CPI Card Group Raises 2026 Outlook After Record Q3 Revenue

CPI Card Group Inc. reported record quarterly revenue for the third quarter of 2026 and raised its full-year revenue growth and free cash flow guidance for the second consecutive quarter, supported by double-digit growth across all three business segments and stronger margins.

Revenue increased 15% year over year to $158.4 million in the three months ended September 30, the highest quarterly total in the company’s history. Growth reflected higher contactless volumes in Secure Card Solutions, increased closed-loop volumes in Prepaid Solutions and expansion in Integrated Paytech, including contributions from TRISM instant issuance.

Gross profit rose 23% to $50.3 million, while gross margin expanded by 200 basis points to 31.7%. Adjusted EBITDA, a non-GAAP measure, increased 17% to $27.5 million, and adjusted EBITDA margin widened by 30 basis points to 17.3%.

GAAP net income more than doubled to $5.0 million from $2.3 million. Diluted earnings per share increased to $0.41 from $0.19, reflecting higher profitability, lower interest expense and a lower effective tax rate than in the prior-year quarter. Income from operations grew 20% year over year.

All three segments post double-digit quarterly growth

Secure Card Solutions remained CPI’s largest business, with third-quarter revenue rising 13% to $111.9 million from $99.2 million. Prepaid Solutions revenue increased 15% to $26.9 million, driven in part by higher closed-loop volumes. Integrated Paytech recorded the fastest quarterly growth, with revenue up 20% to $23.5 million.

For the first nine months of 2026, Secure Card Solutions revenue advanced 21% to $332.6 million. Prepaid Solutions grew 3% to $71.6 million, while Integrated Paytech increased 8% to $63.0 million. Total year-to-date revenue was up 16%.

The company also reported progress on efforts to diversify beyond its established card businesses and expand higher-margin cloud-based offerings. CPI secured a digital win with Bankjoy for cloud-based push provisioning, while Arroweye has recorded more than 30 new wins since its acquisition. Karta moved into the second stage of a prepaid pilot with a large U.S. national retailer, and management said TRISM was performing in line with its investment case.

Cash generation supports lower leverage

Cash provided by operating activities reached a record $57.3 million for the first nine months, compared with $19.9 million a year earlier. After $11.1 million of capital expenditures, year-to-date free cash flow increased to $46.1 million from $6.1 million. Third-quarter free cash flow was $10.1 million, up from $5.3 million.

Total debt stood at $287.9 million at September 30, down from $321.1 million at the end of 2025. Cash and cash equivalents were $15.2 million, and available liquidity was $74.5 million. CPI’s net leverage ratio declined to 2.6 times from 3.6 times a year earlier.

Management’s capital allocation priorities remain investment in the business, including strategic acquisitions, continued deleveraging and opportunistic returns of capital to shareholders.

2026 revenue and free cash flow outlook raised

CPI now expects low-double-digit revenue growth for 2026, compared with its August outlook for high-single-digit to low-double-digit growth. The company also increased its free cash flow forecast to $50 million to $55 million from $45 million to $50 million.

All other targets were affirmed. Management continues to expect low-to-mid-single-digit adjusted EBITDA growth and a year-end net leverage ratio between 2.5 and 3.0 times, with the result expected toward the low end of that range. The company also plans to continue making disciplined strategic investments.

The outlook remains subject to risks including shifts in customer inventory practices, customer retention and competition, supply-chain disruption, tariffs and trade-policy changes, cybersecurity incidents, technology shifts and execution risks related to acquisitions such as Arroweye and TRISM. CPI also cited its indebtedness and refinancing obligations, economic conditions, consumer credit quality and regulatory compliance among factors that could cause actual results to differ from current expectations.