Repay (US:RPAY)2022-03-02 03:37Financial Data and Key Metrics Changes - In Q4 2021, card payment volume grew by 43% year-over-year, totaling $5.6 billion, while total revenue increased by 50% to $62.2 million, reflecting a take rate of approximately 110 basis points [24][25] - For the full year 2021, card payment volume grew by 35%, total revenue increased by 41%, and gross profit grew by 44% [5][24] - Gross profit for Q4 2021 was $47.2 million, a 57% increase year-over-year, with organic growth contributing 17% [25][26] - Adjusted net income for Q4 was $27 million, or $0.28 per share, with adjusted EBITDA of $27.8 million, up 58% year-over-year [26] Business Line Data and Key Metrics Changes - The business payments vertical, targeting a $3.4 trillion total addressable market (TAM), performed well with over 80 B2B software integrations and more than 3,600 clients [11] - The consumer payment side showed strength, particularly in the auto loan business, driven by high demand in the used car market [12] - The mortgage origination segment experienced strong demand, with expectations for increased transaction velocity due to rising interest rates [13] Market Data and Key Metrics Changes - The company expanded its customer base in the Credit Union space by nearly 5x year-over-year, now serving over 200 Credit Union customers [9] - The supplier network for accounts payable (AP) grew to over 110,000, with significant success in converting clients to the TotalPay solution [11] Company Strategy and Development Direction - The company plans to increase card penetration across all verticals and optimize processing infrastructure to reduce costs while growing volume [20][21] - Strategic M&A remains a key growth driver, with an active pipeline for potential acquisitions [23] - The company aims to commercialize and market its unified accounts receivable/accounts payable capabilities [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 20% organic gross profit growth in 2022, driven by strong performance in auto loans and recovery in personal loan volumes [31] - The company anticipates that the majority of growth will come from existing customers, providing high visibility into future revenue [36] - Management noted that consumer health remains strong, with positive trends in loan repayments and expectations for pent-up demand in healthcare services [54] Other Important Information - The company secured approximately $590 million in capital through stock and convertible notes offerings, positioning itself for growth opportunities [6] - The integration of acquisitions from 2021 is progressing well, with synergies expected to be realized [19] Q&A Session Summary Question: Drivers of organic growth acceleration - Management highlighted strength in auto loans and recovery in personal loan volumes as key drivers for organic growth acceleration [33][34] Question: Revenue visibility and complexity - Management indicated that a majority of growth will come from existing customers, providing a high degree of revenue visibility [36] Question: Virtual card penetration and cross-border payments - Current virtual card penetration is estimated at 15% to 20%, with expectations for growth through the TotalPay solution [40] Question: Size and growth of B2B business - The B2B business is growing north of 30%, expected to comprise about 25% of the total mix by the end of 2022 [42] Question: Impact of consumer health on business - Management noted strong consumer health and repayment trends, with expectations for continued strength in loan repayments [53][54] Question: M&A pipeline and strategy - The company is likely to pursue smaller tuck-in acquisitions in the near term while maintaining an active pipeline for strategic opportunities [58][59] Question: Growth of new auto loan originations - The company is more exposed to the used car market, which continues to show strong demand despite inventory constraints [61] Question: Mortgage business size and growth - The mortgage business is less than 10% of total revenue but is growing, particularly in servicing and loan repayments [81][82]