Good afternoon, and welcome to Repay's Third Quarter 2025 Earnings Conference Call. With us today are John Morris, Co-Founder and Chief Executive Officer, and Robert Hauser, Chief Financial Officer. During this call, we will be making forward-looking statements about our beliefs and estimates regarding future events and results. Those forward-looking statements are subject to risks and uncertainties, including those set forth in the SEC filings related to today's results and in our most recent Form 10-K. Actual results may differ materially from any forward-looking statements that we make today. 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 reference certain non-GAAP financial measures. Reconciliations and other explanations of those non-GAAP financial measures can be found in today's press release and in the earnings supplement, each of which are available on the company's IR site. With that, I will now turn the call over to John.

Thanks, Stewart. Good afternoon, and thank you for joining us today. During the third quarter, Repay executed on our promise to sequentially improve growth in the second half of the year. Our core growth strategy is built on our drive to optimize digital payment flows across our consumer and business payment verticals. We embed our payment technology into software platforms for a seamless experience. And during 2025, we remain focused on the path of returning to sustainable growth as we exit the year. In Q3, we achieved 5% revenue growth and 1% gross profit growth on a normalized year-over-year basis, which excludes the political media contributions during 2024. Our adjusted EBITDA margins remain robust at 40%, and we continue to generate strong free cash flow conversion of 67% while reinvesting into organic growth initiatives. These financial results demonstrate the strategic improvements that are underway. Across Repay, we have been enhancing our go-to-market implementation pipelines and operations. We're automating processes, strengthening partnerships, enriching our capabilities, and fine-tuning our clients' experience. We are testing and deploying AI tools across the company to build Repay for a scalable future. Repay is using real-time API observability for our gateway monitoring, which is leading to some of the highest authorization and uptime across the industry. We have been utilizing assisted AI functionality during the client onboarding process for faster API connectivity with software partners, reducing manual documentation, and improving implementations. During the quarter, we developed Repay's Dynamic Wallet, allowing loan payments to be seamlessly integrated into iOS and Android's digital wallet. Dynamic Wallet provides instant access to loan details, reminders to make payments on time, and tap and pay directly within the consumer's digital wallet. Easier access leads to a better customer experience for our clients and increased digital payments for faster and secure transactions.…

Thank you, John, and good afternoon, everyone. First, I'm very excited to join Repay. My first couple of months have been incredible and busy. I've been learning about the company culture and technology, all of which have confirmed my belief in the opportunities ahead. Repay is a tremendous payment platform across our consumer and B2B verticals that is positioned to benefit from the secular digital payment trends. I look forward to digging deeper and getting to work and helping drive the company forward. Now let's go over our financial results for Q3 2025. Revenue was $77.7 million, and gross profit was $57.8 million. Normalized revenue growth and gross profit growth increased 51%, respectively, which excludes the political media contributions during last year's presidential election cycle. Our Q3 growth was impacted by approximately 4% as we continue to lap the previously discussed client losses from 2024. When excluding these impacts, Q3 gross profit increased mid-single digit year over year. During Q3, our gross profit margins compressed approximately 3.4% year over year. Our gross profit margins were impacted from lapping one-off client losses and contributions from political media, a larger mix of clients with volume discounts as our client base volumes continue to grow significantly, and we continue to ramp enterprise clients with volume pricing. An increased mix of revenue from ACH and check volumes. As our clients adopt more of our modalities and undergo provider consolidation, we are processing more of our clients' overall volumes. In addition, we have experienced an increase in average transaction value as we continue to move upmarket towards larger enterprise clients. Higher overall transaction values caused higher than expected assessment fees on capped interchange lines. Going forward, we expect these impacts to continue. Consumer payments gross profit increased 1% year over year. Our 3% impact from…

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2. For participants using speaker equipment, it may be necessary to pick up your before pressing the star key. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from the line of Peter Heckmann from D.A. Davidson. Please go ahead.

Hey. Good afternoon. Thanks for taking the question. In terms of the free cash flow outlook, I guess, do you see that trending into 2026? You know, we've seen, you know, fairly strong or fairly high free cash flow conversion in some years and kind of off in some years. But I think your updated guidance is now greater than 50% for 2025. I guess, you know, kind of best guess is for 2026. How are you positioning that?

Hi, Pete. It's Rob. Thanks for the question. Yeah. So we're I can lay out how we're thinking about it for Q4, and we're gonna give 2026 guidance in the next earnings call. But we're rolling you know, we'd expect to be in the upper fifties in Q4, and it's really due to just working capital timing. We had a 67% free cash flow conversion in Q3, which was pretty strong. As we talk about working capital and some of the margin compression that we laid out on this call, we're holding around the upper fifties. And I would model it that as our exit rate going into 2026.

Okay. That's helpful. And then just can you remind us, it may be in the appendix of the slide deck, but just the specific political media spend headwind from the fourth quarter of last year.

Yeah. So the headwind we had in the fourth quarter last year was $4.6 million of gross profit. For the fourth quarter of last year and on an annual basis, the political media was around $11.75 million for fall 2024.

Okay. On a gross profit basis. Got it. Alright. I'll get back in the queue. Appreciate it.

Yeah. No problem.

Thank you. Ladies and gentlemen, if you wish to ask a question, please press and one. The next question comes from the line of Tim Chiodo from UBS. Please go ahead.

Great. Thank you for taking the question. I was hoping you could expand a little bit upon within the B2B business. The Visa commercial enhanced data program, the CEDT, that's been rolling out this year. Talk a little bit about the various data requirements, maybe how they differ from the prior level two, level three requirements, what you think this might mean for overall B2B interchange, what are some of the puts and takes there? And, of course, I believe there's a slightly higher network fee associated with it as well. We would appreciate any of the context on your business and for the industry overall.

Hi, Tim. So, good evening. How are you? This is John. And specifically, was your question on the B2B side? Was it associated with the AP side or the AR side? You may have not been specific. I'll talk a little bit about that. It's a very detailed question as well, so I won't go so deep.

Okay. I guess on the AR side, it might mean slightly lower interchange. And on the AP side, I'm sorry. Hold on. So might be slightly lower as well. So I was just wondering I mean, I guess both is the short answer. But, really, I was hoping you could talk about what the requirement changes are, if there's anything you need to do differently on the AR side. And then what it might mean in terms of the interchange rates that you might earn on the AP side. And then, also, there's that little extra network fee, I believe, as well.

Yeah. So there's I'll start on the so level ultimately, it's level two, three, and level two itself is going to be going away. And that's really talking about the enriched data coming out of the invoices coming really from the mostly from the accounting ERP systems. And there's several different requirements there to go through that, and those have to be passed through with the transaction to qualify for the level three rates. The level three rates themselves are a little bit better. But the level two rates, you have to now add some additional incremental pieces of data to that to get to qualify for the level three rates. We obviously are very aware of that. Visa is really associated with Visa. And those requirements are actually, Visa is fine-tuning some of those things as you uniquely this will come out ultimately in the next spring. But they're doing testing with many of those things today. So we're working through that. Our ability to pull data, our embedded solutions is a positive thing for us. Meaning, like, we have the ability to be able to go and work with our ERP systems to achieve that. But it's a work in process for most everybody in the industry. As those are a few changes that have come about. And on the AP side, obviously, we have virtual cards that can be Visa or Mastercards. So we would look to optimize what's best in our favor on the AP side as in that case, we're receiving interchange on the AP side. So we would optimize what's the best rate for us there.

Understood. Alright. Thank you so much.

Thank you. Ladies and gentlemen, if you wish to ask a question, once again, a reminder, ladies and gentlemen, if you wish to ask a question, we take the next question from the line of James Faucette from Morgan Stanley. Please go ahead.

Hi. This is Shefali Tamaskar on for James. Thanks for taking my question. Just on consumer payments, in the presentation, you called out some pockets of consumer softness. Could you speak to what subverticals you're seeing this in most and what trends have looked like through early November, if possible?

Sure. So good evening, Shefali. So from an overall perspective, on the consumer side, we would consider a stable consumer on the marketplace. Obviously, we're not the actual those are not actually our end customers. Our customers are businesses. But we consider a stable consumer. And then softness wise, we've talked about previously that we saw some softness in the automotive to used car piece of that. We think that's still relatively in the same position there. And that would be consistent with what we've seen previously, and we see that consistently the same now.

Great. That's helpful. And then you mentioned also being open to M&A as you look ahead to '26. So I just wanted to hear about what potential targets look most interesting to you in terms of where you're seeing most like subvertical momentum across business payments and consumer payments? I know you've previously called out B2B being the more focused point for M&A, but curious how the pipeline looks today.

Sure. So a couple of things. So as we mentioned earlier on the call, we actually take we bought back stock up to 8% of the stock in the July, August time frames. And then we actually, as you've heard as well, we retired $73.5 million of our February convertible debt. That's still a priority for us from a capital allocation perspective is addressing our February maturity, which we expect to do. But from an M&A pipeline perspective, we do see a healthy pipeline of some activity in the marketplace. We are gonna obviously always pay attention to opportunistically where that is. We see that both in consumer and B2B. And just for clarification, we bought 3% in August, 8% year to date. Just wanted to get that clarification when we bought back stock.

Got it. Thank you.

We take the next question from the line of Alex Newman from Stephens Inc. Please go ahead.

Hi. Thanks for taking the question. I just wanted to double click on the nature of the net working capital that's leading to the lower of the free cash flow conversion? Thank you.

Yeah. I mean, it's hi. How are you doing, Alex? This is Rob. It's really just when we snapped the line on when working capital. And you know, like I said, when we've been generating pretty good free cash flow. Conversion at 67% in the quarter. And the guide slightly down from what we had in Q4 previously at 60% to above 50% is literally just timing of when we snap the chalk line on working capital. For the year as well as the compression that we talked about for going upmarket and some of the pay modality mix that we saw that fell through on the GP is probably the biggest driver to where the guide now is above 50%. But we continue to yeah. Go ahead. Go ahead.

No. Sorry.

No. I was just gonna finish that. We continue to generate free cash flow, really good free cash flow conversion. Again, it was just really snapping the chalk line on when the working capital falls through.

Got it. And then a couple of quarters ago, you announced a partnership with the Gateway in Canada. I was just wondering if you could update us on that partnership and how that's ramping.

We're still working through our implementation integrations there, so no major real update associated with that currently.

Got it. Thank you.

Thank you. Ladies and gentlemen, a reminder, ladies and gentlemen, if you wish to ask a question, please press star and 1. As there are no further questions, I would now hand the conference over to the Co-Founder and Chief Executive Officer John Morris, for his closing comments.

Thank you, everyone. I do have a slight correction on our supplier count that we mentioned earlier on the call. We're exiting Q3 with 524,000 suppliers. A very good number for us. We're excited about our growth rate there. As I close this out, thank you for your time today. Continue to make great progress in our strategic initiatives. Remaining focused on returning to profitable normalized growth, generating strong free cash flow, and maintaining a strong balance sheet for financial flexibility. Thanks again for joining us.

Thank you. Ladies and gentlemen, the conference of Repay Holdings Corporation has now concluded. Thank you for your participation. You may now disconnect your lines.