Repay Holdings 2025 Q1 Earnings Misses Targets with Net Loss Widening 52.2%

Repay Holdings (RPAY) reported its fiscal 2025 Q1 earnings on May 12th, 2025. The company experienced a 4.2% decline in total revenue, recording $77.33 million compared to $80.72 million in the same quarter the previous year. Despite challenges, the company has expressed confidence in its growth strategies. However, results fell short of expectations, and the company adjusted its guidance in line with current performance trends, aiming for high single-digit to low double-digit growth in the fourth quarter.

Revenue
Repay Holdings' revenue for Q1 2025 saw a decrease, reaching $77.33 million, down from $80.72 million in Q1 2024. The direct relationships segment generated $74.43 million, while the indirect relationships segment added $2.90 million, contributing to the total revenue.

Earnings/Net Income
The company's losses deepened, with earnings per share dropping to a $0.09 loss from $0.06 in Q1 2024, marking a 50% wider loss. Net loss increased by 52.2%, reaching $-8.17 million compared to $-5.37 million in the previous year. This indicates a challenging financial quarter for Repay Holdings.

Post-Earnings Price Action Review
Investors employing a post-earnings strategy of acquiring Repay Holdings shares following a revenue increase have experienced significant losses over the past five years. The strategy has resulted in an 82.61% decline, starkly underperforming against a benchmark return of 95.08%, creating an excess return deficit of 177.68%. The Sharpe ratio of -0.57 highlights the poor risk-adjusted returns, and the strategy's maximum drawdown of 88.53% underscores its high-risk nature and substantial losses. This analysis suggests that such a strategy may not be advisable moving forward.

CEO Commentary
"REPAY is focused on executing on core growth, which continues to reinforce the ongoing secular tailwinds and resiliency of our business model," said John Morris, CEO of REPAY. He emphasized a 12% year-over-year growth in the Business Payments segment's normalized gross profit, driven by the core accounts payable services.

Guidance
For fiscal year 2025, Repay Holdings anticipates a sequential quarterly acceleration of normalized gross profit growth, aiming for a high single-digit to low double-digit growth rate by the fourth quarter. Free cash flow conversion is expected to exceed 50% in Q2 and accelerate above 60% by Q4 2025.

Additional News
Repay Holdings announced an increase in its share repurchase program, raising the authorization from $50 million to $75 million. This decision reflects the Board's confidence in the company's growth and free cash flow generation. In other news, the company is undergoing a transition in its Chief Financial Officer role, with Tim Murphy stepping down to pursue other opportunities. Additionally, the Board concluded its strategic review process, aiming to focus on delivering growth and value for shareholders in 2025.