Repay (US:RPAY)2025-05-12 22:00Financial 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]