Repay Holdings Corp (RPAY) Q2 2025 Earnings Call Highlights: Navigating Growth and Challenges

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Revenue: $75.6 million, an increase of 1% year-over-year.
Gross Profit: Declined by 2% year-over-year; impacted by client losses and political media contributions.
Adjusted EBITDA: $31.8 million, with a margin of 42%.
Adjusted Net Income: $19.1 million or $0.20 per share.
Free Cash Flow: $22.6 million, with a 71% cash flow conversion rate.
Cash and Liquidity: $163 million in cash and $413 million total liquidity.
Net Leverage: Approximately 2.5 times.
Share Repurchase: 7.9 million shares repurchased year-to-date for $38 million.
Credit Union Clients: Increased to 353 clients.
Supplier Network Growth: Grew 47% year-over-year to over 440,000 suppliers.
Warning! GuruFocus has detected 1 Warning Sign with RPAY.
Release Date: August 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Repay Holdings Corp (NASDAQ:RPAY) reported a sequential improvement in year-over-year growth with a 1% increase in revenue for Q2 2025.
The company maintained strong adjusted EBITDA margins of 42% during the quarter.
Repay Holdings Corp (NASDAQ:RPAY) achieved a 71% free cash flow conversion, demonstrating solid cash generation.
The company onboarded several new clients in its financial solution vertical, including 10 new credit union wins.
Repay Holdings Corp (NASDAQ:RPAY) repurchased approximately 5% of its outstanding shares, using $38 million to buy back 7.9 million shares.
Negative Points
Reported gross profit declined by 2% year-over-year, impacted by client losses and political media contributions.
The business payment segment experienced a 5% year-over-year decline in reported gross profit.
There was softness in the accounts receivable client base within the business payment segment.
The company faced a 10-point headwind in business payments growth due to a client loss in 2024.
Repay Holdings Corp (NASDAQ:RPAY) needs to address $220 million of convertible notes due in February 2026, which may require tapping into its revolver.
Q & A Highlights
Q: Can you explain the confidence behind the guidance for high single-digit growth in the second half of 2025, given the low single-digit growth in the first half? A: Thomas Sullivan, Interim CFO, explained that the normalized growth was negative 1% in Q2, excluding political media impacts. They expect sequential improvement in Q3 and further acceleration in Q4 as they lap previous client losses. The guidance for Q4 is high single-digit to low double-digit normalized growth.
Q: How does Repay plan to manage the $220 million convertible notes due in February 2026? A: John Morris, CEO, stated that the company plans to prioritize using cash on hand to pay down the debt, but they will need to use their revolver to cover the remaining amount. The focus remains on organic growth investments and managing CapEx.
Q: Are there any specific verticals or strategic areas for potential tuck-in M&A? A: John Morris mentioned that any M&A would need to be strategic, aligning with their current operations in consumer and business payments. They are looking for opportunities that could accelerate growth or provide a strategic advantage.
Q: Is there potential to move upmarket into larger customers with the current platform? A: John Morris confirmed that they are investing in enterprise sales and enhancing their direct sales model. They are capitalizing on monetization opportunities and indirect partnerships, which should help them target larger enterprise opportunities within their existing verticals.
Q: What is the current status of the mortgage payments market for card payments? A: John Morris noted that while there is a healthy pipeline and positive traction, it is not expected to be a significant contributor in 2025. The focus remains on building opportunities for future growth.
Q: Can you provide an update on the recent RCS partnership with the POS provider? A: John Morris stated that they are in the process of implementations and are optimistic about the future of the relationship, though no significant updates are available at this time.
Q: What is the mix between AR and AP in the B2B segment, given the softness in AR? A: John Morris indicated that the mix is approximately 60% AR and 40% AP.
Q: Are there any specific areas of consumer softness, and are these trends temporary or cyclical? A: John Morris mentioned that they see resilient trends in auto, personal loans, and mortgage, but the auto sector remains challenged. They have not seen significant changes in consumer behavior, and trends remain consistent through July and early August.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.