Repay (US:RPAY)2025-11-10 23:00Financial Data and Key Metrics Changes - In Q3 2025, Repay reported revenue of $77.7 million, reflecting a 5% normalized year-over-year growth, while gross profit was $57.8 million, with a 1% increase on a normalized basis [13][14] - Adjusted EBITDA was $31.2 million, representing approximately 40% adjusted EBITDA margins, and free cash flow was $20.8 million, resulting in a 67% free cash flow conversion [15][16] - The company had approximately $96 million in cash and $250 million in undrawn revolver capacity, totaling $346 million in liquidity [16] Business Line Data and Key Metrics Changes - Consumer payments segment gross profit increased by 1% year-over-year, with a noted impact of approximately 3% from client losses [14][15] - Business payments segment saw a normalized gross profit increase of 12% year-over-year, with over 20% growth when excluding the impact of client losses [10][15] - The supplier network in the business payments segment grew to over 540,000 suppliers, a 60% increase year-over-year [11] Market Data and Key Metrics Changes - The company added five new software partners, bringing the total partnership network to 291 across consumer and business payment segments [6] - The automotive-to-used car market showed some softness, consistent with previous observations [34] Company Strategy and Development Direction - Repay's core growth strategy focuses on optimizing digital payment flows and embedding payment technology into software platforms [4] - The company is investing in AI tools and automation to enhance client onboarding and improve operational efficiency [5] - Capital allocation priorities include organic growth investments, managing CapEx, and maintaining a strong balance sheet [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to sustainable growth, expecting normalized gross profit growth of 6%-8% in Q4 2025 [17][18] - The company anticipates continued margin pressures due to a mix of larger clients with volume discounts and increased ACH and check volumes [18] - Management highlighted a healthy M&A pipeline and openness to acquisitions to accelerate growth potential [36] Other Important Information - The company repurchased approximately 3% of its outstanding shares in August, totaling $38 million year-to-date [12][16] - Repay retired $73.5 million of its 2026 convertible notes at a discount, reducing total outstanding debt to $434 million [16] Q&A Session Summary Question: Free cash flow outlook into 2026 - Management expects Q4 free cash flow conversion to be in the upper 50s, with a strong 67% conversion in Q3 [21] Question: Political media spend headwind - The headwind for Q4 last year was $4.6 million in gross profit, with an annual impact of approximately $11.75 million [22] Question: Visa Commercial Enhanced Data Program - Management discussed changes in data requirements for B2B transactions and the potential impact on interchange rates [26][30] Question: Consumer payments softness - Management noted stability in the consumer marketplace but identified softness in the automotive-to-used car segment [34] Question: M&A targets and pipeline - Management indicated a healthy pipeline for M&A opportunities in both consumer and B2B segments [36] Question: Nature of net working capital affecting free cash flow - Management clarified that the lower free cash flow conversion is due to timing of working capital and margin compression [41]