CPI Card Group Inc.

Q2 revenue increased 15% to $149 million versus $130 million a year ago; first-half revenue increased 17% to a record for the company. Q2 gross profit increased 21% and gross margin was 32.5%, up about 160 basis points from 30.9% in the prior-year period, helped by more than $3 million of tariff refunds. Q2 adjusted EBITDA was $24 million, up 7%. First-half operating cash flow was $42 million versus $10 million last year, and first-half free cash flow was $36 million versus $1 million last year. For 2026, CPI now expects revenue growth of high single digits to low double digits, adjusted EBITDA growth of low to mid-single digits, free cash flow of $45 million to $50 million, and year-end net leverage of 2.5x to 3.0x. Integrated Paytech revenue growth is now expected to be approximately 20% for the full year, up from 15% at the start of the year. Management also said third-quarter revenue and adjusted EBITDA should be slightly better than the second quarter.

John Lowe described the quarter as strong and said CPI is gaining share, diversifying the business, and expanding its digital and cloud-based solutions. He highlighted momentum in Secure Card Solutions, the TRISM acquisition as a strategic fit that roughly doubles the instant issuance addressable market, and progress in prepaid through closed-loop opportunities and chip-enabled packaging. His tone was confident and upbeat, emphasizing profitable growth, disciplined capital allocation, and a stronger second half.

Terra Grantham said Q2 results were better than expected, with revenue of $149 million, gross margin of 32.5%, and adjusted EBITDA of $24 million. She noted gross margin benefited from more than $3 million of tariff refunds, while SG&A rose to $37 million from $31 million due to Arroweye integration costs and investments in digital and technology; integration and transaction-related costs were nearly $3 million and should be significantly lower in the second half, though TRISM will add some integration expense at lower levels. She also cited $21 million of cash, $92 million of available ABL capacity, $265 million of senior notes outstanding before the $26.5 million redemption in mid-July, net leverage of 2.7x versus 3.6x last year, and CapEx of $6 million in the first half, with full-year CapEx expected to be slightly below 2025 levels.

Analysts focused on how much TRISM contributes to 2026 and 2027, with management saying the deal adds roughly $3.5 million to $4 million in the back half of 2026 and should have a double, and likely a bit more than double, run rate in 2027, but they stopped short of giving specific 2027 guidance. Questions also centered on the gap between first-half Integrated Paytech growth and the full-year 20% target; management pointed to Card@Once momentum, TRISM, and easier comps in the second half. Analysts pressed on prepaid volatility and free cash flow sustainability; management said prepaid remains choppy through late 2026 because of tough comps and uneven ordering, while free cash flow benefited from inventory optimization and some timing, though they still raised full-year FCF guidance and expect inventory to keep improving.