Alexander Neumann

Alex Neumann from Stephens Inc. asked for help in sizing the ARR and backlog from recent customer signings to better understand the outlook for future software revenue growth.

Answer

CEO James Kelly highlighted that software ARR has grown from ~$700M in 2023 to nearly $800M today and expects 'explosive growth' with the launch of the new Voyix POS. Retail President Darren Wilson and Restaurants President Benny Tadele added that the mix is shifting to recurring revenue and multifaceted deals that include high-value add-ons, which lifts overall ARR.

Alexander Neumann of Stephens Inc. inquired about any recent underwriting trends observed within REPAY's consumer end markets and the potential impact on payment volumes and penetration rates.

Answer

CEO John Morris reiterated that the company is not seeing any specific changes in underwriting trends from Q1 into Q2. He pointed to the company's positive outlook for accelerating growth in the second half of the year, driven by new client wins, implementations, and lapping prior client losses, as a sign of underlying business health.

Alexander Neumann inquired about the drivers behind the 24% growth in instant funding and its revenue contribution to Consumer Payments. He also asked about the company's current M&A strategy, valuation environment, and potential areas of interest.

Answer

CEO John Morris attributed instant funding growth to its use in personal loan funding via Visa Direct and Mastercard Send, noting a healthy pipeline despite lapping a large client win. CFO Tim Murphy added that non-card products are about 20% of total revenue, with significant upside as less than 10% of personal lenders currently use the instant funding product. On M&A, John Morris noted increased market activity and normalizing valuations, with a focus on embedded payments. Tim Murphy reiterated a balanced capital allocation strategy focused on organic growth, tuck-in M&A, and share buybacks while managing leverage.