Earnings call transcript: Repay Holdings misses Q2 2025 EPS forecast

Repay Holdings Corp (RPAY) reported its Q2 2025 earnings, revealing a significant miss on earnings per share (EPS) expectations, with an actual EPS of -$1.15 compared to the forecast of $0.20. Despite this, the company’s revenue slightly surpassed expectations, coming in at $75.62 million against a forecast of $73.57 million. The stock saw a 4.08% increase during the regular session but dropped 1.75% in after-hours trading. According to InvestingPro analysis, RPAY is currently trading below its Fair Value, suggesting potential upside opportunity despite recent challenges. The company maintains strong liquidity with a current ratio of 3.71, indicating solid short-term financial health.

Key Takeaways

• Repay Holdings missed EPS expectations with a significant negative surprise.
• Revenue exceeded forecasts with a modest year-over-year increase.
• Stock price increased during regular trading but declined after hours.
• The company highlighted strong performance in digital payment flows.
• Strategic investments in sales and operational efficiency were emphasized.

Company Performance

Repay Holdings reported a mixed performance for Q2 2025. While revenue saw a slight increase of 1% year-over-year, gross profit declined by 2%. The company emphasized its focus on enhancing its product offerings and operational efficiency, which included investments in enterprise sales and customer support teams. Repay’s strong positioning in payment technology was highlighted, with continued growth in its supplier network. InvestingPro data reveals the company maintains a robust gross profit margin of 77.03%, though it hasn’t been profitable over the last twelve months. InvestingPro subscribers have access to 8 additional key insights about RPAY’s financial health and growth prospects.

Financial Highlights

• Revenue: $75.62 million, up 1% year-over-year
• Adjusted EBITDA: $31.8 million, with a 42% margin
• Adjusted net income: $19.1 million, $0.20 per share
• Free cash flow: $22.6 million, with a 71% cash flow conversion
• Cash on balance sheet: $163 million
• Total liquidity: $413 million

Earnings vs. Forecast

Repay Holdings’ EPS of -$1.15 was a stark deviation from the forecasted $0.20, representing a negative surprise of 675%. This miss contrasts sharply with the company’s historical trend, which typically aligns more closely with analyst expectations. In contrast, revenue slightly exceeded forecasts, with a 2.79% positive surprise.

Market Reaction

The stock of Repay Holdings closed the regular trading session with a 4.08% increase, reflecting some investor optimism. However, the after-hours session saw a decline of 1.75%, likely due to the EPS miss. The stock’s current price is $5.06, compared to its 52-week high of $9.75 and low of $3.59, indicating ongoing volatility. InvestingPro analysis shows the stock has experienced a significant -26.07% decline over the past six months, though analyst consensus remains bullish with a target range of $4.50 to $12.00. For comprehensive analysis of RPAY’s valuation and future prospects, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

Looking forward, Repay Holdings expects sequential quarterly normalized gross profit growth, with projections of high single-digit to low double-digit growth in Q4. The company remains focused on capital allocation priorities, including organic growth and strategic mergers and acquisitions.

Executive Commentary

CEO John Morris highlighted the company’s core growth strategy, stating, "Repay’s core growth strategy and resilient business model is built upon a never-ending commitment to optimizing payment flows to our clients." He also emphasized the momentum from prior enterprise sales initiatives and the growing network effect.

Risks and Challenges

• Significant EPS miss may impact investor confidence.
• Decline in gross profit suggests margin pressures.
• Market volatility could affect stock price stability.
• Dependence on digital payment trends poses a risk if growth slows.
• Potential challenges in scaling operations and maintaining competitive edge.

Q&A

During the earnings call, analysts questioned the company’s growth acceleration strategies, particularly in lapping client losses and exploring new market opportunities like mortgage payments. Management expressed confidence in maintaining resilient consumer payment trends and moving upmarket within existing verticals.

Full transcript - Repay Holdings Corp (RPAY) Q2 2025:

Conference Operator: Good afternoon. I’d like to welcome everyone to Repay’s Second Quarter twenty twenty five Earnings Conference Call. This call is being recorded today, 08/11/2025. I’d like to turn the session over to Stuart Gruzantin, Head of Investor Relations at Repay. Stuart, please go ahead.

Stuart Gruzantin, Head of Investor Relations, Repay: Thank you. Good afternoon and welcome to Repay’s second quarter twenty twenty five earnings conference call. With us today are John Morris, Co Founder and Chief Executive Officer and Thomas Sullivan, Interim CFO and Chief Accounting Officer. During this call, we will be making forward looking statements about our beliefs and estimates regarding future events and results. Those forward looking statements are subject to risks and uncertainties including those set forth in the SEC filings related to today’s results and in our most recent Form 10 ks.

Actual results may differ materially from the forward looking statements that we make today. Forward looking statements speak only as of today and we do not assume any obligation or intent to update them except as required by law. In an effort to provide additional information to investors, today’s discussion will also reference certain non GAAP financial measures. Reconciliations and other explanations of those non GAAP financial measures can be found in today’s press release and in the earnings supplement, each of which are available on the company’s IR site. With that, I will now turn the call over to John.

John Morris, Co-Founder and Chief Executive Officer, Repay: Thanks, Stuart. Good afternoon, and thank you for joining us today. On today’s call, we plan to cover three main topics: first, a review of second quarter twenty twenty five second, an update to our 2025 outlook and capital allocation priorities and lastly, an update on our CFO process. In the second quarter, Repay executed on our path to reaccelerating growth during 2025. Across the company, we have made great strides to sequentially improve on our go to market implementation pipelines and operational excellence.

Repay’s core growth strategy and resilient business model is built upon a never ending commitment to optimizing payment flows to our clients. We are embedding payments to drive payment technology with software platforms to seamless experiences. And these clients, businesses and consumers that we serve will continue to benefit from the ongoing secular tailwinds of digital payment flows in The U. S. As a company, we are putting the right processes in place, enhancing partnerships, fine tuning our go to market.

And as we continue to gain traction across our sales pipeline, Repay is building momentum into the second half of the year. During the second quarter, our year over year growth sequentially improved with reported revenue increasing 1% year over year. Our Q2 performance demonstrated steady gross profit growth when excluding political media contributions due in 2024 and the previously communicated client losses. We began to deploy incremental strategic investments into our organic growth opportunities while maintaining strong adjusted EBITDA margins of 42% during the quarter. In addition, Q2 reported free cash flow sequentially improved, resulting in 71% cash flow conversion.

Across our segments, we are benefiting from the go to market investments we’ve made in prior years within our enterprise sales and customer support teams, leading to healthy sales pipelines with enterprise clients. We are encouraged by the sustainable bookings growth experienced over the past several quarters, and we continue to expect these positive trends to reflect our normalized growth in the 2025. As we continue to focus on our core business, we are working on various operational initiatives to improve productivity, automate processes and enhance implementation workflows. Within the Consumer Payments segment, our reported year over year growth sequentially improved as we expected during the second quarter. As a reminder, our Q2 gross profit growth was impacted by approximately three points from previously mentioned clients rolling off our platform.

However, our core growth algorithm of recurring and incremental contributions from existing clients plus the ramp of new client wins gives us confidence for continued sequential improvement leading to accelerated growth as we exit the year. Across our consumer verticals, our go to market teams are building strong sales pipelines with our 185 software partners, while our customer support teams are hard at work enhancing our overall client experience. As a great example, during the second quarter, we announced enhancements to our integration with Meridian Link, a leading provider of software platforms for financial institutions and consumer reporting agencies. By expanding account funding options with Repay’s payment technology, credit unions and financial institutions using Meridian Link can start accepting funds into member accounts faster and improve their customers’ overall experience. Repayed payment technology is integrated into multiple core financial institution and credit union software systems, which helps us generate a strong sales pipeline targeting the thousands of financial institutions nationwide.

During Q2, our financial institution vertical onboarded several new clients, including 10 new credit union wins, increasing our total credit union client base to three fifty three out of approximately 5,000 across The U. S. Year to date, our core consumer bookings have continued to increase from this go to market strategy across our consumer verticals. As we also focus on client implementations and ramp processes, we remain confident that our growth will accelerate as we move through the 2025. We have been building momentum from prior enterprise sales initiatives.

And as we further enhance our direct sales model with investments towards future organic opportunities, we expect overall momentum to continue into 2026. Now turning to our Business Payments segment. In Q2, reported gross profit decreased by approximately 5% year over year as we lapped approximately six points in political media contributions and an approximate 10 impact from last year’s client loss. When excluding these impacts, gross profit would have increased double digit year over year. Business payments growth was driven by our focus on our core accounts payable platform and payment monetization initiatives like expanding enhanced ACH and float income.

Our health care and hospitality verticals continue to be points of strength, adding new clients and expanding existing relationships during the second quarter. We also continue to stand with government municipalities and nonprofit organizations. During the second quarter, the Municipal Authority of Westmoreland County entrusted Repay to handle their vendor invoicing and AP automation after experiencing vulnerabilities with vendor fraud. Repay’s AP platform prevents and protects against persistent fraud and cybersecurity threats within the payment industry. Our AP platform provides security solutions such as vendor payment validation to remove the risk from our clients while also increasing digital payment flows to ensure faster and secure payments to our supplier network.

During the quarter, we did experience softness in our AR client base as we prioritized resources towards AP opportunities and payment mix shifts with suppliers as we work on building our total pay adoption. Nevertheless, we are starting to benefit from our underlying strategic initiatives, giving us confidence that the positive trends we experienced in the first half of the year will lead to growth acceleration in the 2025. Our sales teams are continuing to capitalize on our software partnerships, embedded integrations, building our client pipelines as we target enterprise opportunities across our core verticals. We continue to add to our supplier network, growing 47% year over year to over 440,000 suppliers. In addition, we are focused on increasing both total pay adoption and digital payment penetration across our clients’ total payment volumes, leading to incremental gross profit contributions from existing clients.

Our solid execution in Q2, strong balance sheet and cash generation give Repay the ability to continue investing organically into the business while producing results to generate long term value to our shareholders. In addition, we used the second quarter as a prime opportunity to buy back approximately 5% of Repay’s outstanding shares. Through August 7, we have opportunistically used a total of $38,000,000 to repurchase 7,900,000.0 shares. Looking forward, we have strong momentum giving us confidence across both our Consumer and Business Payment segments to accelerate growth exiting 2025. As we move into the second half of the year, I’d like to provide an update on our previously issued financial outlook.

Given the trends we are seeing into Q3, we will continue executing on our strategic initiatives to deliver sequential quarterly normalized gross profit growth. In Q4, we continue to expect high single digit to low double digit normalized gross profit growth and free cash flow conversion to accelerate above 60%. During the remainder of 2025, our capital allocation priorities remain focused on organic growth and investments, managing CapEx as a percentage of revenue, maintaining a strong balance sheet with ample liquidity and cash generation to address the 2026 convertible notes upon maturity, where we can use cash on hand to reduce our outstanding debt. And on our current share buyback authorization, we’re able to opportunistically repurchase shares. Additionally, we continue to be open to strategic tuck in M and A to further accelerate REPAY’s position and growth potential.

And lastly, we’re excited to announce the appointment of Robert Houser as our Chief Financial Officer, who will be joining the company on September 8. Rob brings over a decade of divisional CFO and operational experience within the payment industry. We look forward to Rob joining as he will become a great strategic partner in running our company. With Rob’s appointment, Interim CFO Thomas Sullivan will return to his role as Chief Accounting Officer. We’re extremely grateful for Thomas’ help in managing the finance organization over the past several months and the entire REPAY team for supporting the company through this process.

With that, I’ll turn it over to Thomas to review our Q2 financials. Thomas?

Thomas Sullivan, Interim CFO and Chief Accounting Officer, Repay: Thank you, John. In the 2025, revenue was $75,600,000 representing an increase of 1% year over year. Reported gross profit declined by 2% year over year, which was impacted by approximately five points as we continue to lap the previously discussed client losses in 2024, and by approximately one point from political media contributions during last year’s presidential election cycle. When excluding these impacts, Q2 gross profit increased single digit year over year. As a reminder, tax seasonality during the first quarter creates lower activity in gross profit on a quarter over quarter basis in Q2.

As John mentioned, our Q2 consumer payments gross profit growth sequentially improved and was approximately flat year over year. When excluding the approximate three point impact from one off client losses, our consumer payments gross profit growth showed improvement towards the fundamental growth profile of our consumer payment segment. The business payment segment reported gross profit declined by 5% year over year. Business payments normalized gross profit increased approximately 1% in Q2 twenty twenty five when excluding the political media contributions in Q2 twenty twenty four. Q2 business payments growth was impacted by a 10 headwind related to the previously communicated client loss during 2024.

In addition, the business payments segment experienced some softness in our AR client base and payment mix shifts with suppliers as we focus on total pay adoption. Q2 adjusted EBITDA was $31,800,000 representing approximately 42% adjusted EBITDA margins, while beginning to strategically place incremental investments towards our sales, implementation and client service teams across the company. Second quarter adjusted net income was $19,100,000 or $0.20 per share. Q2 free cash flow was $22,600,000 resulting in 71% free cash flow conversion that demonstrates the solid cash generation of our business model. We continue to expect free cash flow conversion to accelerate above 60% in Q4.

As of June 30, we had approximately $163,000,000 of cash on the balance sheet with access to $250,000,000 of undrawn revolver capacity for a total liquidity amount of $413,000,000 Repay’s net leverage was approximately 2.5 times. Total outstanding debt of $507,500,000 is comprised of a $220,000,000 convertible note due in February 2026 with a 0% coupon and a $287,500,000 convertible note due in 2029 with a 2.875% coupon. During the second quarter, we were active in buying back shares under our share repurchase program as we repurchased approximately 4,800,000.0 shares for $23,000,000 In addition, we repurchased another $15,000,000 for a total of $38,000,000 and 7,900,000.0 shares year to date. As of August 7, we had approximately 91,300,000.0 fully diluted shares outstanding with $23,000,000 remaining under our existing share repurchase program. I’ll now turn the call back over to the operator to take your questions.

Operator?

Conference Operator: Thank Please proceed.

Steven Kwok, Analyst: Hi, this is actually Steven Kwok filling in for Sanjay. Thanks for taking my questions. The first question I have was just around the guidance. If we just look back at the first two quarters, excluding the political media along with the customer loss, you guys are growing low single digits, and you’re guiding towards the high single digits for the back half of the year. I was wondering like if you can help us bridge like how what gives you confidence in being able to achieve that?

Thanks.

Thomas Sullivan, Interim CFO and Chief Accounting Officer, Repay: Hey, Steven. Thanks for your question.

: As you know, the normalized growth was negative 1% in Q2. That’s of course excluding the political media. We with the client losses, as you pointed out, we have low single digit growth as expected, that was sequential improvement from Q1. We do expect sequential improvement again into q three as we accelerate. We we expect to accelerate full further into q four as we continue to lap the previously discussed client losses.

I think the again, like to reiterate the appropriate way to think about q four is the midpoint of our outlook, which is again high single digit, low digit, double digit normalized growth.

Steven Kwok, Analyst: Got it. And then just a follow-up around the capital management priorities. Given that you still have the 220,000,000 remaining of the convertible notes that’s due with less than six months, should we expect that the primary use of cash will be allocated towards that? Or do you guys envision taking out additional debt to basically cover for that $220,000,000 that’s due?

John Morris, Co-Founder and Chief Executive Officer, Repay: Yeah. I can add. This is John. Good afternoon. As we said on the call that obviously the allocation of capital specifically is investments in organic growth, we’ve been making.

But specifically as well as we and and obviously monitoring our CapEx spend, but we would prioritize the use of cash or capital towards the convert, which is due in February ’26. We would not have a 100% cash available to pay that off in full cash, just to be clear. But we would use you’d like to use, significant cash on hand to pay some debt down, from a prioritization perspective, but we would have to tap our backup, our revolver to to take down the rest of that.

Steven Kwok, Analyst: Got it. And then if I could sneak one last one in. It’s just around the strategic tuck in m and a’s that you called out that you were still interested. Any specific verticals or, you know, what does the pipeline look like? Thanks.

John Morris, Co-Founder and Chief Executive Officer, Repay: No. We we don’t have any specific. It would be something that would obviously we have obviously, we have several criteria we look at in order to be able to evaluate a specific, opportunity. We’ve looked at these things for even the last three years. So it’d be have to be very strategic to us kind of in our swim lanes that we look like to give us an opportunity to accelerate growth or give us a really strategic advantage.

It would be in consumer payments or business payments, obviously, which is what we’re already in today, and embedded payments in some form.

Steven Kwok, Analyst: Great. Thanks for taking my question.

Conference Operator: The next question comes from the line of Joseph Vafi with Canaccord Genuity. Please proceed.

Joseph Vafi, Analyst, Canaccord Genuity: Hey guys, good afternoon. Nice to see the guidance for the year reiterated here. And so just maybe a couple quick questions. I know exiting the strategic review, there’s clearly a little bit of a change in the go to market or an expanded go to market. I know you mentioned a little bit of it here, but just thinking about your platform’s pretty broad, it’s pretty robust.

Does it feel like you can move up market into larger customers versus kind of where your wheelhouse has been today? And maybe some of the other growth opportunities you see on your platform as it’s kind of grown and seasoned here.

John Morris, Co-Founder and Chief Executive Officer, Repay: Yeah, hi, Joe. So you are correct. We have been investing and part of our strategic review we exited as you’re aware, we looked at many different things there, but we specifically looked at how we could accelerate, real accelerate organic growth. We had been last year investing in enterprise sales. We continue to add incremental additional investments in enhancing our direct sales model, allocating more resources to our overall sales team.

We have been capitalizing as well on our monetization opportunities as we drive other non card payment opportunities and then overall indirect partnerships where kind of our partner channels, those that we embed our solutions into, we we continue to invest in those. So that those pieces are going well for us. We we we are the the items that we’ve invested in, we’re we’ve got those moving. Those are all going in the right direction that we wanted them to do. Our that should enhance our overall go to market.

And then the implementation pipelines, we’re working working hard on that. Just overall operational excellence, we’re investing into that. So I think your other question was ways to other verticals or key verticals. We think specifically if you look at the verticals we’re in in our b to b side, you know, that’s in health care and hospitality and government nonprofit. Those have long runways to them.

We we can we love those as we even as we drive some of that opportunity with some of our, overall implementation partners or overall channel partners there. But specifically on the consumer side, we have the ability and we are on the enterprise side. Our pipelines are healthy with some of the enterprise opportunities we’re looking at. And so we think those investors will pay off for us. I wouldn’t call it any net new verticals on the consumer side at this point, just larger opportunities in the existing verticals we’re in.

Joseph Vafi, Analyst, Canaccord Genuity: Great. Thanks for that, John. And then any more updates? I know you were focused some on opening up the mortgage payments market for card payments. Anything going on there worth talking about at this point?

Thanks a lot.

John Morris, Co-Founder and Chief Executive Officer, Repay: From a materiality perspective, no. But from an opportunity in a healthy pipeline, yes. We’re seeing positive, really positive traction on a few opportunities there and a healthy pipeline on some of the things we’re working on there. So, but materiality in 2025, I would not consider it to be a 2025 needle mover from that perspective.

Joseph Vafi, Analyst, Canaccord Genuity: Got it. Thanks very much.

Conference Operator: The next question comes from the line of Alex Newman with Stephens Inc. Please proceed.

Alex Newman, Analyst, Stephens Inc.: Hi, thanks for taking the question. Could you give an update on the recent RCS partnership with the POS provider you talked about last quarter? Any early trends you’re seeing with that relationship?

John Morris, Co-Founder and Chief Executive Officer, Repay: Yes. So I would say from that nothing significant other than we we’re in our process of of the implementations, etcetera. So no major updates on that other than we we like the relationship. We’re excited about what the future holds there with us.

Alex Newman, Analyst, Stephens Inc.: Okay. And then just quickly on on b two b. Could you remind us the the mix between AR and AP for that segment? Just as you called out some softness in the AR side.

John Morris, Co-Founder and Chief Executive Officer, Repay: Yes. It’s probably what’s our probably it’s probably sixty forty ARAP.

Alex Newman, Analyst, Stephens Inc.: Great. Thank you.

Conference Operator: The next question comes from the line of James Faucette with Morgan Stanley. Please proceed.

Jipali Damascar, Analyst, Morgan Stanley: Hi, this is Jipali Damascar on for James. Thanks for the question. So just on consumer payments, you noted in the supplement that you’re seeing resilient trends across auto and personal loans and mortgage, but you’re seeing some pockets of consumer softness. Can you give a little bit more color on where this softness is coming from and if you think it’s more temporary or cyclical in nature?

John Morris, Co-Founder and Chief Executive Officer, Repay: Yes. So specifically on our overall, we actually see similar trends in Q2 as we did in Q1. And we are seeing resilient consumer, at least from what we can see. Remember, we’re not we’re not the actual we’re the payment provider, in in in our case, not the actual lender. So overall, we do see specifically on the auto side when we in the first quarter, we talked about that and we’ve talked about that for a couple quarters.

We do think the auto piece still remains challenged, but we have not specifically seen any impact from the tariffs there. We haven’t seen any major increase or decrease on that side of it. But we we entered into this quarter knowing it was challenged from a few quarters back. We do see, you know, normalized spending.

Jipali Damascar, Analyst, Morgan Stanley: Got it. Thank you. And just to check through July and early August, are you seeing consistent resilient trends as well?

John Morris, Co-Founder and Chief Executive Officer, Repay: Yes, similar trends.

Conference Operator: As a reminder, please press star one if you would like to ask a question. And the next question comes from the line of Tim Scioto with UBS. Please proceed.

Stuart Gruzantin, Head of Investor Relations, Repay0: Hi. Thanks for taking the question. This is Pat Ennis on for Tim Scioto. Wanted to touch on the TotalPay solution and the monetization efforts you had referenced on the last call and and on this call as well. Could you maybe update us on the strategy there and any progress worth noting?

John Morris, Co-Founder and Chief Executive Officer, Repay: Sure. Yes. So actually, we’re making really good progress there. Specifically, one way we see that is our TotalPay solution, as you recall, is we’re processing all the payables for our specific client. And those payables could be executed in the form of a virtual card, of an enhanced ACH, even a and then also specifically if we can’t pay with one of those ways, we can obviously have to pay virtual or digital check or even a physical check.

So we pay all their payables. That’s what we call total pay. So the monetization piece of that is to try to monetize that. If you look at the whole specific total pay number, our gross total pay number is actually increasing. We don’t report volume on total TPV, but we get to see that on our side.

So our TPV itself overall, we see that increasing. That’s a positive sign for us as as we work through and and can try to monetize that. We have been leaning in on our ACH monetization opportunities, and we’re seeing positive results from that as we we have a few different offerings we offer there, as we try to, you know, roll out our offering to to the various different vendors in our vendor network, and we’re seeing some of our initial sampling, some of our initial testing has been positively received.

Stuart Gruzantin, Head of Investor Relations, Repay0: Appreciate it. Then just a follow-up on the supplier network. I mean, growth has been pretty strong over the last several quarters, even on a q over q basis as well. So is that growth a function of existing client demand, or is this a priority to win new business in the b to b segment? And and will that pay dividends eventually?

John Morris, Co-Founder and Chief Executive Officer, Repay: Yeah. So the network effect is real. So we over 440,000 vendors as you can see year over year, nice growth rate. The growth rate itself does as you mentioned, it does include existing but also net new wins and net new overall growth. So we do think the network effect is and we see it specifically.

This is why we like to be vertically focused in that in our solutions there. As you can imagine, as we build critical mass in a specific vertical on a net new basis, we’ve seen that. For sure, we’ve seen a national vendor in a lot of ways. Incrementally, does help us accelerate adoption as we go by vertical and we build up our overall vendor network by vertical.

Stuart Gruzantin, Head of Investor Relations, Repay0: Got it. Appreciate taking the questions.

Conference Operator: There are no further questions at this time. I would like to turn the call back over to John Morris for closing remarks.

John Morris, Co-Founder and Chief Executive Officer, Repay: Thank you so much for your time today. As we’re building momentum into our second half of the year, REPAY continues to execute towards our profitable growth and strong free cash flow generation. We’re making progress. We remain focused on reaccelerating our growth as we move throughout 2025 and into 2026. Really appreciate your time.

Thanks again for joining us today.

Conference Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.

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