Repay Holdings Navigates Challenges with Strategic Growth

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

Repay Holdings’ recent earnings call painted a picture of a challenging quarter, marked by declines in revenue and profitability due to client losses and macroeconomic uncertainties. Despite these hurdles, the company showcased resilience and growth in specific segments, such as Business Payments and Instant Funding, and remains optimistic about future growth driven by new partnerships and strategic investments.

Strong Business Payments Segment Growth

The Business Payments segment emerged as a bright spot for Repay Holdings, reporting a gross profit increase of 7% year-over-year. When political media contributions from Q1 2024 are excluded, this growth accelerates to approximately 12%, highlighting the segment’s robust performance and potential for further expansion.

Instant Funding Product Success

Repay Holdings’ Instant Funding product demonstrated significant success, achieving a 19% year-over-year increase in transaction volumes. This robust growth underscores the product’s potential for further revenue enhancement and its importance in the company’s strategic portfolio.

New Partnerships and Client Onboarding

The company has been proactive in expanding its reach, signing two new software partnerships in the Consumer Payments segment, bringing the total to 182. Additionally, Repay Holdings onboarded 14 new credit unions, increasing the total to 343, which is expected to bolster future growth.

Positive Outlook for Second Half of 2025

Looking ahead, Repay Holdings expressed confidence in sequential quarterly normalized gross profit growth, with expectations of high single-digit to low double-digit growth in Q4 2025. This optimistic outlook is driven by strategic initiatives and anticipated market recovery.

Revenue Decline

The earnings call revealed a revenue decline for Q1 2025, with figures standing at $77.3 million, representing a 4% decrease year-over-year. The reported gross profit also declined by 5%, reflecting the challenges faced during the quarter.

Impact of Client Losses

Client losses significantly impacted Repay Holdings’ financial performance, with reported gross profit and adjusted EBITDA declining approximately 5% and 7% year-over-year, respectively. This underscores the importance of client retention in the company’s growth strategy.

Free Cash Flow Challenges

The company reported a negative free cash flow of $8 million for Q1, impacted by net working capital and client losses. This represents a challenge for Repay Holdings as it navigates through a difficult economic landscape.

Conclusion of Strategic Review

Repay Holdings concluded its strategic review without significant changes, opting instead for organic growth investments amid macroeconomic uncertainties. This decision reflects the company’s focus on sustainable growth and long-term value creation.

Guidance

Repay Holdings provided forward-looking guidance, forecasting a sequential increase in gross profit growth, aiming for high single-digit to low double-digit growth by Q4 2025. The company also anticipates free cash flow conversion to exceed 50% in Q2 and accelerate above 60% by year-end, excluding one-time impacts. This guidance reflects the company’s strategic focus on overcoming current challenges and achieving long-term growth.

In summary, Repay Holdings’ earnings call highlighted a quarter of challenges and opportunities. While revenue and profitability faced headwinds due to client losses and macroeconomic factors, the company demonstrated resilience in its Business Payments and Instant Funding segments. With a positive outlook for the latter half of 2025 and strategic investments in place, Repay Holdings is poised for future growth.