2024 Annual Report

2024 - A Letter from John Lowe

Dear Shareholders,

I am pleased to report on the progress we have made during my first year as President and Chief Executive Officer of CPI Card Group.

In 2024, we delivered 8% net sales growth, increased income from operations, generated strong cash flow, and improved our balance sheet. Our Prepaid segment was particularly strong, growing 26% and exceeding $100 million in net sales for the year, led by demand for our innovative packaging solutions focused on fraud prevention. Our Debit and Credit segment increased 4%, with strong growth from credit and debit cards in the second half of the year, particularly eco-focused contactless cards, complementing full-year strength in our Card@Once® instant issuance solutions and other card personalization services.

In addition to returning the business to growth after a challenging year in 2023, we advanced several key initiatives, including refining and expanding our strategy, enhancing our management team, and completing multiple key capital actions.

Our strategy continues to focus on understanding and serving the needs of our customers and delivering the highest-quality solutions, which has driven our previous success, and we're adapting for the future by increasing our emphasis on efficiency, innovation, and diversification. This includes expanding our addressable markets by offering additional payment products and services to our existing customer base, such as digital push provisioning for mobile wallets, and offering existing solutions to new customer verticals, such as healthcare payment solutions.

To support our strategy and business execution, we have enhanced our management team, bringing in outside expertise to complement the leadership that has driven our growth and success over the last several years. In addition to growing the business, our team is committed to providing a values-driven work environment and empowering our people to serve our customers and other stakeholders.

Finally, we completed several key capital actions in 2024 that we believe will benefit shareholders over time, including refinancing our debt, repurchasing $9 million of our stock, and supporting a secondary offering of common stock on behalf of our largest shareholder.

We are proud of the accomplishments we achieved in 2024 and excited about the long-term opportunities for CPI®. We believe we have the right vision, strategies, solutions, and team to drive the business forward and continue to create shareholder value.

Best,

John Lowe

President and Chief Executive Officer

CPI Card Group® 2024 Annual Report

Vision:

To be the most trusted partner for innovative payment technology solutions

Values:

Do the Right Thing | Strive for Excellence

Be Curious | Be a Great Partner

CPI strives to be our customers' partner of choice by providing market- leading, high-quality payment solutions and best-in-class customer service while delivering continuous innovation. Our customers choose us for our extensive experience in delivering payment card solutions, including debit and credit payment card production, personalization services, leading Software-as-a-Service-based instant issuance and other digital solutions, and prepaid debit cards and related tamper-evident packaging solutions.

CPI's Strategic Pillars drive our approach to doing business and maintaining strong, long-term relationships with our customers and our people:

Customer Focus: We listen to the voice of the customer and provide outstanding support and partnership.

Quality and Efficiency: We deliver high-quality solutions and drive continuous improvement.

Innovation and Diversification: We develop innovative, market- leading differentiated solutions that create competitive advantages for our customers, and we diversify by expanding our offerings to accelerate growth and balance risk.

People and Culture: We promote a values-driven work environment to ensure our people are safe, productive, and empowered to serve our customers and each other.

Metal Cards

CPI has robust expertise in encased metal card design, printing, and production, and offers multiple options developed by our industry-leading research and development specialists. High-definition printing techniques and the integration of EMV technology and payment brand certification allow CPI to provide choices to customers looking for a premium heavy card.

EMV® is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo, LLC. The Contactless Indicator mark, consisting of four graduating arcs, is a trademark owned by and used with permission of EMVCo, LLC.

Digital Solutions

Digital Solutions

Card@Once®

Software-as-a-Service-based Instant Issuance

Card@Once is CPI's market-leading Software-as-a-Service (SaaS)-based instant issuance solution for issuing high-quality contactless, contact, and magnetic stripe cards on demand in a customer's location. At the end of 2024, Card@Once hardware installations included more than 16,000 locations across more than 2,000 financial institutions in the United States.

Push Provisioning

CPI's integrated SaaS-based service utilizes APIs to automate the process of provisioning cards to mobile wallets, enabling faster card replacement, quicker onboarding, higher account activation, and deeper cardholder loyalty.

Fraud Tools

We offer market-leading, third-party AI-driven solutions for managing card risk, utilizing machine learning and predictive analytics to analyze millions of transactions daily for quick insights into merchant risk, data breaches, and fraud.

Digital Card

CPI's Digital Card solution is designed to offer prepaid incentives and rewards via card-not-present transactions that give cardholders immediate spending power with online merchants.

Registrant's telephone number, including area code (720) 681-6304

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐Accelerated filer ☑Non-accelerated filer ☐Smaller reporting company ☑ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial

accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

The aggregate market value of the registrant's common stock held by non-affiliates was $129.2 million on June 30, 2024 computed based on the closing price of the registrant's common stock of $27.25 as reported on the Nasdaq Global Market on that date.

As of February 27, 2025, the number of shares outstanding of the registrant's common stock was 11,240,507.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement for its 2025 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.

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Cautionary Statement Regarding Forward-Looking Information

Certain statements and information in this Annual Report on Form 10-K (as well as information included in other written or oral statements we make from time to time) may contain or constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words "believe," "estimate," "project," "expect," "anticipate," "affirm," "plan," "intend," "foresee," "should," "would," "could," "continue," "committed," "attempt," "aim," "target," "objective," "guides," "seek," "focus," "provides guidance," "provides outlook" or other similar expressions are intended to identify forward-looking statements, which are not historical in nature. These forward-looking statements, including statements about our strategic initiatives and market opportunities, are based on our current expectations and beliefs concerning future developments and their potential effect on us and other information currently available. Such forward-looking statements, because they relate to future events, are by their very nature subject to many important risks and uncertainties that could cause actual results or other events to differ materially from those contemplated.

These risks and uncertainties include, but are not limited to: (i) risks relating to our business and industry, such as a deterioration in general economic conditions, including due to inflationary conditions, resulting in reduced consumer confidence and business spending, and a decline in consumer credit worthiness impacting demand for our products; the unpredictability of our operating results, including an inability to anticipate changes in customer inventory management practices and its impact on our business; our failure to retain our existing key customers or identify and attract new customers; the highly competitive, saturated and consolidated nature of our marketplace; our inability to develop, introduce and commercialize new products and services, including due to our inability to undertake research and development activities; new and developing technologies that make our existing technology solutions and products obsolete or less relevant or our failure to introduce new products and services in a timely manner or at all; system security risks, data protection breaches and cyber-attacks; the usage, or lack thereof, of artificial intelligence technologies; disruptions, delays or other failures in our supply chain, including as a result of inflationary pressures, single-source suppliers, failure or inability of suppliers to comply with our code of conduct or contractual requirements, trade restrictions, tariffs, foreign conflicts or political unrest in countries in which our suppliers operate, and our inability to pass related costs on to our customers or difficulty meeting customers' delivery expectations due to extended lead times; interruptions in our operations, including our information technology systems, or in the operations of the third parties that operate computing infrastructure on which we rely; defects in our software and computing systems; disruptions in production at one or more of our facilities due to weather conditions, climate change, political instability, or social unrest; problems in production quality, materials and process and costs relating to product defects and any related product liability and/or warranty claims and damage to our reputation; our inability to recruit, retain and develop qualified personnel, including key personnel, and implement effective succession processes; our substantial indebtedness, including the restrictive terms of our indebtedness and covenants of future agreements governing indebtedness and the resulting restraints on our ability to pursue our business strategies; our inability to make debt service payments or refinance such indebtedness; our inability to successfully execute on acquisitions or divestitures or strategic relationships; our status as an accelerated filer and complying with the Sarbanes-Oxley Act of 2002 and the costs associated with such compliance and implementation of procedures thereunder; our failure to maintain effective internal control over financial reporting and risks relating to investor confidence in our financial reporting; environmental, social and governance ("ESG") preferences and demands of various stakeholders and the related impact on our ability to access capital, produce our products in conformity with stakeholder preferences, comply with stakeholder demands and comply with any related legal or regulatory requirements or restrictions; negative perceptions of our products due to the impact of our products and production processes on the environment and other ESG-related risks; damage to our reputation or brand image; the effects of climate change on our business; our inability to adequately protect our trade secrets and intellectual property rights from misappropriation, infringement claims brought against us and risks related to open source software; our inability to renew licenses with key technology licensors; our limited ability to raise capital, which may lead to delays in innovation or the abandonment of our strategic initiatives; costs and impacts related to additional tax collection efforts by states, unclaimed property laws, or future increases in U.S. federal or state income taxes, resulting in additional expenses which we may be unable to pass along to our customers; our inability to realize the full value of our long-lived assets; costs and potential liabilities associated with compliance or failure to comply with laws and regulations, customer contractual requirements and evolving industry standards regarding consumer privacy and data use and security; our failure to operate our business in accordance with the Payment Card Industry Security Standards Council security standards or other industry standards; the effects of trade restrictions, delays or interruptions in our ability to source raw materials and components used in our products from

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