Repay Holdings Corp Q4 FY2024 Earnings Call

Good afternoon. I'd like to welcome everyone to Repay Holdings Corporation's fourth quarter 2024 earnings conference call. This call is being recorded today, March 3, 2025. I'd like to turn the session over to Stewart Grisante, head of Investor Relations at Repay Holdings Corporation. Stewart, you may begin.

Thank you. Good afternoon, and welcome to Repay Holdings Corporation's fourth quarter 2024 earnings conference call. With us today are John Morris, Co-Founder and Chief Executive Officer, and Tim Murphy, Chief Financial Officer. During this call, we will be making forward-looking statements about our beliefs and estimates regarding future events and results. Those forward-looking statements are subject to risks and uncertainties, including those set forth in the SEC filings related to today's results and our most recent Form 10-K. Actual results may differ materially from any forward-looking statements that we make today. Forward-looking statements speak only as of today. We do not assume any obligation or intend to update them, except as required by law. In an effort to provide additional information to investors, today's discussion will also reference certain non-GAAP financial measures. Reconciliations and other explanations of those non-GAAP financial measures can be found in the state's press release, in the earnings supplement, each of which are available on the company's IR site. With that, I would now like to turn the call over to John.

Thanks, Stewart. Afternoon, everyone. Thank you for joining us today. On today's call, we plan to cover three main topics. First, a review of the fourth quarter 2024, second, a recap of our progress and accomplishments in 2024, and lastly, the announcement related to a strategic review, including a review of our overall strategic alternatives. First, on Q4, Repay Holdings Corporation closed out the year with another quarter of profitable growth. Our gross profit growth shows steady growth, adjusted EBITDA increased approximately 9%, and free cash flow conversion improved to 64%. Our full-year results showcased our durable business model with gross profit growth of 6%, strong double-digit adjusted EBITDA growth, and accelerating free cash flow conversion from 42% in 2023 to 75% in 2024. In Q4 and throughout 2024, the consumer payment segment executed on our core growth profile, which includes growth from existing clients, as well as signed new clients during the year. Core consumer payments continue to benefit from the ongoing secular tailwinds of processing more digital payments for clients across our verticals. We continue to see the demand for our clients to adopt more payment capabilities. They can repay a powerful one-stop payment platform to optimize payment flows while offering value-added services. Within the consumer payment segment, we added four new software partnerships during the year while further strengthening our existing partners, bringing our total software partners to 180. Our go-to-market and customer support teams leverage these relationships to develop our robust sales pipeline and help improve our overall client experiences. We added several new clients to our platform in Q4, including 16 new credit unions, bringing our total credit union clients to 329. Our payment technology is directly integrated into multiple core financial institution credit union software systems, which is driving a healthy sales pipeline into the 5,000-plus credit unions and regional financial institutions across the US. A great example of a recent win is FinFed Credit Union, one of the nation's largest credit unions that serves approximately 3 million members. Repay Holdings Corporation is excited to go live with FinFed to enhance their members' payment experience, giving them 24/7 digital capabilities while making automobile payments. In addition to new client wins, we made great strides in 2024, positioning Repay Holdings Corporation for vertical-specific growth opportunities ahead, such as expanding our software partnerships within the accounts receivable management vertical. We're also making progress with the credit card servicing industry, a newer sub-vertical. Clients are selecting Repay Holdings Corporation as our payment technology provider because our payment capabilities provide greater flexibility and convenience for their users. And lastly, in value-added services, our instant funding product continues to see healthy growth in Q4 transaction volumes, up approximately 34% year over year. Our clients primarily use this product today to differentiate themselves by offering a quick and convenient way to securely fund their customers within the personal lending vertical. Over the medium term, the instant funding product can become an additional revenue stream with other verticals as we continue to evaluate new areas to expand the capabilities. Our consumer payments growth was partially impacted by select factors during the quarter. Some of these factors were outside of our control, such as the full-quarter impact of the previously mentioned RCS client that is rolling off due to being purchased by another processor, lapping the contributions from a large personal lender in 2023, and a client loss within the lending communication solutions business beginning to move their transaction processing in-house. Over the past year, we have been building momentum within our enterprise sales team, making key hires, which has translated into incremental contributions during 2024. Our core consumer bookings grew nicely year over year, giving us confidence in accelerating growth from new client wins. As we move into 2025, we remain confident in executing our go-to-market, client implementation, and product initiatives. We are also laser-focused on improving our overall client experiences, which can lead to improved client retention, as well as additional value-added service opportunities with existing clients to further enhance the core consumer payments growth algorithm at Repay Holdings Corporation. Now shifting over to our business payment segment, during the fourth quarter, our business payments gross profit grew 60% year over year. Gross profit growth was driven by strength in our core AP business, solid contributions from the political media vertical, and the ramp-up of live new clients during the quarter. Throughout 2024, our AP business benefited from our direct sales team and software partners producing a robust sales pipeline across the healthcare, hospitality, property management, and municipality verticals. We enhanced integrations with existing software partners and added several software partnerships such as Blackbaud in the education vertical, Otter in the hospitality vertical, and most recently Lightspeed DMS in the automotive vertical. Repay Holdings Corporation's collaboration with Lightspeed DMS expands our reach within the automotive industry by extending our vendor payment automation functionality to a wide range of retailers and dealerships. Our sales teams are leaning into our over 100 software partnerships and integrations to cultivate enterprise relationships and develop an extensive client pipeline. By combining these partnerships with our go-to-market sales teams, our normalized business payment bookings continue to build by also increasing our supplier network by 38% year over year, now over 360,000 suppliers. During the fourth quarter, we signed several new enterprise clients, including Fairview Health Services. Fairview Health Services is an award-winning nonprofit healthcare network with a care portfolio footprint of over 50 clinics, hospitals, and medical centers in Minnesota. We're excited to start ramping these volumes with our total pay solution while also enhancing Fairview's fraud prevention processes along the way. In addition to new wins, our business payments segment was positively impacted by the continued ramp of many existing enterprise clients such as Grady Health and UF Health Systems. Within our political media vertical, we've benefited from onboarding several new clients and the strong ad spending during the 2024 presidential election cycle. During the quarter, our B2B growth was partially impacted by a large client being acquired and by general AR softness. AR represents a large opportunity. We are dedicating fewer resources to AR in order to focus on the strong AP growth opportunity ahead. Within AR, we remain focused on enhancing our existing ERP partnerships and optimizing payment acceptance within these existing client bases. Additionally, as we focus on accelerating growth, management made the strategic decision to migrate a group of existing AP clients onto our total pay solution to better serve and address future monetization opportunities for these clients' entire AP spending volumes. This client migration initiative, like other operational strategic initiatives, was part of our focused approach on driving long-term profitable growth. Our core AP business increased in the low teens in Q4 when excluding the one-off client attrition and strategic migration of clients. We remain confident in the sales pipeline as our go-to-market approach continues to build our software partners and enterprise clients while also enhancing our growth profile with additional monetization efforts within our total pay solution, leading to an acceleration in growth during the second half of 2025 and into 2026. Now onto the next topic, a review of our progress in the full year 2024. From a financial perspective, we demonstrated revenue and gross profit growth of 6%, adjusted EBITDA growth of 11%, and improved reported free cash flow conversion to 75%. From an operating and go-to-market perspective, we have made great progress as well, including a focus on our sales and distribution resources. We have been able to grow Repay Holdings Corporation by leveraging our 280 software partners, up from 262 at the end of 2023. We scaled operations by further aligning our internal sales, implementation, and support teams, added talented team members in select roles, and realized efficiencies through process automation within our organization. In addition, Repay Holdings Corporation recently announced the integration with Worth.ai in our merchant underwriting and onboarding processes. By directly embedding Worth.ai into Repay Holdings Corporation's workflows, we can spend less time on manual aspects of merchant underwriting and onboarding while also helping to mitigate KYB risk. On the product side, we implemented new debit acceptance offerings, and as we look to the future, we work in continuous development of new potential capabilities such as RTP. We also continue to explore ways of providing value-added services to our clients, such as expanding into funding into new areas of the company. And from a capital management standpoint, we significantly increased our cash generation profile while strengthening our balance sheet by refinancing our convertible notes to provide ample liquidity and financial flexibility. In addition, we repurchased shares in an additional way during 2024. As we reflect on the accomplishments we achieved in 2024 and turn to 2025, we remain dedicated to the best payment experience for our clients and creating value by facilitating the ongoing secular shift to more digital payment flows. As always, our focus is on creating value for our shareholders. Since becoming a public company in 2019, Repay Holdings Corporation has made eight acquisitions. These strategic acquisitions helped us expand our consumer payment segment into six verticals and 180 software partners while also diversifying Repay Holdings Corporation with a leading business payment platform that represents approximately 20% of our revenue mix today, including 100 software partners and a growing supplier network of over 360,000. Over the past several years, we have been committed to our core values of profitable growth and improving cash flow generation while also being disciplined with our M&A, even strategically divesting an asset during that time. Repay Holdings Corporation has built our technology platform to scale both organically and inorganically with the potential to benefit from additional opportunities ahead. As mentioned previously during the November earnings call, I am continuing to evaluate all aspects of our company and taking the necessary actions to realize shareholder value. With the board's support, we have commenced a comprehensive strategic review with the assistance of outside advisors to assess the full range of alternatives aimed at capturing shareholder value. The review includes evaluating opportunities to further strengthen Repay Holdings Corporation's position in the verticals we serve, adjacent markets, go-to-market strategy, relationships with our partners, and capital allocation. This strategic review may also include consideration of various strategic alternatives, including M&A, a take-private or sale of the company, or other structural changes, transactions, or alternatives that could enhance shareholder value. We do not intend to comment further or provide updates regarding the strategic review until it has been completed unless the company determines that additional disclosure is appropriate or required. As we are undergoing the review of our business, our capital allocation priorities remain focused on creating value for our shareholders while maintaining a strong balance sheet with ample liquidity and financial flexibility. Our approach is as follows: to reinvest in the organic growth opportunities. In 2025, we plan to make targeted sales to market, relationship management, and investments to strengthen our position and accelerate our organic growth in 2026 and 2027. To continue managing CapEx as a percentage of revenue while maintaining prudent investments towards technology and product. To address the $220 million convertible note due February 2026 with this capital allocation framework in mind. Additionally, we continue to be open to accretive strategic M&A, and we will continue to have the authorized share buyback program where we have opportunistically repurchased shares in the past. With that, I'll turn it over to Tim to go over our Q4 and full-year 2024 financials.

Thank you, John. Now let's go over our financial results for Q4 and full-year 2024. In the fourth quarter and full-year 2024, Repay Holdings Corporation delivered solid results across our key metrics. Revenue was $78.3 million in Q4, representing an increase of 3% year over year. Full-year revenue increased 6% year over year. In Q4, gross profit grew by 2% year over year. The consumer payments segment gross profit declined approximately 5% during Q4 and grew 3% in full-year 2024. Our business payments segment gross profit grew 60% in Q4 and 40% for the full year. As John mentioned, our gross profit growth was impacted by select client losses and the strategic technology migration of targeted business payment volumes to our total pay solution. We believe these are isolated to specific situations while our core growth remains healthy. Excluding these impacts, reported gross profit growth would have been approximately 10% in Q4. Q4 adjusted EBITDA was $36.5 million, representing 9% growth in Q4 and 11% growth for the full year. Q4 and full-year adjusted EBITDA margins were approximately 47% and 45%, respectively, demonstrating our disciplined approach to managing operating expenses while being able to support sales, implementation, and client service teams across the company. Fourth-quarter adjusted net income was $22.4 million or $0.24 per share. Q4 reported free cash flow was $23.5 million, representing 64% free cash flow conversion. Our full-year 2024 free cash flow conversion was 75%. Throughout 2024, free cash flow benefited from our continued growth while also seeing the flow through for managing both operating expenses and CapEx. During 2024, free cash flow was favorably impacted by over $20 million in positive net working capital changes that we expect to reverse in Q1 2025. As of December 31, we had approximately $190 million of cash on the balance sheet with access to $250 million of undrawn revolver capacity for a total liquidity amount of $440 million. Repay Holdings Corporation's net leverage is approximately 2.3 times with total outstanding debt of $507.5 million, comprised of a $220 million convertible note due in February 2026 with a 0% coupon and $287.5 million due in 2029 with a 2.875% coupon. Net leverage will continue to naturally benefit from our strong profitability and cash flow generation. As John mentioned in his opening remarks, we have initiated a strategic review of our company, including strategic alternatives with our board's support. As part of this dynamic, we are refraining from providing a 2025 outlook at this time. Before opening for questions, I want to reiterate that with respect to the company's strategic review, the board and management team are committed to improving operations and driving shareholder value. Management remains focused on prudently running the business and executing on our capital allocation priorities during this time. The company cannot provide assurance that exploring strategic alternatives will result in any transaction or particular outcome. As you understand, we will not be communicating anything additional about the strategic review process while it is ongoing. Again, we do remain focused on managing the business diligently and driving shareholder value during this time. We will not be taking any questions on the review process or 2025 outlook. Thank you, I'll now turn the call back over to the operator to take your questions.

Great. Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please. We'll look for questions. The first question is from Ramsey El-Assal from Barclays. Please go ahead.

Hi, gentlemen. Thank you for taking my question, Steven. I appreciate it. I wanted to ask about some of the client losses that you've called out across the business. They had sort of attrition, I should characterize it as attrition. Are you seeing any changes in the drivers of attrition? I think you called out a couple of folks that were taking things in-house, maybe some customer consolidations. Is this sort of a tricky period where you're seeing more of that than usual? Or is there anything changing in the end market of your customers, basically, that would make you think that this is maybe a you may see more attrition than you have in the past?

Hi, Rich. This is John. Good evening. No. We're not seeing any major changes. Any specific ones that I called out, two of those were clients that actually got acquired. One of those was in the consumer side of the business and one of those is in the business payment side. They were important clients to us, but they required nothing we could have changed about that. And then the third one was the only communication solutions. They brought that in-house. We don't see any trend associated with that either.

Okay. Enough. And then a follow-up for me. On slide seven, as you're talking about your consumer payments performance in the quarter, you called out seeing pockets of consumer softness. I'm just curious if you could elaborate a little bit more on what those might be.

Those are related to what we've talked about in the past. With auto and ARM. Just a continuation of what we saw previously. So nothing incremental to that, but just the dynamics and the challenges within the auto space around used car sales, used car affordability, and then the ARM recovery that we anticipate we have not seen. And so there's just a continuation of the depressed volumes in the ARM space that we talked about previously.

Thank you. Good afternoon. I guess maybe starting with how we think about 2025. I know you guys are refraining from providing specific guidance. But just as we think about the trend lines of growth at any strategic actions. Could you just talk about, you know, sort of the direction relative to 2024 you're expecting the segments to operate?

Yeah. I'd say overall, if we think about Q4, I mentioned that if you strip out the client losses and the strategic migration, that reported gross profit growth would have been approximately 10%. And then there's some of the softness that we just talked about in the consumer verticals around auto and ARM. When you take all those things together, I think the growth rate looks similar to how it on a normalized basis, how it looked earlier in 2024. In the first half of 2024, the growth rate was, call it, mid to high single digits. And so I think all those pieces together build back up to that. So, again, we're not providing a 2025 outlook, but that's the way I would think about it when you strip out the losses and some of the consumer macro impacts.

Then, like, business payments should continue to grow as the clip that it is or do we expect that to slow? I mean, how should we think about that segment?

Oh, we talked about elements that there's a client loss, there's the lack we're not as focused on the AR portion of that business. We're still trying to, you know, upgrade and maintain the existing integrations, but really more focused on Core AP. Core AP is growing, call it, low to mid-teens. And so that's how I think about that business is growing at that pace if you strip out the loss. We're not as focused on the AR portion. The AR portion is important to us. We have a lot of strong integrations there. But we're really investing going forward in what we would call core AP.

Okay. Great. And then, John, maybe you could just talk about sort of what led to the decision-making process of getting to the strategic review and, you know, I know there's no deadline or specific timeline, but like, maybe you could just tell us how we should look at it from the outside, in terms of, like, thinking about progress being made, maybe you could give us a little bit more color on that.

Thank you. Yeah. Sure. So if you recall back in the November earnings call, I really am committed to evaluating all aspects of the company to really drive and realize shareholder value. So with the board's support, we commenced this comprehensive strategic review, which is comprehensive with the assistance of outside advisers. We're going to look at the full range of alternatives in order to capture overall shareholder value. We're committed to that. We think we will end in a very positive outcome for our shareholders. Those aspects could be from an outlook, reviewing our go-to-market strategies, our overall account allocation strategy, and our strategic alternatives, including M&A.

Okay. Great. May I ask this one question for Tim? Just on the free cash flow conversion, obviously, you had that one-time benefit that sort of gets reversed in the first quarter. As we think about free cash flow conversion, should we think about it on an adjusted basis to be comparable in 2025, or is that affected by other stuff this year?

No. I would think of it that way. I mean, if you look at the earnings supplement, we did show some detail on that on slide six. And so I think if you strip out the impacts from this year, and then also strip them out from what we expect to reverse in Q1 of next year, you would see a comparable conversion. Overall, we are showing, as we talked about previously, faster adjusted EBITDA growth than top line and a continued reduction of CapEx as a percentage of revenue, which should lead to continued strong free cash flow conversion when you strip out the working capital impacts in both periods.

Hey, guys. Good afternoon. Thanks for the questions. Anything going on in the competitive landscape that we should be aware of? And then secondly, any update on your focus on the mortgage vertical? I know there was a lot going on with some of the card network. Thanks a lot.

Yeah. Hi, Joe. So from a competitive perspective, as you know, last year, we continued to invest in our enterprise sales and our product technology. So we're well-positioned there. Obviously, we're seeing strength in our sales pipelines. That drives our ability to compete in both sides of the business. We find ourselves well-positioned there, but as part of this strategic review, we'll make sure that all things are true. The overall end markets, we still are very positive on. As for the mortgage side, as we mentioned last year, and really in our November call, that's a multi-year organic opportunity for us. That's still progressing as we indicated then. For clients who are rolling that out as we move throughout this year.

I'd add in B2B within AP, we've been calling out wins within the healthcare and hospital vertical recently. We're having a lot of success there, and this speaks to the approach of being vertical-specific within AP, and you can see our solution winning in those verticals. We're not trying to compete in every vertical. We're focusing on areas such as healthcare, hospitals, auto dealerships, and property management, and we're seeing positive traction there in those particular end markets.

Hey, John. Hey, Tim. Thanks for taking the questions this evening. So I wanted to ask just another macro question, but perhaps more specifically on the personal lending vertical. Maybe talk about your expectations there versus the prior year? And then anything you're seeing in terms of demand or supply-side trends to be aware of in the coming year. Thanks so much.

I'd say trends are pretty similar to what we've talked about previously. Personal loans, there is some positive momentum and positive developments around origination activity. Based on our conversations with clients and some of the names we track publicly, there do seem to be indications that they're loosening their underwriting standards and opening up to originations. I do think there's demand for that. And so I would say, generally, that's what we're seeing in personal lending. It's not much different from what we said in prior periods, but there is a little bit of positive momentum there.

Got it. Thank you, Tim. That's great to hear. And then, you know, the total pay volume migration, this strategic shift you called out, could you just walk through the mechanics of that in terms of it sounded like that was part of the B2B payments results this quarter in terms of coming in a little bit lower. But just trying to understand what the mechanics look like and what's going on under the hood. Thanks so much.

So we've identified certain clients that were really focused on virtual cards, and we want to monetize the total payment volume. Where there were instances of effective virtual card-only clients, we're looking to migrate them to our total pay solution. As part of that, there was some volume lost. However, that was a strategic shift, and we were aware of those potential losses and the impact. But the idea is that once that volume has been converted, there's a greater monetization opportunity to not only monetize virtual cards but also paid ACH. We think that we were aware there could be impacts, but we are willing to make that strategic move for the future monetization benefits of having all of that total payment volume on our platform.

Got it. Makes a lot of sense, Tim. Are you seeing, I understand this strategic shift, it makes sense to offer the broad range of payment modalities. But are you seeing a broader shift from virtual card to ACH within the broader supplier base? Just the kind of common question in terms of payment acceptance costs and trends and things like that. Thanks a lot.

Yeah. We still see healthy adoption trends within virtual cards, but we are promoting the paid ACH option more regularly. And we are only able to do that when we have the total payment volume. That's when they're on TotalPay Solutions. So that is, again, a strategic move to be able to capture more of that spend versus just the virtual card. We think that if we do this, we will see it happen, and we are promoting it. It provides a nice balance between virtual card and paid ACH. If we have to, we can default to sending regular ACH or check, but again, we think being able to capture the TPV and monetize similar rates on the virtual card, but then additionally adding paid ACH wins for us in the future.

Andrew, let me add some additional color there. Our net new wins are for all green space in a lot of times. So that shift itself, we're actually bringing them to the virtual card piece, sometimes for the first time. So there's net new wins we talk about a lot of times. Those are just never have an outsourced payables before. We are seeing really nice growth in TPV. We don't disclose that separately, but we are seeing that trend, and we just need to be able to capture more of it and monetize it.

Hey. Good afternoon. I just wanted to confirm, but in terms of these client losses that you've explained, are those fully reflected in the fourth quarter, or would you expect a little bit of additional revenue to run off next quarter?

One of them was we mentioned last quarter, but this quarter was the full quarter impact. And then the others, yes, we've experienced the full runoff this quarter. So there will be, you know, a lapping effect in the back half of next year, but we'll see the impacts of those in the first half of 2025.

Hey, guys. Thanks. Maybe sticking with the organic growth, organic gross profit growth ex-political, I know you touched on it from a high level, but could you sort of put a finer point on the deceleration you saw from the third quarter into the fourth quarter? So sort of bridging from that plus 1% organic growth last quarter to the minus 9% this quarter? Thanks.

Again, that was largely related to the client losses we mentioned, and then the strategic migration of the AP volume. There was a little bit of additional softness in the AR part of B2B. That's why we've emphasized AP. When you strip out those impacts and then consider some of the ongoing ARM and auto macro impacts, it should get us back to a level that we saw earlier in 2024. If you look at the normalized growth rates in Q1 and Q2 of 2024, I would think that's more indicative of where we would be.

And obviously, to get to that number, we are already normalizing for the political, which was in the fourth quarter, and the political for us will not be in 2025.

Hi, good afternoon, and thank you for taking my question. Had a quick one on the consumer segment. On slide seven, you indicated that the headwind from the client losses in Q4 was roughly 5%. So if I add that back to the gross profit decline this quarter, we're roughly flat. My question is, assuming some normalization over the course of the year, can you help us understand how much of that is going to be coming from macro improvement versus new bookings? I know you have a number of go-lives scheduled for this year.

The client losses don't take into account the macro impacts from ARM and auto that I mentioned earlier. The client losses keep you at flat, and the macro impacts bring you down to low single digits, and then you have the ramp of the captive auto win. You have the ramp of the previously signed accounts. You have the really strong bookings that John mentioned. So we're not providing a 2025 outlook here, but that's how I would frame it.

Got it. Appreciate the color. And as a follow-up, you had indicated in the strategic review that M&A was also an option. So just to drill into that as well as your product roadmap, can you talk a little about what would be on your wish list if you were to go the M&A route and any comments around what's on your product roadmap organically would be helpful as well.

So from an M&A perspective, we really like consumer bill pay. We're in some large consumer bill pay verticals today in terms of auto and mortgage and personal lending. There are others we're not in, such as insurance or government and utilities. Those could be interesting, and we see some targets in those spaces. There's some consumer end markets we're not in, more related to general commerce, I would say. In B2B, we'd be focused on AP. So there are many tuck-in opportunities within AP that could get us into additional verticals and grow our supplier network. So I'd say consumer bill pay verticals, broader consumer commerce, and then B2B AP.

I'll add a couple of things to that. Anything that could add to our software partners would embed payments that we fit well into. These could potentially increase our verticals or complement our existing verticals or adjacent verticals, as I mentioned in our strategic review. Something that could drive our overall scale, something that could drive our overall distributions. Those could be software partners or just ways that we could really drive a flywheel effect of driving overall distribution.

Hey. Thank you for taking the question. Tim, you mentioned earlier paid ACH. I just wanted to drill into that more from an industry perspective. When we think about paid ACH, typically, it's paid because you're able to attach information and add value to a typical ACH payment. So number one, is there anything different about the data that you can or cannot attach to an ACH payment in your enhanced ACH offering relative to what you could attach to a card? And second, is there any difference you would call out among various other bank-based payment rails, either cost or timing, associated with something like RTP or FedNow relative to the traditional ACH? Thanks.

Yeah. I mean, again, if the supplier is willing to pay a fee because they're getting enhanced data relative to a regular ACH, it may not be as robust and seamless as a card transaction, but it is more so than regular ACH, and they're willing to pay for that. The difference is the fee to them is lower. So it's higher than regular ACH, but lower than card. Our economics are better because our cost of processing ACH is lower. We net out in the same place even though it's in then so, but it's better for the supplier because they pay less and get more data. It's pretty nuanced terms of what that data is, but it's really a win-win for both of us.

So enriched data, which obviously makes reconciliation a lot easier and the bulk payment process much simpler, as well as the overall embedded part of that, which makes reconciliation back to the original invoice a lot easier.

Thanks, Tim and John. A minor follow-up though, but is it safe to say then that more of the suppliers are set up to receive that information with the virtual card relative to the number that are set up to receive that information with an ACH payment, or is that something that you solve for?

We attempt to solve for that through our supplier enablement. Again, we like owning the 360,000-plus supplier network. We do our own proprietary form of supplier enablement where we have a hands-on real-time approach, allowing us to determine the optimal way to pay and how they want to be paid. We really like owning that network and the enablement process, which gives us visibility into the best way to pay.

Tim, long term, bigger picture long term, if you think about the world of automation, the world of overall cyber and fraud, we think what we add in the value around cybersecurity and the making and sending of payments will be even more important as time goes on. The mailing of checks, for instance, has routing and account numbers on it, and our ability to drive value around the security of that transaction will continue to be important as the era of fraud continues to amplify.

Hey, guys. Thanks. Kind of a high-level question, but double-digit top-line growth has been really elusive, tough to get back to. What has been the biggest hurdles to get back to that? Is it sales, is it the end markets? Is it this client retention? Could you just kind of walk us through why that's been so hard?

I think the timing of the client losses is a big factor. As we've said earlier, they're hitting us in Q3 and really to a larger extent in Q4. I think the timing of that and the continued macro impacts in auto and ARM, which layer onto that. We've mentioned impacts in the AR part of B2B. All these factors describe the transitioning from normalized growth back to what we showed in early 2024. However, we've mentioned that we've had really strong bookings across both consumer and business payments. We've been selling enterprise accounts in consumer and then embedding payments into enterprise software in B2B. We are ramping some accounts that signed last year that will impact this year. There is momentum within go-to-market. There are strong signs within bookings and ramping, though there have been some impacts that hit a lot in both Q3 and more in Q4.

Let me add that as part of this comprehensive strategic review, our goal is to find ways to accelerate growth. That's one of the many things we'll be reviewing, and we're confident we will find opportunities there.

Hi. This is Chipotle Tomskar on for James. So you mentioned wanting to drive further distribution. I wanted to understand how you're thinking about the current opportunity set in the partner network. Are you more focused on penetration of existing partners or expanding the partner base? If so, what segments or verticals are you interested in expanding based on where you're seeing the most demand right now?

Yes. Sure. We're now up to 280 of those partners. About 180 on the consumer side, about 100 on the business payment side. You can see we also added to that during the quarter. Both answers to that question are yes. We want to continue to drive overall penetration into our existing partners, and we think there's a lot of opportunity there. We're continuing to add that as we go to market and find additional strategic relationships. We want to do that. Additionally, we've talked about overall enterprise software platforms. We think there's a significant opportunity over the next two to five years in helping them drive the monetization as we embed our software into their core platforms. Our ability to do that both on the AP and the AR side, we think there's a significant opportunity.

I'll add that we're investing in both, and we do add new software relationships each quarter. Still, there is a significant opportunity within the existing base to increase penetration. There are software relationships where we may be 10% or less penetrated. We think that there are opportunities to find ways to jointly market and promote the solution to increase penetration of existing partners in addition to adding new ones.

We mentioned previously that the enterprise software platforms on the B2B payable side represent a multi-year organic growth opportunity for us.

This concludes the question and answer session. I'd like to turn the floor back to management for any closing comments.

Thank you, operator. Thank you, everyone, and thank you for your time today. Our 2024 results demonstrated our solid execution towards profitable growth and accelerating free cash flow. We remain focused on our strategic initiatives to drive overall shareholder value. Thank you for joining us today.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.