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1. Company Snapshot

1.a. Company Description

CPI Card Group Inc., together with its subsidiaries, engages in the design, production, data personalization, packaging, and fulfillment of financial payment cards.It operates through Debit and Credit, and Prepaid Debit segments.The Debit and Credit segment produces financial payment cards and provides integrated card services to card-issuing banks.


Its products include Europay, Mastercard, And Visa (EMV) and non-EMV financial payment cards and metal cards, as well as private label credit cards.This segment also provides on-demand services and various integrated card services, including card personalization and fulfillment, and instant issuance services.The Prepaid Debit segment primarily offers integrated card services comprising tamper-evident security packaging services to prepaid debit card providers.


It also produces financial payment cards issued on the networks of the payment card brands.It serves issuers of debit and credit cards, Prepaid Debit Card program managers, community banks, credit unions, group service providers, and card transaction processors in the United States.The company was formerly known as CPI Holdings I, Inc.


and changed its name to CPI Card Group Inc.in August 2015.CPI Card Group Inc.


was incorporated in 2007 and is based in Littleton, Colorado.

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1.b. Last Insights on PMTS

Negative drivers behind CPI Card Group Inc.'s recent performance include the company's declining profitability, despite strong revenue growth. The Q4 2024 earnings release showed a slight decline in adjusted EBITDA due to up-front operating expenses to support future earnings growth. Additionally, the company's guidance for mid-to-high single-digit growth in revenues and adjusted EBITDA through 2025, while in line with expectations, may not be sufficient to offset the decline in profitability. Furthermore, the company's focus on investing in future growth may lead to short-term expenses that weigh on profitability.

1.c. Company Highlights

2. CPI Card Group's Q3 2025 Earnings: Navigating Margin Pressures and Growth Initiatives

CPI Card Group reported third-quarter 2025 results that were largely in line with expectations, with net sales increasing 11% to $133 million, driven by the addition of Arroweye and growth in the instant issuance business. However, adjusted EBITDA decreased 7% to $23 million, primarily due to an unfavorable sales mix and $1.6 million in tariff expenses. The company's EPS came in at $0.47, below estimates of $0.63. The adjusted EBITDA margin contracted to 17.3% from 21.4% in the year-ago quarter.

Publication Date: Nov -19

📋 Highlights
  • Q3 Performance:: Sales rose 11% driven by Arroweye acquisition and instant issuance growth, but adjusted EBITDA fell 7% due to unfavorable sales mix and $1.6M tariff impact.
  • Strategic Initiatives:: Margin pressures mitigated via supplier negotiations, automation, and the fully operational Indiana facility, expected to boost efficiencies in 2026.
  • 2025 Outlook:: Revised to low double-digit to low teens net sales growth and flat to low single-digit adjusted EBITDA growth, factoring sales mix and order timing.
  • Prepaid Expansion:: Market leader in prepaid packaging, expanding into healthcare and payroll cards, with chip-enabled fraud-reducing technology piloted with a national retailer.

Operational Efficiencies and Strategic Initiatives

The company is working to counter margin pressures through initiatives such as key supplier negotiations, driving automation, and operational efficiencies. The new Indiana facility is now fully operational, which should aid efficiencies in 2026. CPI Card Group is also expanding its digital solutions, including a strategic relationship with Karta, an Australia-based prepaid program manager and digital technology provider, to bring new digital technology to prepaid cards in the U.S. market.

Prepaid Business and Market Leadership

The prepaid business remains a clear market leader, with CPI Card Group expanding its addressable markets and enhancing growth for the future. The company has made progress on multiple strategy initiatives, including the expansion of its digital solutions, health care payment card expansion, and the introduction of closed-loop prepaid. The prepaid segment has expanded beyond gift cards to include healthcare, payroll cards, and other programs, with the company expecting strong year-on-year growth in the fourth quarter for both net sales and adjusted EBITDA.

Valuation and Outlook

With a P/E Ratio of 8.23 and an EV/EBITDA of 3.74, the company's valuation appears reasonable. Analysts estimate next year's revenue growth at 8.5%. The updated 2025 outlook reflects sales mix in the debit and credit segment and timing of orders in the prepaid segment, with net sales growth expected to be in the low double-digit to low teens range and adjusted EBITDA growth expected to be flat to low single-digit. The company's net leverage ratio stood at 3.6x at quarter-end, which it plans to work down as cash flow is generated.

Tariff Expenses and Future Prospects

Tariff expenses had a $1.6 million impact on the company's EBITDA in the third quarter, with the company expecting a total of $4 million to $5 million in tariff expenses for the year. The company is working to reduce the impact of tariffs on its suppliers. The instant issuance business, Card@Once, is growing faster than the overall company and is expected to have a record year, with the company exploring other use cases outside of the financial institution channel.

3. NewsRoom

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Market Today: Netflix-WBD Deal, X Fined, Meta's News Pacts

Dec -05

Source: gurufocus.com

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CPI Card Group Inc. Announces Investments by its Chairman and Tricor Pacific Capital

Dec -05

Source: businesswire.com

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CPI and Nymbus Announce Seamless Instant Card Issuance Integration

Nov -18

Source: businesswire.com

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Wasatch Micro Cap Value Fund Q3 2025 Contributors And Detractors

Nov -05

Source: seekingalpha.com

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CPI Card Group Inc. (PMTS) Q3 2025 Earnings Call Transcript

Nov -04

Source: seekingalpha.com

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CPI Card Group Inc. (PMTS) Q3 Earnings and Revenues Lag Estimates

Nov -04

Source: zacks.com

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CPI Card Group Inc. Reports Third Quarter 2025 Results

Nov -04

Source: businesswire.com

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CPI Card Group Partners With Karta to Deliver Groundbreaking Digital Security for Prepaid Cards

Oct -29

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.55%)

6. Segments

Debit and Credit

Expected Growth: 3.5%

CPI Card Group Inc.'s 3.5% growth in Debit and Credit is driven by increasing adoption of contactless payments, rising e-commerce transactions, and growing demand for digital payment solutions. Additionally, the company's focus on innovation, strategic partnerships, and expansion into new markets also contribute to its growth momentum.

Prepaid Debit

Expected Growth: 3.8%

The 3.8% growth of Prepaid Debit from CPI Card Group Inc. is driven by increasing adoption of cashless transactions, government benefits disbursement, and payroll cards. Additionally, the growing gig economy and demand for alternative banking solutions also contribute to this growth.

Intersegment Eliminations

Expected Growth: 0.0%

CPI Card Group Inc.'s Intersegment Eliminations with 0.0% growth is driven by neutralized intercompany transactions, indicating no significant impact from internal sales or purchases. This suggests a stable organizational structure, with no material changes in business segments or internal operations.

7. Detailed Products

Financial Payment Cards

CPI Card Group Inc. offers a range of financial payment cards, including credit, debit, and prepaid cards, that enable secure and convenient transactions for consumers and businesses.

Loyalty and Gift Cards

CPI Card Group Inc. provides loyalty and gift cards that help businesses incentivize customer loyalty and drive sales.

EMV and Dual-Interface Cards

CPI Card Group Inc. offers EMV and dual-interface cards that provide enhanced security and contactless payment capabilities.

Instant Issuance Solutions

CPI Card Group Inc. provides instant issuance solutions that enable financial institutions to issue cards on-demand, reducing wait times and improving customer satisfaction.

Personalization and Fulfillment Services

CPI Card Group Inc. offers personalization and fulfillment services that enable the customization and distribution of cards and other materials.

Digital Payment Solutions

CPI Card Group Inc. provides digital payment solutions that enable secure, tokenized transactions and digital wallet integration.

8. CPI Card Group Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for CPI Card Group Inc. is medium due to the presence of alternative payment methods such as digital wallets and cryptocurrencies.

Bargaining Power Of Customers

The bargaining power of customers for CPI Card Group Inc. is low due to the company's strong brand recognition and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for CPI Card Group Inc. is medium due to the presence of multiple suppliers in the market, but the company's large scale of operations gives it some negotiating power.

Threat Of New Entrants

The threat of new entrants for CPI Card Group Inc. is high due to the relatively low barriers to entry in the payment processing industry and the increasing trend of fintech startups.

Intensity Of Rivalry

The intensity of rivalry for CPI Card Group Inc. is high due to the presence of several established players in the payment processing industry, leading to intense competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 123.57%
Debt Cost 8.98%
Equity Weight -23.57%
Equity Cost 8.98%
WACC 8.98%
Leverage -524.33%

11. Quality Control: CPI Card Group Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 3.8/10

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

15.82$

Current Price

15.82$

Potential

-0.00%

Expected Cash-Flows