CoreCard Corp (NYSE:CCRD), a provider of prepackaged software services, announced on Wednesday an extension of its existing agreements with The Goldman Sachs Group (NYSE:GS), Inc. The amendments include extended terms and adjustments to fees, effective immediately.
The Omnibus Amendment No. 2, dated October 23, 2024, impacts several agreements between CoreCard and Goldman Sachs, including the Software License and Support Agreement (SLSA) from October 16, 2018, and the Master Professional Services Agreement (MPSA) from August 1, 2019. Additionally, it affects Schedules of Work (SOW 1 and SOW 2) related to the MPSA.
Under the revised terms, the support services under the SLSA and the work outlined in the SOWs will continue through December 31, 2030. Beginning January 2025, Goldman Sachs will pay increased monthly fees for services under SOW 2.
The amendment also allows Goldman Sachs to terminate the agreements as early as January 1, 2027, with certain termination payments applicable if the termination occurs before December 31, 2030.
This move signifies a strengthening of the business relationship between CoreCard and Goldman Sachs, ensuring a continuation of their partnership for an extended period. The information is based on a press release statement.
In other recent news, CoreCard Corporation has been the subject of several significant developments. B.Riley downgraded CoreCard from Buy to Neutral, adjusting the price target to $15.00 from $19.00 due to concerns over the company's future revenue.
CoreCard recently reported a year-over-year decline in total revenue of 12%, amounting to $13.8 million in the second quarter of 2024.
This decrease was primarily due to lower license revenue and decreased professional services revenue from Goldman Sachs. However, the company's professional services revenue surpassed expectations, and CoreCard has seen a 34% growth in revenue excluding Goldman Sachs and other specific impacts.
Analysts have noted that CoreCard's operating margin declined to 8% from 17% the previous year, despite the company repurchasing shares worth $2.1 million in Q2 2024. As part of its future plans, CoreCard aims to diversify its revenue streams and reduce reliance on its largest customer.
The company is also investing in a new platform, Corfinity, which is expected to contribute to long-term growth.
InvestingPro Insights
To provide additional context to CoreCard Corp's (NYSE:CCRD) recent agreement extension with Goldman Sachs, let's examine some key financial metrics and insights from InvestingPro.
CoreCard's market capitalization stands at $98.62 million, reflecting its position in the prepackaged software services sector. The company's P/E ratio of 63.49 suggests that investors are pricing in expectations for future growth, despite the recent agreement extension.
InvestingPro Tips highlight that CoreCard holds more cash than debt on its balance sheet, indicating a strong financial position that could support its long-term commitments to clients like Goldman Sachs. This financial stability is particularly relevant given the extended agreement terms through 2030.
Additionally, CoreCard has been profitable over the last twelve months, with analysts predicting continued profitability this year. This aligns well with the company's ability to negotiate extended and potentially more lucrative terms with a major client like Goldman Sachs.
It's worth noting that CoreCard's revenue for the last twelve months as of Q2 2024 was $52.43 million, with a revenue growth of -13.66% over the same period. This context makes the extended agreement with Goldman Sachs, including increased monthly fees starting January 2025, particularly significant for the company's future revenue prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights, with 10 more tips available for CoreCard on the platform.
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