RPAY — Repay Holdings Corporation

Summary of Repay Holdings Corporation Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $80.8 million, up 4% year-over-year.
• Adjusted EBITDA: $34.4 million, representing approximately 43% margins.
• Adjusted Net Income: $19.4 million, or $0.22 per share.
• Free Cash Flow: $5.4 million, translating to a 16% conversion rate.
• Debt: Total debt at quarter-end was $288 million in convertible notes and $110 million drawn from a revolving credit facility, with a net leverage ratio of approximately 2.7x.

2. Strategic Updates and Business Highlights

• Acquisition of Kubra: Announced as a significant strategic move to enhance Repay's position in the digital payments ecosystem. Expected to close in Q2 2026, it aims to double revenue and improve free cash flow, with synergies anticipated from integration.
• Consumer Payments: Revenue increased 4% year-over-year, driven by new enterprise client implementations and interest in digital wallet capabilities. The rollout of Repay Voice AI is also underway.
• Business Payments: Strong performance with an 18% revenue increase year-over-year. New partnerships in automotive, property management, and government sectors were highlighted.
• Operational Improvements: Continued automation and AI deployment to enhance performance and risk monitoring, alongside a strategic partner investment that contributed to Q1 EBITDA.

3. Forward Guidance and Outlook

• 2026 Revenue Guidance: Expected to be between $340 million and $346 million, indicating 10% to 12% growth, with normalized growth (excluding political media contributions) projected at 7% to 9%.
• Adjusted EBITDA Guidance: Revised to between $141 million and $146 million, with margins expected around 42%.
• Free Cash Flow Target: Aiming for a conversion rate of 45% for the year, bolstered by anticipated political media contributions in Q3 and Q4.

4. Bad News, Challenges, or Points of Concern

• Competitive Pressures: The company acknowledged near-term impacts on gross profit margins due to changes in card network data programs, particularly affecting the Business Payments segment.
• Integration Risks: While confident in the Kubra acquisition, management emphasized the critical nature of execution and integration planning to mitigate operational risks.
• Market Conditions: There are ongoing macroeconomic uncertainties that could impact consumer behavior, although current trends remain stable.

5. Notable Q&A Insights

• Quarterly Growth Expectations: Management indicated that while Q1 saw 4% growth, they expect a ramp-up in growth rates in subsequent quarters, particularly in Q3 and Q4 due to new client contributions and the political media cycle.
• Consumer Segment Dynamics: The management noted stable consumer trends, with no significant headwinds impacting the outlook for 2026.
• Acquisition Justification: The Kubra acquisition was defended as a strategic move to enhance long-term value creation, with a focus on expanding capabilities and market reach.
• Future Client Engagement: Management expressed confidence in onboarding new clients and ramping volumes, with a strong sales pipeline for the second half of the year.

Overall, Repay Holdings Corporation reported solid Q1 results and provided an optimistic outlook for 2026, underpinned by strategic initiatives and operational improvements, despite acknowledging certain competitive and integration challenges.