CPI Card Group Inc (NASDAQ:PMTS) Reports Q3 2025 Earnings Beat and Revenue Miss, Shares Tumble

CPI Card Group Inc (NASDAQ:PMTS) reported financial results for the third quarter of 2025, delivering a mixed performance that featured a notable earnings beat but a significant revenue miss compared to analyst expectations. The market reaction was sharply negative, with shares falling over 14% in pre-market trading, indicating investor concern over the company's top-line performance and revised outlook.

Earnings and Revenue Versus Estimates

The company's third-quarter results presented a clear divergence between its profitability and sales performance.

• Earnings Per Share (EPS): The company reported a non-GAAP EPS of $0.47 for the quarter. This surpassed the analyst consensus estimate of $0.4624, representing a slight earnings beat.
• Revenue: Net sales for the quarter increased 11% year-over-year to $138.0 million. However, this figure fell short of the $143.4 million analysts had projected, resulting in a revenue miss.

This combination of beating on the bottom line while missing on the top line suggests the company is managing costs effectively but facing challenges in achieving expected sales growth.

Market Reaction and Revised Outlook

The negative pre-market price action appears to be a direct response to the revenue shortfall and, more significantly, the company's decision to lower its full-year financial guidance. CPI Card Group updated its 2025 outlook, tempering expectations for both sales and profitability.

• Net Sales Outlook: Revised to "low double-digit to low teens growth," down from the previous outlook of "low double-digit to mid-teens growth."
• Adjusted EBITDA Outlook: Revised to "flat to low single-digit growth," a reduction from the prior "mid-to-high single-digit growth."

This downward revision aligns the company's internal projections closer to the current analyst estimate for full-year 2025 sales of $551.92 million, but the lowered profit guidance has likely unsettled investors.

Press Release Highlights

Beyond the headline numbers, the earnings report detailed several key operational and financial developments.

• Segment Performance: Growth was driven by the Debit and Credit segment, where sales increased 16% to $115.3 million, largely due to the acquisition of Arroweye and increased sales of instant issuance solutions. This was partially offset by a 7% decline in Prepaid Debit segment sales to $23.3 million.
• Profitability Pressures: Despite higher sales, gross profit decreased 8% to $41.0 million, and the gross profit margin contracted to 29.7% from 35.8% in the prior year. The company cited unfavorable sales mix, tariff expenses, and higher depreciation as primary factors.
• Strategic Initiatives: Management highlighted the continued strong performance of the Arroweye acquisition and the Card@Once instant issuance business. The company also entered a strategic relationship with Australia-based Karta, acquiring a 20% equity interest.
• Balance Sheet: The company ended the quarter with a net leverage ratio of 3.6x. During the quarter, $20 million of senior notes were retired, leaving $265 million outstanding.

Conclusion

CPI Card Group's third-quarter results depict a company navigating a challenging cost environment while integrating strategic acquisitions. While the ability to exceed earnings estimates demonstrates operational control, the revenue miss and subsequent lowering of full-year guidance have taken precedence in the minds of investors, as evidenced by the sharp pre-market sell-off. The company's focus remains on improving margins, achieving synergies from acquisitions, and reducing leverage, but the market's immediate reaction underscores concerns over its near-term growth trajectory.

For a detailed look at historical earnings and future analyst estimates for CPI Card Group, visit the earnings estimates page for PMTS.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, nor does it recommend buying or selling any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.