Gross Profit Growth of 7% in Q2 and 8% YTD (9%
YTD on an organic basis1)
Faster Pace of Adjusted EBITDA Growth with
Expanding Margins
Reiterates 2024 Outlook, Including an
Acceleration in Free Cash Flow Conversion During 2024
Repay Holdings Corporation (NASDAQ: RPAY) (“REPAY” or the
“Company”), a leading provider of vertically-integrated payment
solutions, today reported financial results for its second quarter
ended June 30, 2024.
Second Quarter 2024 Financial Highlights
(in $ millions)
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
YoY Change
Revenue
$
71.8
$
74.3
$
76.0
$
80.7
$
74.9
4
%
Gross profit (1)
54.9
56.7
58.7
61.5
58.6
7
%
Net loss
(5.3
)
(6.5
)
(77.7
)
(5.4
)
(4.2
)
21
%
Adjusted EBITDA (2)
30.5
31.9
33.5
35.5
33.7
10
%
Net cash provided by operating
activities
20.0
28.0
34.9
24.8
31.0
55
%
Free Cash Flow (2)
10.0
13.9
21.8
13.7
19.3
93
%
(1)
Gross profit represents revenue less costs
of services (exclusive of depreciation and amortization).
(2)
Adjusted EBITDA and Free Cash Flow are
non-GAAP financial measures. See “Non-GAAP Financial Measures” and
the reconciliation of Adjusted EBITDA and Free Cash Flow to their
most comparable GAAP measure provided below for additional
information.
“We are pleased with our performance in the second quarter and
our year-to-date results represent a strong first half to the year
as we aim to capture our client’s embedded payment flows,” said
John Morris, CEO of REPAY. “Additionally, recent financing
transactions have strengthened our balance sheet, giving us more
flexibility to address the multi-year growth opportunities across
the verticals within Consumer Payments and Business Payments.”
Second Quarter 2024 Business Highlights
The Company's achievements in the quarter, including those
highlighted below, reinforce management's belief in the ability of
the Company to drive durable and sustained growth across REPAY's
diversified business model.
- 7% year-over-year gross profit growth in Q2
- Consumer Payments gross profit growth of approximately 7%
year-over-year
- Business Payments gross profit growth of approximately 11%
year-over-year
- Accelerated AP supplier network to over 300,000, an increase of
approximately 55% year-over-year
- Added seven new integrated software partners to bring the total
to 273 software relationships as of the end of the second
quarter
- Instant funding volumes increased by approximately 21%
year-over-year
- Added 9 new credit unions bringing total credit union clients
to 300
1 Organic gross profit growth is a non-GAAP financial measure.
See “Non-GAAP Financial Measures” and the reconciliation to its
most comparable GAAP measure provided below for additional
information.
July Balance Sheet Update
On July 8, 2024, REPAY issued $287.5 million aggregate principal
amount of 2.875% Convertible Senior Notes due 2029 (the “2029
Notes”) in a private placement to persons reasonably believed to be
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended. $27.5 million aggregate
principal amount of the 2029 Notes were sold in connection with the
full exercise of the initial purchasers’ option to purchase such
additional 2029 Notes offering pursuant to the purchase agreement.
The 2029 Notes bear interest at a fixed rate of 2.875% per year,
payable semiannually in arrears on January 15 and July 15 of each
year, beginning on January 15, 2025. The 2029 Notes will mature on
July 15, 2029, unless earlier repurchased, redeemed, or converted
in accordance with their terms.
On July 8, 2024, in connection with the issuance of the 2029
Notes, REPAY (i) used approximately $200.0 million of net proceeds
and approximately $5.1 million of cash on hand to repurchase $220.0
million in aggregate principal amount of the 2026 Notes, (ii) used
approximately $40.0 million of the net proceeds to repurchase
approximately 3.9 million shares of common stock, and (iii) used
approximately $39.2 million of net proceeds to fund the costs for
privately negotiated capped call transactions with certain
financial institutions covering the number of shares of common
stock underlying the 2029 Notes. The capped call had an initial
strike price of $13.02 per share and an initial cap price of $20.42
per share.
On July 10, 2024, REPAY entered into a Second Amended and
Restated Revolving Credit Agreement with certain financial
institutions, as lenders, and Truist Bank, as administrative agent.
The Second Amended Credit Agreement establishes a $250.0 million
senior secured revolving credit facility and amends and restates
the Amended and Restated Revolving Credit Agreement dated as of
February 3, 2021, which previously provided for a $185.0 million
senior secured revolving credit facility.
Segments
The Company reports its financial results based on two
reportable segments.
Consumer Payments – The Consumer Payments segment provides
payment processing solutions (including debit and credit card
processing, Automated Clearing House (“ACH”) processing and other
electronic payment acceptance solutions, as well as REPAY’s loan
disbursement product) that enable REPAY’S clients to collect
payments from and disburse funds to consumers and includes its
clearing and settlement solutions (“RCS”). RCS is REPAY’s
proprietary clearing and settlement platform through which it
markets customizable payment processing programs to other ISOs and
payment facilitators. The strategic vertical markets served by the
Consumer Payments segment primarily include personal loans,
automotive loans, receivables management, credit unions, mortgage
servicing, consumer healthcare and diversified retail.
Business Payments – The Business Payments segment provides
payment processing solutions (including accounts payable
automation, debit and credit card processing, virtual credit card
processing, ACH processing and other electronic payment acceptance
solutions) that enable REPAY’s clients to collect payments from or
send payments to other businesses. The strategic vertical markets
served within the Business Payments segment primarily include
retail automotive, education, field services, governments and
municipalities, healthcare, media, homeowner association management
and hospitality.
Segment Revenue, Gross Profit,
and Gross Profit Margin
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousand)
2024
2023
% Change
2024
2023
% Change
Revenue
Consumer Payments
$
69,292
$
65,924
5%
$
145,428
$
135,865
7%
Business Payments
10,592
9,829
8%
20,269
18,503
10%
Elimination of intersegment revenues
(4,978
)
(3,970
)
(10,071
)
(8,048
)
Total revenue
$
74,906
$
71,783
4%
$
155,626
$
146,320
6%
Gross profit (1)
Consumer Payments
$
55,546
$
51,704
7%
$
115,136
$
106,329
8%
Business Payments
8,017
7,209
11%
15,065
13,234
14%
Elimination of intersegment revenues
(4,978
)
(3,970
)
(10,071
)
(8,048
)
Total gross profit
$
58,585
$
54,943
7%
$
120,130
$
111,515
8%
Total gross profit margin (2)
78%
77%
77%
76%
(1)
Gross profit represents revenue less costs
of services (exclusive of depreciation and amortization).
(2)
Gross profit margin represents total gross
profit / total revenue.
2024 Outlook
“Our first half results demonstrate our continued success in
achieving double-digit Adjusted EBITDA growth and accelerating Free
Cash Flow Conversion,” said Tim Murphy, CFO of REPAY. “As we move
into the second half of the year, we are reaffirming our 2024
outlook. Our focus on profitable growth and reducing overall capex
spending, gives us the confidence to accelerate our Free Cash Flow
Conversion during 2024.”
REPAY reiterates its previously provided outlook for full year
2024, as shown below.
Full Year 2024 Outlook
Revenue
$314 - 320 million
Gross Profit
$245 - 250 million
Adjusted EBITDA
$139 - 142 million
Free Cash Flow Conversion
~ 60%
REPAY does not provide quantitative reconciliation of
forward-looking, non-GAAP financial measures, such as forecasted
2024 Adjusted EBITDA and Free Cash Flow Conversion, to the most
directly comparable GAAP financial measure, because it is difficult
to reliably predict or estimate the relevant components without
unreasonable effort due to future uncertainties that may
potentially have a significant impact on such calculations, and
providing them may imply a degree of precision that would be
confusing or potentially misleading.
Conference Call
REPAY will host a conference call to discuss second quarter 2024
financial results today, August 8, 2024 at 5:00 pm ET. Hosting the
call will be John Morris, CEO, and Tim Murphy, CFO. The call will
be webcast live from REPAY’s investor relations website at
https://investors.repay.com/investor-relations. The conference call
can also be accessed live over the phone by dialing (877) 407-3982,
or for international callers (201) 493-6780. A replay will be
available one hour after the call and can be accessed by dialing
(844) 512-2921 or (412) 317-6671 for international callers; the
conference ID is 13747074. The replay will be available at
https://investors.repay.com/investor-relations.
Non-GAAP Financial Measures
This report includes certain non-GAAP financial measures that
management uses to evaluate the Company’s operating business,
measure performance, and make strategic decisions. Adjusted EBITDA
is a non-GAAP financial measure that represents net income prior to
interest expense, tax expense, depreciation and amortization, as
adjusted to add back certain charges deemed to not be part of
normal operating expenses, non-cash charges and/or non-recurring
charges, such as loss on business disposition, non-cash impairment
loss, non-cash change in fair value of assets and liabilities,
share-based compensation charges, transaction expenses,
restructuring and other strategic initiative costs and other
non-recurring charges. Adjusted Net Income is a non-GAAP financial
measure that represents net income prior to amortization of
acquisition-related intangibles, as adjusted to add back certain
charges deemed to not be part of normal operating expenses, loss on
business disposition, non-cash impairment loss, non-cash charges
and/or non-recurring charges, such as loss on business disposition,
non-cash change in fair value of assets and liabilities,
share-based compensation expense, transaction expenses,
restructuring and other strategic initiative costs, other
non-recurring charges, non-cash interest expense and net of tax
effect associated with these adjustments. Adjusted Net Income is
adjusted to exclude amortization of all acquisition-related
intangibles as such amounts are inconsistent in amount and
frequency and are significantly impacted by the timing and/or size
of acquisitions. Management believes that the adjustment of
acquisition-related intangible amortization supplements GAAP
financial measures because it allows for greater comparability of
operating performance. Although REPAY excludes amortization from
acquisition-related intangibles from its non-GAAP expenses,
management believes that it is important for investors to
understand that such intangibles were recorded as part of purchase
accounting and contribute to revenue generation. Adjusted Net
Income per share is a non-GAAP financial measure that represents
Adjusted Net Income divided by the weighted average number of
shares of Class A common stock outstanding (on an as-converted
basis assuming conversion of the outstanding units exchangeable for
shares of Class A common stock) for the three and six months ended
June 30, 2024 and 2023 (excluding shares subject to forfeiture).
Organic gross profit growth is a non-GAAP financial measure that
represents year-on-year gross profit growth that excludes
incremental gross profit attributable to acquisitions and
divestitures made in the applicable prior period or any subsequent
period. Free Cash Flow is a non-GAAP financial measure that
represents net cash flow provided by operating activities less
total capital expenditures. Free Cash Flow Conversion represents
Free Cash Flow divided by Adjusted EBITDA. REPAY believes that
Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per
share, organic gross profit growth, Free Cash Flow and Free Cash
Flow Conversion provide useful information to investors and others
in understanding and evaluating its operating results in the same
manner as management. However, these non-GAAP financial measures
are not financial measures calculated in accordance with GAAP and
should not be considered as a substitute for net income, operating
profit, net cash provided by operating activities, or any other
operating performance measure calculated in accordance with GAAP.
Using these non-GAAP financial measures to analyze REPAY’s business
has material limitations because the calculations are based on the
subjective determination of management regarding the nature and
classification of events and circumstances that investors may find
significant. In addition, although other companies in REPAY’s
industry may report measures titled as the same or similar
measures, such non-GAAP financial measures may be calculated
differently from how REPAY calculates its non-GAAP financial
measures, which reduces their overall usefulness as comparative
measures. Because of these limitations, you should consider REPAY’s
non-GAAP financial measures alongside other financial performance
measures, including net income, net cash provided by operating
activities and REPAY’s other financial results presented in
accordance with GAAP.
Forward-Looking Statements
This communication contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements include, but are not limited to, statements
about future financial and operating results, REPAY’s plans,
objectives, expectations and intentions with respect to future
operations, products and services; and other statements identified
by words such as “guidance,” “will likely result,” “are expected
to,” “will continue,” “should,” “is anticipated,” “estimated,”
“believe,” “intend,” “plan,” “projection,” “outlook” or words of
similar meaning. These forward-looking statements include, but are
not limited to, REPAY’s 2024 outlook and other financial guidance,
expected demand on REPAY’s product offering, including further
implementation of electronic payment options and statements
regarding REPAY’s market and growth opportunities, and REPAY’s
business strategy and the plans and objectives of management for
future operations. Such forward-looking statements are based upon
the current beliefs and expectations of REPAY’s management and are
inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are
difficult to predict and generally beyond REPAY’s control.
In addition to factors disclosed in REPAY’s reports filed with
the U.S. Securities and Exchange Commission, including its Annual
Report on Form 10-K for the year ended December 31, 2023 and
subsequent Form 10-Qs, and those identified elsewhere in this
communication, the following factors, among others, could cause
actual results and the timing of events to differ materially from
the anticipated results or other expectations expressed in the
forward-looking statements: exposure to economic conditions and
political risk affecting the consumer loan market, the receivables
management industry and consumer and commercial spending, including
bank failures or other adverse events affecting financial
institutions, inflationary pressures, general economic slowdown or
recession; changes in the payment processing market in which REPAY
competes, including with respect to its competitive landscape,
technology evolution or regulatory changes; changes in the vertical
markets that REPAY targets, including the regulatory environment
applicable to REPAY’s clients; the ability to retain, develop and
hire key personnel; risks relating to REPAY’s relationships within
the payment ecosystem; risk that REPAY may not be able to execute
its growth strategies, including identifying and executing
acquisitions; risks relating to data security; changes in
accounting policies applicable to REPAY; and the risk that REPAY
may not be able to maintain effective internal controls.
Actual results, performance or achievements may differ
materially, and potentially adversely, from any projections and
forward-looking statements and the assumptions on which those
forward-looking statements are based. There can be no assurance
that the data contained herein is reflective of future performance
to any degree. You are cautioned not to place undue reliance on
forward-looking statements as a predictor of future performance.
All information set forth herein speaks only as of the date hereof
in the case of information about REPAY or the date of such
information in the case of information from persons other than
REPAY, and REPAY disclaims any intention or obligation to update
any forward-looking statements as a result of developments
occurring after the date of this communication. Forecasts and
estimates regarding REPAY’s industry and end markets are based on
sources it believes to be reliable, however there can be no
assurance these forecasts and estimates will prove accurate in
whole or in part. Pro forma, projected and estimated numbers are
used for illustrative purpose only, are not forecasts and may not
reflect actual results.
About REPAY
REPAY provides integrated payment processing solutions to
verticals that have specific transaction processing needs. REPAY’s
proprietary, integrated payment technology platform reduces the
complexity of electronic payments for clients, while enhancing the
overall experience for consumers and businesses.
Condensed Consolidated
Statement of Operations (Unaudited)
Three Months Ended June
30,
Six Months ended June
30,
(in $ thousands, except per share
data)
2024
2023
2024
2023
Revenue
$
74,906
$
71,783
$
155,626
$
146,320
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
16,321
16,840
35,496
34,805
Selling, general and administrative
35,235
38,177
72,256
76,695
Depreciation and amortization
26,771
26,483
53,799
52,623
Loss on business disposition
—
149
—
10,027
Total operating expenses
78,327
81,649
161,551
174,150
Loss from operations
(3,421
)
(9,866
)
(5,925
)
(27,830
)
Other income (expense)
Interest income (expense), net
554
(388
)
934
(1,311
)
Change in fair value of tax receivable
liability
(3,366
)
4,056
(6,279
)
(482
)
Other income (loss), net
21
(183
)
(5
)
(333
)
Total other income (expense)
(2,791
)
3,485
(5,350
)
(2,126
)
Loss before income tax expense
(6,212
)
(6,381
)
(11,275
)
(29,956
)
Income tax benefit (expense)
1,975
1,051
1,673
(3,306
)
Net loss
$
(4,237
)
$
(5,330
)
$
(9,602
)
$
(33,262
)
Net loss attributable to non-controlling
interest
(166
)
(687
)
(319
)
(2,227
)
Net loss attributable to the
Company
$
(4,071
)
$
(4,643
)
$
(9,283
)
$
(31,035
)
Weighted-average shares of Class A common
stock outstanding - basic and diluted
91,821,369
89,170,814
91,519,789
88,894,820
Loss per Class A share - basic and
diluted
$
(0.04
)
$
(0.05
)
$
(0.10
)
$
(0.35
)
Condensed Consolidated Balance
Sheets
(in $ thousands)
June 30, 2024
(Unaudited)
December 31, 2023
Assets
Cash and cash equivalents
$
147,092
$
118,096
Accounts receivable
39,321
36,017
Prepaid expenses and other
15,522
15,209
Total current assets
201,935
169,322
Property, plant and equipment, net
2,913
3,133
Restricted cash
26,944
26,049
Intangible assets, net
416,382
447,141
Goodwill
716,793
716,793
Operating lease right-of-use assets,
net
5,653
8,023
Deferred tax assets
148,545
146,872
Other assets
2,500
2,500
Total noncurrent assets
1,319,730
1,350,511
Total assets
$
1,521,665
$
1,519,833
Liabilities
Accounts payable
$
24,354
$
22,030
Accrued expenses
26,528
32,906
Current operating lease liabilities
1,109
1,629
Current tax receivable agreement
—
580
Other current liabilities
742
318
Total current liabilities
52,733
57,463
Long-term debt
435,589
434,166
Noncurrent operating lease liabilities
5,169
7,247
Tax receivable agreement, net of current
portion
194,610
188,331
Other liabilities
2,839
1,838
Total noncurrent liabilities
638,207
631,582
Total liabilities
$
690,940
$
689,045
Commitments and contingencies
Stockholders' equity
Class A common stock, $0.0001 par value;
2,000,000,000 shares authorized; 92,987,543 issued and 91,571,033
outstanding as of June 30, 2024; 92,220,494 issued and 90,803,984
outstanding as of December 31, 2023
9
9
Class V common stock, $0.0001 par value;
1,000 shares authorized and 100 shares issued and outstanding as of
June 30, 2024 and December 31, 2023
—
—
Treasury stock, 1,416,510 shares as of
June 30, 2024 and December 31, 2023
(12,528
)
(12,528
)
Additional paid-in capital
1,160,879
1,151,324
Accumulated deficit
(332,953
)
(323,670
)
Total Repay stockholders'
equity
$
815,407
$
815,135
Non-controlling interests
15,318
15,653
Total equity
830,725
830,788
Total liabilities and equity
$
1,521,665
$
1,519,833
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Six Months Ended June
30,
(in $ thousands)
2024
2023
Cash flows from operating
activities
Net loss
$
(9,602
)
$
(33,262
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
53,799
52,623
Stock based compensation
12,028
10,570
Amortization of debt issuance costs
1,423
1,423
Loss on business disposition
—
10,027
Other loss
—
118
Fair value change in tax receivable
agreement liability
6,279
482
Deferred tax expense
(1,673
)
3,306
Change in accounts receivable
(3,303
)
(1,858
)
Change in prepaid expenses and other
(313
)
4,842
Change in operating lease ROU assets
2,368
87
Change in accounts payable
2,325
(3,388
)
Change in accrued expenses and other
(6,378
)
(2,957
)
Change in operating lease liabilities
(2,599
)
(34
)
Change in other liabilities
1,426
(1,195
)
Net cash provided by operating
activities
55,780
40,784
Cash flows from investing
activities
Purchases of property and equipment
(571
)
(114
)
Capitalized software development costs
(22,249
)
(23,600
)
Proceeds from sale of business, net of
cash retained
—
40,273
Net cash provided by (used in)
investing activities
(22,820
)
16,559
Cash flows from financing
activities
Payments on long-term debt
—
(20,000
)
Payments for tax withholding related to
shares vesting under Incentive Plan
(2,489
)
(1,376
)
Distributions to Members
—
(609
)
Payment of Tax Receivable Agreement
(580
)
—
Payment of contingent consideration
liability up to acquisition-date fair value
—
(1,000
)
Net cash used in financing
activities
(3,069
)
(22,985
)
Increase in cash, cash equivalents and
restricted cash
29,891
34,358
Cash, cash equivalents and restricted
cash at beginning of period
$
144,145
$
93,563
Cash, cash equivalents and restricted
cash at end of period
$
174,036
$
127,921
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for:
Interest
$
397
$
647
Income taxes
$
1,489
$
797
Reconciliation of GAAP Net
Income (Loss) to Non-GAAP Adjusted EBITDA
For the Three Months Ended
June 30, 2024 and 2023
(Unaudited)
Three Months ended June
30,
(in $ thousands)
2024
2023
Revenue
$
74,906
$
71,783
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
16,321
$
16,840
Selling, general and administrative
35,235
38,177
Depreciation and amortization
26,771
26,483
Loss on business disposition
—
149
Total operating expenses
$
78,327
$
81,649
Loss from operations
$
(3,421
)
$
(9,866
)
Other income (expense)
Interest income (expense), net
554
(388
)
Change in fair value of tax receivable
liability
(3,366
)
4,056
Other income (loss), net
21
(183
)
Total other income (expense)
(2,791
)
3,485
Loss before income tax expense
(6,212
)
(6,381
)
Income tax benefit (expense)
1,975
1,051
Net loss
$
(4,237
)
$
(5,330
)
Add:
Interest (income) expense, net
(554
)
388
Depreciation and amortization (a)
26,771
26,483
Income tax benefit
(1,975
)
(1,051
)
EBITDA
$
20,005
$
20,490
Loss on business disposition (b)
—
149
Non-cash impairment loss (c)
—
50
Non-cash change in fair value of assets
and liabilities (d)
3,366
(4,056
)
Share-based compensation expense (e)
5,874
6,517
Transaction expenses (f)
414
793
Restructuring and other strategic
initiative costs (g)
2,584
4,041
Other non-recurring charges (h)
1,485
2,541
Adjusted EBITDA
$
33,728
$
30,525
Quarterly Reconciliation of
GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA
(Unaudited)
Three Months ended
(in $ thousands)
September 30, 2023
December 31, 2023
March 31, 2024
Net loss
$
(6,484
)
$
(77,674
)
$
(5,365
)
Add:
Interest expense (income), net
103
(365
)
(380
)
Depreciation and amortization (a)
26,523
24,711
27,028
Income tax (benefit) expense
(1,998
)
(3,423
)
302
EBITDA
$
18,144
$
(56,751
)
$
21,585
Non-cash impairment loss (c)
—
75,750
—
Non-cash change in fair value of assets
and liabilities (d)
3,234
3,778
2,913
Share-based compensation expense (e)
5,686
5,899
6,923
Transaction expenses (f)
812
921
677
Restructuring and other strategic
initiative costs (g)
3,084
3,372
2,184
Other non-recurring charges (h)
894
520
1,231
Adjusted EBITDA
$
31,854
$
33,489
$
35,513
Reconciliation of GAAP Net
Income (Loss) to Non-GAAP Adjusted EBITDA
For the Six Months Ended June
30, 2024 and 2023
(Unaudited)
Six Months ended June
30,
(in $ thousands)
2024
2023
Revenue
$
155,626
$
146,320
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
35,496
$
34,805
Selling, general and administrative
72,256
76,695
Depreciation and amortization
53,799
52,623
Loss on business disposition
—
10,027
Total operating expenses
$
161,551
$
174,150
Loss from operations
$
(5,925
)
$
(27,830
)
Other income (expense)
Interest income (expense), net
934
(1,311
)
Change in fair value of tax receivable
liability
(6,279
)
(482
)
Other income (loss), net
(5
)
(333
)
Total other income (expense)
(5,350
)
(2,126
)
Loss before income tax expense
(11,275
)
(29,956
)
Income tax benefit (expense)
1,673
(3,306
)
Net loss
$
(9,602
)
$
(33,262
)
Add:
Interest (income) expense, net
(934
)
1,311
Depreciation and amortization (a)
53,799
52,623
Income tax (benefit) expense
(1,673
)
3,306
EBITDA
$
41,590
$
23,978
Loss on business disposition (b)
—
10,027
Non-cash impairment loss (c)
—
50
Non-cash change in fair value of assets
and liabilities (d)
6,279
482
Share-based compensation expense (e)
12,797
10,571
Transaction expenses (f)
1,091
6,790
Restructuring and other strategic
initiative costs (g)
4,768
5,452
Other non-recurring charges (h)
2,716
4,113
Adjusted EBITDA
$
69,241
$
61,463
Reconciliation of GAAP Net
Income (Loss) to Non-GAAP Adjusted Net Income For the Three Months
Ended June 30, 2024 and 2023 (Unaudited)
Three Months ended June
30,
(in $ thousands)
2024
2023
Revenue
$
74,906
$
71,783
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
16,321
$
16,840
Selling, general and administrative
35,235
38,177
Depreciation and amortization
26,771
26,483
Loss on business disposition
—
149
Total operating expenses
$
78,327
$
81,649
Loss from operations
$
(3,421
)
$
(9,866
)
Interest income (expense), net
554
(388
)
Change in fair value of tax receivable
liability
(3,366
)
4,056
Other income (loss), net
21
(183
)
Total other income (expense)
(2,791
)
3,485
Loss before income tax expense
(6,212
)
(6,381
)
Income tax benefit (expense)
1,975
1,051
Net loss
$
(4,237
)
$
(5,330
)
Add:
Amortization of acquisition-related
intangibles (i)
19,702
20,963
Loss on business disposition (b)
—
149
Non-cash impairment loss (c)
—
50
Non-cash change in fair value of assets
and liabilities (d)
3,366
(4,056
)
Share-based compensation expense (e)
5,874
6,517
Transaction expenses (f)
414
793
Restructuring and other strategic
initiative costs (g)
2,584
4,041
Other non-recurring charges (h)
1,485
2,541
Non-cash interest expense (j)
712
712
Pro forma taxes at effective rate (k)
(8,138
)
(6,869
)
Adjusted Net Income
$
21,762
$
19,511
Shares of Class A common stock outstanding
(on an as-converted basis) (l)
97,665,464
96,796,143
Adjusted Net Income per share
$
0.22
$
0.20
Reconciliation of GAAP Net
Income (Loss) to Non-GAAP Adjusted Net Income
For the Six Months Ended June
30, 2024 and 2023
(Unaudited)
Six Months ended June
30,
(in $ thousands)
2024
2023
Revenue
$
155,626
$
146,320
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
35,496
$
34,805
Selling, general and administrative
72,256
76,695
Depreciation and amortization
53,799
52,623
Loss on business disposition
—
10,027
Total operating expenses
$
161,551
$
174,150
Loss from operations
$
(5,925
)
$
(27,830
)
Other expenses
Interest income (expense), net
934
(1,311
)
Change in fair value of tax receivable
liability
(6,279
)
(482
)
Other income (loss), net
(5
)
(333
)
Total other income (expense)
(5,350
)
(2,126
)
Loss before income tax expense
(11,275
)
(29,956
)
Income tax benefit (expense)
1,673
(3,306
)
Net loss
$
(9,602
)
$
(33,262
)
Add:
Amortization of acquisition-related
intangibles (i)
39,438
40,887
Loss on business disposition (b)
—
10,027
Non-cash impairment loss (c)
—
50
Non-cash change in fair value of assets
and liabilities (d)
6,279
482
Share-based compensation expense (e)
12,797
10,571
Transaction expenses (f)
1,091
6,790
Restructuring and other strategic
initiative costs (g)
4,768
5,452
Other non-recurring charges (h)
2,716
4,113
Non-cash interest expense (j)
1,424
1,424
Pro forma taxes at effective rate (k)
(14,771
)
(7,830
)
Adjusted Net Income
$
44,140
$
38,704
Shares of Class A common stock outstanding
(on an as-converted basis) (l)
97,363,884
96,639,545
Adjusted Net Income per share
$
0.45
$
0.40
Reconciliation of Operating
Cash Flow to Free Cash Flow
For the Three and Six Months
Ended June 30, 2024 and 2023
(Unaudited)
Three Months ended June
30,
Six Months ended June
30,
(in $ thousands)
2024
2023
2024
2023
Net cash provided by operating
activities
$
30,979
$
19,953
$
55,780
$
40,784
Capital expenditures
Cash paid for property and equipment
(484
)
414
(571
)
(114
)
Capitalized software development costs
(11,207
)
(10,399
)
(22,249
)
(23,600
)
Total capital expenditures
(11,691
)
(9,985
)
(22,820
)
(23,714
)
Free cash flow
$
19,288
$
9,968
$
32,960
$
17,070
Free cash flow conversion
57
%
33
%
48
%
28
%
Quarterly Reconciliation of
Operating Cash Flow to Free Cash Flow
(Unaudited)
Three Months ended
(in $ thousands)
September 30, 2023
December 31, 2023
March 31, 2024
Net cash provided by operating
activities
$
27,967
$
34,863
$
24,801
Capital expenditures
Cash paid for property and equipment
(948
)
(183
)
(87
)
Capitalized software development costs
(13,078
)
(12,893
)
(11,042
)
Total capital expenditures
(14,026
)
(13,076
)
(11,129
)
Free cash flow
$
13,941
$
21,787
$
13,672
Free cash flow conversion
44
%
65
%
38
%
Reconciliation of Gross Profit
Growth to Organic Gross Profit Growth
For the Year-over-Year Change
Between the Six Months Ended June 30, 2024 and 2023
(Unaudited)
Q2 Year-to-Date YoY
Change
Gross profit growth
8
%
Less: Growth from acquisitions and
dispositions
(1
%)
Organic gross profit growth (m)
9
%
(a)
See footnote (i) for details on
amortization and depreciation expenses.
(b)
Reflects the loss recognized related to
the disposition of Blue Cow.
(c)
For the three and six months ended June
30, 2023, reflects impairment loss related to a trade name
write-off of Media Payments. For the three months ended December
31, 2023, reflects non-cash goodwill impairment loss related to the
Business Payments segment.
(d)
Reflects the changes in management’s
estimates of the fair value of the liability relating to the Tax
Receivable Agreement.
(e)
Represents compensation expense associated
with equity compensation plans.
(f)
Primarily consists of (i) during the three
and six months ended June 30, 2024 and the three months ended March
31, 2024, professional service fees incurred in connection with
prior transactions, and (ii) during the three and six months ended
June 30, 2023, the three months ended September 30, 2023 and the
three months ended December 31, 2023, professional service fees and
other costs incurred in connection with the disposition of Blue Cow
Software.
(g)
Reflects costs associated with
reorganization of operations, consulting fees related to processing
services and other operational improvements, including
restructuring and integration activities related to acquired
businesses, that were not in the ordinary course.
(h)
For the three and six months ended June
30, 2024 and the three months ended March 31, 2024, reflects
franchise taxes and other non-income based taxes, non-recurring
legal and other litigation expenses and payments made to
third-parties in connection with our IT security and personnel. For
the three and six months ended June 30, 2023, the three months
ended September 30, 2023 and the three months ended December 31,
2023, reflects non-recurring payments made to third-parties in
connection with an expansion of our personnel, one-time payments to
certain partners and franchise taxes and other non-income based
taxes.
(i)
For the three and six months ended June
30, 2024 and 2023, the three months ended September 30, 2023, the
three months ended December 31 2023 and the three months ended
March 31, 2024, reflects amortization of client relationships,
non-compete agreement, software, and channel relationship
intangibles acquired through the business combination with Thunder
Bridge, and client relationships, non-compete agreement, and
software intangibles acquired through REPAY's acquisitions of
TriSource Solutions, APS Payments, Ventanex, cPayPlus, CPS
Payments, BillingTree, Kontrol Payables and Payix. This adjustment
excludes the amortization of other intangible assets which were
acquired in the regular course of business, such as capitalized
internally developed software and purchased software. See
additional information below for an analysis of amortization
expenses:
Three Months ended June
30,
Six Months ended June
30,
(in $ thousands)
2024
2023
2024
2023
Acquisition-related intangibles
$
19,702
$
20,963
$
39,438
$
40,887
Software
6,856
4,772
13,569
10,247
Amortization
$
26,558
$
25,735
$
53,007
$
51,134
Depreciation
213
748
792
1,489
Total Depreciation and amortization
(1)
$
26,771
$
26,483
$
53,799
$
52,623
Three Months ended
(in $ thousands)
September 30, 2023
December 31, 2023
March 31, 2024
Acquisition-related intangibles
$
19,786
$
20,969
$
19,736
Software
6,391
3,150
6,713
Amortization
$
26,177
$
24,119
$
26,449
Depreciation
346
592
579
Total Depreciation and amortization
(1)
$
26,523
$
24,711
$
27,028
(1)
Adjusted Net Income is adjusted to exclude
amortization of all acquisition-related intangibles as such amounts
are inconsistent in amount and frequency and are significantly
impacted by the timing and/or size of acquisitions (see
corresponding adjustments in the reconciliation of net income to
Adjusted Net Income presented above). Management believes that the
adjustment of acquisition-related intangible amortization
supplements GAAP financial measures because it allows for greater
comparability of operating performance. Although REPAY excludes
amortization from acquisition-related intangibles from its non-GAAP
expenses, management believes that it is important for investors to
understand that such intangibles were recorded as part of purchase
accounting and contribute to revenue generation. Amortization of
intangibles that relate to past acquisitions will recur in future
periods until such intangibles have been fully amortized. Any
future acquisitions may result in the amortization of additional
intangibles.
(j)
Represents amortization of non-cash
deferred debt issuance costs.
(k)
Represents pro forma income tax adjustment
effect associated with items adjusted above.
(l)
Represents the weighted average number of
shares of Class A common stock outstanding (on an as-converted
basis assuming conversion of outstanding Post-Merger Repay Units)
for the three and six months ended June 30, 2024 and 2023. These
numbers do not include any shares issuable upon conversion of the
Company’s convertible senior notes due 2026. See the reconciliation
of basic weighted average shares outstanding to the non-GAAP Class
A common stock outstanding on an as-converted basis for each
respective period below:
Three Months ended June
30,
Six Months ended June
30,
2024
2023
2024
2023
Weighted average shares of Class A common
stock outstanding - basic
91,821,369
89,170,814
91,519,789
88,894,820
Add: Non-controlling interests
Weighted average Post-Merger Repay Units
exchangeable for Class A common stock
5,844,095
7,625,329
5,844,095
7,744,725
Shares of Class A common stock
outstanding (on an as-converted basis)
97,665,464
96,796,143
97,363,884
96,639,545
(m)
Represents year-on-year gross profit
growth that excludes incremental gross profit attributable to
acquisitions and dispositions made in the applicable prior period
or any subsequent period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807752300/en/
Investor Relations Contact for REPAY: ir@repay.com Media
Relations Contact for REPAY: Kristen Hoyman (404) 637-1665
khoyman@repay.com
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