mrdecember123
5 years ago
worth a re-read: cash is no longer king, folks!---Repay Holdings Sees Enduring Growth Amidst Shelter-In-Place Orders
The world still has plenty of room to transition to digital payments.
Nicholas Rossolillo
Nicholas Rossolillo
(TMFnrossolillo)
May 16, 2020 at 9:30AM
Author Bio
While initially getting clobbered with the rest of the stock market in March, Repay Holdings (NASDAQ:RPAY) stock has rallied and is up about 27% to-date in 2020. The economic lockdown is having a detrimental effect on the performance of many digital payment platforms, and this company's REPAY service is no exception.
However, the company serves industries that are behind the curve in adopting real-time digital transactions -- an area that has become more important than ever during the coronavirus crisis. Thus, the company reported a big uptick in sales in the first quarter of the year, and it thinks business is unlikely to reverse course as the crisis eases.
Q1 by the numbers
REPAY kicked off 2020 with a 58% year-over-year increase in card volume to $3.8 billion. Paired with a handful of acquisitions in the last year, that led to big growth in results, including a 20% increase in organic gross profit growth from its core platform (60% when including acquisitions).
Metric
Q1 2020
Q1 2019
Change
Revenue
$39.5 million
$23.0 million
71%
Gross profit
$28.7 million
$17.9 million
60%
Adjusted EBITDA
$17.4 million
$11.3 million
53%
Adjusted net income
$11.4 million
$8.90 million
28%
EBITDA = EARNINGS BEFORE INTEREST, TAX, DEPRECIATION, AND AMORTIZATION. DATA SOURCE: REPAY HOLDINGS.
While profits not increasing as much as revenue might turn some investors off, it's important to remember REPAY is very small. This is a growth story right now, and bigger bottom-line returns will follow later. As a small outfit operating in the huge digital payments industry, merger and acquisition activity is also still ongoing.
But for now, REPAY's performance in Q1 was pretty good considering the unprecedented situation in which the world now finds itself. According to CEO John Morris, performance in the period included some weakness in repayment activity toward the end of March as lenders and consumers adjusted to the economic shutdown and worked around shelter-in-place orders. That weakness reversed course and things picked up pace again in April.
A woman holding a smartphone and card.
IMAGE SOURCE: GETTY IMAGES.
Deepening reliance on real-time payments
And this is where REPAY could wind up playing a key role for its customers as the world puts the pieces back together post-coronavirus. While real-time digital transactions have grown commonplace in retail and consumer-centric industries (credit and debit card penetration across all industry sales is expected to reach 67% by 2022), card payments are well below average where REPAY plays. Auto and personal loan payments, mortgage payments, and business-to-business transactions are still heavily dominated by cash (physical or check) and ACH (a form of digital transaction, but not a real-time payment as it takes at least a day for transfer).
Taken collectively, there is potentially huge opportunity here. Loan and business-to-business transactions use instant digital payments less than half of the time -- some, like mortgages, only utilize instant digital transfer about 10% of the time. Taken collectively, the sandbox REPAY is working with transacts some $1.1 trillion a year. At an annual revenue run rate just shy of $11 billion, that leaves plenty of room for the small technologist to make some moves and pick up card payment activity.
Of course, there are reasons these industries have been slow on the uptake. Servicing debt with a credit card payment typically isn't allowed. Even when using a debit card to pay off a loan, a loan servicer has to deal with interchange fees for processing the transaction. Utilizing the now legacy ACH technology, though slow, avoids that interchange rate.
But even if ACH holds up, disrupting cash and check is still a big opportunity. The future was already moving away from cash, and now that a pandemic is in the equation, processing physical money went from an increasingly expensive but necessary model to one that possibly may completely fall out of favor with the general public. REPAY is also helping drive down the cost of real-time transactions, making the form of settlement more attractive to businesses. Add to the mix REPAY's Instant Funding service (used for loan funding and other payments to consumers) that taps Visa Direct and Mastercard's networks, and this looks like a well-rounded tech platform geared to help loan providers prepare for the future.
Of course, REPAY's success still depends on it being able to sustain growth, and though it has ample liquidity and positive cash generation to withstand the current crisis, debt is elevated at $241 million. Thus, further acquisitions could require issuing more stock to pay for them. As a reminder, issuance of new stock dilutes ownership of existing shareholders.
Nevertheless, with shares currently trading at 6.2 times trailing 12-month sales, Repay Holdings has a compelling story that deserves some attention as the dust settles from the coronavirus crisis.
mrdecember123
5 years ago
The "offering" did it------i really like this company, so now we will get an opportunity to ADD AT OUR LEISURE. As always the warrants are where the money opportunity really is. As soon as folks figure out this offering will end up being a positive, i will snap up what folks throw away. PPS target STILL for me in rpayw? 4.00+....and that will be a steal even there maybe. Remember, card companies like rpay and pays offer a safer bet than most----apolitical----not covid-frightening-------and stronger than most in uncertain economic times, too. GROWTH and STILL GROWING.---------------I believe RPAY will bounce back STRONG here soon at some point- erasing this dip----and leaving LONGS with a stronger company anyway.-------------Lower volume sell offs reveal weak hands exiting.I'll be adding to my rpayw going forward. Like i said, it moves proportionately better. GLTA
JohnCM
5 years ago
Is Repay Holdings (NASDAQ:RPAY) Using Too Much Debt?
Simply Wall St
March 10, 2020
Howard Marks put it nicely when he said that, rather than worrying about share price volatility, ‘The possibility of permanent loss is the risk I worry about… and every practical investor I know worries about. When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that Repay Holdings Corporation (NASDAQ:RPAY) does use debt in its business. But the more important question is: how much risk is that debt creating?
When Is Debt A Problem?
Generally speaking, debt only becomes a real problem when a company can’t easily pay it off, either by raising capital or with its own cash flow. If things get really bad, the lenders can take control of the business. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company’s debt levels is to consider its cash and debt together.
How Much Debt Does Repay Holdings Carry?
At the end of September 2019, Repay Holdings had US$204.2m of debt, up from US$94.2m a year ago. However, because it has a cash reserve of US$45.5m, its net debt is less, at about US$158.7m.
How Strong Is Repay Holdings’s Balance Sheet?
Repay Holdings had liabilities of US$34.9m due within 12 months and liabilities of US$265.9m due beyond that. Offsetting this, it had US$45.5m in cash and US$12.6m in receivables that were due within 12 months. So its liabilities total US$242.6m more than the combination of its cash and short-term receivables.
Since publicly traded Repay Holdings shares are worth a total of US$1.23b, it seems unlikely that this level of liabilities would be a major threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time.
In order to size up a company’s debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover). The advantage of this approach is that we take into account both the absolute quantum of debt (with net debt to EBITDA) and the actual interest expenses associated with that debt (with its interest cover ratio).
Repay Holdings’s debt is 3.8 times its EBITDA, and its EBIT cover its interest expense 3.0 times over. This suggests that while the debt levels are significant, we’d stop short of calling them problematic. The good news is that Repay Holdings grew its EBIT a smooth 46% over the last twelve months. Like the milk of human kindness that sort of growth increases resilience, making the company more capable of managing debt.
When analyzing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Repay Holdings’s ability to maintain a healthy balance sheet going forward.
Finally, a business needs free cash flow to pay off debt; accounting profits just don’t cut it. So it’s worth checking how much of that EBIT is backed by free cash flow. Over the most recent three years, Repay Holdings recorded free cash flow worth 75% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This cold hard cash means it can reduce its debt when it wants to.
Our View
The good news is that Repay Holdings’s demonstrated ability to grow its EBIT delights us like a fluffy puppy does a toddler. But we must concede we find its interest cover has the opposite effect. When we consider the range of factors above, it looks like Repay Holdings is pretty sensible with its use of debt. While that brings some risk, it can also enhance returns for shareholders. The balance sheet is clearly the area to focus on when you are analyzing debt. However, not all investment risk resides within the balance sheet – far from it. Consider risks, for instance. Every company has them, and we’ve spotted 1 warning sign for Repay Holdings you should know about.
If you’re interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.
JohnCM
5 years ago
Should You Buy REPAY (RPAY) Ahead of Earnings?
Zacks Equity Research
May 08, 2020
Investors are always looking for stocks that are poised to beat at earnings season and Repay Holdings Corporation (RPAY - Free Report) may be one such company. The firm has earnings coming up pretty soon, and events are shaping up quite nicely for their report.
That is because REPAY is seeing favorable earnings estimate revision activity as of late, which is generally a precursor to an earnings beat. After all, analysts raising estimates right before earnings — with the most up-to-date information possible — is a pretty good indicator of some favorable trends underneath the surface for RPAY in this report.
In fact, the Most Accurate Estimate for the current quarter is currently higher than the broader Zacks Consensus Estimate of 15 cents per share. This suggests that analysts have very recently bumped up their estimates for RPAY, giving the stock a Zacks Earnings ESP of +2.27% heading into earnings season.
Why is this Important?
A positive reading for the Zacks Earnings ESP has proven to be very powerful in producing both positive surprises, and outperforming the market. Our recent 10-year backtest shows that stocks that have a positive Earnings ESP and a Zacks Rank #3 (Hold) or better show a positive surprise nearly 70% of the time, and have returned over 28% on average in annual returns (see more Top Earnings ESP stocks here).
Given that RPAY has a Zacks Rank #2 (Buy) and an ESP in positive territory, investors might want to consider this stock ahead of earnings. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Clearly, recent earnings estimate revisions suggest that good things are ahead for REPAY, and that a beat might be in the cards for the upcoming report.
JohnCM
5 years ago
Repay partners with TurnKey Lender
Apr. 8, 2020
By: Mohit Manghnani, SA News Editor
Repay (NASDAQ:RPAY) is tying up with cloud-based lending software provider TurnKey Lender, which provides system for evaluating borrowers, decision-making support, and online-lending process automation serving U.S. and Canadian marketplace.
This integration will enable credit unions, finance companies and lenders to fund loans 24/7 and accept loan payments via card and ACH directly through the TurnKey Lender platform.
"The partnership will streamline the onboarding process for new companies on both TurnKey Lender and REPAY systems by accelerating legal verification and technical connection procedures for new customers who want to use online payment processing," said Chief Business Development Officer Elena Ionenko.
ebrie014
5 years ago
Great earnings and increased Guidance!
Repay Holdings Corporation (NASDAQ: RPAY) (“REPAY” or the “Company”), a leading provider of vertically-integrated payment solutions, today reported financial results for its third quarter and nine months ended September 30, 2019.
“We are proud of our third quarter results, which included positive contributions from our TriSource acquisition, resulting in year-over-year growth in card payment volume and gross profit of 40% and 39%, respectively,” said John Morris, CEO of REPAY. “We are also thrilled to have recently entered the B2B payments space with the previously-announced acquisition of APS Payments.”
Three Months Ended September 30, 2019 Highlights
Card payment volume was $2.6 billion, an increase of 40% over the third quarter of 2018
Total revenue on a combined basis1 was $41.1 million, an increase of 27% over the third quarter of 2018
Gross profit was $19.4 million, an increase of 39% over the third quarter of 2018
Pro forma net loss1 was ($41.4) million, as compared to net income of $3.7 million in the third quarter 2018
Adjusted EBITDA was $11.9 million, an increase of 29% over the third quarter of 2018
Adjusted Net Income was $10.4 million, an increase of 49% over the third quarter of 2018
Adjusted Net Income per share was $0.18
Nine Months Ended September 30, 2019 Highlights
Card payment volume was $7.3 billion, an increase of 33% over the first three quarters of 2018
Total revenue on a combined basis was $116.5 million, an increase of 21% over the first three quarters of 2018
Gross profit was $54.4 million, an increase of 34% over the first three quarters of 2018
Pro forma net loss was ($32.4) million, as compared to net income of $8.4 million over the first three quarters of 2018
Adjusted EBITDA was $33.7 million, an increase of 24% over the first three quarters of 2018
Adjusted Net Income was $27.1 million, an increase of 31% over the first three quarters of 2018
Adjusted Net Income per share was $0.47
2019 Outlook
The addition of APS Payments is expected to contribute the following to the remainder of 2019:
$500 million in card payment volume
$3.5 million in total revenue
$2.8 million in gross profit
$1.5 million in Adjusted EBITDA
REPAY now expects the below financial results for full year 2019, which reflects expected contributions from APS Payments. The difference between the Previous Guidance and the Updated Guidance is solely related to the contributions from APS.
Full Year 2019 Outlook
Previous Guidance / Updated Guidance
Card Payment Volume
$9.6 - 9.75 billion / $10.1 – 10.25 billion
Total Revenue
$157.0 - 162.0 million / $160.5 – 165.5 million
Gross Profit
$74.0 - 76.0 million / $76.8 – 78.8 million
Adjusted EBITDA
$45.3 - 46.8 million / $46.8 – 48.3 million
dinogreeves
5 years ago
This one was SPAC deal, which is blank check company for a reverse merger with a private company. RPAY was Thunder Bridge Resources then they reversed merged with Repay, their peers are Worldpay, Square, and PayPal. This company can grow in leaps and bounds, it should have spiked when the reverse merger was complete, but the shorts have a handle on it so far, it won't too long, with overall market being down it doesn't help it Nasdaq stock too. I am sitting with 3000 shares at 10.50 average. This company will grow tremendously if the market cooperates.
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