8-K: CoreCard Corporation Extends Key Agreements with Goldman Sachs Through 2030

CoreCard Corporation has extended its software and services agreements with Goldman Sachs through December 31, 2030, with increased fees starting in 2025.

Summary

• CoreCard Corporation has entered into an amendment with The Goldman Sachs Group, Inc. extending several key agreements.
• The amendment extends the Support Services term of the Software License and Support Agreement (SLSA) through December 31, 2030.
• The amendment also extends the term of the Schedules of Work (SOWs) through December 31, 2030.
• Monthly fees under SOW 2 will increase starting in January 2025.
• Goldman Sachs can terminate the agreements no earlier than January 1, 2027, with termination payments due if terminated before December 31, 2030.
• All other material terms of the agreements remain unchanged.

Sentiment

Score: 8

Explanation: The extension of the agreements with a major client like Goldman Sachs, along with increased fees, is a very positive development for CoreCard. The long-term nature of the agreement provides stability and revenue visibility. The potential for termination after 2027 is a minor concern but does not significantly detract from the overall positive sentiment.

Positives

• The extension of the agreements provides long-term revenue visibility for CoreCard through 2030.
• The increased monthly fees under SOW 2 will likely lead to higher revenue for CoreCard starting in 2025.
• The extended relationship with Goldman Sachs demonstrates a strong partnership and confidence in CoreCard's services.

Negatives

• The agreement allows Goldman Sachs to terminate the agreements starting January 1, 2027, which introduces some uncertainty.

Risks

• The possibility of termination by Goldman Sachs after January 1, 2027, could impact future revenue if it occurs.
• Termination payments are due if the agreements are terminated before December 31, 2030, which could be a financial burden for Goldman Sachs.

Future Outlook

The extended agreements provide a stable revenue stream for CoreCard through 2030, with increased fees starting in 2025. However, the possibility of termination by Goldman Sachs after January 1, 2027, introduces some uncertainty.

Industry Context

This announcement indicates a continued reliance on CoreCard's services by a major financial institution like Goldman Sachs, which is a positive sign for CoreCard's position in the financial technology sector. It also highlights the importance of long-term contracts in the industry.

Comparison to Industry Standards

• Long-term software and service agreements are common in the financial technology sector, with companies like Fiserv and Jack Henry also having similar arrangements with large financial institutions.
• The extension of the agreement to 2030 is a significant commitment, comparable to multi-year contracts seen in the industry.
• The increase in monthly fees is a positive sign for CoreCard, as it indicates the value of their services and is a common practice in long-term contracts.

Stakeholder Impact

• Shareholders will likely view the extension of the agreements positively, as it provides long-term revenue visibility.
• Employees may benefit from the stability and growth opportunities associated with the extended contracts.
• Customers may see this as a sign of CoreCard's reliability and commitment to its services.
• Suppliers may benefit from the continued business relationship with CoreCard.

Next Steps

• The Amendment will be filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.

Key Dates

Keywords

CoreCard, Goldman Sachs, Software License, Professional Services, Agreement Extension, Support Services, Monthly Fees, Termination