8-K
false000172059200017205922023-11-092023-11-09

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 09, 2023

 

 

REPAY HOLDINGS CORPORATION

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-38531

98-1496050

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

3 West Paces Ferry Road

Suite 200

 

Atlanta, Georgia

 

30305

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 404 504-7472

 

 

(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:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

 

RPAY

 

The Nasdaq Global Market

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.

Description

99.1*

Press release issued November 9, 2023 by Repay Holdings Corporation

99.2*

 

Earnings Supplement, dated November 2023

99.3*

 

Investor Presentation, dated November 2023

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

*

Filed herewith

 

 


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.

Repay Holdings Corporation

Dated: November 9, 2023

By:

/s/ Timothy J. Murphy

Timothy J. Murphy

Chief Financial Officer

 


EX-99.1

 

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)

 

Q3 2022

 

 

Q4 2022

 

 

Q1 2023

 

 

Q2 2023

 

 

Q3 2023

 

 

YoY
Change

Card payment volume

 

$

6,416.8

 

 

$

6,611.8

 

 

$

6,591.3

 

 

$

6,254.4

 

 

$

6,401.3

 

 

0%

Revenue

 

 

71.6

 

 

 

72.7

 

 

 

74.5

 

 

 

71.8

 

 

 

74.3

 

 

4%

Gross profit (1)

 

 

54.9

 

 

 

57.8

 

 

 

56.6

 

 

 

54.9

 

 

 

56.7

 

 

3%

Net income (loss)

 

 

5.4

 

 

 

(8.2

)

 

 

(27.9

)

 

 

(5.3

)

 

 

(6.5

)

 

-

Adjusted EBITDA (2)

 

 

31.7

 

 

 

36.0

 

 

 

31.2

 

 

 

30.3

 

 

 

31.9

 

 

1%

 

(1)
Gross profit represents revenue less costs of services.
(2)
Adjusted EBITDA is a non-GAAP financial measure. See “Non-GAAP Financial Measures” and the reconciliation of Adjusted EBITDA to its most comparable GAAP measure provided below for additional information.


“REPAY delivered solid performance in the third quarter, with normalized organic revenue and gross profit growth
1 of 11% and 12%, respectively,” said John Morris, CEO of REPAY. “We continued to see stable and resilient trends from our clients throughout the quarter. Our efforts in developing our go-to-market and implementation teams, as well as innovating on our payment technology, continue to be our top priorities. We remain excited about the future of REPAY as we strive to be a network to all networks.”

 

Third Quarter 2023 Business Highlights

 

The Company's achievements in the quarter, including those highlighted below, reinforce management's belief in the ability of the Company to drive durable and sustained growth across REPAY's diversified business model.

12% year-over-year normalized organic gross profit growth1 in Q3 and 13% year-to-date
Consumer Payments organic gross profit growth1 of approximately 14% year-over-year
Business Payments normalized organic gross profit growth1 of approximately 13% year-over-year
Accelerated AP supplier network to over 233,000, an increase of approximately 60% year-over-year
Added five new integrated software partners to bring the total to 257 software relationships as of the end of the third quarter
Increased instant funding transaction volumes by approximately 50% year-over-year
The Company now serves over 266 Credit Unions, an increase of approximately 16% year-over-year

 

1 Normalized organic revenue growth, organic gross profit growth and normalized organic gross profit growth are non-GAAP financial measures. See “Non-GAAP Financial Measures” and the reconciliation to their most comparable GAAP measure provided below for additional information.


 

Segments

 

The Company reports its financial results based on two reportable segments.

 

Consumer Payments The Consumer Payments segment provides payment processing solutions (including debit and credit card processing, Automated Clearing House (“ACH”) processing and other electronic payment acceptance solutions, as well as REPAY’s loan disbursement product) that enable its clients to collect payments and disburse funds to consumers and includes its clearing and settlement solutions (“RCS”). RCS is REPAY’s proprietary clearing and settlement platform through which it markets customizable payment processing programs to other ISOs and payment facilitators. The strategic vertical markets served by the Consumer Payments segment primarily include personal loans, automotive loans, receivables management, credit unions, mortgage servicing, consumer healthcare and diversified retail.

 

Business Payments The Business Payments segment provides payment processing solutions (including accounts payable automation, debit and credit card processing, virtual credit card processing, ACH processing and other electronic payment acceptance solutions) that enable REPAY’s clients to collect or send payments to other businesses. The strategic vertical markets served within the Business Payments segment primarily include retail automotive, education, field services, governments and municipalities, healthcare, media, homeowner association management and hospitality.

 

Segment Card Payment Volume, Revenue, Gross Profit, and Gross Profit Margin

 

 

 

Three Months Ended September 30,

 

 

 

 

Nine Months Ended September 30,

 

 

 

($ in thousand)

 

2023

 

 

2022

 

 

% Change

 

2023

 

 

2022

 

 

% Change

Card payment volume

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Payments

 

$

5,338,250

 

 

$

4,937,825

 

 

8%

 

$

16,057,365

 

 

$

15,146,967

 

 

6%

Business Payments

 

 

1,063,088

 

 

 

1,479,002

 

 

(28%)

 

 

3,189,640

 

 

 

3,880,064

 

 

(18%)

Total card payment volume

 

$

6,401,338

 

 

$

6,416,827

 

 

0%

 

$

19,247,005

 

 

$

19,027,031

 

 

1%

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Payments

 

$

68,720

 

 

$

62,977

 

 

9%

 

$

204,622

 

 

$

183,890

 

 

11%

Business Payments

 

 

9,704

 

 

 

11,440

 

 

(15%)

 

 

28,170

 

 

 

30,266

 

 

(7%)

Elimination of intersegment revenues

 

 

(4,104

)

 

 

(2,862

)

 

 

 

 

(12,152

)

 

 

(7,602

)

 

 

Total revenue

 

$

74,320

 

 

$

71,555

 

 

4%

 

$

220,640

 

 

$

206,554

 

 

7%

Gross profit (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Payments

 

$

53,599

 

 

$

49,724

 

 

8%

 

$

159,929

 

 

$

143,295

 

 

12%

Business Payments

 

 

7,188

 

 

 

8,059

 

 

(11%)

 

 

20,421

 

 

 

20,931

 

 

(2%)

Elimination of intersegment revenues

 

 

(4,104

)

 

 

(2,862

)

 

 

 

 

(12,152

)

 

 

(7,602

)

 

 

Total gross profit

 

$

56,683

 

 

$

54,921

 

 

3%

 

$

168,198

 

 

$

156,624

 

 

7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total gross profit margin (2)

 

76%

 

 

77%

 

 

 

 

76%

 

 

76%

 

 

 

(1)
Gross profit represents revenue less costs of services.
(2)
Gross profit margin represents total gross profit / total revenue.

 

 


 

2023 Outlook Update

 

“We have solid momentum heading into the fourth quarter and are confident in the fundamentals of our business model. Based on the results from the first nine months of the year, as well as current trends, we are raising the midpoint of our 2023 revenue outlook,” said Tim Murphy, CFO of REPAY. “We expect adjusted free cash flow conversion to accelerate into 2024 as we realize the benefits from investments we've made in sales, product and technology over the past several years.”

 

REPAY now expects the following financial results for full year 2023, which replaces the previously provided outlook.

 

 

Full Year 2023 Outlook

Card Payment Volume

$26.0 - 27.2 billion

Revenue

$286 - 292 million

Gross Profit

$218 - 228 million

Adjusted EBITDA

$122 - 130 million

REPAY does not provide quantitative reconciliation of forward-looking, non-GAAP financial measures, such as forecasted 2023 Adjusted EBITDA, to the most directly comparable GAAP financial measure, because it is difficult to reliably predict or estimate the relevant components without unreasonable effort due to future uncertainties that may potentially have a significant impact on such calculations, and providing them may imply a degree of precision that would be confusing or potentially misleading.

 

Conference Call

 

REPAY will host a conference call to discuss third quarter 2023 financial results today, November 9, 2023 at 5:00 pm ET. Hosting the call will be John Morris, CEO, and Tim Murphy, CFO. The call will be webcast live from REPAY’s investor relations website at https://investors.repay.com/investor-relations. The conference call can also be accessed live over the phone by dialing (877) 407-3982, or for international callers (201) 493-6780. A replay will be available one hour after the call and can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers; the conference ID is 13741455. The replay will be available at https://investors.repay.com/investor-relations.

 

Non-GAAP Financial Measures

 

This report includes certain non-GAAP financial measures that management uses to evaluate the Company’s operating business, measure performance, and make strategic decisions. Adjusted EBITDA is a non-GAAP financial measure that represents net income prior to interest expense, tax expense, depreciation and amortization, as adjusted to add back certain charges deemed to not be part of normal operating expenses, non-cash charges and/or non-recurring charges, such as loss on business disposition, non-cash change in fair value of contingent consideration, non-cash impairment loss, non-cash change in fair value of assets and liabilities, share-based compensation charges, transaction expenses, restructuring and other strategic initiative costs and other non-recurring charges. Adjusted Net Income is a non-GAAP financial measure that represents net income prior to amortization of acquisition-related intangibles, as adjusted to add back certain charges deemed to not be part of normal operating expenses, loss on business disposition, non-cash charges and/or non-recurring charges, such as non-cash change in fair value of contingent consideration, non-cash impairment loss, non-cash change in fair value of

 


 

assets and liabilities, share-based compensation expense, transaction expenses, restructuring and other strategic initiative costs, other non-recurring charges, non-cash interest expense and net of tax effect associated with these adjustments. Adjusted Net Income is adjusted to exclude amortization of all acquisition-related intangibles as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Management believes that the adjustment of acquisition-related intangible amortization supplements GAAP financial measures because it allows for greater comparability of operating performance. Although REPAY excludes amortization from acquisition-related intangibles from its non-GAAP expenses, management believes that it is important for investors to understand that such intangibles were recorded as part of purchase accounting and contribute to revenue generation. Adjusted Net Income per share is a non-GAAP financial measure that represents Adjusted Net Income divided by the weighted average number of shares of Class A common stock outstanding (on an as-converted basis assuming conversion of the outstanding units exchangeable for shares of Class A common stock) for the three and nine months ended September 30, 2023 and 2022 (excluding shares subject to forfeiture). Normalized organic revenue growth is a non-GAAP financial measure that represents year-on-year revenue growth that excludes incremental revenue attributable to acquisitions, dispositions and REPAY’s media payments business related to the cyclical political media spending in the applicable prior period or any subsequent period. Organic gross profit growth is a non-GAAP financial measure that represents year-on-year gross profit growth that excludes incremental gross profit attributable to acquisitions and divestitures made in the applicable prior period or any subsequent period. Normalized organic gross profit growth is a non-GAAP financial measure that represents year-on-year organic gross profit growth that excludes incremental gross profit attributable to REPAY’s media payments business related to the cyclical political media spending in the applicable prior period or any subsequent period. Free Cash Flow and Adjusted Free Cash Flow are non-GAAP financial measures that represents net cash flow provided by operating activities less total capital expenditures, and Adjusted Free Cash Flow is further adjusted to add back certain charges deemed to not be part of normal operating expenses and/or non-recurring charges, such as transaction expenses, restructuring and other strategic initiative costs and other non-recurring charges. REPAY believes that Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per share, normalized organic revenue growth, organic gross profit growth, normalized organic gross profit growth, Free Cash Flow and Adjusted Free Cash Flow provide useful information to investors and others in understanding and evaluating its operating results in the same manner as management. However, these non-GAAP financial measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income, operating profit, net cash provided by operating activities, or any other operating performance measure calculated in accordance with GAAP. Using these non-GAAP financial measures to analyze REPAY’s business has material limitations because the calculations are based on the subjective determination of management regarding the nature and classification of events and circumstances that investors may find significant. In addition, although other companies in REPAY’s industry may report measures titled as the same or similar measures, such non-GAAP financial measures may be calculated differently from how REPAY calculates its non-GAAP financial measures, which reduces their overall usefulness as comparative measures. Because of these limitations, you should consider REPAY’s non-GAAP financial measures alongside other financial performance measures, including net income, net cash provided by operating activities and REPAY’s other financial results presented in accordance with GAAP.

 

 

 


 

Forward-Looking Statements

 

This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, REPAY’s plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as “guidance,” “will likely result,” “are expected to,” “will continue,” “should,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “projection,” “outlook” or words of similar meaning. These forward-looking statements include, but are not limited to, REPAY’s 2023 outlook update and other financial guidance, expected demand on REPAY’s product offering, including further implementation of electronic payment options and statements regarding REPAY’s market and growth opportunities, and REPAY’s business strategy and the plans and objectives of management for future operations. Such forward-looking statements are based upon the current beliefs and expectations of REPAY’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond REPAY’s control.

 

In addition to factors disclosed in REPAY’s reports filed with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent Form 10-Qs, and those identified elsewhere in this communication, the following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: exposure to economic conditions and political risk affecting the consumer loan market, the receivables management industry and consumer and commercial spending, including bank failures or other adverse events affecting financial institutions, inflationary pressures, general economic slowdown or recession; changes in the payment processing market in which REPAY competes, including with respect to its competitive landscape, technology evolution or regulatory changes; changes in the vertical markets that REPAY targets, including the regulatory environment applicable to REPAY’s clients; the ability to retain, develop and hire key personnel; risks relating to REPAY’s relationships within the payment ecosystem; risk that REPAY may not be able to execute its growth strategies, including identifying and executing acquisitions; risks relating to data security; changes in accounting policies applicable to REPAY; and the risk that REPAY may not be able to maintain effective internal controls.

 

Actual results, performance or achievements may differ materially, and potentially adversely, from any projections and forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. All information set forth herein speaks only as of the date hereof in the case of information about REPAY or the date of such information in the case of information from persons other than REPAY, and REPAY disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication. Forecasts and estimates regarding REPAY’s industry and end markets are based on sources it believes to be reliable, however there can be no assurance these forecasts and estimates will prove accurate in whole or in part. Pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

 


 

 

About REPAY

 

REPAY provides integrated payment processing solutions to verticals that have specific transaction processing needs. REPAY’s proprietary, integrated payment technology platform reduces the complexity of electronic payments for clients, while enhancing the overall experience for consumers and businesses.

 

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)

 

 

 

Three Months ended September 30,

 

 

Nine Months ended September 30,

 

(in $ thousands, except per share data)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

$

74,320

 

 

$

71,555

 

 

$

220,640

 

 

$

206,554

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Costs of services (exclusive of depreciation and amortization shown separately below)

 

 

17,637

 

 

 

16,634

 

 

 

52,442

 

 

 

49,930

 

Selling, general and administrative

 

 

35,279

 

 

 

36,032

 

 

 

111,974

 

 

 

107,379

 

Depreciation and amortization

 

 

26,523

 

 

 

24,662

 

 

 

79,146

 

 

 

82,442

 

Change in fair value of contingent consideration

 

 

 

 

 

(340

)

 

 

 

 

 

(4,290

)

Loss on business disposition

 

 

 

 

 

 

 

 

10,027

 

 

 

 

Total operating expenses

 

 

79,439

 

 

 

76,988

 

 

 

253,589

 

 

 

235,461

 

Loss from operations

 

 

(5,119

)

 

 

(5,433

)

 

 

(32,949

)

 

 

(28,907

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest (expense) income, net

 

 

(103

)

 

 

(1,100

)

 

 

(1,413

)

 

 

(3,128

)

Change in fair value of tax receivable liability

 

 

(3,234

)

 

 

11,411

 

 

 

(3,716

)

 

 

55,481

 

Other (loss) income

 

 

(26

)

 

 

20

 

 

 

(360

)

 

 

(126

)

Total other income (expense)

 

 

(3,363

)

 

 

10,331

 

 

 

(5,489

)

 

 

52,227

 

Income (loss) before income tax benefit (expense)

 

 

(8,482

)

 

 

4,898

 

 

 

(38,438

)

 

 

23,320

 

Income tax benefit (expense)

 

 

1,998

 

 

 

474

 

 

 

(1,308

)

 

 

(6,414

)

Net income (loss)

 

$

(6,484

)

 

$

5,372

 

 

$

(39,746

)

 

$

16,906

 

Net loss attributable to non-controlling interest

 

 

(316

)

 

 

(473

)

 

 

(2,543

)

 

 

(2,602

)

Net income (loss) attributable to the Company

 

$

(6,168

)

 

$

5,845

 

 

$

(37,203

)

 

$

19,508

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding - basic

 

 

91,160,415

 

 

 

88,735,518

 

 

 

89,658,318

 

 

 

88,749,417

 

Weighted-average shares of Class A common stock outstanding - diluted

 

 

91,160,415

 

 

 

110,114,054

 

 

 

89,658,318

 

 

 

110,789,646

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per Class A share - basic

 

$

(0.07

)

 

$

0.07

 

 

$

(0.41

)

 

$

0.22

 

Income (loss) per Class A share - diluted

 

$

(0.07

)

 

$

0.05

 

 

$

(0.41

)

 

$

0.18

 

 

 

 

 


 

Condensed Consolidated Balance Sheets

 

(in $ thousands)

 

September 30, 2023 (Unaudited)

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

117,730

 

 

$

64,895

 

Accounts receivable

 

 

36,889

 

 

 

33,544

 

Prepaid expenses and other

 

 

13,984

 

 

 

18,213

 

Total current assets

 

 

168,603

 

 

 

116,652

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

3,557

 

 

 

4,375

 

Restricted cash

 

 

23,660

 

 

 

28,668

 

Intangible assets, net

 

 

444,822

 

 

 

500,575

 

Goodwill

 

 

792,543

 

 

 

827,813

 

Operating lease right-of-use assets, net

 

 

8,961

 

 

 

9,847

 

Deferred tax assets

 

 

138,121

 

 

 

136,370

 

Other assets

 

 

2,500

 

 

 

2,500

 

Total noncurrent assets

 

 

1,414,164

 

 

 

1,510,148

 

Total assets

 

$

1,582,767

 

 

$

1,626,800

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Accounts payable

 

$

20,271

 

 

$

21,781

 

Related party payable

 

 

 

 

 

1,000

 

Accrued expenses

 

 

27,473

 

 

 

29,016

 

Current operating lease liabilities

 

 

1,786

 

 

 

2,263

 

Current tax receivable agreement

 

 

 

 

 

24,454

 

Other current liabilities

 

 

1,603

 

 

 

3,593

 

Total current liabilities

 

 

51,133

 

 

 

82,107

 

 

 

 

 

 

 

 

Long-term debt

 

 

433,454

 

 

 

451,319

 

Noncurrent operating lease liabilities

 

 

8,054

 

 

 

8,295

 

Tax receivable agreement, net of current portion

 

 

185,901

 

 

 

154,673

 

Other liabilities

 

 

1,879

 

 

 

2,113

 

Total noncurrent liabilities

 

 

629,288

 

 

 

616,400

 

Total liabilities

 

$

680,421

 

 

$

698,507

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Class A common stock, $0.0001 par value; 2,000,000,000 shares authorized; 92,014,648 issued and 90,936,507 outstanding as of September 30, 2023; 89,354,754 issued and 88,276,613 outstanding as of December 31, 2022

 

 

9

 

 

 

9

 

Class V common stock, $0.0001 par value; 1,000 shares authorized and 100 shares issued and outstanding as of September 30, 2023 and December 31, 2022

 

 

 

 

 

 

Additional paid-in capital

 

 

1,140,588

 

 

 

1,117,736

 

Treasury stock, 1,078,141 shares as of September 30, 2023 and December 31, 2022

 

 

(10,000

)

 

 

(10,000

)

Accumulated other comprehensive loss

 

 

(3

)

 

 

(3

)

Accumulated deficit

 

 

(250,383

)

 

 

(213,180

)

Total Repay stockholders' equity

 

$

880,211

 

 

$

894,562

 

Non-controlling interests

 

 

22,135

 

 

 

33,731

 

Total equity

 

 

902,346

 

 

 

928,293

 

Total liabilities and equity

 

$

1,582,767

 

 

$

1,626,800

 

 

 

 

 

 

 

 

 

 

 


 

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

Nine Months Ended September 30,

 

(in $ thousands)

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net income (loss)

 

$

(39,746

)

 

$

16,906

 

 

 

 

 

 

 

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

79,146

 

 

 

82,442

 

Stock based compensation

 

 

16,256

 

 

 

14,265

 

Amortization of debt issuance costs

 

 

2,136

 

 

 

2,123

 

Loss on business disposition

 

 

10,027

 

 

 

 

Other loss

 

 

273

 

 

 

154

 

Fair value change in tax receivable agreement liability

 

 

3,716

 

 

 

(55,481

)

Fair value change in contingent consideration

 

 

 

 

 

(4,290

)

Payment of contingent consideration liability in excess of acquisition-date fair value

 

 

 

 

 

(8,896

)

Deferred tax expense

 

 

1,308

 

 

 

6,414

 

Change in accounts receivable

 

 

(4,857

)

 

 

(246

)

Change in prepaid expenses and other

 

 

4,161

 

 

 

(3,056

)

Change in operating lease ROU assets

 

 

389

 

 

 

(275

)

Change in accounts payable

 

 

(1,948

)

 

 

3,168

 

Change in related party payable

 

 

 

 

 

(257

)

Change in accrued expenses and other

 

 

(1,544

)

 

 

(2,200

)

Change in operating lease liabilities

 

 

(424

)

 

 

394

 

Change in other liabilities

 

 

(142

)

 

 

1,227

 

Net cash provided by operating activities

 

 

68,751

 

 

 

52,392

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,062

)

 

 

(2,623

)

Capitalized software development costs

 

 

(36,678

)

 

 

(26,232

)

Proceeds from sale of business, net of cash retained

 

 

40,273

 

 

 

 

Net cash provided by (used in) investing activities

 

 

2,533

 

 

 

(28,855

)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Payments on long-term debt

 

 

(20,000

)

 

 

 

Shares repurchased under Incentive Plan and ESPP

 

 

(1,510

)

 

 

(1,981

)

Treasury shares repurchased

 

 

 

 

 

(6,831

)

Distributions to Members

 

 

(947

)

 

 

(488

)

Payment of contingent consideration liability up to acquisition-date fair value

 

 

(1,000

)

 

 

(3,851

)

Net cash used in financing activities

 

 

(23,457

)

 

 

(13,151

)

 

 

 

 

 

 

 

Increase in cash, cash equivalents and restricted cash

 

 

47,827

 

 

 

10,386

 

Cash, cash equivalents and restricted cash at beginning of period

 

$

93,563

 

 

$

76,340

 

Cash, cash equivalents and restricted cash at end of period

 

$

141,390

 

 

$

86,726

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

 

 

Cash paid during the year for:

 

 

 

 

 

 

Interest

 

$

840

 

 

$

1,047

 

 

 


 

 

Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA

For the Three Months Ended September 30, 2023 and 2022

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months ended September 30,

 

 

(in $ thousands)

2023

 

 

2022

 

 

Revenue

$

74,320

 

 

$

71,555

 

 

Operating expenses

 

 

 

 

 

 

Costs of services (exclusive of depreciation and amortization shown separately below)

$

17,637

 

 

$

16,634

 

 

Selling, general and administrative

 

35,279

 

 

 

36,032

 

 

Depreciation and amortization

 

26,523

 

 

 

24,662

 

 

Change in fair value of contingent consideration

 

 

 

 

(340

)

 

Total operating expenses

$

79,439

 

 

$

76,988

 

 

Loss from operations

$

(5,119

)

 

$

(5,433

)

 

Other income (expense)

 

 

 

 

 

 

Interest (expense) income, net

 

(103

)

 

 

(1,100

)

 

Change in fair value of tax receivable liability

 

(3,234

)

 

 

11,411

 

 

Other (loss) income

 

(26

)

 

 

20

 

 

Total other income (expense)

 

(3,363

)

 

 

10,331

 

 

Income (loss) before income tax benefit (expense)

 

(8,482

)

 

 

4,898

 

 

Income tax benefit (expense)

 

1,998

 

 

 

474

 

 

Net income (loss)

$

(6,484

)

 

$

5,372

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

Interest expense (income), net

 

103

 

 

 

1,100

 

 

Depreciation and amortization (a)

 

26,523

 

 

 

24,662

 

 

Income tax (benefit) expense

 

(1,998

)

 

 

(474

)

 

EBITDA

$

18,144

 

 

$

30,660

 

 

 

 

 

 

 

 

Non-cash change in fair value of contingent consideration (b)

 

 

 

 

(340

)

 

Non-cash change in fair value of assets and liabilities (c)

 

3,234

 

 

 

(11,411

)

 

Share-based compensation expense (d)

 

5,686

 

 

 

5,250

 

 

Transaction expenses (e)

 

812

 

 

 

4,117

 

 

Restructuring and other strategic initiative costs (f)

 

3,084

 

 

 

1,484

 

 

Other non-recurring charges (g)

 

894

 

 

 

1,903

 

 

Adjusted EBITDA

$

31,854

 

 

$

31,663

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA

For the Nine Months Ended September 30, 2023 and 2022

(Unaudited)

 

 

Nine Months ended September 30,

 

 

(in $ thousands)

2023

 

 

2022

 

 

Revenue

$

220,640

 

 

$

206,554

 

 

Operating expenses

 

 

 

 

 

 

Costs of services (exclusive of depreciation and amortization shown separately below)

$

52,442

 

 

$

49,930

 

 

Selling, general and administrative

 

111,974

 

 

 

107,379

 

 

Depreciation and amortization

 

79,146

 

 

 

82,442

 

 

Change in fair value of contingent consideration

 

 

 

 

(4,290

)

 

Loss on business disposition

 

10,027

 

 

 

 

 

Total operating expenses

$

253,589

 

 

$

235,461

 

 

Loss from operations

$

(32,949

)

 

$

(28,907

)

 

Other income (expense)

 

 

 

 

 

 

Interest (expense) income, net

 

(1,413

)

 

 

(3,128

)

 

Change in fair value of tax receivable liability

 

(3,716

)

 

 

55,481

 

 

Other (loss) income

 

(360

)

 

 

(126

)

 

Total other income (expense)

 

(5,489

)

 

 

52,227

 

 

Income (loss) before income tax benefit (expense)

 

(38,438

)

 

 

23,320

 

 

Income tax benefit (expense)

 

(1,308

)

 

 

(6,414

)

 

Net income (loss)

$

(39,746

)

 

$

16,906

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

Interest expense (income), net

 

1,413

 

 

 

3,128

 

 

Depreciation and amortization (a)

 

79,146

 

 

 

82,442

 

 

Income tax (benefit) expense

 

1,308

 

 

 

6,414

 

 

EBITDA

$

42,121

 

 

$

108,890

 

 

 

 

 

 

 

 

Loss on business disposition (h)

 

10,027

 

 

 

 

 

Non-cash change in fair value of contingent consideration (b)

 

 

 

 

(4,290

)

 

Non-cash impairment loss (i)

 

50

 

 

 

 

 

Non-cash change in fair value of assets and liabilities (c)

 

3,716

 

 

 

(55,481

)

 

Share-based compensation expense (d)

 

16,257

 

 

 

14,542

 

 

Transaction expenses (e)

 

7,602

 

 

 

16,116

 

 

Restructuring and other strategic initiative costs (f)

 

8,536

 

 

 

4,165

 

 

Other non-recurring charges (g)

 

5,008

 

 

 

4,671

 

 

Adjusted EBITDA

$

93,317

 

 

$

88,613

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income

For the Three Months Ended September 30, 2023 and 2022

(Unaudited)

 

 

Three Months ended September 30,

 

 

(in $ thousands)

2023

 

 

2022

 

 

Revenue

$

74,320

 

 

$

71,555

 

 

Operating expenses

 

 

 

 

 

 

Costs of services (exclusive of depreciation and amortization shown separately below)

$

17,637

 

 

$

16,634

 

 

Selling, general and administrative

 

35,279

 

 

 

36,032

 

 

Depreciation and amortization

 

26,523

 

 

 

24,662

 

 

Change in fair value of contingent consideration

 

 

 

 

(340

)

 

Total operating expenses

$

79,439

 

 

$

76,988

 

 

Loss from operations

$

(5,119

)

 

$

(5,433

)

 

Interest (expense) income, net

 

(103

)

 

 

(1,100

)

 

Change in fair value of tax receivable liability

 

(3,234

)

 

 

11,411

 

 

Other (loss) income

 

(26

)

 

 

20

 

 

Total other income (expense)

 

(3,363

)

 

 

10,331

 

 

Income (loss) before income tax benefit (expense)

 

(8,482

)

 

 

4,898

 

 

Income tax benefit (expense)

 

1,998

 

 

 

474

 

 

Net income (loss)

$

(6,484