Usio Swings to Loss Amidst Vanishing Tax Benefits, Declining Cash

TL;DR

**USIO's Q3 results are a red flag, with net losses and shrinking cash indicating a tough road ahead without that tax benefit.**

AI Summary

Usio, Inc. reported a net loss of $415,086 for the three months ended September 30, 2025, a significant decline from the net income of $2,851,267 in the same period of 2024. For the nine months ended September 30, 2025, the company posted a net loss of $1,016,710, compared to a net income of $2,676,572 in the prior year. Revenue slightly decreased by 0.66% to $21,180,333 for the three months ended September 30, 2025, from $21,321,478 in 2024, but increased by 1.25% to $63,150,373 for the nine-month period from $62,371,752. The operating loss widened to $464,171 in Q3 2025 from $376,650 in Q3 2024, and to $1,100,725 for the nine months from $867,547. A key factor in the shift to net loss was the absence of a federal income tax benefit, which was $3,186,053 in Q3 2024 and for the nine months ended September 30, 2024. Cash and cash equivalents decreased to $7,746,456 as of September 30, 2025, from $8,056,891 at December 31, 2024. The company also saw a significant decrease in prepaid card load assets from $25,648,688 to $9,387,387.

Why It Matters

Usio's shift from net income to a substantial net loss, primarily due to the absence of a federal income tax benefit, signals a challenging period for investors. The decline in cash and cash equivalents, coupled with a significant reduction in prepaid card load assets, could impact the company's liquidity and operational flexibility, potentially hindering future growth initiatives and competitive positioning in the payment processing sector. Employees might face increased scrutiny on costs, while customers could see impacts on service innovation if financial constraints tighten. In a competitive market, Usio's financial performance could make it more vulnerable to larger, more financially robust competitors.

Risk Assessment

Risk Level: high — The company reported a net loss of $415,086 for Q3 2025, a stark contrast to the $2,851,267 net income in Q3 2024, largely due to the absence of a $3,186,053 federal income tax benefit. This significant swing to a loss, coupled with a decrease in cash and cash equivalents from $8,056,891 to $7,746,456, indicates deteriorating financial health and increased operational risk.

Analyst Insight

Investors should exercise caution and consider reducing exposure to USIO given the swing to net losses and declining cash. A deeper dive into the sustainability of revenue growth and future profitability drivers, especially without the prior year's tax benefits, is warranted before making any new investment decisions.

Financial Highlights

debt To Equity

4.32

revenue

$21,180,333

operating Margin

-2.2%

total Assets

$99,401,100

total Debt

$80,712,546

net Income

-$415,086

eps

N/A

gross Margin

N/A

cash Position

$7,746,456

revenue Growth

-0.66%

Key Numbers

• $415,086 — Net Loss (Q3 2025) (Shift from $2,851,267 net income in Q3 2024)
• $1,016,710 — Net Loss (9 Months 2025) (Shift from $2,676,572 net income in 9 Months 2024)
• $21,180,333 — Revenue (Q3 2025) (Slight decrease from $21,321,478 in Q3 2024)
• $63,150,373 — Revenue (9 Months 2025) (Increase from $62,371,752 in 9 Months 2024)
• $3,186,053 — Federal Income Tax Benefit (Q3 2024) (Absence in Q3 2025 contributed to net loss)
• $7,746,456 — Cash and Cash Equivalents (Sept 30, 2025) (Decrease from $8,056,891 at Dec 31, 2024)
• $9,387,387 — Prepaid Card Load Assets (Sept 30, 2025) (Significant decrease from $25,648,688 at Dec 31, 2024)
• $464,171 — Operating Loss (Q3 2025) (Widened from $376,650 in Q3 2024)
• 27,307,839 — Outstanding Common Shares (Nov 10, 2025) (Indicates share count)
• $69,049,366 — Accumulated Deficit (Sept 30, 2025) (Increased from $68,032,656 at Dec 31, 2024)

Key Players & Entities

• Usio, Inc. (company) — registrant
• Securities and Exchange Commission (regulator) — filing oversight
• $415,086 (dollar_amount) — net loss for Q3 2025
• $2,851,267 (dollar_amount) — net income for Q3 2024
• $1,016,710 (dollar_amount) — net loss for nine months ended Sept 30, 2025
• $2,676,572 (dollar_amount) — net income for nine months ended Sept 30, 2024
• $3,186,053 (dollar_amount) — federal income tax benefit in Q3 2024
• $7,746,456 (dollar_amount) — cash and cash equivalents as of Sept 30, 2025
• $8,056,891 (dollar_amount) — cash and cash equivalents as of Dec 31, 2024
• $9,387,387 (dollar_amount) — prepaid card load assets as of Sept 30, 2025

FAQ

Risk Factors

• Deterioration in Profitability and Cash Position [high — financial]: Usio, Inc. reported a net loss of $415,086 in Q3 2025, a significant shift from a net income of $2,851,267 in Q3 2024. The nine-month net loss stands at $1,016,710, compared to a net income of $2,676,572 in the prior year. This decline is exacerbated by the absence of a $3,186,053 federal income tax benefit seen in Q3 2024.
• Reduced Liquidity and Asset Value [high — financial]: Cash and cash equivalents decreased to $7,746,456 as of September 30, 2025, from $8,056,891 at December 31, 2024. More critically, prepaid card load assets saw a substantial drop from $25,648,688 to $9,387,387, indicating a potential reduction in transaction volumes or a change in business model impacting this asset class.
• Widening Operating Losses [medium — financial]: The company experienced an increase in operating loss, widening to $464,171 in Q3 2025 from $376,650 in Q3 2024. For the nine-month period, the operating loss grew to $1,100,725 from $867,547, suggesting that core operations are becoming less efficient or facing increased costs.
• Growing Accumulated Deficit [medium — financial]: The accumulated deficit increased to $69,049,366 as of September 30, 2025, from $68,032,656 at December 31, 2024. This trend indicates a persistent inability to generate sufficient profits to offset historical losses.
• Slight Revenue Decline in Q3 [low — market]: While revenue for the nine months increased slightly by 1.25% to $63,150,373, the third quarter saw a marginal decrease of 0.66% to $21,180,333 from $21,321,478 in the prior year, which could signal slowing demand or increased competition.

Industry Context

Usio, Inc. operates in the payment processing and financial technology sector, a highly competitive and rapidly evolving industry. Key trends include the increasing demand for digital payment solutions, the rise of fintech innovations, and a growing focus on regulatory compliance and data security. Companies in this space face pressure to innovate, manage transaction volumes efficiently, and maintain robust security protocols.

Regulatory Implications

As a payment processor, Usio is subject to various financial regulations, including those related to anti-money laundering (AML), Know Your Customer (KYC) requirements, and data privacy (e.g., PCI DSS). Changes in these regulations or non-compliance can lead to significant fines, reputational damage, and operational disruptions.

What Investors Should Do

1. Monitor operating expense trends closely.
2. Investigate the reasons for the sharp decline in prepaid card load assets.
3. Assess the sustainability of current operations without tax benefits.
4. Evaluate the company's cash burn rate and runway.

Key Dates

• 2025-09-30: End of Third Quarter 2025 — Reporting period for the significant net loss and decrease in prepaid card load assets.
• 2024-09-30: End of Third Quarter 2024 — Period of significant net income and substantial federal income tax benefit, providing a key comparison point.
• 2024-12-31: End of Fiscal Year 2024 — Baseline for comparison of cash and cash equivalents and prepaid card load assets.

Glossary

Prepaid card load assets

Assets representing the value loaded onto prepaid cards that have not yet been redeemed by cardholders. (A significant decrease in these assets suggests a potential reduction in customer activity or a change in how these funds are managed on the balance sheet.)

Accumulated deficit

The cumulative net losses of a company that have not been offset by net income since its inception. (An increasing accumulated deficit indicates ongoing unprofitability and can be a concern for long-term financial health.)

Settlement processing assets/obligations

Assets and liabilities related to the facilitation of financial transactions, where funds are held temporarily during the settlement process. (A substantial increase in these items suggests increased transaction volume or complexity in the company's payment processing services.)

Merchant reserves

Funds held back by a payment processor from a merchant's account to cover potential chargebacks or other liabilities. (Relatively stable merchant reserves suggest consistent risk management practices, despite other balance sheet fluctuations.)

Year-Over-Year Comparison

Compared to the prior year's third quarter, Usio, Inc. has experienced a significant downturn, shifting from a net income of $2,851,267 to a net loss of $415,086. While nine-month revenue saw a slight increase of 1.25%, the third quarter revenue experienced a marginal decline of 0.66%. Operating losses have widened, and a critical factor in the profitability decline is the absence of a substantial federal income tax benefit that was present in the prior year. The balance sheet also shows a notable decrease in cash and a dramatic reduction in prepaid card load assets.

Key Financial Figures

• $0.001 — ich registered Common stock, par value $0.001 per share USIO The Nasdaq Stock Mar
• $250,000 — he amount insured by the FDIC, which is $250,000. Accounts receivable potentially subjec

Filing Documents

• usio20250930_10q.htm (10-Q) — 1424KB
• ex_856480.htm (EX-31.1) — 14KB
• ex_856481.htm (EX-31.2) — 14KB
• ex_856482.htm (EX-32.1) — 10KB
• 0001437749-25-034425.txt ( ) — 5994KB
• usio-20250930.xsd (EX-101.SCH) — 46KB
• usio-20250930_cal.xml (EX-101.CAL) — 46KB
• usio-20250930_def.xml (EX-101.DEF) — 305KB
• usio-20250930_lab.xml (EX-101.LAB) — 298KB
• usio-20250930_pre.xml (EX-101.PRE) — 337KB
• usio20250930_10q_htm.xml (XML) — 989KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 3 Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited). 3 Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 3 Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2025 and 2024 4 Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2025 and 2024 5 Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months ended September 30, 2025 and 2024 7 Notes to Condensed Consolidated Financial Statements 8 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. 19 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk. 28 Item 4.

Controls and Procedures

Controls and Procedures. 28

– OTHER INFORMATION

PART II – OTHER INFORMATION 29 Item 1. Legal Proceedings. 29 Item 1A. Risk Factors. 30 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 30 Item 3. Defaults Upon Senior Securities. 30 Item 4. Mine Safety Disclosures (Not applicable). 30 Item 5. Other Information. 30 Item 6. Exhibits. 31 2 Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. USIO, INC. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2025 December 31, 2024 (Unaudited) Assets Current assets: Cash and cash equivalents $ 7,746,456 $ 8,056,891 Accounts receivable, net 5,211,771 5,053,639 Accounts receivable, tax credit — 1,494,612 Settlement processing assets 57,431,550 47,104,006 Prepaid card load assets 9,387,387 25,648,688 Customer deposits 1,939,656 1,918,805 Inventory 337,693 403,796 Prepaid expenses and other 1,139,848 585,500 Current assets before merchant reserves 83,194,361 90,265,937 Merchant reserves 4,876,537 4,890,101 Total current assets 88,070,898 95,156,038 Property and equipment, net 3,594,558 3,194,818 Other assets: Intangibles, net 227,356 881,346 Deferred tax asset, net 4,580,440 4,580,440 Operating lease right-of-use assets 2,569,971 3,037,928 Other assets 357,877 357,877 Total other assets 7,735,644 8,857,591 Total assets $ 99,401,100 $ 107,208,447 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 840,101 $ 1,256,819 Accrued expenses 2,717,798 3,366,925 Operating lease liabilities, current portion 639,585 612,680 Equipment loan, current portion 241,986 147,581 Settlement processing obligations 57,431,550 47,104,006 Prepaid card load obligations 9,387,387 25,648,688 Customer deposits 1,939,656 1,918,805 Current liabilities before merchant reserve obligations 73,198,063 80,055,504 Merchant reserve obligations 4,876,537 4,890,101 Total current liabilities 78,074,600 84,945,605 Non-current liabilities: Equipment loan, net of current portion 594,716 571,862 Operating lease liabilities, net of current portion 2,043,230 2,534,017 Total liabilities 80,712,546 88,051,484 Commitments and contingencies (Note 11) Stockholders' equity: Preferred stock, $ 0.01 par value, 10,000,000 shares authorized; - 0 - shares outstanding at September 30, 2025 (unaudited) and

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View this 10-Q filing on SEC EDGAR