Repay Holdings Reports Steady Growth Amid Challenges

Repay Holdings ((RPAY)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for Repay Holdings Corporation painted a picture of steady growth and strategic expansion, albeit with certain challenges. The sentiment was generally positive, with notable achievements in adjusted EBITDA and free cash flow conversion. The business payments segment stood out with strong performance and expansion through new partnerships. However, these successes were tempered by declines in the consumer payments segment and client losses, alongside the absence of a 2025 outlook due to an ongoing strategic review.

Profitable Growth

Repay Holdings Corporation concluded the year with another quarter of profitable growth. The company reported a 9% increase in adjusted EBITDA and an improvement in free cash flow conversion to 64% in the fourth quarter. For the full year, the results were equally impressive, showcasing a 6% growth in gross profit, an 11% increase in adjusted EBITDA, and a significant rise in free cash flow conversion from 42% in 2023 to 75% in 2024.

Business Payments Segment Growth

The business payments segment was a standout performer, with gross profit growing 60% year over year in the fourth quarter and 40% for the full year. This growth was driven by the strength in the core accounts payable business and contributions from the political media vertical, highlighting the segment’s robust expansion.

Expansion and New Partnerships

Repay Holdings Corporation continued its expansion efforts by adding four new software partnerships, bringing the total to 180. The integration with Worth.ai is expected to enhance merchant underwriting and onboarding processes, further strengthening the company’s operational capabilities.

Strong Sales Pipeline

The company bolstered its sales pipeline by adding several new clients, including 16 new credit unions, increasing the total to 329. The business payments segment also signed several new enterprise clients, such as Fairview Health Services, indicating a strong demand for Repay’s services.

Consumer Payments Segment Challenges

Despite the overall positive performance, the consumer payments segment faced challenges, with a 5% decline in gross profit during the fourth quarter. This decline was attributed to client losses and macroeconomic impacts in the auto and accounts receivable management verticals.

Client Losses and Strategic Migration

The fourth quarter’s gross profit growth was impacted by select client losses and the strategic technology migration of targeted business payment volumes to the total pay solution. Additionally, the acquisition of a large client in the B2B segment affected accounts receivable softness.

Lack of 2025 Outlook

Due to an ongoing strategic review, Repay Holdings refrained from providing a 2025 outlook. The review includes consideration of various strategic alternatives, such as mergers and acquisitions, a take-private, or a sale of the company, reflecting a focus on exploring all avenues for future growth.

Forward-Looking Guidance

During the fourth quarter of 2024, Repay Holdings demonstrated profitable growth with a 9% increase in adjusted EBITDA and an improvement in free cash flow conversion to 64%. For the full year, the company reported a 6% growth in gross profit, an 11% increase in adjusted EBITDA, and a rise in free cash flow conversion from 42% in 2023 to 75% in 2024. Despite facing some client losses and macroeconomic challenges, the company remains committed to improving operations and shareholder value through a comprehensive strategic review.

In summary, Repay Holdings Corporation’s earnings call reflected a balanced narrative of growth and challenges. While the company achieved significant gains in its business payments segment and expanded its partnerships, it also faced hurdles in the consumer payments segment and client retention. The absence of a 2025 outlook underscores the strategic review’s importance, as the company explores various options to enhance shareholder value.