UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
(Exact name of Registrant as Specified in Its Charter)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On November 9, 2023, Repay Holdings Corporation (the “Company”) issued a press release announcing the results of the Company’s operations for the quarter ended September 30, 2023.
A copy of the Company’s press release is attached hereto as Exhibit 99.1 and is hereby incorporated by reference in this Item 2.02. As provided in General Instruction B.2 of Form 8-K, the information and exhibits contained in this Item 2.02 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall they be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
On November 9, 2023, the Company provided supplemental information regarding its business and operations in an earnings supplement and investor presentation that will be made available on the investor relations section of the Company’s website.
Copies of the earnings supplement and investor presentation are attached hereto as Exhibits 99.2 and 99.3 and are hereby incorporated by reference in this Item 7.01. As provided in General Instruction B.2 of Form 8-K, the information and exhibits contained in this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, nor shall they be deemed to be incorporated by reference in any filing under the Securities Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
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Description |
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99.1* |
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Press release issued November 9, 2023 by Repay Holdings Corporation |
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99.2* |
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99.3* |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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* |
Filed herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Repay Holdings Corporation |
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Dated: November 9, 2023 |
By: |
/s/ Timothy J. Murphy |
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Timothy J. Murphy |
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Chief Financial Officer |
REPAY Reports Third Quarter 2023 Financial Results
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
ATLANTA, November 9, 2023 -- 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) |
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Q3 2022 |
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Q4 2022 |
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Q1 2023 |
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Q2 2023 |
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Q3 2023 |
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YoY |
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Card payment volume |
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$ |
6,416.8 |
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$ |
6,611.8 |
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$ |
6,591.3 |
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$ |
6,254.4 |
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$ |
6,401.3 |
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0% |
Revenue |
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71.6 |
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72.7 |
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74.5 |
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71.8 |
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74.3 |
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4% |
Gross profit (1) |
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54.9 |
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57.8 |
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56.6 |
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54.9 |
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56.7 |
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3% |
Net income (loss) |
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5.4 |
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(8.2 |
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(27.9 |
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(5.3 |
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(6.5 |
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- |
Adjusted EBITDA (2) |
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31.7 |
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36.0 |
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31.2 |
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30.3 |
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31.9 |
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1% |
“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.
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
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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($ in thousand) |
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2023 |
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2022 |
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% Change |
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2023 |
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2022 |
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% Change |
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Card payment volume |
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Consumer Payments |
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$ |
5,338,250 |
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$ |
4,937,825 |
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8% |
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$ |
16,057,365 |
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$ |
15,146,967 |
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6% |
Business Payments |
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1,063,088 |
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1,479,002 |
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(28%) |
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3,189,640 |
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3,880,064 |
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(18%) |
Total card payment volume |
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$ |
6,401,338 |
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$ |
6,416,827 |
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0% |
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$ |
19,247,005 |
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$ |
19,027,031 |
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1% |
Revenue |
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Consumer Payments |
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$ |
68,720 |
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$ |
62,977 |
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9% |
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$ |
204,622 |
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$ |
183,890 |
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11% |
Business Payments |
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9,704 |
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11,440 |
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(15%) |
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28,170 |
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30,266 |
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(7%) |
Elimination of intersegment revenues |
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(4,104 |
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(2,862 |
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(12,152 |
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(7,602 |
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Total revenue |
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$ |
74,320 |
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$ |
71,555 |
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4% |
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$ |
220,640 |
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$ |
206,554 |
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7% |
Gross profit (1) |
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Consumer Payments |
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$ |
53,599 |
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$ |
49,724 |
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8% |
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$ |
159,929 |
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$ |
143,295 |
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12% |
Business Payments |
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7,188 |
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8,059 |
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(11%) |
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20,421 |
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20,931 |
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(2%) |
Elimination of intersegment revenues |
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(4,104 |
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(2,862 |
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(12,152 |
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(7,602 |
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Total gross profit |
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$ |
56,683 |
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$ |
54,921 |
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3% |
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$ |
168,198 |
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$ |
156,624 |
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7% |
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Total gross profit margin (2) |
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76% |
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77% |
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76% |
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76% |
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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.
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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.
Contacts
Investor Relations Contact for REPAY:
ir@repay.com
Media Relations Contact for REPAY:
Kristen Hoyman
(404) 637-1665
khoyman@repay.com
Condensed Consolidated Statement of Operations (Unaudited)
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Three Months ended September 30, |
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Nine Months ended September 30, |
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(in $ thousands, except per share data) |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenue |
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$ |
74,320 |
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$ |
71,555 |
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$ |
220,640 |
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$ |
206,554 |
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Operating expenses |
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Costs of services (exclusive of depreciation and amortization shown separately below) |
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17,637 |
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16,634 |
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52,442 |
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49,930 |
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Selling, general and administrative |
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35,279 |
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36,032 |
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111,974 |
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107,379 |
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Depreciation and amortization |
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26,523 |
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24,662 |
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79,146 |
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82,442 |
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Change in fair value of contingent consideration |
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— |
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(340 |
) |
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— |
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(4,290 |
) |
Loss on business disposition |
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— |
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— |
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10,027 |
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— |
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Total operating expenses |
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79,439 |
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76,988 |
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253,589 |
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235,461 |
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Loss from operations |
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(5,119 |
) |
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(5,433 |
) |
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(32,949 |
) |
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(28,907 |
) |
Other income (expense) |
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Interest (expense) income, net |
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(103 |
) |
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(1,100 |
) |
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(1,413 |
) |
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(3,128 |
) |
Change in fair value of tax receivable liability |
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(3,234 |
) |
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11,411 |
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(3,716 |
) |
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55,481 |
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Other (loss) income |
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(26 |
) |
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20 |
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(360 |
) |
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(126 |
) |
Total other income (expense) |
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(3,363 |
) |
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10,331 |
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(5,489 |
) |
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52,227 |
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Income (loss) before income tax benefit (expense) |
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(8,482 |
) |
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4,898 |
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(38,438 |
) |
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23,320 |
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Income tax benefit (expense) |
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1,998 |
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|
474 |
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(1,308 |
) |
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(6,414 |
) |
Net income (loss) |
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$ |
(6,484 |
) |
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$ |
5,372 |
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$ |
(39,746 |
) |
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$ |
16,906 |
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Net loss attributable to non-controlling interest |
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(316 |
) |
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(473 |
) |
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(2,543 |
) |
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(2,602 |
) |
Net income (loss) attributable to the Company |
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$ |
(6,168 |
) |
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$ |
5,845 |
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$ |
(37,203 |
) |
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$ |
19,508 |
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Weighted-average shares of Class A common stock outstanding - basic |
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91,160,415 |
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88,735,518 |
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89,658,318 |
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88,749,417 |
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Weighted-average shares of Class A common stock outstanding - diluted |
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91,160,415 |
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110,114,054 |
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89,658,318 |
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110,789,646 |
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Income (loss) per Class A share - basic |
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$ |
(0.07 |
) |
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$ |
0.07 |
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$ |
(0.41 |
) |
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$ |
0.22 |
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Income (loss) per Class A share - diluted |
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$ |
(0.07 |
) |
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$ |
0.05 |
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|
$ |
(0.41 |
) |
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$ |
0.18 |
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Condensed Consolidated Balance Sheets
(in $ thousands) |
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September 30, 2023 (Unaudited) |
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December 31, 2022 |
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Assets |
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Cash and cash equivalents |
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$ |
117,730 |
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$ |
64,895 |
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Accounts receivable |
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36,889 |
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|
33,544 |
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Prepaid expenses and other |
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|
13,984 |
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|
|
18,213 |
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Total current assets |
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|
168,603 |
|
|
|
116,652 |
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|
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Property, plant and equipment, net |
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|
3,557 |
|
|
|
4,375 |
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Restricted cash |
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|
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 |
) |
|
||||