Repay's Q1 2025 Earnings Call: Unpacking Contradictions in Strategy, Growth, and Consumer Trends

Strategic review and decision process, client losses and revenue growth, consumer payments growth expectations, investment strategy, and consumer spending environment are the key contradictions discussed in Repay's latest 2025Q1 earnings call.



Impact of Client Losses and Strategic Review:
- REPAY's reported gross profit and adjusted EBITDA declined approximately 5% and 7% year-over-year, respectively, due to previously communicated client losses during 2024.
- The strategic review process was concluded, and REPAY decided to focus on organic growth investments rather than considering alternative strategic outcomes.

Consumer Payments Segment Resilience:
- The consumer payments segment showed core consumer bookings growth year-over-year, indicating resilience despite macroeconomic uncertainties.
- The focus on robust payment capabilities and value-added services like Instant Funding attracted new clients and strengthened existing relationships.

Business Payments Segment Growth:
- Gross profit in the business payments segment increased approximately 7% year-over-year, excluding the impact of political media contributions, demonstrating 12% normalized growth.
- Growth was driven by core accounts payable business, new enterprise client signings, and expansion in software partnerships and supplier networks.

Free Cash Flow Conversion and Capital Allocation:
- Q1 free cash flow conversion was impacted by net working capital reversals and client losses, but excluding these, it would have been similar to Q1 2024's 38%.
- REPAY increased its share repurchase authorization to $75 million, focusing on capital allocation priorities like organic growth investments and managing share repurchase opportunities.