REPAY Reports Fourth Quarter and Full Year 2021 Financial Results

Rhea-AI Summary

Repay Holdings Corporation (NASDAQ: RPAY) reported strong financial results for Q4 and FY 2021. Card payment volume reached $5.6 billion in Q4, up 43% year-over-year, while total revenue was $62.2 million, a 50% increase. Gross profit soared 57% to $47.2 million. For the full year, card payment volume was $20.5 billion, total revenue hit $219.3 million, and gross profit rose to $163.8 million. However, net losses were $(17.4) million in Q4 and $(56.0) million for the year. The company forecasts 2022 card payment volume between $27 and $28 billion, projecting total revenue of $296 - 306 million.

Positive

• Q4 card payment volume increased by 43% YoY to $5.6 billion.
• Total revenue grew by 50% YoY to $62.2 million in Q4.
• Gross profit rose by 57% YoY to $47.2 million in Q4.
• Adjusted net income increased by 130% YoY to $27.0 million in Q4.
• 2022 outlook projects card payment volume of $27 - 28 billion and total revenue of $296 - 306 million.

Negative

• Net loss increased to $(17.4) million in Q4 from $(8.9) million a year prior.
• Full year net loss was $(56.0) million, although improved from $(117.4) million in 2020.

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, 2021.

“We reported a strong fourth quarter, capping off another successful year of growth for REPAY, both organically and through acquisitions. In 2021, we experienced card payment volume and gross profit growth of 35% and 44%, respectively, compared to 2020,” said John Morris, CEO of REPAY. “We are well positioned for another successful year of growth in 2022, and we will continue to position ourselves to take advantage of the many secular trends towards frictionless digital payments that have been, and we expect will continue to be, a tailwind driving our business.”

Three Months Ended December 31, 2021 Highlights

• Card payment volume was $5.6 billion, an increase of 43% over the fourth quarter of 2020
• Total revenue was $62.2 million, a 50% increase over the fourth quarter of 2020
• Gross profit was $47.2 million, an increase of 57% over the fourth quarter of 2020
• Net loss was ($17.4) million, as compared to a net loss of ($8.9) million in the fourth quarter of 2020
• Adjusted EBITDA¹, revised definition was $27.8 million, an increase of 58% over the fourth quarter of 2020
• Adjusted Net Income¹, revised definition was $27.0 million, an increase of 130% over the fourth quarter of 2020
• Adjusted Net Income¹ per share, revised definition was $0.28

Twelve Months Ended December 31, 2021 Highlights

• Card payment volume was $20.5 billion, an increase of 35% over the full year 2020
• Total revenue was $219.3 million, a 41% increase over the full year 2020
• Gross profit was $163.8 million, an increase of 44% over the full year 2020
• Net loss was $(56.0) million, as compared to net loss of $(117.4) million in the full year 2020
• Adjusted EBITDA¹, revised definition was $93.2 million, an increase of 57% over the full year 2020
• Adjusted Net Income¹, revised definitionwas $73.0 million, an increase of 100% over the full year 2020
• Adjusted Net Income¹ per share, revised definition was $0.80

Gross profit represents total revenue less cost of services. Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per share are non-GAAP financial measures. See “Non-GAAP Financial Measures” and the reconciliations of Adjusted EBITDA and Adjusted Net Income to their most comparable GAAP measures provided below for additional information.

¹ Beginning with the fourth quarter of 2021, the Company changed its definitions of its non-GAAP financial measures to simplify the presentation and enhance comparability between periods. A historical reconciliation of net income to both the revised and previous definitions of Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share is set forth in the attachment to this release.

2022 Outlook

“We are pleased with our fourth quarter performance, reporting gross profit growth of 57%,” said Tim Murphy, CFO of REPAY. “In 2022, we will continue to invest in sales, product and technology to further accelerate our growth and position us well for the digital shifts our industry is experiencing across the verticals we serve. Our outlook assumes organic growth of approximately 20%, which we expect to gradually increase throughout 2022, with much stronger growth in the second half of the year.”

The change in methodology for REPAY’s Non-GAAP financial measures has no impact on the Company’s outlook for 2022 and any subsequent periods, as Adjusted EBITDA is presented below under the revised definition. REPAY expects the following financial results for full year 2022.

	Full Year 2022 Outlook
Card Payment Volume	$27 - 28 billion
Total Revenue	$296 - 306 million
Gross Profit	$224 - 232 million
Adjusted EBITDA	$128 - 134 million

This range assumes no further unforeseen COVID-related impacts, which could create substantial economic duress in 2022. REPAY does not provide quantitative reconciliation of forward-looking, non-GAAP financial measures, such as forecasted 2022 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 2021 financial results today, March 1, 2022, at 5:30 pm ET. Hosting the call will be John Morris, CEO, and Tim Murphy, CFO. The call will be webcast live from REPAY’s investor relations website at https://investors.repay.com/investor-relations. The conference call can also 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 13726126. The replay will be available at https://investors.repay.com/investor-relations.

Non-GAAP Financial Measures

This report includes certain non-GAAP financial measures that management uses to evaluate the Company’s operating business, measure 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 charges deemed to not be part of normal operating expenses, non-cash charges and/or non-recurring charges, such as loss on extinguishment of debt, loss on termination of interest rate hedge, non-cash change in fair value of warrant liabilities, non-cash change in fair value of contingent consideration, non-cash change in fair value of assets and liabilities, share-based compensation charges, transaction expenses, employee recruiting costs, other taxes, restructuring and other strategic initiative 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 charges deemed to not be part of normal operating expenses, non-cash charges and/or non-recurring charges, such as loss on extinguishment of debt, loss on termination of interest rate hedge, non-cash change in fair value of warrant liabilities, non-cash change in fair value of contingent consideration, non-cash change in fair value of assets and liabilities, share-based compensation expense, transaction expenses, employee recruiting costs, restructuring and other strategic initiative costs, other non-recurring charges, non-cash interest expense and net of tax effect associated with these adjustments. 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 REPAY excludes amortization from acquisition-related intangibles from its 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 an as-converted basis assuming conversion of the outstanding units exchangeable for shares of Class A common stock) for the three and twelve months ended December 31, 2021 and 2020 (excluding certain shares subject to forfeiture). REPAY believes that Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per share 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, and Adjusted Net Income per share 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, 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, and Adjusted Net Income per share alongside other financial performance measures, including net income and REPAY’s other financial results presented in accordance with GAAP.

Beginning with the quarter ended December 31, 2021, REPAY changed its method of calculating Adjusted EBITDA and Adjusted Net Income by removing the adjustment related to legacy commission restructuring charges and their tax effects. Adjusted EBITDA and Adjusted Net Income for the years and quarters ended December 31, 2020 and 2019 were also adjusted to conform to the current presentation, resulting in reductions in the Adjusted EBITDA and Adjusted Net Income from the previously reported amounts. The presentation for Adjusted EBITDA and Adjusted Net Income for all periods presented have been updated to reflect these changes and a reconciliation between the revised and previous definitions of Adjusted EBITDA and Adjusted Net Income have been provided within the “Reconciliations of GAAP Net Income to Non-GAAP Adjusted EBITDA” and “Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income” tables below. The change in methodology for Non-GAAP financial measures has no impact on the Company’s outlook for 2022 and any subsequent periods.

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,” “should,” “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 2022 outlook and other financial guidance, expected demand on REPAY’s product offering, including further implementation of electronic payment options and statements regarding REPAY’s market and growth opportunities, and REPAY’s business strategy and the plans and objectives of management for future operations. 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 REPAY’s control.

In addition to factors disclosed in REPAY’s reports filed with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2021, 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: exposure to economic conditions and political risk affecting the consumer loan market, the receivables management industry and consumer and commercial spending; the impacts of the ongoing COVID-19 coronavirus pandemic and the actions taken to control or mitigate its spread; a delay or failure to integrate and/or realize the benefits of the Company’s recent acquisitions; 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, including the regulatory environment applicable to REPAY’s clients; 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; changes in accounting policies applicable to REPAY; and the risk that REPAY may not be able to 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 needs. REPAY’s proprietary, integrated payment technology platform reduces the complexity of electronic payments for clients, while enhancing the overall experience for consumers and businesses.

Consolidated Statement of Operations
($ in thousands)		Three Months ended December 31, 2021 (Unaudited)				Three Months ended December 31, 2020 (Unaudited)				Year ended December 31, 2021				Year ended December 31, 2020
Revenue		$	62,200			$	41,438			$	219,258			$	155,036
Operating expenses
Costs of services		$	15,000				11,457			$	55,484				41,447
Selling, general and administrative			33,421				21,537				120,053				87,302
Depreciation and amortization			26,312				16,776				89,692				60,807
Change in fair value of contingent consideration			5,947				500				5,846				(2,510	)
Impairment loss			2,180				—				2,180				—
Total operating expenses		$	82,860			$	50,270			$	273,255			$	187,046
Loss from operations		$	(20,660	)		$	(8,832	)		$	(53,997	)		$	(32,010	)
Interest expense			(916	)			(3,598	)			(3,679	)			(14,445	)
Loss on extinguishment of debt			—				—				(5,941	)			—
Change in fair value of warrant liabilities			—				—				—				(70,827	)
Change in fair value of tax receivable liability			(14,208	)			(384	)			(14,109	)			(12,439	)
Other income (expense)			15				(73	)			97				(3	)
Other loss			—				—				(9,099	)			—
Total other expense			(15,109	)			(4,055	)			(32,731	)			(97,714	)
Loss before income tax benefit			(35,769	)			(12,887	)			(86,728	)			(129,724	)
Income tax benefit			18,371				3,963				30,691				12,358
Net loss		$	(17,398	)		$	(8,924	)		$	(56,037	)		$	(117,366	)
Net loss attributable to non-controlling interests			(1,642	)			284				(5,952	)			(11,770	)
Net loss attributable to the Company		$	(15,756	)		$	(9,208	)		$	(50,085	)		$	(105,596	)
Weighted-average shares of Class A common stock outstanding - basic and diluted			88,431,186				71,166,120				83,318,189				52,180,911
Loss per Class A share - basic and diluted		($	0.18	)		($	0.13	)		($	0.60	)		($	2.02	)

Consolidated Balance Sheets
($ in thousands)		December 31, 2021				December 31, 2020
Assets
Cash and cash equivalents		$	50,049			$	91,130
Accounts receivable			33,236				21,311
Prepaid expenses and other			12,427				6,925
Total current assets			95,712				119,366
Property, plant and equipment, net			3,801				1,628
Restricted cash			26,291				15,375
Intangible assets, net			577,694				369,227
Goodwill			824,082				458,970
Operating lease right-of-use assets, net			10,500				10,075
Deferred tax assets			145,260				135,337
Other assets			2,500				—
Total noncurrent assets			1,590,128				990,612
Total assets		$	1,685,840			$	1,109,978
Liabilities
Accounts payable		$	20,083				11,880
Related party payable			17,394				15,812
Accrued expenses			26,819				19,216
Current maturities of long-term debt			—				6,761
Current operating lease liabilities			1,990				1,527
Current tax receivable agreement			24,496				10,240
Other current liabilities			1,566				-
Total current liabilities			92,348				65,436
Long-term debt, net of current maturities			448,485				249,953
Noncurrent operating lease liabilities			9,091				8,837
Tax receivable agreement, net of current portion			221,333				218,988
Other liabilities			1,547				10,583
Total noncurrent liabilities			680,456				488,361
Total liabilities		$	772,804			$	553,797
Commitments and contingencies
Stockholders' equity
Class A common stock, $0.0001 par value; 2,000,000,000 shares authorized, and 88,502,621 and 71,244,682 issued and outstanding as of December 31, 2021 and 2020, respectively			9				7
Class V common stock, $0.0001 par value; 1,000 shares authorized and 100 shares issued and outstanding as of December 31, 2020 and 2019			—				—
Additional paid-in capital			1,100,012				691,675
Accumulated other comprehensive loss			(2	)			(6,437	)
Accumulated deficit			(226,016	)			(175,932	)
Total Repay stockholders' equity			874,003				509,313
Non-controlling interests			39,033				46,868
Total equity		$	913,036			$	556,181
Total liabilities and equity		$	1,685,840			$	1,109,978

Key Operating and Non-GAAP Financial Data

Unless otherwise stated, all results compare fourth quarter and year ended 2021 results to fourth quarter and year ended 2020 results from continuing operations for the periods ended December 31, respectively.

The following tables and related notes reconcile these non-GAAP measures to GAAP information for the three-month and years ended December 31, 2021 and 2020:

		Three months ended December 31,									Year ended December 31,
(in $ thousands)			2021			2020		% Change				2021			2020		% Change
Card payment volume		$	5,643,146		$	3,954,934		43	%		$	20,463,810		$	15,194,939		35	%
Gross profit1			47,200			29,981		57	%			163,774			113,589		44	%
Adjusted EBITDA2			27,846			17,604		58	%			93,200			59,551		57	%

(1)		Gross profit represents total revenue less other costs of services.
(2)		Adjusted EBITDA is a non-GAAP financial measure that represents net income adjusted for interest expense, depreciation and amortization and certain other charges deemed to not be part of normal operating expenses, non-cash charges and/or 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 Net Income to Non-GAAP Adjusted EBITDA For the Three Months Ended December 31, 2021 and 2020 (Unaudited)
($ in thousands)		Three Months Ended December 31, 2021				Three Months Ended December 31, 2020 (k)
Revenue		$	62,200			$	41,438
Operating expenses
Costs of services		$	15,000			$	11,457
Selling, general and administrative			33,421				21,537
Depreciation and amortization			26,312				16,776
Change in fair value of contingent consideration			5,947				500
Impairment loss			2,180				—
Total operating expenses		$	82,860			$	50,270
Loss from operations		$	(20,660	)		$	(8,832	)
Other (expense) income
Interest expense			(916	)			(3,598	)
Change in fair value of tax receivable liability			(14,208	)			(384	)
Other income (expense)			15				(73	)
Total other expense			(15,109	)			(4,055	)
Loss before income tax benefit			(35,769	)			(12,887	)
Income tax benefit			18,371				3,963
Net loss		$	(17,398	)		$	(8,924	)
Add:
Interest expense			916				3,598
Depreciation and amortization (a)			26,312				16,776
Income tax benefit			(18,371	)			(3,963	)
EBITDA		$	(8,541	)		$	7,487
Non-cash change in fair value of contingent consideration (b)			5,947				500
Non-cash change in fair value of assets and liabilities (c)			14,208				384
Share-based compensation expense (d)			6,082				4,679
Transaction expenses (e)			5,507				3,147
Employee recruiting costs (f)			182				92
Other taxes (g)			352				29
Restructuring and other strategic initiative costs (h)			1,643				524
Other non-recurring charges (i)			2,466				762
Adjusted EBITDA, revised definition		$	27,846			$	17,604
Revised definition no longer adjusts for:
Commission restructuring charges (j)			—				1,394
Adjusted EBITDA, previous definition		$	27,846			$	18,998

Reconciliations of GAAP Net Income to Non-GAAP Adjusted EBITDA For the Years Ended December 31, 2021 and 2020 (Unaudited)
($ in thousands)		Year Ended December 31, 2021				Year Ended December 31, 2020 (k)
Revenue		$	219,258			$	155,036
Operating expenses
Costs of services			55,484				41,447
Selling, general and administrative			120,053				87,302
Depreciation and amortization			89,692				60,807
Change in fair value of contingent consideration			5,846				(2,510	)
Impairment loss			2,180				—
Total operating expenses		$	273,255			$	187,046
Loss from operations		$	(53,997	)		$	(32,010	)
Other (expense) income
Interest expense			(3,679	)			(14,445	)
Loss on extinguishment of debt			(5,941	)			—
Change in fair value of warrant liabilities			—				(70,827	)
Change in fair value of tax receivable liability			(14,109	)			(12,439	)
Other income (expense)			97				(3	)
Other loss			(9,099	)			—
Total other expense			(32,731	)			(97,714	)
Loss before income tax benefit			(86,728	)			(129,724	)
Income tax benefit			30,691				12,358
Net loss		$	(56,037	)		$	(117,366	)
Add:
Interest expense			3,679				14,445
Depreciation and amortization (a)			89,692				60,807
Income tax benefit			(30,691	)			(12,358	)
EBITDA		$	6,643			$	(54,472	)
Loss on extinguishment of debt (l)			5,941				—
Loss on termination of interest rate hedge (m)			9,080				—
Non-cash change in fair value of warrant liabilities (n)			—				70,827
Non-cash change in fair value of contingent consideration (b)			5,846				(2,510	)
Non-cash change in fair value of assets and liabilities (c)			14,109				12,439
Share-based compensation expense (d)			22,311				19,446
Transaction expenses (e)			19,250				10,924
Employee recruiting costs (f)			612				214
Other taxes (g)			977				426
Restructuring and other strategic initiative costs (h)			4,578				1,103
Other non-recurring charges (i)			3,853				1,154
Adjusted EBITDA, revised definition		$	93,200			$	59,551
Revised definition no longer adjusts for:
Commission restructuring charges (j)			2,527				8,614
Adjusted EBITDA, previous definition		$	95,727			$	68,165

Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income For the Three Months Ended December 31, 2021 and 2020 (Unaudited)
($ in thousands)		Three Months Ended December 31, 2021				Three Months Ended December 31, 2020 (k)
Revenue		$	62,200			$	41,438
Operating expenses
Costs of services		$	15,000			$	11,457
Selling, general and administrative			33,421				21,537
Depreciation and amortization			26,312				16,776
Change in fair value of contingent consideration			5,947				500
Impairment loss			2,180				—
Total operating expenses		$	82,860			$	50,270
Loss from operations		$	(20,660	)		$	(8,832	)
Other (expense) income
Interest expense			(916	)			(3,598	)
Change in fair value of tax receivable liability			(14,208	)			(384	)
Other income (expense)			15				(73	)
Total other expense			(15,109	)			(4,055	)
Loss before income tax benefit			(35,769	)			(12,887	)
Income tax benefit			18,371				3,963
Net loss		$	(17,398	)		$	(8,924	)
Add:
Amortization of acquisition-related intangibles (o)			23,174				14,188
Non-cash change in fair value of contingent consideration (b)			5,947				500
Non-cash change in fair value of assets and liabilities(c)			14,208				384
Share-based compensation expense (d)			6,082				4,679
Transaction expenses (e)			5,507				3,147
Employee recruiting costs (f)			182				92
Restructuring and other strategic initiative costs (h)			1,643				524
Other non-recurring charges (i)			2,466				762
Non-cash interest expense (p)			676				—
Pro forma taxes at effective rate (q)			(15,535	)			(3,655	)
Adjusted Net Income, revised definition		$	26,952			$	11,697
Shares of Class A common stock outstanding (on an as-converted basis) (r)			96,357,762				79,524,966
Adjusted Net Income per share, revised definition		$	0.28			$	0.15
Revised definition no longer adjusts for:
Commission restructuring charges (j)			—				1,394
Change in tax effect of adjustment (s)			—				(229	)
Adjusted Net Income, previous definition		$	26,952			$	12,862
Adjusted Net Income per share, previous definition		$	0.28			$	0.16

Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income For the Years Ended December 31, 2021 and 2020 (Unaudited)
($ in thousands)		Year Ended December 31, 2021				Year Ended December 31, 2020 (k)
Revenue		$	219,258			$	155,036
Operating expenses
Costs of services			55,484				41,447
Selling, general and administrative			120,053				87,302
Depreciation and amortization			89,692				60,807
Change in fair value of contingent consideration			5,846				(2,510	)
Impairment loss			2,180				—
Total operating expenses		$	273,255			$	187,046
Loss from operations		$	(53,997	)		$	(32,010	)
Other (expense) income
Interest expense			(3,679	)			(14,445	)
Loss on extinguishment of debt			(5,941	)			—
Change in fair value of warrant liabilities			—				(70,827	)
Change in fair value of tax receivable liability			(14,109	)			(12,439	)
Other income (expense)			97				(3	)
Other loss			(9,099	)			—
Total other expense			(32,731	)			(97,714	)
Loss before income tax benefit			(86,728	)			(129,724	)
Income tax benefit			30,691				12,358
Net loss		$	(56,037	)		$	(117,366	)
Add:
Amortization of acquisition-related intangibles (o)			79,932				52,126
Loss on extinguishment of debt (l)			5,941				—
Loss on extinguishment of interest rate hedge (m)			9,080				—
Non-cash change in fair value of warrant liabilities (n)			—				70,827
Non-cash change in fair value of contingent consideration (b)			5,846				(2,510	)
Non-cash change in fair value of assets and liabilities (c)			14,109				12,439
Share-based compensation expense (d)			22,311				19,446
Transaction expenses (e)			19,250				10,924
Employee recruiting costs (f)			612				214
Restructuring and other strategic initiative costs (h)			4,578				1,103
Other non-recurring charges(i)			3,853				1,154
Non-cash interest expense (p)			2,536				—
Pro forma taxes at effective rate (q)			(38,998	)			(11,813	)
Adjusted Net Income, revised definition		$	73,013			$	36,544
Shares of Class A common stock outstanding (on an as-converted basis) (r)			91,264,512				73,373,106
Adjusted Net Income per share, revised definition		$	0.80			$	0.50
Revised definition no longer adjusts for:
Commission restructuring charges (j)			2,527				8,614
Change in tax effect of adjustment (s)			(571	)			(1,413	)
Adjusted Net Income, previous definition		$	74,969			$	43,745
Adjusted Net Income per share, previous definition		$	0.82			$	0.60

Quarterly Reconciliations of GAAP Net Income to Non-GAAP Adjusted EBITDA (Unaudited)
		Predecessor											Successor
($ in thousands)		Three Months Ended March 31, 2019			Three Months Ended June 30, 2019			July 1, 2019 through July 10, 2019					July 10, 2019 through September 30, 2019				Three Months Ended September 30, 2019 (Combined)				Three Months Ended December 31, 2019				Three Months Ended March 31, 2020				Three Months Ended June 30, 2020				Three Months Ended September 30, 2020				Three Months Ended December 31, 2020				Three Months Ended March 31, 2021				Three Months Ended June 30, 2021				Three Months Ended September 30, 2021				Three Months Ended December 31, 2021
Net income (loss)		$	4,864		$	4,156		$	(32,763	)			$	(15,882	)		$	(48,645	)		$	(30,939	)		$	(13,182	)		$	(83,200	)		$	(12,060	)		$	(8,924	)		$	(17,981	)		$	(13,351	)		$	(7,308	)		$	(17,398	)
Add:
Interest expense			1,449			1,470			227					2,686				2,913				3,236				3,518				3,704				3,624				3,598				1,183				817				764				916
Depreciation and amortization (a)			2,914			2,975			333					10,703				11,036				4,895				13,904				14,706				15,421				16,776				17,793				19,679				25,907				26,312
Income tax benefit			—			—			—					(2,719	)			(2,719	)			(2,272	)			(1,116	)			(3,897	)			(3,383	)			(3,963	)			(5,942	)			(4,117	)			(2,261	)			(18,371	)
EBITDA		$	9,227		$	8,601		$	(32,203	)			$	(5,212	)		$	(37,415	)		$	(25,080	)		$	3,124			$	(68,687	)		$	3,602			$	7,487			$	(4,947	)		$	3,028			$	17,102			$	(8,541	)
Loss on extinguishment of debt (l)			—			—												1,316				64				—				—				—				—				5,941				—				—				—
Loss on termination of interest rate hedge (m)			—			—												—				—				—				—				—				—				9,080				—				—				—
Non-cash change in fair value of warrant liabilities (n)			—			—												—				15,258				6,898				66,670				(2,740	)			—				—				—				—				—
Non-cash change in fair value of contingent consideration (b)			—			—												—				—				—				740				(3,750	)			500				2,649				(1,200	)			(1,550	)			5,947
Non-cash change in fair value of assets and liabilities (c)			—			—												451				1,188				542				10,038				1,475				384				(1,043	)			4,355				(3,411	)			14,208
Share-based compensation expense (d)			127			124												10,409				12,262				3,523				5,475				5,768				4,679				5,151				5,505				5,573				6,082
Transaction expenses (e)			1,686			810												35,017				2,613				2,869				1,575				3,332				3,147				2,340				6,978				4,425				5,507
Management Fees(t)			100			100												11				—				—				—				—				—				—				—				—				—
Employee recruiting costs (f)			15			0												18				18				0				56				67				92				136				38				256				182
Other taxes (g)			59			168												32				(33	)			186				39				171				29				139				420				66				352
Restructuring and other strategic initiative costs (h)			124			93												80				56				78				112				389				524				628				945				1,362				1,643
Other non-recurring charges (i)			—			—												114				101				130				202				60				762				386				334				667				2,466
Adjusted EBITDA, revised definition		$	11,338		$	9,896											$	10,033			$	6,447			$	17,350			$	16,221			$	8,374			$	17,604			$	20,460			$	20,403			$	24,490			$	27,846
Revised definition no longer adjusts for:
Commission restructuring charges (j)			—			550												1,877				130				—				—				7,221				1,394				—				—				2,527				—
Adjusted EBITDA, previous definition		$	11,338		$	10,446											$	11,910			$	6,577			$	17,350			$	16,221			$	15,595			$	18,998			$	20,460			$	20,403			$	27,017			$	27,846

Quarterly Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income (Unaudited)
		Predecessor											Successor
($ in thousands)		Three Months Ended March 31, 2019			Three Months Ended June 30, 2019			July 1, 2019 through July 10, 2019					July 10, 2019 through September 30, 2019				Three Months Ended September 30, 2019 (Combined)				Three Months Ended December 31, 2019				Three Months Ended March 31, 2020				Three Months Ended June 30, 2020				Three Months Ended September 30, 2020				Three Months Ended December 31, 2020				Three Months Ended March 31, 2021				Three Months Ended June 30, 2021				Three Months Ended September 30, 2021				Three Months Ended December 31, 2021
Net income (loss)		$	4,864		$	4,156		$	(32,763	)			$	(15,882	)		$	(48,645	)		$	(30,939	)		$	(13,182	)		$	(83,200	)		$	(12,060	)		$	(8,924	)		$	(17,981	)		$	(13,351	)		$	(7,308	)		$	(17,398	)
Add:
Amortization of acquisition-related intangibles (o)			1,980			1,980												9,778				11,591				13,203				13,841				14,240				14,188				16,039				17,270				23,449				23,174
Loss on extinguishment of debt (l)			—			—												1,316				64				—				—				—				—				5,941				—				—				—
Loss on extinguishment of interest rate hedge (m)			—			—												—				—				—				—				—				—				9,080				—				—				—
Non-cash change in fair value of warrant liabilities (n)			—			—												—				15,258				6,898				66,670				(2,740	)			—				—				—				—				—
Non-cash change in fair value of contingent consideration (b)			—			—												—				—				—				740				(3,750	)			500				2,649				(1,200	)			(1,550	)			5,947
Non-cash change in fair value of assets and liabilities(c)			—			—												451				1,188				542				10,038				1,475				384				(1,043	)			4,355				(3,411	)			14,208
Share-based compensation expense (d)			127			124												10,409				12,262				3,523				5,475				5,768				4,679				5,151				5,505				5,573				6,082
Transaction expenses (e)			1,686			810												35,017				2,613				2,869				1,575				3,332				3,147				2,340				6,978				4,425				5,507
Management Fees(t)			100			100												11				—				—				—				—				—				—				—				—				—
Employee recruiting costs (f)			15			—												18				18				—				56				67				92				136				38				256				182
Restructuring and other strategic initiative costs (h)			124			93												80				56				78				112				389				524				628				945				1,362				1,643
Other non-recurring charges (i)			—			—												114				101				130				202				60				762				386				334				667				2,466
Non-cash interest expense (p)			—			—												—				—				—				—				—				—				536				662				662				676
Pro forma taxes at effective rate (q)			—			—												(770	)			(832	)			(1,697	)			(4,427	)			(2,034	)			(3,655	)			(8,722	)			(7,693	)			(7,048	)			(15,535	)
Adjusted Net Income, revised definition		$	8,896		$	7,262											$	7,779			$	11,381			$	12,364			$	11,082			$	4,747			$	11,697			$	15,140			$	13,843			$	17,077			$	26,952
Shares of Class A common stock outstanding (on an as-converted basis) (r)																		57,531,359				62,840,068				67,130,452				69,623,608				78,885,221				79,524,966				84,578,585				87,734,237				92,581,752				96,357,762
Adjusted Net Income per share, revised definition																	$	0.14			$	0.18			$	0.18			$	0.16			$	0.06			$	0.15			$	0.18			$	0.16			$	0.18			$	0.28
Revised definition no longer adjusts for:
Commission restructuring charges (j)			—			550												1,877				130				—				—				7,221				1,394				—				—				2,527				—
Change in tax effect of adjustment (s)			—			—												(82	)			(6	)			—				—				(1,184	)			(229	)			—				—				(571	)			—
Adjusted Net Income, previous definition		$	8,896		$	7,812											$	9,574			$	11,505			$	12,364			$	11,082			$	10,784			$	12,862			$	15,140			$	13,843			$	19,033			$	26,952
Adjusted Net Income per share, previous definition																	$	0.17			$	0.18			$	0.18			$	0.16			$	0.14			$	0.16			$	0.18			$	0.16			$	0.21			$	0.28

(a)		See footnote (o) for details on amortization and depreciation expenses.
(b)		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.
(c)		Reflects the changes in management’s estimates of the fair value of the liability relating to the Tax Receivable Agreement.
(d)		Represents compensation expense associated with equity compensation plans, totaling $6,081,869 and $22,311,251 in the three months and year ended December 31, 2021, respectively, and totaling $4,679,451 and $19,445,800 in the three months and year ended December 31, 2020, respectively.
(e)		Primarily consists of (i) during the three months and year ended December 31, 2021, professional service fees and other costs incurred in connection with the acquisitions of Ventanex, cPayPlus, CPS Payments, BillingTree, Kontrol Payables and Payix, as well as professional service expenses related to the January 2021 equity and convertible notes offerings, and (ii) during the three months and year ended December 31, 2020, professional service fees and other costs incurred in connection with the acquisition of CPS Payments, and additional transaction expenses incurred in connection with the business combination with Thunder Bridge Acquisition Ltd. in 2019 (the “Business Combination”) and the acquisitions of TriSource Solutions, APS Payments, Ventanex and cPayPlus, as well as professional service expenses related to the June 2020 and September 2020 equity offerings.
(f)		Represents payments made to third-party recruiters in connection with a significant expansion of Company personnel, which REPAY expects will become more moderate in subsequent periods.
(g)		Reflects franchise taxes and other non-income based taxes.
(h)		Reflects consulting fees related to processing services and other operational improvements, including restructuring and integration activities related to acquired businesses, that were not in the ordinary course during the three months and years ended December 31, 2021 and 2020.
(i)		For the three months and years ended December 31, 2021 and 2020, reflects extraordinary refunds to clients and other payments related to COVID-19. Additionally, for the three months ended December, 31, 2021, reflects trade names impairment, for the year ended December 31, 2021, reflects non-cash rent expense and loss on disposal of fixed assets, and for the year ended December 31, 2020, reflects expenses incurred related to one-time accounting system and compensation plan implementation related to becoming a public company.
(j)		Represents fully discretionary charges incurred to restructure certain sales representatives’ commission arrangements, by making a one-time payment to the representative to buy out the right to receive future monthly commission payments associated with a portfolio of client contracts. The commission restructuring transactions are subject to negotiation and therefore do not follow a fixed structure, timetable or standard terms. Neither the Company nor the representatives are obligated to offer or accept such restructuring of commission arrangements. Beginning the quarter ended December 31, 2021, REPAY changed its method of calculating Adjusted EBITDA and Adjusted Net Income by removing the adjustment related to legacy commission restructuring charges.
(k)		Does not include adjustments of $8.1 million and $32.6 million for the three months and year ended December 31, 2020, respectively, which were presented as pro forma adjustments in previously filed reports, for incremental depreciation and amortization recorded due to fair-value adjustments for Hawk Parent under ASC 805 as a result of Business Combination.
(l)		Reflects write-offs of debt issuance costs relating to Hawk Parent’s term loans.
(m)		Reflects realized loss of REPAY’s interest rate hedging arrangement which terminated in conjunction with the repayment of Term Loans.
(n)		Reflects the mark-to-market fair value adjustments of the warrant liabilities.
(o)		For the three months and year ended December 31, 2021, reflects amortization of client relationships, non-compete agreement, software, and channel relationship intangibles acquired through the Business Combination, and client relationships, non-compete agreement, and software intangibles acquired through Repay Holdings, LLC’s acquisitions of TriSource Solutions, APS Payments, Ventanex, cPayPlus, CPS Payments, BillingTree, Kontrol Payables and Payix. For the three months and year ended December 31, 2020 reflects amortization of client relationships, non-compete agreement, software, and channel relationship intangibles acquired through the Business Combination, and client relationships, non-compete agreement, and software intangibles acquired through Repay Holdings, LLC’s acquisitions of TriSource Solutions, APS Payments, Ventanex, cPayPlus and CPS. 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 amortization expenses:

		Three months ended December 31,						Year ended December 31,
($ in thousands)		2021			2020			2021			2020
Acquisition-related intangibles		$	23,174		$	14,188		$	79,932		$	52,126
Software			2,714			2,291			8,464			7,467
Reseller buyouts			—			15			—			58
Amortization		$	25,888		$	16,494		$	88,396		$	59,651
Depreciation			424			282			1,296			1,156
Total Depreciation and amortization (1)		$	26,312		$	16,776		$	89,692		$	60,807

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 its 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.

(p)		Represents non-cash deferred debt issuance costs.
(q)		Represents pro forma income tax adjustment effect associated with items adjusted above and the tax effect adjustment of removing legacy commission restructuring charges. Beginning the quarter ended December 31, 2021, REPAY changed its method of calculating Adjusted EBITDA and Adjusted Net Income by removing the adjustment related to legacy commission restructuring charges and their tax effects.
(r)		Represents the weighted average number of shares of Class A common stock outstanding (on an as-converted basis) for the three months and years ended December 31, 2021 and 2020. These numbers do not include any shares issuable upon conversion of the Company’s convertible senior notes due 2026. See additional information below for an analysis of REPAY’s shares of Class A common stock outstanding:

		Three Months Ended December 31,				Year Ended December 31,
		2021		2020		2021		2020
Weighted average shares of Class A common stock outstanding - basic		88,431,186		71,166,120		83,318,189		52,180,911
Add: Non-controlling interests Weighted average Post-Merger Repay Units exchangeable for Class A common stock		7,926,576		8,358,846		7,946,323		21,192,195
Shares of Class A common stock outstanding (on an as-converted basis)		96,357,762		79,524,966		91,264,512		73,373,106

(s)		Represents tax effect adjustment of legacy commission restructuring charges. Beginning the quarter ended December 31, 2021, REPAY changed its method of calculating Adjusted EBITDA and Adjusted Net Income by removing the adjustment related to legacy commission restructuring charges and their tax effects.
(t)		Reflects management fees paid to Corsair Investments, L.P. pursuant to the management agreement, which terminated upon the completion of the Business Combination.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220301006058/en/

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

FAQ

What were Repay's Q4 2021 financial results?

Repay reported Q4 2021 total revenue of $62.2 million, a 50% increase YoY, and gross profit of $47.2 million, up 57% YoY.

What is Repay's outlook for 2022?

Repay expects 2022 card payment volume between $27 - 28 billion and total revenue of $296 - 306 million.

How did Repay's net loss change in Q4 2021?

Repay's net loss in Q4 2021 was $(17.4) million, a rise from $(8.9) million in Q4 2020.

What were Repay's total revenues for the full year 2021?

Repay's total revenue for FY 2021 was $219.3 million, a 41% increase compared to FY 2020.