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RH

Repay Holdings Corp (RPAY)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 printed revenue of $77.3M, gross profit of $58.7M, GAAP net loss of $(8.2)M, Adjusted EBITDA of $33.2M, and Adjusted EPS of $0.22; gross profit margin held at 76% while Adjusted EBITDA margin was ~43% .
  • Business Payments strength (+7% reported GP YoY; +12% normalized) offset Consumer Payments softness (−5% GP YoY) amid three 2024 client losses; management emphasized normalized growth would have been low-single digits absent these losses .
  • 2025 outlook introduced: sequential acceleration in normalized gross profit with Q4 growth high-single digit to low double-digit and free cash flow conversion >50% in Q2 and >60% by Q4; strategic review concluded and buyback authorization raised to $75M (from $50M) with ~$61.2M remaining capacity .
  • Street context: Q1 revenue modestly beat consensus while EPS was essentially in line; note Street “EBITDA Consensus Mean” refers to EBITDA (not company “Adjusted EBITDA”) and should be interpreted cautiously for comparability. Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • Business Payments normalized gross profit growth of ~12% YoY driven by AP strength, new enterprise ramps, and monetization (enhanced ACH, float income); supplier network expanded ~40% YoY to ~390,000 .
  • Adjusted EBITDA margin held at ~43% despite top-line pressure, reflecting disciplined OpEx management and sales/implementation investments contributing to late-2025 acceleration .
  • Capital allocation catalysts: strategic review concluded with a pivot to organic growth and buyback authorization increased to $75M, underscoring Board conviction in cash generation and valuation .
    • “We believe the reported first quarter growth rates do not fully reflect our underlying business trends... our 2025 outlook includes sequential quarterly normalized gross profit growth...” — John Morris, CEO .

What Went Wrong

  • Reported and normalized gross profit declined 5% and 4% YoY respectively, primarily from previously announced client losses and Q1 one-time working capital effects that hit free cash flow conversion (−24%) .
  • Consumer Payments gross profit fell ~5% YoY; automotive and ARM verticals remained pressured, with headwinds from affordability and ARM recovery delays (not seeing rebound yet) .
  • Free cash flow was $(8.0)M in Q1 due to ~$16M reversal/timing in working capital and ~$(3)M client loss impact; management expects cadence to normalize and accelerate through 2025 .

Financial Results

MetricQ3 2024Q4 2024Q1 2025Q1 2025 Consensus*
Revenue ($USD Millions)$79.1 $78.3 $77.3 $75.7*
Gross Profit ($USD Millions)$61.6 $59.7 $58.7 —
Gross Profit Margin (%)78% 76% 76% —
GAAP Diluted EPS ($)$0.03 $(0.05) $(0.09) —
Adjusted EPS ($)$0.23 $0.24 $0.22 $0.2195*
EBITDA ($USD Millions)$31.6 (GAAP) $21.5 (GAAP) $18.4 (GAAP) $33.0*
Adjusted EBITDA ($USD Millions)$35.1 $36.5 $33.2 —
Adjusted EBITDA Margin (%)~44% ~47% ~43% —
  • Values retrieved from S&P Global.*

Segment breakdown (Q1 2025 vs Q1 2024):

SegmentRevenue ($USD Thousands) Q1 2024Revenue ($USD Thousands) Q1 2025YoYGross Profit ($USD Thousands) Q1 2024Gross Profit ($USD Thousands) Q1 2025YoY
Consumer Payments$76,136 $71,942 (6%) $59,591 $56,709 (5%)
Business Payments$9,677 $10,988 14% $7,047 $7,557 7%
Elimination$(5,093) $(5,605) —$(5,093) $(5,605) —
Total$80,720 $77,325 (4%) $61,545 $58,661 (5%)

KPIs and operating metrics:

KPIQ1 2025Prior ReferenceYoY/Comment
AP Supplier Network~390,000 ~360,000 in Q4 2024 +~40% YoY
Integrated Software Partners (Total)283 280 in Q4 2024 +3 QoQ
Instant Funding Volume Growth~19% YoY ~34% YoY in Q4 2024 Healthy growth
Credit Unions (clients)343; +14 added 329 in Q4 2024 Continued expansion

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Normalized Gross Profit Growth (sequential)FY 2025None provided in Q4 2024 (strategic review ongoing) Sequential acceleration; Q4 2025 YoY high-single digit to low double-digit New
Free Cash Flow ConversionQ2 2025None provided >50% New
Free Cash Flow ConversionQ4 2025None provided >60% New
Share Repurchase AuthorizationOngoing$50M authorization [implied prior]Increased to $75M; ~$61.2M remaining capacity Raised

REPAY does not provide quantitative reconciliations for forward-looking non-GAAP measures (normalized GP growth and FCF conversion) due to uncertainty .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Strategic ReviewCEO evaluating options; positioning for 2025 Strategic review initiated; withholding 2025 outlook Review concluded; invest in organic growth; buybacks increased Pivot to organic execution; capital returns optionality
Consumer PaymentsNormalizing spend; enterprise wins; auto/mortgage initiatives Auto affordability/ARM softness; client losses timing Resiliency in nondiscretionary spend; bookings strong; 14 credit unions added Bookings ramping; gradual improvement; lapping client losses by H2
Business Payments (AP/TotalPay)Strong growth; political media tailwind; supplier network expansion 60% GP growth; strategic migration to TotalPay; AR softness +12% normalized GP growth; monetization via enhanced ACH/float; 390k suppliers Monetization playbook scaling; election tailwind rolled off
Monetization (Paid ACH/Virtual Card)Embedding payables in ISVs; partnerships (Mastercard) Promoting paid ACH vs virtual card; enablement to optimize rails Emphasizing enhanced ACH and float income expansion Expanding mix; improving unit economics
Macro/TariffsConsumer normalization; affordability pressures Continued auto/ARM softness Watching tariff-driven inflation; nondiscretionary spend resilient YTD Monitoring; cautious near-term
Technology/PartnershipsWorth AI KYB, ISV integrations (Otelier, Blackbaud) Enterprise software embedding; mortgage debit acceptance live 283 partners; large new clearing/settlement ISV; expanding integrations Broadening embedded footprint

Management Commentary

  • “Our Business Payments segment normalized gross profit growth accelerated to 12% year-over-year... the success of recent monetization efforts.” — John Morris, CEO .
  • “We believe the reported first quarter growth rates do not fully reflect our underlying business trends... our 2025 outlook includes sequential quarterly normalized gross profit growth... and free cash flow conversion accelerating throughout the year.” — John Morris, CEO .
  • “Q1 adjusted EBITDA was $33.2 million, representing approximately 43% adjusted EBITDA margins... demonstrates our disciplined approach to managing operating expenses while still being able to invest.” — Tim Murphy, CFO .
  • “In light of the prevailing macro uncertainty, the Board has decided to conclude the strategic review process at this time.” — John Morris, CEO .
  • “The share repurchase program... up to $75 million... there remains approximately $61.2 million in capacity.” — Company press release .

Q&A Highlights

  • Capital allocation: Management will prioritize organic growth investments, opportunistic buybacks when price is “disconnected,” and maintain liquidity to address 2026 convert; tuck-in M&A is lower priority .
  • Guidance cadence: Normalized gross profit expected low-single digit in Q2, higher in Q3, and high-single digit to low-double digit exiting Q4 (midpoint framing); Adjusted EBITDA trajectory should mirror gross profit .
  • Client losses impact: ~600 bps drag in Consumer and ~12 points in Business; absent losses, Q1 growth would have been low-single digits .
  • TotalPay migration: Largely stabilized; migration aimed at monetizing total payment volume across paid ACH and virtual card .
  • Macro tone: Nondiscretionary consumer payments resilient; watching potential tariff-driven inflation; similar trends into Q2 .

Estimates Context

  • Q1 2025: Revenue $77.3M vs consensus $75.7M (modest beat); Primary EPS $0.22 vs consensus $0.2195 (in line); S&P “EBITDA Consensus Mean” targets EBITDA, whereas company highlights “Adjusted EBITDA” ($33.2M), so comparisons require care. Values retrieved from S&P Global.*
  • Forward look: Street models Q3–Q4 2025 revenue in the ~$76.8–$76.9M range and EPS ~0.21, with EBITDA ~$31.0–$32.9M, suggesting a cautious trajectory ahead of management’s H2 acceleration plan. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Mix shift and monetization in Business Payments are working (normalized +12% YoY) despite client attrition; supplier network scale and enhanced ACH should continue to drive unit economics and margin resilience .
  • Near-term Consumer softness persists (auto, ARM), but enterprise wins, mortgage debit acceptance rollouts, and credit union expansion underpin H2 acceleration; lapping 2024 client losses improves comps in H2 .
  • Free cash flow conversion should normalize and accelerate (>50% in Q2, >60% by Q4) after Q1 working capital reversal; watch quarterly cadence to validate execution .
  • Strategic review conclusion removes overhang and sharpens focus on organic growth; increased buyback authorization ($75M) adds a valuation support lever .
  • Earnings quality: Company metrics emphasize non-GAAP (Adjusted EBITDA, Adjusted EPS) and “normalized” GP excluding cyclical political media; track GAAP vs non-GAAP deltas and one-time items (TRA fair value changes) to assess underlying trends .
  • Trading setup: Near-term prints may remain mixed until H2; catalysts include enterprise go-lives, business payments monetization, and evidence of sequential normalized GP growth (watch Q2/Q3 trend vs management cadence) .
  • Balance sheet/liquidity: ~$165M cash and $250M revolver support buybacks and 2026 convert management while net leverage ~2.5x; monitor capital allocation pacing and convert strategy .

Sources

  • REPAY Q1 2025 press release and financials .
  • REPAY Q1 2025 earnings call transcript .
  • Buyback authorization press release (increase to $75M) .
  • Q4 2024 press release and call for prior-period context .
  • Q3 2024 press release and call for trend analysis .

Note: Where consensus estimates are shown, values retrieved from S&P Global.*