Repay Holdings Corp (RPAY) Q1 2025 Earnings Call Highlights: Navigating Challenges with ...
Gross Profit: Declined by 5% year over year.
Consumer Payments Gross Profit: Declined by 5% during Q1.
Business Payments Gross Profit: Increased by 77% year over year; 12% growth excluding political media contributions.
Adjusted EBITDA: $33.2 million, with a margin of 43%.
Adjusted Net Income: $20.3 million or $0.22 per share.
Free Cash Flow: Reported negative $8 million; impacted by $16 million due to timing and client losses.
Cash and Liquidity: $165 million in cash, $250 million undrawn revolver, totaling $415 million in liquidity.
Debt: Total outstanding debt of $507.5 million; leverage approximately 2.5 times.
Instant Funding Transaction Volume: Increased by approximately 19% year over year.
Credit Union Clients: Increased to 343 clients.
Warning! GuruFocus has detected 1 Warning Sign with RPAY.
Release Date: May 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Repay Holdings Corp (NASDAQ:RPAY) maintained strong adjusted EBITDA margins of 43% during Q1 2025.
The company signed two new software partnerships, increasing its total software partners to 182.
RPAY's instant funding product saw transaction volumes rise approximately 19% year over year.
The Business Payments segment reported a gross profit increase of 12% year over year, excluding political media impacts.
RPAY announced an increased share repurchase program authorization to $75 million, indicating confidence in its valuation.
Reported revenue for Q1 2025 decreased by 4% year over year.
Consumer Payments segment gross profit declined by 5% during Q1 2025.
Reported free cash flow was negative $8 million for Q1 2025, impacted by client losses and networking capital issues.
The company faced a 600-basis-point drag on Consumer Payments due to client losses.
Economic unpredictability and macro uncertainties could potentially impact consumer spending and near-term growth.
Q: Can you provide some additional color on what you're seeing in the consumer spending environment, particularly from a credit perspective? A: John Morris, CEO: Year to date, we've seen resiliency in non-discretionary consumer spending. From our perspective, we're not seeing any major impact on overall payment processing related to macroeconomic factors affecting consumers.
Q: Given your increased buyback authorization of $25 million, do you plan to continue leaning into this rather than M&A? A: John Morris, CEO: We will opportunistically repurchase shares when we believe our share price is disconnected from our long-term intrinsic value. Tim Murphy, CFO: Our capital allocation priorities remain focused on organic growth, executing buybacks, and maintaining liquidity for convertible notes due in 2026, with tuck-in M&A as a secondary priority.
Q: How far did you go in the strategic review process to see if you could extract more value? A: John Morris, CEO: We conducted a comprehensive review and concluded that additional investment in organic growth would yield the best results for REPAY and its shareholders. The strategic review confirmed the market potential for these investments.
Q: Can you help us think about the EBITDA growth trajectory over the course of 2025? A: Tim Murphy, CFO: Adjusted EBITDA growth is expected to follow a similar path as gross profit growth, with no incremental spend beyond what we've forecasted. The political contributions in 2024 impacted growth by about 4-5 points, which is normalized in our 2025 growth rates.
Q: How has the recent macro environment impacted your exposures, particularly in auto affordability and personal lending trends? A: Tim Murphy, CFO: Our end markets have shown resilience, with spending holding up nicely through Q1 and similar trends in Q2. We are monitoring the auto space closely, but have not seen any significant changes in dynamics.
Q: Could you discuss any underwriting trends within the consumer end market and their impact on volume and penetration rates? A: John Morris, CEO: We haven't observed specific trends that would change from Q1 to Q2. Our growth outlook is positive, driven by new wins, implementations, and lapping of client losses, especially in the second half of the year.
Q: Can you remind us about the client losses and their impact on overall revenue growth? A: Tim Murphy, CFO: We experienced a 600-basis-point drag on Consumer Payments and 12 points in Business Payments due to client losses. Excluding these losses, our growth would have been in the low-single digits.
Q: What is your inclination towards expanding and scaling B2B versus monetizing it? A: John Morris, CEO: We see significant growth opportunities in the B2B space, with a lot of white space for profitable investments. Our pipeline and future prospects indicate strong potential for scaling this business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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