Repay Holdings Corp

Previous wording

We have been monitoring the current economic environment in the U.S. and globally – characterized by heightened inflation (including changes in wages), rising interest rates, supply chain issues, slower growth and recent banking system volatility. Such macroeconomic conditions may continue to evolve in ways that are difficult to fully anticipate and may also include increased levels of unemployment and/or a recession. Some or all of these market factors have and could continue to adversely affect our payment volumes from the consumer loan market, the receivables management industry and consumer and commercial spending. The effect of these events on our financial condition, results of operations and cash flows is uncertain and cannot be predicted at this time. Finally, the impact of all of these various events on our results in the first nine months of 2024 may not be necessarily indicative of their impact on our results for the remainder of 2024.

Current wording

We have been monitoring the current economic environment in the U.S. and globally – characterized by heightened inflation (including changes in wages), evolving U.S. trade policies, supply chain issues and slower growth. Such macroeconomic conditions may continue to evolve in ways that are difficult to fully anticipate and may also include increased levels of unemployment and/or a recession. Some or all of these market factors have and could continue to adversely affect our payment volumes from the consumer loan market, the receivables management industry and consumer and commercial spending. The effect of these events on our financial condition, results of operations and cash flows is uncertain and cannot be predicted at this time. Finally, the impact of all of these various events on our results in the first three months of 2025 may not be necessarily indicative of their impact on our results for the remainder of 2025.

Previous wording

Revenue. As our clients process increased volumes of payments, our revenues increase as a result of the fees we charge for processing these payments. Most of our revenues are derived from volume-based payment processing fees (“discount fees”) and other related fixed per transaction fees. Discount fees represent a percentage of the dollar amount of each credit or debit transaction processed and include fees relating to processing and services that we provide. The transaction price for such processing services is determined, based on the judgment of management, considering factors such as margin objectives, pricing practices and controls, client segment pricing strategies, the product life cycle and the observable price of the service charged to similarly situated clients. During the three and nine months ended September 30, 2024 and 2023, our chargeback rate was less than 1% of our card payment volume.

Current wording

Revenue. As our clients process increased volumes of payments, our revenues increase as a result of the fees we charge for processing these payments. Most of our revenues are derived from volume-based payment processing fees (“discount fees”) and other related fixed per transaction fees. Discount fees represent a percentage of the dollar amount of each credit or debit transaction processed and include fees relating to processing and services that we provide. The transaction price for such processing services is determined, based on the judgment of management, considering factors such as margin objectives, pricing practices and controls, client segment pricing strategies, the product life cycle and the observable price of the service charged to similarly situated clients. During the three months ended March 31, 2025 and 2024, our chargeback rate was less than 1% of our card payment volume.

Previous wording

Interest income (expense), net. Interest income consists of interest received on our cash and cash equivalents. Interest expense consists of interest paid in respect of our indebtedness under the convertible senior notes.

Current wording

Interest expense. Interest expense consists of interest paid in respect of our indebtedness under the convertible senior notes and amortization of deferred debt issuance costs.

Previous wording

Interest (expense) income, net was ($0.4) million for the nine months ended September 30, 2024, and included ($4.7) million of interest expense and $4.3 million of interest income. Interest (expense) income, net was ($1.4) million for the nine months ended September 30, 2023, and included ($3.0) million of interest expense and $1.6 million of interest income. Interest expense increased by $1.7 million compared to the prior year period, due to a higher outstanding principal balance under the convertible senior notes. Interest income increased by $2.8 million compared to prior year period, due to higher average interest rates earned on our cash and cash equivalents.

Current wording

Interest income was $1.4 million for the three months ended March 31, 2025 and $1.3 million for the three months ended March 31, 2024, due to higher average interest rates earned on our cash and cash equivalents.

Previous wording

Interest (expense) income, net was ($1.3) million for the three months ended September 30, 2024, and included ($2.9) million of interest expense and $1.6 million of interest income. Interest (expense) income, net was ($0.1) million for the three months ended September 30, 2023, and included ($0.9) million of interest expense and $0.8 million of interest income. Interest expense increased by $2.0 million compared to the prior year period, due to a higher outstanding principal balance under the convertible senior notes. Interest income increased by $0.8 million compared to the prior year period, due to higher average interest rates earned on our cash and cash equivalents.

Current wording

Interest expense was $3.1 million for the three months ended March 31, 2025 and $0.9 million for the three months ended March 31, 2024, due to a higher outstanding principal balance under the convertible senior notes.

Previous wording

We incurred a loss, related to accretion expense and fair value adjustment of the tax receivable liability of $6.5 million for the three months ended September 30, 2024, compared to a $3.2 million loss for the three months ended September 30, 2023, an increase of $3.2 million. This increase was due to higher fair value adjustments related to the tax receivable liability, primarily as a result of accretion and changes to the discount rate, or Early Termination Rate, used to determine the fair value of the liability.

Current wording

We incurred a loss, related to accretion expense and fair value adjustment of the tax receivable liability of $3.0 million for the three months ended March 31, 2025, compared to a $2.9 million net loss for the three months ended March 31, 2024, an increase of $0.1 million. This increase was due to higher fair value adjustments related to the tax receivable liability, primarily as a result of accretion and changes to the discount rate, or Early Termination Rate, used to determine the fair value of the liability.

Previous wording

The income tax benefit was $0.1 million for the nine months ended September 30, 2024. This was a result of the operating loss incurred by us, primarily driven by the change in fair value of the tax receivable liability, stock-based compensation deductions and the amortization of assets acquired in the Business Combination and prior acquisitions, offset by stock-based compensation expense net tax shortfall, the state rate change impact on deferred taxes and the impact related to cancellation of debt income and write-off of unamortized debt issuance costs associated with the partial repurchase of the 2026 Notes, which are required to be recorded discretely in the interim period in which they occur. The income tax expense was $1.3 million for the nine months ended September 30, 2023, which was a result of the operating loss incurred by us, primarily driven by the change in fair value of the tax receivable liability, stock-based compensation deductions and the amortization of assets acquired in the Business Combination and prior acquisitions, offset by stock-based compensation expense net tax shortfall and the impact of the BCS disposition which are both required to be reported discretely in the interim period in which they occur.

Current wording

The income tax benefit was $0.5 million for the three months ended March 31, 2025. This was a result of the operating loss incurred by us, primarily driven by the change in fair value of the tax receivable liability, stock-based compensation deductions and the amortization of assets acquired in the Business Combination and prior acquisitions, offset by stock-based compensation expense net tax shortfall. The income tax expense was $0.3 million for the three months ended March 31, 2024, which was a result of the operating loss incurred by us, primarily driven by the change in fair value of the tax receivable liability, stock-based compensation deductions and the amortization of assets acquired in the Business Combination and prior acquisitions, offset by stock-based compensation expense net tax shortfall and the state rate change impact on deferred taxes which are both required to be reported discretely in the interim period in which they occur.

Previous wording

Revenue for the Consumer Payments segment was $214.6 million for the nine months ended September 30, 2024 and $204.6 million for the nine months ended September 30, 2023, representing a $10.0 million or 4.9% year-over-year increase. This increase was the result of newly signed clients and the growth of existing clients. For the nine months ended September 30, 2023, revenues of approximately $1.2 million are attributable to BCS.

Current wording

Gross profit for the Consumer Payments segment was $56.7 million for the three months ended March 31, 2025 and $59.6 million for the three months ended March 31, 2024, representing a $2.9 million or 4.9% year-over-year decrease. This decrease was the result of the growth from newly signed clients and existing clients being offset from impacts from previously announced client losses.

Previous wording

Revenue for the Business Payments segment was $15.3 million for the three months ended September 30, 2024 and $9.7 million for the three months ended September 30, 2023, representing a $5.6 million or 57.6% year-over-year increase. This increase was the result of newly signed clients, the growth of existing clients and political media spending associated with the 2024 election cycle in our media payments business.

Current wording

Revenue for the Business Payments segment was $11.0 million for the three months ended March 31, 2025 and $9.7 million for the three months ended March 31, 2024, representing a $1.3 million or 13.4% year-over-year increase. This increase was the result of newly signed clients and the growth of existing clients, which was partially offset from impacts from previously announced client losses and political media spending in the first quarter of 2024 associated with the 2024 election cycle in our media payments business.

Previous wording

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 gain on extinguishment of debt, loss on business disposition, 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.

Current wording

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 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.

Previous wording

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, non-cash charges and/or non-recurring charges, such as gain on extinguishment of debt, loss on business disposition, 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 we exclude amortization from acquisition-related intangibles from our 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.

Current wording

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, non-cash charges and/or non-recurring charges, such as 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 we exclude amortization from acquisition-related intangibles from our 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.

Previous wording

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 Post-Merger Repay Units) for thethree and nine months ended September 30, 2024 and 2023 (excluding shares subject to forfeiture).

Current wording

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 Post-Merger Repay Units) for thethree months ended March 31, 2025 and 2024 (excluding shares subject to forfeiture).

Previous wording

The following tables set forth a reconciliation of our results of operations for the three and nine months ended September 30, 2024 and 2023.

Current wording

The following tables set forth a reconciliation of our results of operations for the three months ended March 31, 2025 and 2024.

Previous wording

See footnote (j) for details on amortization and depreciation expenses.

Current wording

See footnote (g) for details on amortization and depreciation expenses.

Previous wording

Primarily consists of (i) during the three and nine months ended September 30, 2024, professional service fees incurred in connection with prior transactions, and (ii) during the three and nine months ended September 30, 2023, professional service fees and other costs incurred in connection with the disposition of BCS.

Current wording

Primarily consists of professional service fees incurred in connection with prior transactions.

Previous wording

For the three and nine months ended September 30, 2024, reflects franchise taxes and other non-income based taxes, non-recurring legal and other litigation expenses, and payments made to third-parties in connection with our IT security and personnel. For the three and nine months ended September 30, 2023, reflects non-recurring payments made to third-parties in connection with a significant expansion of our personnel, one-time payments to certain partners and franchise taxes and other non-income based taxes.

Current wording

For the three months ended March 31, 2025 and 2024, reflects franchise taxes and other non-income based taxes, non-recurring legal and other litigation expenses and payments made to third-parties in connection with our IT security and personnel.

Previous wording

Represents the weighted average number of shares of Class A common stock outstanding (on an as-converted basis assuming conversion of outstanding Post-Merger Repay Units) for the three and nine months ended September 30, 2024 and 2023. These numbers do not include any shares issuable upon conversion of our 2026 Notes. See the reconciliation of basic weighted average shares outstanding to the non-GAAP Class A common stock outstanding on an as-converted basis for each respective period below:

Current wording

Represents the weighted average number of shares of Class A common stock outstanding (on an as-converted basis assuming conversion of outstanding Post-Merger Repay Units) for the three months ended March 31, 2025 and 2024. These numbers do not include any shares issuable upon conversion of our 2026 Notes. See the reconciliation of basic weighted average shares outstanding to the non-GAAP Class A common stock outstanding on an as-converted basis for each respective period below:

Previous wording

Net income (loss) attributable to the Company for the three months ended September 30, 2024 and 2023 was $3.2 million and ($6.2) million, respectively, representing a 152.6% year-over-year improvement in our profitability. Net loss attributable to the Company for the nine months ended September 30, 2024 and 2023 was $6.0 million and $37.2 million, respectively, representing a 83.8% year-over-year improvement in our profitability.

Current wording

Adjusted EBITDA for the three months ended March 31, 2025 and 2024 was $33.2 million and $35.5 million, representing a 6.6% year-over-year decrease. Adjusted Net Income for the three months ended March 31, 2025 and 2024 was $20.3 million and $22.4 million, respectively, representing a 9.2% year-over-year decrease. Net loss attributable to the Company for the three months ended March 31, 2025 and 2024 was $7.9 million and $5.2 million, respectively, representing a 51.8% year-over-year increase.

Previous wording

The increases in Adjusted EBITDA and Adjusted Net Income and improvement in net loss attributable to the Company for the three and nine months ended September 30, 2024 were primarily due to the organic growth of our business from newly signed clients, the growth of existing clients, political media spending associated with the 2024 election cycle in our media payments business and cost savings initiatives that reduced both cost of services and selling, general and administrative expenses as a percentage of revenue.

Current wording

The decreases in Adjusted EBITDA and Adjusted Net Income and increase in net loss attributable to the Company for the three months ended March 31, 2025 were primarily due to the organic growth of our business from newly signed clients, the growth of existing clients and cost savings initiatives being more than offset from impacts from previously announced client losses and political media spending in the first quarter of 2024 associated with the 2024 election cycle in our media payments business.

Previous wording

We have historically financed our operations and working capital through net cash from operating activities. As of September 30, 2024, we had $168.7 million of cash and cash equivalents and available borrowing capacity of $250.0 million under the Amended Credit Agreement. This balance does not include restricted cash, which reflects cash accounts holding reserves for potential losses and client settlement funds of $46.5 million as of September 30, 2024. Our primary cash needs are to fund working capital requirements, invest in technology development, fund acquisitions and related contingent consideration, make scheduled principal payments and interest payments on our outstanding indebtedness and pay tax distributions to members of Hawk Parent. We expect that our cash flow from operations, current cash and cash equivalents and available borrowing capacity will be sufficient to fund our operations and planned capital expenditures and to service our debt obligations for the next twelve months and the following five years.

Current wording

We have historically financed our operations and working capital through net cash from operating activities. As of March 31, 2025, we had $165.5 million of cash and cash equivalents and available borrowing capacity of $250.0 million under the Second Amended Credit Agreement. This balance does not include restricted cash, which reflects cash accounts holding reserves for potential losses and client settlement funds of $43.7 million as of March 31, 2025. Our primary cash needs are to fund working capital requirements, invest in technology development, fund acquisitions and related contingent consideration, make scheduled principal payments and interest payments on our outstanding indebtedness and pay tax distributions to members of Hawk Parent. We expect that our cash flow from operations, current cash and cash equivalents and available borrowing capacity will be sufficient to fund our operations and planned capital expenditures and to service our debt obligations for the next twelve months and the following five years.

Previous wording

On May 16, 2022, our board of directors approved a share repurchase program under which we may repurchase up to $50 million of our outstanding Class A common stock (the “Share Repurchase Program”). The Share Repurchase Program has no expiration date but may be modified, suspended or discontinued at any time at our discretion. During the three months ended September 30, 2024, we repurchased 158,496 shares for a total of approximately $1.3 million under the Share Repurchase Program. As of September 30, 2024, we have $36.2 million remaining capacity under the Share Repurchase Program. In addition, in July 2024 we used approximately $40.0 million of proceeds from the offering of 2029 Notes to repurchase approximately 3.9 million shares of Class A common stock.

Current wording

On May 16, 2022, our board of directors approved a share repurchase program under which we may repurchase up to $50 million of our outstanding Class A common stock (the “Share Repurchase Program”). The Share Repurchase Program has no expiration date but may be modified, suspended or discontinued at any time at our discretion. As of March 31, 2025, we have $36.2 million remaining capacity under the Share Repurchase Program.

Previous wording

Net cash provided by operating activities was $115.8 million and $68.8 million for the nine months ended September 30, 2024 and 2023, respectively, which reflects net income as adjusted for non-cash operating items including depreciation and amortization, share-based compensation, and changes in working capital accounts.

Current wording

Net cash provided by operating activities was $2.5 million and $24.8 million for the three months ended March 31, 2025 and 2024, respectively, which reflects net income as adjusted for non-cash operating items including depreciation and amortization, share-based compensation, and changes in working capital accounts.

Previous wording

Net cash used in investing activities was $34.1 million for the nine months ended September 30, 2024, due to the capitalization of software development activities.

Current wording

Net cash used in investing activities was $10.5 million for the three months ended March 31, 2025, due to the capitalization of software development activities.

Previous wording

Net cash provided by investing activities was $2.5 million for the nine months ended September 30, 2023, due to cash received from the disposition of BCS, partially offset by the capitalization of software development activities.

Current wording

Net cash used in investing activities was $11.1 million for the three months ended March 31, 2024, due to the capitalization of software development activities.

Previous wording

Net cash used in financing activities was $23.5 million for the nine months ended September 30, 2023, due to the repayment of the outstanding revolving credit facility balance, payments for tax withholding related to shares vesting under Incentive Plan and ESPP and the CPS earnout payment.

Current wording

Net cash used in financing activities was $19.5 million for the three months ended March 31, 2025, due to the due to a payment under the TRA and the payments for tax withholding related to shares vesting under Incentive Plan.

Previous wording

As of September 30, 2024, the Second Amended Credit Agreement provided for a revolving credit facility of $185.0 million. As of September 30, 2024, we had $0 million drawn against the revolving credit facility. We paid $0.2 million and $0.4 million in fees related to unused commitments for the three and nine months ended September 30, 2024, respectively. We paid $0.1 million and $0.4 million in fees related to unused commitments for the three and nine months ended September 30, 2023, respectively.

Current wording

As of March 31, 2025, the Second Amended Credit Agreement provided for a revolving credit facility of $250.0 million. As of March 31, 2025, we had $0 million drawn against the revolving credit facility. We paid $0.2 million and $0.1 million in fees related to unused commitments for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

As of September 30, 2024, we had convertible senior notes outstanding of $496.2 million, net of deferred issuance costs, under the 2026 Notes and 2029 Notes. We were in compliance with the related restrictive financial covenants. Additionally, we currently expect that we will remain in compliance with the restrictive financial covenants under the 2026 Notes, the 2029 Notes and the Second Amended Credit Agreement, prospectively.

Current wording

As of March 31, 2025, we had convertible senior notes outstanding of $497.6 million, net of deferred issuance costs, under the 2026 Notes and 2029 Notes. We were in compliance with the related restrictive covenants. Additionally, we currently expect that we will remain in compliance with the restrictive covenants under the 2026 Notes, the 2029 Notes and the Second Amended Credit Agreement, prospectively.

Previous wording

There have been no significant changes to our critical accounting policies and critical accounting estimates for the nine months ended September 30, 2024. See Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023, for a complete discussion of critical accounting policies and critical accounting estimates.

Current wording

There have been no significant changes to our critical accounting policies and critical accounting estimates for the three months ended March 31, 2025. See Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024, for a complete discussion of critical accounting policies and critical accounting estimates.