Welcome to the today's conference call being hosted by Repay. With us today are John Morris, Co-Founder and Chief Executive Officer and Tim Murphy, Chief Financial Officer. During this call, we will be making some forward looking statements about our beliefs and estimates regarding future events and results. These forward looking statements are subject to risk and uncertainties, including those set forth in the SEC filings related to today's result. Actual results may differ materially from any forward looking statements that we make today. The forward looking statements speak only as of today, and we do not assume any obligation or intent to update them except as required by law. With respect to any non-GAAP financial measures mentioned during the call today, the company reconciliation information relating to those measures can be found in the corresponding earnings release on the company's IR site. I would now like to turn the call over to Mr. Morris. Please go ahead.

Thank you, operator and good afternoon everyone. Thank you for joining us to discuss our second quarter results. We are pleased with our results in the quarter, which included organic volume growth of 29% and gross profit growth of 33%, and adjusted EBITDA growth of 24% compared to the second quarter of 2018. We are also pleased to announce the acquisition of TriSource Solutions, which I will discuss in more detail in a few moments. Tim will go over our results later in the call. But since this is our first quarterly earnings call, I thought it would be helpful to briefly review our business model and growth strategies. As most of you know, Repay is a rapidly growing omni-channel payment technology provider. We are modernizing and enabling electronic acceptance. And today, our focus is on three key markets; personal loans, automotive loans and receivables management. We project by 2020 total payment volume in these markets will grow to $535 billion. These in markets have historically been underserved by payment technology and service providers as merchants in these verticals predominantly utilize cash, checks and ACH payments. Our customers are typically the merchants that lend money, such as personal finance companies and auto vendors. We currently serve over 11,000 merchant locations, and contracts with our customers often have a duration of three years with a three-year renewal. Volume retention was approximately 97% in the year-to-date as of June 30, 2019, and the average tenure for our top ten clients is approximately four years. Our customers use our technology solutions to process the payments they receive from their borrowers. Our platform provides an attractive value proposition to both the merchants and the borrowers, driving strong client growth and penetration. Merchants experience an accelerated payment cycle through debit card processing, allowing them to…

Thanks, John. Repay has a strong financial profile and highly visible and recurring volume growth, strong margins and a high free cash flow conversion, which gives us the flexibly to strategically deploy capital to drive shareholder value. Our growth during the quarter compared to the comparable prior year quarter was organic, and driven by expanding usage and increasing adoption within our current client base. I'll notice Q2 results were down sequentially when compared to Q1, which is the result of seasonal fluctuations in consumer spending patterns. Volumes and revenues during the first quarter of the calendar year tend to increase in comparison to remaining three quarters of the calendar year on a same store basis. This increase is due to consumers' receipt of tax refunds and the increases in repayment activity levels that follow. Now, on to Q2 results. Card payment volume was $2.2 billion, an increase of 27% over the prior year second quarter. Total revenue was $36.2 million, an increase of 17% over the prior year second quarter. Processing and service fees were $22.6 million, an increase of 16% over the prior year second quarter. Moving on to expense. Interchange and network fees were $13.6 million compared to $11.5 million in the second quarter of 2018. The increase was primarily due to increased card payment volume, which leads to higher interchange and network fees. Other costs of services were $5.6 million compared $6.8 million in the second quarter of 2018. To decrease was due to ongoing dialog with our vendors on securing more favorable terms as we continue to grow volume together. Gross profit was $17.1 million, an increase in 33% over the prior year second quarter. As mentioned previously, this is a key metric for us. And this is how we price new customer deals. And our…

Good afternoon. Welcome to your first call as a public company. Congratulations on getting your deal done. The TriSource deal just -- is that deal closed today?

It was announced today, Bob.

And when do you expect it to close.

It closed yesterday, and was announced today.

Okay, very good. And what are the full year numbers for TriSource, what would be a run rate…?

What we've published is a run rate adjusted EBITDA of $7 million.

Okay. That's an annualized run rate of $7 million. And then what is the growth rate of that company? And what kind of synergies -- how accretive is this business? I guess, it reduces your processing cost.

Yes, the growth rate is actually similar to our top line growth rate, so probably mid to high teens. And we are in the process of starting to identify synergies. As you said, we think that a natural synergy would be for our go forward growth in volume. We would not have any processing costs. But we're continuing to evaluate that.

And what are your processing -- can you quantify that a little bit?

We're still evaluating, Bob. Good afternoon, this is John. We're still evaluating what we think we -- I think as I said earlier, the target -- as we target new acquisitions, we think that's going to be a great opportunity for us to gain some synergies for. These are just back end costs, so we don't break our processing costs between back end and front end, that's -- which is why we're not able to disclose that today. And then we think as well -- we think there is opportunity as we continue to organically grow our volume, which we've been able to do. We think there is some synergy associated with new organic volume growth.

And then just -- the business, the trends -- the organic trends in line with your expectations. And what is, excluding TriSource, what is the right organic top line and EBITDA growth rate for this company, do you feel well over the next, say over the next three to five years?

I would say for top line, it's probably mid to high teens. We've been experiencing growth in our teens and we expect that we can continue with strong growth for top line. And then for adjusted EBITDA, I would say high teens. We've been at around 20%, as you see in the quarter in the first half the year we're above 20% growth for adjusted EBITDA. But I would say longer term, it's probably high teens.

And just last question, I will turn it over is, the opportunity in Canada. Are you doing -- you are some business in Canada today, and how do you size that market opportunity?

We currently just entered Canada this year, so it's a brand new market. And we have -- we enter there, because we have some existing customers who have a large presence there. So it made a lot of sense for us to do that. We see a similar opportunities as I've mentioned earlier that we see in the states where we can be -- build an entire technology around the loan repayment space that's new and to the currently at present space in Canada. So it will take us a little while to organically grow there. We may see some opportunities on a non-organic perspective as we enter into Canada. But it will be, as we are organically, it will be slow for us but we have some good opportunities there. We're excited about that. We think our new instant funding product will also enhance the offering as well. We see positive demand there and we're live in Canada today.

Our next question comes from the line of [Craig Moore] with AllianceBernstein. Please proceed with your question.

I wanted to ask about potential impacts from RTP on your business whether the stand up of new RTP networks could take the place of debit rails, lowering profitability, and whether or not, MasterCard's deal. The previous deal will transact this and enhancing that with the acquisition of that and their new billing platform is a threat to your business? Thanks.

So first the new fed network, looks like it will be three to five years out and we don't view this as a threat. We think this confirms what we've been seeing about our secular shift from cash check and ACH that we were experiencing. We currently deliver payment technology that pushes funds in a real time way by the Visa Direct and the MasterCard MoneySend networks. This particular network will be a push credit transaction. So we are currently also -- we pull funds by the debit networks in a real time basis, which is a large part of our volume is our software is heavily integrated to the payment flows of our customers, and our their LMSs. And most of our transactions are set up for automatic reoccurring debits. So those are pull transactions. We find that -- and the consumer like to set things up and automatically hasn't happened, most do not like to think about paying their card payment every month. So we find that to be a positive part of our technology experience for our customers' customers. The new real time system is a push transaction. I personally think that this new network will be attractive to the B2B space. And I think there is some positive opportunities there as that vertical begins to expand and adopt new technology. And finally, we will always provide the best payment technology solutions to our clients. And if this becomes a great network then obviously we will always make great technology available to our merchants.

Our next question comes from the line of Mark Palmer with BTIG. Please proceed with your question.

Yes gentlemen, thanks for taking my question. Congratulations on your first quarterly earnings report. With regard to M&A, I wanted to get a sense of what the pipeline looks like for additional M&A, particularly in the areas that you'd -- identified previously, particularly healthcare, recreational vehicle, finance and credit unions?

So we have our own in-house M&A team who has build up an inorganic pipeline of the deals, a deal flow that we've been looking at. We think that as an active pipeline, we think that it's actionable pipeline. If we chose to find specifically deals that are strategic to us. The opportunities you're talking about, there are some in that area would add B2Bs to that as a vertical as well, that we think is attractive out there. We don't forecast acquisitions. We are growing organically and don't necessarily have the requirement to do acquisitions necessarily. But we do think there's a great opportunity in the marketplace for the right opportunities with some great technology that we can add our technology to that we think could be growing. We're putting the pieces in place to be able to establish a good platform to continue to scale to that. So we do see some opportunities out there. If we were to be looking at the rest of the year, if we did something it may be something on a smaller scale. But again, we will only look at deals that are actively enclosed deals that we think are -- create great shareholder value. Our history shows that we typically look at things from the single digit figures from a multiple perspective. So we'll continue to try to be disciplined in our approach and rebalance.

And then to add to that too that as we -- as John touched on earlier, this TriSource acquisition really helps enhance our M&A strategy. We think that having our own backend platform can really make some of these acquisition opportunities more attractive and provide synergy opportunities and realization that we didn't have previously. So we think TriSource, in addition just allowing us to control our backend and allowing us to enhance our technology, provides real value for our M&A strategy.

Our next question comes from the line of Andrew Jeffrey with SunTrust. Please proceed with your question.

Good afternoon. Appreciate you taking the question. John, I wondered if you could elaborate a little bit on TriSource? Could you talk about other verticals or other processors for which it processes, and what the mix of the business is today?

So from a TriSource perspective, it is predominantly a back end processor. They have their own direct business, but it's predominantly processing business. Which we like and we want to continue to grow, and enhance the technology around that and expand that as that grows. But it is over majority of this maybe 70 plus percent processing business.

Why is it the processing 70…

I'm not saying processing it would be processing like, just like they process for us, our back end settlement.

I guess, I'm just wondering how big a customer Repay is and TriSource, and for what other front end platforms that make new processes?

So we are at least 25% from a customer size for them. And then from a front end perspective, they have a two or three different front ends that they take files from. They are not a front end processor themselves.

Right, so that's 25%. And then I wonder so much value like which Repay and Repay's case is being created at the front end. Could you elaborate a little bit on what -- the types of, if not specific products, but the kinds of benefits or value add to take -- to bring to market by virtue of have even more vertically integrated or integrated front to back?

So remember, our customers are financial institutions that are non-banks. So they need a third party processor to actually take payments. They're not banks themselves. So the need for just the movement and the taking of payments we -- in addition to that, we're delivering the whole financial technology experience there from a PCI perspective. But also, if they're using our bill presentment engine, they would just be white labeling our bill presentment engine to take a web payment. They would be using our IVR system to take a payment over IVR. They would also be using our -- maybe our mobile app, or -- and they were integrated into their entire loan management system from a overall cashless perspective settling up their funds. So we see the whole total integration being a huge value add for them. Our technology adds a lot of value there. It's kind of the moat around our business. And as you can imagine, if the more channels they begin to use, the more enhanced the consumer experience is there. And we're bringing them the cutting edge technology for -- to enhance their overall payment experience for their end customer, which was the borrower in many cases.

Okay. I look forward to earning more, and just one last one, if I could squeeze it in here is. You mentioned maybe a little mix affecting yield, and auto is obviously a huge market opportunity. Is there the potential that's not captured by your guidance for a big customer like the Cactus come on from an absolute dollar volume perspective, or did you -- is your guidance reflect all the significant on-boarding that you're going to do this year?

I think there is an opportunity. We are in discussions with some of those. Those tend to take a little bit longer, because they're typically RFP processes. But we are in discussions with some of the captives. I wouldn't say it's fully baked into the numbers. But just because of the timing and how long that could take to complete and roll out. But that is part of our -- those all are part of our discussion. It is part of our pipeline but it could be -- lead to a little bit of upside.

Our next question comes from a line of Mike Grondahl with Northland Securities. Please proceed with your question.

This is Owen in for Mike. I'm just wondering how the trends were in personal loan and auto loan segments?

Yes, personal loans continues to be our -- we've been in there -- we've been in that space the longest, so it continues to be the largest part of our mix. And it's still strong. We still have a lot of organic growth and same store sales growth with existing customers. But as we've been discussing, we are focusing our sales efforts on auto. And we have seen more of our volume growth coming from the auto space, which means we still think it's an enormous opportunity. We have a very large market to address. And it's where we're focusing our efforts. So trends are still very strong in both personal loans and auto, but we are still focused on growing the auto space.

And follow-up, what is like the outlook for signing up integrated partner?

Well, we added to this quarter, as John mentioned, so we're at 56 now and we probably want to do one to three a quarter, I would say, is a good estimate. And so we've been in that range now for the first half of 2019.

Our next question is a follow up question from Bob Napoli with William Blair. Please proceed with your question.

Just wanted to follow-up on the balance sheet and with the M&A pipeline that you have and your leverage at 3.5. What are you willing to take the leverage up to? And how quickly do you deleverage? How much dry powder do you have? I mean it looks like -- the TriSource looks like perfect fit for you guys. But just as a little more color on the balance sheet would be helpful.

So we agree, it was very strategic for us. And as I mentioned, we expect combined net leverage to be about 3.5 times. We have about $60 million of capacity between cash and our credit facilities. And so as Jon said, if we were to do another acquisition this year, it may not need to be on the smaller side. If we're going to do a larger acquisition, we probably we need to access public currency. So we really want to try to stay in that 3.5 times range and not stretch too far beyond that. But we're buying businesses with EBITDA and we're buying businesses that are growing very quickly. And we ourselves organically are growing very quickly. So we feel like we would de-lever down probably below three a quarter, three times quickly within call it six to 12 months, which is what we've historically done. And so that will give us the additional capacity for acquisitions.

And then on TriSource, their customer base. Is there any risk of losing customers? Do you have any -- are there any significant customers that are competitors of yours?

No, there is not any significant customers that are competitors. Obviously, we are the largest customer so feel good about that.

And then you had talked about the healthcare market as a potential sector. Are you making any progress on the healthcare space?

Yes, we're organically growing there. And healthcare to us, we look at that as a revenue cycle management part of that. For example, the outsourcing of, say receivables from, like a hospital, or. So that's something we're still getting some traction in. We're just organically going there. Some of it take some time with some integrations. We see some positive signs there. That will take a little while. It's usually a bit longer sales cycle but we still see there's a very viable vertical for us, and we will continue to invest there.

Ladies and gentlemen, we have reached the end of the question and answer session. And this does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.