Repay (US:RPAY)2025-05-12 22:02Financial Data and Key Metrics Changes - In Q1 2025, revenue was $77.3 million, representing a decrease of 4% year over year [22] - 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 [22] - Adjusted EBITDA for Q1 was $33.2 million, maintaining an adjusted EBITDA margin of approximately 43% [23] - Reported free cash flow was negative $8 million, impacted by client losses and working capital changes, but excluding these impacts, free cash flow conversion would have been similar to 38% in Q1 2024 [24] 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 [8][12] - 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 [13][22] - Instant funding product in value-added services saw transaction volumes rise approximately 19% year over year [11] Market Data and Key Metrics Changes - Non-discretionary consumer spending remained resilient year to date, with no major impacts observed from macroeconomic factors [9][52] - The company signed two new software partnerships in consumer payments, increasing total software partners to 182 [10] Company Strategy and Development Direction - The company concluded its strategic review process, focusing on organic growth investments rather than M&A, believing this will yield the best results for shareholders [16][17] - Key operational priorities include enhancing the direct sales model, capitalizing on monetization opportunities, and building indirect partnership channels [17] - The company aims for sequential quarterly normalized gross profit growth, projecting high single-digit to low double-digit growth by Q4 2025 [18] 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, with expectations for growth acceleration in the second half of 2025 [18][19] - The macroeconomic environment has changed, but the company remains focused on profitable growth and cash flow generation [16][19] Other Important Information - The Board of Directors increased the share repurchase program authorization to $75 million, maintaining a strong balance sheet with ample liquidity [19][25] - Tim Murphy, the CFO, will be stepping down, with Thomas Sullivan appointed as interim CFO [20][19] Q&A Session Summary Question: Can you provide additional color on the consumer spending environment? - Management noted resiliency in non-discretionary consumer spending, with no major impacts from overall payment processing related to macroeconomic factors [29] Question: Given the increased buyback authorization, do you plan to continue leaning into this rather than M&A? - Management confirmed that they will opportunistically repurchase shares when the share price is disconnected from intrinsic value, while focusing on organic growth [30][31] Question: How far did you go down the strategic review process? - The company assessed various strategic alternatives but concluded that additional investment in organic growth would yield the best results for shareholders [34] Question: Can you help us think about the EBITDA growth trajectory over 2025? - Management indicated that adjusted EBITDA growth would follow a similar path as gross profit growth, with no incremental spend beyond what has been forecasted [38] Question: What are you seeing in terms of repayment volume health in the auto vertical? - Management reported strength in nondiscretionary spending in the auto sector, with no specific issues observed [77]