Executive Summary

Our company provides technology solutions and processing services to the financial services market, commonly referred to as the FinTech industry. We derive revenue from licensing our financial transaction management software and providing software maintenance, support, and processing services to our customers.

Our largest customer, Goldman Sachs Group, Inc., represented 62% of our consolidated revenues in 2024. We recently extended our agreements with Goldman through 2030, but the amount and timing of future revenues from this customer will depend on factors like the number of active accounts and whether they continue their credit card business.

In 2024, our total revenue was $57.4 million, a 2% increase from 2023. Service revenue, which includes processing services and software maintenance, grew 1% year-over-year. Product revenue, which includes software license fees, increased 58% due to achieving more license tiers.

Our cost of revenue as a percentage of total revenue decreased from 65% in 2023 to 62% in 2024, driven by the higher license revenue. Operating expenses increased due to higher development and general and administrative costs, including stock-based compensation.

We had $19.5 million in cash at the end of 2024, down from $26.9 million at the end of 2023, primarily due to higher accounts receivable, lower depreciation, and lower deferred revenue. We used $4.9 million for capital expenditures and made $7.6 million in share repurchases.

Looking ahead, we believe we have a strong cash position to support our operations and growth initiatives. However, our results can fluctuate due to factors like the timing of software license sales, customer implementations, and professional services contracts. We also face risks related to our reliance on our largest customer, regulatory changes, and competition.

Results of Operations

Revenue

• Total revenue was $57.4 million in 2024, up 2% from 2023.
• Service revenue (processing, maintenance, support) grew 1% to $54.6 million.
• Product revenue (software licenses) increased 58% to $2.8 million.

Cost of Revenue

• Cost of revenue was 62% of total revenue in 2024, down from 65% in 2023.
• The decrease was driven by higher license revenue.

Operating Expenses

• Operating expenses increased due to higher development and G&A costs, including stock-based compensation.
• Marketing expenses increased 31% as we expanded our client base.

Investment Income (Loss)

• Investment loss was $427,000 in 2024 compared to $1.6 million in 2023.
• The 2024 loss was primarily from equity method losses.

Income Taxes

• Effective tax rate decreased from 24.5% in 2023 to 21.1% in 2024 due to higher income in lower tax foreign locations.

Liquidity and Capital Resources

• Cash balance decreased from $26.9 million at the end of 2023 to $19.5 million at the end of 2024.
• Cash provided by operations was $5.8 million in 2024 compared to $16.8 million in 2023.
• Invested $2.2 million in securities and used $4.9 million for capital expenditures.
• Repurchased $7.6 million in shares in 2024.
• Expect to use cash for operations, capital expenditures, and potential acquisitions.

Critical Accounting Policies

Revenue Recognition

• Software licenses are recognized at a point in time upon delivery.
• Professional services and maintenance/support are recognized over time.
• Processing services are recognized as a series of distinct daily services.

Valuation of Investments

• Minority interests in non-public companies are based on management’s estimates.
• Impairment charges are recorded when there is a decline in value that is other than temporary.