Crane Nxt (CXT -1.13%), a technology-driven supplier of payment automation, security, and authentication solutions, reported earnings results on August 6, 2025, for fiscal Q2 2025 (ended June 30, 2025). The company delivered GAAP revenue of $404.4 million, up 9.1% from the prior year and above analyst expectations of $383.16 million. Non-GAAP earnings per share (EPS) came in at $0.97, beating the $0.95 consensus (non-GAAP), though falling short of last year's $1.06 adjusted (non-GAAP) result. Despite these topline gains, GAAP operating profit margin weakened and organic core sales slipped, reflecting operational pressures from acquisition integration and volume declines in some business segments. Management maintained its full-year outlook, signaling confidence in ongoing efforts to improve profitability and integration benefits over the coming quarters.
| Metric | Fiscal Q2 2025 | Q2 2025 Estimate | Fiscal Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.97 | $0.95 | $1.06 | (8.5%) |
| Revenue (GAAP) | $404.4 million | $383.2 million | $370.6 million | 9.1% |
| Operating Profit Margin (GAAP) | 11.8% | 18.2% | (6.4 pp) | |
| Adjusted Operating Profit Margin | 21.2% | 24.1% | (2.9 pp) | |
| Adjusted Free Cash Flow | $67.4 million | $53.9 million | 25.0% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in the fiscal Q1 2025 earnings report.
About the business and recent priorities
Crane Nxt delivers advanced technology for secure payment processing, authentication of products, and anti-counterfeiting protection. It operates two main business units: Payment Innovations, which offers technology for automated cash handling and retail point-of-sale systems, and Security and Authentication Technologies, which supplies solutions for secure documents, currency, and product authentication.
Recently, the company has focused on expanding its presence in authentication and security solutions through acquisitions. Notable purchases include OpSec Security and De La Rue Authentication Solutions. These acquisitions allow the company to serve more government and brand protection clients, strengthening its position in the growing market for authentication technologies. Key factors for ongoing success include maintaining technological leadership, effective integration of acquisitions, capitalizing on increased demand for security solutions, sustaining competitive positioning, and managing impacts from rising debt levels due to acquisition financing.
Quarter highlights: Financial and operational details
GAAP revenue surpassed $400 million for the first time, boosted mainly by recent acquisitions and favorable foreign exchange. Of the $33.8 million year-over-year increase in GAAP sales, $26.7 million came directly from acquiring OpSec Security and De La Rue Authentication Solutions. Foreign currency translation added a further $10.1 million. However, organic core sales decreased slightly by $3.0 million, revealing that growth from acquisitions is masking some weakness in underlying demand, as core sales declined 1%.
In the Crane Payment Innovations segment, which builds payment devices and systems for retailers and financial service providers, sales fell 5.8% year over year. Core sales dropped 7.3%. Lower volumes in the vending market, attributed to tariffs and customers pushing out equipment purchases, contributed to the decline. Segment operating profit slid 20.2%, and the GAAP operating margin for Crane Payment Innovations dropped by 4.2 percentage points.
Security and Authentication Technologies, the unit providing anti-counterfeiting and authentication products for currency, government-issued identification, and branded goods, saw revenue increase by 32.0%. This rise came from both acquisitions (up 18.3%) and organic growth (core sales up 9.1%), alongside currency effects. The unit recorded record-high order backlogs for international currency work in fiscal Q1 2025, driven by demand for micro-optics and digital authentication services. However, operating profit margins in this segment declined sharply due to acquisition-related dilution, increased manufacturing costs, and investment in integration activities. Adjusted operating profit margin for the Security and Authentication Technologies segment was 20.6%, although still lower by 2.7 percentage points from a year ago.
Several material, one-time events and adjustments affected the quarter. The company recognized $12.4 million in transaction costs and $7.3 million in restructuring expenses, tied mainly to integrating acquisitions. Adjusted earnings also exclude higher amortization charges reflecting new intangible assets from purchase accounting. The overall operating profit margin compressed by 6.4 percentage points year over year, to 11.8%, with adjusted operating profit margin down by 2.9 percentage points.
Cash flow performance was strong, with adjusted free cash flow up by 25.0% year over year and conversion at 120% of adjusted net income for the quarter. Adjusted free cash flow was $67.4 million, and conversion was 120% of adjusted net income. Total debt increased to $1.13 billion as the company financed its major acquisitions, raising the net leverage ratio to 2.6 times trailing twelve months adjusted EBITDA as of June 30, 2025. Cash on hand was $152.5 million as of June 30, 2025. Management highlighted the company’s robust balance sheet and reaffirmed its commitment to operational synergies from integration, which are expected to improve profitability in future periods, as stated in the earnings release.
The quarterly dividend was set at $0.17 per share for the third quarter of 2025, continuing a regular dividend payout trend.
Product and segment details
Volume declines were most notable in vending due to tariffs on Chinese components and customers holding off on new orders. Management introduced price increases to mitigate these tariff impacts but expects further pressure in this market for the short term. Despite these challenges, the segment continues winning multi-year contracts for service and maintenance, which support a recurring revenue base.
The Security and Authentication Technologies segment produces physical and digital authentication solutions designed to prevent counterfeiting and fraud. Its product lineup now includes government tax stamp platforms, digital identity document security, and brand protection marks. The integration of OpSec Security and De La Rue Authentication Solutions brought new assets and customers, such as the National Football League, which renewed a contract for both physical product and digital authentication services. International currency contracts continued to grow in fiscal Q1 2025, increasing order backlogs and providing improved revenue visibility into upcoming quarters. Integration and synergy realization are ongoing.
Key metrics for both segments included robust backlog growth. In the Security and Authentication Technologies segment, continued demand from government clients accounts for a sizeable portion of recurring revenues and underpins some resilience regardless of broader economic conditions. The company reported a backlog of $144.4 million in Payment Innovations and $447.2 million in Security and Authentication Technologies. Management also pointed to wins in micro-optics technology, which enhance both physical and digital security offerings.
Looking ahead: Guidance and focus areas
Management maintained its full-year EPS guidance, expecting sales growth of 6% to 8% for fiscal 2025, adjusted segment operating margins in the 25.5% to 26.5% range for fiscal 2025, and adjusted EPS of $4.00 to $4.30 for fiscal 2025. Adjusted free cash flow conversion guidance stands at approximately 90% to 110% for the full year, excluding one-time items. The outlook for Payment Innovations is for flat to slightly negative sales for the rest of fiscal 2025, reflecting continued uncertainty in the vending market and potential for delayed equipment purchases. In contrast, Security and Authentication Technologies is forecast to post 19% to 21% annual sales growth for the full year, driven largely by contributions from recent acquisitions and strong international demand.
Management highlighted the importance of capturing operational synergies, integrating acquired units efficiently, and addressing margin pressures as priorities for the second half of the year. Investors should continue monitoring underlying core trends, including organic revenue performance, debt levels, and margins for both primary segments. Progress on profit improvement and working down higher debt will remain key issues. Payment Innovations’ volume challenges, especially in vending, and the pace of synergy realization will be critical for hitting guidance and supporting sustained profitability improvements.
The quarterly dividend was set at $0.17 per share for the third quarter of 2025.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
