Repay Holdings Corporation (RPAY) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call shows mixed signals: strong growth in business payments and supplier network, but margin pressures and a missed free cash flow target. The Q&A reveals stable market trends but lacks clarity on some growth initiatives. Adjusted ratings reflect a balance of positives and negatives, leading to a neutral sentiment for the stock price over the next two weeks.
Key Financial Performance
Revenue $78.6 million in Q4 2025, representing a 10% year-over-year growth on a normalized basis, excluding political media contributions during 2024. Growth driven by steady payment streams with existing clients and new client contributions.
Gross Profit $58.3 million in Q4 2025, showing a 9% year-over-year growth on a normalized basis, excluding political media contributions during 2024. Growth attributed to increased client payment volumes and new client ramp-ups.
Adjusted EBITDA $32.4 million in Q4 2025, with adjusted EBITDA margins at 41%. Growth supported by resource allocation towards sales, implementation, and client service teams.
Free Cash Flow $13.8 million in Q4 2025, resulting in a 43% free cash flow conversion. Slightly below expectations due to quarterly timing of net working capital, not expected to reverse in Q1.
Consumer Payments Revenue Increased 8% year-over-year in Q4 2025. Growth driven by steady payment streams with existing clients and incremental contributions from new clients.
Consumer Payments Gross Profit Increased 6% year-over-year in Q4 2025. Growth attributed to deeper integrations and enhanced client experiences.
Business Payments Revenue Normalized revenue increased 41% year-over-year in Q4 2025, excluding political media contributions during 2024. Growth driven by new client wins in healthcare and hospitality verticals and modernization initiatives.
Business Payments Gross Profit Normalized gross profit increased 73% year-over-year in Q4 2025, excluding political media contributions during 2024. Growth supported by expanded supplier network and enhanced ACH offerings.
Supplier Network Increased to 602,000 suppliers in Q4 2025, a 65% year-over-year growth. Growth driven by adding over 240,000 suppliers during 2025, boosting momentum in the hospitality vertical.
Adjusted Net Income $16.8 million in Q4 2025 or $0.19 per share. Impacted by a noncash goodwill impairment charge of $138.9 million related to the Consumer Payments segment.
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Operating Highlights
Dynamic Wallet: Introduced new product capabilities like Dynamic Wallet, allowing iOS and Android users to tap and pay and access statement activity directly within their digital wallet experience.
Repay Voice: Tested new product capabilities such as Repay Voice, which aims to revolutionize the IVR experience for consumer calls and is set for a staged rollout in 2026.
Consumer Payments: Increased consumer software partnerships to 189, enhancing integrations for better client and consumer experiences. Revenue grew 8% and gross profit grew 6% year-over-year in Q4 2025.
Business Payments: Normalized revenue increased 41% and gross profit increased 73% year-over-year in Q4 2025. Expanded supplier network to 602,000 suppliers, a 65% increase year-over-year, and added 105 software partners and embedded integrations.
AI and Automation: Leveraged AI to reduce integration time, assist client onboarding, and deploy middleware for faster tech migrations, reducing manual processes and costs.
Operational Improvements: Streamlined processes, changed key executives, and allocated resources to sales and customer support teams to pursue enterprise clients.
M&A and Partnerships: Focused on strategic M&A and partnerships to boost vertical reach and long-term growth.
Capital Allocation: Prioritized organic growth, strategic M&A, partnerships, and share buybacks while maintaining financial flexibility.
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Risk or Challenges
Noncash goodwill impairment charge: A $138.9 million noncash goodwill impairment charge was reported in the Consumer Payments segment, which negatively impacted net income.
Debt and leverage: The company paid off $147 million of 0% convertible notes using cash and a $110 million draw on its revolving credit facility, resulting in a pro forma net leverage of approximately 2.5x. This could pose financial risks if cash flow generation does not meet expectations.
Client implementation delays: Several client implementations were delayed, pushing go-live timelines to later than expected, which could impact revenue growth in the first quarter of 2026.
Annualized churn: The company experienced annualized churn in the back half of 2025, which may affect year-over-year growth in early 2026.
Interest expense: Interest expense is expected to be approximately $15 million in 2026, which includes costs associated with the $110 million revolving credit facility and 2029 convertible notes. This could impact free cash flow and profitability.
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Guidance & Outlook
Revenue Expectations: In 2026, Repay expects revenues to be between $340 million and $345 million, representing 10% to 12% reported revenue growth and approximately 7% to 9% normalized revenue growth when excluding the positive contributions of the Political Media business.
Adjusted EBITDA: Repay expects adjusted EBITDA to be between $136.5 million and $141.5 million, representing approximately 40% adjusted EBITDA margins.
Free Cash Flow Conversion: The company is confident in achieving a free cash flow conversion target of above 45%, which incorporates fluctuations in net working capital and incremental interest payments.
Interest Expense: Interest expense is expected to be approximately $15 million during 2026, including payments associated with the 2029 convertible notes and $110 million draw on the revolving credit facility.
Growth Expectations: Year-over-year growth in Q1 2026 is expected to be lower than the full-year outlook due to implementation delays and annualized churn. However, the second half of 2026 is expected to return to strong double-digit normalized growth.
Political Media Contributions: Political media contributions are expected to positively impact revenue by $8 million to $10 million, representing approximately 3 percentage points of reported growth year-over-year.
Capital Allocation Priorities: In 2026, Repay plans to deploy capital towards organic growth opportunities, strategic M&A and partnerships, product and technology initiatives, share repurchases, and potentially reducing total debt outstanding.
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Shareholder Return Plan
Share Repurchase Program: Repay has $23 million remaining under its existing share repurchase program that can be utilized during 2026. The company plans to balance capital deployment towards organic investment, M&A, partnerships, and share buybacks while maintaining financial flexibility.
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Key Q&A
Q:Can you provide an update on major end markets such as auto, personal loans, health care, and mortgage?
A:The trends in auto and personal loans remain consistent with last year, showing stability in affordability constraints. Health care and mortgage markets also show no significant changes from previous experiences.
Q:Are there any customer renewals in 2026 that we should be aware of?
A:There are no major customer renewals in 2026 outside of the standard auto-renewals already embedded in the guidance.
Q:What impact are higher tax refunds having on volumes and payment activity?
A:There was a seasonal uplift in payment volumes in February due to tax refunds, which is typical for the first quarter. However, the company only sees payment volumes and not the total refund amounts.
Q:Can you provide details on the contribution of float income to growth and margins in the B2B segment?
A:Float income from customer deposits in the B2B business contributed significantly to growth. The company started collecting interest on these deposits in 2025, and it remains stable in the 2026 guidance. Other factors like customer losses and monetization efforts also contributed to strong results.
Q:What is the current M&A pipeline and focus areas?
A:The company has a healthy M&A pipeline, focusing on both consumer and business payments. Potential investments aim to drive new vertical reach and complement existing business units, with an emphasis on long-term organic growth.
Q:What are the key areas of focus for organic growth investments in 2026?
A:The company is investing in enterprise sales, go-to-market initiatives, and AI-driven product innovations like voice AI and IVR voice AI. These investments aim to streamline operations, enhance client implementations, and drive scalability.
Q:How has the CDP from Visa impacted the business payments portion of prepaid's business?
A:The CDP initiative affects the AR side by making Level 2 pricing more complex, transitioning to Level 3. On the AP side, the company focuses on maximizing monetization through various virtual card brands.
Q:What is the growth outlook for the business payment segment over the next few years?
A:The business payment segment is expected to grow in the high teens organically, with some variability due to political cycles like midterm elections, which contribute $8-10 million in revenue.
Q:Are there any significant consumer initiatives expected to contribute to growth in 2026?
A:Initiatives like auto OEM and mortgage solutions are included in the 2026 outlook, but the mortgage solution is a longer-term project taking more time than expected.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact amount of float income from customer deposits and the precise impact of the CDP initiative on AR and AP sides. Additionally, the response on consumer initiatives like the mortgage solution lacked clarity on timelines and specific contributions to growth.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI assist
AI capability
AI integration
AI middleware
AI resource
AP payment
AP platform
APE traction
Android user
Businesses organization
Clients convenience
DPE client
Emotive software
Gold enterprise
Group gateway
IVR experience
NAL fund
Payments segment
Repays AP
Repays platform
Strawhecker Group
Voice
achievement
client vertical
foundation
hospitality
improvement
partner integration
product capability
productivity
progress
topic review
RPAY Transcript
Repay Holdings Corporation (RPAY) Q4 2025 Earnings Call Transcript
Unknown3-9
The earnings call shows mixed signals: strong growth in business payments and supplier network, but margin pressures and a missed free cash flow target. The Q&A reveals stable market trends but lacks clarity on some growth initiatives. Adjusted ratings reflect a balance of positives and negatives, leading to a neutral sentiment for the stock price over the next two weeks.
Repay Holdings Corporation (RPAY) Q3 2025 Earnings Call Transcript
Unknown11-10
The earnings call presents a mixed picture: modest revenue growth and strong free cash flow conversion are overshadowed by gross profit margin compression and client losses. The Q&A section reveals management's reluctance to provide specific guidance, raising concerns. However, the share repurchase and debt reduction are positives. Without a market cap, the stock's reaction is uncertain but likely neutral given the balanced positives and negatives.
Repay Holdings Corporation (RPAY) Q2 2025 Earnings Call Transcript
Unknown8-11
The earnings call summary showed mixed results with flat consumer payments gross profit and a decline in business payments. However, the company has a strong free cash flow and increased share repurchase program, which are positive. The Q&A revealed uncertainties like unclear M&A strategies and consumer softness, but growth is expected in H2 2025. Overall, the mixed financial performance and cautious optimism balance out, leading to a neutral sentiment.
Repay Holdings Corporation (RPAY) Q1 2025 Earnings Call Transcript
Unknown5-12
The earnings call presents mixed signals. The revenue decline and negative free cash flow are concerning, but the share repurchase authorization and stable cash reserves provide some positivity. The Q&A highlights resilience in consumer spending and potential growth in B2B markets. However, the lack of 2025 guidance and competitive pressures weigh negatively. Overall, the sentiment is neutral, as the positive and negative factors balance each other out.
RPAY Slides
RPAY Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
