Welcome to today's earnings 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 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 results. Actual results might 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. In an effort to provide additional information to investors, today’s discussion will also include references are in non-GAAP financial measures and explanation of these non-GAAP financial measures as well as a reconciliation of these non-GAAP measures to the nearest GAAP financial measures can be found in our earnings release available in 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 third quarter results. I’m pleased to announce another successful quarter. Our ability to deliver robust organic growth speaks to the strength of our people, and the consistent execution of our strategy, building on our unique competitive advantages, including our integrated platform, proprietary technology and our comprehensive solution set. We are consistently winning market share, and we continue to see strengths across our business. We're investing for the future, and we're delivering strong results for shareholders by pursuing highly strategic acquisitions, deploying new products and technologies and expanding into new verticals. We’re pleased with our results in the quarter, which included volume growth of 40% to $2.6 billion, gross profit growth of 39% to $19.4 million and adjusted EBITDA growth of 29% to $11.9 million compared to the third quarter of 2018. During the quarter, we made strong progress across key growth categories. Starting with organic growth, we expanded usage increased adoption of debit cards within our existing customer base. As we continue to see the secular shift away from cash check and ACH payments to debit cards. We continue to win new customers in existing and new verticals by leveraging our sales and marketing efforts with our open platform strategy to convert near-term pipeline of both merchants and software partners. We added three software partners during the quarter bringing our total number to 59. Software integrations are invaluable to our business, they enable our direct sales force to more easily access customer opportunities and respond to inbound leads. In the quarter, we announced that we joined the Jack Henry Symitar Vendor Integration Program providing access to over 800 credit unions. Participation in the program will provide us with connectivity to Symitar’s technical resources to enable…

Thanks, John. Now on to our Q3 results. As mentioned, REPAY delivered another strong quarter across all of our key metrics. Card payment volume was $2.6 billion an increase of 40% over the prior year’s third quarter. Total revenue was $41.1 million an increase of 27% over the prior year's third quarter. I'd like to also point out that Q3 results were up versus Q2. Our total revenue take rate during the quarter excluding TriSource was 1.62%, which is consistent with what we previously discussed. Including TriSource, our combined take rate was 1.57%. TriSource contributed $3.4 million of revenue during the third quarter. Moving on to expenses, Interchange and network fees were $14 million compared to $12 million in the third 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 $7.6 million compared to $6.3 million in the third quarter of 2018. The increase was primarily due to the addition of TriSource. However when excluding TriSource, the amount was down in Q3 consistent with trends in prior-periods. Gross profit was $19.4 million an increase of 39% over the prior-year’s third quarter. As a reminder, this is a key metric for us as this is how we price new customer deals and our sales team incentive structure is based on gross profit. We continue to experience expanding gross profit margins versus prior years. SG&A was $55.1 million compared to $6.1 million in the third quarter of 2018. The increase was primarily due to transaction costs related to closing of the business combination with Thunder Bridge and stock compensation expense related to new equity issuances. Third quarter pro forma net loss was $41.4 million compared to net income of $3.7 million in the third quarter…

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Mark Palmer with BTIG. Please proceed with your question.

Yes, gentlemen, very nice quarter. With regard to the M&A pipeline that you mentioned is being active, if you can talk a little bit about what areas you're potentially focused on and in particular, the extent to which an expansion of the B2B vertical may be a part of that?

Hey Mark, yes so we’re focused on M&A across a variety of verticals, both existing and new. As we've talked about, we're actively in discussions with various targets in all those verticals. And we do have, we do seize opportunities in B2B. There are some competitors of APS that could be interesting for us and allow us to expand in that vertical. So we're exploring that as well.

Okay, and with regard to Canada, you went live in the second quarter. If you could put that opportunity into perspective, what it could mean in terms of contribution starting in 2020?

Sure, so Canada as you're aware, we just went into Canada organically this year, we think a commitment and when we're going into a new vertical, even in a new market it’s a two to three year commitment. So this is our first year, we're continuing to build our ecosystem around that both front and back-end as well as our integrations to their various software integrated partners. And that takes a little bit of time, we are obviously building our potential client list and pipelines associated with that as well. We like all the signs that we see for the reasons we wanted to go there. Those all still exist. We're still excited about that. As far as 2020 goes, we think it would be year two into that investment. We think that we will see some important movement there as we continue to bring on potential new customers. But I would say it would be the latter part of 2020. And then obviously, in year three, if we're talking about just organically, we see that being the higher probability of contribution.

Very good. Thank you.

Our next question comes from the line of Mike Grondahl with Northland Capital Markets. Please proceed with your question.

Hi, yes, thanks guys. First question, the three new software partners get you to 59, I'm assuming Jack Henry is one of those with the credit union connection. What area or niche are the other two in?

Yes, hey Mike. Yes, so the other two are in auto vertical. And so as we've talked about, we're very focused on that from a sales perspective. And we have our sales team as well as our partner Relationship Manager focused on adding new auto relationships.

Got it. In both of the other two, software partners were auto?

Yes.

Okay. And then any high level comments just on the personal loan market in the auto market, just kind of what you're seeing incrementally out there?

Yes, so we've seen great activity across all of our verticals. All of our verticals we see strong progress, all the way across all verticals in personal loan including auto as well. We continue to have a strong organic sales pipeline there with contributions from each one of those verticals. And we're excited about even our fourth quarter associated with that.

Okay, thanks a lot.

Our next question comes from the line of Craig Maurer with Autonomous. Please proceed with your question.

Yes, hi, thanks. Regarding the guidance, despite the strong result, the underlying guidance was not increased, could you discuss why that was, was that related to take rate pressure from auto or cost of being a public company, et cetera which I would imagine you would have known about already. And secondly, there are two very large auto players out there that you guys don't have Credit Acceptance and Exeter. Could you talk about whether either of those guys might be in your sales pipeline? Thanks.

Sure, on the guidance point, as you've seen, we feel like we had a very strong quarter. And we feel good about the remainder of the year. We did want to make it clear that we're updating the ranges for the APS contributions, not because we see any weakness in the core business just because we wanted to remain conservative for the remainder of the year. That being said, we do feel positive about it and feel really good about this quarter as well. And then in terms of the large auto opportunities, we have had discussions with those and they’re in various stages, and that those are definitely in our pipeline, and it's something that we're targeting for 2020.

Okay, thanks gentlemen.

[Operator Instructions] Our next question comes from the line of Brian Hogan with William Blair. Please proceed with your question.

Yes, good afternoon. First question is actually on the capacity for additional deals mostly done TriSource and APS, how you leverage at 3.5 times. What is your capacity considering your active deal pipeline?

Yes, so we do have some capacity under our existing credit facility, we have cash on the balance sheet. And as you've seen, historically, we're buying businesses that have EBITDA and that are growing very quickly. And so as we ourselves de-lever, we’ll find additional capacity. And then those businesses that we’re acquiring will provide a further capacity and they'll continue to accelerate growth as well. And so we do feel comfortable in the 3.5 times, if something was very strategic, we may consider going slightly above that with a target of deleveraging back down closer to three times within six to 12 months. And so we do feel like there is room for additional M&A.

All right. The next question is actually I'm considering your acquisitions of TriSource and APS. What do you feel your long-term, have your long-term growth rates kind of targets changed, I mean I think you were targeting maybe a high teens organic growth rate, has that changed with the APS given a substantial market opportunity, or are you still targeting around the high-teens?

Yes, so that's APS is growing a little bit faster than our business and but it'll be a fairly minor contribution to the pro forma combined business. So we do think there's a potential for a slight pick-up in growth rates, but we still, we would still target the high teens.

Right. And last question for me at the moment is actually the gross margin came in at 72% or so, is that a margin that go forward levels? Or it was there kind of nuances in there given given obviously, there's moving parts with the TriSource and take rates and then what have you just kind of get some color on what the go forward should be?

Yes, and so if you see in our disclosures price versus gross profit margin is about 50%. And so, although it was fairly small contributor that that was part of that. And we would expect that, given APS’s margin profile that will probably stay consistent for the next few quarters, and then potentially be able to expand toward the end of next year. That being said both these acquisitions are driving additional gross profit dollars. So we feel good about where we are in margins and still feel like there's room for expansion, as we realize some of the synergies from APS and as we continue to decrease our processing costs.

All right, thank you.

Our next question comes from the line of Joseph Foresi with Cantor Fitzgerald. Please proceed with your question.

Hi, gentlemen, I apologize. I jumped on late. So I'm sure you've covered some of this. But let me just start with congratulating you on the acquisition and maybe you could talk strategically about how you think about the exposure to B2B at this point, and where you think you're going to be able to, to start to make an impact and maybe some of the operational positives that you're taking from your current business into that environment?

Sure. Hi, Joe. We're actually very excited about that as a new vertical for us. We think it's a very large TAM, and lots of opportunities there, just with many of the sub-verticals. As you can see, we're integrated with several of the accounting softwares which will lean towards some of the small businesses, but also kind of the small to mid-size ranges where we're at. B2B in itself is a very large space. We think that if we continue to invest in sales as well as technology, which is something where we think we have a core competency, and we can continue to expand that with them, add more resources there. There's several more integrations we think we can do, we can team-up with several additional channel partners in the B2B space. We think we can continue to accelerate our growth organically there. And we obviously see some possible opportunities out there in the inorganic side of that.

Got it and then just Tim, a question for you, just from a modeling perspective, what should we think or how should we think about kind of sequential versus annual, and anything you point out specifically around modeling that you'd want the investment community to know sort of going forward around the acquisition or otherwise?

Yes, I mean, like we've talked about, take rates have come down slightly as a result of TriSource and APS, we've been consistent with that. And so you'll see that it was down slightly in Q3. It's not anything to do with the core business. Our core business was at 162 basis points. And so that's actually a little bit higher than we had discussed previously. But take rate may continue to come down just because of the profiles of APS and TriSource. But as we've talked about, we focused on gross profit. We still feel strong about gross profit margins, and gross profit dollars and then I'd say also just with in terms of adjusted EBITDA margin, slight tick down from adding public company costs, which is something we've mentioned previously, we will continue to invest in the business for growth in terms of sales and technology. So I'd say adjusted EBITDA margin of 44% is consistent with what we would expect going forward.

Got it. And then the last one for me, as you look at expanding the business strategically, should we expect more opportunistic acquisitions within the core or outside the core or both? I'm just wondering, if there's more kind of to do, within sort of the core business or B2B or you open to finding the best ROIs? Thanks.

Yes, we're always looking at opportunities across verticals. I mean there are opportunities that exist in verticals and certainly as I mentioned earlier within some of the competitors in B2B, so but that we don't want to limit ourselves to our existing verticals because we do think there are attractive opportunities out there that and new verticals that would provide a really strong returns.

Thank you.

Our next question comes from the line of Brian Hogan with William Blair. Please proceed with your question.

Sorry, one more kind of follow-up question. And actually, Tim any comments, or any changes in the competitive dynamics of the markets, you focus on your core markets in particular and just kind of discuss your obviously it’s a massive market but the B2B payments and who your primary competitors are focused there?

Yes, we don't see any new competitive threats, I mean the players that we've discussed previously ACI and they're still competitor but nothing has changed in terms of that dynamic. And then, in B2B there are couple that we are pointing up against in these ERP integrations. But we think with our technology, we can actually expand within some of these existing integrations and win new business and then that creates potential M&A opportunities as well. So there's no new threats and will -- as we go deeper into B2B and learn more about that business, I'm sure we will gain more insights.

All right, thank you.

Just no further questions left in the queue, I would like to turn the call back over to Mr. Morris for any closing remarks.

Yes, thank you so much for your time today. We again are encouraged by our third quarter results of how the businesses continue to perform well. We're excited about our business. We're excited, grateful for our customers. And we're looking forward to a positive fourth quarter, as well as a positive 2020. Thank you for your time today.

This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.