Repay (RPAY)2025-03-03 21:11Revenue Segmentation - The Consumer Payments segment represented approximately 83% of total revenue for the year ended December 31, 2024[32]. - The Business Payments segment accounted for approximately 17% of total revenue for the year ended December 31, 2024[33]. - The top 10 clients contributed approximately 20% and 18% of total gross profit for the years ended December 31, 2024 and 2023, respectively[28]. Chargeback and Fraud Management - The chargeback rate was under 1% of total payment volume for the year ended December 31, 2024[51]. - The chargeback rate for the year ended December 31, 2024, was less than 1% of payment volume, indicating effective fraud management[138]. - The company is exposed to risks associated with fraudulent transactions, which could lead to increased chargeback liabilities[136]. Acquisitions and Market Expansion - The company has successfully acquired eleven businesses from January 1, 2016 through December 31, 2024[38]. - The company has completed eleven acquisitions from January 1, 2016, to December 31, 2024, focusing on integrated payments companies to expand its market presence and product offerings[62]. - The acquisition of Sigma Payment Solutions on January 1, 2016, marked the company's entry into the automotive finance space, enhancing its integration with automotive finance software platforms[63]. - The acquisition of PaidSuite on September 28, 2017, accelerated growth into the receivable management space through client and software integration partner relationships[64]. - The acquisition of TriSource Solutions on August 14, 2019, provided further control over the transaction processing ecosystem and improved product delivery capabilities[66]. - The company intends to expand into new verticals where it currently has limited operations or does not operate[35]. - The company is focused on expanding into new vertical markets and increasing market penetration through acquisitions and partnerships[154]. Operational Efficiency and Technology - The company plans to continue driving operational efficiencies to process larger payment volumes without significant increases in personnel and operating expenses[37]. - The company aims to strengthen and extend its solution portfolio through continued innovation and investment in technology capabilities[36]. - The electronic payments market is characterized by rapid technological evolution, and the company must continuously develop new products to remain competitive[116]. - The company’s future growth depends on its ability to adapt technology to meet the needs of new vertical markets, which may require additional resources[155]. - There is a risk that the company may not successfully implement new technologies or upgrades, which could impact operations and financial results[144]. Competition and Market Risks - The company is facing significant competition from various payment processing companies, including ACI Worldwide and traditional merchant acquirers like Bank of America Merchant Services[58]. - There is a notable digital shift in the industry, with a transition from cash and check to electronic payments, accelerated by changes in consumer behavior due to the COVID-19 pandemic[59]. - The company faces risks from industry consolidation within its vertical markets, which may limit market opportunities and demand[121]. - Sales efforts to large enterprises involve long and unpredictable cycles, requiring significant time and expense[123]. - Failure to adapt to changes in consumer behavior and emerging payment methods could lead to a loss of revenue[117]. Compliance and Regulatory Environment - The Dodd-Frank Act has imposed regulations on debit interchange transaction fees, affecting the company's cost structure and operational flexibility[75]. - The company is subject to various federal and state data privacy and information security laws, requiring continuous monitoring and compliance efforts[78]. - The company may act as a Business Associate under HIPAA regulations, necessitating compliance with privacy and security rules regarding Protected Health Information[80]. - The company faces potential regulatory enforcement proceedings and monetary liabilities if it fails to comply with laws prohibiting unfair or deceptive acts[183]. - The regulatory environment for interchange fees has intensified, potentially impacting transaction volumes and pricing[171]. - The company may incur significant compliance costs as it expands into new jurisdictions, such as Canada[176]. - The company is exposed to risks associated with the regulatory environment affecting its clients, particularly in consumer lending[177]. - The company must maintain effective internal controls to provide reliable financial reports and prevent fraud, with potential material weaknesses identified[188]. Employee Engagement and Culture - The company employed approximately 465 full-time employees as of December 31, 2024[95]. - 82% of employees reported that the company is a great place to work in the 2024 engagement survey[97]. - The company has been certified as a Great Place to Work® for the last eight consecutive years[97]. - The company offers a comprehensive benefits package, including 100% coverage of employee healthcare premiums[101]. - The Employee Stock Purchase Plan (ESPP) allows employees to become shareholders at a discounted price[101]. - The company emphasizes a culture of rewards and recognition, providing multiple opportunities for performance-based awards[99]. - The company has a dedicated human resources team focused on attracting, developing, and retaining top talent[98]. - The company provides tuition assistance and reimbursement for certain pre-approved continuing education programs[101]. Financial Position and Debt Management - The company increased its senior secured credit facilities to a 440.0 million in aggregate principal amount of 0.00% convertible senior notes due 2026[191]. - On July 8, 2024, the company repurchased 287.5 million in aggregate principal amount of 2.875% convertible senior notes due 2029[191]. - The company’s ability to service its debt obligations depends on future performance, which is subject to various external factors[191]. - The conditional conversion feature of the 2026 and 2029 Notes may adversely affect the company's liquidity if triggered[198][199]. - Payments under the Tax Receivable Agreement may exceed actual tax benefits realized, potentially impairing the company's financial condition[211]. - The company may incur additional indebtedness to finance payments under the Tax Receivable Agreement if cash resources are insufficient[211]. Stockholder Rights and Governance - The company has anti-takeover provisions that could limit stockholders' ability to take certain actions and may depress the trading price of its Class A common stock[220]. - Certain stockholders holding 15% or more of the outstanding capital stock are prohibited from engaging in business combination transactions for a specified period unless conditions are met[221]. - The board of directors has the ability to issue preferred stock without stockholder approval, which could significantly dilute the ownership of a hostile acquirer[221]. - Stockholder action by written consent is prohibited, requiring actions to be taken at annual or special meetings, potentially delaying proposals[221]. - Special meetings of stockholders can only be called by the board of directors, chairman, or CEO, which may delay stockholder proposals[221]. - The board of directors can amend bylaws to prevent unsolicited takeovers, inhibiting acquirers from facilitating takeover attempts[221]. - Exclusive forum provisions designate Delaware courts for disputes, potentially limiting stockholders' choice of judicial forum[222]. - These exclusive-forum provisions may discourage lawsuits against the company or its directors, potentially impacting operational results[223].