Repay (US:RPAY)2025-11-10 23:02Financial Data and Key Metrics Changes - In Q3 2025, revenue was $77.7 million, with a normalized revenue growth of 5% year-over-year, and gross profit was $57.8 million, with a gross profit growth of 1% [12][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 [14][15] - The company had approximately $96 million in cash and $250 million in undrawn revolver capacity, totaling $346 million in liquidity [15] Business Line Data and Key Metrics Changes - Consumer payments segment reported a gross profit increase of 1% year-over-year, with a single-digit growth when excluding the impact of client losses [14][13] - 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 [9][14] - The supplier network in the business payments segment increased to over 540,000 suppliers, growing approximately 60% year-over-year [10] 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 company experienced a stable consumer marketplace, with noted softness in the automotive-to-used car segment [35] Company Strategy and Development Direction - The core growth strategy focuses on optimizing digital payment flows and embedding payment technology into software platforms [4] - The company is enhancing its go-to-market strategies, automating processes, and deploying AI tools to build a scalable future [5][6] - The strategic focus is on increasing TotalPay adoption and prioritizing resources towards accounts payable opportunities [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to sustainable growth as they exit the year, with expectations for sequential improvement in normalized growth in Q4 [4][16] - The company anticipates ongoing margin pressures due to a mix of larger clients with volume discounts and higher transaction values [17][18] - The updated Q4 outlook expects normalized gross profit growth of 6%-8% and free cash flow conversion to be greater than 50% [16][18] Other Important Information - The company repurchased approximately 3% of its outstanding shares in August, totaling $38 million year-to-date [11][15] - Management is open to M&A opportunities to accelerate growth potential [19] Q&A Session Summary Question: Free cash flow outlook into 2026 - Management expects free cash flow conversion to be in the upper 50s for Q4, with a strong 67% conversion in Q3 [21] Question: Political media spend headwind for Q4 - The headwind for Q4 last year was $4.6 million in gross profit, with an annual impact of around $11.75 million [22] Question: Visa Commercial Enhanced Data Program - Management discussed the transition from level two to level three data requirements, which may affect interchange rates [27][30] Question: Consumer payments softness - Management noted stability in the consumer marketplace but identified softness in the automotive-to-used car segment [35] Question: M&A pipeline - Management sees a healthy pipeline for M&A opportunities in both consumer and B2B segments [37]