CoreCard Corp (NYSE:CCRD), a provider of prepackaged software services, disclosed a change in its certifying accountant as of Wednesday. Nichols, Cauley and Associates, LLC, the company's previous independent registered public accounting firm, has chosen not to stand for re-appointment following the current year's audit.
The company, headquartered in Norcross, Georgia, stated that the audit reports by Nichols, Cauley for the fiscal years ending December 31, 2022, and December 31, 2023, contained no adverse opinion or disclaimer of opinion and were not qualified or modified regarding uncertainties, audit scope, or accounting principles.
Throughout the fiscal years 2022 and 2023, and the subsequent interim period through September 30, 2024, there were no disagreements between CoreCard and Nichols, Cauley on matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure that would have required mention in the firm's audit reports.
CoreCard has provided Nichols, Cauley with a copy of the report filed with the Securities and Exchange Commission (SEC) and has received a letter from Nichols, Cauley, dated today, confirming their agreement with the statements made by CoreCard. This letter is included as an exhibit in the company's current report.
Moving forward, CoreCard plans to initiate a Request for Proposal process to identify a new independent registered public accounting firm. The company will announce the engagement of a new firm upon completion of this process.
This transition comes as CoreCard continues to position itself within the prepackaged software industry. The information regarding the change in the company's certifying accountant is based on a press release statement.
In other recent news, CoreCard Corporation 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.
In a significant development, CoreCard extended its agreements with Goldman Sachs, which include extended terms and adjustments to fees. The amendments affect several agreements, including the Software License and Support Agreement and the Master Professional Services Agreement, and will continue through December 31, 2030.
B.Riley downgraded CoreCard from Buy to Neutral due to concerns over the company's future revenue. The company is also investing in a new platform, Corfinity, which is expected to contribute to long-term growth.
These recent developments highlight CoreCard's commitment to strategic growth and diversification, despite challenges.
InvestingPro Insights
As CoreCard Corp (NYSE:CCRD) navigates this transition in its auditing relationship, it's worth examining some key financial metrics and insights provided by InvestingPro. The company's market capitalization stands at $112.18 million, reflecting its position in the prepackaged software industry.
InvestingPro data shows that CoreCard's revenue for the last twelve months as of Q2 2024 was $52.43 million, with a gross profit of $17.13 million during the same period. This translates to a gross profit margin of 32.67%, indicating the company's ability to maintain profitability in its core operations.
Two particularly relevant InvestingPro Tips highlight CoreCard's financial position. First, the company "holds more cash than debt on its balance sheet," which suggests a strong liquidity position as it transitions to a new auditing firm. Second, CoreCard has been "profitable over the last twelve months," aligning with the clean audit reports mentioned in the article.
It's worth noting that CoreCard is currently trading at a high earnings multiple, with a P/E ratio of 72.86. This valuation metric could be of interest to investors as the company undergoes changes in its financial reporting processes.
For readers interested in a deeper analysis, InvestingPro offers additional tips and metrics that could provide further context to CoreCard's financial situation and market performance. In fact, there are 8 additional InvestingPro Tips available for CoreCard, offering a more comprehensive view of the company's financial health and market position.
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