CPI Card Group Inc. Q1 2026 Earnings Recap

Shares dropped 11.5% as investors reacted negatively to margin compression driven by higher integration costs and declining profitability despite solid revenue growth, alongside weakness in the Prepaid segment and a cautious margin outlook.

Key Takeaways

• Revenue rose 20% to $147 million, led by a 35% increase in Secure Card Solutions fueled by Arroweye’s $16 million contribution.
• Prepaid Solutions revenue fell 17%, impacted by timing of key customer orders, partially offset by stronger closed-loop card sales.
• Integrated Paytech grew only 1% due to tough prior year comps, though the company maintains full-year growth expectations above 15%.
• Adjusted EBITDA increased 9%, but net income plunged 57% to $2.1 million due to $3 million in pretax integration costs, which are expected to remain elevated in Q2.
• Gross margin dropped from 33.2% to 30.0%, hurt by lower Prepaid margins, rising production costs including tariffs, and increased depreciation despite Secure Card Solutions’ margin benefits.