REPAY Announces Partnership with Remitter

ATLANTA–(BUSINESS WIRE)–Mar. 26, 2020– Repay Holdings Corporation, (NASDAQ: RPAY) (“REPAY”) a leading provider of vertically-integrated payment solutions, today announced its partnership with Remitter USA Inc., a market leading white-labeled SMS and email communications platform, powered by AI and used by providers in the financial services industry to improve payments recovery performance.

The integration between REPAY and Remitter will further streamline and automate recovery efforts for creditors in the financial services industry by removing the friction and communication gaps associated with the recovery process, engaging consumers with highly personalized, actionable text and emails to facilitate swift collection of missed or late payments. Remitter’s mobile-first technology has proven to significantly increase collections, shorten time-to-payment, reduce costs in a collection environment and improve overall consumer experiences.

Deployed in multiple global markets, Remitter delivers a world-class mobile communications and recovery experience that intelligently adapts to consumers, sending text and emails on the optimum day and time, in the right language and automating follow-up based on individual consumer behavior and natural language processing (NLP). REPAY’s integrated payment processing technology will enable Remitter users in receivables management to seamlessly accept credit and debit cards as well as ACH payments 24/7 through a customer-branded online payment portal.

“As leaders in the payments space, our clients look to us for innovative ways to deliver enhanced payment experiences to their customers. By pairing the deep industry experience and capabilities of REPAY and Remitter, we feel we can bring a new level of AI-driven personalization and predictability to payments – ultimately empowering integrated clients with a distinct competitive advantage in the marketplace,” said Susan Perlmutter, Chief Revenue Officer of REPAY.

“REPAY’s broad range of payment capabilities complements Remitter’s AI-enabled payment recovery platform, which will provide our clients the ability to quickly test and deploy this integrated solution for immediate benefits. Using REPAY and Remitter together proves that you can measurably improve recovery performance while also enriching the customer experience and strengthening brand affinity, so we are excited to bring this to market in with such a strong partner and industry leader,” said Simon Scalzo, Remitter’s Founder.

About REPAY

REPAY provides integrated payment processing solutions to verticals that have specific transaction processing needs. REPAY’s proprietary, integrated payment technology platform reduces the complexity of electronic payments for merchants, while enhancing the overall experience for consumers.

About Remitter USA Inc.

Remitter is an innovative communication (text and email) platform using artificial intelligence to deliver world-class, adaptive recovery experiences to creditors’ customers in financial services, utilities, telco and healthcare. At the core of Remitter’s success is its proven ability to lift recovery performance using predictive and heuristic behavioral data to provide consumers with personalized experiences.

Investor Relations Contact for REPAY:
repayIR@icrinc.com

Media Relations Contact for REPAY:
Kristen Hoyman
khoyman@repay.com

Media Relations Contact for Remitter:
Dee Gligorevic
dee@remitter.com

Source: Repay Holdings Corporation v

Personal Loan Demand and COVID-19. What Now?

Personal Loan Demand and COVID-19
Our appetite for borrowing only continues to grow, Coronavirus or not.

Debt levels are rising despite what has been eleven years of favorable economic performance. That was before the Coronavirus outbreak. Borrowing demand, however, is likely to remain strong, if not just a little delayed, despite the forced global slowdown.

Credit cards are a big piece of that debt. After home, car, and student loans, credit cards are the next biggest debt category (see the blue in the chart below). With rising credit card balances comes more interest in debt consolidation loans provided by fintech lenders like Lending Club, Prosper, or SoFi.

Debt Share by Product Type and Age_New York Fed

 The New York Fed Report on Household Debt 2019

Based on an Experian study from 2019, The Motley Fool reports personal loan debt is the fastest-growing type of debt. Personal loan debt growth of 12% is double the growth of the next biggest category, credit card debt. The average borrower has a $16,000 loan balance.

Total Personal Loan Balances in the U.S._ExperianExperian

The need for personal loans and debt consolidation will continue to exist, virus or not. In fact, the demand could grow due to the new economic environment.

Lending Club’s Growth Numbers

Lending Club is one of the lending leaders. Since they are publicly traded, we can get a good snapshot of the industry by looking at their numbers. From their last quarterly earnings report (slide 13), we can see the growth of demand for personal loans quarterly and a year over year (YoY) comparison to 2018.

Lending Club Quarterly Loan Originations

The loan origination numbers here are in the millions of dollars. Lending Club is averaging between $2.7 billion and $3.35 billion in originations per quarter. The total for 2019 is a little over $12 billion. Not only is that a lot of loans, but the YoY growth is double-digit in four of the past five quarters. People’s appetite for borrowing isn’t slowing down.

And then there’s the virus.

Effects of the Coronavirus

Many U.S. cities are on some form of quarantine or lockdown, meaning people are going out less. As we write this, bars and restaurants are closing or converting to carry-out only service in cities, both big and small. But loans and other debts must continue to be paid unless a temporary suspension of payments goes through Congress.

And while the appetite for borrowing hasn’t changed yet, people’s behaviors have. Those used to going out and making a payment at a bank branch or in some other point-of-sale manner are now staying home. They need to find different ways to accomplish the same tasks.

On the bright side, the internet and digital payment options continue to function properly. If they were going to overload and malfunction, as we’ve seen with the Robinhood stock trading app, we would have seen and heard of it by now.

Digital payment options like online, text or SMS, and interactive voice response ensure customers can make payments virtually, and businesses can get paid. Companies with more available and flexible payment options will be rewarded during this unprecedented time. Your flexibility in this area will increase your cash flow.

Despite having to put new policies in place (like working from home, shorter hours, reduced staff, etc.), you have a business to run. You need to get paid. As a lender, many people are relying on you during this time.

  • Your employees need to get paid, so their lives aren’t disrupted too much more than they already are.
  • Your future borrowers are relying on you for much-needed funds.
  • While perhaps delayed, many of your borrowers are still getting paychecks and want to pay what they have promised. Many are hoping to maintain or improve their credit standing.
  • Your shareholders are looking for smart, careful management of their investments during a difficult time.

Make it easy for borrowers, especially now, by giving them as many options as possible.

As behaviors change due to the virus, there’s a good chance people will be spending less. But that will probably have little effect on the demand for personal loans, especially for debt consolidation. Odds are demand will stay strong. When things normalize, people will want to borrow. Flexible payment systems are one way, along with solid underwriting and portfolio management, that you can continue to originate quality loans and keep your business running smoothly.

REPAY Reports Fourth Quarter and Full Year 2019 Financial Results

ATLANTA–(BUSINESS WIRE)– Repay Holdings Corporation (NASDAQ: RPAY) (“REPAY” or the “Company”), a leading provider of vertically-integrated payment solutions, today reported financial results for its fourth quarter and full year ended December 31, 2019.

“2019 was a milestone year for REPAY. We completed our business combination with Thunder Bridge, which resulted in REPAY becoming a publicly traded company. We also announced two strategic acquisitions – TriSource Solutions, which increased our back end capabilities, and APS Payments, which brought us into the B2B vertical and increased our total addressable market by more than one trillion dollars. Including the impact of these acquisitions, we experienced year-over-year growth in card payment volume and gross profit of 44% and 43%, respectively. Organically, we also had a very productive year reporting 29% organic gross profit growth compared to 2018,” said John Morris, CEO of REPAY. “2020 is shaping up to be another great year for the Company. With the addition of Ventanex, which brings us significant growth opportunities in the mortgage servicing and B2B healthcare markets, we now have a total annual projected payment volume opportunity of $2.3 trillion. Our leading platform, coupled with this attractive market opportunity, positions us well for robust growth and profitability.”

Three Months Ended December 31, 2019 Highlights

  • Card payment volume was $3.4 billion, an increase of 72% over the fourth quarter of 2018
  • Total revenue including the impact of the new revenue recognition standard was $33.6 million
  • Total revenue excluding the impact of the new revenue recognition standard was $49.3 million, an increase of 45% over the fourth quarter of 2018
  • Gross profit was $24.3 million, an increase of 67% over the fourth quarter of 2018
  • Pro forma net loss1 was ($7.5) million, as compared to net income of $2.1 million in the fourth quarter 2018
  • Adjusted EBITDA was $14.7 million, an increase of 52% over the fourth quarter of 2018
  • Adjusted Net Income was $12.3 million, an increase of 70% over the fourth quarter of 2018
  • Adjusted Net Income per share was $0.20

Twelve Months Ended December 31, 2019 Highlights

  • Card payment volume was $10.7 billion, an increase of 44% over the full year of 2018
  • Total revenue on a combined basis1 including the impact of the new revenue recognition standard was $104.6 million
  • Total revenue on a combined basis1 excluding the impact of the new revenue recognition standard was $165.8 million, an increase of 28% over the full year 2018
  • Gross profit was $78.7 million, an increase of 43% over the full year of 2018
  • Pro forma net loss was ($39.9) million, as compared to net income of $10.5 million for the full year of 2018
  • Adjusted EBITDA was $48.4 million, an increase of 32% over the full year of 2018
  • Adjusted Net Income was $39.5 million, an increase of 41% over the full year of 2018
  • Adjusted Net Income per share was $0.66

1 Please refer to “Basis of Presentation” below for an explanation of the presentation of this information.

Gross profit for 2019 represents total revenue, including the impact of the adoption of ASC 606, less other costs of services. Gross profit for 2018 represents total revenue, without the impact of the adoption of ASC 606, less interchange, network, other fees and other cost of services. The adoption of ASC 606 had no impact on gross profit. Adjusted EBITDA is a non-GAAP financial measure that represents net income (loss) adjusted for interest expense, tax expense, depreciation and amortization and certain other non-cash charges and non-recurring items. Adjusted Net Income is a non-GAAP financial measure that represents net income (loss) adjusted for amortization of acquisition-related intangibles and certain other non-cash charges and non-recurring items. Adjusted Net Income per share is a non-GAAP financial measure that represents Adjusted Net Income divided by the weighted average number of shares of Class A common stock outstanding (on as-converted basis) for the three months ended December 31, 2019, and for the Successor period from July 11, 2019 to December 31, 2019 (excluding certain shares that were subject to forfeiture). See “Non-GAAP Financial Measures” and the reconciliations of Adjusted EBITDA and Adjusted Net Income to their most comparable GAAP measure provided below for additional information.

Business Combination

The Company was formed upon closing of the merger (the “Business Combination”) of Hawk Parent Holdings LLC (together with Repay Holdings, LLC and its other subsidiaries, “Hawk Parent”) with a subsidiary of Thunder Bridge Acquisition, Ltd, (“Thunder Bridge”), a special purpose acquisition company, on July 11, 2019 (the “Closing Date”). On the Closing Date, Thunder Bridge changed its name to Repay Holdings Corporation.

Basis of Presentation

As a result of the Business Combination, the Company was identified as the acquirer for accounting purposes, and Hawk Parent, which owned the business conducted prior to the closing of the Business Combination, is the acquiree and accounting “Predecessor.” The Company is the “Successor” for periods after the Closing Date, which includes consolidation of the Hawk Parent business subsequent to the Closing Date. The Company’s financial statement presentation reflects the Hawk Parent business as the “Predecessor” for periods through the Closing Date. Where the Company discusses results for the twelve month period ended December 31, 2019, we are referring to the combined results of the Predecessor for the periods from January 1, 2019 through July 10, 2019 and the Successor for the period from the Closing Date through December 31, 2019. The combined basis of presentation reflects a simple arithmetic combination of the Predecessor and Successor periods. The acquisition was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of net assets acquired. As a result of the application of the acquisition method of accounting as of the effective time of the Business Combination, the financial statements for the Predecessor period and for the Successor period are presented on different bases. When information is noted as being “pro forma” in this press release, it means that the financial statements were adjusted to remove the effects of purchase accounting adjustments related to the Business Combination. The historical financial information of Thunder Bridge prior to the Business Combination has not been reflected in the Predecessor period financial statements.

Impact of Adoption of Topic 606

On January 1, 2019, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) and related cost capitalization guidance, using the modified retrospective transition method. As such, the Company is not required to restate comparative financial information prior to the adoption of ASC 606 and, therefore, such information for the three months and year ended December 31, 2018 continues to be reported under FASB ASC Topic 605, Revenue Recognition (“ASC 605”). The adoption of ASC 606 did not impact the Company’s financial position, and only resulted in presentation changes in our statements of income, with revenues and expenses presented net of interchange, network and other fees. For the three months ended December 31, 2019, the adoption of ASC 606 reduced both revenue and operating expenses by $15.6 million and had no impact on operating income. The adoption of ASC 606 did not have any impact on net income or net income per share (basic and diluted) for the three months ended December 31, 2019. For the year ended December 31, 2019, the adoption of ASC 606 reduced both revenue and operating expenses by $61.2 million and had no impact on operating income. The adoption of ASC 606 did not have any impact on net income for the year ended December 31, 2019. A comparison of the current presentation under ASC 606 to the prior presentation under ASC 605 is provided below for the three months and the year ended December 31, 2019:

Three months ended December 31, 2019 (Successor)

(in $ thousands)

As Reported
under ASC 606

Impact of ASC
606

Excluding Impact
of Adoption of
ASC 606

Revenue

$33,634

($15,618)

$49,252

Operating expenses

47,099

(15,618)

62,717

Income (loss) from operations

($13,465)

$0

($13,465)

Twelve months ended December 31, 2019

July 11, 2019 to December 31, 2019
(Successor)

January 1, 2019 to July 10, 2019
(Predecessor)

(in $ thousands)

As
Reported
under ASC
606

Impact of
ASC 606

Excluding
Impact of
Adoption of
ASC 606

As
Reported
under ASC
606

Impact of
ASC 606

Excluding
Impact of
Adoption of
ASC 606

2019
Combined
Including
Impact of
Adoption of
ASC 606

2019
Combined
Excluding
Impact of
Adoption of
ASC 606

Revenue

$57,560

($28,847)

$86,407

$47,043

($32,347)

$79,390

$104,603

$165,797

Operating expenses

85,172

(28,847)

114,019

67,640

(32,347)

99,987

152,812

214,006

Income (loss) from operations

($27,611)

$0

($27,611)

($20,597)

$0

($20,597)

($48,209)

($48,209)

Subsequent Events

On February 10, 2020, REPAY announced the acquisition of Ventanex for up to $50 million, which includes up to a $14 million performance-based earnout. The closing of the acquisition was financed with a combination of cash on hand and new borrowings under REPAY’s existing credit facility. As part of the financing for the transaction, REPAY entered into an agreement with Truist Bank (formerly SunTrust Bank) and other members of its existing bank group to amend and upsize its previous $230 million credit facility to $345 million to provide additional capacity for growth.

On February 21, 2020, the Company entered into a swap transaction with Regions Bank. On a quarterly basis, commencing on March 31, 2020 up to and including the termination date of February 10, 2025, the Company will make fixed payments on the beginning notional amount of $30 million. On a quarterly basis, commencing on February 21, 2020 up to and including the termination date of February 10, 2025, the counterparty will make floating rate payments based on the 3 month LIBOR on the beginning notional amount of $30 million.

2020 Outlook

REPAY expects the below financial results for full year 2020, which reflects expected contributions from Ventanex.

Full Year 2020 Outlook

Card Payment Volume

$15.5 – 16.0 billion

Total Revenue

$155.0 – 165.0 million

Gross Profit

$115.0 – 120.0 million

Adjusted EBITDA

$66.0 – 70.0 million

Revenue information for the full year 2020 outlook is presented in accordance with ASC 606. In addition, REPAY does not provide quantitative reconciliation of forward-looking, non-GAAP financial measures such as forecasted 2020 Adjusted EBITDA to the most directly comparable GAAP financial measure because it is difficult to reliably predict or estimate the relevant components without unreasonable effort due to future uncertainties that may potentially have significant impact on such calculations, and providing them may imply a degree of precision that would be confusing or potentially misleading.

Conference Call

REPAY will host a conference call to discuss fourth quarter and full year 2019 financial results today at 5:00 pm ET. Hosting the call will be John Morris, CEO, and Tim Murphy, CFO. The conference call can be accessed live over the phone by dialing (877) 407-3982, or for international callers (201) 493-6780. A replay will be available one hour after the call and can be accessed by dialing 844-512-2921 or (412) 317-6671 for international callers; the conference ID is 13699265. The call will be webcast live from REPAY’s investor relations website and the replay will be available at https://investors.repay.com/investor-relations.

Non-GAAP Financial Measures

This communication includes certain non-GAAP financial measures that REPAY’s management uses to evaluate its operating business, measure its performance and make strategic decisions. Adjusted EBITDA is a non-GAAP financial measure that represents net income prior to interest expense, tax expense, depreciation and amortization, as adjusted to add back certain non-cash and non-recurring charges, such as loss on extinguishment of debt, non-cash change in fair value of contingent consideration, share-based compensation charges, transaction expenses, management fees, legacy commission related charges, employee recruiting costs, loss on disposition of property and equipment, other taxes, strategic initiative related costs and other non-recurring charges. Adjusted Net Income is a non-GAAP financial measure that represents net income prior to amortization of acquisition-related intangibles, as adjusted to add back certain non-cash and non-recurring charges, such as loss on extinguishment of debt, non-cash change in fair value of contingent consideration, transaction expenses, share-based compensation expense, management fees, legacy commission related charges, employee recruiting costs, loss on disposition of property and equipment, strategic initiative related costs and other non-recurring charges. Adjusted Net Income is adjusted to exclude amortization of all acquisition-related intangibles as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Management believes that the adjustment of acquisition-related intangible amortization supplements GAAP financial measures because it allows for greater comparability of operating performance. Although we exclude amortization from acquisition-related intangibles from our non-GAAP expenses, management believes that it is important for investors to understand that such intangibles were recorded as part of purchase accounting and contribute to revenue generation. Adjusted Net Income per share is a non-GAAP financial measure that represents Adjusted Net Income divided by the weighted average number of shares of Class A common stock outstanding (on as-converted basis) for the three months ended December 31, 2019, and for the Successor period from July 11, 2019 to December 31, 2019 (excluding certain shares that were subject to forfeiture). Organic gross profit growth is a non-GAAP financial measure that represents the year-on-year gross profit growth that excludes gross profit attributed to acquisitions made in 2019. REPAY believes that Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per share and organic gross profit growth provide useful information to investors and others in understanding and evaluating its operating results in the same manner as management. However, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per share and organic gross profit growth are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income, operating profit, or any other operating performance measure calculated in accordance with GAAP. Using these non-GAAP financial measures to analyze REPAY’s business has material limitations because the calculations are based on the subjective determination of management regarding the nature and classification of events and circumstances that investors may find significant. In addition, although other companies in REPAY’s industry may report measures titled Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per share, organic gross profit growth or similar measures, such non-GAAP financial measures may be calculated differently from how REPAY calculates its non-GAAP financial measures, which reduces their overall usefulness as comparative measures. Because of these limitations, you should consider Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per share and organic gross profit growth alongside other financial performance measures, including net income and REPAY’s other financial results presented in accordance with GAAP. You should be aware of additional limitations with respect to Adjusted Net Income per share because the GAAP presentation of net loss per share is only reflected for the Successor period.

Forward-Looking Statements

This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, REPAY’s plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as “guidance,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “projection,” “outlook” or words of similar meaning. These forward-looking statements include, but are not limited to, REPAY’s full year 2020 outlook and statements regarding REPAY’s market and growth opportunities. Such forward-looking statements are based upon the current beliefs and expectations of REPAY’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control.

In addition to factors previously disclosed in prior reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: a delay or failure to integrate and realize the benefits of the TriSource acquisition and any difficulties associated with operating in the back-end processing markets in which REPAY does not have any experience; a delay or failure to integrate and realize the benefits of the APS Payments acquisition and any difficulties associated with marketing products and services in the B2B vertical market in which REPAY does not have any experience; a delay or failure to integrate and realize the benefits of the Ventanex acquisition and any difficulties associated with marketing products and services in the mortgage or B2B healthcare vertical market in which REPAY does not have any experience; changes in the payment processing market in which REPAY competes, including with respect to its competitive landscape, technology evolution or regulatory changes; changes in the vertical markets that REPAY targets; risks relating to REPAY’s relationships within the payment ecosystem; risk that REPAY may not be able to execute its growth strategies, including identifying and executing acquisitions; risks relating to data security; exposure to economic conditions and political risk affecting the consumer loan market and consumer and commercial spending; the impacts of the recent COVID-19 coronavirus outbreak (which are highly uncertain and cannot be reasonably estimated or predicted at this time); changes in accounting policies applicable to REPAY; and the risk that REPAY may not be able to develop and maintain effective internal controls.

Actual results, performance or achievements may differ materially, and potentially adversely, from any projections and forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. All information set forth herein speaks only as of the date hereof in the case of information about REPAY or the date of such information in the case of information from persons other than REPAY, and REPAY disclaims any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication. Forecasts and estimates regarding REPAY’s industry and end markets are based on sources it believes to be reliable, however there can be no assurance these forecasts and estimates will prove accurate in whole or in part. Pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

About REPAY

REPAY provides integrated payment processing solutions to verticals that have specific transaction processing and technology needs. REPAY’s proprietary, integrated payment technology platform reduces the complexity and enhances the experience of electronic payments.

Consolidated Statement of Operations
(Unaudited)

Successor

Predecessor

(in $ thousands)

Three Months
ended December
31, 20191

July 11, 2019
through December
31, 20191

January 1, 2019
through July 10,
20191

Three Months
ended December
31, 2018

Year Ended
December 31,
2018

Revenue

Processing and service fees

$33,634

$57,560

$47,043

$21,402

$82,186

Interchange and network fees

12,456

47,827

Total Revenue

$33,634

$57,560

$47,043

$33,858

$130,013

Operating expenses

Interchange and network fees

$12,456

$47,827

Other costs of services

9,289

15,657

10,216

6,858

27,160

Selling, general and administrative

24,756

45,758

51,201

8,088

29,097

Depreciation and amortization

13,054

23,757

6,223

2,841

10,421

Change in fair value of contingent consideration

0

0

0

(103)

(1,103)

Total operating expenses

$47,099

$85,172

$67,640

$30,141

$113,402

Income (loss) from operations

($13,465)

($27,611)

($20,597)

$3,718

$16,611

Other expenses

Interest expenses

(3,236)

(5,922)

(3,145)

1,572

(6,073)

Change in fair value of assets and liabilities

(1,188)

(1,638)

0

0

0

Other income (expenses)

(64)

(1,380)

0

0

(1)

Total other income (expenses)

(4,487)

(8,940)

(3,145)

1,572

(6,074)

Income (loss) before income tax expense

(17,952)

(36,552)

(23,743)

5,289

10,537

Income tax benefit

2,272

4,991

0

0

0

Net income (loss)

($15,681)

($31,561)

($23,743)

$5,289

$10,537

Net income (loss) attributable to non-controlling interest

(7,872)

(15,721)

0

0

0

Net income (loss) attributable to the Company

($7,809)

($16,290)

($23,743)

$5,289

$10,537

Weighted-average shares of Class A common stock outstanding – basic and diluted

37,003,144

Net income (loss) per Class A share – basic and diluted

($0.21)

Reflects the impact of the Company’s adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“Topic 606” or “ASC 606”) and related cost capitalization guidancewhich was adopted by the Company on January 1, 2019 using the modified retrospective transition method. The adoption of ASC 606 resulted in presentation changes in our statements of income, with revenues and expenses presented net of interchange, network and other fees in accordance with Topic 606. As a result of the application of the modified retrospective transition method, the Company’s prior period results were not restated to reflect ASC 606.

Consolidated Balance Sheets

December 31,
2019

December 31,
2018

(Successor)

(Predecessor)

Assets

Cash and cash equivalents

$

24,617,996

$

13,285,357

Accounts receivable

14,068,477

5,979,247

Related party receivable

563,084

Prepaid expenses and other

4,632,965

817,212

Total current assets

43,882,522

20,081,816

Property, plant and equipment, net

1,610,652

1,247,149

Restricted cash

13,283,121

9,976,701

Customer relationships, net of accumulated amortization

247,589,240

62,528,880

Software, net of amortization

61,219,143

5,170,748

Other intangible assets, net of accumulated amortization

24,241,505

523,133

Goodwill

389,660,519

119,529,202

Other assets

555,449

Total noncurrent assets

738,159,629

198,975,813

Total assets

$

782,042,151

$

219,057,629

Liabilities

Accounts payable

$

9,586,001

$

2,909,378

Related party payable

14,571,266

Accrued expenses

15,965,683

12,837,826

Current maturities of long-term debt

5,250,000

4,900,000

Current tax receivable agreement

6,336,487

Total current liabilities

51,709,437

20,647,204

Long-term debt, net of current maturities

198,192,705

85,815,204

Line of credit

10,000,000

3,500,000

Tax receivable agreement

60,839,739

Deferred tax liability

768,335

Other liabilities

16,864

16,864

Total noncurrent liabilities

269,817,643

89,332,068

Total liabilities

$

321,527,080

$

109,979,272

Commitment and contingencies (Note 12)

Members’ Equity

$

109,078,357

Class A common stock, $0.0001 par value; 2,000,000,000 shares authorized
and 37,530,568 issued and outstanding as of December 31, 2019

$

3,753

Class V common stock, $0.0001 par value; 1,000 shares authorized and 100
shares issued and outstanding as of December 31, 2019

Additional paid-in capital

307,914,346

Accumulated other comprehensive income

313,397

Accumulated deficit

(53,878,460

)

Total stockholders’ equity

$

254,353,036

Equity attributable to noncontrolling interests

206,162,035

Total liabilities and stockholders’ equity and members’ equity

$

782,042,151

$

219,057,629

Key Operating and Non-GAAP Financial Data

We believe that adjusting the key operating and non-GAAP measures for comparability between the Predecessor, Successor and Pro Forma periods is useful to the user of our financial statements.

The unaudited non-GAAP pro forma results of operations data for the three month period and year ended December 31, 2019 included in the discussion below are based on our historical financial statements, adjusted to remove the effects of purchase accounting adjustments related to the Business Combination. The pro forma results included herein have not been prepared in accordance with Article 11 of Regulation S-X.

Unless otherwise stated, all results compare fourth quarter and 2019 full year results to fourth quarter and 2018 full year results from continuing operations for the period ended December 31, respectively.

The following tables and related notes reconcile these Non-GAAP measures and the Pro Forma Measures to GAAP information for the three month period and year ended December 31, 2019 and 2018:

Three months ended December 31,

Twelve months ended December 31,

(in $ thousands)

2019

2018

% Change

2019

2018

% Change

Card payment volume

$3,422,076

$1,988,132

72%

$10,696,655

$7,451,759

44%

Gross profit1

$24,345

$14,544

67%

$78,731

$55,027

43%

Adjusted EBITDA2

$14,737

$9,692

52%

$48,432

$36,779

32%

(1) Gross profit for 2019 represents total revenue, including the impact of the adoption of ASC 606, less other costs of services. Gross profit for 2018 represents total revenue, without the impact of the adoption of ASC 606, less interchange, network, other fees and other cost of services in 2018. The adoption of ASC 606 had no impact on gross profit.

(2) Adjusted EBITDA is a non-GAAP financial measure that represents net income adjusted for interest expense, depreciation and amortization and certain other non-cash charges and non-recurring items. See “Non-GAAP Financial Measures” above and the reconciliation of Adjusted EBITDA to its most comparable GAAP measure below.

Reconciliations of GAAP Revenue under ASC 606 to Non-GAAP Adjusted Revenue
without the impact of ASC 606
For the Three Months Ended December 31, 2019 and 2018

Three months ended December 31, 2019 (Successor)

Three months
ended
December 31,
2018 As
Reported Under
ASC 605 (GAAP)
(Predecessor)

(in $ thousands)

As Reported
under ASC 6061

Impact of ASC
6061

Excluding Impact
of Adoption of
ASC 606

Revenue

Processing and service fees

$33,634

($571)

$34,205

$21,402

Interchange and network fees

0

(15,046)

15,046

12,456

Total Revenue

$33,634

($15,618)

$49,252

$33,858

Operating expenses

Interchange and network fees

$0

($15,046)

$15,046

$12,456

Other costs of services

9,289

(571)

9,860

6,858

Selling, general and administrative

24,756

24,756

8,088

Depreciation and amortization

13,054

13,054

2,841

Change in fair value of contingent consideration

0

0

(103)

Total operating expenses

$47,099

($15,618)

$62,717

$30,141

Income (loss) from operations

($13,465)

$0

($13,465)

$3,718

Reflects the impact of the Company’s adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“Topic 606” or “ASC 606”) and related cost capitalization guidancewhich was adopted by the Company on January 1, 2019 using the modified retrospective transition method. The adoption of ASC 606 resulted in presentation changes in our statements of income, with revenues and expenses presented net of interchange, network and other fees in accordance with Topic 606. As a result of the application of the modified retrospective transition method, the Company’s prior period results were not restated to reflect ASC 606

Reconciliations of GAAP Revenue under ASC 606 to Non-GAAP Adjusted Revenue excluding impact of ASC 606
For the Year Ended December 31, 2019 and 2018

Twelve months ended December 31, 2019

July 11, 2019 to December 31, 2019 (Successor)

January 1, 2019 to July 10, 2019 (Predecessor)

(in $ thousands)

As Reported
under ASC 6061

Impact of ASC
6061

Excluding
Impact of
Adoption of
ASC 606

As Reported
under ASC 6061

Impact of ASC
6061

Excluding Impact
of Adoption of
ASC 606

2019 Combined
Including Impact
of Adoption of
ASC 6061

2019 Combined
Excluding Impact
of Adoption of
ASC 606

2018 As
Reported

Under ASC
605 (GAAP)
(Predecessor)

Revenue

Processing and service fees

$57,560

($1,254)

$58,815

$47,043

($2,358)

$49,401

$104,603

$108,216

$82,186

Interchange and network fees

0

(27,593)

27,593

0

(29,989)

29,989

0

57,582

47,827

Total Revenue

$57,560

($28,847)

$86,407

$47,043

($32,347)

$79,390

$104,603

$165,797

$130,013

Operating expenses

Interchange and network fees

$0

($27,593)

$27,593

$0

($29,989)

$29,989

$0

$57,582

$47,827

Other costs of services

15,657

(1,254)

16,911

10,216

(2,358)

12,574

25,873

29,485

27,160

Selling, general and administrative

45,758

45,758

51,201

51,201

96,960

96,960

29,097

Depreciation and amortization

23,757

23,757

6,223

6,223

29,980

29,980

10,421

Change in fair value of contingent consideration

0

0

0

0

0

0

(1,103)

Total operating expenses

$85,172

($28,847)

$114,019

$67,640

($32,347)

$99,987

$152,812

$214,006

$113,402

Income (loss) from operations

($27,611)

$0

($27,611)

($20,597)

$0

($20,597)

($48,209)

($48,209)

$16,611

Reflects the impact of the Company’s adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“Topic 606” or “ASC 606”) and related cost capitalization guidancewhich was adopted by the Company on January 1, 2019 using the modified retrospective transition method. The adoption of ASC 606 resulted in presentation changes in our statements of income, with revenues and expenses presented net of interchange, network and other fees in accordance with Topic 606. As a result of the application of the modified retrospective transition method, the Company’s prior period results were not restated to reflect ASC 606

Reconciliations of GAAP Net Income to Non-GAAP Adjusted EBITDA
For the Three Months Ended December 31, 2019 and 2018

Successor

Predecessor

(in $ thousands)

Three Months
Ended December
31, 20191

Adjustments(o)

Pro Forma1

Three months
ended December
31, 2018

Revenue

Processing and service fees

$33,634

$33,634

$21,402

Interchange and network fees

0

0

12,456

Total Revenue

$33,634

$33,634

$33,858

Operating expenses

Interchange and network fees

$0

$0

$12,456

Other costs of services

9,289

9,289

6,858

Selling, general and administrative

24,756

24,756

8,088

Depreciation and amortization

13,054

(8,159)

4,895

2,841

Change in fair value of contingent consideration

0

0

(103)

Total operating expenses

$47,099

$38,940

$30,141

Income (loss) from operations

($13,465)

($5,306)

$3,718

Other expenses

Interest expenses

(3,236)

(3,236)

(1,572)

Change in fair value of assets and liabilities

(1,188)

(1,188)

0.000

Other income (expenses)

(64)

(64)

0.015

Total other income (expenses)

(4,487)

(4,487)

(1,572)

Income (loss) before income tax expense

(17,952)

(9,794)

2,146

Income tax benefit

2,272

2,272

0.000

Net income (loss)

($15,681)

($7,522)

$2,146

Add:

Interest expense

3,236

1,572

Depreciation and amortization(a)

4,895

2,841

Income tax (benefit)

(2,272)

0

EBITDA

($1,662)

$6,558

Loss on extinguishment of debt (b)

64

(0)

Non-cash change in fair value of contingent consideration(c)

0

(103)

Non-cash change in fair value of assets and liabilities(d)

1,188

0

Share-based compensation expense(e)

12,262

167

Transaction expenses(f)

2,613

2,596

Management Fees(g)

0

100

Legacy commission related charges(h)

130

0

Employee recruiting costs(i)

18

109

Loss on disposition of property and equipment

0

17

Other taxes(j)

(33)

15

Strategic initiative costs(k)

56

192

Other non-recurring charges(l)

101

41

Adjusted EBITDA

$14,737

$9,692

Reflects the impact of the Company’s adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“Topic 606” or “ASC 606”) and related cost capitalization guidancewhich was adopted by the Company on January 1, 2019 using the modified retrospective transition method. The adoption of ASC 606 resulted in presentation changes in our statements of income, with revenues and expenses presented net of interchange, network and other fees in accordance with Topic 606. As a result of the application of the modified retrospective transition method, the Company’s prior period results were not restated to reflect ASC 606.

Reconciliations of GAAP Net Income to Non-GAAP Adjusted EBITDA
For the Year Ended December 31, 2019 and 2018

Successor

Predecessor

Predecessor

(in $ thousands)

July 11, 2019
through
December 31,
20191

January 1, 2019
through July 10,
20191

Combined1

Adjustments(o)

Pro Forma1

Twelve months
ended December
31, 2018

Revenue

Processing and service fees

$57,560

$47,043

$104,603

$104,603

$82,186

Interchange and network fees

0

0

0

0

47,827

Total Revenue

$57,560

$47,043

$104,603

$104,603

$130,013

Operating expenses

Interchange and network fees

$0

$0

$0

$0

$47,827

Other costs of services

15,657

10,216

25,873

25,873

27,160

Selling, general and administrative

45,758

51,201

96,960

96,960

29,097

Depreciation and amortization

23,757

6,223

29,980

(15,412)

14,568

10,421

Change in fair value of contingent consideration

0

0

0

0

(1,103)

Total operating expenses

$85,172

$67,640

$152,812

$137,401

$113,402

Income (loss) from operations

($27,611)

($20,597)

($48,209)

($32,797)

$16,611

Other expenses

Interest expenses

(5,922)

(3,145)

(9,067)

(9,067)

(6,073)

Change in fair value of assets and liabilities

(1,638)

0

(1,638)

(1,638)

0

Other income (expenses)

(1,380)

0

(1,380)

(1,380)

(1)

Total other income (expenses)

(8,940)

(3,145)

(12,085)

(12,085)

(6,074)

Income (loss) before income tax expense

(36,552)

(23,743)

(60,294)

(44,882)

10,537

Income tax benefit

4,991

0

4,991

4,991

0

Net income (loss)

($31,561)

($23,743)

($55,303)

($39,891)

$10,537

Add:

Interest expense

9,067

6,073

Depreciation and amortization(a)

14,568

10,421

Income tax (benefit)

(4,991)

0

EBITDA

($21,247)

$27,031

Loss on extinguishment of debt (b)

1,380

1

Non-cash change in fair value of contingent consideration(c)

0

(1,103)

Non-cash change in fair value of assets and liabilities(d)

1,638

0

Share-based compensation expense(e)

22,922

797

Transaction expenses(f)

40,126

4,751

Management Fees(g)

211

400

Legacy commission related charges(h)

2,557

4,168

Employee recruiting costs(i)

51

256

Loss on disposition of property and equipment

0

17

Other taxes(j)

226

216

Strategic initiative costs(k)

352

272

Other non-recurring charges(l)

215

(27)

Adjusted EBITDA

$48,432

$36,779

Reflects the impact of the Company’s adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“Topic 606” or “ASC 606”) and related cost capitalization guidancewhich was adopted by the Company on January 1, 2019 using the modified retrospective transition method. The adoption of ASC 606 resulted in presentation changes in our statements of income, with revenues and expenses presented net of interchange, network and other fees in accordance with Topic 606. As a result of the application of the modified retrospective transition method, the Company’s prior period results were not restated to reflect ASC 606.

Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income
For the Three Months Ended December 31, 2019 and 2018
(Unaudited)

Successor

Predecessor

(in $ thousands)

Three Months
Ended December
31, 20191

Adjustments(o)

Pro Forma1

Three months
ended December
31, 2018

Revenue

Processing and service fees

$33,634

$33,634

$21,402

Interchange and network fees

0

0

12,456

Total Revenue

$33,634

$33,634

$33,858

Operating expenses

Interchange and network fees

$0

$0

$12,456

Other costs of services

9,289

9,289

6,858

Selling, general and administrative

24,756

24,756

8,088

Depreciation and amortization

13,054

(8,159)

4,895

2,841

Change in fair value of contingent consideration

0

0

(103)

Total operating expenses

$47,099

$38,940

$30,141

Income (loss) from operations

($13,465)

($5,306)

$3,718

Other expenses

Interest expenses

(3,236)

(3,236)

(1,572)

Change in fair value of assets and liabilities

(1,188)

(1,188)

0

Other income (expenses)

(64)

(64)

0

Total other income (expenses)

(4,487)

(4,487)

(1,572)

Income (loss) before income tax expense

(17,952)

(9,794)

2,146

Income tax benefit

2,272

2,272

0

Net income (loss)

($15,681)

($7,522)

$2,146

Add:

Amortization of Acquisition-Related Intangibles(m)

3,432

1,980

Loss on extinguishment of debt (b)

64

(0)

Non-cash change in fair value of contingent consideration(c)

0

(103)

Non-cash change in fair value of assets and liabilities(d)

1,188

0

Share-based compensation expense(e)

12,262

167

Transaction expenses(f)

2,613

2,596

Management Fees(g)

0

100

Legacy commission related charges(h)

130

0

Employee recruiting costs(i)

18

109

Loss on disposition of property and equipment

0

17

Strategic initiative costs(k)

56

192

Other non-recurring charges(l)

101

41

Adjusted Net Income

$12,343

$7,244

Shares of Class A common stock outstanding (on an as-converted basis)(n)

62,840,068

Adjusted Net income per share

$0.20

Reflects the impact of the Company’s adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“Topic 606” or “ASC 606”) and related cost capitalization guidancewhich was adopted by the Company on January 1, 2019 using the modified retrospective transition method. The adoption of ASC 606 resulted in presentation changes in our statements of income, with revenues and expenses presented net of interchange, network and other fees in accordance with Topic 606. As a result of the application of the modified retrospective transition method, the Company’s prior period results were not restated to reflect ASC 606.

Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income
For the Year Ended December 31, 2019 and 2018
(Unaudited)

Successor

Predecessor

Predecessor

(in $ thousands)

July 11, 2019
through
December
31, 20191

January 1, 2019
through July 10,
20191

Combined1

Adjustments(o)

Pro Forma1

Twelve months
ended December
31, 2018

Revenue

Processing and service fees

$57,560

$47,043

$104,603

$104,603

$82,186

Interchange and network fees

0

0

0

0

47,827

Total Revenue

$57,560

$47,043

$104,603

$104,603

$130,013

Operating expenses

Interchange and network fees

$0

$0

$0

$0

$47,827

Other costs of services

15,657

10,216

25,873

25,873

27,160

Selling, general and administrative

45,758

51,201

96,960

96,960

29,097

Depreciation and amortization

23,757

6,223

29,980

(15,412)

14,568

10,421

Change in fair value of contingent consideration

0

0

0

0

(1,103)

Total operating expenses

$85,172

$67,640

$152,812

$137,401

$113,402

Income (loss) from operations

($27,611)

($20,597)

($48,209)

($32,797)

$16,611

Other expenses

Interest expenses

(5,922)

(3,145)

(9,067)

(9,067)

(6,073)

Change in fair value of assets and liabilities

(1,638)

0

(1,638)

(1,638)

0

Other income (expenses)

(1,380)

0

(1,380)

(1,380)

(1)

Total other income (expenses)

(8,940)

(3,145)

(12,085)

(12,085)

(6,074)

Income (loss) before income tax expense

(36,552)

(23,743)

(60,294)

(44,882)

10,537

Income tax benefit

4,991

0

4,991

4,991

0

Net income (loss)

($31,561)

($23,743)

($55,303)

($39,891)

$10,537

Add:

Amortization of Acquisition-Related Intangibles(m)

9,917

7,919

Loss on extinguishment of debt (b)

1,380

1

Non-cash change in fair value of contingent consideration(c)

0

(1,103)

Non-cash change in fair value of assets and liabilities(d)

1,638

0

Share-based compensation expense(e)

22,922

797

Transaction expenses(f)

40,126

4,751

Management Fees(g)

211

400

Legacy commission related charges(h)

2,557

4,168

Employee recruiting costs(i)

51

256

Loss on disposition of property and equipment

0

17

Strategic initiative costs(k)

352

272

Other non-recurring charges(l)

215

(27)

Adjusted Net Income

$39,479

$27,987

Shares of Class A common stock outstanding (on an as-converted basis)(n)

59,721,429

Adjusted Net income per share

$0.66

Reflects the impact of the Company’s adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“Topic 606” or “ASC 606”) and related cost capitalization guidancewhich was adopted by the Company on January 1, 2019 using the modified retrospective transition method. The adoption of ASC 606 resulted in presentation changes in our statements of income, with revenues and expenses presented net of interchange, network and other fees in accordance with Topic 606. As a result of the application of the modified retrospective transition method, the Company’s prior period results were not restated to reflect ASC 606.

  1. See footnote (m) for details on our amortization and depreciation expenses.
  2. Reflects write-offs of debt issuance costs relating to Hawk Parent’s term loans and prepayment penalties relating to its previous debt facilities.
  3. Reflects the changes in management’s estimates of future cash consideration to be paid in connection with prior acquisitions from the amount estimated as of the most recent balance sheet date.
  4. Reflects the changes in management’s estimates of the fair value of the liability relating to the Tax Receivable Agreement
  5. Represents compensation expense associated with Hawk Parent’s equity compensation plans, totaling $908,977 in the Predecessor period from January 1, 2019 to July 10, 2019 inclusive of charges from accelerated vesting due to a change of control triggered by the Business Combination, and $22,013,287 as a result of new grants made in the Successor period.
  6. Primarily consists of (i) during the three and twelve months ended December 31, 2019, professional service fees and other costs in connection with the Business Combination, the acquisition of TriSource Solutions, the acquisition of APS Payments, and (ii) during the three and twelve months ended December 30, 2018, professional service fees and other costs in connection with the Business Combination, and additional transaction related expenses in connection with the acquisitions of PaidSuite, Inc. and PaidMD, LLC (together, “PaidSuite”) and Paymaxx Pro, LLC (“Paymaxx”), which transactions closed in 2017.
  7. Reflects management fees paid to Corsair Investments, L.P. pursuant to the management agreement, which terminated upon the completion of the Business Combination.
  8. Represents payments made to certain employees in connection with significant restructuring of their commission structures. These payments represented commission structure changes which are not in the ordinary course of business.
  9. Represents payments made to third-party recruiters in connection with a significant expansion of our personnel, which REPAY expects will become more moderate in subsequent periods.
  10. Reflects franchise taxes and other non-income based taxes.
  11. Consulting fees relating to REPAY’s processing services and other operational improvements that were not in the ordinary course as well as one-time fees relating to special projects for new market expansion that are not anticipated to continue in the ordinary course of business are reflected in the twelve months ended December 31, 2019 and 2018, respectively. Additionally, one-time expenses related to the creation of a new entity in connection with equity arrangements for the members of Hawk Parent in connection with the Business Combination are reflected in the twelve months ended December 31, 2019.
  12. For the twelve months ended December 31, 2018 reflects reversal of adjustments over the prior and current periods made for legal expenses incurred related to a dispute with a former customer, for which we were reimbursed in the current period as a result of its settlement. For the three months ended December 31, 2018 and the twelve months ended December 31, 2019, reflects expenses incurred related to other one-time legal and compliance matters.
  13. For the three and twelve months ended December 31, 2018, reflects amortization of customer relationships intangibles acquired through Hawk Parent’s acquisitions of PaidSuite and Paymaxx during the year ended December 31, 2017 and the recapitalization transaction in 2016, through which Hawk Parent was formed in connection with the acquisition of a majority interest in Repay Holdings, LLC by certain investment funds sponsored by, or affiliated with, Corsair Capital LLC. For the three and twelve months ended December 30, 2019 reflects amortization of the customer relationships intangibles described previously, as well as customer relationships, non-compete agreement, software, and channel relationship intangibles acquired through the Business Combination, and customer relationships, non compete agreement, and software intangibles acquired through Repay Holdings, LLC’s acquisitions of TriSource Solutions, LLC and APS Payments. This adjustment excludes the amortization of other intangible assets which were acquired in the regular course of business, such as capitalized internally developed software and purchased software. See additional information below for an analysis of our amortization expenses:

Three months ended December 31,

Twelve months ended December 31,

(in $ thousands)

2019

2018

2019

2018

Acquisition-related intangibles

$3,432

$1,980

$9,917

$7,919

Software

1,197

724

3,895

2,052

Reseller buyouts

15

15

58

58

Amortization

$4,644

$2,719

$13,870

$10,029

Depreciation

252

122

698

393

Total Depreciation and amortization1

$4,895

$2,841

$14,568

$10,421

  1. Adjusted Net Income is adjusted to exclude amortization of all acquisition-related intangibles as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions (see corresponding adjustments in the reconciliation of net income to Adjusted Net Income presented above). Management believes that the adjustment of acquisition-related intangible amortization supplements GAAP financial measures because it allows for greater comparability of operating performance. Although REPAY excludes amortization from acquisition-related intangibles from our non-GAAP expenses, management believes that it is important for investors to understand that such intangibles were recorded as part of purchase accounting and contribute to revenue generation. Amortization of intangibles that relate to past acquisitions will recur in future periods until such intangibles have been fully amortized. Any future acquisitions may result in the amortization of additional intangibles.

(n) Represents the weighted average number of shares of Class A common stock outstanding (on as-converted basis) for the three months ended December 31, 2019, and for the Successor period from July 11, 2019 to December 31, 2019 (excluding certain shares that were subject to forfeiture).

(o) Adjustment for incremental depreciation and amortization recorded due to fair-value adjustments under ASC 805 in the Successor Period.

Reconciliation of Organic Gross Profit Growth

Twelve months ended December 31, 2019

Total gross profit growth

43%

less: growth from acquisitions

14%

Organic gross profit growth

29%

 

Investor Relations Contact for REPAY:
repayIR@icrinc.com

Media Relations Contact for REPAY:
Kristen Hoyman
(404) 637-1665
khoyman@repay.com

Source: Repay Holdings Corporation

Why Credit Unions Should License Payment Technology

Credit union technology
Does your credit union use technology to make things easier for members?

Mambu, Salesforce, Microsoft Office 360, Google G Suite, and Leasewave

What do these software companies have in common? Two things:

  1. Banks and credit unions commonly use them
  2. The software is licensed, not purchased

These software companies are doing everything from providing email services to managing customer data and lease transactions to serving as core banking systems. And they do it all in the cloud through software licensing, commonly referred to as SaaS or software as a service.

Banks and credit unions have been moving towards the cloud from on-premise software more slowly than other industries. This Credit Union 2.0 tech trends article, however, places cloud as one of the seven areas expected to grow in the future. The other six areas are:

  • Digital Transformation
  • Fintech Partnerships
  • Marketing Automation
  • Analytics
  • Artificial Intelligence (AI) & Machine Learning
  • IT Security
Payments: Fast, Convenient, and Profitable for a Credit Union

Do you know what technology hasn’t changed that much for credit unions? Payment technology. The basic premise is still there. Members want an easy way to pay for services and pay back loans.

Does your credit union make this easy for members?

Payment services represent a massive opportunity for credit unions to engage with members and exceed their service expectations.

Payment System Technology

Until the chip and pin cards and EMV (Europay, Mastercard and Visa) hit the U.S. a few years ago, there had been virtually no change in payment technology. Visa and Mastercard are still the leading card brands controlling much of the standard operating procedures and interchange rates when it comes to card transactions. All this is still true.

But now, most of the advances in payment systems are in security, automation, and the use of AI.

Since cloud can mean enhanced security and PCI compliance, there’s no reason not to utilize third-party payment technology platforms. Credit unions can take a modern fintech-based payment system and license its use without having to develop and maintain these advanced tech systems for themselves.

Why build the infrastructure of a new payment system from scratch when the latest and most secure payment technology advancements are at your fingertips and could be licensed and implemented in a matter of weeks?

Licensing for Credit Unions

Some payment companies, including REPAY, let you license their suite of payment technology products, including online payment portals, text pay platforms, IVR (Interactive Voice Response) / phone pay, and mobile apps. These solutions can be customized for each credit union, so the look, feel, and voice of the credit union can be captured. Often, the members will never know the payment platforms they are accessing belong to anyone other than their credit unions.

Offering convenient and modern payment services can give credit unions a competitive advantage over smaller or more conservative financial institutions. Utilizing specific channels, such as text pay and mobile apps, can increase the number of touchpoints credit unions have with their members, thereby promoting engagement and strengthening the member – credit union relationship. There is no reason why credit unions can’t offer the same payment options the big banks do.

With core banking software, credit unions can often pick which modules they want to use. You can license the ones most applicable to your credit union without having to buy things you don’t need. Licensing of payment systems allows this, too.  Your credit union will stay at the forefront of technology, maintain the highest-level security, and give the greatest flexibility and convenience to your members while only paying for the parts that you use.

Is your payment system in need of an upgrade? If it is, or you want to see how some of the best payment software in the industry works, contact us today for a demo.

Tax Season is a Huge Payment Opportunity for Auto Dealers & BHPH

Tax Season Opportunity
Take advantage of one of the few times of year you KNOW your customers have money for both down payments and loan payments.

The average tax refund last year was $2,869, according to Marketwatch.

As auto dealers, you know cars are only getting more expensive as manufacturers add more desirable technology and features. Tax season is a prime opportunity to target some of your prospects and turn them into buyers as they use their refunds to buy cars.

For most people, money is still very tight, and saving can be tough. According to two studies, Turbotax Free filers and the IRS VITA (Volunteer Income Tax Assistance) Program, almost half of the respondents said they needed their tax refund money for necessities, such as groceries, bills, or rent.

CNBC expects the refund number to be just a little bit higher this year at $3,100. CNBC also reports only 10% of refund recipients expect to use the money for investments. eBay conducted its retail study and found 37% of millennials receiving refunds are planning to spend the money on purchasing cars.

That means there are going to be a lot of potential car buyers out there. Make sure you don’t miss this opportunity.

Reap Two Huge Benefits

Per the IRS and Turbotax studies, almost half of respondents do not need their refunds for necessities, which means there will be a lot of people with money to spend on a car. Your dealership can benefit in two ways, as buyers:

  1. Make down payments for a car purchase (9% are expected to make a major purchase and cars definitely qualify, according to the CNBC article)
  2. Pay down debt, including existing auto loans customers have with you (the #1 expected use of tax refunds this year)

Check out the chart from CNBC with information provided by a GoBankingRates poll:

Tax refund plans according to CNBC and GoBankingRates

While using the refund for down payment money is easy to understand, if you hold a loan portfolio of any size, you could get a big bump in yield by receiving an early payoff. This might be even better for your dealership than customers using the money to buy a new car. The option of rolling over this loan into a bigger loan for a creditworthy buyer is a win/win, too.

Are you Ready?

There are lots of things to consider as we enter the peak of tax season. Do you have a marketing plan to target early payoffs or rolling a loan payoff and trade-in into a bigger, more expensive car? Do you have easy and convenient payment options allowing your new and existing customers to make down payments and loan payments?

To capitalize on tax season, you need to be sure you never miss a payment opportunity. The most basic place to start is ensuring you can accept payments via debit/credit cards, prepaid cards, and ACH/bank accounts. The next step is thinking beyond your normal business hours and beyond the physical boundaries of your brick and mortar dealership. Can your customers make loan payments online, on a mobile app, or via text or Interactive Voice Response (IVR/phone pay)? It’s important to make the payment process as convenient as possible so you don’t miss cashing in on that tax refund.

Other points to consider during this time have to do with prepayments. Do the loans you hold in-house have a prepayment penalty? What about your best lending partners? Do you use precomputed interest? If there is a charge for prepayment, no matter how small, then your portfolio can:

  • Earn fees from the penalty
  • Earn other fees related to the loan payoff
  • Use the funds to lend to a new borrower at a possibly higher interest rate
  • Roll this balance into a new bigger loan for the same borrower

The numbers are clear. In Q4 of 2019, household debt crossed $14 trillion, an all-time high, according to Reuters. Many families do not have extra money sitting aside for a car. The one significant opportunity you have to collect loan payments or get customers into a new car is during tax refund season. Don’t miss it!

REPAY to Attend the 2020 KBW Fintech Payments Conference

KBW Fintech Conference

ATLANTA–(BUSINESS WIRE)–Feb. 20, 2020– Repay Holdings Corporation (NASDAQ: RPAY) (“REPAY”), a leading provider of vertically-integrated payment solutions, today announced that the Company will present at the 2020 KBW Fintech Payments Conference on Tuesday, March 3, 2020 in New York, NY. The presentation will begin at 2:40pm ET.

The presentation will be webcast live from the Company’s investor relations website at https://investors.repay.com/ under the “Events” section. An archive of the webcast will be available at the same location on the website for 90 days.

About REPAY

REPAY provides integrated payment processing solutions to verticals that have specific transaction processing and technology needs. REPAY’s proprietary, integrated payment technology platform reduces the complexity and enhances the experience of electronic payments.

Source: Repay Holdings Corporation

Investor Relations Contact for REPAY:
repayIR@icrinc.com

Media Relations Contact for REPAY:
Kristen Hoyman
(404) 637-1665
khoyman@repay.com

REPAY and Visa Host AFSA Webinar on The Borrower’s Digital Lending Journey

Borrower's Digital Lending Journey_AFSA Webinar

REPAY and Visa hosted a webinar on The Borrower’s Digital Lending Journey for the American Financial Services Association (AFSA) on February 20, 2020. Susan Perlmutter, Chief Revenue Officer for REPAY, and Scott MacWilliams, Vice President, Merchant Sales with Visa, discussed the borrower’s journey and the tools and services lenders can implement to transform the lending experience from beginning to end.

AFSA Members can view the recording here.

Payment Options for Millennial Borrowers

Millennial Payment Options

At this point, millennial borrowers probably make up a large portion of your customer base, so it’s important to understand their spending habits and priorities. The American Institute for Certified Public Accountants (AICPA) conducted a study of millennials and found 70% believed that financial stability was the ability to pay all their bills each month. So, according to millennials, stability means striving for zero payments due at the end of the month.

If you lend to millennials for student or consumer loans, think about this definition of financial stability and the simple aspiration of just paying the bills each month. According to Investopedia’s analysis of the AICPA study, one in four millennials had late payments or interaction with a debt collector. As a group, these borrowers are often loaded down with debt and still receiving financial support from their parents.

And thanks to social media and the immediate gratification lifestyle, millennials may often be more concerned about chasing the latest technology gadgets and the same experiences and things their friends have. With all these competing priorities, consumer lenders can be the last to get paid.

What’s a lender to do?

How Millennials Bank

It should come as no surprise that this group of borrowers uses mobile banking more than any other. The Balance uncovered some interesting banking trends and found the three things millennials do most often on their mobile banking apps are:

  1. Schedule person to person money transfers
  2. Transfer funds between accounts
  3. Check their transaction history

Here’s what they are not doing: checking their accounts to see if they have the funds available to pay you after they’ve paid for rent, internet, utilities, and fun.

While they may like their banks, they love technology more. They will jump at the chance to switch to another bank, fintech lender, or credit union if their bank is too inconvenient or if their mobile banking app is too slow or archaic.  Bottom line: millennials love mobile functionality and convenience. Are you leveraging this and making it easy for them to pay you?

Offer Payment Options

Millennial borrowers are starting to earn good money, so many are able to repay you at some point during the month. Yet, if you aren’t convenient or easily accessible, they will likely forget about you until after they’ve paid everyone else.

Many lenders think ACH is the answer, and automatic drafts out of their borrowers’ bank accounts are the best solutions for guaranteeing payments. It’s possible, however, that given their spending habits, your millennial borrowers won’t have enough cash in their accounts to clear the payments.

Why not offer payment options that fit into their daily lives and are easily accessible whenever your borrowers are ready to pay?  Mobile apps and text pay are great options that put you exactly where your customers are – on their mobile phones. You can send payment reminders, balance updates, and marketing campaigns via push notifications or text messages.  Your borrowers, in turn, can initiate and authorize payments and chat directly with your customer service representatives. Interactive Voice Response (IVR) enables borrowers to make payments 24/7 over the phone without ever speaking with a live agent.

Millennials value little above convenience and tech-savvy options. You can use this to your advantage to ensure you get paid and keep default rates low. Make it easy for them, and you will get paid.

If your payments system doesn’t offer options like IVR or text pay, contact REPAY to request a demo. You’ll see for yourself that these additional payment options will help you collect more easily from this fast-growing group of millennial borrowers.

REPAY Named Finalist in CreditUnions.com’s 2020 Innovation Series

CreditUnions.com Innovation Series

REPAY is proud to announce it has been named a finalist in CreditUnions.com‘s 2020 Innovation Series, powered by Callahan & Associates. During the Innovation Series webinar on Tuesday, February 18, 2020, Fleurette Runyan from REPAY discussed how REPAY helps credit unions reinvent and elevate the member experience through payment technology.

Meet The Payments Finalists For The 2020 Innovation Series | Credit Unions

REPAY Announces the Acquisition of Ventanex

Ventanex

Upsizes Existing Credit Facility to $345 million

ATLANTA–(BUSINESS WIRE)–Feb. 10, 2020– Repay Holdings Corporation (NASDAQ: RPAY) (“REPAY”), a leading provider of vertically-integrated payment solutions, today announced the acquisition of Ventanex for up to $50 million, of which $36 million was paid at closing. The remaining $14 million may become payable upon the achievement of performance growth targets. The closing of the acquisition was financed with a combination of cash on hand and new borrowings under REPAY’s existing credit facility. As part of the financing for the transaction, REPAY has entered into an agreement with Truist Bank (formerly SunTrust Bank) and other members of its existing bank group to amend and upsize its existing credit facility by $115 million to provide additional capacity for growth.

Ventanex, founded in 2012 and headquartered in Dallas, TX, is an integrated payments solutions provider to the consumer finance and B2B healthcare verticals. Ventanex’s technology platform offers inbound and outbound omnichannel payment solutions and complex rules-based processing. Ventanex enables its clients to send and receive funds across numerous payment types, including but not limited to, ACH, debit card, credit card, virtual card, and check. The Ventanex solution is deeply integrated into its clients’ workflow via connectivity with their primary enterprise software solutions.

“The acquisition of Ventanex advances REPAY’s overarching strategy of being the preferred payments provider to high-growth verticals where our technology and payment capabilities serve as differentiators. The consumer finance and B2B healthcare markets will provide significant growth opportunities, as these verticals are in the early stages of a secular shift from legacy payment mediums to the more innovative and varied payment solutions in which we specialize. Additionally, Ventanex’s consumer finance and B2B focus aligns well with our existing client base, allowing us to provide both customer sets with more robust offerings,” said John Morris, CEO of REPAY. “We are eager to welcome the Ventanex team into the REPAY family and look forward to working together to grow our consumer finance and B2B healthcare businesses.”

“We are thrilled to partner with REPAY to accelerate our growth in the consumer finance and B2B healthcare verticals, as both markets are large and present numerous value creation opportunities. We expect the combination of our product suite and REPAY’s distribution capabilities to drive meaningful growth in our core markets,” said Chris Sanders, CEO of Ventanex.

Transaction Details

  • REPAY acquired Ventanex for $50 million
    • $36 million was paid at closing
    • Up to $14 million may become payable through two separate earnouts, which are dependent upon Ventanex’s performance for the 12-month periods ending December 31, 2020 and 2021
  • The acquisition was financed with a combination of cash on hand and new borrowings under REPAY’s existing credit facility
  • As part of the financing for the transaction, REPAY has entered into an agreement with Truist Bank and other members of its existing bank group to amend and upsize its current $230 million credit facility to $345 million
    • Approximately $255 million was outstanding under the credit facility at the closing of the Ventanex transaction
  • Combined net leverage is expected to approximate 3.7x on a post-transaction basis
  • In 2019, Ventanex is expected to generate approximate revenue, gross profit, and adjusted EBITDA of $12.00 million, $6.50 million, and $4.25 million, respectively

Strategic Rationale

  • New, Attractive, High-growth Markets
    • The consumer finance and B2B healthcare markets have large addressable markets and provide numerous technology-centered value creation opportunities
    • Ventanex’s mortgage loan servicer focus materially expands REPAY’s addressable market by approximately $500 billion. Ventanex’s solution is integrated with the largest mortgage loan servicing platforms, including Black Knight and Fiserv
    • Ventanex’s foothold in the B2B healthcare vertical will allow REPAY to pursue the high-growth, $170 billion market for outbound healthcare payments
  • Cross Sell Opportunities
    • Similar client bases largely comprised of companies that service loans
    • Ventanex’s products are highly complementary to those of REPAY; therefore, bi-directional cross sell opportunities exist
  • Growth Acceleration
    • REPAY believes that its distribution, technology, and processing capabilities will accelerate new client wins
    • Additionally, REPAY expects continued professionalization and infrastructure investments to enable Ventanex to scale and move up-market on the customer dimension

Forward-Looking Statements

This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “projection,” “outlook” or words of similar meaning. These forward-looking statements include, but are not limited to, statements regarding REPAY’s industry and market sizes, future opportunities for REPAY, as well as the Ventanex estimated full year performance metrics. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.

In addition to factors previously disclosed in prior reports filed with the U.S. Securities and Exchange Commission and those identified elsewhere in this communication, the following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: a delay or failure to integrate and realize the benefits of the Ventanex acquisition and any difficulties associated with marketing products and services in the mortgage or B2B healthcare vertical markets in which REPAY does not have any experience; changes in the payment processing market in which REPAY competes, including with respect to its competitive landscape, technology evolution or regulatory changes; changes in the vertical markets that REPAY targets; risks relating to REPAY’s relationships within the payment ecosystem; the risk that REPAY may not be able to execute its growth strategies, including identifying and executing acquisitions; risks relating to data security; changes in accounting policies applicable to REPAY; and the risk that REPAY may not be able to develop and maintain effective internal controls.

Actual results, performance or achievements may differ materially, and potentially adversely, from any projections and forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance as projected financial information and other information are based on estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond our control. All information set forth herein speaks only as of the date hereof in the case of information about REPAY or the date of such information in the case of information from persons other than REPAY, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication. Forecasts and estimates regarding REPAY’s industry and end markets are based on sources we believe to be reliable, however there can be no assurance these forecasts and estimates will prove accurate in whole or in part. Annualized, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

About REPAY

REPAY provides integrated payment processing solutions to verticals that have specific transaction processing and technology needs. REPAY’s proprietary, integrated payment technology platform reduces the complexity and enhances the experience of electronic payments.

Source: Repay Holdings Corporation

Contacts

Investor Relations Contact for REPAY:
repayIR@icrinc.com

Media Relations Contact for REPAY:
Kristen Hoyman
(404) 637-1665
khoyman@repay.com