RPAY - Earnings call transcript Q1 2022 | Repay Holdings Corporation

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Operator

Greetings. 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 the 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 in our most recent Form 10-K filed with the SEC. materially forward-looking differ make that may today. results from statements any we Actual speak today, them as not forward-looking only The statements of by obligation intent required assume or and to as update except law. any do we an today's will investors, non-GAAP measures. also information certain discussion to to additional references In effort financial to provide include are the company's IR explanation non-GAAP measures, financial on An earnings supplement, available of those each of which site. turn the call to I now like to would Mr. over Morris. Please go ahead, sir.

John Morris

for joining good first and you, you review everyone. Thank today afternoon, our us Thank quarter operator, to results.

revenue volume During of the card growth reported gross quarter, of and we growth payment of XX%. XX%, total XX% profit growth

We integration partners. also software total have now XXX

In record, addition, business our up client and was across beyond. setting QX a well new implementations us for XXXX

our first highlights. to business quarter on Moving

vertical hospitality management payment payables and signed XX-plus software second the for year. during markets, now uses ERP this currently have going initiative quarter. QX We end On cross-selling focus Investor our to example XX payable We and Hotel massive which business trillion X.X our One with begin integrations, way. our continued of our have a BXB HIA our of the who is QX Apps, XXXX. streamlined unified vertical, in payments to recent this adding properties during Repay which about perform capability to partnership First, during was over talked HIA, representing a after a more well learned capabilities X,XXX a our and processing to provider, on solution quarter formal clients. AR/AP we is approximately call, of TAM,

to side, over AP we've supplier the grown XXX,XXX. network On our

technology and be AP Shepherd not-for-profit will Atlanta-based signed allow private to By operational our Center accounts hospital, an automation who solutions. using will improve During payment their processes, automating the Shepherd payable quarter, we looking our vendor internal allow its at Shepherd rebates. We've and as to AP been create experience hospital BXB also cash expand TAM AP. to efficiencies, teams our vendors from benefit better for for new a ways well as Center,

found investment XXXX XXXX. recently all we significant and instance, levels translates into This at For a of government. opportunities

April strong business. in We will strength repayment growth In on signed another big and strength side loan TotalPay be in fact, our we Atlanta. a continue personal May. season as This now part large virtual BXB as a to our solution into personal strong. consumer of Metro we the expand mix card key a refund We is loan the early drive driver and penetration. quarter our in had from recently volumes in of and payments QX tax side were continued volume saw municipality

so consumer experienced of do last in According many XX% year, last industry debt loans Federal pre-pandemic originated seasonal and highest $XXX Reserve end nonmortgage totaled of New of to XXXX the level growth our to increase of up year, suggests accelerating recently originations. Bank broader the the spending and recovery trillion XX% recently now in over the of that the clients loans The personal tracks XXXX. the on will billion The addition, continue in In Experian year. personal above data is loans personal have levels remainder noted that for the borrowing. York, $X.XX at record. and of a versus

and loan new lack rapidly prices growing focused auto the used of elevated, payments, much as Our was is by business car used vehicles. driven on very remain demand car

partnership The to an integration announced loan enhancing further cash a experience partnership participating Payix electronically using payment record acceptance over acceptance, including see eCash reconciliation integration into Payix amounts. space. technology companies exclusive at retail software We then pharmacies. and dollar Nortridge end-to-end expands efforts enabling This and simplify to continue place. their extended system unions. loans the leading are and cash with having servicing credit union thousands loan major payments going expanding of leading by lenders management, options We're higher unions. We for provider for between digital eCash. online payment stores, the to from payments offer credit of and clients of provide streamlining X credit convenience payment known to to locations, a system to us the recently FLEX, durations We core into as and success reconciliation Cash to and a clients. streamlines software on recently unit settled and make credit stores provider The for Nortridge payment borrowers all operations through Software, entered abilities members, is payment brings member overall XXX well. unions' credit

to our largest mortgage of are business. service customers payment Much Turning some coming of mortgage is from as clients more growth existing our and volume. servicing our

our and and Our X transactions, feedback thus servicer joined Board processing STX offering is in fully advisory exchange, live. servicers. STX new this continuing far. total participants the advisors, of to very go members to take offering can mortgage really new Board members the live as bringing recently We're has An emerging to the leading been positive add off

volume partner our solution. excited funding Our instant XXXX. was QX QX for to roughly Visa funding We're to grow program be above of Direct part XXXX the instant XX% help

solutions. have help access real-time and Visa and aimed resources to launch Visa's to Direct partner, will a As payment sell Repay tools

Lastly, competitive positioned pipeline and sentiment with via acquired are opportunity and that business away and recently with programs. networks which ISOs an to than sentiment Conference Electronic Repay perform new Association came Transactions our proprietary platform an more the presents nicely facilitators traditional flexibility for the and significant both winning to attended that offers a market for This and autonomy the future Repay to experience. take the we large it takeaways, ETA enhanced well technology onboarding share We clearing continues and superior growth. believe payment greater provide as with we continue

services, Visa's Fast Acceptance us key Fast the prequalified capabilities program, Through the networks processes Track and its Visa Visa acquiring partners. to and Visa-preferred and to program Acceptance of In global will provide network to [Payfacs] willing of partners join Track fintechs and as direct develop fact, globally. who partner preferred a providing access a its we're network to excited point with are

So a it payments we go years not sets and continue the for in business us trends strong feel to foundation will digital to will our that drive solid come. in XXXX. of quarter that first will tailwind frictionless for be success a that was macro environment The secular towards a away

a will investments and reminder, out a which few As specific guiding we for our on be focus year. last call, laid our initiatives the

across to clients. our verticals with penetration all continue As discussed, we top increase card

majority derived base. our the be to our expect existing of growth We client from

drive We from have to This first interaction. as we and every reduce been grow touch optimizing our processing infrastructure volume. help in us the will order automation costs

commercialized, formally and cross-selling are We our are AR/AP marketed capabilities unified year. this

well we card growth network expand to quarter, AP as adoption. BXB As shown virtual impressive our by increase signed clients and continue the supplier as new this virtual card

We developing on and all also for will best solutions focus verticals. the continue to payment software

enhance pipeline. Lastly, confident that beginning relative see creation to in allocation. performance And remains attractive Strategic to on thoughtful peers. believe valuations that capital we to value are focused we moderate, the are opportunities to M&A our lever remain continuing us. a and will We we're continue private M&A for powerful

it Tim year. Repay turning for team discuss detail. our to With so guidance Before Tim, I will and this the turn I to the call Tim? want far hard that, over financials the in over to entire greater to work thank

Timothy Murphy

Thank you, John.

on to review let's before our move results for XXXX. Now financial our QX I financial guidance

were XX% of across quarter, the As revenue $XX.X delivered XXX John in points. $X.X all of for first the We over first was volume the was take payment results rate believe versus increase year of prior increase years. a average Repay first decline of quarter. higher XXXX our much individual in million, approximately an rates tax quarter. strong an is the prior basis sequential over metrics. reason the Card prior represents mentioned, dollar year refund key that XX% Total in take billion, This primary amounts

would such This priced certain the Please is would expect but overall client and these is stays happens quarter. fees tax approximately do would debts. as refunds correlate lower fee types on convenience volume business XX% closer revenue because be take approximately repay fee, fees to to points refunds payment consumer of those recall contributed Payix of the QX incremental to the that BillingTree, with convenience loans, that other take where the types consumer For the by Kontrol the in rates XXXX. and lead the We rates. outstanding the use QX higher the our basis $XX.X paid to pricing flat we higher pays periods, medical up, in same. or during back bills experienced million XXX future and

The and services were of XX% signals in X% tax prior tough costs of on first year first $XX.X quarter expenses other QX refund out incremental increase gross the in were million for of of is season. organic profit in quarter to to the an sent QX Other basis, comp million, Payix of million that XXXX quarter. quarter. the over compared Gross Moving compared recall first $XX.X there from we services XXXX. growth us. normal On profit the XXXX. of to BillingTree, QX. was Kontrol $XX million for to cost $X were rounds saw of an X Please the addition Since a

QX to future and growth in We expect organic periods. be higher

least at SG&A $XX.X our was fact, XX%. In is the $XX.X million April million quarter in to estimate current first of XXXX. compared for

million adjusted was share. $XX.X net quarter per income $X.XX or First

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

XX%. and infrastructure X.Xx. adjusted continue is remain future. and place the sales, of quarter the XXXX Rule XX was anticipate in First accelerated for in beyond. foreseeable growth organic for the We product increased leverage Combined forma as total approximately net still EBITDA in proper of We revenue pro throughout putting confident do percentage a investment above to staying technology

to very We by allow be end of will fund comfortable XXXX, level, a us the expect continue which and this below opportunities. to inorganic to organic X.Xx

balance total $XXX access million cash revolver March of million. XX, sheet we to liquidity of amount a the capacity of million undrawn As $XXX $XX and of had on for

on XX, XXX we million shares outstanding March fully a diluted of had As basis. approximately

moving year. remainder Finally, of our the thoughts on the for to

profit are which total gross and between $XX million. $XXX $XXX between to We results billion to $XXX QX, XXXX, includes $XXX guidance $XXX million, be pleased million reiterating be $XXX million in $XX to adjusted we volumes million with and million between between EBITDA for our are revenue to and our and and billion,

in be continue is of The We the contribution the growth XX% the the in overall to growth P&L to XXXX our share political BXB expect we come expected of XXXX. to This by of includes of half XXXX. growth personal anticipated the comprise outlook of AP mix half driven be assets Payix, fast-growing well end as loans second expect by Media which exposure in also first vertical, is impacted in such organic BXG of approximately health growth business, greater by to to as gross in a the profit strong positively the the This assumes XX%. care. recovery approximately to which as XXXX continued cycle,

to much second in We expect the organic growth of year. gradually throughout stronger half growth with the the increase year

this strong operator the Operator? in off are to We to XXXX over of to the year. start remainder questions. throughout momentum now your call look the already back and continuing a turn I'll forward the take to

Operator

question first El-Assal with Instructions] is Our Barclays. from [Operator Ramsey

Ramsey El-Assal

drivers could that's provide things notable guidance. in going across are things rate How with assumptions like into everything environment? hikes, chain, on you the if on to thinking your wondering supply color baked the you addition macro verticals the about of was some I the some

Timothy Murphy

Yes. Sure.

we remainder organic stronger the driving and of that as just overall growth for number year. So factors mentioned, a there's think of are the we growth

used adoption auto underlying we in still recovery lead but are higher of of And just We we exposed general see longer personal payment and loan to just demand, strong macro there given more auto. some balances, health challenges the within volume is durations, to there. electronic very drivers growth which the we the repayment in we're BXB auto greater Just see care understand assumption in within in loans have. space, cars

benefit leads part to of the we our the business remainder that fastest-growing of year. will Media year, of us we -- specifically about specific And see have will cycle, and the on which second bigger the help our positively part become do media mix the business, as AP we all in the and the to BXB exposure talked to kind the the a of So thinking half and political well. some vertical of then of as is will

Ramsey El-Assal

or feeling of So sound for It doesn't kind a for at loan a you're headwind. a tailwind of it other macro in in bit headwinds? macro sounds originations thinking headwind business, than area, you're of personal like is a your point about, more of sense like types the a potential of example, worried this little loan sort

Timothy Murphy

Yes. Yes.

a data future periods as As John we've originations, recently, really have been loan -- and there's greater to we strong lead are volume which in will normalization, on that be mentioned, as some I interesting benefit even said, there that likely tools. well. mean, solutions in they're And repayment more personal payment would may from to where credit situation customers we our we think efficient adopt more focused on be collection because to when our

that for potentially us as driver increased volumes. so could be as And a well

Ramsey El-Assal

Got it.

might and was follow-up, I but the this have missed quarter? growth might the Okay. what quick organic in And really it, and mentioned you have

Timothy Murphy

far we our at we've we to expect seen is so It estimate XX%, why least was increase. is which X%. April said And continue is what -- for we've -- to

Ramsey El-Assal

recall I this missed around. I mention that first that, you time that for did your time think apologize. I the evening. I Thanks

Operator

next with KBW. Sanjay is from Our question Sakhrani

Sanjay Sakhrani

I on on Obviously, question sort us guess of thinking be of your there with might companies for? you're bit. could what the come out first in a you and valuations what update quite M&A maybe just there's John, has lots on looking backdrop.

John Morris

still this around of allocation our at afternoon, Good and have side even We we a our at And sure. us, We we it's moderate, as funds we our to think we looks we we that thoughtful with M&A do that, have Board very creation that on that lever so see a we had Yes, for of and for discussions that private best beginning value Sanjay. pipeline capital shareholders. a very are think still powerful Obviously, for around see a as use are for call. I there the move highest we'll year. as that the if said the -- this. team organic what's -- both specifically strong throughout ourselves have look the more great valuations

We are positioned well.

to growth We successful opportunities most sense overall continue look in at history it very help our us being the us. have of enhance strategy, a we'll makes marketplace And where that the the marketplace, will there. the for in long-term

we look to key We have lots criteria at M&A. order in of strategic evaluate

strong good We So pipeline. see opportunities.

-- year. of perspective and we we are very will making in sure -- we're approach this We throughout from disciplined valuation be and diligent moderate our watching to and there, that some that a expect

had sheet will overall for balance strong we just be be also heading we set but the as opportunities are Our we'll -- up capital around conversations think have in our allocation well. way, great we

Sanjay Sakhrani

terms for to Perfect. the to so in point that repayment in make consumer of maybe the And that? seeing guess, you and softness attention you I market customers look lenders a sort out economy. behavior on of Ramsey's assuming can Are might seeking the And are of period informed. of you is seek some what obviously, actually be just sort following else like question, are then paying is you repayment Tim, we maybe, to your your going go up options, of

Timothy Murphy

And baked we so we've talked think market And that the we being is talked that we that's we consumer all about and strong. loans. are and hearing is and that for of the very right what will think something we've we healthy think rest signs into about And were is now. demand something those [payable] The continue. personal positive year. so There's -- great the

Operator

question Heckmann D.A. Davidson. Peter is Our next with from

Peter Heckmann

that not winning BXB. like payment competitive electronic as a mix those there and Or Can have more BXB just to gone hospital, the there, customers bit takeaways a when you business example, an is yet as takeaways? solution the for well for of talk you're little about are

Timothy Murphy

It's just of winning actually forms against typically other payment.

virtual So to moving point, typically checks just your and from business into to away electronic, moving specifically cards.

it's It's takeaways. greenfield the not competitive verticals well. serve that we just specifically we BXB, as So see within within often and completely

Peter Heckmann

the seasonality personal for just thinking quarter to of terms the the the in due generally, just tax lending strong business business, is then And about Okay. first of refunds.

expect would down sequentially the it first to or quarter, flattish with quarter? Second you be

Timothy Murphy

do in it's support half I the tax the be growth in higher year. of expect growing of down. season, of business, BXB out coming refund which to some organic we second faster, it's But parts like slightly Typically, will said, our QX. growth We have actually faster

least in I we're XX% at April estimating As said, already.

more personal and QX support will So that's about than we second well. as QX as John and happening loan think mentioned, but is kind of that how the half a year, strength. And was think we of versus future prior the in growth the QX, expect in QX of it lot rapidly we recovery, periods,

Operator

next with Our question Andrew Schmidt from is Citi.

Andrew Schmidt

to BXB business. the I First, ask want on

a go-to-market just the is brand. is now think fully still the clarification. the Is the I go-to-market Or -- TotalPay? individual

or perspective? Just from curious there's individual consolidation a approach if kind multi-brand the of happened yet of brands has the distribution if a

John Morris

sure. AP Repay -- receiving total single sending it that perspective. as call both for actually allows their does brand. make just virtual be payables. ones a with funds our solution cards but or us the it's their it ones because ACH, funds the We Yes, solution, as really overall It's with of checks to to currently how just payables all payments, -- are like describe pay to is the side, would they the an TotalPay on also obviously, going But from not well not

that. be market. -- that integrations brand, new for that as So and we're the as -- best include brand this out solution But descriptor AP total AR ERPs will that that. as we next integrated year into. year the to to a both AR into and as upgrade we different integrated overall, Repay AP be solution, our to say will into complete out versions, will will various And roll we'll be take we'll that throughout adding we a as we drive for will the a the find and only we to I have move that as the that and

aware, of As have integrations we both sides through you our that. are with acquisitions

will to various update on as add AP so accounting we these continue And AR versions we those. ERP systems, to both and to

Andrew Schmidt

about And to vertical helpful. good government. to Very expansion Okay. hear the

there some obviously about that's maybe Salesforce end lift we existing to much within very required heavy there's and expansion and lucrative from not vertical whether it's BXB, where it's any is the or strategy But you integrations market. required think but is a modify think when perspective. -- I not a go-to-market sales materials, investment

vertical when curious Just we think about BXB? within expansion

John Morris

there most Obviously, investment. the not adding For we're perspective, specific it's an that's significant part, vertical we're BizDev then If talent, if of ERP would which integration incremental. really from the we a touching a it's government lot from perspective, is maybe already. integration an systems lighter the And much lift touch that talent would from unique on but where on be would we That's something side. a be the perspective, touch. AP piece mostly would side,

that's or side. a easy fairly the lift So for integration technology us a us for on

Andrew Schmidt

but with It that you're just to seeing personal the are optimistic if probably just yet. just more this the like in sounds to loan want consider. any more has and there sneak you're underlying offsets And been it quarter, full But what of there's just outlook. curious sneak seeing in just the a on if about then business doesn't more year out year outlook, outlook. we but make the that what couple confidence I sense first -- asked way the one there, confirm increase in, could X I the should that quarter Perfect. full growth, for sounds in Obviously, in different you're more it ways, momentum,

Timothy Murphy

outlook. of the we Like year, are confident No. the said, is there. in the we've a we're There number of drivers reiterated No. why which rest

a happening of You parts in have mentioned exposure where health There's also personal care. a we loans. recovery to healthcare, different few

have payables. consumer as payments, claims health hospital We as care payables well

the as And so recovery ongoing health we care in think that just well. supports outlook

John Morris

that, had we add opening I mentioned as also client my remarks, implementations. would I in a then QX record And

and confidence are of those they as as the obviously into processing some of And layered so come nature that forecast, live well. gives actually more those. begin us recurring our And

Operator

Jeffrey Our Securities. Andrew next with question from Truist is

Andrew Jeffrey

A your when is couple XX% business look remind more how you little instant have that competitive solutions feel me. offering about of should time, hear can at it us, and that And and the perhaps of more a over Or are growth be encouraging to to things value of product. the just would but John, really it you the you differentiation - you One, drive helpful. yield? such just of does sort a about stickier like in nuanced, more for that we that solution, funding point customer. think that driving

John Morris

Yes. Sure.

piece which originally at the those it's outflows, big So some of picture, a -- the of were I'd even ACH. specifically the and say large that, on in form payment you and check it, historically if side cash even of would look consumer be happening

it more influence transaction, that card So as file method something set a back. we will of stored Typically, repayment. payment -- to funded, card-based influence file as will a picture that at the it, on gets digital that -- to for or default look you gets big the whole repayment influence, as usually how mechanisms

digital of which now, that that. door it's -- probably starting more it So we seeing characteristic the a means and back We're out come activity way, will whole to secular the more is that talk at That's that to way. as we an shift. also think influencer. We're about go really

we're of evidence we seeing, as that's it, we and so drive that's different about an experiences of those that's And that secular talk and that shift part -- behaviors, but that.

per piece more visibility based. good to necessarily indicator that. what's a more more on transaction of fee that. of It's which There's it what on great type will get us it of volume not really transactional a on transactional there, is click just which paid of eventually be bps is gives transaction back. that, you is come. a of also But that Now But

Andrew Jeffrey

really throughout revenue on The understand then little this and organic here? light And just gross was to it's and quarter, puts margin Tim, the elaborate a profit and can year ramp. Margin takes should Right. secular I how going growth little you drives that looks bit flywheel. you good. affect a Right. talk Can just about margin. also mix

Timothy Murphy

Yes.

So north of a has expected of from than has do a actually XX%. BillingTree. we -- profit gross been to with lot that BillingTree better margin

a -- relates tax QX season. so have had it they as also to strong refund And and -- they

So their has revenue up. volume which and the gross margins higher much than average the brings profit average, overall

And so QX. And platform as of which driver that's costs, the one that to well, should BillingTree and that. RCS happen as of in drive we've we're in converting our in which up then back discussed process, will effectively will reduce processing margin

And gross profit remainder for the actually so be of those a margins year we would that think for higher little could potentially bit reasons. the

Andrew Jeffrey

Okay.

seasonality to have So number? that in don't you worry about necessarily

Timothy Murphy

because help to will back slightly the similar No, I that support margins. the conversion end, of think higher of

Operator

James Our is Faucette Morgan with Instructions] [Operator next Stanley. from question

Jeffrey Goldstein

This James. is on actually Goldstein for Jeff

mentioned You the that to take tax rate the dynamics. the refund was due reason for decline

in ongoing term, ensure exiting you'd year I and any rate? expect to either your your or into XXXX, that? growth wanted still longer to change long-term just that take the around thinking stable So just -- Just

Timothy Murphy

Yes.

year as I to would or beyond. be to material XXX so up like the So flat And think increase with it closer model. mentioned seeing basis we it in average was expect unique convenience there wouldn't to April repricing individual We're into change back that we our fee think refund points, next mentioned. refunds any higher back up going was. We then tax and it to dynamic, already I real

refund related this was XXXX specific it So really for to I season. think tax dynamic the

Jeffrey Goldstein

was Okay. network growing think supplier enough. up you XXX,XXX And which then Fair your I suppliers quarter. to from XXX,XXX mentioned last

you And solutions? do to, network What your there network? think growing is think that Just that? should that there keep to that how maybe level you way reach we Just to a of critical should ability about we help if like there? would have something it you a dedicated adoption would How out resources accelerate about think about like could encourage? imagine effect your is

Timothy Murphy

of verticals, similar get that with, we grow pace. of these effect to Obviously -- as it. will continue real. Ultimately, add the expand will we some to able be down different more couple a areas, has But into more Well see is could to do are niche we going as suppliers. add it you into suppliers to a to these you network see out at more drill of really we us

So are good people adding way you have your if -- of your it’s were could you network as to as on But effect. if take virtual mean that pise customers network, you all a most the that’s well. a your thing to of either card, would

will the see sales, organically many continue we is as a our unique to grow niche some well. as positive as for virtual vendors specific we on which pace. and over card a similar of at But it should network you grow we effect we effect start it see us. in, over So is probably new can as adoption to ultimately to network drives to unique it it so and where That continue areas where people grow out there. that that We have see when a we those down many getting drill

Operator

turn time. questions more with Kennedy like comments. closing to would over do no with the we to for Actually, conference John I Blair. have this are question back William There Cris at a

Cris Kennedy

BXB Thanks me for happen taking loan revenue did consumer the give in. I so to kind have But of what category, by you repayments, squeezing question I you? growth and missed And if it. apologize

Timothy Murphy

but not call, that on that past. this in We've we have done the done

is our is XX-plus back-end low far fastest is then growing which payments the in BXB teens. And RCS, call of platform probably business growing so probably percent. part we teens. by what the high And is is in consumer other, the really the

outlook -- have healthy the other reasons and organic have the becoming think, in confidence it's And of year bigger the And because the we rates mix, are, BXB those of as fastest growth is I again, in so that's the of we one part the then the for grower. remainder a just areas well.

John Morris

has No start our more We us in positioned year, time. we to We're for appreciate and encouraged their questions? take go succeed thank I us very at trends which secular seeing this And many just evening. Great. your conferences. continue the to you strong payments. different Thank joining everybody by many to see beyond, digital you XXXX want forward greatly frictionless and well I of advantage look of as as we to towards to you. the of

Operator

Thank conference. you. today's does conclude This

lines this may participation. disconnect and your thank at your time, for you You

Repay (RPAY) 11 May 222022 Q1 Earnings call transcript