CPI Card Group (NASDAQ:PMTS) reported second-quarter revenue growth of 15% and raised its full-year revenue growth and free-cash-flow outlook, citing continued strength in its Secure Card Solutions business, contributions from acquisitions and tariff refunds.
The company said second-quarter revenue rose to $149 million from $130 million a year earlier. Organic revenue, excluding the contribution from Arroweye, increased 12%. For the first half of 2026, revenue increased 17%, producing what management described as record first-half revenue.
Secure Card Growth Offsets Prepaid Volatility
Secure Card Solutions revenue increased 17% to $111 million during the second quarter. The increase was driven by higher volumes of contactless cards, higher personalization revenue and a $5 million contribution from Arroweye. Excluding Arroweye, organic revenue in the segment rose 13%.
Terra Grantham, CPI’s newly appointed CFO, said Secure Card Solutions helped offset a slower-than-expected start to the year in Prepaid Solutions. The company continues to expect choppiness in the prepaid market through late 2026, as customer ordering patterns remain uneven.
Prepaid Solutions revenue increased 18% to $23 million, although the comparison was affected by an accounting change implemented in the second quarter of 2025. The segment also faced comparisons with stronger sales of higher-value packaging solutions a year earlier.
Management said it remains focused on longer-term prepaid opportunities, particularly in the closed-loop market, which it estimates is roughly five times the size of the open-loop market. CPI said it is now serving all of the top prepaid program managers in the U.S. and is seeing customer interest in closed-loop packaging designed to address fraud concerns.
The company is also continuing a pilot with Karta involving SafeToBuy chip-embedded prepaid packages at one of the largest U.S. national retailers. Lowe said the pilot had moved into its second stage and appeared to be progressing well, though he did not provide a timetable or revenue estimate.
TRISM Acquisition Expands Instant-Issuance Reach
During the quarter, CPI acquired TRISM Instant Issuance, a provider of on-premise instant card issuance technology. Management said the acquisition approximately doubles CPI’s instant-issuance addressable market by enabling the company to serve larger financial institutions that prefer to manage issuance technology on site rather than through a cloud-based software-as-a-service offering.
CPI said the transaction expands its instant-issuance presence to nearly 20,000 locations across more than 3,000 financial institutions. TRISM also adds recurring revenue, longer-term customer relationships and opportunities to sell other CPI offerings.
Management expects TRISM to help lift Integrated Paytech revenue growth to approximately 20% in 2026, up from its prior expectation of 15%. In response to an analyst question, Lowe said TRISM is expected to contribute roughly $3.5 million to $4 million in revenue during the latter portion of 2026. He added that its 2027 run rate should be at least double that amount, though the company did not provide formal 2027 guidance.
Integrated Paytech revenue increased 4% in the second quarter, supported by higher Card@Once revenue and a small contribution from TRISM, which closed in late June. Management said it expects stronger growth in the second half from Card@Once and digital solutions, TRISM contributions and more favorable comparisons with the prior year.
The company also highlighted agreements to expand the reach of its cloud-based Push Provisioning and Card@Once solutions through Blossom, which serves more than 350 credit unions, and CU*Answers, which serves more than 400 credit unions. Arroweye recorded its 25th new customer win since its acquisition, CPI said.
Cash Flow, Margins and Balance Sheet
Second-quarter gross profit increased 21%, and gross margin expanded about 160 basis points to 32.5%. Grantham said the result primarily reflected more than $3 million in tariff refunds received during the quarter.
The tariff refunds and revenue growth supported adjusted EBITDA, though margins were affected by the sales mix. Higher-margin prepaid revenue was softer, while Secure Card Solutions grew but carries lower margins than the prepaid business.
SG&A expenses rose to $37 million from $31 million, reflecting Arroweye integration costs and investments in digital and technology initiatives. Arroweye-related integration and transaction expenses were nearly $3 million in the second quarter. Grantham said those costs should decline significantly in the second half, while TRISM integration expenses are expected to be lower.
First-half operating cash flow totaled $42 million, up from $10 million a year earlier. The company attributed free-cash-flow growth to reduced working-capital usage, lower chip inventory, Secure Card Solutions performance and inventory optimization efforts. Management said some first-half cash-flow benefits were timing-related and expects higher capital expenditures in the second half.
At quarter-end, CPI had $21 million in cash and $92 million of available borrowing capacity under its asset-based lending revolver. It had $265 million of senior notes outstanding before redeeming $26.5 million of notes in mid-July. Net leverage was 2.7 times at quarter-end, compared with 3.6 times a year earlier.
2026 Outlook Raised
CPI raised its 2026 outlook for revenue growth to high single digits to low double digits and increased its free-cash-flow expectation to $45 million to $50 million. The company previously guided to free-cash-flow conversion in line with 2025, when free cash flow was $41 million.
The company maintained its outlook for adjusted EBITDA growth of low to mid-single digits and year-end net leverage of 2.5 times to 3.0 times. Grantham said CPI expects third-quarter revenue and adjusted EBITDA to be slightly above second-quarter levels.
Management said the Fort Wayne, Indiana, production facility is supporting capacity expansion and allowing production to be moved more efficiently between Indiana and Colorado. Lowe said the site was built with more than a decade of future growth in mind and still has capacity available as Secure Card Solutions volumes increase.
About CPI Card Group (NASDAQ:PMTS)
CPI Card Group, Inc (NASDAQ: PMTS) is a leading provider of payment, identification and related credential solutions for financial institutions, governments and private enterprises. The company specializes in the design, manufacturing and personalization of secure plastic and metal cards, including EMV chip, magnetic-stripe and contactless cards. CPI Card Group also offers digital credentialing services and cloud-based card management tools that enable real-time controls, mobile wallet integration, fraud monitoring and analytics.
With a focus on security and innovation, CPI Card Group integrates advanced features such as holograms, microprinting, RFID/NFC technology and laser-engraved artwork into its card products.
