Repay (RPAY) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was $77.3 million, down 4% year-over-year, with gross profit and adjusted EBITDA declining due to client losses, one-time impacts, and reduced political media spending.

• Net loss widened to $8.2 million from $5.4 million in Q1 2024, reflecting higher interest expense and lower revenue.

• Free cash flow was negative at $8 million, impacted by $16 million in working capital timing and $3 million from client losses, with FCF conversion at (24%) versus 38% in Q1 2024.

• The strategic review process concluded with a renewed focus on organic growth, enhanced direct sales, expanded partnership channels, and increased share repurchase authorization to $75 million.

• Leadership transition announced as CFO Tim Murphy steps down, with Thomas Sullivan appointed as interim CFO.

Financial highlights

• Revenue: $77.3 million, down 4% year-over-year; gross profit: $58.7 million, down 5%; adjusted EBITDA: $33.2 million (43% margin), down 7%.

• Net loss: $8.2 million vs. $5.4 million loss in Q1 2024; loss per share: $(0.09) vs. $(0.06).

• Adjusted net income: $20.3 million, or $0.22 per share, down 9% year-over-year.

• Free cash flow: $(8.0) million, with conversion at (24%) due to one-time impacts.

• Gross profit margin stable at 76% year-over-year.

Outlook and guidance

• Sequential quarterly acceleration in normalized gross profit growth expected for FY 2025, with Q4 2025 growth projected at high single to low double digits.

• Free cash flow conversion expected to exceed 50% in Q2 and accelerate above 60% by year-end 2025, excluding one-time impacts.

• Adjusted EBITDA growth expected to mirror gross profit growth, with no incremental spend beyond current forecasts.

• Management expects cash flow from operations, current cash, and available borrowing capacity to be sufficient for operations and debt service for the next twelve months and five years.