth, which excludes Output Solutions revenues, was up 52%. ACH and complementary services were up $7 million, or 82%; card service revenues were up $5.7 million or 29%; Prepaid revenues were up $3.4 million or 107%; and Output Solutions contributed an incremental $13.6 million. On an annual basis, PayFac revenues increased 91%. Gross profits for the year were $15.6 million versus $7.4 million in the prior year period, an improvement of $8.2 million or 111%. Gross margins for 2021 were 25.2%, up 230 basis points compared to 22.9% in 2020. Looking forward to 2022, we expect gross margins to be in the range of 25.5% to 27% range, fluctuating based upon product mix. Adjusted EBITDA for the year ended December 31, 2021 was a positive $4 million, an almost $5 million improvement compared to a loss of $800,000 in the same period in the prior year. The net loss for the year was $300,000 or $0.02 per share compared to a net loss of $2.9 million or $0.19 per share in the same period last year. Again, the 2020 results included $800,000 benefit from the forgiveness of the PPP. I would like to note that we had positive taxable income for the year, reflecting timing differences between book and tax incomes. Annually, we review our deferred tax assets. Reflecting the positive taxable income in 2021, we were able to reduce the deferred tax allowance account and increased the deferred tax asset by $110,000 and reported federal income tax credit in the P&L in the same amounts. It was a record year at Usio, with revenue increasing at the fastest rate ever achieving our fifth consecutive year of top line growth. We have now reported five consecutive quarters of positive adjusted EBITDA and have been consistently strengthening our balance sheet. At the same time, we've been investing in the business and strengthening our infrastructure, adding experience and talented professionals throughout the organization to support the further growth as Louis previously articulated. The best is yet to come. This concludes our prepared remarks for today. We would now like to open up the call for any questions.

[Operator Instructions] Our first question comes from the line of Barry Sine with Spartan Capital Securities.

My first question is on the increase in the quarter on SG&A expenses, and you talked a little bit about that in the K. It looks like personnel are up about 19 headcount versus a year ago, you talked about adding salespeople, engineering, customer service. Could you give us any more color on what you're doing with SG&A, what products you're going to focus on and what the impact of that might be?

Well, the biggest impact right now is we're expanding our call center operations just because of the dramatic increase in current activity for prepaid cards, which we provide customer service for. But we're also, more importantly, gearing up for the Voyager Digital program, which will have substantial volumes. We've increased our internal staff. We've taken on more space in our current building, and we've dramatically increased our outsourced offshore call center as well. Also, we've added sales staff as we've previously communicated.

My second question is around the guidance that you guys have given, 18% to 20% revenue growth. How much of that, if any, is as a result of continuing recovery from COVID? And then apart from that, what products do you look to be the strongest drivers? You've called out PayFac, you've called out Voyager. Anything else in there to drive that 18% to 20%?

Well, first thing, all business lines are doing well. And as we've previously communicated, our growth engines for the future are Prepaid and PayFac. You'll see growth across all business lines, but Prepaid and PayFac will grow the fastest. Prepaid, we talked about visibility coming into this year, and Prepaid is a big part of that visibility. Today, we have over $41 million sitting on card balances. We know a certain percentage of that is going to spoil this year, and that gives us a lot of visibility. The launch of the Voyager program will be substantial for our company, and Prepaid has added a lot of more business. We're really excited about our new customer, [Inmar], which if you're not familiar with that company, I'm going to get some of the percentages wrong, but they are the leader in grocery couponing. They're the leader in prescription -- when you fill a prescription, turning that into cash for the pharmacies and the drug companies. And I think they own about 80% of those -- both of those markets. And because of that, they have tons of relationships with Fortune 5000 companies. And they're turning those relationships into a lot of newer products including promotions, which should have a big impact for us. The guaranteed income programs continue to grow across the United States. We are the de facto leader in that space because we're the only one doing it right now. And we should be able to attract all -- most, if not all, of those programs as they come live.

And my last question is around the buyback activity. If I look at the results of the quarter in both absolute terms and then relative to what analyst expectations were, very, very strong quarter. The stock has been weak. It's even down today, which is kind of ridiculous. You have buyback capability in place. What's the Board's philosophy on perhaps stepping that up and using it, especially now that you're guiding to positive free cash flow for the year?

Yes. I would say that the Board looks at that. I can -- we believe the stock is down since the peak last year because a fund, they have made mandatory redemptions and they're actually out of the stocks now that caused that to occur. There was some industry pressure that was related to the reoccurrence of COVID inflationary pressure, and those two factors really don't affect us. As we've proven, we grew revenues during COVID. Inflation, a little bit of inflation doesn't really hurt us because we're in mostly nondiscretionary spending accounts -- health care, taxes and insurance and mortgage and things like that. So the industry pressures, I think that people will understand that we're not really involved in that. And having that fund out is, obviously, relieves a lot of pressure. But the stuff that the board is always reviewing potential for stock buyback activity.

Our next question comes from Gary Prestopino with Barrington Research.

A series of questions here. Greg, could you maybe give us some idea -- I think you said your conversion is now at about 60%. Where were you last year at this time?

So last year at this time, we were right at 50% and that's up from 24% in, call it, July of 2020.

So definitely on an uptrend there. Could you give us some idea of how much your ISV count has increased?

In 2021, we signed 26 new ISV agreements. Now not all those were -- have been implemented, but we did implement 27 ISVs in the course of 2021. So that's inclusive of some of that number and then some carryover from 2020. So the total number of executed versus processing ISVs, or I should say, implemented ISVs is -- we're right around that 36% mark that I would consider fully implemented and processing.

Okay, implemented and processing. And can you give me some idea of where you were at the end of 2020?

I believe that number was closer to 22.

And then with some of these ISVs that you're signing up, are they targeting any new vertical markets?

Yes, we do have another one that just came online that's targeting, believe it or not, golf courses. And it's a software that powers tee times, so we're seeing a little bit more or resurgence of activity that were temporarily suspended because of COVID. So another ISV is called Booster Hub, and they work with schools and various teams, organizations within those schools to do fundraising, and that's an interesting vertical. As I said in my remarks, I was at the American Bar Technology Show a couple of weeks ago in Chicago, so we did talk to some other associated software vendors that provide support to the legal industry. So really, it's just a variety of different sources that we're contracting with.

And then in terms of -- when you're talking about SG&A expense, that's categorized under other expenses on your income statement?

Yes.

So that's going to be below the growth in revenues. What about -- I mean, would it be safe to say that total OpEx would kind of mirror what you guys are thinking for the SG&A in terms of being below revenue growth, that would kind of hold there as well?

I mean we've been pretty consistent in the last two years in that. We're just going to -- we have a lot of internal use software capitalization going on to advance our technology. And then in addition to that, particularly as we add space, then there's additional requirements for office stay -- office seating. And then obviously, additional computers as we bring on additional staff. Those are the trend components.

And then some questions on the prepaid, particularly the Voyager. This is going to start really rolling out and hitting the P&L in the back half of the year. Is that an assumption we should make in our modeling?

Well, just to chime in here, you certainly are not seeing any revenue from that program, you shouldn't -- you would not expect to see any in the first quarter of this year. The timing and how they scale up the program is going to be largely up to Voyager. But all indications seem to be that it should be running fairly full strength by the second half of the year. So I think that's a fair assumption. However, just keep in mind that it really will be at the Voyager in terms of the speed in which they rolled out cars to the customers that have requested a card account.

And on what you're doing with Voyager, you're going to get program management fees plus interchange fees, ATM fees, things of that nature?

Yes, and customer service revenue.

I mean, typically that we're on that fixed fees rate with Voyager. And then a portion of interchange, but there's obviously revenue share on fees that are assessed to card accounts. But every transaction, fees, including customer service transactions or customer service interactions.

So with what you're doing with Voyager, when you start getting these cards out and getting these cards loaded up from the Voyager accounts, I would assume, does that also positively impact what you're doing for Voyager on the ACH? I guess the question I'm having is as there's a transfer of money from Voyager accounts to these prepaid cards, is that an ACH transaction for you as well?

Yes. And more importantly. So if the money has got to get into their account before they can spend it -- so we're moving money in and out via ACH. And Voyager is one big marketing machine and they're using their card to attract new users. So we think the card is going to help them grow their business, and that will obviously help our business because we do all their payments, and we're just really, really excited about this program. Houston didn't mention, we're not -- this program is why in the sense that we're actually generating transactions, cash transactions today. So like the executive team of Voyager has cards and they're using it. And we also produced the initial card order for Q1 was about $250,000 in revenue. But please note that we don't mark up their cards. But it shows a substantial commitment from them for the early stages.

Our next question comes from Jon Hickman with Ladenburg Thalmann.

I wanted to ask about the sponsorship for the NASCAR. I envision you guys is basically a B2B company, and I was just wondering if you could elaborate on how your consumer focus there with that campaign is going to drive business?

Well, first thing is we're doing it in conjunction with Voyager, Voyager sponsorship car all year. We only helped out a little bit. So we only have the car for two races of the whole season. So it's small in that consideration. And we are using it to drive shareholder awareness so the car actually has our stock symbol on it. And Voyager asked us to do this. So it's a co-marketing deal.

My other questions were surrounding the OpEx SG&A. You said that growth would be slower than revenue, but could you peg that for us? Do you expect 5%? 5% to 10%? Any help there would be great.

Yes, I don't think we have those numbers for you on this call, Jon. I'd tell you that we're focused on making sure it grows stronger than revenue growth, but we are going to be spending some cash. We've got a lot of business that we need more people for and especially with the call center. But understanding the call center for us is not expense. It's a revenue-creating group. So when we add headcount there, we're going to receive a lot of revenue associated with each headcount.

[Operator Instructions] The next question comes from Michael Diana with Maxim Group.

I'd like to go back to the guaranteed income programs. Houston, you were saying, I think that they tend to be bigger than some of the other programs, less complicated and last, potentially in any way, sort of much longer. That sounds like much better profitability compared to some of your other programs. Can you just comment on that?

So yes, I mean, you can imagine, for example, [Technical Difficulty] program, we had we had nearly 1 million cards go out for just one of those cities. And that's 1 million individuals that may be contacting us or that we need to essentially serve once those cards have been mailed. And so if you got $100 on 1 million cards, well, that's $100 million in load volume that we're able to process -- that we're able to process through our system. If instead, you've got 1,000 cards being loaded with $1,000 each per month or, let me say, 10,000 cards loaded with $1,000 each per month, that's well over $100 million running through our system, and we're dealing with 10,000 cardholders as opposed to 1 million cardholders. So just that in and of itself, the way that math works out, these longer-term and larger dollar value guaranteeing the same programs are much more efficient to operate. Now keep in mind, there is a little bit of a trade-off in the sense that a larger percentage of funds on smaller incentive programs or any type of disbursement programs will be captured in terms of inactivity fees or breakage. So you do have kind of a mechanism to help cover those expenses on the smaller programs. But just in general, when you're talking about dollars that are being processed to deal with 10,000 cardholders versus 1 million is going to be a lot less operationally complex and complicated, and you gain a lot of efficiencies and therefore margin out of that type of program.

And Greg, you talked about -- you're in a beta test on Buy Now, Pay Later. Obviously, that's been a huge area over the last two years or so. Could you talk a little more about that?

So we've got some innate technology that we're using with some -- another partner to power that solution. So essentially, we're going to be able to offer that Buy Now, Pay Later in a couple of different flavors, whether that's in -- for installments, whether that's over the course of the year or 18 months. And we believe that's going to be very attractive to some of our ISVs on the professional services side. For example, physician offices, dentist offices. I think everyone knows that most of our ISVs are card-not-present service oriented and traditionally Buy Now, Pay Later has been targeted towards brick-and-mortar and consumer-related goods. So we believe this will be a nice complementary offering for those ISVs.

And Michael, it's important to note that we won't be carrying any of the notes on these transactions. So we'll get paid a origination fee but we will not be carrying any of the risk associated with that debt.

This concludes our question-and-answer section. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.