Repay Holdings Corporation

Good afternoon. I'd like to welcome everyone to Repay's first quarter 2024 earnings conference call. This call is being recorded today, May 9th, 2024. I'd like to turn the session over to Stuart Brassante, Head of Investor Relations at Repay. Stuart, you may proceed.

Thank you. Good afternoon and welcome to our first quarter 2024 earnings conference call. With us today are John Morris, co-founder and chief executive officer, and Tim Murphy, chief financial 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 our most recent Form 10-K. Actual results may differ materially from any 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 that, except as required by law. In an effort to provide additional information to investors, today's discussion will also include references to 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 like to turn the call over to John. Thanks, Stuart.

Good afternoon, everyone. Thank you for joining us today. Our Q1 results represent a strong start to the year as we aim to capture new payment flows while enhancing client relationships with many value-added services. In Q1, we achieved organic revenue growth of 10%, organic gross profit growth of 11%, reported adjusted EBITDA growth of approximately 15%, and reported free cash flow growth of 90% plus year over year, with each metric performing in line to our expectations. In Q1, we made progress on our three main strategic initiatives which drive growth in 2024 and beyond. They include our go-to-market efficiency, client implementations, and a focus on product. This progress further enhances our vast ecosystem of payment flows, which we have combined and developed over the past decade. We pay clients value our ability to move money efficiently and easily, as well as provide omni-modality and omni-channel services with our one-stop payment technology. In addition, our vertical-specific software network allows us to embed payments directly within their in-price workflows, making the process seamless and secure to our clients. Consistent with the card networks, we continue to see growth opportunities across emerging verticals for debit card payments, such as loan repayments, commercial payments in our B2B segment, and new flows such as instant funding via Visa Direct and MassCardSend. As we continue to strengthen our technical and go-to-market relationships with our software partners, We're excited about the multi-year growth opportunities across our consumer and business payment verticals. In Q1, consumer payments organic gross profit growth was 11%. Our strong performance in Q1 was a continuation of our growth algorithm, which includes growth coming from existing clients as well as signing new clients over the past several quarters. Our growth is also aided by the ongoing secular tailwinds within our consumer payments verticals and the continued ramp of recent large client implementations. We added many new clients to our network in Q1, including 15 new credit unions, an acceleration from last quarter, bringing our total credit union clients to 291. We onboarded a larger credit union client during the quarter, which was one of the largest 50 credit unions in the United States. This partnership exemplifies our clients' continuous focus on the customer's digital experience, where enhanced payment capabilities can lead to strong operating performance and ongoing membership growth. Credit unions and community banks are a great growth driver for repay, as our vertical expertise and software integrations are a differentiated solution leading to a healthy sales pipeline to address the thousands of financial institutions in the United States. And during the quarter, we added another core software integration partner that specifically serves credit unions and banks, further positioning us well for this opportunity. In addition, accounts receivable management continues to be an attractive vertical for repay with multiple years of growth ahead. During the quarter, we signed one of the largest providers in the U.S. of outsourced accounts receivable management and loan servicing. We also expanded our software partnerships with Maxify, a provider of collections and accounts receivable management software for lenders and collection agencies. Through this integration, Repay's payment technology enables businesses to optimize and streamline payment collections directly within Maxify's software. We added three partners during the quarter in the consumer payment segment and remain focused on strengthening our software partnerships, developing our sales pipeline, and continuously improving our clients' experience. We remain on pace to go live and get processing with the previously announced large auto captive lender in late Q2 with a measured ramp throughout the second half of 2024. And lastly, in value-added services, our instant funding product continues to see great growth with transactional volume up approximately 33% year-over-year. This product offers an incredible opportunity for our clients to differentiate themselves in the marketplace by delivering quick, convenient, secure funding experiences to their customers. And over the medium term, we are evaluating new areas of expanding these capabilities. We also had a very productive quarter in the business payment segment, which grew gross profit by 17% year-over-year. Gross profit growth was driven by our implementation teams converting strong sales pipelines into the live clients that began to ramp during the quarter. In AR, we remain focused on optimizing payment acceptance with strengthening our client base through our direct sales team and ERP partners. Within AP, we grew our supplier network to over 279,000 suppliers while adding and enhancing integrations with several software partners during the quarter. In addition, we were honored to receive WEX's 2023 Spark Partner of the Year for our best-in-class partnership facilitating virtual card business-to-business payments. During the quarter, we signed many new clients across our verticals. In the hospitality vertical, we are now live with Rejoice World Las Vegas, a fully integrated premium resort on the Las Vegas Strip, and many new hospitality clients continue to onboard additional properties onto our AP automation and total pay solution. Our existing partnerships are driving new client wins within our healthcare vertical, including several regional healthcare systems located in Texas, Georgia, and Maryland. We're gaining increased traction and building a healthy sales pipeline from recent software integrations such as Sage and TAC, Microsoft Dynamics, Quadient, and Enflow. We're winning new clients as we continue to enhance our existing integrations with auto dealer software partners, and we're developing new partnerships along the way, such as EnergyCap, a leading provider of utility bill and energy management software. With our partnership, EnergyCap clients can now rely on Repay's embedded accounts payable automation within their software ecosystem. And importantly, we are continuing to streamline the onboarding and implementation process while also focusing on increasing the digital payment volumes of our clients. A great example is Country Pure Food, one of the largest manufacturers of multi-serve juices, plant-based beverages, and frozen commodities in the U.S. Since recently onboarding Country Pure Food, Repay's total pay solution has transformed their payment volumes from 100% paper-based to over 60% digital. with 30% virtual card adoption rate and a clear path to 80% digital payment volumes. As you can see from our results, we have been able to grow Repay by expanding our services, leveraging over 266 integrated software partners, guiding our clients through a seamless onboarding process, and constantly evolving our tech platform. As we look into the future, our platform continues to scale as we automate manual processes. A scaling of our platform and realizing the benefits from the investments we've made in sales, product, and technology over the past several years will enable us to accelerate free cash flow conversion throughout the year and beyond. Lastly, our capital allocation priorities remain focused on creating value for our shareholders by investing into organic growth opportunities while continuing to be open to accretive strategic M&A. Repay is positioned with a strong balance sheet to continue to grow profitably and accelerate cash generation throughout the year. We actually did Q1 with solid execution and consistent seasonal trends as we embark on the remainder of the year. With that, I'll turn it over to Tim to go over our financials and our outlook for 2024. Tim?