Repay (RPAY) - 2025 Q1 - Quarterly Results

Report Overview and Key Announcements 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 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] - Free cash flow was negatively impacted by one-time working capital issues and previously announced client losses[4] - 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] Strategic Updates & Management Changes 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] - The share repurchase authorization was increased by $25 million, for a new total authorization of $75 million[1][5] - Tim Murphy, the Chief Financial Officer, will be leaving REPAY after 11 years with the company[5] Segment Performance The company operates two reportable segments: Consumer Payments, focusing on consumer collections, and Business Payments, providing B2B solutions including accounts payable automation Segment Overview 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][11] - 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] Segment Financial Results (Q1 2025) 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 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 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][10] - 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][10] - Free cash flow conversion is expected to exceed 50% in Q2 2025 and accelerate to above 60% by Q4 2025[10] Consolidated Financial Statements (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 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 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 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 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 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 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 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 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%) |