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RH

Repay Holdings Corp (RPAY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered “another quarter of profitable growth”: Revenue $78.3M (+3% YoY), Gross Profit $59.7M (+2% YoY), Adjusted EBITDA $36.5M (+9% YoY), and Free Cash Flow $23.5M (64% conversion) .
  • Segment mix bifurcated: Business Payments Gross Profit +60% YoY on political media tailwinds; Consumer Payments Gross Profit −5% YoY due to specific client roll-offs and in‑house transitions .
  • Management initiated a comprehensive strategic review and refrained from providing a 2025 outlook, a potential stock catalyst depending on outcomes (M&A, sale/take-private, structural changes) .
  • Working capital timing boosted 2H’24 FCF by $25M ($20M in Q3, ~$5M in Q4); ~$20M expected to reverse in Q1 2025, normalizing conversion in forward periods .

What Went Well and What Went Wrong

What Went Well

  • Business Payments momentum: “gross profit grew 60% year-over-year” in Q4, supported by strong AP and political media, plus new enterprise wins (e.g., Fairview Health Services) .
  • Cash generation and margin discipline: Adjusted EBITDA grew ~9% YoY to $36.5M with ~47% margin (“approximately 47%”), and FCF conversion reached 64% (Q4) and 75% for FY 2024 .
  • Platform scale: AP supplier network surpassed 360,000 (+38% YoY), software partners reached 280, instant funding volumes +34% YoY; “We remain dedicated to delivering the best payment experience…” (CEO) .

What Went Wrong

  • Consumer softness and attrition: Management cited “pockets of consumer softness” in auto and ARM, plus RCS client roll-off (acquired), and a lending communications client moving in-house; impacts were isolated but notable .
  • Strategic migration impact: Shifting certain AP clients to TotalPay led to expected volume loss in the quarter to improve future monetization (paid ACH plus virtual card) .
  • No 2025 guidance: With the strategic review underway, management withheld FY25 outlook, limiting near-term visibility; ~$20M of working capital benefit expected to reverse in Q1 2025 .

Financial Results

Quarterly Key Financials (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$74.9 $79.1 $78.3
Gross Profit ($USD Millions)$58.6 $61.6 $59.7
Adjusted EBITDA ($USD Millions)$33.7 $35.1 $36.5
GAAP Diluted EPS ($USD)$(0.04) $0.03 $(0.05)
Adjusted EPS ($USD)$0.22 $0.23 $0.24
Gross Profit Margin (%)78% 78% 76%
Free Cash Flow ($USD Millions)$19.3 $48.8 $23.5
Free Cash Flow Conversion (%)57% 139% 64%

Q4 YoY Comparison (Q4 2024 vs Q4 2023)

MetricQ4 2023Q4 2024YoY
Revenue ($USD Millions)$76.0 $78.3 +3%
Gross Profit ($USD Millions)$58.7 $59.7 +2%
Adjusted EBITDA ($USD Millions)$33.5 $36.5 +9%
Gross Profit Margin (%)77% 76% −100 bps
GAAP Diluted EPS ($USD)$(0.80) $(0.05) NM
Free Cash Flow ($USD Millions)$21.8 $23.5 +8%

Segment Breakdown (Q4 2024 vs Q4 2023)

SegmentRevenue ($USD Thousands) Q4’23Revenue Q4’24YoYGross Profit ($USD Thousands) Q4’23Gross Profit Q4’24YoYGP Margin (%)
Consumer Payments$71,124 $66,349 −7% $56,168 $53,081 −5% N/A
Business Payments$9,850 $17,357 +76% $7,545 $12,069 +60% N/A
Elimination$(4,987) $(5,435) N/A$(4,987) $(5,435) N/AN/A
Total$75,987 $78,271 +3% $58,726 $59,715 +2% 76% (Q4’24)

KPIs and Operating Metrics (oldest → newest)

KPIQ2 2024Q3 2024Q4 2024
AP supplier network>300,000 >330,000 >360,000
Integrated software partners273 276 280
Instant funding volume YoY+21% +24% +34%
Credit union clients300 313 329

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD)FY 2024$314–$320M $314–$320M Maintained
Gross Profit ($USD)FY 2024$245–$250M $245–$250M Maintained
Adjusted EBITDA ($USD)FY 2024$139–$142M $139–$142M Maintained
Free Cash Flow Conversion (%)FY 2024~60% ~65% (updated) Raised
FY 2025 OutlookFY 2025N/ANo guidance provided due to strategic review Withheld

Notes: Reported FY 2024 FCF conversion ended at 75% after favorable working capital timing (~$25M) with ~$20M expected to reverse in Q1 2025 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Consumer macro (auto, ARM)Moderating consumer; tight lending; nondiscretionary spend emphasized “Pockets of consumer softness” persisted in auto and ARM Softness continuing
Political mediaExpected back-half benefit and ~20% growth vs 2022 cycle Strong contribution, lifting Business Payments GP +60% YoY Oct/Nov surge; non-recurring into 2025
Enterprise wins (auto captive, healthcare)Auto captive to go live, Grady Health signed and ramping Auto captive ramp ongoing; new enterprise wins including Fairview Health Ramping through 2025–2026
Mortgage debit acceptanceLive with select servicers; multiyear opportunity beginning 2025 Continues to ramp; not offsetting Q4 impacts yet Positive trajectory
AP monetization (TotalPay, paid ACH)Strategy to monetize total payment volume; supplier enablement Migrated certain AP clients to TotalPay; short-term volume loss for long-term monetization (paid ACH + VC) Longer-term mix shift
Platform scale and integrationsSupplier network >300K; 273–276 partners; ERP integrations growing Supplier network >360K; 280 partners Expanding
Capital structure/liquidityJuly 2029 converts, revolver upsized; net leverage ~2.7x Liquidity ~$440M; net leverage ~2.3x; two converts outstanding (2026: $220M 0%, 2029: $287.5M 2.875%) Improved leverage
Technology/dataEmbedding Worth AI for underwriting; RTP exploration Continued emphasis on enriched data and reconciliation; cyber/fraud value-add in B2B Advancing
Strategic reviewCEO evaluating value realization Formal strategic review announced; potential alternatives including M&A/take-private New catalyst

Management Commentary

  • “Q4 closed out the year with another quarter of profitable growth at REPAY… strong double digit Adjusted EBITDA growth and accelerating Free Cash Flow Conversion from 42% in 2023 to 75% in 2024.” – John Morris, CEO .
  • “With the Board’s support, we have commenced a comprehensive strategic review… including M&A, a sale or take private… and other structural changes… to enhance shareholder value.” – Company statement; reiterated on call .
  • “Consumer Payments growth was partially impacted… RCS client rolling off…, lapping contributions from a large personal lender in 2023, and a client loss within the lending communication solutions business moving in-house.” – John Morris .
  • “Q4 adjusted EBITDA was $36.5 million… margins ~47%… Fourth quarter adjusted net income was $22.4 million or $0.24 per share.” – Tim Murphy, CFO .
  • “Free cash flow benefited from… managing operating expenses and CapEx… favorably impacted by over $20 million in positive net working capital changes that we expect to reverse in Q1 2025.” – Tim Murphy .

Q&A Highlights

  • Attrition drivers: Three client losses largely tied to acquisitions and one in-house transition; no broader trend change observed .
  • Consumer softness: Continued headwinds in auto (used car affordability) and ARM (depressed volumes); normalization expected but timing uncertain .
  • Business Payments outlook: Core AP growing low-to-mid teens ex one-offs; AR emphasis reduced to focus on AP .
  • TotalPay migration mechanics: Strategic move from VC-only to TotalPay to monetize paid ACH and TPV; accepted short-term volume loss for longer-term economics .
  • FCF conversion normalization: Comparable conversion when stripping working capital impacts in both periods; CapEx as % of revenue declining supports sustained conversion .
  • Strategic review scope: Full range of alternatives; no further updates until completed .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 revenue and EPS was unavailable due to S&P Global request limits at the time of retrieval; as a result, beat/miss vs consensus cannot be quantified in this report [SPGI access error].
  • Directionally, results show YoY growth in revenue (+3%) and Adjusted EBITDA (+9%) with adjusted EPS $0.24, but we do not opine on Street comparison without S&P Global data .

Key Takeaways for Investors

  • Mix-driven quarter: Business Payments outperformed (political media), while Consumer Payments saw isolated attrition and macro softness; expect non-recurring media tailwind to roll off in 2025 .
  • Strong profitability and cash generation: Adjusted EBITDA margin ~47% and FCF conversion robust, but normalize for ~$25M working capital timing in 2H’24 with ~$20M reversal in Q1’25 .
  • Strategic review is a catalyst: Potential outcomes (M&A, sale/take-private, structural changes) could reshape valuation; lack of FY25 guidance increases event risk/optionality .
  • Monetization strategy in AP: TotalPay migration and paid ACH enhance economics over time; expect near-term noise with longer-term accretion as TPV capture improves .
  • 2025 growth drivers: Auto captive ramp, mortgage debit acceptance rollout, enterprise software partnerships (e.g., Blackbaud) underpin medium-term growth trajectory .
  • Balance sheet flexibility: $190M cash and $250M undrawn revolver ($440M liquidity), net leverage ~2.3x; maturities staggered across 2026 and 2029 convertibles .
  • Trading lens: Watch Q1 2025 for working capital reversal impact on FCF; monitor strategic review headlines; assess sustainability of AP growth as political tailwinds fade and TotalPay mix shifts .

Sources

  • Q4 2024 Earnings Press Release (Full Year results, segment detail, reconciliations, balance sheet/cash flow):
  • Q4 2024 Earnings Call Transcript (prepared remarks, Q&A):
  • Q3 2024 Press Release and Transcript (trend analysis):
  • Q2 2024 Press Release and Transcript (trend analysis):
  • Investor presentation 8-K references (FCF timing detail):
  • Pre-announcement press release (call details):