Repay Holdings Corporation

Good afternoon. I'd like to welcome everyone to Repay's fourth quarter 2025 earnings conference call. This call is being recorded today, March 9th, 2026. I'd like to turn the session over to Stuart Grisanti, head of investor relations at Repay. Stuart, you may begin.

Thank you. Good afternoon, and welcome to REPAY's fourth quarter 2025 earnings conference call. With us today are John Morris, co-founder and chief executive officer, and Robert Hauser, 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 in 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 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 in the company's IR site. With that, I will now turn the call over to John.

Thanks, Stuart. Good afternoon, everyone, and thank you for joining us today. Repay delivered on its promise to improve growth as the company exited 2025. During the fourth quarter, Repay returned to solid, normalized growth while continuing to generate strong profitability and free cash flow. This performance underscores the progress of Repay's strategic initiatives and operational improvements throughout 2025 REPAY underwent the necessary improvements to strengthen our operations, go to market, and overall organizational leadership. As we proceed through 2026, we are well positioned to continue our momentum while supporting and optimizing our clients' digital payment flows. On today's call, we plan to go over the three main topics. First, a review of the fourth quarter. Second, a summary of our progress and achievements during 2025. And lastly, our 2026 outlook to drive growth into the future. First, a review of the fourth quarter. Repay closed out the year, accelerating our normalized growth. In Q4, we achieved 10% revenue growth and 9% gross profit growth on a normalized year-over-year basis, which excludes the political media contributions during 2024. Adjusted evidence margins were 41%, and pre-tax flow conversion was 43%, while reinvesting into several organic growth initiatives. Within the consumer payment segment, Q4 revenue increased 8% and gross profit increased 6% year over year. Our growth is built on steady payment streams with existing clients plus incremental contributions as we process more of our clients' total payment volumes and then ramp up new clients across the verticals we serve. We increased our consumer software partnerships to 189 while also further enhancing many existing integrations leading to better client and consumer experiences. Deeper integrations address the pain points across our consumer payments verticals by combining Refade's flexible payment processing capabilities directly within our clients' existing workflows. Clients that offer the convenience of modern payment modalities can seamlessly accept and track payments while enhancing their operational efficiency. The newly announced integration with Emotive Software An all-in-one automotive financing compliance platform is one of the many examples of how Repay is building on our software partnerships to build a healthy core consumer bookings pipeline. And throughout 2025, our bookings have gained momentum, giving us confidence to the full year, 2026. Additionally, our consumer payments teams are focused on client implementations to help reduce go-live timelines and provide sustainable growth as our clients continue to expand with us. Now turning to our business payment segment. In Q4, normalized revenue increased 41% and gross profit increased 73% year-over-year, while excluding the political media contributions during 2024. Throughout 2025, our business payment strategic focus was on our core AP platform. Our go-to-market and partnerships prioritized the vast AP opportunities, leading to many new client wins in the healthcare and hospitality verticals. We executed on several modernization initiatives like Float Income, expanded our enhanced ACH offering, and increased total pay adoption with both new and existing clients. In Q4, we increased our supplier network to 602,000 suppliers, increasing over 65% year-over-year. And we exited the quarter with 105 software partners and embedded integrations. This represents adding over 240,000 suppliers during 2025, leading to great momentum to our hospitality vertical and while building on many software relationships, such as use, which serves a broad spectrum of organizations across multiple industries. Businesses and organizations across verticals are looking for ways to modernize AP processes and improve payment security. 3PAY's advanced AP platform provides these capabilities. An innovative way that organizations are adopting AP platforms is with our recently announced referral partnership with the Western Virginia University Gold and Blue Enterprises. GPE clients can leverage REPAY's platform to donate their earned REPAYs to the university's NIL fund. So overall, we are pleased with the business payments momentum from our partnerships and direct sales teams. We expect our AP initiatives to continue building traction during 2026 and beyond. Now onto our next topic, a review of the 2025 achievements and progress. REPAY went through challenges during 2025 while also making important changes to reinforce our core foundation for a skilled future. We changed key executives, streamlined processes, and worked on ways to deploy automation and AI. During 2025, we allocated resources towards our sales and customer support teams to pursue enterprise clients across our verticals. We've added 14 software partners and integrations during 2025 and exited the year with over 294 total partners. We began rolling out new product capabilities like Dynamic Wallet, where iOS and Android users can tap and pay and access statement activity directly within their digital wallet experience. Ultimately, our continuing investment in product and technology is about providing best-in-class performance and reliability for our existing clients and prospective clients. We strive to achieve exceptional experiences for our clients and customers. From this, we are proud to be recognized by the Straw Hacker Group for Best Gateway Uptime in 2026. and Repay earned first place for the highest authorization rate for the second consecutive year in 2025. In 2025, we also reviewed Repay's platform for the automated and digital future ahead. I'm excited for the powerful combination of leveraging AI capabilities with Repay's technology to increase productivity across the organization. We are utilizing AI to reduce integration time for faster AP connectivity with software partners and are rolling out AI assist functionality for clients' onboarding processes. We are deploying AI middleware for client and tech migrations, leading to faster discovery and risk detection, reducing manual processes and lowering costs over time. We also tested new product capabilities such as RepayVoice. RepayVoice will revolutionize the IVR experience for consumer calls and already has a list of enterprise clients eager for a space rollout during 2026. These productivity improvements are scalable as we look to spur growth further into inorganic opportunities. We're positioned to digest potential M&A faster with the foundation we approved upon during 2025. I am proud of the progress we made from an operating perspective as we acted the year. Each quarter led to sequential improvements in the right direction. And now we are focused on maintaining the momentum as we execute throughout 2026. With that, I'll turn the call over to Rob to go over our Q4 financials and discuss our 2026 outlook and capital allocation priorities. Rob?

Thank you, John, and good afternoon, everyone. In the fourth quarter, Repay delivered solid results across our key metrics. Revenue was $78.6 million, and gross profit was $58.3 million. On a normalized basis, revenue and gross profit growth were 10% and 9%, respectively, which excludes the political media contributions during last year's presidential election cycle. As a company, we are proud of the progress we've made to sequentially improve growth in Q4. Q4 growth profit margins were approximately 74.2%, representing a similar margin profile that we experienced during Q3 2025 from lapping political media contributions, enterprise volume discounts, and non-card mix as we process more of our clients' overall volumes. Going forward, we expect a similar margin profile that we experienced during Q3 and Q4 2025 to continue during 2026. Consumer payments revenue and gross profit increased 8% and 6% year-over-year, respectively. Business payments normalized revenue and growth profit increased approximately 41% and 73% in Q4 2025. Q4 adjusted EBITDA was $32.4 million, representing approximately 41% of adjusted EBITDA margins. Repay has been balancing resource allocation throughout 2025 and making incremental investments towards the sales implementation and client service teams to support our future growth initiatives. Fourth quarter adjusted net income was $16.8 million or 19 cents per share. And the fourth quarter reported net income was impacted by a non-cash goodwill impairment charge of $138.9 million related to our consumer payment segment. Free cashflow was $13.8 million during the quarter resulting in 43% free cashflow conversion. Free cash flow was slightly below our expectations due to the quarterly timing of networking capital that is not expected to reverse in Q1. As of December 31st, we had approximately $116 million of cash on the balance sheet. Since year end, we paid off the $147 million of 0% convertible notes at maturity using approximately $37 million of cash on our balance sheet and drawing $110 million on our revolving credit facility. On a pro forma basis for the debt payment in January, REPAY has approximately $79 million of pro forma cash and $398 million of pro forma debt outstanding. Pro forma total debt outstanding is comprised of $110 million draw on a revolver facility in January and $288 million of convertible notes due in 2029 with a 2.875% coupon. Proforma total liquidity is approximately $219 million, which includes $140 million of undrawn revolver capacity. REPAY's Proforma net leverage is approximately two and a half times after the 2026 convert maturity. Now moving on to our 2026 outlook and capital allocation priorities for the year ahead. As John mentioned, Repay made many strategic changes during 2025, an ongoing effort to improve our go-to-market operations and technology for a scale future. These operational improvements are incorporated in our 2026 outlook and approach to allocating capital going forward. Our full year 2026 outlook reflects the growth algorithm that Repay can sustainably achieve as we benefit from the secular digital payments tailwind, growth from existing clients, and the ramp of new clients onto our platform. In 2026, we expect revenues to be between $340 million and $346 million. This represents 10% to 12% reported revenue growth and approximately 7% to 9% normalized revenue growth when excluding the positive contributions of our political media business. We expect adjusted EBITDA to be between $136.5 million and $141.5 million, representing approximately 40% adjusted EBITDA margins. We are confident in achieving a free cash flow conversion target of above 45%, which incorporates fluctuations in net working capital and the incremental interest payments associated with the recent $110 million draw on our revolving credit facility. Net interest expense is incorporated in our free cash flow. We expect interest expense to be approximately $15 million during 2026. which includes the interest payments associated with our 2029 convertible notes and $110 million draw on our revolving credit facility. As a reminder, free cash flow conversion is calculated by dividing free cash flow by adjusted EBITDA. During the first quarter, our year-over-year growth is expected to be lower than the full year of 2026 outlook. as we have some implementations getting pushed out as several client wins in the back half of 2025 are set to go live later than initially expected, and we'll be lapping against some annualized churn we experienced in the back half of last year. However, we are confident in the ramp of signed clients and strategic initiatives during the year, with the second half returning to strong double-digit normalized growth. We are also expected to benefit from a strong midterm election cycle with the majority of political media contributions occurring during Q3 and Q4. Overall, we expect political media contributions to positively impact revenue by $8 million to $10 million, representing approximately three percentage points of reported growth year over year. And finally, from a capital deployment perspective in Q1, we will be making $15 million in TRA payments. In 2026, our capital allocation priorities are focused on creating long-term value while maintaining strong cash generation to support liquidity and financial flexibility. During 2026, we plan to deploy capital towards four key areas. Our first priority is with organic growth opportunities. We will continue to make targeted OpEx investments to strengthen our position and accelerate our growth potential for 2027 and beyond. We expect to allocate capital towards strategic M&A and partnerships to further boost existing and new vertical reach while increasing the long-term growth in cash flow for the company. We will maintain a prudent level of CapEx towards product and technology initiatives. We have $23 million remaining under our existing share repurchase program that we can use during 2026. And lastly, we have the financial flexibility to balance capital deployment towards organic investment, M&A, partnerships, and share buybacks with the potential to reduce our total debt outstanding. We are heading into 2026 with exciting progress and momentum. As a company, we are committed to implementing our capital allocation strategy and achieving our 2026 outlook with double-digit reported revenue growth and strong profitability. I'll now turn the call over to the operator to take your questions. Operator?

Thank you. We will now be conducting a question and answer session. We ask that you please limit yourselves to one question and one follow-up. If you would like to ask a question, please press star and the number one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and the number two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment while we poll for questions.

And our first question comes from Mike Grondahl with Northland Securities. You may proceed with your question.

I was wondering if you could just spend a moment on kind of the major end markets, maybe auto and personal loans and health care and mortgage, if you could, a little bit.

Hi, Mike. Good afternoon. How are you today? Yes, this is John. Hi. So from that perspective, what we see is consistent with what we've seen in the fourth quarter, what we've seen throughout last year. We see consistent trends that we saw last year on the auto and affordability constraints. That's relatively stable for what we have been seeing, so we still see that occurring in both auto and personal loans.

Got it. Anything in health care or mortgage to call out in those markets?

Very similar as well. We're not seeing anything that would be different than what we have been experiencing.

Okay. And then any customer renewals in 2026 we should be aware of that are coming up? Anything stick out there?

Nothing major that would not be inside of our guide that would not be standard on most of our contracts would be auto renewals in some ways. But nothing we wouldn't have a already embedded into our guide.

Okay. Great. And congrats on the outlook and some growth. That's great.

All right. Thanks, Mike.

Our next question comes from the line of Alex Newman with Stevens. Please proceed.

Hi. Thanks for taking my question. Just quickly, anything on tax refunds? I know there's a lot of data out there saying average refunds are higher, just any impact those are having on volumes and repayment activity?

Hi, Alex. Yes, this is John. So we have seen a tax refund season. We saw some volume increase in the month of February. But so far today, we found that to be at least we see we only see the payment volume. Right. So we don't actually see the gross tax refund. other than we've seen some normal – and this is a seasonal – this is on the consumer payment side. We do see seasonal uplift in our first quarter related to tax refunds. That appears to be relatively normal. Again, we don't see the total refund. We just see payments.

Got it. And then, just a quick question on B2B, just on the float income. Could you just dive into how much that contributed to growth, the margins, and where that flow income is being generated from?

Yeah. Hi, Alex. This is Rob.

Yeah, so the flow is from our customer deposits and our B2B business. We don't typically comment on the exact amount of money, but it was a good portion. In the fourth quarter, we... started collecting that interest on customer deposits in 2025. So as we go into our guide into 2026, it's relatively stable. But it played a part of our strong results in the fourth quarter, but we also, for the B2B business, lapped some large customer losses in the fourth quarter versus prior that also helped, as well as the monetization efforts we've been making on moving volume to total pay and monetizing some of that volume was a big driver for Fort Coder and the B2B side.

Great. Thanks for the call, I guess. Yep.

Our next question comes from the line of James Fawcett with Morgan Stanley. You may proceed.

Hi, this is Shefali Kamaskar asking on behalf of James. So just on the M&A, you called out that recent improvements have allowed you to better digest potential M&A faster. So on that, could you provide an update on what the pipeline looks like? You mentioned potentially new verticals, and is it more focused on the consumer versus business payment side?

Hi, Cliff. This is John. So yes, we've always had a healthy pipeline. Obviously, we haven't done any deals in the last, really, three years. But The opportunity would be both in consumer and business payments with the right selective investment opportunities for us. If we look at partnerships, if we look at potential areas that could drive new vertical reach or additional vertical reach for us that would be complementary to our existing two business units. Both of those are possibilities. We're always looking for attractive opportunities for us to help reinvest and drive that would help us with our overall performance. but also help us with our ability to drive more long-term organic growth as well.

Great. That's helpful. And then you mentioned a focus on organic growth investments as well. Could you speak to what you're most focused on investing in for 26, whether that be, I know you focused on some sales support, AI investments, if you could rank order what you're most focused on.

Sure. So from an organic perspective, it's continuously, as you're aware, our investments this year will really be our future growth for 27 and beyond. So we're continuing to invest like we did last year in enterprise sales, some of the go-to-market initiatives around self-support, some of the things we want to do as we use As I said earlier in the call, as we use AI to help drive new product initiatives like the voice AI, the IVR voice AI that we're going to be rolling out, some things on implementations. We want to obviously continue. We think that this is a great opportunity for us to use AI both to help us streamline that, simplify things, but also help our clients possibly implement things as well faster. So that's something we'll work on throughout the year, and that'll help us drive even more scale. But some of the things that we're seeing as we drive automation and create some things with that, that's exciting for us. It will help us as we scale, especially if we did something around any kind of implementation from an inorganic perspective. We think that would allow us to really bring that on board faster.

Great. Thank you.

Before we move on to our next question, as a reminder, if you'd like to ask a question, please press star and the number one on your keypad to enter the queue. Our next question comes from Timothy Chiodo with UBS. You may proceed with your question.

Great.

Thanks a lot. I want to follow up on a topic that we touched on on a prior earnings call. We talked a little bit about the CEDP from Visa. And as far as it relates to the business payments portion of prepaid businesses, Clearly there's two sides to that, right? There's the AR side and the AP side. We also saw when Visa reported they had a nice growth rate for commercial revenue potentially related to the CEDP network fee addition. I was hoping you could talk a little bit about how things have evolved now that we're a little bit deeper into that program, both on the AR side, meaning your ability to meet the requirements to get the lower interchange and how that's changing. And then on the AP side, how those receiving your card payments are adapting or not. And if you could just talk about a little bit on both of those sides. Thank you, John.

Hi, Tim. Yes, great questions. And, yes, that's an initiative that, as you're aware, at least one of the card brands rolled out in late January this year. and specifically on the level two side, level two, level three, getting into some details on how cards are qualified, et cetera. So that predominantly will affect the AR side of the world, specifically on the receiving side and how our clients in or how we can affect pricing around that. As you probably are aware, asking that question, you're aware that level two effectively is going away to level three, and even the ability for the client side to gain and capture some of that has become a little bit more complex. So on that side of it, we would have some impact on our AR side of our B2B business related to that. And on the AP side, we have multiple ways to do virtual cards. You can have more than one brand that you issue from on that side. So our focus there would be to maximize our ability to monetize based on the overall, whichever brand that we push those rails through or push those transactions through would be optimized for us.

Thank you, John.

Our next question comes from Pete Heckman with D.A. Davidson. You may proceed.

Thank you. Good afternoon. I wanted to follow up on the business payment segment and how you think about that business growing over the next couple of years. Do you feel like there's a sustainable level of high teens, low 20s type organic growth possible from that business? And if so, how do you think about it in terms of signing up new end clients, new partners, volume? How do you build up to that? And then just on the consumer side, Are there any of your larger initiatives that you had talked about over the last, let's say, 18 months, some of the big new clients or big new initiatives that you expect to be outsized contributors to the consumer segment in 2026?

Hi, Pete. This is Rob Hauser.

Answering your first question around B2B, in our guide, you know, We had a strong fourth quarter, but when you look at our business going forward in 2026, probably one way to think about it is somewhere in the high teens. Now, remember, this is a political year, so as we called out, we're expecting a political season, a midterm election in the third and fourth quarters when that typically happens. And as we said on the call, that's estimated around $8 to $10 million. and revenue. So this is a political year versus prior year, which wasn't. So you do have some of that lumpiness between presidential and midterm elections. But we're expecting, you know, when you think about this business on a normalized basis, you know, it's probably in the high teens type of growth business for us.

Okay, and that's helpful. And then in terms of consumer, are any of those initiatives that we've talked about, like the auto OEM, the mortgage solution, anything like that that you expect to be relative outsized contributors to growth?

No, in 2026 specifically, we have some of those initiatives baked into our outlook. And then specifically on mortgage, That's a longer-term pull-through that's taken us way longer than we expected, as I mentioned last year. But effectively, any kind of initiatives associated with both of those are baked into our 2026 forecast.

Okay. I appreciate it.

There are no further questions at this time, and this now concludes our question-and-answer session. I would like to turn the floor back over to John Morris for closing comments.

Thank you, everyone, for joining us today. Repay exited 2025 with solid momentum. We are now looking towards the future by executing on our plan for double-digit reported growth in 2026 outlook to drive our long-term value for our clients and our shareholders. The repay of tomorrow is built to scale and benefit from the opportunities ahead. I look forward to sharing more on our progress throughout 2026 and beyond. Thanks again for joining us.

Ladies and gentlemen, thank you for your participation. This concludes today's conference. Please disconnect your lines and have a wonderful day.