Good afternoon. I'd like to welcome everyone to Repay's Third Quarter 2025 Earnings Conference Call. This call has been recorded today, November 10, 2025. I'd like to turn this session over to Stuart Grisante, Head of Investor Relations at Repay. Stuart, you may begin.

Thank you. Good afternoon and welcome to Repay's Third Quarter 2025 Earnings Conference Call. With us today are John Morris, Co-Founder and Chief Executive Officer, and Robert Hauser, 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 FCC filings related to today's results and in our most recent Form 10-K. Actual results may differ materially from any forward-looking statements that we make today. Board-looking statements speak only as of today and we do not assume any obligation or intend to update them, except as recorded 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 today's press release in an earnings supplement, each of which are available on the company's IR site. With that, I will now turn the call over to John.

Thanks, Stuart. Good afternoon and thank you for joining us today. During the third quarter, Repay executed on our promise to sequentially improve growth in the second half of the year. Our core growth strategy is built on our drive to optimize digital payment flows across our consumer and business payment verticals. We embed our payment technology into software platforms for a seamless experience. and during the second half of 2025 we remain focused on the path of returning to sustainable growth as we exit the year in q3 we achieved five percent revenue growth and one percent gross profit growth on a normalized year-over-year basis which excludes to the political media contributions during 2024. our adjusted EBITDA margins remain robust at 40 percent and we continue to generate strong free cash flow conversion of 67 percent while reinvesting into organic growth initiatives these financial results demonstrate the strategic improvements that are underway across repay we have been enhancing our go-to-market implementation pipelines and operations we are automating processes strengthening partnerships and enriching our capabilities and fine-tuning our clients experience we are testing and deploying ai tools across the company to build Repay for a scalable future. Repay is using real-time API observability for our gateway monitoring, which is leading to some of the highest authorization and uptime across the industry. We have been utilizing assisted AI functionality during the client onboarding process for faster API connectivity with software partners, reducing manual documentation and improving implementations. During the quarter, we developed Repay's dynamic wallet, allowing loan payments to be seamlessly integrated into iOS and Android's digital wallet. Dynamic Wallet provides instant access to loan details, reminders to make payments on time, and tap and pay directly within the consumer's digital wallet. Easier access leads to better customer experience for our clients and increase digital payments for faster and secure transactions. Also, we have been adding new software partners during the quarter. We added five new software partners, bringing our partnership network to 291 across our consumer payments and business payment segments our investments in enterprise sales and customer support teams have built a healthy sales pipeline across the verticals we serve this is reflected in sustained year-to-date bookings growth additionally operational initiatives are leading to improved productivity increased automation and quicker implementation workflows as these prizes trends continue our normalized growth is expected to sequentially improve further in the fourth quarter now moving on to our q3 segment highlights within consumer payment segment reported gross profit increased one percent year over year our core growth algorithm is built on both the recurring and incremental contributions from existing clients and the ramp of recent client wins as a reminder q3 gross profit growth was partially impacted by approximately three percent from the previously mentioned clients rolling off our platform without these impacts gross profit increase single digits year over year in q3 we increased our consumer software partnerships to 188 while also enhancing many existing integrations to further improve client and customer experience during september we announced a partnership with alpha systems a leading provider of sas software within the auto and equipment financing industry the partnership combines alpha system software with a complete solution of payment acceptance across modalities and channels. Financial institutions and lenders that use Alpha's loan management platform can utilize Repay's out-of-the-box CNIS payment experience while also streamlining their internal accounting and reconciliation processes. This partnership is a great example that embodies Repay's overarching embedded payment strategy while also presenting additional sub-vertical growth opportunities. We also announced a new integration with Fuse, an AI-powered LOS platform that serves banks, credit unions, and financing institutions. FUSA software embraces automation capabilities while also now embedding Repay's secure payment processing technology directly into workflows to enhance financial institutions' operations. By combining our extensive software partners that span across our consumer verticals with our direct go-to-market approach, our sales teams are building on strong sales and booking pipelines while adding many new clients, including 11 new credit unions wins and our financial institutions vertical. Year-to-date, core consumer bookings have continued to increase from this go-to-market strategy. Our teams are continuing to focus on client implementations and ramp processes. The minimum we see in software partners, sales bookings, and improving implementation workflows instills our confidence and our sustainable growth profile as we exit the year. Now turning to the business payment segment. In Q3, normalized gross profit increased 12% year-over-year, which excludes the political media contributions during 2024. Please keep in mind that we also lapped approximately 10% impact from last year's client loss. Without these impacts, our gross profit growth was over 20% year over year. Business payments growth was driven by our accounts payable platform and payment monetization initiatives of float income and expanding our enhanced ACH offering. We continue to win and implement new clients in our healthcare and hospitality verticals, leading to double-digit growth in our core AP platform. Our strategic focus is on increasing total pay adoption as we continue to prioritize our go-to-market and partnership resources towards AP opportunities. Our supplier network increased to over 540,000 suppliers, growing approximately 60% year-over-year as we see great traction in our hospitality vertical and we are building on existing software relationships such as Blackbaud and our education and nonprofit protocols. We also recently announced a new integration with USE, a leading provider of AP automation software across multiple industries. Repay's directly embedded technology ensures timely vendor payments while improving productivity by reducing the need for manual processes for organizations. We are pleased with the business payments momentum for our sales teams and expect to see sustained AP traction from our 103 strategic partnerships and embedded integrations. In Q3, Repay took positive steps in the right direction through execution. We returned to profitable normalized growth while generating significant free cash flow and maintaining a strong balance sheet for financial flexibility. We opportunistically deployed capital towards our organic growth initiatives, repurchased approximately 3% of our outstanding shares in August, bringing our total share repurchases to $38 million year-to-date, and reduced our debt outstanding by retiring $73.5 million of our 2026 convertible notes at a discount. Looking forward, we expect the momentum to continue, giving us confidence across both consumer payments and business payments in the Q4 2025. And lastly, I would like to welcome Rob Hauser, Repay's Chief Financial Officer, who joined the company in September. Rob has already hit the ground running, bringing over a decade of payment experience and a proven operational track record. I look forward to working with Rob to build on RePay's success. With that, I will turn the call over to Rob to review our Q3 financials.

Thank you, John, and good afternoon, everyone. I'm very excited to join RePay. My first couple of months have been incredible and busy. I've been learning about the company, culture, and technology, all of which have confirmed my belief in the opportunities ahead. Repay has a tremendous payment platform across our consumer and B2B verticals that is positioned to benefit from the secular digital payment trends. I look forward to digging deeper and getting to work and helping drive the company forward. Now let's go over our financial results for Q3 2025. Revenue was $77.7 million and gross profit was $57.8 million. dollars. Normalized revenue growth and gross profit growth increased five percent and one percent respectively, which excludes the political media contributions during last year's presidential election cycle. Our Q3 growth was impacted by approximately four percent as we continue to lap the previously discussed client losses from 2024. When excluding these impacts, Q3 gross profit increased mid-single-digit year-over-year. During Q3, our gross profit margins compressed approximately 3.4% year-over-year. Our gross profit margins were impacted from lapping one-off client losses and contributions from political media, a larger mix of clients with volume discounts as our client-based volumes continue to grow significantly and we continue to ramp enterprise clients with volume pricing, an increased mix of revenue from ACH and check volumes. As our clients adopt more of our modalities and undergo provider consolidation, we are processing more of our clients' overall volumes. In addition, we have experienced an increase in average transaction value as we continue to move upmarket towards larger enterprise clients. Higher overall transaction values caused higher-than-expected assessment fees on capped interchange volumes. Going forward, we expect these impacts to continue. Consumer payments growth profit increased 1% year over year. Our consumer payments segment is starting to show sequential improvement towards the fundamental growth of this segment. When excluding the approximate 3% impact from one-off client losses, gross profit increased single digits during the quarter. Business payments normalized growth profit increased approximately 12% in Q3 2025. In addition, business payments growth was impacted by approximate 10% headwind related to the previously communicated client loss during 2024. Q3 adjusted EBITDA was $31.2 million, representing approximately 40% adjusted EBITDA margins. Throughout 2025, Repay has been able to manage OPEX while balancing resource allocation and making incremental investment towards the sales, implementation, and client service teams to support future growth. Third quarter adjusted net income was $18.2 million, or 21 cents per share. Free cash flow was $20.8 million during the quarter, resulting in 67% free cash flow conversion and demonstrating our solid cash generation as we execute towards sustainable profitable growth. As of September 30th, we had approximately $96 million of cash on the balance sheet with access to $250 million of undrawn revolver capacity for a total liquidity amount of $346 million. Repays net leverage was approximately two and a half times. During the third quarter, we opportunistically reduced debt outstanding by retiring $74 million dollars of our 2026 convertible notes at a discount principal value total outstanding debt of 434 million dollars is comprised of 147 million dollars convertible note due in february 2026 with a zero percent coupon and a 288 million dollar convertible note due in 2029 with a 2.875 In addition, as the company previously announced, Repay reduced outstanding shares by repurchasing approximately 3.1 million shares for $15.6 million in August. We repurchased a total of $38 million and 7.9 million shares year-to-date, reducing fully diluted shares outstanding by approximately 8%. As of September 30th, we had approximately 92 million shares outstanding with $23 million dollars remaining under our existing share repurchase program. As we move into the fourth quarter, we're refining our financial outlook. In Q4, we now expect six to eight percent normalized gross profit growth and free cash flow conversion to be greater than 50 percent. Our updated outlook reflects the normalized growth that Repay can sustainably achieve as we benefit from secular digital payment tailwinds, growth from existing clients, and the ramp of new clients onto our platform. Our go-to-market and sales pipeline remains robust, which will continue to lead to solid volume and revenue growth opportunities. However, normalized growth profit growth is expected to be towards high single digits, which is at the low end of the previously issued growth outlook due to ongoing margin pressures we saw during Q3. Going forward, we expect gross profit growth to be impacted from an increasing mix of larger clients with volume discounts and pricing, an increased mix of ACH and check volumes, and higher overall transaction values. Additionally, the Q4 growth outlook naturally benefits from fully lapping the one-off client losses from 2024. The Q4 normalized growth would be closer to the lower end of the updated range if we didn't experience this benefit during Q4. And as a reminder, our reported financials will be lapping strong political media contributions, causing an approximate 10% impact to repays Q4 reported growth. The updated Q4 free cash flow conversion outlook is expected to be above 50% compared to prior outlook of 60% due to the timing of net worth in capital. For the remainder of 2025, our capital allocation priorities remain focused on organic growth investments managing capex as a percentage of revenue maintaining a strong balance sheet with liquidity and incremental cash generation to address the remaining february 2026 convertible notes at maturity we plan to use cash on hand to further reduce a portion of our outstanding debt while also using our revolving credit facility for the remaining balance at maturity and under our current share buyback authorization we are able to opportunistically repurchase shares. In addition, we continue to be open to M&A to further accelerate repay's position and growth potential. Over the next few months, I look forward to building my first 100 days as we begin the budget process for next year. We plan to provide details related to our 2026 outlook and capital allocation strategy on our next earnings call in early 2026. Until then, I'm eager to meet with all of our shareholders and analysts while continue to execute towards our updated Q4 outlook. Thank you. I'll now turn the call over to the operator to take your questions. Operator?

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from the line of Peter Heckman from DA Davidson. Please go ahead.

Hey, good afternoon. Thanks for taking the question. In terms of the free cash flow outlook, How do you see that trending into 2026? We've seen fairly strong or fairly high free cash flow conversion in some years and kind of off in some years. But I think your updated guidance is now greater than 50% for 2025. I guess the best guess is for 2026. How are you positioning that?

Hi, Pete. It's Rob. Thanks for the question. Yeah, so I can lay out how we're thinking about it for Q4, and we're going to give 2026 guidance in the next earnings call. But we're rolling, you know, we'd expect to be in the upper 50s in Q4, and it's really due to just working capital timing. We had a 67% free cash flow conversion in Q3, which was pretty strong. But as we talk about working capital and some of the margin compression that we laid out on this call, we're holding around the upper 50s. And I would model at that as our exit rate going into 26.

Okay, that's helpful. And then just can you remind us, it may be in the appendix of the slide deck, but just the specific political media spend headwind from the fourth quarter of last year?

Yeah, so the headwind we had in fourth quarter of last year was $4.6 million of gross profit for fourth quarter of last year. And on an annual basis, the political media was around $11.75 million for full 24. It's a profit basis. Got it.

All right.

I'll get back in the queue.

I appreciate it.

Yeah, no problem. Thank you. Ladies and gentlemen, if you wish to ask a question, please press stop and one. The next question comes from the line of Tim Chiodo from UBS. Please go ahead.

Great. Thank you for taking the question. I was hoping you could expand a little bit upon within the B2B business, the Visa Commercial Enhanced Data Program, the CEDT, that's been rolling out this year. Talk a little bit about the various data requirements, maybe how they differ from the prior Level 2, Level 3 requirements, what you think this might mean for overall B2B interchange, what are some of the puts and takes there. And, of course, I believe there's a slightly higher network fee associated with it. any of the context on your business and for the industry overall.

Hi, Tim. So good evening. How are you? This is John. And specifically, was your question on the B2B side, was it associated with the AP side or the AR side? You may have not been specific. I'll talk a little bit about that. It's a very detailed question as well, so I won't go so deep?

I guess on the AR side, it might be slightly lower interchange. And on the AP side, I'm sorry, it might be slightly lower as well. So I was just wondering, I mean, I guess both is the short answer, what it might be in terms of the...

So ultimately, it's level three and level two itself is going to be going away. And that's really talking about the enriched data coming out of the invoices coming really mostly from the accounting ERP systems, and there's several different requirements there to go through that, and those have to be passed through with the transaction to qualify for the level three rates. The level three rates themselves are a little bit better, but the level two rates, you have to now add some additional incremental pieces of data to that to get to qualify for the level three rates. We obviously are very aware of that. Visa, this is really associated with Visa, and those requirements are actually Visa is fine-tuning some of those things. It's uniquely, this will come out ultimately in the next spring, but they're doing testing with many of those things today. And so we're working through that. Our ability to pull data, our embedded solutions is a positive thing for us, meaning like we have the ability to be able to go and work with our ERP systems to achieve that. But it's a work in process for most everybody in the industry, as those are a few changes that have come about. And on the AP side, obviously, we have virtual cards that can be Visa or MasterCards. So we would look to optimize what's best in our favor on the AP side. In that case, we're receiving interchange on the AP side. So we would optimize what's the best rate for us there. you so much.

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. Once again, a reminder, ladies and gentlemen, if you wish to ask a question, please press star and one. We take the next question from the line of James Fawcett from Morgan Stanley. Please go ahead.

Hi, this is Shefali Tamascar on for James. Thanks for taking my question. Just on consumer payments, in the presentation you called out some pockets of consumer softness. Could you speak to what sub-verticals you're seeing this in most and what trends have looked like through early November, if possible?

Sure. So, good evening, Shefali. So, from an overall perspective on the consumer side we would consider you know a stable consumer on the marketplace obviously we're not the actual uh those are not actually our end customers our customers are businesses but we consider a stable consumer um and then softness wise we've talked about previously that we saw some softness in the in the automotive to use car uh piece of that we we think that's still relatively in the same position there. And that would be consistent with what we've seen previously, and we see that consistently the same now. Great.

That's helpful. And then you mentioned also being open to M&A as you look ahead to 2026. So I just wanted to hear about what potential targets look most interesting to you in terms of where you're seeing most sub-vertical momentum across business payments and consumer payments. I know you've previously called out, B2B being the more focused point for M&A, but curious how the pipeline looks today.

Sure. So a couple things. So as we mentioned earlier on the call, we actually bought back stock up to 8% of the stock in the July-August timeframes. And then we actually, as you heard as well. We retired $73.5 million of our February convertible debt. That's still a priority for us from a capital allocation perspective is addressing our February maturity, which we expect to do. But from an M&A pipeline perspective, we do see a healthy pipeline of some activity in the marketplace, and we are going to obviously always pay attention to opportunistically where that is. We see that both in consumer and B2B.

And just for clarification, We bought 3% in August, 8% year-to-date. Just wanted to give that clarification when we bought back stock.

Got it.

Thank you. We take the next question from the line of Alex Newman from Stephen's Inc. Please go ahead.

Thanks for taking the question. I just wanted to double-click on the nature of the networking capital. It's leading to the lower of the free cash flow conversion. Thank you.

Yeah, I mean, it's a hi. How are you doing, Alex? This is Rob. It's really just when we snap the line on working capital. And, you know, like I said, when we we've been generating pretty good free cash flow conversion at 67 percent in the quarter. And the guide slightly down from what we had in Q4 previously at 60% to above 50% is literally just timing of when we snapped the chalk line on working capital for the year, as well as the compression that we talked about for going up market and some of the pay modality mix that we saw that fell through on the GP is probably the biggest driver to where the guide now is above 50%. But we continue to... Go ahead.

No, sorry.

No, I was just going to finish that. You know, we continue to generate free cash flow, really good free cash flow conversion. Again, it was just really snapping the chalk line on when the working capital falls through.

Yeah, and then I know a couple quarters ago you announced a partnership with the Gateway in Canada. I was just wondering if you could update us on that partnership and how that's ramping.

We're still working through our implementation integrations there, so no major real update associated with that currently.

Thank you.

Ladies and gentlemen, if you wish to ask a question, please press star and 1.

A reminder, ladies and gentlemen, if you wish to ask a question, please press star and 1.

As there are no further questions, I would now have the conference over to the co-founder and Chief Executive Officer, John Morris, for his closing comments.

Thank you, everyone. I do have a slight correction on our supplier count that we mentioned earlier on the call. we're exiting Q3 with 524,000 suppliers a very good number for us we're excited about our growth rate there but as I close this out thank you for your time today we continue to make great progress in our strategic initiatives remaining focused on our returning to profitable normalized growth generating strong free cash flow and maintaining a strong balance sheet for financial flexibility thanks again for joining us thank you Ladies and Chairman, the conference of Repay Holdings Corporation has now concluded.

Thank you for your participation. You may now disconnect your lines.