USIO

Usio is a sub-scale, full-stack payments and prepaid-card processor whose FY2025 numbers show a business that has stopped compounding. Revenue of $85.4M grew just 3.0% and is essentially flat over two years ($84.1M in 2023, $82.9M in 2024, $85.4M in 2025), while gross profit was up only 0.4% to $19.7M on a thin 23.1% gross margin. More telling, operating income was -$2.36M (a -60.5% deterioration) and net income swung to -$2.51M from +$3.31M in 2024 — and note operating income was already negative in 2024, so the prior 'profit' did not come from the core business. This is a company with a -$70.5M accumulated deficit and a five-year record of mostly-red bottom lines, not a proven earner temporarily stumbling.

The balance sheet is better than the headline 6.53x liabilities/equity suggests: the bulk of the $123M current assets and $114M current liabilities is merchant settlement float, and real interest-bearing debt is tiny ($1.07M long-term plus $289K current). The business still generated positive operating cash flow of $1.51M and even bought back $1.07M of stock. So this is not a distressed situation — but cash of $7.43M is thin and falling (-7.7%), operating cash flow dropped 48%, and ROE is -14%. Quality is mediocre and trending the wrong way.