Financial Data and Key Metrics Changes - In Q1 2025, revenue was $77.3 million, representing a decrease of 4% year over year [19] - Reported gross profit declined by 5% year over year, with consumer payment segment gross profit also down by 5%, while business payment segment gross profit increased by 77% year over year [19] - Adjusted EBITDA for Q1 was $33.2 million, reflecting approximately 43% adjusted EBITDA margins [21] - Reported free cash flow was negative $8 million, impacted by client losses and working capital changes [22] - As of March 31, the company had approximately $165 million in cash and access to $250 million in undrawn revolver capacity, totaling $415 million in liquidity [23] Business Line Data and Key Metrics Changes - Consumer payments showed core growth with contributions from existing clients and new client wins, despite client losses impacting reported growth [6][10] - Business payments reported a gross profit increase of approximately 7% year over year, with a normalized growth of about 12% when excluding political media contributions from the previous year [11][19] - The company signed two new software partnerships in consumer payments, increasing total software partners to 182 [8] Market Data and Key Metrics Changes - The company noted resiliency in non-discretionary consumer spending year to date, despite economic unpredictability [7] - The sales pipeline for enterprise clients remains healthy, with ongoing efforts to enhance payment capabilities [7][8] Company Strategy and Development Direction - The company concluded its strategic review process, focusing on organic growth investments as the best way to create shareholder value [13][14] - Key operational priorities include enhancing the direct sales model, capitalizing on monetization opportunities, and building indirect partnership channels [15] - The company aims for sequential quarterly normalized gross profit growth, targeting high single-digit to low double-digit growth by Q4 2025 [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to invest organically and produce results that generate shareholder value [16] - The company anticipates free cash flow conversion exceeding 50% in Q2 and accelerating above 60% by year-end, excluding one-time impacts [22] - Management acknowledged the ongoing macroeconomic uncertainties but emphasized the strength of their business model and value proposition [7][10] Other Important Information - The company announced an increase in its share repurchase program authorization to $75 million [17] - Tim Murphy, the CFO, will be stepping down, with Thomas Sullivan appointed as interim CFO [18] Q&A Session Summary Question: Can you provide additional color on the consumer spending environment? - Management noted resiliency in non-discretionary consumer spending year to date, with no major impacts from overall payment processing related to macroeconomic factors [26][27] Question: Given the increased buyback authorization, do you plan to focus more on this rather than M&A? - Management confirmed that they will opportunistically repurchase shares when they believe the share price is disconnected from intrinsic value, while still focusing on organic growth [28][30] Question: How far did you go down the strategic review process? - Management indicated that the decision to conclude the review was based on the belief that additional investment in organic growth would yield the best results for shareholders [33][34] Question: Can you discuss the EBITDA growth trajectory for 2025? - Management expects adjusted EBITDA growth to follow a similar path as gross profit growth, with no incremental spend beyond what has been forecasted [36] Question: What are the trends in the auto vertical? - Management reported strength in nondiscretionary spending within the auto vertical, with no significant changes observed in client dynamics [75]

Financial Performance - Q1 2025 - Revenue decreased by 4% year-over-year, from $80.7 million in Q1 2024 to $77.3 million in Q1 2025[14, 67] - Gross profit decreased by 5% year-over-year, from $61.5 million in Q1 2024 to $58.7 million in Q1 2025[14, 67] - Adjusted EBITDA decreased by 7% year-over-year, from $35.5 million in Q1 2024 to $33.2 million in Q1 2025[14, 67] - Free Cash Flow decreased significantly from $13.7 million in Q1 2024 to -$8.0 million in Q1 2025, representing a 159% decrease[14, 67] - Free Cash Flow conversion decreased from 38% in Q1 2024 to -24% in Q1 2025[14] Segment Performance - Q1 2025 - Consumer Payments revenue decreased by 6% year-over-year, from $76.1 million in Q1 2024 to $71.9 million in Q1 2025[20] - Consumer Payments gross profit decreased by 5% year-over-year, from $59.6 million in Q1 2024 to $56.7 million in Q1 2025[20] - Business Payments revenue increased by 17% year-over-year excluding political media, but increased 14% as reported, from $9.7 million in Q1 2024 to $11.0 million in Q1 2025[23, 78] - Business Payments gross profit increased by 12% year-over-year excluding political media, but increased 7% as reported, from $7.0 million in Q1 2024 to $7.6 million in Q1 2025[23, 78] Liquidity and Leverage - Total liquidity was $415 million as of Q1 2025, including cash and undrawn revolver capacity[26, 50] - Net debt was $343 million as of March 31, 2025[28] - Net leverage was 2.5x LTM Adjusted EBITDA as of March 31, 2025[28] FY 2025 Outlook - The company expects sequential quarterly acceleration in normalized growth year-over-year[34] - The company expects Q4 normalized growth of high single digit to low double digit[34] - The company expects Free Cash Flow conversion to exceed 50% in Q2 and accelerate above 60% by the end of 2025[34]

Financial Performance - Total revenue for Q1 2025 was $77,325,000, a decrease of 4.3% compared to $80,720,000 in Q1 2024[10] - Net loss for Q1 2025 was $8,168,000, compared to a net loss of $5,365,000 in Q1 2024, representing a 52.5% increase in losses year-over-year[10] - Total revenue for the three months ended March 31, 2025, was $77.325 million, a decrease from $80.720 million in the same period of 2024, representing a decline of approximately 3.0%[32] - The net loss attributable to the Company for the three months ended March 31, 2025, was $7.947 million, compared to a net loss of $5.212 million in the same period of 2024[37] - The Company reported a net loss of $8.2 million for the three months ended March 31, 2025, compared to a net loss of $5.4 million for the same period in 2024[109] - Adjusted Net Income for the same period was $20.3 million, representing a 9.2% year-over-year decrease from $22.4 million in 2024[139] - Net loss attributable to the Company increased by 51.8% year-over-year, reaching $7.9 million in 2025 compared to $5.2 million in 2024[139] Revenue Breakdown - Revenue from direct relationships in the Consumer Payments segment was $69.254 million for Q1 2025, down from $73.311 million in Q1 2024, indicating a decrease of about 5.0%[32] - Consumer Payments segment represented approximately 86% of total revenue for the three months ended March 31, 2025, while Business Payments segment accounted for approximately 14%[90][91] - Consumer Payments segment revenue decreased by $4.2 million or 5.5% year-over-year, totaling $71.9 million for the three months ended March 31, 2025[122] - Business Payments segment revenue increased to $11.0 million for the three months ended March 31, 2025, compared to $9.7 million for the same period in 2024[93] Cash Flow and Liquidity - Cash and cash equivalents at the end of Q1 2025 were $165,466,000, down from $189,530,000 at the end of 2024, a decrease of 12.7%[8] - Net cash provided by operating activities was $2,503,000 for Q1 2025, a significant decrease from $24,801,000 in Q1 2024[16] - As of March 31, 2025, the Company had $165.5 million in cash and cash equivalents, with an available borrowing capacity of $250.0 million under the Second Amended Credit Agreement[143] - Net cash used in investing activities was $10.5 million in 2025, consistent with $11.1 million in 2024, primarily for software development[148] - Net cash used in financing activities was $19.5 million in 2025, compared to $3.0 million in 2024, due to payments under the TRA and tax withholding related to shares vesting[149] Expenses and Costs - Operating expenses for Q1 2025 totaled $80,945,000, a decrease of 2.7% from $83,224,000 in Q1 2024[10] - Costs of services were $18.7 million for the three months ended March 31, 2025, a decrease of $0.5 million or 2.6% from $19.2 million in the same period of 2024[111] - Depreciation and amortization expenses decreased by $1.7 million or 6.3%, totaling $25.3 million for the three months ended March 31, 2025, down from $27.0 million in 2024[113] - Selling, general and administrative expenses remained flat at $37.0 million for the three months ended March 31, 2025, compared to the same period in 2024, reflecting a 0.0% change[112] Assets and Liabilities - Total assets decreased to $1,535,392,000 as of March 31, 2025, down from $1,571,908,000 at the end of 2024, a decline of 2.3%[8] - Total liabilities decreased to $768,194,000 as of March 31, 2025, down from $798,739,000 at the end of 2024, a reduction of 3.8%[8] - Total equity decreased to $767,198,000 as of March 31, 2025, down from $773,169,000 at the end of 2024, a decline of 0.8%[8] - The Tax Receivable Agreement (TRA) balance at the end of the period was $190.4 million, reflecting a decrease from $203.6 million at the beginning of the period[52] - The Company had TRA payables for related parties of $25.5 million as of March 31, 2025, down from $27.5 million as of December 31, 2024[70] Interest and Borrowings - The Company incurred interest expense of $3,107,000 in Q1 2025, compared to $912,000 in Q1 2024, indicating a substantial increase in borrowing costs[10] - The Company incurred interest expense of $2.1 million on convertible senior notes for the three months ended March 31, 2025[64] - The estimated fair value of borrowings as of March 31, 2025, was $456.189 million, reflecting the amortized cost of the revolving credit facility and convertible senior notes[44] - As of March 31, 2025, total borrowings amounted to $507.5 million, with a carrying value of $497.6 million after accounting for debt issuance costs[65] Tax and Compliance - The effective tax rate for the Company was 5.2% for the three months ended March 31, 2025, compared to (6%) for the same period in 2024[79] - The Company recorded an income tax benefit of $0.5 million for Q1 2025, while an income tax expense of $0.3 million was recorded for Q1 2024[79] - The Company recognized adjustments of $0.5 million for deferred tax assets related to the income tax benefit for the three months ended March 31, 2025[80] Shareholder Activities - The company purchased a total of 465,103 shares of Class A common stock during the three months ended March 31, 2025, at an average price of $6.76 per share[170] - The company has a Share Repurchase Program approved for up to $50 million of its outstanding Class A common stock, with no expiration date[170] Risk Factors and Economic Conditions - The Company continues to monitor macroeconomic conditions, including inflation and potential recession impacts, which may affect payment volumes and overall financial performance[101] - The company believes the effects of inflation on its results of operations and financial condition have not been significant, but future impacts cannot be assured[161] - There have been no material changes in risk factors since the last annual report for the year ended December 31, 2024[169]

[Report Overview and Key Announcements](index=1&type=section&id=Report%20Overview%20and%20Key%20Announcements) REPAY's Q1 2025 revenue was $77.3 million with a net loss of $8.2 million, showing strong Business Payments growth despite overall gross profit decline and negative free cash flow [First Quarter 2025 Financial & Business Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20%26%20Business%20Highlights) REPAY reported Q1 2025 revenue of $77.3 million and a net loss of $8.2 million, with Business Payments showing 12% normalized gross profit growth despite overall gross profit decline and negative free cash flow Q1 2025 Financial Highlights | (in $ millions) | Q1 2024 | Q1 2025 | | :--- | :--- | :--- | | Revenue | $80.7 | $77.3 | | Gross profit | $61.5 | $58.7 | | Net (loss) income | $(5.4) | $(8.2) | | Adjusted EBITDA | $35.5 | $33.2 | | Net cash provided by operating activities | $24.8 | $2.5 | | Free Cash Flow | $13.7 | $(8.0) | | Free Cash Flow Conversion | 38% | (24%) | - The Business Payments segment's normalized gross profit growth accelerated to **12% year-over-year**, driven by the core accounts payable business, new enterprise customers, and recent monetization efforts[4](index=4&type=chunk) - Free cash flow was negatively impacted by one-time working capital issues and previously announced client losses[4](index=4&type=chunk) - Key operational achievements in Q1 2025 include an AP supplier network growth to over **390,000** (an increase of approximately **40% year-over-year**), instant funding volumes increasing by approximately **19% year-over-year**, and the addition of **14 new credit unions**, bringing the total to **343**[10](index=10&type=chunk) [Strategic Updates & Management Changes](index=1&type=section&id=Strategic%20Updates%20%26%20Management%20Changes) The company concluded its strategic review process, increased its share repurchase authorization by $25 million to $75 million, and announced the departure of its Chief Financial Officer - The Board of Directors has decided to conclude the company's strategic review process[5](index=5&type=chunk) - The share repurchase authorization was increased by **$25 million**, for a new total authorization of **$75 million**[1](index=1&type=chunk)[5](index=5&type=chunk) - Tim Murphy, the Chief Financial Officer, will be leaving REPAY after **11 years** with the company[5](index=5&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) The company operates two reportable segments: Consumer Payments, focusing on consumer collections, and Business Payments, providing B2B solutions including accounts payable automation [Segment Overview](index=2&type=section&id=Segment%20Overview) The company operates two segments: Consumer Payments for collecting funds from consumers in various verticals, and Business Payments for B2B solutions like accounts payable automation - **Consumer Payments** provides solutions like debit/credit card and ACH processing for clients to collect payments from consumers in key markets including personal loans, automotive loans, and credit unions[9](index=9&type=chunk)[11](index=11&type=chunk) - **Business Payments** offers B2B payment solutions including accounts payable automation and virtual credit card processing in key markets such as retail automotive, education, healthcare, and media[12](index=12&type=chunk) [Segment Financial Results (Q1 2025)](index=3&type=section&id=Segment%20Financial%20Results%20(Q1%202025)) In Q1 2025, Consumer Payments revenue decreased 6% to $71.9 million, while Business Payments revenue increased 14% to $11.0 million, reflecting divergent segment performance Segment Revenue and Gross Profit (Three Months Ended March 31) | ($ in thousands) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | | | | | Consumer Payments | $71,942 | $76,136 | (6%) | | Business Payments | $10,988 | $9,677 | 14% | | **Total revenue** | **$77,325** | **$80,720** | **(4%)** | | **Gross profit** | | | | | Consumer Payments | $56,709 | $59,591 | (5%) | | Business Payments | $7,557 | $7,047 | 7% | | **Total gross profit** | **$58,661** | **$61,545** | **(5%)** | [2025 Outlook](index=2&type=section&id=2025%20Outlook) REPAY anticipates accelerating normalized gross profit growth throughout 2025, reaching high-single to low-double digits by Q4, with free cash flow conversion exceeding 60% by Q4 [2025 Company Expectations](index=2&type=section&id=2025%20Company%20Expectations) REPAY expects sequential quarterly acceleration of normalized gross profit growth throughout 2025, with free cash flow conversion projected to exceed 60% by the fourth quarter - The company expects sequential quarterly acceleration of normalized gross profit growth throughout **2025**[4](index=4&type=chunk)[10](index=10&type=chunk) - The fourth quarter year-over-year normalized gross profit growth rate is projected to be in the **high-single digits to low double-digits**[4](index=4&type=chunk)[10](index=10&type=chunk) - Free cash flow conversion is expected to exceed **50% in Q2 2025** and accelerate to above **60% by Q4 2025**[10](index=10&type=chunk) [Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section presents REPAY's unaudited consolidated financial statements, including the statement of operations, balance sheets, and cash flows for the reported periods [Consolidated Statement of Operations](index=7&type=section&id=Consolidated%20Statement%20of%20Operations) For Q1 2025, REPAY's total revenue decreased to $77.3 million, and net loss widened to $8.2 million, resulting in a $0.09 loss per share Q1 2025 Statement of Operations Highlights | (in $ thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $77,325 | $80,720 | | Loss from operations | $(3,620) | $(2,504) | | Net loss | $(8,168) | $(5,365) | | Loss per Class A share | $(0.09) | $(0.06) | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were $1.54 billion, with cash at $165.5 million, and total liabilities decreased to $768.2 million Balance Sheet Highlights | (in $ thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $165,466 | $189,530 | | Total current assets | $250,127 | $275,248 | | Goodwill | $716,793 | $716,793 | | Total assets | $1,535,392 | $1,571,908 | | Long-term debt | $497,588 | $496,778 | | Total liabilities | $768,194 | $798,739 | | Total equity | $767,198 | $773,169 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 net cash from operating activities significantly decreased to $2.5 million, with $10.5 million used in investing and $19.5 million in financing activities Q1 2025 Statement of Cash Flows Highlights | (in $ thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,503 | $24,801 | | Net cash used in investing activities | $(10,537) | $(11,129) | | Net cash used in financing activities | $(19,484) | $(2,987) | [Non-GAAP Financial Measures and Reconciliations](index=10&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section provides reconciliations of non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and Normalized Gross Profit Growth [Reconciliation of Net Income to Adjusted EBITDA](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) Q1 2025 Adjusted EBITDA was $33.2 million, down from $35.5 million, with significant adjustments for depreciation, share-based compensation, and restructuring costs Reconciliation of Net Loss to Adjusted EBITDA (Q1) | (in $ thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net loss | $(8,168) | $(5,365) | | Depreciation and amortization | $25,294 | $27,028 | | Share-based compensation expense | $6,045 | $6,923 | | Restructuring and other strategic initiative costs | $3,511 | $2,184 | | **Adjusted EBITDA** | **$33,175** | **$35,513** | [Reconciliation of Net Income to Adjusted Net Income](index=12&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income) Q1 2025 Adjusted Net Income was $20.3 million ($0.22 per share), primarily adjusted by adding back $19.3 million for amortization of acquisition-related intangibles Reconciliation of Net Loss to Adjusted Net Income (Q1) | (in $ thousands, except per share) | 2025 | 2024 | | :--- | :--- | :--- | | Net loss | $(8,168) | $(5,365) | | Amortization of acquisition-related intangibles | $19,329 | $19,736 | | Share-based compensation expense | $6,045 | $6,923 | | **Adjusted Net Income** | **$20,314** | **$22,378** | | **Adjusted Net Income per share** | **$0.22** | **$0.23** | [Reconciliation of Operating Cash Flow to Free Cash Flow](index=13&type=section&id=Reconciliation%20of%20Operating%20Cash%20Flow%20to%20Free%20Cash%20Flow) Q1 2025 Free Cash Flow was negative $8.0 million, a significant drop from $13.7 million in Q1 2024, resulting in a -24% conversion rate Reconciliation to Free Cash Flow (Q1) | (in $ thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,503 | $24,801 | | Total capital expenditures | $(10,537) | $(11,129) | | **Free cash flow** | **$(8,034)** | **$13,672** | | **Free cash flow conversion** | **(24%)** | **38%** | [Reconciliation to Normalized Gross Profit Growth](index=13&type=section&id=Reconciliation%20to%20Normalized%20Gross%20Profit%20Growth) Q1 2025 total gross profit decline of 5% normalizes to 4%, while Business Payments' normalized growth was 12%, adjusted for prior year's political media spending Normalized Gross Profit Growth by Segment (Q1 2025 vs Q1 2024) | | Consumer Payments | Business Payments | Total | | :--- | :--- | :--- | :--- | | Gross profit growth | (5%) | 7% | (5%) | | Less: Growth from political media | — | (5%) | (1%) | | **Normalized gross profit growth** | **(5%)** | **12%** | **(4%)** |

Financial Data and Key Metrics Changes - In Q4 2024, revenue was $78.3 million, representing a 3% year-over-year increase, while full-year revenue increased by 6% [35] - Gross profit grew by 2% year-over-year in Q4, with the consumer payments segment gross profit declining approximately 5% during Q4 and growing 3% for the full year [35] - Adjusted EBITDA for Q4 was $36.5 million, reflecting a 9% growth, with full-year adjusted EBITDA growth at 11% [37] - Free cash flow conversion improved to 64% in Q4 and 75% for the full year, benefiting from strong cash generation and management of operating expenses [38][39] Business Line Data and Key Metrics Changes - The consumer payments segment saw growth from existing clients and new client signings, with 16 new credit unions added in Q4, bringing the total to 329 [10] - The business payments segment gross profit grew 60% year-over-year in Q4, driven by strength in the core AP business and contributions from new clients [16] - Core AP business increased in the low teens in Q4 when excluding client attrition and strategic migrations [22] Market Data and Key Metrics Changes - The consumer payments segment faced challenges due to client losses and macroeconomic factors affecting the auto and ARM sectors [14][49] - The business payments segment benefited from strong ad spending during the 2024 presidential election cycle, positively impacting revenue [19] Company Strategy and Development Direction - The company is undergoing a comprehensive strategic review to assess alternatives for enhancing shareholder value, including potential M&A opportunities [30][31] - Focus on vertical-specific growth opportunities, particularly in accounts receivable management and credit card servicing [12] - Plans to reinvest in organic growth opportunities and strengthen market position through targeted sales and relationship management [32] Management's Comments on Operating Environment and Future Outlook - Management noted that client losses were primarily due to acquisitions and in-house transitions, with no significant changes in market dynamics [46][47] - The company remains confident in its sales pipeline and is focused on improving client experiences to enhance retention and growth [15] - Management refrained from providing a 2025 outlook due to the ongoing strategic review [40][41] Other Important Information - The company has made eight acquisitions since going public in 2019, expanding its consumer payment segment and diversifying its business payment platform [27][28] - The company has approximately $190 million in cash and $250 million in undrawn revolver capacity, totaling $440 million in liquidity [39] Q&A Session Summary Question: What changes are being seen in client attrition drivers? - Management indicated that client losses were due to acquisitions and in-house transitions, with no major trends suggesting increased attrition [46][47] Question: Can you elaborate on consumer softness mentioned in Q4? - Management noted ongoing challenges in the auto sector and ARM recovery, leading to depressed volumes [49] Question: What is the expected growth trend for 2025? - Management refrained from providing specific guidance but indicated that growth rates could normalize to mid to high single digits, excluding client losses [52] Question: What is the focus regarding the mortgage vertical? - The mortgage vertical is viewed as a multi-year organic opportunity, with ongoing progress expected [66] Question: What are the strategic review goals? - The strategic review aims to evaluate all aspects of the company to enhance shareholder value, including go-to-market strategies and potential M&A [58][59] Question: How is the competitive landscape evolving? - Management believes they are well-positioned in the market, with strong sales pipelines and ongoing investments in enterprise sales and product technology [65] Question: What are the trends in personal lending? - Positive momentum is noted in personal lending, with indications of loosening underwriting standards [72] Question: What is the rationale behind the total pay volume migration? - The migration aims to monetize total payment volume more effectively, despite some initial volume loss [75] Question: What are the hurdles to achieving double-digit top-line growth? - Timing of client losses and macro impacts in specific sectors have hindered growth, but strong bookings indicate potential for recovery [124][126]

Financial Data and Key Metrics Changes - In Q4 2024, revenue was $78.3 million, a 3% year-over-year increase, while full-year revenue increased by 6% [35] - Q4 gross profit grew by 2% year-over-year, with consumer payments segment gross profit declining approximately 5% in Q4 but growing 3% for the full year [35] - Adjusted EBITDA for Q4 was $36.5 million, representing a 9% increase, with full-year adjusted EBITDA growth at 11% [37] - Free cash flow for Q4 was $23.5 million, reflecting a 64% conversion rate, while full-year free cash flow conversion improved to 75% [38] Business Line Data and Key Metrics Changes - The consumer payments segment experienced growth from existing clients and new client signings, with 16 new credit unions added in Q4, totaling 329 credit union clients [10] - The business payments segment gross profit grew 60% year-over-year in Q4, driven by strength in the core AP business and contributions from new clients [16] - Core AP business increased in the low teens in Q4 when excluding one-off client attrition and strategic migrations [22] Market Data and Key Metrics Changes - The consumer payments segment faced challenges due to client losses and macroeconomic factors affecting the auto and ARM sectors [14][49] - The business payments segment benefited from strong demand in verticals such as healthcare, hospitality, and political media, particularly during the 2024 presidential election cycle [19] Company Strategy and Development Direction - The company is undergoing a comprehensive strategic review to assess alternatives for enhancing shareholder value, including potential M&A opportunities and capital allocation strategies [30][31] - Focus on vertical-specific growth opportunities, particularly in accounts receivable management and credit card servicing [12] - Plans to reinvest in organic growth opportunities and strengthen market position through targeted sales and relationship management investments [32] Management's Comments on Operating Environment and Future Outlook - Management noted that client losses were primarily due to acquisitions and in-house transitions, with no significant changes in market dynamics expected [46][47] - The company remains confident in its sales pipeline and client retention strategies, aiming for improved growth in 2025 despite refraining from providing specific guidance [40][52] Other Important Information - The company has made eight acquisitions since going public in 2019, expanding its consumer payment segment and diversifying its business payment platform [27][28] - The company has approximately $190 million in cash and $250 million in undrawn revolver capacity, totaling $440 million in liquidity [39] Q&A Session Summary Question: What are the drivers of client attrition? - Management indicated that client losses were due to acquisitions and in-house transitions, with no significant trends suggesting increased attrition [46][47] Question: Can you elaborate on consumer softness mentioned in Q4? - Management noted ongoing challenges in the auto sector and ARM recovery, leading to continued depressed volumes [49] Question: What is the outlook for 2025? - Management refrained from providing specific guidance but indicated that growth rates could normalize to mid to high single digits, excluding client losses [52] Question: How is the competitive landscape evolving? - Management expressed confidence in their competitive position, highlighting investments in enterprise sales and product technology [65] Question: What are the expectations for the personal lending vertical? - Management noted positive momentum in personal lending, with indications of loosening underwriting standards [72] Question: What is the strategy behind the total pay volume migration? - Management explained that migrating clients to the total pay solution aims to enhance monetization opportunities despite some initial volume loss [75] Question: What are the M&A opportunities being considered? - Management is focused on consumer bill pay verticals and B2B AP opportunities, looking for tuck-in acquisitions to expand their network [105][106]

Q4 2024 Earnings Supplement March 2025 Disclaimer 1 Repay Holdings Corporation ("REPAY" or the "Company") is required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission ("SEC") Such filings, which you may obtain for free at the SEC's website at http://www.sec.gov, discuss some of the important risk factors that may affect REPAY's business, results of operations and financial condition. On July 11, 2019, Thunder Bridge Acquisition ...

Core Insights - Repay Holdings (RPAY) reported quarterly earnings of $0.24 per share, matching the Zacks Consensus Estimate, but down from $0.27 per share a year ago [1] - The company posted revenues of $78.27 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 4.68%, compared to $75.99 million in the same quarter last year [2] - Repay Holdings shares have declined approximately 5.5% year-to-date, while the S&P 500 has gained 1.2% [3] Earnings Performance - The company has surpassed consensus EPS estimates two times over the last four quarters [1] - Repay Holdings has topped consensus revenue estimates three times in the last four quarters [2] - The current consensus EPS estimate for the upcoming quarter is $0.24 on revenues of $85.51 million, and for the current fiscal year, it is $0.97 on revenues of $333.89 million [7] Market Outlook - The estimate revisions trend for Repay Holdings is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - The outlook for the Financial Transaction Services industry, where Repay Holdings operates, is relatively strong, ranking in the top 34% of over 250 Zacks industries [8]

Revenue Segmentation - The Consumer Payments segment represented approximately 83% of total revenue for the year ended December 31, 2024[32]. - The Business Payments segment accounted for approximately 17% of total revenue for the year ended December 31, 2024[33]. - The top 10 clients contributed approximately 20% and 18% of total gross profit for the years ended December 31, 2024 and 2023, respectively[28]. Chargeback and Fraud Management - The chargeback rate was under 1% of total payment volume for the year ended December 31, 2024[51]. - The chargeback rate for the year ended December 31, 2024, was less than 1% of payment volume, indicating effective fraud management[138]. - The company is exposed to risks associated with fraudulent transactions, which could lead to increased chargeback liabilities[136]. Acquisitions and Market Expansion - The company has successfully acquired eleven businesses from January 1, 2016 through December 31, 2024[38]. - The company has completed eleven acquisitions from January 1, 2016, to December 31, 2024, focusing on integrated payments companies to expand its market presence and product offerings[62]. - The acquisition of Sigma Payment Solutions on January 1, 2016, marked the company's entry into the automotive finance space, enhancing its integration with automotive finance software platforms[63]. - The acquisition of PaidSuite on September 28, 2017, accelerated growth into the receivable management space through client and software integration partner relationships[64]. - The acquisition of TriSource Solutions on August 14, 2019, provided further control over the transaction processing ecosystem and improved product delivery capabilities[66]. - The company intends to expand into new verticals where it currently has limited operations or does not operate[35]. - The company is focused on expanding into new vertical markets and increasing market penetration through acquisitions and partnerships[154]. Operational Efficiency and Technology - The company plans to continue driving operational efficiencies to process larger payment volumes without significant increases in personnel and operating expenses[37]. - The company aims to strengthen and extend its solution portfolio through continued innovation and investment in technology capabilities[36]. - The electronic payments market is characterized by rapid technological evolution, and the company must continuously develop new products to remain competitive[116]. - The company’s future growth depends on its ability to adapt technology to meet the needs of new vertical markets, which may require additional resources[155]. - There is a risk that the company may not successfully implement new technologies or upgrades, which could impact operations and financial results[144]. Competition and Market Risks - The company is facing significant competition from various payment processing companies, including ACI Worldwide and traditional merchant acquirers like Bank of America Merchant Services[58]. - There is a notable digital shift in the industry, with a transition from cash and check to electronic payments, accelerated by changes in consumer behavior due to the COVID-19 pandemic[59]. - The company faces risks from industry consolidation within its vertical markets, which may limit market opportunities and demand[121]. - Sales efforts to large enterprises involve long and unpredictable cycles, requiring significant time and expense[123]. - Failure to adapt to changes in consumer behavior and emerging payment methods could lead to a loss of revenue[117]. Compliance and Regulatory Environment - The Dodd-Frank Act has imposed regulations on debit interchange transaction fees, affecting the company's cost structure and operational flexibility[75]. - The company is subject to various federal and state data privacy and information security laws, requiring continuous monitoring and compliance efforts[78]. - The company may act as a Business Associate under HIPAA regulations, necessitating compliance with privacy and security rules regarding Protected Health Information[80]. - The company faces potential regulatory enforcement proceedings and monetary liabilities if it fails to comply with laws prohibiting unfair or deceptive acts[183]. - The regulatory environment for interchange fees has intensified, potentially impacting transaction volumes and pricing[171]. - The company may incur significant compliance costs as it expands into new jurisdictions, such as Canada[176]. - The company is exposed to risks associated with the regulatory environment affecting its clients, particularly in consumer lending[177]. - The company must maintain effective internal controls to provide reliable financial reports and prevent fraud, with potential material weaknesses identified[188]. Employee Engagement and Culture - The company employed approximately 465 full-time employees as of December 31, 2024[95]. - 82% of employees reported that the company is a great place to work in the 2024 engagement survey[97]. - The company has been certified as a Great Place to Work® for the last eight consecutive years[97]. - The company offers a comprehensive benefits package, including 100% coverage of employee healthcare premiums[101]. - The Employee Stock Purchase Plan (ESPP) allows employees to become shareholders at a discounted price[101]. - The company emphasizes a culture of rewards and recognition, providing multiple opportunities for performance-based awards[99]. - The company has a dedicated human resources team focused on attracting, developing, and retaining top talent[98]. - The company provides tuition assistance and reimbursement for certain pre-approved continuing education programs[101]. Financial Position and Debt Management - The company increased its senior secured credit facilities to a $250.0 million revolving credit facility as of July 10, 2024[191]. - On January 19, 2021, the company issued $440.0 million in aggregate principal amount of 0.00% convertible senior notes due 2026[191]. - On July 8, 2024, the company repurchased $220.0 million of the 2026 Notes and issued $287.5 million in aggregate principal amount of 2.875% convertible senior notes due 2029[191]. - The company’s ability to service its debt obligations depends on future performance, which is subject to various external factors[191]. - The conditional conversion feature of the 2026 and 2029 Notes may adversely affect the company's liquidity if triggered[198][199]. - Payments under the Tax Receivable Agreement may exceed actual tax benefits realized, potentially impairing the company's financial condition[211]. - The company may incur additional indebtedness to finance payments under the Tax Receivable Agreement if cash resources are insufficient[211]. Stockholder Rights and Governance - The company has anti-takeover provisions that could limit stockholders' ability to take certain actions and may depress the trading price of its Class A common stock[220]. - Certain stockholders holding 15% or more of the outstanding capital stock are prohibited from engaging in business combination transactions for a specified period unless conditions are met[221]. - The board of directors has the ability to issue preferred stock without stockholder approval, which could significantly dilute the ownership of a hostile acquirer[221]. - Stockholder action by written consent is prohibited, requiring actions to be taken at annual or special meetings, potentially delaying proposals[221]. - Special meetings of stockholders can only be called by the board of directors, chairman, or CEO, which may delay stockholder proposals[221]. - The board of directors can amend bylaws to prevent unsolicited takeovers, inhibiting acquirers from facilitating takeover attempts[221]. - Exclusive forum provisions designate Delaware courts for disputes, potentially limiting stockholders' choice of judicial forum[222]. - These exclusive-forum provisions may discourage lawsuits against the company or its directors, potentially impacting operational results[223].

Financial Performance - Q4 2024 revenue increased by 3% year-over-year to $78.3 million, with full year revenue growth of 6% to $313.0 million[2]. - Gross profit for Q4 2024 grew by 2% year-over-year to $59.7 million, with full year gross profit increasing by 6% to $241.4 million[2]. - Adjusted EBITDA for Q4 2024 rose by 9% year-over-year to $36.5 million, reflecting strong operational performance[2]. - Revenue for Q4 2024 was $78,271,000, representing a 3.9% increase from $75,987,000 in Q4 2023[26]. - Total revenue for the year 2024 reached $313,042,000, up 5.5% from $296,627,000 in 2023[26]. - Adjusted EBITDA for the full year 2024 was $140,810,000, compared to $126,806,000 in 2023, marking an increase of 11%[35]. - The company reported a net loss of $10,345,000 for the full year 2024, an improvement from a net loss of $117,420,000 in 2023[35]. - Adjusted Net Income for the full year 2024 was $87,818,000, up from $84,942,000 in 2023, an increase of 2.1%[35]. Cash Flow and Expenses - Free Cash Flow for Q4 2024 was $23.5 million, an 8% increase year-over-year, with Free Cash Flow Conversion at 64%[2]. - Adjusted Free Cash Flow Conversion improved from 42% in 2023 to 75% in 2024, showcasing enhanced cash flow efficiency[5]. - Net cash provided by operating activities for 2024 was $150,090,000, compared to $103,614,000 in 2023, marking a 44.8% increase[30]. - Free cash flow for the three months ended December 31, 2024, was $23,459,000, compared to $21,787,000 in 2023, reflecting an increase of 7.7%[36]. - Free cash flow conversion rate for the year ended December 31, 2024, was 75%, up from 42% in 2023[36]. - Total capital expenditures for the year ended December 31, 2024, were $44,853,000, a decrease from $50,816,000 in 2023, indicating a reduction of 11.7%[36]. Operating Performance - Operating expenses for Q4 2024 were $79,441,000, a significant decrease from $154,401,000 in Q4 2023, primarily due to the absence of impairment losses[26]. - Total operating expenses for the full year 2024 were $320,812,000, down from $408,040,000 in 2023, a decrease of 21.4%[35]. - Total depreciation and amortization for the year ended December 31, 2024, was $103,710,000, consistent with $103,857,000 in 2023[38]. Segment Performance - Consumer Payments segment revenue decreased by 7% year-over-year in Q4 2024, while Business Payments segment revenue increased by 76% year-over-year[14]. - The Company experienced a 60% year-over-year growth in Business Payments gross profit, driven by strong contributions from the political media vertical[12]. - Instant funding volumes increased by approximately 34% year-over-year, indicating strong demand for payment solutions[12]. Strategic Initiatives - The Company is undergoing a strategic review process to explore various alternatives, including potential M&A opportunities[6]. - The Board has not set a deadline for the strategic review process, which aims to enhance shareholder value[6]. Balance Sheet Highlights - Cash and cash equivalents increased to $189,530,000 as of December 31, 2024, up from $118,096,000 in 2023[28]. - Total assets as of December 31, 2024, were $1,571,908,000, compared to $1,519,833,000 in 2023, reflecting a growth of 3.4%[28]. - Long-term debt increased to $496,778,000 in 2024 from $434,166,000 in 2023, indicating a rise of 14.4%[28]. - The Company issued $287,500,000 in long-term debt during 2024, which contributed to its cash flow[30]. Shareholder Information - The weighted-average shares of Class A common stock outstanding were 88,392,571 for Q4 2024, down from 91,206,870 in Q4 2023[26]. - Weighted average shares of Class A common stock outstanding for the year ended December 31, 2024, were 89,915,137, down from 90,048,638 in 2023[41].