Raising Full Year 2023 Revenue Outlook Gross
Profit Growth of 3% in Q3 and 7% Year-to-Date Normalized Organic
Gross Profit Growth1 of 12% in Q3 and 13% Year-to-Date
Repay Holdings Corporation (NASDAQ: RPAY) (“REPAY” or the
“Company”), a leading provider of vertically-integrated payment
solutions, today reported financial results for its third quarter
ended September 30, 2023.
Third Quarter 2023 Financial Highlights
(in $ millions)
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
YoY Change
Card payment volume
$
6,416.8
$
6,611.8
$
6,591.3
$
6,254.4
$
6,401.3
0%
Revenue
71.6
72.7
74.5
71.8
74.3
4%
Gross profit (1)
54.9
57.8
56.6
54.9
56.7
3%
Net income (loss)
5.4
(8.2
)
(27.9
)
(5.3
)
(6.5
)
-
Adjusted EBITDA (2)
31.7
36.0
31.2
30.3
31.9
1%
(1)
Gross profit represents revenue less costs
of services.
(2)
Adjusted EBITDA is a non-GAAP financial
measure. See “Non-GAAP Financial Measures” and the reconciliation
of Adjusted EBITDA to its most comparable GAAP measure provided
below for additional information.
“REPAY delivered solid performance in the third quarter, with
normalized organic revenue and gross profit growth1 of 11% and 12%,
respectively,” said John Morris, CEO of REPAY. “We continued to see
stable and resilient trends from our clients throughout the
quarter. Our efforts in developing our go-to-market and
implementation teams, as well as innovating on our payment
technology, continue to be our top priorities. We remain excited
about the future of REPAY as we strive to be a network to all
networks.”
Third Quarter 2023 Business Highlights
The Company's achievements in the quarter, including those
highlighted below, reinforce management's belief in the ability of
the Company to drive durable and sustained growth across REPAY's
diversified business model.
- 12% year-over-year normalized organic gross profit growth1 in
Q3 and 13% year-to-date
- Consumer Payments organic gross profit growth1 of approximately
14% year-over-year
- Business Payments normalized organic gross profit growth1 of
approximately 13% year-over-year
- Accelerated AP supplier network to over 233,000, an increase of
approximately 60% year-over-year
- Added five new integrated software partners to bring the total
to 257 software relationships as of the end of the third
quarter
- Increased instant funding transaction volumes by approximately
50% year-over-year
- The Company now serves over 266 Credit Unions, an increase of
approximately 16% year-over-year
1 Normalized organic revenue growth,
organic gross profit growth and normalized organic gross profit
growth are non-GAAP financial measures. See “Non-GAAP
Financial Measures” and the reconciliation to their most comparable
GAAP measure provided below for additional information.
Segments
The Company reports its financial results based on two
reportable segments.
Consumer Payments – The Consumer Payments segment provides
payment processing solutions (including debit and credit card
processing, Automated Clearing House (“ACH”) processing and other
electronic payment acceptance solutions, as well as REPAY’s loan
disbursement product) that enable its clients to collect payments
and disburse funds to consumers and includes its clearing and
settlement solutions (“RCS”). RCS is REPAY’s proprietary clearing
and settlement platform through which it markets customizable
payment processing programs to other ISOs and payment facilitators.
The strategic vertical markets served by the Consumer Payments
segment primarily include personal loans, automotive loans,
receivables management, credit unions, mortgage servicing, consumer
healthcare and diversified retail.
Business Payments – The Business Payments segment provides
payment processing solutions (including accounts payable
automation, debit and credit card processing, virtual credit card
processing, ACH processing and other electronic payment acceptance
solutions) that enable REPAY’s clients to collect or send payments
to other businesses. The strategic vertical markets served within
the Business Payments segment primarily include retail automotive,
education, field services, governments and municipalities,
healthcare, media, homeowner association management and
hospitality.
Segment Card Payment Volume, Revenue, Gross
Profit, and Gross Profit Margin
Three Months Ended September
30,
Nine Months Ended September
30,
($ in thousand)
2023
2022
% Change
2023
2022
% Change
Card payment volume
Consumer Payments
$
5,338,250
$
4,937,825
8%
$
16,057,365
$
15,146,967
6%
Business Payments
1,063,088
1,479,002
(28%)
3,189,640
3,880,064
(18%)
Total card payment volume
$
6,401,338
$
6,416,827
0%
$
19,247,005
$
19,027,031
1%
Revenue
Consumer Payments
$
68,720
$
62,977
9%
$
204,622
$
183,890
11%
Business Payments
9,704
11,440
(15%)
28,170
30,266
(7%)
Elimination of intersegment revenues
(4,104
)
(2,862
)
(12,152
)
(7,602
)
Total revenue
$
74,320
$
71,555
4%
$
220,640
$
206,554
7%
Gross profit (1)
Consumer Payments
$
53,599
$
49,724
8%
$
159,929
$
143,295
12%
Business Payments
7,188
8,059
(11%)
20,421
20,931
(2%)
Elimination of intersegment revenues
(4,104
)
(2,862
)
(12,152
)
(7,602
)
Total gross profit
$
56,683
$
54,921
3%
$
168,198
$
156,624
7%
Total gross profit margin (2)
76%
77%
76%
76%
(1) Gross profit represents revenue
less costs of services.
(2) Gross profit margin represents total
gross profit / total revenue.
2023 Outlook Update
“We have solid momentum heading into the fourth quarter and are
confident in the fundamentals of our business model. Based on the
results from the first nine months of the year, as well as current
trends, we are raising the midpoint of our 2023 revenue outlook,”
said Tim Murphy, CFO of REPAY. “We expect adjusted free cash flow
conversion to accelerate into 2024 as we realize the benefits from
investments we've made in sales, product and technology over the
past several years.”
REPAY now expects the following financial results for full year
2023, which replaces the previously provided outlook.
Full Year 2023 Outlook
Card Payment Volume
$26.0 - 27.2 billion
Revenue
$286 - 292 million
Gross Profit
$218 - 228 million
Adjusted EBITDA
$122 - 130 million
REPAY does not provide quantitative reconciliation of
forward-looking, non-GAAP financial measures, such as forecasted
2023 Adjusted EBITDA, to the most directly comparable GAAP
financial measure, because it is difficult to reliably predict or
estimate the relevant components without unreasonable effort due to
future uncertainties that may potentially have a significant impact
on such calculations, and providing them may imply a degree of
precision that would be confusing or potentially misleading.
Conference Call
REPAY will host a conference call to discuss third quarter 2023
financial results today, November 9, 2023 at 5:00 pm ET. Hosting
the call will be John Morris, CEO, and Tim Murphy, CFO. The call
will be webcast live from REPAY’s investor relations website at
https://investors.repay.com/investor-relations. The conference call
can also be accessed live over the phone by dialing (877) 407-3982,
or for international callers (201) 493-6780. A replay will be
available one hour after the call and can be accessed by dialing
(844) 512-2921 or (412) 317-6671 for international callers; the
conference ID is 13741455. The replay will be available at
https://investors.repay.com/investor-relations.
Non-GAAP Financial Measures
This report includes certain non-GAAP financial measures that
management uses to evaluate the Company’s operating business,
measure performance, and make strategic decisions. Adjusted EBITDA
is a non-GAAP financial measure that represents net income prior to
interest expense, tax expense, depreciation and amortization, as
adjusted to add back certain charges deemed to not be part of
normal operating expenses, non-cash charges and/or non-recurring
charges, such as loss on business disposition, non-cash change in
fair value of contingent consideration, non-cash impairment loss,
non-cash change in fair value of assets and liabilities,
share-based compensation charges, transaction expenses,
restructuring and other strategic initiative costs and other
non-recurring charges. Adjusted Net Income is a non-GAAP financial
measure that represents net income prior to amortization of
acquisition-related intangibles, as adjusted to add back certain
charges deemed to not be part of normal operating expenses, loss on
business disposition, non-cash charges and/or non-recurring
charges, such as non-cash change in fair value of contingent
consideration, non-cash impairment loss, non-cash change in fair
value of assets and liabilities, share-based compensation expense,
transaction expenses, restructuring and other strategic initiative
costs, other non-recurring charges, non-cash interest expense and
net of tax effect associated with these adjustments. Adjusted Net
Income is adjusted to exclude amortization of all
acquisition-related intangibles as such amounts are inconsistent in
amount and frequency and are significantly impacted by the timing
and/or size of acquisitions. Management believes that the
adjustment of acquisition-related intangible amortization
supplements GAAP financial measures because it allows for greater
comparability of operating performance. Although REPAY excludes
amortization from acquisition-related intangibles from its non-GAAP
expenses, management believes that it is important for investors to
understand that such intangibles were recorded as part of purchase
accounting and contribute to revenue generation. Adjusted Net
Income per share is a non-GAAP financial measure that represents
Adjusted Net Income divided by the weighted average number of
shares of Class A common stock outstanding (on an as-converted
basis assuming conversion of the outstanding units exchangeable for
shares of Class A common stock) for the three and nine months ended
September 30, 2023 and 2022 (excluding shares subject to
forfeiture). Normalized organic revenue growth is a non-GAAP
financial measure that represents year-on-year revenue growth that
excludes incremental revenue attributable to acquisitions,
dispositions and REPAY’s media payments business related to the
cyclical political media spending in the applicable prior period or
any subsequent period. Organic gross profit growth is a non-GAAP
financial measure that represents year-on-year gross profit growth
that excludes incremental gross profit attributable to acquisitions
and divestitures made in the applicable prior period or any
subsequent period. Normalized organic gross profit growth is a
non-GAAP financial measure that represents year-on-year organic
gross profit growth that excludes incremental gross profit
attributable to REPAY’s media payments business related to the
cyclical political media spending in the applicable prior period or
any subsequent period. Free Cash Flow and Adjusted Free Cash Flow
are non-GAAP financial measures that represents net cash flow
provided by operating activities less total capital expenditures,
and Adjusted Free Cash Flow is further adjusted to add back certain
charges deemed to not be part of normal operating expenses and/or
non-recurring charges, such as transaction expenses, restructuring
and other strategic initiative costs and other non-recurring
charges. REPAY believes that Adjusted EBITDA, Adjusted Net Income,
Adjusted Net Income per share, normalized organic revenue growth,
organic gross profit growth, normalized organic gross profit
growth, Free Cash Flow and Adjusted Free Cash Flow provide useful
information to investors and others in understanding and evaluating
its operating results in the same manner as management. However,
these non-GAAP financial measures are not financial measures
calculated in accordance with GAAP and should not be considered as
a substitute for net income, operating profit, net cash provided by
operating activities, or any other operating performance measure
calculated in accordance with GAAP. Using these non-GAAP financial
measures to analyze REPAY’s business has material limitations
because the calculations are based on the subjective determination
of management regarding the nature and classification of events and
circumstances that investors may find significant. In addition,
although other companies in REPAY’s industry may report measures
titled as the same or similar measures, such non-GAAP financial
measures may be calculated differently from how REPAY calculates
its non-GAAP financial measures, which reduces their overall
usefulness as comparative measures. Because of these limitations,
you should consider REPAY’s non-GAAP financial measures alongside
other financial performance measures, including net income, net
cash provided by operating activities and REPAY’s other financial
results presented in accordance with GAAP.
Forward-Looking Statements
This communication contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements include, but are not limited to, statements
about future financial and operating results, REPAY’s plans,
objectives, expectations and intentions with respect to future
operations, products and services; and other statements identified
by words such as “guidance,” “will likely result,” “are expected
to,” “will continue,” “should,” “is anticipated,” “estimated,”
“believe,” “intend,” “plan,” “projection,” “outlook” or words of
similar meaning. These forward-looking statements include, but are
not limited to, REPAY’s 2023 outlook update and other financial
guidance, expected demand on REPAY’s product offering, including
further implementation of electronic payment options and statements
regarding REPAY’s market and growth opportunities, and REPAY’s
business strategy and the plans and objectives of management for
future operations. Such forward-looking statements are based upon
the current beliefs and expectations of REPAY’s management and are
inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are
difficult to predict and generally beyond REPAY’s control.
In addition to factors disclosed in REPAY’s reports filed with
the U.S. Securities and Exchange Commission, including its Annual
Report on Form 10-K for the year ended December 31, 2022 and
subsequent Form 10-Qs, and those identified elsewhere in this
communication, the following factors, among others, could cause
actual results and the timing of events to differ materially from
the anticipated results or other expectations expressed in the
forward-looking statements: exposure to economic conditions and
political risk affecting the consumer loan market, the receivables
management industry and consumer and commercial spending, including
bank failures or other adverse events affecting financial
institutions, inflationary pressures, general economic slowdown or
recession; changes in the payment processing market in which REPAY
competes, including with respect to its competitive landscape,
technology evolution or regulatory changes; changes in the vertical
markets that REPAY targets, including the regulatory environment
applicable to REPAY’s clients; the ability to retain, develop and
hire key personnel; risks relating to REPAY’s relationships within
the payment ecosystem; risk that REPAY may not be able to execute
its growth strategies, including identifying and executing
acquisitions; risks relating to data security; changes in
accounting policies applicable to REPAY; and the risk that REPAY
may not be able to maintain effective internal controls.
Actual results, performance or achievements may differ
materially, and potentially adversely, from any projections and
forward-looking statements and the assumptions on which those
forward-looking statements are based. There can be no assurance
that the data contained herein is reflective of future performance
to any degree. You are cautioned not to place undue reliance on
forward-looking statements as a predictor of future performance.
All information set forth herein speaks only as of the date hereof
in the case of information about REPAY or the date of such
information in the case of information from persons other than
REPAY, and REPAY disclaims any intention or obligation to update
any forward-looking statements as a result of developments
occurring after the date of this communication. Forecasts and
estimates regarding REPAY’s industry and end markets are based on
sources it believes to be reliable, however there can be no
assurance these forecasts and estimates will prove accurate in
whole or in part. Pro forma, projected and estimated numbers are
used for illustrative purpose only, are not forecasts and may not
reflect actual results.
About REPAY
REPAY provides integrated payment processing solutions to
verticals that have specific transaction processing needs. REPAY’s
proprietary, integrated payment technology platform reduces the
complexity of electronic payments for clients, while enhancing the
overall experience for consumers and businesses.
Condensed Consolidated Statement of
Operations (Unaudited)
Three Months ended September
30,
Nine Months ended September
30,
(in $ thousands, except per share
data)
2023
2022
2023
2022
Revenue
$
74,320
$
71,555
$
220,640
$
206,554
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
17,637
16,634
52,442
49,930
Selling, general and administrative
35,279
36,032
111,974
107,379
Depreciation and amortization
26,523
24,662
79,146
82,442
Change in fair value of contingent
consideration
—
(340
)
—
(4,290
)
Loss on business disposition
—
—
10,027
—
Total operating expenses
79,439
76,988
253,589
235,461
Loss from operations
(5,119
)
(5,433
)
(32,949
)
(28,907
)
Other income (expense)
Interest (expense) income, net
(103
)
(1,100
)
(1,413
)
(3,128
)
Change in fair value of tax receivable
liability
(3,234
)
11,411
(3,716
)
55,481
Other (loss) income
(26
)
20
(360
)
(126
)
Total other income (expense)
(3,363
)
10,331
(5,489
)
52,227
Income (loss) before income tax benefit
(expense)
(8,482
)
4,898
(38,438
)
23,320
Income tax benefit (expense)
1,998
474
(1,308
)
(6,414
)
Net income (loss)
$
(6,484
)
$
5,372
$
(39,746
)
$
16,906
Net loss attributable to non-controlling
interest
(316
)
(473
)
(2,543
)
(2,602
)
Net income (loss) attributable to the
Company
$
(6,168
)
$
5,845
$
(37,203
)
$
19,508
Weighted-average shares of Class A common
stock outstanding - basic
91,160,415
88,735,518
89,658,318
88,749,417
Weighted-average shares of Class A common
stock outstanding - diluted
91,160,415
110,114,054
89,658,318
110,789,646
Income (loss) per Class A share -
basic
$
(0.07
)
$
0.07
$
(0.41
)
$
0.22
Income (loss) per Class A share -
diluted
$
(0.07
)
$
0.05
$
(0.41
)
$
0.18
Condensed Consolidated Balance
Sheets
(in $ thousands)
September 30, 2023
(Unaudited)
December 31, 2022
Assets
Cash and cash equivalents
$
117,730
$
64,895
Accounts receivable
36,889
33,544
Prepaid expenses and other
13,984
18,213
Total current assets
168,603
116,652
Property, plant and equipment, net
3,557
4,375
Restricted cash
23,660
28,668
Intangible assets, net
444,822
500,575
Goodwill
792,543
827,813
Operating lease right-of-use assets,
net
8,961
9,847
Deferred tax assets
138,121
136,370
Other assets
2,500
2,500
Total noncurrent assets
1,414,164
1,510,148
Total assets
$
1,582,767
$
1,626,800
Liabilities
Accounts payable
$
20,271
$
21,781
Related party payable
—
1,000
Accrued expenses
27,473
29,016
Current operating lease liabilities
1,786
2,263
Current tax receivable agreement
—
24,454
Other current liabilities
1,603
3,593
Total current liabilities
51,133
82,107
Long-term debt
433,454
451,319
Noncurrent operating lease liabilities
8,054
8,295
Tax receivable agreement, net of current
portion
185,901
154,673
Other liabilities
1,879
2,113
Total noncurrent liabilities
629,288
616,400
Total liabilities
$
680,421
$
698,507
Commitments and contingencies
Stockholders' equity
Class A common stock, $0.0001 par value;
2,000,000,000 shares authorized; 92,014,648 issued and 90,936,507
outstanding as of September 30, 2023; 89,354,754 issued and
88,276,613 outstanding as of December 31, 2022
9
9
Class V common stock, $0.0001 par value;
1,000 shares authorized and 100 shares issued and outstanding as of
September 30, 2023 and December 31, 2022
—
—
Additional paid-in capital
1,140,588
1,117,736
Treasury stock, 1,078,141 shares as of
September 30, 2023 and December 31, 2022
(10,000
)
(10,000
)
Accumulated other comprehensive loss
(3
)
(3
)
Accumulated deficit
(250,383
)
(213,180
)
Total Repay stockholders'
equity
$
880,211
$
894,562
Non-controlling interests
22,135
33,731
Total equity
902,346
928,293
Total liabilities and equity
$
1,582,767
$
1,626,800
Condensed Consolidated Statements of Cash
Flows (Unaudited)
Nine Months Ended September
30,
(in $ thousands)
2023
2022
Cash flows from operating
activities
Net income (loss)
$
(39,746
)
$
16,906
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
79,146
82,442
Stock based compensation
16,256
14,265
Amortization of debt issuance costs
2,136
2,123
Loss on business disposition
10,027
—
Other loss
273
154
Fair value change in tax receivable
agreement liability
3,716
(55,481
)
Fair value change in contingent
consideration
—
(4,290
)
Payment of contingent consideration
liability in excess of acquisition-date fair value
—
(8,896
)
Deferred tax expense
1,308
6,414
Change in accounts receivable
(4,857
)
(246
)
Change in prepaid expenses and other
4,161
(3,056
)
Change in operating lease ROU assets
389
(275
)
Change in accounts payable
(1,948
)
3,168
Change in related party payable
—
(257
)
Change in accrued expenses and other
(1,544
)
(2,200
)
Change in operating lease liabilities
(424
)
394
Change in other liabilities
(142
)
1,227
Net cash provided by operating
activities
68,751
52,392
Cash flows from investing
activities
Purchases of property and equipment
(1,062
)
(2,623
)
Capitalized software development costs
(36,678
)
(26,232
)
Proceeds from sale of business, net of
cash retained
40,273
—
Net cash provided by (used in)
investing activities
2,533
(28,855
)
Cash flows from financing
activities
Payments on long-term debt
(20,000
)
—
Shares repurchased under Incentive Plan
and ESPP
(1,510
)
(1,981
)
Treasury shares repurchased
—
(6,831
)
Distributions to Members
(947
)
(488
)
Payment of contingent consideration
liability up to acquisition-date fair value
(1,000
)
(3,851
)
Net cash used in financing
activities
(23,457
)
(13,151
)
Increase in cash, cash equivalents and
restricted cash
47,827
10,386
Cash, cash equivalents and restricted
cash at beginning of period
$
93,563
$
76,340
Cash, cash equivalents and restricted
cash at end of period
$
141,390
$
86,726
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for:
Interest
$
840
$
1,047
Reconciliation of GAAP Net Income to
Non-GAAP Adjusted EBITDA For the Three Months Ended
September 30, 2023 and 2022 (Unaudited)
Three Months ended September
30,
(in $ thousands)
2023
2022
Revenue
$
74,320
$
71,555
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
17,637
$
16,634
Selling, general and administrative
35,279
36,032
Depreciation and amortization
26,523
24,662
Change in fair value of contingent
consideration
—
(340
)
Total operating expenses
$
79,439
$
76,988
Loss from operations
$
(5,119
)
$
(5,433
)
Other income (expense)
Interest (expense) income, net
(103
)
(1,100
)
Change in fair value of tax receivable
liability
(3,234
)
11,411
Other (loss) income
(26
)
20
Total other income (expense)
(3,363
)
10,331
Income (loss) before income tax benefit
(expense)
(8,482
)
4,898
Income tax benefit (expense)
1,998
474
Net income (loss)
$
(6,484
)
$
5,372
Add:
Interest expense (income), net
103
1,100
Depreciation and amortization (a)
26,523
24,662
Income tax (benefit) expense
(1,998
)
(474
)
EBITDA
$
18,144
$
30,660
Non-cash change in fair value of
contingent consideration (b)
—
(340
)
Non-cash change in fair value of assets
and liabilities (c)
3,234
(11,411
)
Share-based compensation expense (d)
5,686
5,250
Transaction expenses (e)
812
4,117
Restructuring and other strategic
initiative costs (f)
3,084
1,484
Other non-recurring charges (g)
894
1,903
Adjusted EBITDA
$
31,854
$
31,663
Reconciliation of GAAP Net Income to
Non-GAAP Adjusted EBITDA For the Nine Months Ended September
30, 2023 and 2022 (Unaudited)
Nine Months ended September
30,
(in $ thousands)
2023
2022
Revenue
$
220,640
$
206,554
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
52,442
$
49,930
Selling, general and administrative
111,974
107,379
Depreciation and amortization
79,146
82,442
Change in fair value of contingent
consideration
—
(4,290
)
Loss on business disposition
10,027
—
Total operating expenses
$
253,589
$
235,461
Loss from operations
$
(32,949
)
$
(28,907
)
Other income (expense)
Interest (expense) income, net
(1,413
)
(3,128
)
Change in fair value of tax receivable
liability
(3,716
)
55,481
Other (loss) income
(360
)
(126
)
Total other income (expense)
(5,489
)
52,227
Income (loss) before income tax benefit
(expense)
(38,438
)
23,320
Income tax benefit (expense)
(1,308
)
(6,414
)
Net income (loss)
$
(39,746
)
$
16,906
Add:
Interest expense (income), net
1,413
3,128
Depreciation and amortization (a)
79,146
82,442
Income tax (benefit) expense
1,308
6,414
EBITDA
$
42,121
$
108,890
Loss on business disposition (h)
10,027
—
Non-cash change in fair value of
contingent consideration (b)
—
(4,290
)
Non-cash impairment loss (i)
50
Non-cash change in fair value of assets
and liabilities (c)
3,716
(55,481
)
Share-based compensation expense (d)
16,257
14,542
Transaction expenses (e)
7,602
16,116
Restructuring and other strategic
initiative costs (f)
8,536
4,165
Other non-recurring charges (g)
5,008
4,671
Adjusted EBITDA
$
93,317
$
88,613
Reconciliation of GAAP Net Income to
Non-GAAP Adjusted Net Income For the Three Months Ended
September 30, 2023 and 2022 (Unaudited)
Three Months ended September
30,
(in $ thousands)
2023
2022
Revenue
$
74,320
$
71,555
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
17,637
$
16,634
Selling, general and administrative
35,279
36,032
Depreciation and amortization
26,523
24,662
Change in fair value of contingent
consideration
—
(340
)
Total operating expenses
$
79,439
$
76,988
Loss from operations
$
(5,119
)
$
(5,433
)
Interest (expense) income, net
(103
)
(1,100
)
Change in fair value of tax receivable
liability
(3,234
)
11,411
Other (loss) income
(26
)
20
Total other income (expense)
(3,363
)
10,331
Income (loss) before income tax benefit
(expense)
(8,482
)
4,898
Income tax benefit (expense)
1,998
474
Net income (loss)
$
(6,484
)
$
5,372
Add:
Amortization of acquisition-related
intangibles (j)
19,786
20,847
Non-cash change in fair value of
contingent consideration (b)
—
(340
)
Non-cash change in fair value of assets
and liabilities (c)
3,234
(11,411
)
Share-based compensation expense (d)
5,686
5,250
Transaction expenses (e)
812
4,117
Restructuring and other strategic
initiative costs (f)
3,084
1,484
Other non-recurring charges (g)
894
1,903
Non-cash interest expense (k)
712
712
Pro forma taxes at effective rate (l)
(7,828
)
(5,152
)
Adjusted Net Income
$
19,896
$
22,782
Shares of Class A common stock outstanding
(on an as-converted basis) (m)
97,052,574
96,618,566
Adjusted Net Income per share
$
0.21
$
0.24
Reconciliation of GAAP Net Income to
Non-GAAP Adjusted Net Income For the Nine Months Ended
September 30, 2023 and 2022 (Unaudited)
Nine Months ended September
30,
(in $ thousands)
2023
2022
Revenue
$
220,640
$
206,554
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
52,442
$
49,930
Selling, general and administrative
111,974
107,379
Depreciation and amortization
79,146
82,442
Change in fair value of contingent
consideration
—
(4,290
)
Loss on business disposition
10,027
—
Total operating expenses
$
253,589
$
235,461
Loss from operations
$
(32,949
)
$
(28,907
)
Other expenses
Interest (expense) income, net
(1,413
)
(3,128
)
Change in fair value of tax receivable
liability
(3,716
)
55,481
Other income
—
—
Other (loss) income
(360
)
(126
)
Total other income (expense)
(5,489
)
52,227
Income (loss) before income tax benefit
(expense)
(38,438
)
23,320
Income tax benefit (expense)
(1,308
)
(6,414
)
Net income (loss)
$
(39,746
)
$
16,906
Add:
Amortization of acquisition-related
intangibles(j)
60,673
69,924
Loss on business disposition (h)
10,027
—
Non-cash change in fair value of
contingent consideration (b)
—
(4,290
)
Non-cash impairment loss (i)
50
—
Non-cash change in fair value of assets
and liabilities (c)
3,716
(55,481
)
Share-based compensation expense (d)
16,257
14,542
Transaction expenses (e)
7,602
16,116
Restructuring and other strategic
initiative costs (f)
8,536
4,165
Other non-recurring charges (g)
5,008
4,671
Non-cash interest expense (k)
2,136
2,123
Pro forma taxes at effective rate (l)
(15,658
)
(10,714
)
Adjusted Net Income
$
58,601
$
57,962
Shares of Class A common stock outstanding
(on an as-converted basis) (m)
96,778,735
96,646,974
Adjusted Net Income per share
$
0.61
$
0.60
Reconciliation of Operating Cash Flow to
Free Cash Flow and Adjusted Free Cash Flow For the Three and
Nine Months Ended September 30, 2023 and 2022
(Unaudited)
Three Months ended September
30,
Nine Months ended September
30,
(in $ thousands)
2023
2022
2023
2022
Net cash provided by operating
activities
$
27,967
$
25,332
$
68,751
$
52,392
Capital expenditures
Cash paid for property and equipment
(948
)
(799
)
(1,062
)
(2,623
)
Cash paid for intangible assets (n)
(13,078
)
(8,657
)
(36,678
)
(23,482
)
Total capital expenditures
(14,026
)
(9,456
)
(37,740
)
(26,105
)
Free cash flow
$
13,941
$
15,876
$
31,011
$
26,287
Adjustments
Transaction expenses (e)
812
4,117
7,602
16,116
Restructuring and other strategic
initiative costs (f)
3,084
1,484
8,536
4,165
Other non-recurring charges (g)
894
1,903
5,008
4,671
Adjusted free cash flow
$
18,731
$
23,380
$
52,157
$
51,239
Reconciliation of Revenue Growth to Organic
Revenue Growth and Normalized Organic Revenue Growth For the
Year-over-Year Change Between the Three Months Ended September 30,
2023 and 2022 (Unaudited)
Q3 YoY Change
Total Revenue growth
4
%
Less: Growth from acquisitions and
dispositions
(4
%)
Organic revenue growth (o)
8
%
Less: Growth from contributions related to
political media
(3
%)
Normalized organic revenue growth (p)
11
%
Reconciliation of Gross Profit Growth to
Organic Gross Profit Growth and Normalized Organic Gross Profit
Growth by Segment For the Year-over-Year Change Between the
Three Months Ended September 30, 2023 and 2022
(Unaudited)
Consumer Payments
Business Payments
Total
Gross profit growth
8
%
(11
%)
3
%
Less: Growth from acquisitions and
dispositions
(6
%)
—
(6
%)
Organic gross profit growth (q)
14
%
(11
%)
9
%
Less: Growth from contributions related to
political media
—
(24
%)
(3
%)
Normalized organic gross profit growth
(r)
14
%
13
%
12
%
Reconciliation of Gross Profit Growth to
Organic Gross Profit Growth and Normalized Organic Gross Profit
Growth For the Year-over-Year Change Between the Nine Months
Ended September 30, 2023 and 2022 (Unaudited)
Q3 Year-to-Date YoY
Change
Gross profit growth
7
%
Less: Growth from acquisitions and
dispositions
(4
%)
Organic gross profit growth (q)
11
%
Less: Growth from contributions related to
political media
(2
%)
Normalized organic gross profit growth
(r)
13
%
(a)
See footnote (j) for details on
amortization and depreciation expenses.
(b)
Reflects the changes in management’s
estimates of future cash consideration to be paid in connection
with prior acquisitions from the amount estimated as of the most
recent balance sheet date.
(c)
Reflects the changes in management’s
estimates of the fair value of the liability relating to the Tax
Receivable Agreement.
(d)
Represents compensation expense associated
with equity compensation plans, totaling $5.7 million and $16.3
million for the three and nine months ended September 30, 2023,
respectively, and totaling $5.3 million and $14.5 million for the
three and nine months ended September 30, 2022, respectively.
(e)
Primarily consists of (i) during the three
and nine months ended September 30, 2023, professional service fees
and other costs incurred in connection with the disposition of Blue
Cow Software, and (ii) during the three and nine months ended
September 30, 2022, professional service fees and other costs
incurred in connection with the acquisitions of BillingTree,
Kontrol Payables and Payix.
(f)
Reflects costs associated with
reorganization of operations, consulting fees related to processing
services and other operational improvements, including
restructuring and integration activities related to acquired
businesses, that were not in the ordinary course during the three
and nine months ended September 30, 2023 and 2022.
(g)
For the three and nine months ended
September 30, 2023, reflects payments made to third-parties in
connection with an expansion of our personnel, franchise taxes and
other non-income based taxes and one-time payments to certain
partners. For the three and nine months ended September 30, 2022,
reflects one-time payments to certain clients and partners,
payments made to third-parties in connection with a significant
expansion of our personnel, franchise taxes and other non-income
based taxes, other payments related to COVID-19 and non-cash rent
expense. Beginning in the period ended September 30, 2023, no
longer reflects non-cash rent expense.
(h)
Reflects the loss recognized related to
the disposition of Blue Cow.
(i)
Reflects impairment loss related to trade
name write-off of Media Payments.
(j)
For the three and nine months ended
September 30, 2023 and 2022, reflects amortization of client
relationships, non-compete agreement, software, and channel
relationship intangibles acquired through the business combination
with Thunder Bridge, and client relationships, non-compete
agreement, and software intangibles acquired through REPAY's
acquisitions of TriSource Solutions, APS Payments, Ventanex,
cPayPlus, CPS Payments, BillingTree, Kontrol Payables and Payix.
This adjustment excludes the amortization of other intangible
assets which were acquired in the regular course of business, such
as capitalized internally developed software and purchased
software. See additional information below for an analysis of
amortization expenses:
Three Months ended September
30,
Nine Months ended September
30,
(in $ thousands)
2023
2022
2023
2022
Acquisition-related intangibles
$
19,786
$
20,847
$
60,673
$
69,924
Software
6,391
3,209
16,639
10,855
Amortization
$
26,177
$
24,056
$
77,312
$
80,779
Depreciation
346
606
1,834
1,663
Total Depreciation and amortization
(1)
$
26,523
$
24,662
$
79,146
$
82,442
(1)
Adjusted Net Income is adjusted to exclude
amortization of all acquisition-related intangibles as such amounts
are inconsistent in amount and frequency and are significantly
impacted by the timing and/or size of acquisitions (see
corresponding adjustments in the reconciliation of net income to
Adjusted Net Income presented above). Management believes that the
adjustment of acquisition-related intangible amortization
supplements GAAP financial measures because it allows for greater
comparability of operating performance. Although REPAY excludes
amortization from acquisition-related intangibles from its non-GAAP
expenses, management believes that it is important for investors to
understand that such intangibles were recorded as part of purchase
accounting and contribute to revenue generation. Amortization of
intangibles that relate to past acquisitions will recur in future
periods until such intangibles have been fully amortized. Any
future acquisitions may result in the amortization of additional
intangibles.
(k)
Represents amortization of non-cash
deferred debt issuance costs.
(l)
Represents pro forma income tax adjustment
effect associated with items adjusted above.
(m)
Represents the weighted average number of
shares of Class A common stock outstanding (on an as-converted
basis assuming conversion of outstanding Post-Merger Repay Units)
for the three and nine months ended September 30, 2023 and 2022.
These numbers do not include any shares issuable upon conversion of
the Company’s convertible senior notes due 2026. See the
reconciliation of basic weighted average shares outstanding to the
non-GAAP Class A common stock outstanding on an as-converted basis
for each respective period below:
Three Months ended September
30,
Nine Months ended September
30,
2023
2022
2023
2022
Weighted average shares of Class A common
stock outstanding - basic
91,160,415
88,735,518
89,658,318
88,749,417
Add: Non-controlling interests
Weighted average Post-Merger Repay Units
exchangeable for Class A common stock
5,892,159
7,883,048
7,120,417
7,897,557
Shares of Class A common stock
outstanding (on an as-converted basis)
97,052,574
96,618,566
96,778,735
96,646,974
(n)
Excludes acquisition costs that are
capitalized as channel relationships.
(o)
Represents year-on-year revenue growth
that excludes incremental revenue attributable to acquisitions and
dispositions made in the applicable prior period or any subsequent
period.
(p)
Represents year-on-year organic revenue
growth that excludes incremental revenue attributable to REPAY’s
media payments business related to the cyclical political media
spending associated with the 2022 mid-term elections in the
applicable prior period or any subsequent period.
(q)
Represents year-on-year gross profit
growth that excludes incremental gross profit attributable to
acquisitions and dispositions made in the applicable prior period
or any subsequent period.
(r)
Represents year-on-year organic gross
profit growth that excludes incremental gross profit attributable
to REPAY’s media payments business related to the cyclical
political media spending associated with the 2022 mid-term
elections in the applicable prior period or any subsequent
period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108706347/en/
Investor Relations Contact for REPAY: ir@repay.com Media
Relations Contact for REPAY: Kristen Hoyman (404) 637-1665
khoyman@repay.com
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