CPI Card Group's March 5, 2026 results showed annual prepaid revenue falling 12.1%, or 3.3% after adjusting both years for an accounting change. [S01]

The numbers point to a more specific story than declining enthusiasm for gift cards. CPI earns money from producing and supporting payment products. Its sales are affected by when orders are recognised, the packaging customers choose and how much work accompanies each card.

A manufacturer and service provider, not the gift balance

The annual report describes the Prepaid Debit business as supplying secure packaging, cards and integrated services to U.S. prepaid programme managers. Those revenues measure what CPI sells to business customers, not the value consumers load or spend. The group also produces debit and credit cards and provides personalisation and related payment services. [S02]

This position in the supply chain changes the question investors and programme managers should ask. A manufacturer can experience weaker sales because customers buy a less valuable product mix, even while a retailer continues selling gift cards. Conversely, higher production revenue need not imply an equivalent rise in consumer spending.

USD million

Source

CPI 2025 Form 10-K, Prepaid Debit segment

Supplier revenue includes cards, secure packaging and services. The accounting change affects comparability; this is not consumer gift-card demand.

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CPI annual reported Prepaid Debit revenue (USD million)
Category	Reported segment revenue
2024	106.541 USD million
2025	93.625 USD million

Separating timing from trading

USD million

Source

[S01] CPI, Exhibit F

Each year has two presentations of the same business, not two revenue streams. Adjustment applies a consistent point-in-time recognition basis.

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Two views of annual prepaid revenue (USD million)
Category	Reported	Accounting-adjusted
2024	106.541 USD million	102.341 USD million
2025	93.625 USD million	98.993 USD million

CPI changed certain work-in-process revenue from recognition during production to recognition at shipment. Exhibit F restates the comparison on a consistent basis. [S01]

That adjustment addresses timing. It does not erase changes in product mix, pricing or customer orders, and it should not be treated as a second revenue stream. The narrower adjusted decline is useful precisely because it asks a different question from the reported accounts.

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Separating timing from trading
Prepaid Debit metric	2024	2025
Annual revenue, USD million	106.541	93.625
Annual gross profit, USD million	43.124	31.942
Annual gross margin	40.5%	34.1%

Source: CPI's annual report. Reported annual figures, not the adjusted series above. [S02]

The report connects prepaid weakness with the accounting change and stronger higher-value packaging sales in the prior year. Gross margin fell from 40.5% to 34.1%. Elsewhere it notes that more complex contactless cards generally sell at higher prices than simpler formats, illustrating why mix matters in this manufacturing business. [S02]

CPI's packaging range includes sealed foldover formats, multipacks and blister packs. Security construction is therefore part of what a programme manager buys, rather than an incidental wrapper around the loaded funds. [S04]

Why security technology is a commercial response

CPI acquired 20% of Karta in October 2025 for USD10 million in total consideration, comprising USD2.5 million paid in cash at closing and USD7.5 million of contingent rebates tied to future sales. The March results described continuing retailer pilots. [S01][S02]

USD million

Source

CPI 2025 Form 10-K, equity-method investment

The USD7.5 million component is contingent future-sales rebates. This is a 20% equity interest, not a pilot budget, company valuation or evidence of fraud prevention.

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CPI consideration for its Karta minority stake (USD million)
Category	Investment consideration
Cash paid at closing	2.5 USD million
Contingent consideration recorded	7.5 USD million

The historical partnership announcement identifies Karta as an Australian prepaid programme manager and payments technology business. CPI became its exclusive U.S. supplier for contactless gift cards using the SafeToBuy applet. The design removes printed payment details from packaging and keeps credentials inaccessible before activation. Its October announcement targeted an early-2026 U.S. launch and described a retailer pilot. [S03]

For CPI, the strategic opportunity is to sell a more valuable combination of production, personalisation and security. For Karta, a U.S. manufacturing relationship offers a route to customers that would be harder to reach through software alone. The minority investment gives CPI an economic interest beyond an individual production order.

That rationale should not be confused with achieved returns. Neither the pilot description nor the investment establishes nationwide adoption, the amount of fraud prevented or a profitable new revenue stream. Programme managers would ultimately have to pay enough for the added protection to cover its implementation and production costs.

Two different tests of progress

The existing prepaid business needs consistent revenue and margin comparisons. The security initiative needs evidence of deployment, customer adoption and commercial contribution. Keeping those tests separate avoids letting an attractive future product obscure a weaker year, while also avoiding the opposite mistake of interpreting an accounting-driven decline as a measure of the entire gift card market.