CompoSecure Q3 Net Loss Widens Amid Spin-Off, Revenue Plummets to Zero

TL;DR

**CompoSecure's Q3 is a total reset; revenue vanished post-spin-off, making it an equity play now – proceed with extreme caution.**

AI Summary

CompoSecure, Inc. (CMPO) reported a significant net loss of $174.696 million for the three months ended September 30, 2025, compared to a net loss of $85.474 million in the prior year, primarily due to a substantial revaluation of warrant liability and earnout consideration liability. Revenue plummeted to $0 for the quarter, down from $107.135 million in Q3 2024, and for the nine months, net sales were $59.824 million, a sharp decrease from $319.712 million in the same period last year. This drastic change is attributed to the spin-off of Resolute Holdings Management, Inc. and the subsequent equity method accounting for CompoSecure Holdings, L.L.C. effective February 28, 2025, which deconsolidated the operating company's results. Despite the revenue decline, cash and cash equivalents increased to $127.362 million as of September 30, 2025, from $77.461 million at December 31, 2024, driven by $119.484 million in net cash provided by financing activities, including $154.356 million from warrant exercises. The company's total liabilities decreased significantly to $353.006 million from $617.364 million, largely due to the reduction in warrant liability from $104.231 million to $41.427 million and the deconsolidation of Holdings' liabilities. Strategic outlook is now heavily reliant on earnings from the equity method investment, which contributed $39.637 million in Q3 2025 and $93.390 million for the nine months.

Why It Matters

This filing reveals a dramatic shift in CompoSecure's financial structure and operational reporting due to the Resolute Holdings spin-off. Investors need to understand that the company's direct revenue generation has ceased, with future performance now tied to its equity method investment in Holdings. This could lead to increased volatility and uncertainty, as the market adjusts to a new valuation model. Competitively, this move might allow CompoSecure to focus on strategic investments and partnerships, but it also removes direct control over the operating assets, potentially impacting its ability to respond to market changes in the secure payment card and digital asset industries.

Risk Assessment

Risk Level: high — The risk level is high due to the complete cessation of direct net sales, reporting $0 in revenue for Q3 2025, a drastic drop from $107.135 million in Q3 2024. This fundamental business model change, driven by the spin-off and equity method accounting, introduces significant uncertainty regarding future cash flows and profitability, as evidenced by the net loss widening to $174.696 million.

Analyst Insight

Investors should re-evaluate CompoSecure's investment thesis, focusing on the performance and prospects of its equity method investment in Holdings rather than direct operational metrics. Consider the implications of the deconsolidation on long-term growth and dividend potential, and monitor the stability of earnings from the equity method investment closely.

Financial Highlights

debt To Equity

N/A

revenue

$0

operating Margin

N/A

total Assets

$505.475M

total Debt

N/A

net Income

-$174.696M

eps

N/A

gross Margin

N/A

cash Position

$127.362M

revenue Growth

-100.0%

Revenue Breakdown

Key Numbers

• $174.696M — Net Loss (Q3 2025) (Increased from $85.474M in Q3 2024, primarily due to revaluation of warrant and earnout liabilities.)
• $0 — Net Sales (Q3 2025) (Down from $107.135M in Q3 2024, due to deconsolidation of operating subsidiary.)
• $59.824M — Net Sales (9M 2025) (Significantly lower than $319.712M in 9M 2024, reflecting the spin-off impact.)
• $127.362M — Cash and Cash Equivalents (Sep 30, 2025) (Increased from $77.461M at Dec 31, 2024, boosted by warrant exercises.)
• $353.006M — Total Liabilities (Sep 30, 2025) (Decreased from $617.364M at Dec 31, 2024, largely due to warrant liability reduction and deconsolidation.)
• $93.390M — Earnings in Equity Method Investment (9M 2025) (New income stream post-spin-off, crucial for future profitability.)
• $154.356M — Proceeds from Warrant Exercises (9M 2025) (Major contributor to increased cash and cash equivalents.)
• $152.782M — Revaluation of Warrant Liability (9M 2025) (Significant non-cash expense contributing to net loss.)
• $57.101M — Revaluation of Earnout Consideration Liability (9M 2025) (Another substantial non-cash expense impacting net loss.)
• 124,961,235 — Class A Common Stock Outstanding (Sep 30, 2025) (Increased from 100,462,844 shares at Dec 31, 2024.)

Key Players & Entities

• CompoSecure, Inc. (company) — registrant
• Resolute Holdings Management, Inc. (company) — spun-off entity
• CompoSecure Holdings, L.L.C. (company) — wholly-owned subsidiary now accounted for under equity method
• New York Stock Exchange (regulator) — exchange where Class A Common Stock is registered
• The Nasdaq Global Market (regulator) — exchange where Redeemable Warrants are registered
• $174.696 million (dollar_amount) — net loss for three months ended September 30, 2025
• $0 (dollar_amount) — net sales for three months ended September 30, 2025
• $127.362 million (dollar_amount) — cash and cash equivalents as of September 30, 2025
• $353.006 million (dollar_amount) — total liabilities as of September 30, 2025
• $93.390 million (dollar_amount) — earnings in equity method investment for nine months ended September 30, 2025

FAQ

Risk Factors

• Valuation of Liabilities [high — financial]: The company experienced significant net losses in Q3 2025 ($174.696 million) and for the nine months, largely driven by non-cash revaluations of warrant liability ($152.782 million for 9M 2025) and earnout consideration liability ($57.101 million for 9M 2025). These revaluations can introduce volatility and impact reported profitability.
• Impact of Spin-off [high — operational]: The spin-off of Resolute Holdings Management, Inc. and subsequent deconsolidation of operating results led to a drastic decline in reported revenue to $0 for Q3 2025 and significantly reduced net sales for the nine-month period. The company's financial performance is now heavily reliant on its equity method investment.
• Dependence on Equity Method Investment [high — financial]: The company's strategic outlook and profitability are now heavily dependent on the earnings from its equity method investment in CompoSecure Holdings, L.L.C., which contributed $93.390 million for the nine months ended September 30, 2025. Any adverse performance of this investment could materially impact CompoSecure's financial results.
• Warrant Liability Volatility [medium — financial]: The warrant liability decreased from $104.231 million at December 31, 2024, to $41.427 million at September 30, 2025. However, the revaluation of this liability contributed $152.782 million to the net loss for the nine months of 2025, indicating significant price sensitivity and potential for future fluctuations.
• Earnout Consideration Liability [medium — financial]: The revaluation of the earnout consideration liability resulted in a charge of $57.101 million for the nine months of 2025. This liability is subject to future performance and can lead to further adjustments impacting net income.
• Shareholder Dilution [medium — financial]: The number of Class A Common Stock outstanding increased from 100,462,844 at December 31, 2024, to 124,961,235 at September 30, 2025. This increase, partly driven by $154.356 million in proceeds from warrant exercises, could lead to dilution for existing shareholders.

Industry Context

CompoSecure operates in the financial transaction card market, a niche within the broader fintech sector. The industry is characterized by a focus on security, innovation in materials (metal, composite), and value-added services like digital asset storage. Key customers are global financial institutions seeking to enhance customer acquisition and retention through premium card offerings.

Regulatory Implications

While the 10-Q does not detail specific regulatory changes, the financial services industry is subject to stringent regulations regarding data security, privacy, and financial reporting. Any changes in these areas could impact CompoSecure's operations and compliance costs.

What Investors Should Do

1. Monitor the performance of the equity method investment.
2. Analyze the volatility of warrant and earnout liability revaluations.
3. Assess the long-term strategy post-spin-off.
4. Evaluate the impact of increased share count on EPS.

Key Dates

• 2025-02-28: Spin-off of Resolute Holdings Management, Inc. — Led to deconsolidation of operating results and adoption of equity method accounting for CompoSecure Holdings, L.L.C., fundamentally changing the company's reporting structure and revenue recognition.
• 2025-09-30: End of Q3 2025 — Reported $0 revenue and a net loss of $174.696 million, heavily influenced by non-cash liability revaluations.
• 2025-09-30: Balance Sheet Date — Cash and cash equivalents increased to $127.362 million, while total liabilities decreased to $353.006 million, primarily due to warrant exercises and liability reductions.

Glossary

Equity Method Investment

An accounting method used when an investor has significant influence, but not control, over an investee. The investment is initially recorded at cost and adjusted for the investor's share of the investee's net income or loss. (This is now a primary source of income for CompoSecure following the spin-off, contributing $93.390 million in earnings for the nine months of 2025.)

Revaluation of Warrant Liability

The process of adjusting the carrying value of outstanding warrants to their current fair market value. Changes in fair value are recognized as gains or losses in the income statement. (A significant non-cash expense for CompoSecure, contributing $152.782 million to the net loss for the nine months of 2025.)

Revaluation of Earnout Consideration Liability

The adjustment of the fair value of contingent payments owed to sellers in a business acquisition. Changes in the estimated future payments based on performance metrics impact the liability and are recognized in earnings. (Another substantial non-cash expense, accounting for $57.101 million of the net loss for the nine months of 2025.)

Deconsolidation

The process of removing the financial results of a subsidiary from the parent company's consolidated financial statements, typically occurring when control is lost or a business is divested. (Explains the drastic drop in reported revenue to $0 for Q3 2025 and the reduction in total liabilities.)

Warrant Exercises

The action taken by a warrant holder to purchase shares of a company's stock at a specified price. This results in the company receiving cash and issuing new shares. (Provided $154.356 million in cash for the nine months of 2025, significantly boosting the company's cash position.)

Year-Over-Year Comparison

CompoSecure's financial reporting has been dramatically altered by the spin-off of Resolute Holdings Management, Inc. Revenue has plummeted from $107.135 million in Q3 2024 to $0 in Q3 2025, and nine-month sales decreased from $319.712 million to $59.824 million. This shift to equity method accounting means the company's reported net income is now driven by its investment's performance, which contributed $93.390 million for the nine months of 2025, a new income stream. While total liabilities decreased significantly from $617.364 million to $353.006 million, largely due to warrant liability reduction and deconsolidation, the net loss widened from $85.474 million in Q3 2024 to $174.696 million in Q3 2025, primarily due to substantial non-cash revaluations of warrant and earnout liabilities.

Key Financial Figures

• $0.0001 — which registered Class A Common Stock, $0.0001 par value per share CMPO New York Stock

Filing Documents

• cmpo-20250930.htm (10-Q) — 1775KB
• composecure-arnonxemployee.htm (EX-10.1) — 31KB
• cmpo-executiveseverancepla.htm (EX-10.2) — 102KB
• composecure-cfoofferletter.htm (EX-10.3) — 71KB
• exhibit311-sox302certifica.htm (EX-31.1) — 9KB
• exhibit312-sox302certifica.htm (EX-31.2) — 9KB
• exhibit321-section1350cert.htm (EX-32.1) — 4KB
• exhibit322-section1350cert.htm (EX-32.2) — 4KB
• image_0a.jpg (GRAPHIC) — 96KB
• image_1a.jpg (GRAPHIC) — 0KB
• 0001823144-25-000125.txt ( ) — 9193KB
• cmpo-20250930.xsd (EX-101.SCH) — 59KB
• cmpo-20250930_cal.xml (EX-101.CAL) — 70KB
• cmpo-20250930_def.xml (EX-101.DEF) — 318KB
• cmpo-20250930_lab.xml (EX-101.LAB) — 730KB
• cmpo-20250930_pre.xml (EX-101.PRE) — 532KB
• cmpo-20250930_htm.xml (XML) — 1134KB

Financial Statements

Financial Statements 1 Consolidated Balance Sheets (Unaudited) 2 Consolidated Statements of Operations (Unaudited) 3 Consolidated Statements of Comprehensive Loss (Unaudited) 4 Consolidated Statements of Stockholders' E quity ( Deficit ) (Unaudited) 5 Consolidated Statements of Cash Flows (Unaudited) 8

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 33 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 47 Item 4 .

Controls and Procedures

Controls and Procedures 48 Part II. Other Information 49 Item 1.

Legal Proceedings

Legal Proceedings 49 Item 1A.

Risk Factors

Risk Factors 49 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 73 Item 3. Defaults Upon Senior Securities 74 Item 4. Mine Safety Disclosures 74 Item 5. Other Information 74 Item 6. Exhibits 74

Signatures

Signatures 76 3 EXPLANATORY NOTE REGARDING CHANGE TO EQUITY METHOD ACCOUNTING Effective as of February 28, 2025, as a result of the spin-off (the "Spin-Off") of Resolute Holdings Management, Inc. ("Resolute Holdings") and the related Management Agreement (the "Management Agreement") between the Company's wholly-owned subsidiary, CompoSecure Holdings, L.L.C. ("Holdings") and Resolute Holdings, the results of operations of Holdings, and its operating company subsidiaries, are not consolidated in the Company's financial statements included in this Quarterly Report on Form 10-Q and, instead, are accounted for under the equity method of accounting. Under the equity method of accounting, Holdings' accounts are not reflected within the Company's consolidated balance sheets and statements of operations. The Company's share of the earnings of Holdings is reported in the Company's consolidated statements of operations as earnings from equity method investment. The Company's carrying value in Holdings is reported on the Company's consolidated balance sheets as equity method investment. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q, and the documents incorporated by reference herein, may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management. Although the Company believes that its plans, intentions, and expectations reflected in or suggested by these forward- looking statements are reasonable, the Company cannot assure you that it will achieve or realize these plans, intentions, or expectations. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. Generally, statements that are not historical facts, including statements concerning the Company's possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. In so

- Financial Statements

Part I - Financial Statements

Financial Statements

Item 1. Financial Statements 1 COMPOSECURE, INC. Consolidated Balance Sheets ($ in thousands, except par value and share amounts) September 30, 2025 December 31, 2024 Unaudited ASSETS CURRENT ASSETS Cash and cash equivalents $ 127,362 $ 77,461 Accounts receivable — 47,449 Inventories, net — 44,833 Prepaid expenses and other current assets 4,665 4,159 Total current assets 132,027 173,902 Property and equipment, net — 23,448 Right-of-use asset - operating leases — 5,404 Deferred tax asset 289,152 264,815 Derivative asset - interest rate swap — 2,749 Equity method investment 84,296 — Deposits and other assets — 3,600 Total assets 505,475 473,918 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable 1,518 11,544 Accrued expenses 40,841 14,682 Bonus payable — 8,466 Commission payable — 2,563 Current portion of long-term debt — 11,250 Current portion of lease liabilities - operating leases — 2,113 Current portion of earnout consideration liability 20,533 Current portion of tax receivable agreement liability 16,103 5,171 Total current liabilities 58,462 76,322 Long-term debt, net of deferred financing costs — 184,389 Warrant liability 41,427 104,231 Lease liabilities - operating leases — 3,888 Tax receivable agreement liability 253,117 248,534 Total liabilities 353,006 617,364 Commitments and contingencies (Note 14) Preferred stock, $ 0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding — — Class A common stock, $ 0.0001 par value; 1,000,000,000 and 250,000,000 shares were authorized as of September 30, 2025 and December 31, 2024, respectively; 124,961,235 and 100,462,844 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 12 10 Treasury shares ( 12,247 ) — Additional paid-in-capital 659,319 361,379 Accumulated other comprehensive (loss) income ( 206 ) 2,543 Accumulated deficit ( 494,409 ) ( 507,378 ) Total stockholders' eq

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) ($ amounts in thousands, except share data) 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS CompoSecure, Inc. (the "Company"), through its wholly-owned subsidiary, CompoSecure Holdings, L.L.C. ("Holdings") is a manufacturer and designer of complex metal, composite and proprietary financial transaction cards. The Company was founded and commenced operations in 2000. The Company provides products and services primarily to global financial institutions, plastic card manufacturers, system integrators, and security specialists. The Company is located in Somerset, New Jersey. Since its inception, the Company has established itself as a technology partner to market leaders, fintechs and consumers enabling trust for millions of people around the globe. The Company combines elegance, simplicity and security to deliver exceptional experiences and peace of mind in the physical and digital world. The Company's innovative payment card technology and metal cards with Arculus secure authentication and digital asset storage capabilities deliver unique, premium branded experiences, enable people to access and use their financial and digital assets, and ensure trust at the point of a transaction. The Company creates newly innovated, highly differentiated and customized quality financial payment products for banks and other payment card issuers to support and increase their customer acquisition, customer retention and organic customer spend. The Company's customers consist primarily of leading international and domestic banks and other payment card issuers primarily within the United States ("U.S."), with additional direct and indirect customers in Europe, Asia, Latin America, Canada, and the Middle East. The Company is a platform for next generation payment technology, security, and authentication solutions. The Company maintains trusted, highly-embedded and long-term customer relationships with an expanding set of

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View this 10-Q filing on SEC EDGAR