Repay Holdings Corporation (NASDAQ: RPAY) (“REPAY” or the “Company”), a leading provider of vertically-integrated payment solutions, today reported financial results for its third quarter ende...
Autore: Business Wire
Gross Profit Growth of 9% in Q3 and 8% YTD (9% YTD on an organic basis1)
Strong Adjusted EBITDA Growth and Accelerating Free Cash Flow Conversion
Updated 2024 Outlook, Increasing Free Cash Flow Conversion for 2024
ATLANTA: Repay Holdings Corporation (NASDAQ: RPAY) (“REPAY” or the “Company”), a leading provider of vertically-integrated payment solutions, today reported financial results for its third quarter ended September 30, 2024.
Third Quarter 2024 Financial Highlights | ||||||||||||||||||||||
(in $ millions) |
| Q3 2023 |
| Q4 2023 |
| Q1 2024 |
| Q2 2024 |
| Q3 2024 |
| YoY Change | ||||||||||
Revenue |
| $ | 74.3 |
|
| $ | 76.0 |
|
| $ | 80.7 |
|
| $ | 74.9 |
|
| $ | 79.1 |
| 6% | |
Gross profit (1) |
|
| 56.7 |
|
|
| 58.7 |
|
|
| 61.5 |
|
|
| 58.6 |
|
|
| 61.6 |
| 9% | |
Net (loss) income |
|
| (6.5 | ) |
|
| (77.7 | ) |
|
| (5.4 | ) |
|
| (4.2 | ) |
|
| 3.2 |
| - | |
Adjusted EBITDA (2) |
|
| 31.9 |
|
|
| 33.5 |
|
|
| 35.5 |
|
|
| 33.7 |
|
|
| 35.1 |
| 10% | |
Net cash provided by operating activities |
|
| 28.0 |
|
|
| 34.9 |
|
|
| 24.8 |
|
|
| 31.0 |
|
|
| 60.1 |
| 115% | |
Free Cash Flow (2) |
|
| 13.9 |
|
|
| 21.8 |
|
|
| 13.7 |
|
|
| 19.3 |
|
|
| 48.8 |
| 250% | |
(1) | Gross profit represents revenue less costs of services (exclusive of depreciation and amortization). |
(2) | Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. See “Non-GAAP Financial Measures” and the reconciliation of Adjusted EBITDA and Free Cash Flow to their most comparable GAAP measure provided below for additional information. |
“Q3 represented another quarter of profitable growth and accelerating Free Cash Flow conversion at REPAY,” said John Morris, CEO of REPAY. “We continue to see growth across many areas of our business and remain focused on executing our strategy to capture embedded payment flows from clients within our verticals. We believe this approach, along with new software partnerships and further enhancing our payment technology platform, will continue to help us drive sustainable growth, strong cash generation, and value for our shareholders. REPAY remains committed to efficiently allocating capital, which may include organic investments, strategic M&A, and opportunistically repurchasing shares.”
Third Quarter 2024 Business Highlights
The Company's achievements in the quarter, including those highlighted below, reinforce management's belief in the ability of the Company to drive durable and sustained growth across REPAY's diversified business model.
1 | Organic gross profit growth is a non-GAAP financial measure. See “Non-GAAP Financial Measures” and the reconciliation to its most comparable GAAP measure provided below for additional information. |
Segments
The Company reports its financial results based on two reportable segments.
Consumer Payments – The Consumer Payments segment provides payment processing solutions (including debit and credit card processing, Automated Clearing House (“ACH”) processing and other electronic payment acceptance solutions, as well as REPAY’s loan disbursement product) that enable REPAY’S clients to collect payments from and disburse funds to consumers and includes its clearing and settlement solutions (“RCS”). RCS is REPAY’s proprietary clearing and settlement platform through which it markets customizable payment processing programs to other ISOs and payment facilitators. The strategic vertical markets served by the Consumer Payments segment primarily include personal loans, automotive loans, receivables management, credit unions, mortgage servicing, consumer healthcare and diversified retail.
Business Payments – The Business Payments segment provides payment processing solutions (including accounts payable automation, debit and credit card processing, virtual credit card processing, ACH processing and other electronic payment acceptance solutions) that enable REPAY’s clients to collect payments from or send payments to other businesses. The strategic vertical markets served within the Business Payments segment primarily include retail automotive, education, field services, governments and municipalities, healthcare, media, homeowner association management and hospitality.
Segment Revenue, Gross Profit, and Gross Profit Margin | ||||||||||||||||||||
|
| Three Months Ended September 30, |
|
|
| Nine Months Ended September 30, |
|
| ||||||||||||
($ in thousands) |
| 2024 |
| 2023 |
| % Change |
| 2024 |
| 2023 |
| % Change | ||||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Consumer Payments |
| $ | 69,189 |
|
| $ | 68,720 |
|
| 1% |
| $ | 214,617 |
|
| $ | 204,622 |
|
| 5% |
Business Payments |
|
| 15,297 |
|
|
| 9,704 |
|
| 58% |
|
| 35,566 |
|
|
| 28,170 |
|
| 26% |
Elimination of intersegment revenues |
|
| (5,341 | ) |
|
| (4,104 | ) |
|
|
|
| (15,412 | ) |
|
| (12,152 | ) |
|
|
Total revenue |
| $ | 79,145 |
|
| $ | 74,320 |
|
| 6% |
| $ | 234,771 |
|
| $ | 220,640 |
|
| 6% |
Gross profit (1) |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Consumer Payments |
| $ | 54,889 |
|
| $ | 53,599 |
|
| 2% |
| $ | 170,026 |
|
| $ | 159,929 |
|
| 6% |
Business Payments |
|
| 12,013 |
|
|
| 7,188 |
|
| 67% |
|
| 27,077 |
|
|
| 20,421 |
|
| 33% |
Elimination of intersegment revenues |
|
| (5,341 | ) |
|
| (4,104 | ) |
|
|
|
| (15,412 | ) |
|
| (12,152 | ) |
|
|
Total gross profit |
| $ | 61,561 |
|
| $ | 56,683 |
|
| 9% |
| $ | 181,691 |
|
| $ | 168,198 |
|
| 8% |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total gross profit margin (2) |
| 78 | % |
| 76 | % |
|
|
| 77 | % |
| 76 | % |
|
| ||||
(1) | Gross profit represents revenue less costs of services (exclusive of depreciation and amortization). |
(2) | Gross profit margin represents total gross profit / total revenue. |
2024 Outlook Update
“REPAY’s solid year-to-date results gives us the confidence in double-digit Adjusted EBITDA growth and accelerating Free Cash Flow Conversion,” said Tim Murphy, CFO of REPAY. “We are updating our reported Free Cash Flow Conversion target from approximately 60% to approximately 65% as we benefited from a one-time net working capital impact during the year. Our focus in 2024 remains on profitable growth and reducing overall capex spending to achieve our targeted Free Cash Flow Conversion.”
REPAY updated its outlook for full year 2024, as shown below.
| Full Year 2024 Outlook |
Revenue | $314 - 320 million |
Gross Profit | $245 - 250 million |
Adjusted EBITDA | $139 - 142 million |
Free Cash Flow Conversion (1) | ~ 65% |
(1) | Free Cash Flow Conversion represents Free Cash Flow / Adjusted EBITDA. Free Cash Flow and Adjusted EBITDA are non-GAAP financial measures. See “Non-GAAP Financial Measures” and the reconciliation of Free Cash Flow and Adjusted EBITDA to their most comparable GAAP measure provided below for additional information. |
REPAY does not provide quantitative reconciliation of forward-looking, non-GAAP financial measures, such as forecasted 2024 Adjusted EBITDA and Free Cash Flow Conversion, to the most directly comparable GAAP financial measure, because it is difficult to reliably predict or estimate the relevant components without unreasonable effort due to future uncertainties that may potentially have a significant impact on such calculations, and providing them may imply a degree of precision that would be confusing or potentially misleading.
Conference Call
REPAY will host a conference call to discuss third quarter 2024 financial results today, November 12, 2024 at 5:00 pm ET. Hosting the call will be John Morris, CEO, and Tim Murphy, CFO. The call will be webcast live from REPAY’s investor relations website at https://investors.repay.com/investor-relations. The conference call can also be accessed live over the phone by dialing (877) 407-3982, or for international callers (201) 493-6780. A replay will be available one hour after the call and can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers; the conference ID is 13748834. The replay will be available at https://investors.repay.com/investor-relations.
Non-GAAP Financial Measures
This report includes certain non-GAAP financial measures that management uses to evaluate the Company’s operating business, measure performance, and make strategic decisions. Adjusted EBITDA is a non-GAAP financial measure that represents net income prior to interest expense, tax expense, depreciation and amortization, as adjusted to add back certain charges deemed to not be part of normal operating expenses, non-cash charges and/or non-recurring charges, such as gain on debt extinguishment, loss on business disposition, non-cash impairment loss, non-cash change in fair value of assets and liabilities, share-based compensation charges, transaction expenses, restructuring and other strategic initiative costs and other non-recurring charges. Adjusted Net Income is a non-GAAP financial measure that represents net income prior to amortization of acquisition-related intangibles, as adjusted to add back certain charges deemed to not be part of normal operating expenses, gain on debt extinguishment, loss on business disposition, non-cash impairment loss, non-cash charges and/or non-recurring charges, such as loss on business disposition, non-cash change in fair value of assets and liabilities, share-based compensation expense, transaction expenses, restructuring and other strategic initiative costs, other non-recurring charges, non-cash interest expense and net of tax effect associated with these adjustments. Adjusted Net Income is adjusted to exclude amortization of all acquisition-related intangibles as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Management believes that the adjustment of acquisition-related intangible amortization supplements GAAP financial measures because it allows for greater comparability of operating performance. Although REPAY excludes amortization from acquisition-related intangibles from its non-GAAP expenses, management believes that it is important for investors to understand that such intangibles were recorded as part of purchase accounting and contribute to revenue generation. Adjusted Net Income per share is a non-GAAP financial measure that represents Adjusted Net Income divided by the weighted average number of shares of Class A common stock outstanding (on an as-converted basis assuming conversion of the outstanding units exchangeable for shares of Class A common stock) for the three and nine months ended September 30, 2024 and 2023 (excluding shares subject to forfeiture). Organic gross profit growth is a non-GAAP financial measure that represents year-on-year gross profit growth that excludes incremental gross profit attributable to acquisitions and divestitures made in the applicable prior period or any subsequent period. Free Cash Flow is a non-GAAP financial measure that represents net cash flow provided by operating activities less total capital expenditures. Free Cash Flow Conversion represents Free Cash Flow divided by Adjusted EBITDA. REPAY believes that Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per share, organic gross profit growth, Free Cash Flow and Free Cash Flow Conversion provide useful information to investors and others in understanding and evaluating its operating results in the same manner as management. However, these non-GAAP financial measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income, operating profit, net cash provided by operating activities, or any other operating performance measure calculated in accordance with GAAP. Using these non-GAAP financial measures to analyze REPAY’s business has material limitations because the calculations are based on the subjective determination of management regarding the nature and classification of events and circumstances that investors may find significant. In addition, although other companies in REPAY’s industry may report measures titled as the same or similar measures, such non-GAAP financial measures may be calculated differently from how REPAY calculates its non-GAAP financial measures, which reduces their overall usefulness as co