• Q4 Revenue: $78.3 million, a 3% increase year over year.
• Full-Year Revenue Growth: 6% increase year over year.
• Q4 Gross Profit Growth: 2% year over year.
• Consumer Payments Segment Gross Profit: Declined 5% in Q4; grew 3% for the full year.
• Business Payments Segment Gross Profit: Grew 60% in Q4; 40% for the full year.
• Q4 Adjusted EBITDA: $36.5 million, representing 9% growth.
• Full-Year Adjusted EBITDA Growth: 11% increase.
• Q4 Adjusted EBITDA Margin: Approximately 47%.
• Full-Year Adjusted EBITDA Margin: Approximately 45%.
• Q4 Adjusted Net Income: $22.4 million or $0.24 per share.
• Q4 Free Cash Flow: $23.5 million, representing 64% conversion.
• Full-Year Free Cash Flow Conversion: 75%.
• Cash and Liquidity: $190 million cash on balance sheet; $440 million total liquidity.
• Net Leverage: Approximately 2.3 times with total outstanding debt of $507.5 million.

• Warning! GuruFocus has detected 2 Warning Sign with RPAY.

Release Date: March 03, 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 9% increase in adjusted EBITDA and improved free cash flow conversion to 64% in Q4 2024.
• The Business Payments segment saw a significant gross profit growth of 60% year over year in Q4.
• RPAY added four new software partnerships in Q4, bringing the total to 180, which strengthens their sales pipeline.
• The company successfully integrated its payment technology into multiple core financial institution and credit union software systems, adding 16 new credit union clients.
• RPAY's instant funding product experienced a 34% year-over-year increase in transaction volumes, indicating strong demand and potential for future revenue streams.

Negative Points

• The Consumer Payments segment experienced a 5% decline in gross profit during Q4, partially due to client losses and strategic migrations.
• RPAY faced challenges in the auto and ARM sectors, with continued softness impacting consumer payments growth.
• The company experienced client attrition, including a significant client moving transaction processing in-house and others being acquired by competitors.
• RPAY's strategic review process has led to a lack of specific guidance for 2025, creating uncertainty for investors.
• The company is dedicating fewer resources to the AR segment, which has shown softness, to focus on AP growth opportunities.

Q & A Highlights

Q: Are you seeing any changes in the drivers of client attrition, and is this a period where you're seeing more attrition than usual? A: John Morris, CEO: No major changes are observed. Two clients were acquired, one in the consumer side and one in business payments, which were beyond our control. The third client brought their transaction processing in-house. We don't see any trend associated with these events.

Q: Can you elaborate on the pockets of consumer softness you mentioned in your consumer payments performance? A: Timothy Murphy, CFO: The softness is related to ongoing challenges in the auto space, such as used car sales and affordability, and the ARM recovery, which has not materialized as anticipated. These are continuations of previous trends.

Q: How should we think about the growth trend for 2025, especially in the Business Payments segment? A: Timothy Murphy, CFO: Excluding client losses and strategic migrations, the growth rate is expected to be similar to the mid- to high-single digits seen in early 2024. Core AP is growing in the low- to mid-teens, and we are focusing more on AP than AR.

Q: What led to the decision to conduct a strategic review, and how should we view progress from the outside? A: John Morris, CEO: The strategic review, supported by the Board, aims to evaluate all aspects of the company to drive shareholder value. This includes reviewing go-to-market strategies, capital allocation, and strategic alternatives like M&A. We are committed to a positive outcome for shareholders.

Q: Can you explain the strategic shift in TotalPay volume migration and its impact on B2B payments results? A: Timothy Murphy, CFO: We migrated certain clients to our TotalPay solution to monetize total payment volume, which led to some volume loss. This strategic move aims to capture future monetization opportunities by offering both virtual cards and paid ACH.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.