Triumph Financial, Inc. Q4 FY2025 earnings call

• Welcomed David Valier, president of Load Pay. - Goal is to help the industry transact confidently by strengthening the network. - Pursuit of growth, efficiency, and balance sheet strength. - Core payments business trending to 50% or greater EBITDA margin. - Load Pay expected to contribute accretively with capital-efficient margins. - Factoring business growing organically with penetration widening. - Cross-selling opportunities between payments and audit to increase revenue.

The core payments business had a 30% EBITDA margin in the fourth quarter and is trending higher. Load Pay exited the quarter with annualized revenue of $1.5 million and is guided to triple this amount in 2026. The factoring segment had a pretax margin of around 33% in Q4, with improvements driven by technology and automation. The intelligence segment had relatively flat revenue but contracted $1 million of incremental annualized revenue, with bookings starting to show in Q1 numbers.

• Load Pay to triple annualized revenue in 2026. - Core payments EBITDA margin trending above 30% in 2026 and aiming for 50% or greater long term. - Factoring pretax margin expected to expand through 2026 and '27, with ultimate target over 40%. - Bookings from Q4 intelligence segment already starting to show in Q1 numbers.

• Uncertainties in execution of the business model, especially with factors adopting the network. - Potential issues with credit risk assessment in lending businesses. - ABL business not playing out as complementary to transportation strategy as expected.

Q: Were the $6 million savings from the sale of the building and airplane baked into the 2026 expense guide?

A: It's a combination; the savings from the building and plane are part of the first quarter estimate and will be part of the run rate going forward.

Q: How does Load Pay plan to triple revenue in 2026?

A: It will be a combination of opening 7,000 to 12,000 accounts and driving linked and funded percentage higher to increase revenue per account.

Q: What's the driver of the improvement in factoring pretax margin?

A: Focus on technology and automation, and reduction in headcount.

Q: When will the contracted incremental annualized revenue from the intelligence segment show up?

A: Bookings from Q4 were generally 30 days from booking to billing, so it has already started showing in Q1 numbers.

Q: What's the risk in the credit loss expense?

A: It's about understanding the risks associated with the underlying borrowers and having tight credit policies and discipline to avoid distractions.