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RH

Repay Holdings Corp (RPAY)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue of $75.6M (+1% YoY) and gross profit of $57.2M (-2% YoY); Adjusted EBITDA was $31.8M with 71% free cash flow conversion, while GAAP net loss was $(108.0)M due to a non-cash $103.8M goodwill impairment primarily in Consumer Payments .
  • Both revenue and adjusted EPS modestly beat S&P Global consensus: revenue $75.6M vs $73.5M*, EPS $0.20 vs $0.194*; beats reflect resilience in Consumer Payments and normalization of political media effects in Business Payments .
  • 2025 outlook reiterated: sequential acceleration in normalized gross profit growth with Q4 expected high-single to low double-digit YoY, and FCF conversion >60% by Q4; management emphasized progress on go-to-market, implementation pipelines, and operational efficiency .
  • Capital allocation was a key catalyst: REPAY repurchased ~4.8M shares (~5% of outstanding) for $22.6M in Q2, and reported net leverage of ~2.5x with $163M cash at quarter-end .

What Went Well and What Went Wrong

What Went Well

  • Free cash flow conversion improved to 71% in Q2, aided by operating cash flow of $33.1M and disciplined capex, supporting liquidity and capital returns .
  • Consumer Payments was resilient: revenue +2% YoY and gross profit approximately flat YoY, with margin benefits from processing cost optimization and strategic initiatives .
  • Strategic and commercial momentum: software integrations reached 286, AP supplier network expanded to 440,000+ (+~47% YoY), instant funding volume +~38% YoY; “building momentum from our strategic initiatives to accelerate growth exiting the year” (CEO) .

What Went Wrong

  • Business Payments gross profit declined 5% YoY as reported (normalized +1% YoY) given lapping 2024 political media and a previously disclosed client loss; total company gross profit declined 2% YoY .
  • Reported GAAP results were impacted by a non-cash goodwill impairment of $103.8M largely in Consumer Payments, triggered by share price decline and changes in discount rate and comps, driving $(108.0)M net loss .
  • Adjusted EBITDA fell 6% YoY to $31.8M, reflecting gross profit pressure and client attrition headwinds; normalized gross profit growth was slightly negative overall .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$74.9 $77.3 $75.6
Gross Profit ($USD Millions)$58.6 $58.7 $57.2
Gross Profit Margin %78% 76% 76%
GAAP Net (Loss) Income ($USD Millions)$(4.2) $(8.2) $(108.0)
GAAP Diluted EPS ($USD)$(0.04) $(0.09) $(1.15)
Adjusted EBITDA ($USD Millions)$33.7 $33.2 $31.8
Adjusted Net Income ($USD Millions)$21.8 $20.3 $19.1
Adjusted EPS ($USD)$0.22 $0.22 $0.20
Free Cash Flow ($USD Millions)$19.3 $(8.0) $22.6

Estimates vs Actual (Q2 2025):

MetricEstimateActualSurprise
Revenue ($USD Millions)$73.48*$75.63 +$2.14*
Adjusted/Normalized EPS ($USD)$0.194*$0.20 +$0.006*

Values with asterisks (*) retrieved from S&P Global.

Segment breakdown:

Segment Metric ($USD Thousands)Q2 2024Q2 2025
Consumer Payments Revenue69,292 70,474
Business Payments Revenue10,592 10,945
Elimination of Intersegment Revenue(4,978) (5,793)
Total Revenue74,906 75,626
Consumer Payments Gross Profit55,546 55,429
Business Payments Gross Profit8,017 7,586
Elimination of Intersegment(4,978) (5,793)
Total Gross Profit58,585 57,222
Total Gross Profit Margin %78% 76%

KPIs:

KPIQ1 2025Q2 2025
Software Partners (count)283 286
AP Supplier Network (count)390,000+ 440,000+
Instant Funding Volumes (YoY)+~19% +~38%
Credit Union Clients (count)343 353
Share Repurchases (Qtr)—~4.8M shares; $22.6M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Normalized Gross Profit Growth YoYQ4 2025High-single to low double-digit High-single to low double-digit reiterated Maintained
Sequential Acceleration in Normalized GrowthFY 2025Sequential quarterly acceleration Sequential quarterly acceleration reiterated Maintained
Free Cash Flow ConversionQ4 2025>60% by Q4 >60% by Q4 reiterated Maintained
Free Cash Flow ConversionQ2 2025>50% expected Achieved 71% actual Raised (actual beat guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Capital allocation & buybacksStrategic review announced; strong FCF conversion in 2024 (75%) Repurchased ~5% shares in Q2; focus on liquidity, vendor negotiations More aggressive buybacks; disciplined liquidity
Business Payments (AP/TotalPay)AP network ramp (+38% YoY suppliers in Q4’24); AP-led growth Continued AP scale (+~47% YoY suppliers); TotalPay monetization progress discussed on call Expansion and monetization progressing
Consumer Payments demandMixed: client roll-offs in Q4’24; gross profit down ~5% Resilient in auto, personal loans, credit unions, mortgage servicing; pockets of consumer softness Stabilizing; selective softness
Political media impactQ4’24 benefited Business Payments (60% GP growth) Lapping political media drove YoY declines; normalized growth positive in BP (+1%) Normalization; reduced tailwind
Client losses/attritionQ1’25: normalized GP down (4%); disclosed client losses ~3 pts GP growth headwind from one-off losses; BP ~10 pts headwind Headwinds fading by H2
Leverage and convertsUpsized revolver (July 2024); converts outstanding Net leverage ~2.5x; cash $163M; debt detail including 2026/2029 notes Manageable leverage; flexibility
CFO transitionTim Murphy stepping down; interim CFO in Q2 CFO process update on call; appointment of Robert S. Houser effective Sept 8 Transition underway; permanent CFO named

Management Commentary

  • “We began to deploy incremental strategic investments into our growth opportunities, while sequentially improving Free Cash Flow Conversion to over 71%... building momentum from our strategic initiatives to accelerate growth exiting the year.” — John Morris, CEO .
  • Call emphasis: three topics — Q2 review, outlook/capital allocation priorities, and CFO process; commitment to profitable growth and strong FCF generation .
  • Balance sheet/Liquidity: Net leverage ~2.5x with $163M cash; revolver capacity provides flexibility for maturities and potential M&A .

Q&A Highlights

  • Guidance confidence: Management expects sequential improvement in normalized growth through Q3, with Q4 high-single to low double-digit normalized growth as client losses are lapped .
  • TotalPay monetization: Progress noted; growing gross TPV across payables and expanding monetization avenues within AP (virtual card, enhanced ACH, checks) .
  • Segment mix and demand: BP mix ~60% AR / ~40% AP; consumer softness pockets noted, with resilience in auto, personal loans, credit unions, mortgage servicing .
  • CFO process: Affirmed transition steps; later appointment of Robert S. Houser as CFO effective Sept 8 detailed in 8-K .

Estimates Context

  • Revenue and EPS beat: Actual revenue $75.6M vs consensus $73.5M*, Actual adjusted EPS $0.20 vs consensus $0.194*. Beats were modest and reflect stabilization in Consumer Payments and normalization in Business Payments (ex political media) .
  • Estimate participation: 7 revenue and 8 EPS estimates contributed to consensus*, suggesting reasonable coverage for a small/mid-cap. Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Modest beat on revenue and adjusted EPS, with FCF conversion well above prior guidance, underscores improving cash generation even as gross profit normalizes post-political media .
  • Non-cash goodwill impairment distorts GAAP results but does not impact liquidity or cash generation; focus should remain on normalized growth trajectory and FCF .
  • Consumer Payments is stabilizing; Business Payments normalized GP growth turned positive ex-political media; watch for acceleration into Q3/Q4 as client loss headwinds fade .
  • Capital returns accelerating (repurchased ~5% of shares in Q2); with net leverage ~2.5x and ample liquidity, REPAY retains optionality for buybacks, debt management, and selective M&A .
  • Near-term trading: stock likely reacts to improved FCF and reiterated growth outlook versus impairment headline; monitor execution on TotalPay monetization and AP supplier network scaling .
  • Medium-term thesis: secular digitization tailwinds, deeper ISV integrations, and pipeline strength position REPAY for resumed growth exiting 2025 with expanding cash conversion .
  • Risks: macro/consumer softness pockets, competitive dynamics, and execution on CFO transition; political media laps continue to affect YoY optics in BP until fully normalized .