Q2 2023 Gross Profit Growth of 8% and Organic
Gross Profit Growth of 12% Year-over-Year Raising Full Year 2023
Revenue and Gross Profit Outlook
Repay Holdings Corporation (NASDAQ: RPAY) (“REPAY” or the
“Company”), a leading provider of vertically-integrated payment
solutions, today reported financial results for its second quarter
ended June 30, 2023.
Second Quarter 2023 Financial Highlights
(in $ millions)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
YoY Change
Card payment volume
$
6,196.3
$
6,416.8
$
6,611.8
$
6,581.4
$
6,253.7
1%
Revenue
67.4
71.6
72.7
74.5
71.8
6%
Gross profit (1)
50.7
54.9
57.8
56.6
54.9
8%
Net income (loss)
(1.4
)
5.4
(8.2
)
(27.9
)
(5.3
)
-
Adjusted EBITDA (2)
27.6
31.7
36.0
31.2
30.3
10%
Adjusted Net Income (2)
16.6
22.8
21.8
19.2
18.8
13%
(1)
Gross profit represents revenue less costs
of services.
(2)
Adjusted EBITDA and Adjusted Net Income
are non-GAAP financial measures. See “Non-GAAP Financial Measures”
and the reconciliations of Adjusted EBITDA and Adjusted Net Income
to their most comparable GAAP measures provided below for
additional information.
“We are pleased with our second quarter results, which include
12% organic gross profit growth1. Our strong results through the
first half of the year give us the confidence to raise the midpoint
of our guidance for revenue and gross profit for 2023,” said John
Morris, CEO of REPAY. “There is a lot of excitement and progress
happening across the Company in each of our consumer payments and
business payments segments, as we continue to further penetrate and
expand our services into the now 252 software partners with which
we are integrated. We believe our proprietary, embedded payment
technology is even more necessary now, as our clients look to
enhance the overall digital payments experience for businesses and
consumers.”
Second 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 organic gross profit growth1
- Consumer Payments organic gross profit growth1 of approximately
16% year-over-year
- Business Payments reported organic gross profit growth1 of
approximately 4% year-over-year (15% year-over-year when excluding
political media)
- Expanded AP supplier network to 195,000, an increase of
approximately 45% year-over-year
- Added four new integrated software partners to bring the total
to 252 software relationships as of the end of the second
quarter
- Increased instant funding transaction volumes by approximately
60% year-over-year
- The Company now serves over 257 Credit Unions, an increase of
approximately 14% year-over-year
1 Organic gross profit growth is a
non-GAAP financial measure. See “Non-GAAP Financial Measures”
and the reconciliation to its 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 June
30,
Six Months Ended June
30,
($ in thousand)
2023
2022
% Change
2023
2022
% Change
Card payment volume
Consumer Payments
$
5,183,804
$
4,918,600
5%
$
10,708,568
$
10,209,143
5%
Business Payments
1,069,930
1,277,653
(16%)
2,126,549
2,401,062
(11%)
Total card payment volume
$
6,253,734
$
6,196,253
1%
$
12,835,117
$
12,610,205
2%
Revenue
Consumer Payments
$
65,924
$
59,833
10%
$
135,865
$
120,914
12%
Business Payments
9,829
9,934
(1%)
18,503
18,826
(2%)
Elimination of intersegment revenues
(3,970
)
(2,332
)
(8,048
)
(4,741
)
Total revenue
$
71,783
$
67,435
6%
$
146,320
$
134,999
8%
Gross profit (1)
Consumer Payments
$
51,704
$
46,082
12%
$
106,329
$
93,572
14%
Business Payments
7,209
6,954
4%
13,234
12,872
3%
Elimination of intersegment revenues
(3,970
)
(2,332
)
(8,048
)
(4,741
)
Total gross profit
$
54,943
$
50,704
8%
$
111,515
$
101,703
10%
Total gross profit margin (2)
77%
75%
76%
75%
(1)
Gross profit represents revenue less costs
of services.
(2)
Gross profit margin represents total gross
profit / total revenue.
2023 Outlook Update
“As the year-to-date results showed strong performance and
resilience in our business model, we are raising the midpoint of
our 2023 revenue and gross profit outlook,” said Tim Murphy, CFO of
REPAY. “As we realize the benefits from investments we made in
sales, product, and technology, we continue to expect adjusted free
cash flow conversion to remain strong in 2023, accelerating
throughout the year into 2024.”
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
$280 - 288 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 second quarter 2023
financial results today, August 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 13739478. 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 six months ended
June 30, 2023 and 2022 (excluding shares subject to forfeiture).
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. 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, 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 June
30,
Six Months ended June
30,
(in $ thousands, except per share
data)
2023
2022
2023
2022
Revenue
$
71,783
$
67,435
$
146,320
$
134,999
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
16,840
16,731
34,805
33,296
Selling, general and administrative
38,177
39,130
76,695
71,348
Depreciation and amortization
26,483
29,191
52,623
57,780
Change in fair value of contingent
consideration
—
(1,050
)
—
(3,950
)
Loss on business disposition
149
—
10,027
—
Total operating expenses
81,649
84,002
174,150
158,474
Loss from operations
(9,866
)
(16,567
)
(27,830
)
(23,475
)
Other income (expense)
Interest expense
(910
)
(1,051
)
(2,070
)
(2,040
)
Change in fair value of tax receivable
liability
4,056
19,450
(482
)
44,070
Other income
457
10
544
17
Other loss
(118
)
(150
)
(118
)
(150
)
Total other income (expense)
3,485
18,259
(2,126
)
41,897
Income (loss) before income tax benefit
(expense)
(6,381
)
1,692
(29,956
)
18,422
Income tax benefit (expense)
1,051
(3,045
)
(3,306
)
(6,888
)
Net income (loss)
$
(5,330
)
$
(1,353
)
$
(33,262
)
$
11,534
Net loss attributable to non-controlling
interest
(687
)
(1,362
)
(2,227
)
(2,129
)
Net income (loss) attributable to the
Company
$
(4,643
)
$
9
$
(31,035
)
$
13,663
Weighted-average shares of Class A common
stock outstanding - basic
89,170,814
88,903,674
88,894,820
88,756,482
Weighted-average shares of Class A common
stock outstanding - diluted
89,170,814
113,250,565
88,894,820
112,866,991
Income (loss) per Class A share -
basic
$
(0.05
)
$
0.00
$
(0.35
)
$
0.15
Income (loss) per Class A share -
diluted
$
(0.05
)
$
0.00
$
(0.35
)
$
0.12
Condensed Consolidated Balance
Sheets
(in $ thousands)
June 30, 2023
(Unaudited)
December 31, 2022
Assets
Cash and cash equivalents
$
103,784
$
64,895
Accounts receivable
33,889
33,544
Prepaid expenses and other
13,304
18,213
Total current assets
150,977
116,652
Property, plant and equipment, net
2,956
4,375
Restricted cash
24,137
28,668
Intangible assets, net
457,921
500,575
Goodwill
792,543
827,813
Operating lease right-of-use assets,
net
9,485
9,847
Deferred tax assets
135,051
136,370
Other assets
2,500
2,500
Total noncurrent assets
1,424,593
1,510,148
Total assets
$
1,575,570
$
1,626,800
Liabilities
Accounts payable
$
18,830
$
21,781
Related party payable
—
1,000
Accrued expenses
26,128
29,016
Current operating lease liabilities
1,750
2,263
Current tax receivable agreement
—
24,454
Other current liabilities
541
3,593
Total current liabilities
47,249
82,107
Long-term debt
432,742
451,319
Noncurrent operating lease liabilities
8,480
8,295
Tax receivable agreement, net of current
portion
181,596
154,673
Other liabilities
1,887
2,113
Total noncurrent liabilities
624,705
616,400
Total liabilities
$
671,954
$
698,507
Commitments and contingencies
Stockholders' equity
Class A common stock, $0.0001 par value;
2,000,000,000 shares authorized; 91,372,869 issued and 90,294,728
outstanding as of June 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
June 30, 2023 and December 31, 2022
—
—
Additional paid-in capital
1,132,720
1,117,736
Treasury stock, 1,078,141 shares as of
June 30, 2023 and December 31, 2022
(10,000
)
(10,000
)
Accumulated other comprehensive loss
(3
)
(3
)
Accumulated deficit
(244,215
)
(213,180
)
Total Repay stockholders'
equity
$
878,511
$
894,562
Non-controlling interests
25,105
33,731
Total equity
903,616
928,293
Total liabilities and equity
$
1,575,570
$
1,626,800
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Six Months Ended June
30,
(in $ thousands)
2023
2022
Cash flows from operating
activities
Net income (loss)
$
(33,262
)
$
11,534
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
52,623
57,780
Stock based compensation
10,570
9,016
Amortization of debt issuance costs
1,423
1,411
Loss on business disposition
10,027
—
Other loss
118
150
Fair value change in tax receivable
agreement liability
482
(44,070
)
Fair value change in contingent
consideration
—
(3,950
)
Payment of contingent consideration
liability in excess of acquisition-date fair value
—
(8,896
)
Deferred tax expense
3,306
6,888
Change in accounts receivable
(1,858
)
1,838
Change in prepaid expenses and other
4,842
(1,172
)
Change in operating lease ROU assets
87
(827
)
Change in accounts payable
(3,388
)
1,491
Change in related party payable
—
77
Change in accrued expenses and other
(2,957
)
(5,347
)
Change in operating lease liabilities
(34
)
892
Change in other liabilities
(1,195
)
245
Net cash provided by operating
activities
40,784
27,060
Cash flows from investing
activities
Purchases of property and equipment
(114
)
(1,824
)
Purchases of intangible assets
(23,600
)
(14,825
)
Proceeds from sale of business, net of
cash retained
40,273
—
Net cash provided by (used in)
investing activities
16,559
(16,649
)
Cash flows from financing
activities
Payments on long-term debt
(20,000
)
—
Shares repurchased under Incentive Plan
and ESPP
(1,376
)
(1,840
)
Treasury shares repurchased
—
(1,145
)
Distributions to Members
(609
)
(386
)
Payment of contingent consideration
liability up to acquisition-date fair value
(1,000
)
(3,851
)
Net cash used in financing
activities
(22,985
)
(7,222
)
Increase in cash, cash equivalents and
restricted cash
34,358
3,189
Cash, cash equivalents and restricted
cash at beginning of period
$
93,563
$
76,340
Cash, cash equivalents and restricted
cash at end of period
$
127,921
$
79,529
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for:
Interest
$
647
$
628
Reconciliation of GAAP Net
Income to Non-GAAP Adjusted EBITDA
For the Three Months Ended
June 30, 2023 and 2022
(Unaudited)
Three Months ended June
30,
(in $ thousands)
2023
2022
Revenue
$
71,783
$
67,435
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
16,840
$
16,731
Selling, general and administrative
38,177
39,130
Depreciation and amortization
26,483
29,191
Change in fair value of contingent
consideration
—
(1,050
)
Loss on business disposition
149
—
Total operating expenses
$
81,649
$
84,002
Loss from operations
$
(9,866
)
$
(16,567
)
Other income (expense)
Interest expense
(910
)
(1,051
)
Change in fair value of tax receivable
liability
4,056
19,450
Other income
457
10
Other loss
(118
)
(150
)
Total other income (expense)
3,485
18,259
Income (loss) before income tax benefit
(expense)
(6,381
)
1,692
Income tax benefit (expense)
1,051
(3,045
)
Net income (loss)
$
(5,330
)
$
(1,353
)
Add:
Interest expense
910
1,051
Depreciation and amortization (a)
26,483
29,191
Income tax (benefit) expense
(1,051
)
3,045
EBITDA
$
21,012
$
31,934
Loss on business disposition (b)
149
—
Non-cash change in fair value of
contingent consideration (c)
—
(1,050
)
Non-cash impairment loss (d)
50
—
Non-cash change in fair value of assets
and liabilities (e)
(4,056
)
(19,450
)
Share-based compensation expense (f)
6,517
5,934
Transaction expenses (g)
793
7,069
Restructuring and other strategic
initiative costs (h)
4,041
1,435
Other non-recurring charges (i)
1,782
1,764
Adjusted EBITDA
$
30,288
$
27,636
Reconciliation of GAAP Net
Income to Non-GAAP Adjusted EBITDA
For the Six Months Ended June
30, 2023 and 2022
(Unaudited)
Six Months ended June
30,
(in $ thousands)
2023
2022
Revenue
$
146,320
$
134,999
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
34,805
$
33,296
Selling, general and administrative
76,695
71,348
Depreciation and amortization
52,623
57,780
Change in fair value of contingent
consideration
—
(3,950
)
Loss on business disposition
10,027
—
Total operating expenses
$
174,150
$
158,474
Loss from operations
$
(27,830
)
$
(23,475
)
Other income (expense)
Interest expense
(2,070
)
(2,040
)
Change in fair value of tax receivable
liability
(482
)
44,070
Other income
544
17
Other loss
(118
)
(150
)
Total other income (expense)
(2,126
)
41,897
Income (loss) before income tax benefit
(expense)
(29,956
)
18,422
Income tax benefit (expense)
(3,306
)
(6,888
)
Net income (loss)
$
(33,262
)
$
11,534
Add:
Interest expense
2,070
2,040
Depreciation and amortization (a)
52,623
57,780
Income tax (benefit) expense
3,306
6,888
EBITDA
$
24,737
$
78,242
Loss on business disposition (b)
10,027
—
Non-cash change in fair value of
contingent consideration (c)
—
(3,950
)
Non-cash impairment loss (d)
50
Non-cash change in fair value of assets
and liabilities (e)
482
(44,070
)
Share-based compensation expense (f)
10,571
9,292
Transaction expenses (g)
6,790
11,999
Restructuring and other strategic
initiative costs (h)
5,452
2,681
Other non-recurring charges (i)
3,354
2,771
Adjusted EBITDA
$
61,463
$
56,965
Reconciliation of GAAP Net
Income to Non-GAAP Adjusted Net Income
For the Three Months Ended
June 30, 2023 and 2022
(Unaudited)
Three Months ended June
30,
(in $ thousands)
2023
2022
Revenue
$
71,783
$
67,435
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
16,840
$
16,731
Selling, general and administrative
38,177
39,130
Depreciation and amortization
26,483
29,191
Change in fair value of contingent
consideration
—
(1,050
)
Loss on business disposition
149
—
Total operating expenses
$
81,649
$
84,002
Loss from operations
$
(9,866
)
$
(16,567
)
Interest expense
(910
)
(1,051
)
Change in fair value of tax receivable
liability
4,056
19,450
Other income
457
10
Other loss
(118
)
(150
)
Total other income (expense)
3,485
18,259
Income (loss) before income tax benefit
(expense)
(6,381
)
1,692
Income tax benefit (expense)
1,051
(3,045
)
Net income (loss)
$
(5,330
)
$
(1,353
)
Add:
Amortization of acquisition-related
intangibles (j)
20,963
25,941
Loss on business disposition (b)
149
—
Non-cash change in fair value of
contingent consideration (c)
—
(1,050
)
Non-cash impairment loss (d)
50
—
Non-cash change in fair value of assets
and liabilities (e)
(4,056
)
(19,450
)
Share-based compensation expense (f)
6,517
5,934
Transaction expenses (g)
793
7,069
Restructuring and other strategic
initiative costs (h)
4,041
1,435
Other non-recurring charges (i)
1,782
1,764
Non-cash interest expense (k)
712
709
Pro forma taxes at effective rate (l)
(6,869
)
(4,368
)
Adjusted Net Income
$
18,752
$
16,631
Shares of Class A common stock outstanding
(on an as-converted basis) (m)
96,796,143
96,787,200
Adjusted Net Income per share
$
0.19
$
0.17
Reconciliation of GAAP Net
Income to Non-GAAP Adjusted Net Income
For the Six Months Ended June
30, 2023 and 2022
(Unaudited)
Six Months ended June
30,
(in $ thousands)
2023
2022
Revenue
$
146,320
$
134,999
Operating expenses
Costs of services (exclusive of
depreciation and amortization shown separately below)
$
34,805
$
33,296
Selling, general and administrative
76,695
71,348
Depreciation and amortization
52,623
57,780
Change in fair value of contingent
consideration
—
(3,950
)
Loss on business disposition
10,027
—
Total operating expenses
$
174,150
$
158,474
Loss from operations
$
(27,830
)
$
(23,475
)
Other expenses
Interest expense
(2,070
)
(2,040
)
Change in fair value of tax receivable
liability
(482
)
44,070
Other income
544
17
Other loss
(118
)
(150
)
Total other income (expense)
(2,126
)
41,897
Income (loss) before income tax benefit
(expense)
(29,956
)
18,422
Income tax benefit (expense)
(3,306
)
(6,888
)
Net income (loss)
$
(33,262
)
$
11,534
Add:
Amortization of acquisition-related
intangibles(j)
40,887
49,077
Loss on business disposition (b)
10,027
—
Non-cash change in fair value of
contingent consideration (c)
—
(3,950
)
Non-cash impairment loss (d)
50
—
Non-cash change in fair value of assets
and liabilities (e)
482
(44,070
)
Share-based compensation expense (f)
10,571
9,292
Transaction expenses (g)
6,790
11,999
Restructuring and other strategic
initiative costs (h)
5,452
2,681
Other non-recurring charges (i)
3,354
2,771
Non-cash interest expense (k)
1,424
1,411
Pro forma taxes at effective rate (l)
(7,830
)
(5,562
)
Adjusted Net Income
$
37,945
$
35,183
Shares of Class A common stock outstanding
(on an as-converted basis) (m)
96,639,545
96,661,414
Adjusted Net Income per share
$
0.39
$
0.36
Reconciliation of Operating
Cash Flow to Free Cash Flow and Adjusted Free Cash Flow
For the Three and Six Months
Ended June 30, 2023 and 2022
(Unaudited)
Three Months ended June
30,
Six Months ended June
30,
(in $ thousands)
2023
2022
2023
2022
Net cash provided by operating
activities
$
19,953
$
13,306
$
40,784
$
27,060
Capital expenditures
Cash paid for property and equipment
414
(1,271
)
(114
)
(1,824
)
Cash paid for intangible assets (n)
(10,399
)
(5,062
)
(23,600
)
(12,075
)
Total capital expenditures
(9,985
)
(6,333
)
(23,714
)
(13,899
)
Free cash flow
$
9,968
$
6,973
$
17,070
$
13,161
Adjustments
Transaction expenses (g)
793
7,069
6,790
11,999
Restructuring and other strategic
initiative costs (h)
4,041
1,435
5,452
2,681
Other non-recurring charges (i)
1,782
1,764
3,354
2,771
Adjusted free cash flow
$
16,584
$
17,241
$
32,666
$
30,612
Reconciliation of Gross Profit
Growth to Organic Gross Profit Growth
For the Year-over-Year Change
Between the Three Months Ended June 30, 2023 and 2022
(Unaudited)
Q2 YoY Change
Total gross profit growth
8
%
Less: Growth from acquisitions and
dispositions
(4
%)
Organic gross profit growth (o)
12
%
(a)
See footnote (j) for details on
amortization and depreciation expenses.
(b)
Reflects the loss recognized related to
the disposition of Blue Cow.
(c)
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.
(d)
For the three and six months ended June
30, 2023, reflects impairment loss related to trade name write-off
of Media Payments.
(e)
Reflects the changes in management’s
estimates of the fair value of the liability relating to the Tax
Receivable Agreement.
(f)
Represents compensation expense associated
with equity compensation plans, totaling $6.5 million and $10.6
million for the three and six months ended June 30, 2023,
respectively, and totaling $5.9 million and $9.3 million for the
three and six months ended June 30, 2022, respectively.
(g)
Primarily consists of (i) during the three
and six months ended June 30, 2023, professional service fees and
other costs incurred in connection with the disposition of Blue Cow
Software, and (ii) during the three and six months ended June 30,
2022, professional service fees and other costs incurred in
connection with the acquisitions of BillingTree, Kontrol Payables
and Payix.
(h)
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 six months ended June 30, 2023 and 2022.
(i)
For the three and six months ended June
30, 2023, reflects payments made to third-parties in connection
with an expansion of our personnel, franchise taxes and other
non-income based taxes, one-time payments to certain partners and
non-cash rent expense. For the three and six months ended June 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.
(j)
For the three and six months ended June
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 June
30,
Six Months ended June
30,
(in $ thousands)
2023
2022
2023
2022
Acquisition-related intangibles
$
20,963
$
25,941
$
40,887
$
49,077
Software
4,772
2,700
10,247
7,646
Amortization
$
25,735
$
28,641
$
51,134
$
56,723
Depreciation
748
550
1,489
1,057
Total Depreciation and amortization
(1)
$
26,483
$
29,191
$
52,623
$
57,780
(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 six months ended June 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 June
30,
Six Months ended June
30,
2023
2022
2023
2022
Weighted average shares of Class A common
stock outstanding - basic
89,170,814
88,903,674
88,894,820
88,756,482
Add: Non-controlling interests
Weighted average Post-Merger Repay Units
exchangeable for Class A common stock
7,625,329
7,883,526
7,744,725
7,904,932
Shares of Class A common stock
outstanding (on an as-converted basis)
96,796,143
96,787,200
96,639,545
96,661,414
(n)
Excludes acquisition costs that are capitalized as channel
relationships.
(o)
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808192687/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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