Gross Profit Growth of 9% in Q3 and 8% YTD (9%
YTD on an organic basis1)
Strong Adjusted EBITDA Growth and Accelerating
Free Cash Flow Conversion
Updated 2024 Outlook, Increasing Free Cash Flow
Conversion for 2024
Repay Holdings Corporation (NASDAQ: RPAY) (“REPAY” or the
“Company”), a leading provider of vertically-integrated payment
solutions, today reported financial results for its third quarter
ended September 30, 2024.
Third Quarter 2024 Financial
Highlights
(in $ millions)
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
YoY
Change
Revenue
$
74.3
$
76.0
$
80.7
$
74.9
$
79.1
6%
Gross profit (1)
56.7
58.7
61.5
58.6
61.6
9%
Net (loss) income
(6.5
)
(77.7
)
(5.4
)
(4.2
)
3.2
-
Adjusted EBITDA (2)
31.9
33.5
35.5
33.7
35.1
10%
Net cash provided by operating
activities
28.0
34.9
24.8
31.0
60.1
115%
Free Cash Flow (2)
13.9
21.8
13.7
19.3
48.8
250%
(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.
“Q3 represented another quarter of profitable growth and
accelerating Free Cash Flow conversion at REPAY,” said John Morris,
CEO of REPAY. “We continue to see growth across many areas of our
business and remain focused on executing our strategy to capture
embedded payment flows from clients within our verticals. We
believe this approach, along with new software partnerships and
further enhancing our payment technology platform, will continue to
help us drive sustainable growth, strong cash generation, and value
for our shareholders. REPAY remains committed to efficiently
allocating capital, which may include organic investments,
strategic M&A, and opportunistically repurchasing shares.”
Third 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.
- 9% year-over-year gross profit growth in Q3
- Consumer Payments gross profit growth of approximately 2%
year-over-year and 6% year-to-date
- Business Payments gross profit growth of approximately 67%
year-over-year and 33% year-to-date
- Accelerated AP supplier network to over 330,000, an increase of
approximately 42% year-over-year
- Added three new integrated software partners to bring the total
to 276 software relationships as of the end of the third
quarter
- Instant funding volumes increased by approximately 24%
year-over-year
- Added 13 new credit unions bringing total credit union clients
to 313
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.
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
September 30,
Nine Months Ended
September 30,
($ in thousands)
2024
2023
% Change
2024
2023
% Change
Revenue
Consumer Payments
$
69,189
$
68,720
1%
$
214,617
$
204,622
5%
Business Payments
15,297
9,704
58%
35,566
28,170
26%
Elimination of intersegment revenues
(5,341
)
(4,104
)
(15,412
)
(12,152
)
Total revenue
$
79,145
$
74,320
6%
$
234,771
$
220,640
6%
Gross profit (1)
Consumer Payments
$
54,889
$
53,599
2%
$
170,026
$
159,929
6%
Business Payments
12,013
7,188
67%
27,077
20,421
33%
Elimination of intersegment revenues
(5,341
)
(4,104
)
(15,412
)
(12,152
)
Total gross profit
$
61,561
$
56,683
9%
$
181,691
$
168,198
8%
Total gross profit margin (2)
78
%
76
%
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 Update
“REPAY’s solid year-to-date results gives us the confidence in
double-digit Adjusted EBITDA growth and accelerating Free Cash Flow
Conversion,” said Tim Murphy, CFO of REPAY. “We are updating our
reported Free Cash Flow Conversion target from approximately 60% to
approximately 65% as we benefited from a one-time net working
capital impact during the year. Our focus in 2024 remains on
profitable growth and reducing overall capex spending to achieve
our targeted Free Cash Flow Conversion.”
REPAY updated its 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 (1)
~ 65%
(1)
Free Cash Flow Conversion represents Free
Cash Flow / Adjusted EBITDA. Free Cash Flow and Adjusted EBITDA are
non-GAAP financial measures. See “Non-GAAP Financial Measures” and
the reconciliation of Free Cash Flow and Adjusted EBITDA to their
most comparable GAAP measure provided below for additional
information.
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 third quarter 2024
financial results today, November 12, 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 13748834. 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 gain on debt extinguishment, 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, gain on debt extinguishment, 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 nine months ended
September 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 update and other financial
guidance, statements regarding REPAY’s market and growth
opportunities, REPAY’s business strategy and the plans and
objectives of management for future operations and the allocation
of capital. 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
September 30,
Nine Months ended
September 30,
(in $ thousands, except per share
data)
2024
2023
2024
2023
Revenue
$
79,145
$
74,320
$
234,771
$
220,640
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
17,584
17,637
53,080
52,442
Selling, general and administrative
36,707
35,279
108,963
111,974
Depreciation and amortization
25,529
26,523
79,328
79,146
Loss on business disposition
—
—
—
10,027
Total operating expenses
79,820
79,439
241,371
253,589
Loss from operations
(675
)
(5,119
)
(6,600
)
(32,949
)
Other income (expense)
Interest (expense) income, net
(1,310
)
(103
)
(376
)
(1,413
)
Gain on extinguishment of debt
13,136
—
13,136
—
Change in fair value of tax receivable
liability
(6,479
)
(3,234
)
(12,758
)
(3,716
)
Other income (loss), net
67
(26
)
62
(360
)
Total other income (expense)
5,414
(3,363
)
64
(5,489
)
Income (loss) before income tax
expense
4,739
(8,482
)
(6,536
)
(38,438
)
Income tax benefit (expense)
(1,524
)
1,998
149
(1,308
)
Net income (loss)
$
3,215
$
(6,484
)
$
(6,387
)
$
(39,746
)
Net loss attributable to non-controlling
interest
(28
)
(316
)
(347
)
(2,543
)
Net income (loss) attributable to the
Company
$
3,243
$
(6,168
)
$
(6,040
)
$
(37,203
)
Weighted-average shares of Class A common
stock outstanding - basic
88,263,285
91,160,415
90,426,364
89,658,318
Weighted-average shares of Class A common
stock outstanding - diluted
103,129,907
91,160,415
90,426,364
89,658,318
Income (loss) per Class A share -
basic
$
0.04
$
(0.07
)
$
(0.07
)
$
(0.41
)
Income (loss) per Class A share -
diluted
$
0.03
$
(0.07
)
$
(0.07
)
$
(0.41
)
Condensed Consolidated Balance
Sheets
(in $ thousands)
September 30,
2024
(Unaudited)
December 31,
2023
Assets
Cash and cash equivalents
$
168,715
$
118,096
Accounts receivable
41,124
36,017
Prepaid expenses and other
14,930
15,209
Total current assets
224,769
169,322
Property, plant and equipment, net
2,713
3,133
Restricted cash
46,540
26,049
Intangible assets, net
402,292
447,141
Goodwill
716,793
716,793
Operating lease right-of-use assets,
net
11,564
8,023
Deferred tax assets
157,097
146,872
Other assets
2,500
2,500
Total noncurrent assets
1,339,499
1,350,511
Total assets
$
1,564,268
$
1,519,833
Liabilities
Accounts payable
$
28,792
$
22,030
Accrued expenses
52,246
32,906
Current operating lease liabilities
1,199
1,629
Current tax receivable agreement
—
580
Other current liabilities
1,026
318
Total current liabilities
83,263
57,463
Long-term debt
496,214
434,166
Noncurrent operating lease liabilities
10,958
7,247
Tax receivable agreement, net of current
portion
201,273
188,331
Other liabilities
2,861
1,838
Total noncurrent liabilities
711,306
631,582
Total liabilities
$
794,569
$
689,045
Commitments and contingencies
Stockholders' equity
Class A common stock, $0.0001 par value;
2,000,000,000 shares authorized; 93,213,403 issued and 87,720,670
outstanding as of September 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
September 30, 2024 and December 31, 2023
—
—
Treasury stock, 5,492,733 and 1,416,510
shares as of September 30, 2024 and December 31, 2023,
respectively
(53,782
)
(12,528
)
Additional paid-in capital
1,138,160
1,151,324
Accumulated deficit
(329,710
)
(323,670
)
Total Repay stockholders'
equity
$
754,677
$
815,135
Non-controlling interests
15,022
15,653
Total equity
769,699
830,788
Total liabilities and equity
$
1,564,268
$
1,519,833
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Nine Months Ended September
30,
(in $ thousands)
2024
2023
Cash flows from operating
activities
Net loss
$
(6,387
)
$
(39,746
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
79,328
79,146
Stock based compensation
18,495
16,256
Amortization of debt issuance costs
2,185
2,136
Loss on business disposition
—
10,027
Gain on extinguishment of debt
(13,136
)
—
Other loss
—
273
Fair value change in tax receivable
agreement liability
12,758
3,716
Deferred tax expense
(149
)
1,308
Change in accounts receivable
(5,107
)
(4,857
)
Change in prepaid expenses and other
279
4,161
Change in operating lease ROU assets
(3,541
)
389
Change in accounts payable
6,762
(1,948
)
Change in accrued expenses and other
19,339
(1,544
)
Change in operating lease liabilities
3,281
(424
)
Change in other liabilities
1,731
(142
)
Net cash provided by operating
activities
115,838
68,751
Cash flows from investing
activities
Purchases of property and equipment
(782
)
(1,062
)
Capitalized software development costs
(33,278
)
(36,678
)
Proceeds from sale of business, net of
cash retained
—
40,273
Net cash provided by (used in)
investing activities
(34,060
)
2,533
Cash flows from financing
activities
Issuance of long-term debt
287,500
—
Payments on long-term debt
(205,150
)
(20,000
)
Payments of debt issuance costs
(9,350
)
—
Payments for tax withholding related to
shares vesting under Incentive Plan
(2,720
)
(1,510
)
Treasury shares repurchased
(41,577
)
—
Stock options exercised
395
—
Distributions to Members
—
(947
)
Purchase of capped calls related to
issuance of convertible notes
(39,186
)
—
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
(10,668
)
(23,457
)
Increase in cash, cash equivalents and
restricted cash
71,110
47,827
Cash, cash equivalents and restricted
cash at beginning of period
$
144,145
$
93,563
Cash, cash equivalents and restricted
cash at end of period
$
215,255
$
141,390
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for:
Interest
$
643
$
840
Income taxes
$
2,045
$
1,201
Reconciliation of GAAP Net
Income (Loss) to Non-GAAP Adjusted EBITDA For the Three Months
Ended September 30, 2024 and 2023 (Unaudited)
Three Months ended September
30,
(in $ thousands)
2024
2023
Revenue
$
79,145
$
74,320
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
17,584
$
17,637
Selling, general and administrative
36,707
35,279
Depreciation and amortization
25,529
26,523
Total operating expenses
$
79,820
$
79,439
Loss from operations
$
(675
)
$
(5,119
)
Other income (expense)
Interest (expense) income, net
(1,310
)
(103
)
Gain on extinguishment of debt
13,136
—
Change in fair value of tax receivable
liability
(6,479
)
(3,234
)
Other income (loss), net
67
(26
)
Total other income (expense)
5,414
(3,363
)
Income (loss) before income tax
expense
4,739
(8,482
)
Income tax benefit (expense)
(1,524
)
1,998
Net income (loss)
$
3,215
$
(6,484
)
Add:
Interest expense (income), net
1,310
103
Depreciation and amortization (a)
25,529
26,523
Income tax benefit
1,524
(1,998
)
EBITDA
$
31,578
$
18,144
Gain on extinguishment of debt (b)
(13,136
)
—
Non-cash change in fair value of assets
and liabilities (c)
6,479
3,234
Share-based compensation expense (d)
6,477
5,686
Transaction expenses (e)
937
812
Restructuring and other strategic
initiative costs (f)
2,202
3,084
Other non-recurring charges (g)
562
894
Adjusted EBITDA
$
35,099
$
31,854
Quarterly Reconciliation of
GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA
(Unaudited)
Three Months ended
(in $ thousands)
December 31, 2023
March 31, 2024
June 30, 2024
Net income (loss)
$
(77,674
)
$
(5,365
)
$
(4,237
)
Add:
Interest expense (income), net
(365
)
(380
)
(554
)
Depreciation and amortization (a)
24,711
27,028
26,771
Income tax (benefit) expense
(3,423
)
302
(1,975
)
EBITDA
$
(56,751
)
$
21,585
$
20,005
Non-cash impairment loss (i)
75,750
—
—
Non-cash change in fair value of assets
and liabilities (c)
3,778
2,913
3,366
Share-based compensation expense (d)
5,899
6,923
5,874
Transaction expenses (e)
921
677
414
Restructuring and other strategic
initiative costs (f)
3,372
2,184
2,584
Other non-recurring charges (g)
520
1,231
1,485
Adjusted EBITDA
$
33,489
$
35,513
$
33,728
Reconciliation of GAAP Net
Income (Loss) to Non-GAAP Adjusted EBITDA For the Nine Months Ended
September 30, 2024 and 2023 (Unaudited)
Nine Months ended September
30,
(in $ thousands)
2024
2023
Revenue
$
234,771
$
220,640
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
53,080
$
52,442
Selling, general and administrative
108,963
111,974
Depreciation and amortization
79,328
79,146
Loss on business disposition
—
10,027
Total operating expenses
$
241,371
$
253,589
Loss from operations
$
(6,600
)
$
(32,949
)
Other income (expense)
Interest (expense) income, net
(376
)
(1,413
)
Gain on extinguishment of debt
13,136
—
Change in fair value of tax receivable
liability
(12,758
)
(3,716
)
Other income (loss), net
62
(360
)
Total other income (expense)
64
(5,489
)
Income (loss) before income tax
expense
(6,536
)
(38,438
)
Income tax benefit (expense)
149
(1,308
)
Net income (loss)
$
(6,387
)
$
(39,746
)
Add:
Interest expense (income), net
376
1,413
Depreciation and amortization (a)
79,328
79,146
Income tax (benefit) expense
(149
)
1,308
EBITDA
$
73,168
$
42,121
Loss on business disposition (h)
—
10,027
Non-cash impairment loss (i)
—
50
Gain on extinguishment of debt (b)
(13,136
)
—
Non-cash change in fair value of assets
and liabilities (c)
12,758
3,716
Share-based compensation expense (d)
19,274
16,257
Transaction expenses (e)
2,028
7,602
Restructuring and other strategic
initiative costs (f)
6,970
8,536
Other non-recurring charges (g)
3,278
5,008
Adjusted EBITDA
$
104,340
$
93,317
Reconciliation of GAAP Net
Income (Loss) to Non-GAAP Adjusted Net Income For the Three Months
Ended September 30, 2024 and 2023 (Unaudited)
Three Months ended September
30,
(in $ thousands)
2024
2023
Revenue
$
79,145
$
74,320
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
17,584
$
17,637
Selling, general and administrative
36,707
35,279
Depreciation and amortization
25,529
26,523
Total operating expenses
$
79,820
$
79,439
Loss from operations
$
(675
)
$
(5,119
)
Interest (expense) income, net
(1,310
)
(103
)
Gain on extinguishment of debt
13,136
—
Change in fair value of tax receivable
liability
(6,479
)
(3,234
)
Other income (loss), net
67
(26
)
Total other income (expense)
5,414
(3,363
)
Income (loss) before income tax
expense
4,739
(8,482
)
Income tax benefit (expense)
(1,524
)
1,998
Net income (loss)
$
3,215
$
(6,484
)
Add:
Amortization of acquisition-related
intangibles (j)
19,111
19,786
Gain on extinguishment of debt (b)
(13,136
)
—
Non-cash change in fair value of assets
and liabilities (c)
6,479
3,234
Share-based compensation expense (d)
6,477
5,686
Transaction expenses (e)
937
812
Restructuring and other strategic
initiative costs (f)
2,202
3,084
Other non-recurring charges (g)
562
894
Non-cash interest expense (k)
762
712
Pro forma taxes at effective rate (l)
(5,364
)
(7,828
)
Adjusted Net Income
$
21,245
$
19,896
Shares of Class A common stock outstanding
(on an as-converted basis) (m)
94,074,811
97,052,574
Adjusted Net Income per share
$
0.23
$
0.21
Reconciliation of GAAP Net
Income (Loss) to Non-GAAP Adjusted Net Income For the Nine Months
Ended September 30, 2024 and 2023 (Unaudited)
Nine Months ended September
30,
(in $ thousands)
2024
2023
Revenue
$
234,771
$
220,640
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
53,080
$
52,442
Selling, general and administrative
108,963
111,974
Depreciation and amortization
79,328
79,146
Loss on business disposition
—
10,027
Total operating expenses
$
241,371
$
253,589
Loss from operations
$
(6,600
)
$
(32,949
)
Other expenses
Interest (expense) income, net
(376
)
(1,413
)
Gain on extinguishment of debt
13,136
—
Change in fair value of tax receivable
liability
(12,758
)
(3,716
)
Other income (loss), net
62
(360
)
Total other income (expense)
64
(5,489
)
Income (loss) before income tax
expense
(6,536
)
(38,438
)
Income tax benefit (expense)
149
(1,308
)
Net income (loss)
$
(6,387
)
$
(39,746
)
Add:
Amortization of acquisition-related
intangibles (j)
58,549
60,673
Loss on business disposition (h)
—
10,027
Non-cash impairment loss (i)
—
50
Gain on extinguishment of debt (b)
(13,136
)
—
Non-cash change in fair value of assets
and liabilities (c)
12,758
3,716
Share-based compensation expense (d)
19,274
16,257
Transaction expenses (e)
2,028
7,602
Restructuring and other strategic
initiative costs (f)
6,970
8,536
Other non-recurring charges (g)
3,278
5,008
Non-cash interest expense (k)
2,186
2,136
Pro forma taxes at effective rate (l)
(20,135
)
(15,658
)
Adjusted Net Income
$
65,385
$
58,601
Shares of Class A common stock outstanding
(on an as-converted basis) (m)
96,259,523
96,778,735
Adjusted Net Income per share
$
0.68
$
0.61
Reconciliation of Operating
Cash Flow to Free Cash Flow For the Three and Nine Months Ended
September 30, 2024 and 2023 (Unaudited)
Three Months ended
September 30,
Nine Months ended
September 30,
(in $ thousands)
2024
2023
2024
2023
Net cash provided by operating
activities
$
60,058
$
27,967
$
115,838
$
68,751
Capital expenditures
Cash paid for property and equipment
(211
)
(948
)
(782
)
(1,062
)
Capitalized software development costs
(11,029
)
(13,078
)
(33,278
)
(36,678
)
Total capital expenditures
(11,240
)
(14,026
)
(34,060
)
(37,740
)
Free cash flow
$
48,818
$
13,941
$
81,778
$
31,011
Free cash flow conversion
139
%
44
%
78
%
33
%
Quarterly Reconciliation of
Operating Cash Flow to Free Cash Flow (Unaudited)
Three Months ended
(in $ thousands)
December 31, 2023
March 31, 2024
June 30, 2024
Net cash provided by operating
activities
$
34,863
$
24,801
$
30,979
Capital expenditures
Cash paid for property and equipment
(183
)
(87
)
(484
)
Capitalized software development costs
(12,893
)
(11,042
)
(11,207
)
Total capital expenditures
(13,076
)
(11,129
)
(11,691
)
Free cash flow
$
21,787
$
13,672
$
19,288
Free cash flow conversion
65
%
38
%
57
%
Reconciliation of Gross Profit
Growth to Organic Gross Profit Growth For the Year-over-Year Change
Between the Nine Months Ended September 30, 2024 and 2023
(Unaudited)
Q3 Year-to-Date
YoY Change
Gross profit growth
8
%
Less: Growth from acquisitions and
dispositions
(1
%)
Organic gross profit growth (n)
9
%
(a)
See footnote (j) for details on
amortization and depreciation expenses.
(b)
Reflects a gain on the repurchase of 2026
Notes principal, net of a write-off of debt issuance costs relating
to the repurchased principal.
(c)
Reflects the changes in management’s
estimates of the fair value of the liability relating to the Tax
Receivable Agreement.
(d)
Represents compensation expense associated
with equity compensation plans.
(e)
Primarily consists of (i) during the three
and nine months ended September 30, 2024, the three 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 nine 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.
(f)
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.
(g)
For the three and nine months ended
September 30, 2024, the three 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
nine 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.
(h)
Reflects the loss recognized related to
the disposition of Blue Cow.
(i)
For the nine months ended September 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.
(j)
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
September 30,
Nine Months ended
September 30,
(in $ thousands)
2024
2023
2024
2023
Acquisition-related intangibles
$
19,111
$
19,786
$
58,549
$
60,673
Software
6,008
6,391
19,577
16,639
Amortization
$
25,119
$
26,177
$
78,126
$
77,312
Depreciation
410
346
1,202
1,834
Total Depreciation and amortization
(1)
$
25,529
$
26,523
$
79,328
$
79,146
Three Months ended
(in $ thousands)
December 31, 2023
March 31, 2024
June 30, 2024
Acquisition-related intangibles
$
20,969
$
19,736
$
19,702
Software
3,150
6,713
6,856
Amortization
$
24,119
$
26,449
$
26,558
Depreciation
592
579
213
Total Depreciation and amortization
(1)
$
24,711
$
27,028
$
26,771
(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.
(k)
Represents amortization of non-cash
deferred debt issuance costs.
(l)
Represents pro forma income tax adjustment
effect associated with items adjusted above.
(m)
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 nine months ended September 30, 2024 and 2023.
These numbers do not include any shares issuable upon conversion of
the Company’s convertible senior notes. 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
September 30,
Nine Months ended
September 30,
2024
2023
2024
2023
Weighted average shares of Class A common
stock outstanding - basic
88,263,285
91,160,415
90,426,364
89,658,318
Add: Non-controlling interests
Weighted average Post-Merger Repay Units
exchangeable for Class A common stock
5,811,526
5,892,159
5,833,159
7,120,417
Shares of Class A common stock
outstanding (on an as-converted basis)
94,074,811
97,052,574
96,259,523
96,778,735
(n)
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/20241112724651/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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