RPAY - Earnings call transcript Q3 2019 | Repay Holdings Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to today's earnings conference call being hosted by REPAY. With us today are John Morris, Co-Founder and Chief Executive Officer and Tim Murphy, Chief Financial Officer.

During this call, we will be making forward-looking statements about our beliefs and estimates regarding future events and results. These forward-looking statements are subject to risk and uncertainties, including those set forth in the SEC filings related to today's results. Actual results might differ materially from any forward-looking statements that we make today.

only obligation today, them or required law. speak not we except statements by any assume intent forward-looking as and of do as The to update release discussion provide financial to non-GAAP and the in non-GAAP measures as explanation available financial financial to In a are non-GAAP measures additional can these nearest in as effort include references GAAP IR to investors, an our company's be measures today’s site. measures will of reconciliation also in these earnings information the found well of I over would the now like to to turn call Mr. Morris. Please go ahead.

John Morris

good Thank you, quarter. pleased operator for everyone. and results. announce our to afternoon discuss us third I’m quarter joining to successful you another Thank

consistent organic speaks building of deliver strategy, the comprehensive advantages, to on our robust ability unique set. Our our our technology growth and of proprietary execution integrated competitive solution platform, our and to the including strength our people,

we business. and and see strong strategic winning new are to by pursuing technologies new strengths share, acquisitions, future, verticals. the into continue for highly deploying our and products across we're for investing shareholders and We market expanding results consistently delivering We're

to billion, pleased profit volume growth to the $X.X which XXXX. our growth of results included of We’re XX% adjusted to of $XX.X in quarter, of EBITDA and million compared with the $XX.X XX% growth to million gross XX% third quarter

cards adoption debit across categories. with Starting of we our base. growth usage strong key the quarter, we increased progress made During organic growth, existing expanded within customer

secular and payments cards. ACH see As check we to continue shift away the cash from to debit

XX. strategy software the efforts partners. merchants leveraging new with existing We pipeline of software to our marketing both and total quarter verticals to added win new near-term in by customers to three number our during continue convert We our bringing partners open platform and sales and

invaluable customer easily our to sales integrations to and our Software direct opportunities leads. enable business, access force they to respond are more inbound

REPAY’s with is to platform to access to Symitar’s platform. can technical providing integrate Henry payment provide the integration we program products. program that Program help Vendor unions. Participation The in credit customers ensure that the third-party proprietary Symitar Symitar’s easily we Integration to quarter, to announced designed with over resources deploy joined Episys the will connectivity Jack enable XXX Symitar’s In us vendor

we relationships Canada. Finally, our to develop partnerships business in continue and

As FinTech we're to provide the part a at experts an measurable on lenders. sponsor presenter Canadian network will event ROI Canadian finance that of focus that Lenders to effort solutions Summit, next that as itself excited week, and be positions key to policies for and and Canadian platform with tools, a key

As an benefits organic we initiative in at XXXX. we continue the to that effort see Canada a is require But commitment. from in anticipate REPAY, success expected multi-year will

also quarter, with continue volumes. focused various ways partners remain work efficiencies more on to on across processing third to the We we In our finding and business. operational effectively our efficiently grow

front acquisition transaction M&A you the completed third services. Solutions during know, processing the we as provides back-end of On TriSource which quarter the

Tim on provide call. later So going of the that well is far, will on business further extremely color this and this integration

our technology the acquiring provides this quarter BXB strong significantly is Arizona, need capabilities. a in fits in third acquisition and growth with integrated completed distribution of believe end which the we of ability provider an the the to subject with M&A, focused payments APS headquartered It organic Mesa, addressable diversification, acquisition superior founded with for APS our Payments existing broadens leverage of margins, and XXXX Continue on the in We businesses opportunities our enhanced to M&A us growth BXB. technology. strategy end-market market high and model verticals.

continue capitalizing a market, brand that with require ongoing in APS highly are operating large, growth growing vertical, the markets payments BXB a platforms Sage, card goes platforms as paper key It is $XX which ERP also billion fast perfectly integrations to goes electronic payments. in BXB with launches and Acumatica and integrations APS in the market of checks. our with SAP, through APS fits Adagio, our on approximately from ERP integrated away to new into solution. us checks. including paper market approach account from to move businesses through key

and are could deeper methods We distribution result to existing could facilitate APS efficiencies from strong the channel processing and ERP benefit that could professionalization in infrastructure migration believe and resources. relationships our integrations. REPAY’s

having opportunities the TriSource acquisition As this. that these said own some the perfect of APS and can provide previously. one more have acquisition didn't we that synergy a we our platform is The back-end acquisition previously, of of of opportunities benefits is make attractive example

Further, like growth to now resellers of for provides would value solution into BXB we I merchants, the proposition have entered vertical elaborate acquisition long-term in ERP BXB which APS, incentives and our the continued that to the commercial electronic and partners drive payments. on with BXB

and credit Our ecosystem primarily payments, customers receivable debit payment technology processes of cards. our accounts

the the with to platform the invoice addition merchant. the ERP present interfaces our technology seamlessly processing, transaction to In paying to

Commercial merchant the more rates merchants payments debit increasingly paper checks. to relative efficient, side as quicker, demanding error are card cards, lead to and and pay credit with are ability to reduced

Additionally, correction the injury the efficiencies result ERP our integrations merchant solutions eliminate processes. payment need for error and the in for as merchant, personnel dual side

acceptance. Level to of card X and significantly X enable processing customers Level capabilities reduce the BXB cost our Lastly,

by our them partners and also deliver customers. enabling benefit to BXB resellers Importantly, ERP enhanced their solutions to products

We payments. to and solutions To to the we checks secular distribution with BXB our card away conclude, from from in BXB remain and more and transition and space highly of shift strong the paper our merchants electronic excited more volume enhance cards paper retention the statistics our payments, within results checks card other nature coupled forms to about of business, integrated will and growth. as technology broaden continue our payment BXB

over continues two wrap past I will quarter one plan pleased have pipeline, evaluate. few in-house to acquisitions development the a results. our now months and active team call the up, regularly discuss QX turn to very to Tim to a M&A have successful corporate we’re strategic over Just QX to Tim? which results. our very with executing this excited and growth on was our We're completed

Tim Murphy

Thanks, John.

on Now results. QX to our

another As billion versus mentioned, of year's up was third key increase $X.X QX over point revenue million quarter. also an payment increase results strong prior of third REPAY Card quarter. metrics. XX% Total our an across quarter over I'd prior $XX.X year’s of all the volume out QX. that to delivered like the were XX% was

excluding total TriSource, we our Our X.XX%, X.XX%. quarter TriSource is which rate discussed. take what consistent during Including rate previously was take was with revenue the combined

the $X.X during contributed million revenue of third quarter. TriSource

to million to network The TriSource. million $X.X XXXX. services in The of higher expenses, was quarter costs of $X.X third XXXX. million $XX compared million to were of card and was Interchange interchange quarter compared the addition increase primarily network primarily in due and third on the which were Moving fees. to fees of to Other volume increased increase the due leads $XX to payment

prior-periods. excluding when TriSource, However was down trends amount the with in consistent in QX

an Gross XX% was third prior-year’s $XX.X profit the quarter. of over million increase

on As team we is metric deals as incentive for is a profit. key a sales how reminder, this based structure us price our customer this gross and new is

$X.X combination due increase Thunder with new expense experience costs stock million to The primarily and SG&A $XX.X compared years. quarter was XXXX. in Bridge compensation equity profit third to was the expanding continue to transaction related related prior issuances. We to margins versus million to business of closing gross the of

net mentioned. quarter compared the the $XX.X The for Third income third was a million SG&A forma pro $X.X quarter of increased XXXX. loss just made reasons million net was of as to of in decrease result

XXXX. million $XX.X was in income net share to or adjusted quarter compared million $X Third quarter $X.XX third of per the

adjusted was of increase quarter third $XX.X an quarter. third XX% over the EBITDA prior-year million Lastly,

and Third The EBITDA slight of the XX% fees service additional decrease and third related becoming tax resources. as legal quarter. new public adjusted XX% as processing compared company, is of primarily quarter to prior-year costs to a percentage such a in was result accounting

was closing XX, you announced our at for of remaining business know, completed maybe acquisition million $XX XX, payable paid based on the APS XX, of million, the of $XX we August July combination with As on earn-outs. On Bridge, the million which acquisition and up we Thunder October all performance announced Payments TriSource. through $XX to we

proceeds with expected REPAY’s be pro hand on under acquisition was to a cash borrowings APS The of and credit net post forma is times Combined X.X financed leverage a facility. approximately on existing combination transaction from basis.

APS. EBITDA to between $XX.XX $XX.X be to expected $XX.X million. and billion. $XX.X anticipated million million Moving $XX.X million volume billion million. to Gross and the profit Total is $XXX.X and to between on from to previous contributions and outlook, guidance to The between related our payment $XX.X updated the be includes which difference and revenue expected expected be APS. full-year XXXX between was Card and is is between anticipated be solely million the adjusted is contributions guidance from $XXX.X

share I wanted in an also you update give our to count.

we XXXX approximately As XX, outstanding of converted on XX.X shares an basis. had million September as

release the shares on to earnings quarter-end, XX.X the released issued resulting in an subsequent million noted REPAY million additional converted today. X.X approximately as an as approximately outstanding in shares, of basis As or

take presentation updated operator out Operator? will share which to slide site, questions. IR count. turn our to investor our over We a the posted back your the to lays now an includes I that call

Operator

time, Please line question. first Our this comes session. proceed Thank Mark BTIG. question your will a you. Palmer with we the conducting Instructions] with [Operator be At from of question-and-answer

Mark Palmer

bit being expansion you active, the that? areas what an can BXB if Yes, you're the With focused and about regard part be may a M&A mentioned the gentlemen, a you on to very in of talk which nice to little extent quarter. particular, vertical that of is potentially pipeline

John Morris

both new. we’re focused verticals, yes Mark, so M&A Hey and across variety existing a of on

could of about, we for some in And opportunities to talked those do we've allow we're various all that in discussions vertical. competitors with that BXB. us have, and seize interesting expand are in APS There verticals. we As actively us in do be targets

exploring So well. we're as that

Mark Palmer

the Okay, to live second and Canada, with in quarter. went regard you

contribution perspective, put could mean that terms starting XXXX? could you in If in opportunity of what into it

John Morris

Canada a commitment. as three new Sure, new market this commitment so into and organically a we aware, to in it’s into going even you're a we're just a think year, went vertical, when Canada we year two

year, front So build back-end and that various as integrations their this partners. is both continuing to to we're our around software well ecosystem our our as first integrated

reasons that our we Those and associated see that. go We for with pipelines And list are building we all potential about we a that the signs there. as obviously excited We're that bit still like to the still wanted all client takes little time, well. exist. of

will we would We two year on far we potential be customers. continue movement think that investment. bring new into there as As that goes, XXXX to it see we some important think say obviously, higher the being if probability part of then about But would it would in talking contribution. see the of XXXX. And we're year that we three, just I be latter as organically,

Mark Palmer

good. Thank you. Very

Operator

Please Markets. Capital question from with comes proceed of Mike next Grondahl Northland Our line your the question. with

Mike Grondahl

thanks guys. yes, Hi,

First question, are two get the of in? connection. union three or other Jack What new the credit I'm to is you assuming XX, with partners Henry niche one software those area the

John Morris

hey are Mike. Yes, other auto two in vertical. so Yes, the

And focused partner Relationship so sales a our talked we're as focused as sales we've well team our auto adding very on And as relationships. have we that about, from perspective. Manager new on

Mike Grondahl

other Got both of it. software the two, auto? In were partners

John Morris

Yes.

Mike Grondahl

Okay. kind high just market, personal you're just level the out auto incrementally market And on comments then loan seeing of any what there? in the

Tim Murphy

Yes, activity our all verticals. seen so we've of great across

see verticals All loan across way including well. as of verticals strong personal we progress, in the our all auto all

associated strong organic quarter those with And verticals. from one we're with have there excited of to pipeline each a contributions that. about our continue even We fourth sales

Mike Grondahl

Okay, thanks lot. a

Operator

comes Please from your Maurer line question question. next of Our with Autonomous. the with proceed Craig

Craig Maurer

hi, thanks. Yes,

despite being et result, would talk pressure rate auto of you take you have strong a guidance discuss the was imagine that Exeter. increased, those guys not secondly, or known was related and you company, either could cetera be about very there about that two the there that don't are underlying sales the cost Thanks. have from was, of which already. whether would pipeline? players out guys Credit might Regarding And Acceptance I auto public you large to your in guidance, Could why

John Morris

good strong quarter. on make as like the updating very did we feel feel had guidance the for about ranges year. that want seen, we're the And weakness said, That the in it do just feel We point, the we clear remainder any of we and Sure, contributions, wanted you've about it the we because a to being this really about of remain see we good as conservative well. for remainder quarter business because to core we feel year. the the positive not APS

something And auto for in had the that then our we have and opportunities, in targeting XXXX. those we're and are and large it's terms with various discussions pipeline, of they’re definitely stages, in that those

Craig Maurer

gentlemen. thanks Okay,

Operator

the from comes question next with line Our of your Instructions] Brian Blair. [Operator William proceed Please question. Hogan with

Brian Hogan

afternoon. Yes, good

and at First for APS, X.X question done What how deals your deal leverage your is pipeline? mostly TriSource considering is times. active the capacity you additional capacity actually on

Tim Murphy

our we businesses Yes, historically, have are you've so growing very under do the capacity quickly. as that we And on facility, credit have sheet. existing that some have we're balance EBITDA seen, cash buying and

And continue capacity. businesses so well. additional to find And as as they'll we then ourselves a acquiring de-lever, will that we’ll we’re and further growth capacity provide accelerate those

to we And deleveraging something was feel a target we in X.X to slightly within may times back comfortable do the three months. six consider above times, if down with very going so closer strategic, of XX that

additional so do for And we room M&A. is there feel like

Brian Hogan

rates think APS. changed, question changed with kind given the I opportunity, next high growth that do All a TriSource right. your considering you a maybe targeting mean have growth of targets were teens the of organic your long-term, around market substantial APS and you acquisitions What rate, are long-term high-teens? I'm feel The or you targeting I is actually still has your

Tim Murphy

forma so business. APS it'll faster the Yes, contribution that's bit fairly be pro to combined minor but and a is a our than growing business little

do think we still, for teens. a but in slight there's pick-up So we the target would we rates, growth still potential a high

Brian Hogan

the margin at kind me Or actually for question of just forward XX% that there should given and at of or color the and take is last margin And that some in it with gross go there's moment nuances a then have what the Right. on there the get levels? what was obviously, you so, forward in be? go TriSource rates is parts moving given came kind

Tim Murphy

our is if Yes, in see and profit about you gross versus so disclosures price margin XX%.

next to end of contributor we that said And profile small would dollars. so, the quarters, additional potentially toward was that. that profit that next few the consistent although are acquisitions expand part for both able stay it fairly that, gross probably year. these and then was will expect margin given being And driving of APS’s That be

room So the feel there's to are margins where from we like we for processing APS and good we as about decrease expansion, and costs. in continue of our some as we synergies still feel realize

Brian Hogan

you. All thank right,

Operator

with line Joseph Foresi Our proceed Cantor from next of comes question the with Fitzgerald. question. your Please

Joseph Foresi

I jumped gentlemen, Hi, apologize. late. I on

business could the about the BXB So you've sure you But just be about and and this maybe covered that talk you make let of able strategically of I'm some where congratulating you your acquisition this. you're taking how an environment? start to on at think going maybe to, to impact to me start think to point, you're you that some with current and positives exposure the into operational from

John Morris

very with large us. that new TAM, opportunities think Hi, lots for Sure. about and sub-verticals. vertical the actually very of We just Joe. We're there, a as it's many a of excited

BXB well which a businesses, very we're large As you at. with several small can where small We itself competency, will in have in if add see, continue to we're that of we can technology, to softwares as resources that mid-size the we and a something the which of with towards sales integrated as expand think but we kind core accounting of more the think we where there. some is also space. ranges them, invest lean is continue to

we And more several side our There's some out can we inorganic opportunities BXB we of we think organically space. accelerate partners with growth We do, channel in there can integrations team-up see think the in additional can several possible that. to we the there. continue obviously

Joseph Foresi

how specifically sort around of otherwise? annual, about around anything what community modeling investment just from versus sequential you the question a just point we it forward kind modeling Got you'd think and going perspective, should we for a out to want of or that or Tim, know think and should the then you, acquisition

Tim Murphy

down like consistent Yes, I result that. come we've about, APS, talked mean, of as we've have been TriSource take rates and slightly with a

with anything the And It's it to so not do was that you'll down slightly QX. in core business. see

was at XXX core points. Our business basis

so higher And than previously. bit discussed we actually little a had that's

talked take and and focused and we come still gross to as APS with about down margins, gross gross the profit previously, about, I'd which EBITDA we've profit. TriSource. because down on But the of of in mentioned But may something say profit continue public dollars feel in adding of adjusted business continue just company margin, costs, rate profiles strong We is invest and in just slight terms we also to for growth from sales we've tick of will technology. terms then

consistent with we going margin adjusted of would expect So is XX% forward. EBITDA I'd what say

Joseph Foresi

Got for best expect or open core just strategically, sort kind within or business business it. if core to Thanks. acquisitions there's or I'm outside you opportunistic more at the core to the of the look me, we wondering, as the And BXB or ROIs? both? the then of finding within should expanding you more last the one do,

Tim Murphy

across we're verticals. are Yes, the to always looking in think limit and and that ourselves certainly out we that some BXB, want do that but of opportunities opportunities provide are in that verticals there competitors mentioned so existing new earlier verticals because at strong to would a within I I really as opportunities there our mean we don't returns. verticals exist attractive there

Joseph Foresi

Thank you.

Operator

comes question proceed of Hogan with William from with your question. the Blair. Our next Please line Brian

Brian Hogan

competitive who And more comments, one question. a of just your kind Tim competitors and any there? BXB particular massive and focused payments in or markets your you the follow-up the in your kind core Sorry, discuss but dynamics markets, market actually, it’s the focus any of are obviously primary of changes on

Tim Murphy

And in changed new don't the we discussed competitor there and competitive ACI dynamic. we've threats, but players previously that in BXB see are still terms any couple of our within technology, in as that has mean then, pointing integrations. then I Yes, integrations actually with we that nothing But well. M&A we and of opportunities these win some can and creates against we ERP expand new business up existing think that potential these they're are

new -- we and and learn as more gain will about business, that go more insights. no there's threats we will sure So I'm into BXB deeper

Brian Hogan

thank right, All you.

Operator

left questions further like no to turn the Just closing any remarks. to would back for the I queue, in call Morris over Mr.

John Morris

third well. forward time We're we're you how your by customers. encouraged a looking We again for for today. business. our as a our Thank as to quarter are quarter, positive thank for your continue of about well much perform XXXX. grateful our results positive you the so We're time excited, to excited businesses Yes, And today. fourth

Operator

This concludes today's teleconference.

now You at you this Thank for day. wonderful and may disconnect lines a time. your have your participation

Repay (RPAY) 14 Nov 192019 Q3 Earnings call transcript