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Triumph Financial, Inc. (TFIN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 diluted EPS was $0.13 and net income to common was $3.0 million; net interest income was $87.8 million and noninterest income was $15.8 million .
  • Payments segment achieved its best EBITDA margin to date at 8.6%, with invoices processed up 8.1% q/q and total payment volume up 7.5% q/q; TriumphPay’s quarterly run-rate revenue reached $60.1 million, and network engagement was ~48.7% in brokered TL, with the company crossing 50% after year-end .
  • Factoring operating margin improved to 23.7% (from 21.0% in Q3), with purchased volume +5.3% q/q and average transportation invoice size up 2.5% q/q .
  • Management guided Q1 2025 expenses to ~$99 million and warned Q1 earnings may be lower given seasonal trucking weakness and investment timing; each 25 bps rate cut would reduce quarterly consolidated net interest income by $0.5–$1.0 million .
  • Near-term stock catalysts: continued Payments density gains (management now targets 60–65% brokered TL market share in 2025), CHRW FaaS/LoadPay rollout (material revenue expected in H2 2025), and proof points on Intelligence monetization following the ISO acquisition .

What Went Well and What Went Wrong

What Went Well

  • “We believe that more than 50% of all brokered freight transactions touch our network,” with annualized network engagement ~$53.6B in Q4 and crossing 50% after year-end; Payments’ EBITDA margin was positive and best ever at 8.6% .
  • Factoring operating margin rose to 23.7% with operating income up $1.1 million q/q, supported by seasonal normalization and lower funding costs; purchased volume +5.3% q/q .
  • Cost of funds improved: Q4 cost of total funds was 1.41%, and full-year cost of funds was 1.51%, “better than almost any banking peer” (management) .

What Went Wrong

  • Credit costs remained elevated: Liquid Credit drove $2.8 million (62%) of quarterly credit expense, equipment finance was the largest share of NPAs, and NPA/Assets rose to 2.02% vs. 1.42% a year ago .
  • Network transactions and payment volumes on the network declined q/q due to the exit of a tier-1 factor; Network invoices -14.3% q/q and network payment volume -13.2% q/q (still up y/y) .
  • Management cautioned Q1 2025 earnings could decline from Q4 as investments outpace near-term revenue and seasonal freight weakness persists; Q1 expenses guided to ~$99 million .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Diluted EPS ($)$0.37 $0.08 $0.19 $0.13
Net Income to Common ($mm)$8.825 $1.945 $4.546 $3.036
Net Interest Income ($mm)$91.919 $87.915 $88.699 $87.807
Noninterest Income ($mm)$14.230 $17.167 $17.497 $15.751
Net Interest Margin (%)7.55% 7.07% 6.81% 6.65%

Segment and operating metrics:

Segment/KPIQ4 2023Q2 2024Q3 2024Q4 2024
Factoring Total Revenue ($mm)$38.683 $37.073 $37.939 $38.212
Factoring Operating Margin (%)22.45% 12.48% 20.99% 23.67%
Accounts Receivable Purchased ($mm)$2,570.442 $2,542.327 $2,610.177 $2,747.351
Avg Transportation Invoice ($)$1,781 $1,738 $1,724 $1,767
Payments Total Revenue ($mm)$12.937 $13.862 $14.873 $15.031
Payments EBITDA Margin (%)0.3% (10.0)% 0.5% 8.6%
Invoices Processed (#)5,703,740 6,062,779 6,278,246 6,788,408
Payments Processed ($mm)$6,217.323 $6,687.587 $7,091.493 $7,625.735
Network Invoice Volume (#)442,353 701,768 661,628 567,258
Network Payment Volume ($mm)$740.048 $1,133.118 $1,063.228 $922.927

Balance-sheet and operating KPIs:

KPIQ4 2023Q2 2024Q3 2024Q4 2024
Loans Held for Investment ($mm)$4,163,100 $4,288,417 $4,332,967 $4,546,960
Deposits ($mm)$3,977,478 $4,392,018 $4,706,694 $4,820,820
ROA (annualized, %)0.70% 0.19% 0.36% 0.26%
Yield on Loans (%)9.29% 9.10% 8.85% 8.48%
Cost of Total Funds (%)1.47% 1.62% 1.57% 1.41%
Nonperforming Assets / Total Assets (%)1.42% 1.60% 2.07% 2.02%

Note: Wall Street consensus estimates from S&P Global were unavailable due to data request limits; we could not compare actuals versus estimates at this time.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating ExpensesQ4 2024“Below $97 million” (Q4) Q1 2025 approximately $99 million Raised
Earnings TrajectoryQ1 2025“Do not expect Q1 2025 earnings to be great” Q1 earnings may be lower than Q4 2024 Lowered
Payments Market ShareFY 2024/2025Target 50% brokered TL by YE 2024 Crossed 50% since YE; aim 60–65% by YE 2025 Raised
Net Interest Income Sensitivity2025Not previously specified−$0.5–$1.0 million per quarter for each 25 bps Fed rate cut New
CHRW Monetization Timing2025Majority of CHRW TL volume on network by Q3 2025 Material revenue expected in H2 2025; incremental earlier Timing refined
LoadPay Rollout & RevenueQ1 2025/H2 2025Broad launch Q1 2025 Beta continues; broader rollout in Q1; revenue de minimis until H2 2025 Timing refined

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
AI/ML Instant DecisionPilot; autonomous purchase decisions in seconds Scaled to 50% of small carriers; fewer disputes/chargebacks 100% of small carriers; 74.8% touch-free; 9-second approval Strengthening adoption/efficiency
Freight/MacroLongest freight recession; cautious Cautious near-term; no short-term turnaround Spot rates improved late Q4; Q1 seasonal pullback; loads per customer down y/y Gradual stabilization with caution
Payments Density~47% engagement ~48% engagement; CHRW onboarding began 48.7% in Q4; crossed 50% since YE; target 60–65% YE 2025 Rising density
LoadPayLimited launch; Q1 2025 broad rollout planned Beta progress and live weekend/holiday instant payments 216 accounts by Jan 17; 1.67% avg interchange in Q4 Ramping adoption/monetization
Intelligence SegmentNot yet announced—Established via ISO acquisition; >90% GM expected; revenue small in 2025 New initiative; early build
Credit QualityElevated in transport exposures Elevated; some asset quality deterioration Liquid Credit drove 62% of credit expense; equipment finance largest NPAs; CRE classified stable Elevated but managed
Cost of Funds—1.57% in Q3 1.41% in Q4; FY cost of funds 1.51% Improving

Management Commentary

  • “More than 50% of all brokered freight transactions touch our network… we expect to eclipse over $100 billion in payments through TriumphPay since inception” (CEO letter) .
  • “Payments segment… just had its best quarter ever based on [EBITDA]” with aspiration for 50% EBITDA margin at maturity .
  • “We expect full quarter expenses in Q1 of approximately $99 million… Q1 earnings may decline from current levels” .
  • “Each 25 basis point rate cut would reduce our consolidated quarterly net interest income by $0.5–$1.0 million” .
  • Intelligence: “Gross margins… should be higher than anything else we do” with ISO to expand scoring/benchmarking .
  • LoadPay: 192 accounts at YE; Q4 avg interchange 1.67%; 216 accounts by Jan 17; deposits decaying quickly but wallet use active .
  • Instant Decision: “74.8% pass through… approved in nine seconds” with fully touchless purchase for small carriers .

Q&A Highlights

  • Payments outlook: Management targets 60–65% brokered TL market share by YE 2025; expects continued EBITDA margin improvement; revenue from newer deals weighted to H2 2025 .
  • Intelligence monetization: Revenue expected to grow in 2025 but “won’t be meaningful” until the back end of 2026; >90% gross margins due to owned data and neutrality .
  • Expense trajectory: Starting from ~$99 million in Q1 2025, “very modest growth” (low to mid-single digits) for the year; increases largely compensation/ISO integration .
  • FaaS adoption and unit economics: Large-broker focus (CHRW first); average $1,600 invoice implies ~$35 revenue per invoice before allocations; aim to scale volumes without proportional people costs .
  • LoadPay adoption: Management views 5,000–10,000 active accounts by YE 2025 as a “really good start”; debit card average interchange ~1.9% in January to date .
  • Network volume: Q3 network decline driven by factor exit; management expects growth to resume Q4 2024 and through 2025 as CHRW ramps .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 (EPS and revenue) were unavailable due to data request limits; as a result, we cannot provide a beats/misses comparison to Wall Street at this time. Values would ordinarily be retrieved from S&P Global.*

Key Takeaways for Investors

  • Payments inflection emerging: Positive EBITDA with accelerating density; crossing 50% brokered TL engagement and targeting 60–65% in 2025 should support fee growth and margin expansion even before CHRW monetization appears in H2 2025 .
  • Factoring fundamentals improving: Higher operating margin and purchased volume with AI-driven Instant Decision now fully deployed for small carriers (touch-free 75% of invoices) underpins scalability and resilience .
  • Near-term earnings risk: Q1 2025 earnings likely lower amid seasonal trucking softness and front-loaded investments; plan for ~$99 million opex and some rate sensitivity on NII .
  • Intelligence optionality: ISO acquisition and data capabilities promise high-margin, scalable revenue streams; expect modest 2025 revenue with bigger impact beyond 2025 as offerings mature .
  • LoadPay traction: Early adoption and interchange metrics validate unit economics; distribution via factoring clients, select carriers, and broker partners provides a unique channel advantage .
  • Credit watchpoints: Liquid Credit and equipment finance remain focal points; NPAs elevated but collateral positions and CRE classification trends suggest managed risk .
  • Execution milestones to monitor: CHRW onboarding cadence, Payments fee growth and EBITDA margin progression, LoadPay active accounts, Intelligence product launches, and return to growth in network transactions .