RPAY - Earnings call transcript Q1 2020 | Repay Holdings Corporation

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Operator

Greetings and 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 risks 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 an the in non-GAAP measures as explanation available financial financial to In a to 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 certain these earnings information the found well of

I over would go the now like to to ahead. turn call Please Mr. Morris.

John Morris

Thank to you, earnings been call. afternoon, safe this during stay hope in challenging I last two has world have We changed significantly and healthy operator, just and and good The that difficult our continuing months period. is since time. everyone. everyone

want health the investors, top We reiterate the customers, and and wellbeing take of other also to partners, our stakeholders remains employees, analysts opportunity that to mind. of

incredible team and inspired We stress period of uncertainty. during work by are and of this grateful the our

customers first environment macro The the value evident the the and business has for remain to mission our and our same deliver our grown we from proposition even shifted, value quarter has stronger. results. principles our is While

to to volume compared show on the organic XX% three respectively. first basis, growth of We On touch payment and XX% of quarter card Today, an growth key profit we profit gross XX% wanted I of and topics. saw XXXX. gross

First a year-to-date on update our business.

time. I to a long-term for help us of business growth. strategies believe our wanted lastly, near insulate to aspects wanted spend unprecedented this that Second, minutes few our and the reviewing I review during we And

interest shared during our our XX, in year-to-date value innovative call solutions, believe that only payment increased we repays trends. more proposition this that Now our quarter meaning become might March fourth see would attractive. period to electronic discuss On on unprecedented we

implementation several in increased our have thesis clients offerings for across existing and of and payment played new demand as our of capabilities. that has have our we electronic far as accelerated experienced businesses So customers

be providing are payments their merchants, these to unprecedented customers with proud they We to able services serve enable to time. make in need to this them

performed could to be exhibit and I more volumes want technology period. grateful not payment outstanding again, has this thank team loan their continue I challenging like and to Overall to that for mention well repayment verticals exceptionally our efforts Our them for in our through personally resiliency. would

and lenders some payments. the we electronic March, to unable we make as softness payments, and adopt our more was April have volumes being towards of end take which consumers by remote believe and While implement physical and observed driven lenders consumers rebounded

high receive We also solidifying loan experienced eligible large payment believe rank package the funds, Act a began that they're in consumers loan stimulus belief payments to in repayments lenders, We receive as unemployment priority. of benefits. majority volume be our spike would to and state our so borrowers CARES

physical payments. also Demand increased to lenders funding borrowers disbursements from has quickly moved for instant electronic and as

transactions send by funds visa instant we to debit reminder, Mastercard year cards directly product prepaid a as lenders can As last enabled funding and eligible introduced Send. electronic a and where direct by

of verticals, to growing BXB update fast We our an our a new also which is and provide would on part like business.

seen necessity. AP have out and We for of demand largely increasing automation AR

adopt impacted We slightly more BXB business do expect electronic volumes spending. to be in payment by mid expect to options. sized small reduced the term short continue We and to businesses

steady. relatively our the BXB On remained business has side, healthcare

permitted and drop this in elective a have we again. elective pick to we surgeries, surgeries are While business seen once are orders place back shelter up in lifted, expect once

has platform processing Our TriSource stable. remained

been some modest exposures portfolios. to These retail diversified are While not our material business. impact there has legacy to

immune to merchant uncertainties serve base of not the monitor verticals us to continue during believe we our time, positions we this situation resiliency and challenges well continue term. the the to extremely diverse long will and We and the closely we are that while for

to secular us to with the growth source unprecedented innovative more specialize, as continue from we which shift that steady provides solutions help and also which We payment we environment. of navigate unique integrated should a benefit the characteristics macro provide these

now I'll discuss these characteristics. some of

loan repayment of obligations for As I QX majority call payments, automatically economic earlier. Data loan that still non-discretionary are very nature. financial be facilitate great are mentioned said in of that types even the and paid, large the recurring downturn. on are payments loan payments, the prioritize necessary to set which an auto I are business, we usually payments particularly illustrates in a These consumers the recession

to believe web, text payment we help solve taking both such acquire us prevented methods accelerate as and We electronic the clients, variety environment new shelter from fundings. place current orders can addition, been believe have the and payments and allow our in-person in IVR, will challenges mobile. we loan with of given servicer we In lender

providing transactions will be customers during many impact period. specializes example immediate As unprecedented servicing for value which there business, in may forbearance mortgage acknowledge CARES in the another referenced we yet processing have our of that the our overall Act portfolio of This unique payment is mortgage on exception-based an this the Recall volume. while in mortgage to of loan upcoming complex months. that solutions Ventanex our

benefit we payment expect I business as up electronic earlier, ramp which AP small our capabilities. to automation start as we options, to And midsize businesses to our more BXB will mentioned adopt

the not We capital in benefits continue to cost. also to justify the the working at to paid of to term, and the all believe will absorb costs the payment near that getting electronic outweigh likely willingness is risk

remains per real right digitalization in time. more Now this ever, than world

suite of solutions enabling run payment this while during have difficult that enable customers the efficiently we full all businesses their And shift to to our time.

protect of prompted more crisis. business we serve we our coronavirus taken the to our strong industries the position we've provide well, steps but face also business the products and economic as So and is in financially even the

an manage structure us topline to cost downward we when enables which of and have attractive First flow cash earnings pressure. even metrics experienced all,

liquidity In remain addition, our cash and strong. positions

put recently prioritization have place business center had in developed we to payment hiring initiatives cost around the allow lines tools across reporting visibility of and We've portfolio management. Some volumes. automated daily enhanced and

business the the in some on negative economic the of could pandemic and delay these expect crisis impacts timing from our to the a business. resulting We and our impacts there due nature of be

severity will our sufficient through will provide on see earnings of we eventual business, economic what provide in specific the results. around an we what how duration the now of Later crisis. and could some the affect and downturn preservation and our in our capital Based XXXX call, know Tim we initiatives easing believe that context the

Tim touch The wanted is topic the final to initiatives and the I today review strategic the call our of long-term. near over before to for turning on

grown but As the for has I business mentioned value our have principles earlier, business same, the stronger. our proposition remained and even its

We continue large underserved verticals repayment debit loan increase the existing and customers. to address penetration with

long to customers near growth in for portion now Despite the in driven are volume growth expect which to which environment A leading to be industry continue we our these significant have XXXX, existing of be and with and comes and the term. our continue we expected we organic existing unprecedented in by case our clients that from will living, increased usage we retention. the adoption expanded

new driven existing addition growth, and continue to we organically aided verticals existing our during be and new client will integrations direct experience quarter. expect to by two new salesforce. by which wins customer partners to software we In This added the

through our healthcare space added in mortgage servicing the we acquisition four integrations in BXB Ventanex and addition, In quarter. the first of

your April. of I cloud record April at with announced brings That and XX a and like for Lender, sales process automation. March. gross online lending we our in end we partnership note profit TurnKey total to that the March also support, decision-making to evaluating the software borrowers, integrations new for a based months In had knowing

and it excited in to will loan us this access U.S. funding loan of payments. partnership Canada. lenders and offering the for our those plus as to a We're XXX with of variety both of also across network many about a It verticals enhance provides

traction tailored to the recently of a lease any beginning with end-to-end in integrations. transaction. Canada lending also key with partnership some to industry experience leading needs and software We're automation NovaTech and signed We loan

footprint Canada the XX prime with lenders, Canadian XX% in of about has market. substantial NovaTech

addition, increased we online frictionless credit centric has unions and preferences. payment transaction ensure in are and by options full habits portals experience. web applications SMS, to spending demand to consumer customer an for most pay, help seeing text Repay in In rapidly to a branded challenged suite to expanded the IVR, stepped payments the digital shift of mobile offer new, deploy

provider. Mercedes-Benz leading payment financial that And finally, Repay has automotive, been and mobility financial also services provider to pleased selected processing announce a services, for are as the we

deeper repaid solutions payment their options with mobile, backend phone-based preferences will enhanced transactions. provide varied more the online, match At for processing Mercedes to and broader engine, enable its and to platform modern personal payment to customer base along

We a are very long and team. successful to with looking Mercedes-Benz partnership a forward

Now driver moving a of growth and continue company. be into which for the always M&A to been will has the

the first we significant know, markets. opportunities acquisition the Ventanex went mortgage of you third which BXB our is bring completed July. in acquisition healthcare and we As during the growth last public Ventanex servicing the since

us of positioned in the underserved. Our electronic with the growing current significant look with term. and To targets as the our are from post-crisis to offer check solutions attractive active and along continues continue to in has remains verticals also M&A cash along up, that short pipeline drive well verticals increases, to move the to business unique new as diversity accelerate. we we But volume payments for large, wrap

turn outlook results to year. the detail over now call discuss in Tim to our the Tim? and go I'll over to for QX

Tim Murphy

during John. Thank and healthy everyone hope is time. you, this staying safe I

to based on the results outlook our for Now, scenario before of let's financial illustrative year. review the move our remainder QX our

metrics. the the Despite of toward all results delivered Repay in first across environment change macroeconomic of our key quarter, end significant the strong the

XX% For million approximately XX% increase quarter. the revenue first $XX.X during card was $X.X first of quarter. payment, the billion, an quarter volume million, $XX.X the Ventanex an over prior Total increase prior the year's of and APS was year quarter. of first over TriSource, revenue first contributed

Moving and of addition primarily of expenses was first due on $XX.X to is APS XXXX. services increase the to to in costs the quarter. This quarter TriSource, Other the in Ventanex. of compared $X.X million million

flattened QX. with additions, However, the those largely when amount excluding

the of $XX.X of over of increased profit the first million, quarter XX% quarter XX% quarter. gross basis, Gross an an On the compared year's first XXXX organic to first was XXXX. profit in prior increase

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

the $X.X from SG&A of first share-based to increased due primarily compared was compensation our quarter $XX.X increase operating to was acquisitions. million The million costs hiring added in XXXX. and

to compared decrease result in income million First $X.X mentioned. quarter was of as reasons of mainly $X.X first net for XXXX. million the net SG&A quarter increased The pro forma income was the just a of

net adjusted $X.XX the million adjustment. includes quarter note income Please now or share. per this First was tax $XX.X effect

Lastly, year of first quarter million XX% an our increase EBITDA adjusted first over quarter. the prior $XX.X

XX% was first such to as adjusted revenue related EBITDA becoming a total a a decrease XX% This legal, new additional primarily of of as compared accounting resources. quarter is First and company costs prior quarter. the percentage year to result tax in public

Additionally, margins and below business. our loan Ventanex APS, TriSource, repayment slightly are EBITDA

our mentioned, strong. remain and John As positions cash liquidity

the We loan revolver undrawn of draw capacity. and of delayed undrawn sheet, term balance of capacity, in have million million $XX cash $XX million $XX

loan $XX which on April, leverage level approximately million draw our pro tapped million of Please APS total a to net times. is the loan, in pay leverage our delayed below current Post covenant capacity that times, X.X the this out. was X.X early note term draw approximately we delayed first term well net draw $XX earn forma of

down that time. also to this we wanted draw at not decided I our to revolver note have

that course and able balance generation, access about strong be to times to these monitor our closely. But revolver. our navigate of liquidity believe capital Given our flow through position we current our will cash from sheet needing will to we strength we continue

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

the for on Finally, illustrative the scenario our outlook moving of remainder year. based to

have earlier, certain overall or continues check. payments loan volumes second towards verticals mentioned we to resiliency observed believe We by And exhibit and softness electronic towards the more payment the we April longer-term quarter. this cash of repayment moves some end trend As clients versus on-site March volume our reflects rebounded. into but

future will We deep trends. across all they and in to and course volumes cannot of our impacts disruption the into gain to businesses of continue how from be. daily of to COVID-XX long the how length are visibility monitor order going We economic last predict

illustrative our three the of that market are laid over To specific our the are we these impact the supplement year macro out economic make scenarios for business this assumptions website. uncertainty, providing on account and remainder that a investor and drivers on posted relations may in

meaning this is scenario return first our measures to stay home a largely scenario health recovery orders rapid the demand bounces fairly at assumes consumer well-coordinated, rise strongly. Also, and temporary. are that and expire Now assumes unemployment into over summer QX, work in that people back the public

For and defaults would that brief mean delinquencies half tick returning and in QX before a slightly loan repayment of originations this slow a business, the for through the year. up period fully second

QX diversified and that steady. is in manufacturing but consumer experiences Under is as scenario, this this in market. back which there QX portfolio debts term expect means ARM in transitioned would bounce weaknesses, to new this payments benefits business, payments, remained distribution a have TriSource medium some BXB healthcare near-term that volumes our also we in the For rebound and

Under prior may end business to if some performance this upside low quarter. recovery the of There consistent the this early the guidance. in third the we with foresee scenario, be our occurs

assumes recovering QX. second the Our in scenario

first This by seasonal of by consumer is we measures recovery. year public normalizes well assume contributing assumes Specifically, to moderately offset and the end, scenario aren't is year. that at hiring elevated which the unemployment coordinated demand end the that the health scenario also QX

For repayment to as and our business, that the dip tighten that quarter lenders mean third and increased originations would defaults loan persist underwriting further requirements. this delinquencies

the QX and would and half winter the for ARM diversified manufacturing healthcare we the scenario, are payments Under that in expenditures six next weak rebound this pre-crisis levels early also and relative not latter phase demonstrate expect into down experienced and recovery to fall to that pre-crisis weaker elective this business, that that BXB months. remain a For of level businesses yields with a distribution healthcare mean would reaching procedures. and collections

end with we which scenario, this we taking, our due an actions of XX% further revenue adjusted to risk a prior Under about estimate guidance the been of EBITDA to cost the impact low can to less implement. we've

Our and if early third to through sustained XXXX week due elevated scenario demand into loss XXXX of XXXX. assumes remaining recovery. This case most assumes jobs our bearish going an difficulty scenario represents unemployment consumer which continued permanent of

and of continues a For experience delinquencies volumes. into repayments half to would that of depressed this origination mean elevated defaults business, loan and XXXX the lasting second levels XXXX new loan

continue Our sustained means to in manufacturing that in QX business there this distribution significant show volumes BXB and and weakness decreases are procedures. elective healthcare

it our that to longer-term diversified what continue scenario, assess to there this will EBITDA. that experienced also of for try through to this period. mitigate the of adjusted and means to impact to to a It's yields this most us and require in business forecast to would prolonged more order lines, and adjust each could headwinds revenue aggressively costs but mean collections businesses best a shutdown businesses obviously challenging weaker QX Under was ARM

actions, earlier, today. to have on in focus areas we mentioned As chosen terms three key of cost

prioritization. area is hiring The first

a development hires. define non those revenue sales that continue have as new We technology on and developers, placed generating support freeze initiatives, product and to management. priority mainly priority will product owners We

The second eliminated expense all operating implemented expense is nonessential and approval management. spending processes. We enhanced

area is third cost The management. vendor

a actions in been to we of million We decide additional will recovery key if implement anticipate XXXX. sense increasing. close cost $X the $X period related ways likelihood prolonged is to above our processing costs. expense vendors in on may to They more management reduce with have to the approximately – initiatives million save We

questions. take Operator? back over now the call operator will I to the to turn the

Operator

Our Please question. we and question-and-answer of a Bob first will conducting comes line [Operator question your session. William Instructions] the with you. Thank with Napoli Ladies proceed from Blair. now be gentlemen,

Bob Napoli

on Thank Question, saw you, John, how of you hear acceleration. then much if in what guys. and like Tim, could good down to a color give you from little on you March a trends, exactly slow

by or gotten lever a had talking like not I mean week to in accelerate. saw of it which some I growth. numbers don’t, organic other yes, get if Visa I of profit you or seen decelerate terms that numbers out sectors and where we've gross kind those in like you So can week the companies, guess about some XX% Maybe you We've organically.

John Morris

Thanks, Bob.

to some discussed, So nationwide the we declines end there as was in as the closing. and March we mandates lenders of did place see of were volume start toward lot a shelter rolled branches our out

to consumers not transition in store. a and And lenders the when able so payments period were there was make those

early payments And have so to which back toward CARES March belief we Act then exhibit loan loan high a the and when we strength increased volumes, throughout And from pick that early have repayment And April priority of the stimulus volume. up or and weeks. that the week repayments half April consumers as started repayments. into may. lead into that and for the end to repayments to and a we two really caused on a see really the transition again place about And think solidifies again, these discussed continued

And as impact that to rapidly. are probably our longer we take payments also businesses rebound that end X% portfolio declined And declined allowed maybe states And it'll a toward so up retail open then – repayments, businesses portfolio, in the seen the because TriSource to April. come business-to-business back, first in again back that allowed And was then TriSource on which bit And early operate again. think back. XX% little the to and more there in But bounce focused we've May. will come are then retail loan largely is we in saw of quarter.

to and see rebounded in has averages. in open now portfolios then continue probably BXB monthly early a up. QX We May, were as see things two slightly be longer The come little and loan home these portfolios with up. inline was bit was May to And other TriSource retail we April take TriSource up overall down. repayments back So repayments

Bob Napoli

Thank be of helpful. seeing funnel in that a this the think you. of the shift, Then is may that from in, That's you which businesses. question customers secular the seeing the accelerating certain on kind follow top just if demand at if longterm, up you you're more businesses

So any you and term? longer the pandemic of demand thoughts your on what for products the think means that increasing effects

John Morris

loans. renewals think electronic do I so electronic funding Yes, accelerating for and demand payments of it's and

new we that little longer the and as we strong do to and a all that that taking and payment that very channels So, lot various had merchants had of their these channels to adoption to with were had think mentioned, in through text of the a and we sales were were resistant April electronic pull maybe funnel like March IVR, and or of mobile. to payment accelerate in

So them move happening seeing they our and contracting much we're process and than previously. more seeing we're through were that quickly underwriting

real catalyst this So within we loan repayments. think there's

in to And think BXB, was then think, methods be the these electronic lasting. general April, spending now business down. softness was payment that But a in just that there's shift I longer do will I

BXB So benefiting I certainly payments. this is think

that. so, significant feel coming as feel a which of you organic is of good We rates, higher growth. we out And driver strength about adoption of a with this in position know,

Bob Napoli

Thank I it. appreciate you.

Operator

Thank you.

with questions. with comes Sanjay question Our Sakhrani your KBW. from Sanjay of Please live. next your go line is the line ahead

Sanjay Sakhrani

Sorry, you're glad Nice on to hear mute. from I'm I you was well. you. Thank guys.

Are in anecdotes of stimulus goes able might about a artificially share to away, it's question, on are with or Bob's else stimulus kind when that provide gains how we it be trends any April sustainable some first that that upside of like the and might Just if roll case be of given you might the anything you that? terms guys market up over. there propped up think to follow confident

Tim Murphy

in we that the adoption there's as confident Yes, it's feel that sense the increased well. sustainable

then adoption even if for And and and also allow reason to would if so that these fact the them insurance would the be dip to payments, of features not would is then direct even there's by And that that payments. those unemployment other in the that rebates it offset hopefully were – there the consumers, recovery any one just has point some that into also make stimulus were to think dip continue – enhanced these the increased and there scenarios. recovery we went

like there's point view. So out of really increased That's – I we sustainable us. we our earlier, coming that said of that, it's benefits from then view think think and that adoption,

early do then see positive And very as in May, trends I we mentioned.

So to be it continuing. seems

We are in seeing slowdown not any that trend.

it. anything view to And you So that's there? how want if we John, add

John Morris

that. could of be some longer a be could there especially based are new generally loans through we through I I a seen Sanjay, seen this see Yes, overall continue and speaking I of that mean see which as loans. Ultimately this a And over accelerate really exactly, behavior that also will as I loans the that to really we filter is stimulus consumer you think payments where And everyone's, that I before. payments. lending, could But well. said of type are, happen. that did or we We've there some auto activity. to digital payments are the that electronic delay pivotal some think term that I've think change time. installment some But far the change as in and where in you scenario consumer think know,

Sanjay Sakhrani

high Okay with. you measure And scenario event think do that I'm think trying rate I thinking scenario just completely through macro levels, there's I'm curious strong to was we're understanding outlook. underneath I probability to about one agree how two scenario the a secular relative it. and think more do a it's or tailwind I that, trying on scenario unemployment which appreciate up one likely environment event? up two. And curious, is just it my versus – a how follow- I'm you to questions

adjustments lower model new that to catch happens, of the And to up one how to we it measure a were trying today. if you scenario scenario to make quickly to sit reality most can two just here even sort I'm versus likely what's your happen, probability. seems So scenario in Thanks. event three some though up then as the

Tim Murphy

Yes, sure.

these verticals, we So, it's based we to our and repayment think on scenario about one. merchants what closer know loan probably

can't how likely scenario were on a as we been if recovery we happen, one we've what we on biggest a focused priority focusing scenario actions, couple expense probably think know, quickly Of three, driver predict slip course of would to this it's but we mentioned, more of exactly is hires. reduction to it will the based cost only on the

So two this if or scenario even three, additional we moving on towards freeze would we scenario saw hiring. be able put to

We the are people still in those growth on mode initiatives. or generating focus key to still hiring revenue

And we needed we so we for pull. to have to that some that reason saw pull back, lever

on And as we action very would are was monitoring and that closely so that reasonable. as we take felt that I soon think that

Sanjay Sakhrani

Yes, thank you.

John Morris

would I few and that I year online the March we anticipate for call And months their have that we we mentioned also had to of a as Yes Tim is in main obviously that mentioned things April. coming that sales, well. on would our and new add as number record sales

So be payments from we in cash, when and you're real we involved positive that's shift a the as acceleration digital are. think, this And well, secular shifts the if then for but I cash term itself shift should from of as is talk the near remote about there's a checks offering positive thing.

Sanjay Sakhrani

you. thank Great,

Operator

you. Thank

comes Vafi question the either of Joseph line with Canaccord. question. next Please Our from

Joseph Vafi

Good my guys. Thanks Hi afternoon. for call. taking

change pricing or I'm both by know seen transaction now is given a any I is dynamics change segments born are in or you the paying and and I who costs And the for paying a done perhaps these terms or if of merchants, a wondering by interchange fees, who have environment if and some vendors kind kind Just of others. have your there's sometimes just it's wondering suppliers, in of how of of all in in born, pricing? And was consumer couple. follow-up. in the I is

Tim Murphy

more to large of the lender. our loan can in space, acceptable convenience of Yes, by in repayment and it so be lending auto the in the vertical, be borne the consumer. loan typically fee But the absorbed or it's a by form

on some the would seen sometimes that side consumer. where they want some have the We easing of to accommodate lender

one that's thing. So

of business BXB the meaning on by there's then the payment. But the the of things worn that discounts concept there. And side it, like traditionally person a side taking and it’s

made seen more change any is and card. to changes may to someone bears businesses, credit there, side They the over scenario haven't at the We costs. who the more that, use want a major to where with any haven't a we may immediate look but BXB shifts on but chooses choose time, to offering associated seen

Joseph Vafi

Sure. a kind leading of past deal partnership partners I looks TurnKey know interesting software, is a like Lender really of or worked just kind with but And the a this the with different leading little Fintech bit you've Fintech in platform. And different. in

a it's different think I not seems of application. bit it really a – little like it's a

I think, now. strategic now. M&A are environment environment, get prices and balancing may more right some on Thanks endeavors would wondering at little that attractive look then I How you relative versus be and some now would the lot. a a people right it to mean, more M&A So M&A cautious other the opportunistically, that just perhaps more

John Morris

the… on So

John Morris

Go ahead Tim.

Tim Murphy

John. ahead Go

John Morris

the we as as haves we software of yes, relationship on strong announced opened the as platform. far Yes, couple things we on TurnKey to the up think that plus partnerships, reach lenders our XXX they Lender ability

we into on our expand Canada. thing for to well. great as there's ability into to same NovaTech is Canada expand continue So there we a think opportunity And as a

our to a in little relationships, and/or is extend this or reach. area while case, form sulfur enter which the when into is area geographical, these we to talked One will geographical about of us Canada we've us things past in vertical, a new allow the it takes

reach will the And so we market, us to lender Canadian market. think those into both our allow extend of

positive so for we think relationship that's a And us. very

well. watching see build company. on we're what's some fit we think for. continue looking different opportunities. to Tim, although credible next not all there, how just out add – going as acquisition forward can happening and But some then that there as to look We additional be It requirements various a do public months we're patient look And obviously We the we specifically want opportunity our there possibilities kind would the think Tim seeing we here continue that to pipeline some our specifically to And but – we've this that to some few there. we well as this. to of out. might we're seen of evaluate, we could are opportunity activity impacts And health, M&A color being positioned color we're would come side think you work businesses. would give and of We opportunities there. some be would look there to something

Tim Murphy

think, I right. that's Yes,

– have we've internal full, we’re the corporate discussed, and active we keep to that pipeline some having have starting dialogue is to an team inbounds. We some receive trying actually as and development

evaluating consider the fielding on right, we'll – is those And we're so said and still what most makes time And call, them. we as pipeline. the an active an sense. when But the it's it's

Joseph Vafi

very Great. guys. Thanks much

Operator

Thank you.

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

Craig Maurer

that how all, to I Tim, you the your segments? how And expect second yield for can warrants. comment now and hey an to hoping different if warrants. at plan was you first are shifting was was hear based on published there the regarding April on move I Thanks. X-K guys. the volumes Yes, late in between And right on hoping John, good we you should could comment

John Morris

sure. Yes,

points, to felt QX. So it is from about like to in the expect few would the yield We next strong which that up revenue we similar basis XXX QX into quarters. level going be was

continue able from our about margins profitability we've about to to perspective so from and to drive rates also profit. And been good through pricing gross we're take and revenue feeling that gross and

that So continues.

reduction notice warrant in be there's still that about warrants themselves clean that we put of sort the purpose the the thinking the be if of on out a proactively this is the the how can of of start on warrants clock to we kind notice presented the that and that period. up and opportunity And we'll manage just was price nothing week. notice now did evaluating and to And and wanted a potential concrete in period open that

do on And choose we will so if additional something disclosed that. there information obviously to be

Craig Maurer

you. Thank

Operator

you. Thank

Heckmann proceed next comes question. Davidson. of the from Peter question Our with your Please with DA line

Peter Heckmann

my I about XXXX that the wanting million to was savings are in should up in the good of $X how second on follow-up answered. been of Most that much you afternoon. cost just Hey, questions show targeting $X have in to quarter? million

Tim Murphy

so is about coming that from say to that. I'd of of Yes, hiring $X the approximately $XXX,XXX bucket. priority Most million

the second on And the as And second two did of process beginning we well. at also at so other the quarter. turn these quarter we implemented right initiatives the beginning, then right that

the think most slowing only just priorities. I focused full again, should on hiring, of there. So, hiring, have a effect quarter it stopping about just highest but that And not down coming from,

Peter Heckmann

about the just Okay. borrower space, see as then regards in think a how normal do And to forbearance period you catch how that auto lending you typically? and then up? the What's forbearance typically do

Tim Murphy

– and in loans, been student Well, there's any customers with but heard in understanding that is, discussions we've mortgage with true auto. auto our voluntary. our that's not in it's mandated forbearance We've

we ultimately have deferrals deferrals, widespread. that's so, heard those of due. but And still be not where will some situations necessarily there's been And

And our so very as positive feel about we repayment we volumes. discussed, loan

And they decrease deferrals, are means serve volume not at to I've specifically will to that which due, increase that widespread related those seen time. ultimately so when hurdles our any any

are that any of voluntary future the auto case not paid. a of handful mandated kind I'm in an aware with those of benefit a deferrals terms of will case deferrals, but in by us when So, again,

Peter Heckmann

outperformance of one, amount originally just outperformed my it on acquired Okay. area conservatism And just was revenue Was some around you revenue? the commentary of mentioned expectations. last the maybe acquired one the or there that

Tim Murphy

the was performed have it think well. – businesses I

and just was But generally at it about good feel so conservatism probably we they think good outset. nicely them the like in feel QX. I through performed

Peter Heckmann

Got it.

John Morris

I as year-over-year contribution helped to Yes, the growth also think, well. just organic probably

Peter Heckmann

it. Got

That right, I sense. All appreciate Okay. makes it.

Operator

Thank you.

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

Mike Grondahl

end the guys. that thanks the sales they can direct And reps, Yes, March reps you to where of ago? XXXX. The total year and a at compare sales just were

John Morris

Yes, sure.

from do sources. the we lead are a or agents. direct direct the We now in rep. don't partners if recall, as and partners probably rely software referral And have XXs So you on salesforce, low sales we ISOs so

around ago, acquisitions. come XX in maybe of significantly that low through that been so year would and So a XX, that's that A XX probably has lot it. have range to increased

pieces like that strong is we've One of things the the distribution – acquired we really had about that channels. businesses they've

those them of already. enhanced we've some And

So that addition, the of then just and new increase mix in from acquisitions. direct salespeople of is a organic kind the hiring

Mike Grondahl

cycle little. talk sounds can a And follow-up could you about big quick Got it a the Services, little be customer a to And just the a win, it size sales like bit for Financial there? it. us it trying Mercedes-Benz

Tim Murphy

a the pretty Sure. only Not the now but sales process. sale just regional was It long implementation.

of obviously our their lot and team a and it's overall enhance chip it fantastic customer Mercedes, Mercedes. think and from feel our so had a done lot to blue that platform, that a they technology just is And benefiting like our will meet demands us really them we live took customized already, we with job all a specifications has going not but

effort. So it great was a

we're so we've – processing recently, data started just And gathering now.

I in those channels the be we understand a into time. more usage of put that. over and actual it's a because about contribution. we’d processing had for did to understand just with but that this very channels think too talk I we different transactions, contribution as year, using the in We to probably we some for volumes, sense processing And have that conservative specific better were visibility wanted early adoption

Mike Grondahl

Got it.

you. Okay. Thank

John Morris

anticipate about – would would on that We And this something talk be prior calls some I general, obviously mentioned customers. we like specific the wanted be just aware captive had we would to don't since very make this in appropriate world announce. we looking thought often we anticipate, not to we you pricings at technology things opportunity. of like reasons won think But the one way like customer, our the to we why obviously every we continue don't margins and specific all the of opportunity, for we can we enhance the our was and announcing like leading do our technology we – we But that. add,

Operator

you. Thank

comes the with Suisse. with from Timothy questions. Chiodo Please of question next Our proceed Credit line your

Timothy Chiodo

color it opportunity for a around want mentioned to the calls little around the instant taking it. And And bit, appetite give into guess, are transaction, a Visa is related sizing just few understand the us few Maybe you the on which a question added a then you. you product. basis and per interchange, funding Maybe help the specifically will, net. Thanks. could added if just is, and dig any for that cogs MasterCard economics, that fees last points or charging assuming, gross questions. network cetera. the you on there I more times, Thank could us the are afternoon market director, We've and very My for of, and Good revenue earnings guys. the or cents basis would be helpful. et meaning any the it's I'm sort product, context the and if on potential the you thanks it's gross

Tim Murphy

John do that one? want to take you

John Morris

Sure, yes.

amount be click would of substantial net have that transactions is be is basis. decent amount without revenue So peers, on not basis, a through. would a of basis, it it just transaction trend, a per you on per be, on It overall it the may a definitely way contributor volume. per product kind coming priced revenue of see although a could you substantial specifically Therefore a would

on net see a will revenue reasons we're ticks while getting revenue perspective to is we're with One as net to aggressive we contributions. ultra be what up we the as – meaningful It over actual time a to the of not volume don't adoption from take that are seeing happens. trying

from adoption But get per on on different And repayment side, what through fee shifting points and do seen card-based real the we accelerate transaction transaction. side. is in basis is a as you've a the activity – – priced tran new think and get of it's transaction wanting a think from heard to the about that funds we existing And increased is, a of couple is that reasons increased consumer they're time time more are could before we We over wanting that time. now aware, think to the to real what on-boarding you're have customers. speaking. or We it is the we on us and that say and unique unique generally a differentiator

a, can So more revenue. you think don't the we real to term, from any digital of in specific an give for to we the in near And accelerate have we time. a to opportunity shift it's contribution net numbers

outlook. we change see getting time and self of We we will our move on be kind continue ahead to to continue that as be without our over of will conservative conservative there

Timothy Chiodo

that. Thanks I Great. appreciate John. a lot

Operator

time, At for and conclude conference to there are this questions. your you. thank this further Thank at gentlemen, Ladies and no the you participation. like I'd time

disconnect at You may lines time. your this

Repay (RPAY) 11 May 202020 Q1 Earnings call transcript