Repay Holdings Bets On Scale After Strong Quarter

Repay Holdings ((RPAY)) has held its Q1 earnings call. Read on for the main highlights of the call.

Repay Holdings’ latest earnings call struck an upbeat tone as management balanced modest top-line growth with widening margins and ambitious expansion plans. Executives emphasized strong momentum in Business Payments, rising profitability and a transformational Kubra acquisition that could double revenue, while acknowledging near-term margin pressure, elevated leverage and integration risks.

Q1 Revenue Growth and Mix Shift

Repay reported Q1 revenue of $80.8 million, up 4% year over year, as Business Payments outpaced the rest of the portfolio. Business Payments revenue climbed 18% while Consumer Payments rose 4%, and excluding volatile political media, normalized revenue growth was about 16%, underscoring healthier underlying trends than the headline number suggests.

Strong Profitability and Margin Expansion

Profitability remained a highlight, with adjusted EBITDA reaching $34.4 million and margins around 43% despite card network headwinds. Management’s confidence in the model led them to raise the longer-term outlook, now targeting roughly a 42% adjusted EBITDA margin for 2026, signaling continued discipline on costs and operating leverage.

Confirmed 2026 Outlook and Double-Digit Growth

The company reaffirmed its 2026 targets, calling for revenue between $340 million and $346 million, implying 10% to 12% reported growth and 7% to 9% normalized growth. Adjusted EBITDA is projected at $141 million to $146 million with free cash flow conversion of 45%, showing management’s intent to translate growth into cash despite a higher rate environment.

Business Payments Momentum and Network Expansion

Repay’s Business Payments segment continued to scale as the company added new software partners and expanded its supplier network to more than 665,000 vendors, a gain of over 70% year over year. Automated matching of more than 15,000 new vendors in the quarter is expected to enhance digital monetization, deepening the network effects that underpin the business model.

Strategic Investment Delivers Immediate EBITDA Uplift

Management highlighted a strategic investment in a distribution partner and a smaller purchase that are already contributing to results, adding just under $1 million to Q1 EBITDA. These deals are expected to provide about $4.5 million in full-year EBITDA, illustrating the company’s focus on targeted, accretive capital deployment alongside organic growth.

Technology and AI-Driven Product Progress

Repay is leaning into technology to sustain its edge, rolling out its Repay Voice AI in phases to select enterprise clients and seeing strong interest in digital wallet capabilities integrated with Apple and Google. The firm is also using automation and AI for risk monitoring and routing optimization, aiming to enhance processing performance and improve economics over time.

Capital Structure and Balance Sheet Actions

The company refinanced maturing notes by drawing $110 million on its revolver and using $37 million of cash, while maintaining $288 million of 2029 convertible notes at a 2.875% coupon. It closed the quarter with roughly $44 million of cash and net leverage of about 2.7 times, and management is targeting a return to below three times leverage within roughly 18 months of the Kubra deal closing.

Kubra Acquisition Adds Transformational Scale

Repay’s planned acquisition of Kubra, expected to close in the second quarter of 2026, is set to reshape the business by approximately doubling revenue based on Kubra’s 2025 results. The combined company is expected to touch more than 40% of U.S. and Canadian households each month and handle over $130 billion of annual payment volume, with management pointing to identifiable cost and revenue synergies and a stronger free cash flow profile.

Card Network Data Changes Pressure Gross Profit

Card network adjustments to enhanced data programs, including Level 2, Level 3 and related schemes, are creating a near-term drag on gross profit margins, especially within Business Payments accounts receivable. Management stressed that these impacts are already embedded in the 2026 outlook and that they are working on mitigation strategies, but investors should expect some pressure as the market digests the changes.

Free Cash Flow and Significant Cash Uses

Free cash flow in Q1 totaled $5.4 million, translating to a 16% conversion rate as several one-time items weighed on cash generation. The quarter included roughly $15 million of tax receivable agreement payments and about $22.5 million for the strategic distribution partner purchase, leaving underlying cash performance more subdued than the income statement might suggest.

Leverage, Liquidity and Deleveraging Path

With the revolver draw, Repay’s net leverage stood near 2.7 times, leaving some headroom before management’s stated ceiling around three times. The upcoming Kubra acquisition will push leverage higher in the near term, and the team emphasized the importance of execution on synergies to drive the combined business back below their leverage target within roughly a year and a half.

Execution and Integration Risk Around Kubra

While Kubra promises significant scale and synergy potential, management acknowledged that the deal brings real execution risk, spanning operations, client transitions, regulatory approvals and integration complexity. They stressed that integration planning is already underway, but until the deal closes, they can provide only limited detail, leaving investors to monitor progress and risk controls closely.

Political Media and Revenue Volatility

Political media remained a swing factor, contributing to Q1 performance and expected to add $8 million to $10 million of revenue in 2026, equivalent to roughly three percentage points of reported growth. Because most of this revenue will fall in the third and fourth quarters, year-over-year comparisons may be lumpy, making it important for investors to distinguish underlying trends from election-driven spikes.

Corporate Governance Activity and Potential Distractions

The company also addressed ongoing governance activity, noting that the board denied a request from Veridae Partners and rejected a nonbinding proposal from Forger Capital as undervaluing the business. Such proxy and solicitation dynamics can create near-term distraction and uncertainty for stakeholders, even as management seeks to keep focus on executing its strategic and financial plans.

Forward-Looking Guidance and Outlook

Looking ahead, Repay reaffirmed a 2026 roadmap featuring revenue of $340 million to $346 million, adjusted EBITDA of $141 million to $146 million and free cash flow conversion of 45% including net interest costs. Political media is expected to add $8 million to $10 million, mainly in the back half, while the Kubra acquisition is projected to roughly double revenue, enhance free cash flow and bring leverage back below three times within about 18 months after closing.

Repay’s earnings call painted a company leaning into growth and scale while keeping a close eye on profitability and leverage, leaving investors with a cautiously optimistic narrative. With Business Payments momentum, rising margins and the transformational Kubra deal on the horizon, the key questions now center on execution, integration and the company’s ability to manage regulatory and governance noise without losing strategic focus.