Repay Holdings Corporation (RPAY) Earnings

Management highlights

Repay had a solid start to 2026 after exiting 2025 with momentum. Announced a strategically significant acquisition of Cooper. In Q1, remained focused on core growth and operational execution, achieved 4% revenue growth and ~43% adjusted EBITDA margins. In consumer payments, implemented new enterprise clients with more payment channels, saw strong interest in digital wallet capabilities and began phased rollout of Repay Voice AI. In business payments, had strong performance with 18% revenue growth, added two new software partners, sales pipeline built in various verticals, vendor enablement with automation to improve vendor matching. Recently announced acquisition of Cobra, board supports it, expect to close in Q2 2026, teams planning integration to create value.

Guidance

For 2026, Repay expects revenue to be between $340 million and $346 million, representing 10% to 12% reported revenue growth (7% to 9% normalized revenue growth excluding political media). Adjusted EBITDA is expected to be between $141 million and $146 million. Confident in achieving free cash flow conversion target of 45%. Cobra acquisition expected to close in Q2 2026 upon regulatory approvals, and target return to below three times net leverage within approximately 18 months of closing.

Segment performance

In Q1, consumer payments revenue increased approximately 4% year over year. Business payments revenue increased approximately 18% year over year, with normalized revenue increasing approximately 16% (excluding positive political media contributions during the quarter). Adjusted EBITDA was $34.4 million, representing approximately 43% adjusted EBITDA margins. At quarter end, consumer payments had over 297 software partners across consumer and business payment verticals, and business payments ended Q1 with over 665,000 vendors in its supplier network, an increase of over 70% year over year.

Risks & headwinds

Risks include execution risks related to integrating the Cobra acquisition, as any integration of this scale requires critical execution. Also, uncertainties regarding the political media cycle and its impact on revenue, though management expects political media contributions to positively impact revenue by $8 to $10 million.

Analyst Q&A

• Q: Hey, guys. Good afternoon. Nice to see the revenue outlook guidance and, you know, the accelerating growth here. I thought maybe we could just start. I know you don't provide quarterly guidance here, but, you know, as we look at the year and we look at the ramp on the top line, you know, excluding political media, how should we kind of think about, you know, how the quarters progress here on the top line? And I'll have a quick follow-up.

  A: Yeah, so strong first quarter came out at 4% growth. And as I said, excluding political media, we expect to ramp a full year. We'll be at the 7% to 9% growth as we guided. And really coming out of that, as I talked about last quarter, we had some new client wins that pushed into the second half of this year. And so in Q1 of this year, we are lapping some small attrition that happened on the back half of last year. So we're at 4% growth this quarter, and we expect to ramp as we get into Q2 and really into Q3. Some of those new client wins will come on, and we feel really confident about that. And so that's really what the ramp up is, excluding political media. Then when you include the reported numbers, you know, the 10 to 12% double digit growth for the year. We have a strong political media. It's a midterm election season that really ramps in Q3 and Q4. And that's what really gets us to the reported double digit growth for the year.

• Q: On the consumer side, you said that, you know, consumer was a little bit down year over year. I know你're expanding offerings there with some customers and there's a dynamic there that kind of leads, I think, to short-term, maybe a short-term headwind and then a longer-term tailwind. Just if you could refresh us on that.

  A: On the consumer side, so we did 4% growth for Q1. Got it. I got that. I got it a little confused there, John. Maybe just one other than on You know, is there a macro assumption built into the guide this year or just, you know, where we are at this point on a macro run rate built into the guide for 20 or your outlook here for 2026? A: Yeah, sure. This is John. Hello, Joe. Specifically, we do continue to see a stable consumer and the trends we see, at least currently, and that same outlook as we consider that in our four-year outlook.

• Q: Just in terms of the Cobra deal and evaluating it versus, let's say, buyback or other smaller deals, I guess, what do you feel is the most, what do you feel are one or two of the most compelling aspects of Cobra? What does it bring to repay? And then in terms of thinking about the combined company, I guess, what are the attributes that you would see two years out that really make you feel like Either your growth rate or margins or both will really drive additional shareholder value.

  A: We are very excited about it. Obviously, it gives us a comprehensive end-to-end digital platform. We take the best of both of us. So it really allows us to really expand across our bill presentment capabilities, our communication services, and our overall payment processing with our own clearing and settlement engine. So we take the strengths of both as we are able to deliver those new solutions together on behalf of both our clients. And we think that's a really great long-term value creation. I would also point you to slide eight in our earnings supplement. We think we've become one of the leading providers of these resilient verticals. It does expand our TAM. really increases our scale. And obviously, there's some compelling synergies that we've talked about in this transaction. So on a post-combined basis, as we look out into the next 18, 24 months, gives us what we consider to be very attractive financial strength as well. Yeah, I would just add to that, you know, the free cash flow generation of the combined company is what really excites us as well. Pretty decent free cash flow conversion as we go in the out years. And as John mentioned, we've committed to hitting those synergies and, you know, we're really confident in those synergies out of the gate. We've got plans in place and are very confident on day one to close to start executing on those. Let me touch another couple points that I mentioned earlier on the call. It approximately doubles our revenue. We'll then be able to interact with over 40% of all U.S. and Canadian households every month, process over $130 billion in annual payment volume. These are very highly non-recurring categories that... And then, I'm sorry, very non-discretionary categories with very highly reoccurring billing cycles. Think about it. We've become a very large consumer bill pay processor on a combined basis. We think that it obviously is recession resistant as well.

• Q: The relatively small deal in the first quarter, does that contribute any revenue or does it eliminate like a red share or residual so it really just has an impact on the EBITDA line?

  A: Yeah, no additional revenue contribution there. Fully integrated strategic partner there, so no additional revenue there, but fantastic opportunity for us as a highly strategic distribution partner. And on the EBITDA side, It contributed a little less than a million dollars on EBITDA and Q1, and it was part of our full-year re-guide for EBITDA, about a $4.5 million increase. And remember, it's not a full year because we brought it in towards the end of the quarter. So it's what – listen, we hit our full-year guide, our quarter guide, and we still feel strong about the guide we gave in fourth quarter, really the uptake of was due to this strategic distribution partner.

• Q: In the consumer side, auto, personal loans, how would you kind of describe the headwinds you're facing there, the tailwinds you're seeing there? If you could handicap those two businesses for us, that would be helpful.

  A: Yes. Mike, good afternoon. It's been actually fairly consistent for the last few quarters that we talked about, and we're not seeing any major differences there. We still see resiliency. We still, you know, and one example of that would be we had a strong February-March relationship On the consumer side, from a tax refund season perspective. So we see positive trends there in our volumes. So currently, that's what we're seeing, which we think is very stable trends across our verticals.

• Q: You guys noted your digital wallet capabilities in the press release. Could you just highlight those again?

  A: Sure. So, from a digital wallet perspective, think about you dropping your, in your case, maybe your card statement automatically in your native wallet, in your Apple or Google wallet on your phone. We're going to be able to deliver that solution and are currently rolling some of that out with our clients. We're going to be able to take those consumer invoices or consumer bill presentments and present that directly into their native Apple device. So we see a significant interest from our clients on that, which would be some kind of biller. We see significant interest there as well as you may also heard earlier on the call today, we talked about using AI to build, help us with our product development, and specifically even we use that to create and recreate what we consider to be IVR and turn that into a repay voice, which is an interactive AI solution when you, on behalf of our billers, when someone calls in and wants to make a phone payment, et cetera, we're able to use AI to help them drive that. And again, early stages of testing and rolling some of those things out with our clients, but see significant interest in our product development and some of the things we're doing.

• Q: A topic that we brought up on a prior call, we hit on this a little bit, but I see actually a comment in slide four. So it seems as though It's risen to maybe a greater level of materiality. So you have a comment that says that gross profit margins experience near-term impact changes of enhanced data programs with the card networks. And I was hoping you could expand upon the comment in slide four of the investor presentation.

  A: Hi, Tim. Yes. We have seen what we considered we expected, where we saw the impact coming through from the level two, level three on the CEDP in the business payment side of it, predominantly on the AR side, as you would expect. So we've seen that impact come through as expected on our side. And then we obviously, you would assume that's embedded in our annual outlook that we gave as well. We do see opportunities as well from our growth in our B2B space on our overall total payment volume, opportunities to continue to drive monetization in addition to that.

• Q: Just one quick follow-up. I know you mentioned a few new customer ramps that you've got good visibility to. Just, you know, any other organic go-get requirements, do you think, other than, you know, maybe small, normal course stuff to to get to your guidance this year, or is the visibility pretty good on some of these new client wins?

  A: Yes, thanks for the question. No, from a go-get for 2026, we feel really good about those bookings were already booked, and it's really about just executing on deploying those clients and ramping them on the second half, which we have a lot of confidence around. A lot of the work that our sales team is doing now is really starting to focus towards 2027. So our confidence level on those bookings, they're booked. It's just a matter of deploying on the second half. And we have a high confidence level on that.

• Q: As I was looking through your May 2026 deck, page 22 lists a handful of acquisitions that you guys have done. John, what was the best acquisition there that you did and why? And which one was maybe the toughest and why?

  A: Sure, sure. Specifically on an acquisition side, obviously, Acquiring TriSource with our backend clearing and settlement has fundamentally, you know, understanding payments and understanding the whole technology stack and infrastructure there and our ability to use that to maximize our overall margins and throughput and overall client experiences has to rake up at the top, not one single thing. Our B2B acquisitions have been very positive for us as well. On the challenging side, I think was your other question there. I ultimately would say sometimes actually the smallest ones could be a little bit challenging because the ability to move certain technology pieces around despite the ROI on it can be some challenge sometimes. But I would ultimately say on that piece on the challenging side, it would ultimately be your ability to just combine things together. Now, we haven't done an acquisition in the last three years, so we are very confident in what we've done and how we've kind of merged all of our tech stack together and how we've really enhanced our overall product offerings. We think we're in a really good spot from an overall product competitive perspective. And then we've really monetized many things that we are trying to do on both sides of the business. If you add on the fact of what we're doing with AI and really how we're leaning hard into AI on a lot of different things, we've talked to you for the last few quarters about some of the investments we're making on integrations and implementations. We haven't fully turned our flywheel there how we want to, so we're going to continue to use that to really help us enhance that experience, how we can use that also to really do some additional things on from the front office in the back office of our business, in addition to enhancing some of our integrations and speeding up implementations. So we think some fantastic opportunities ahead of us as well. And that if you combine that with what we've learned over the fast, you know, the several acquisitions we have done, it gives us a great deal of confidence in the Kuber transaction. and how we're leaning into our core abilities of executing there. It's very exciting for us as we look out and what we think we can do together. I think as we execute and we understand, as we said on the call, execution is critical. We know that, but we think we're set up well to be able to execute there.