Repay (RPAY) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q2 2022, the company reported card payment volume growth of 34%, total revenue growth of 39%, and gross profit growth of 42% [7][23] - Organic gross profit growth for the quarter was 10% [7][24] - Adjusted net income for Q2 was $16.1 million, or$ 0.17 per share, with adjusted EBITDA of $27.6 million, reflecting a 35% increase year-over-year [25] Business Line Data and Key Metrics Changes - The B2B payments business showed strength, driven by the digitization of business payments and the need for efficiencies [7] - Instant Funding product volume grew approximately 50% compared to Q2 2021 [10] - The consumer payments side saw a record quarter with 225 credit union clients, indicating growth in that segment [8] Market Data and Key Metrics Changes - The personal loan market is experiencing mixed signals, with lenders tightening credit standards due to increased delinquencies [11][32] - Auto lending demand remains strong, but the market is supply constrained, affecting affordability [12] - The company expects the recovery in the personal loan market to take longer than initially anticipated [11] Company Strategy and Development Direction - The company aims for mid-teens organic growth in 2023, supported by a diverse underpenetrated market and a large distribution network [18] - Focus on sustainable growth with strong unit economics, optimizing processing infrastructure to reduce costs [20] - The company is actively pursuing strategic M&A opportunities to enhance scale and market competitiveness [22][81] Management's Comments on Operating Environment and Future Outlook - Management noted that while the macro environment is uncertain, they expect strong demand for their payment solutions to continue [30] - The company anticipates growth in the B2B segment, particularly in the AP Media vertical, driven by political ad spending [16][30] - Management expressed confidence in navigating potential downturns, citing the resilience of their medium to enterprise customer base [58][96] Other Important Information - The company has$ 60 million in cash and access to $165 million of undrawn revolver capacity, providing a total liquidity of$ 225 million [27] - The share repurchase program has been implemented, indicating confidence in the company's valuation [22][82] Q&A Session Summary Question: Details on personal loan vertical - Management indicated strong demand but noted lenders are tightening credit standards due to increased delinquencies [32] Question: Organic growth expectations for next year - The company expects to exit 2022 with about 20% organic growth, with B2B expected to grow north of 25% [33] Question: Trends in auto loans - Management noted long-duration portfolios in auto loans are less impacted by delinquencies compared to personal loans [37] Question: Instant Funding growth trajectory - Instant Funding is growing faster than originations, with a shift towards digital transactions [44] Question: M&A appetite and pipeline - The company has a healthy pipeline for M&A opportunities and is being prudent with capital allocation [81] Question: B2B business growth strategy - The company plans to expand its supplier network and continue investing in product and technology for B2B growth [89]