Repay (NASDAQ: RPAY) grows Q1 revenue, lines up $372M KUBRA acquisition
Rhea-AI Filing Summary
Repay Holdings Corporation reported a net loss for the quarter ended March 31, 2026 while modestly growing revenue and preparing for a major acquisition. Revenue rose to $80.8 million, up 4.5% from $77.3 million a year earlier, driven by growth from newly signed and existing clients across both Consumer and Business Payments segments.
The company posted a net loss of $10.0 million, compared with a $8.2 million loss in the prior-year quarter, as higher interest expense and a larger fair value loss on its tax receivable agreement offset operating improvements. Adjusted EBITDA increased slightly to $34.4 million from $33.2 million, reflecting stable underlying profitability.
Repay used cash and new borrowing to reshape its balance sheet. Cash, cash equivalents and restricted cash declined to $86.8 million, and total borrowings stood at $397.5 million in principal, including $287.5 million of 2029 Convertible Senior Notes and $110.0 million drawn on its revolving credit facility. The tax receivable agreement liability was $191.8 million.
Strategically, Repay completed a $22.5 million asset purchase from a distribution partner, mainly buying out economic interests in a commercial arrangement. It also agreed to acquire KUBRA for approximately $372 million, to be financed with cash on hand and planned new credit facilities totaling $600 million, with closing expected in the second quarter of 2026 subject to regulatory approvals and customary conditions.
Subsequent to quarter-end, the board adopted a stockholder rights plan that issues one preferred share purchase right for each Class A common share and is designed to dilute any investor acquiring 12.5% or more of the outstanding Class A common stock without prior board approval.
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Insights
Repay shows steady revenue and EBITDA but higher losses as it gears up for a large debt‑financed acquisition.
Repay Holdings Corporation increased quarterly revenue to $80.8M, up 4.5% year over year, with both Consumer Payments and Business Payments contributing. Adjusted EBITDA edged up to $34.4M, indicating core operations remain stable despite higher interest and TRA-related expenses.
The company is significantly expanding through the planned acquisition of KUBRA for about $372M, alongside a proposed $500M term loan and $100M revolver. This will materially increase leverage, coming on top of existing $397.5M in borrowings and a $191.8M tax receivable agreement liability.
Cash, cash equivalents and restricted cash fell to $86.8M after heavy financing and TRA payments, even as operating cash flow improved to $16.8M. Future filings around the expected closing of the KUBRA deal in Q2 2026 will clarify integration progress, final financing terms and the combined company’s earnings profile.
Key Figures
Key Terms
Tax Receivable Agreement financial
Convertible Senior Notes financial
Adjusted EBITDA financial
stockholder rights plan financial
capped call financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO |
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Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of April 29, 2026, there are
REPAY HOLDINGS CORPORATION
Quarterly Report on Form 10‑Q
For the quarter ended March 31, 2026
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION |
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Item 1. |
Condensed Consolidated Financial Statements |
1 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. |
Controls and Procedures |
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PART II – OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
34 |
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Item 1A. |
Risk Factors |
34 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
37 |
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Item 3. |
Defaults Upon Senior Securities |
37 |
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Item 4. |
Mine Safety Disclosures |
37 |
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Item 5. |
Other Information |
37 |
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Item 6. |
Exhibits |
37 |
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Signatures |
39 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements reflect our current views with respect to, among other things, anticipated benefits from our recent acquisitions, expected demand on our product offerings, including further implementation of electronic payment options and statements regarding our market and growth opportunities, and our business strategy and the plans and objectives of management for future operations. You generally can identify these statements by the use of words such as “outlook,” “potential,” “continue,” “may,” “seek,” “approximately,” “predict,” “believe,” “expect,” “plan,” “intend,” “estimate” or “anticipate” and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as “will,” “should,” “would,” “likely” and “could.” These statements may be found under Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. These risks and uncertainties include, but are not limited to: the risk that the proposed KUBRA (defined below) transaction may not be completed in a timely manner or at all; the inability to integrate and/or realize the benefits of the KUBRA transaction, including expected synergies; the occurrence of any fact, event, change, development or circumstance that could give rise to the termination of the KUBRA acquisition agreement; the failure to satisfy any of the conditions to the consummation of the KUBRA acquisition, including the receipt of certain governmental or regulatory approvals; the risk that the financing necessary to consummate the KUBRA acquisition may not be obtained, may be delayed, or may be available only on less favorable terms than anticipated; that the announcement of the KUBRA acquisition could disrupt the Company’s or KUBRA’s relationships with customers, employees or other business partners; the impact, cost and effect of actions by activist stockholders; the risk that our stockholder rights plan may delay, discourage or prevent a change of control or acquisition of the Company, even if such action may be considered beneficial by some stockholders; exposure to economic conditions and political risk affecting the consumer loan market, the receivables management industry and consumer and commercial spending, including bank failures or other adverse events affecting financial institutions, inflationary pressures, evolving U.S. trade policies, general economic slowdown or recession; changes in the payment processing market in which we compete, including with respect to its competitive landscape, technology evolution or regulatory changes; changes in the vertical markets that we target, including the regulatory environment applicable to our clients; the ability to retain, develop and hire key personnel; risks relating to our relationships within the payment ecosystem; risk that we may not be able to execute our growth strategies, including identifying and executing acquisitions; risks relating to data security; changes in accounting policies applicable to us; the risk that we may not be able to maintain effective internal controls; and those risks described under Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we disclaim any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties, there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements.
PART I – FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
REPAY HOLDINGS CORPORATION
Condensed Consolidated Balance Sheets
($ in thousands) |
March 31, 2026 (Unaudited) |
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December 31, 2025 |
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Assets |
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Cash and cash equivalents |
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Current restricted cash |
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Accounts receivable, net |
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Prepaid expenses and other |
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Total current assets |
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Property and equipment, net |
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Noncurrent restricted cash |
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Intangible assets, net |
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Goodwill |
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Operating lease right-of-use (“ROU”) assets, net |
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Deferred tax assets |
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Other assets |
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Total noncurrent assets |
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Total assets |
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$ |
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Liabilities |
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Accounts payable |
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Accrued expenses |
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Current maturities of long-term debt, net |
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Current operating lease liabilities |
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Current tax receivable agreement ($ |
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Other current liabilities |
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Total current liabilities |
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Long-term debt, net |
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Noncurrent operating lease liabilities |
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Tax receivable agreement, net of current portion ($ |
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Other liabilities |
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Total noncurrent liabilities |
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Total liabilities |
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Stockholders' equity |
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Class A common stock, $ |
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Class V common stock, $ |
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Treasury stock, |
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Additional paid-in capital |
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Accumulated deficit |
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Total Repay stockholders' equity |
$ |
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$ |
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Non-controlling interests |
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Total equity |
$ |
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$ |
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Total liabilities and equity |
$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
1
REPAY HOLDINGS CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
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Three Months Ended March 31, |
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($ in thousands, except per share data) |
2026 |
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2025 |
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Revenue |
$ |
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$ |
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Operating expenses |
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Costs of services (exclusive of depreciation and amortization shown separately below) |
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Selling, general and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Loss from operations |
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Other income (expense) |
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Interest income |
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Interest expense |
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Change in fair value of tax receivable liability |
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Other income (loss), net |
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Total other income (expense) |
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Loss before income tax (expense) benefit |
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Income tax (expense) benefit |
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Net loss |
$ |
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$ |
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Less: Net loss attributable to non-controlling interests |
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Net loss attributable to the Company |
$ |
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Loss per Class A share attributable to the Company: |
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Basic and diluted |
$ |
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$ |
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Weighted-average shares outstanding: |
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Basic and diluted |
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See accompanying notes to condensed consolidated financial statements.
2
REPAY HOLDINGS CORPORATION
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
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Repay Stockholders |
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Class A Common |
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Class V Common |
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Additional |
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Accumulated |
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Non-controlling |
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Total |
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($ in thousands) |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Stock |
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Deficit |
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Interests |
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Equity |
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Balance at December 31, 2024 |
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$ |
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$ |
— |
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$ |
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$ |
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$ |
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$ |
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$ |
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Exchange of Post-Merger Repay Units |
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— |
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— |
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— |
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Release of share awards vested under Incentive Plan |
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— |
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— |
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— |
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— |
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Tax withholding related to shares vesting under Incentive Plan |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Net loss |
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( |
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( |
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( |
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Balance at March 31, 2025 |
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$ |
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$ |
— |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
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Balance at December 31, 2025 |
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$ |
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$ |
— |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Release of share awards vested under Incentive Plan |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Tax withholding related to shares vesting under Incentive Plan |
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( |
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— |
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— |
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( |
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— |
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— |
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( |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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( |
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Balance at March 31, 2026 |
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$ |
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$ |
— |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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See accompanying notes to condensed consolidated financial statements.
3
REPAY HOLDINGS CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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Three Months Ended March 31, |
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($ in thousands) |
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2026 |
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2025 |
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Cash flows from operating activities |
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Net loss |
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$ |
( |
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$ |
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Adjustments to reconcile net loss to net cash provided by operating activities: |
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Depreciation and amortization |
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Stock based compensation |
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Amortization of debt issuance costs |
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Other loss |
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— |
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Fair value change in tax receivable agreement liability |
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Deferred tax benefit |
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( |
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Change in accounts receivable, net |
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Change in prepaid expenses and other |
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Change in operating lease ROU assets |
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Change in other assets |
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Change in accounts payable |
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Change in accrued expenses and other |
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Change in operating lease liabilities |
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Change in other liabilities |
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Net cash provided by operating activities |
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Cash flows from investing activities |
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Purchases of property and equipment |
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Purchases of intangible assets |
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Capitalized software development costs |
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Net cash used in investing activities |
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Cash flows from financing activities |
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Issuance of long-term debt |
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Payments on long-term debt |
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Payments for tax withholding related to shares vesting under Incentive Plan |
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Payment of Tax Receivable Agreement (“TRA”) |
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Net cash used in financing activities |
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Decrease in cash, cash equivalents and restricted cash |
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Cash, cash equivalents and restricted cash at beginning of period |
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$ |
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Cash, cash equivalents and restricted cash at end of period |
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$ |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
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Cash paid during the period for: |
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Interest |
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$ |
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$ |
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Income taxes (net of refunds received) |
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$ |
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$ |
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Reconciliation of cash, cash equivalents and restricted cash in the Condensed Consolidated Balance Sheets to the amounts shown in the Condensed Consolidated Statements of Cash Flows: |
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Cash and cash equivalents |
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|
|
$ |
|
||
Current restricted cash |
|
|
|
|
|
|
||
Noncurrent restricted cash |
|
|
|
|
|
|
||
Total cash, cash equivalents and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
See accompanying notes to condensed consolidated financial statements.
4
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
1. Organizational Structure and Corporate Information
Repay Holdings Corporation was incorporated as a Delaware corporation on July 11, 2019 in connection with the closing of a transaction (the “Business Combination”) pursuant to which Thunder Bridge Acquisition Ltd., a special purpose acquisition company organized under the laws of the Cayman Islands (“Thunder Bridge”), (a) domesticated into a Delaware corporation and changed its name to “Repay Holdings Corporation” and (b) consummated the merger of a wholly owned subsidiary of Thunder Bridge with and into Hawk Parent Holdings, LLC, a Delaware limited liability company (“Hawk Parent”).
Throughout this section, unless otherwise noted or unless the context otherwise requires, the terms “we”, “us”, “Repay” and the “Company” and similar references refer to Repay Holdings Corporation and its consolidated subsidiaries.
The Company is headquartered in Atlanta, Georgia.
On March 27, 2026, the Company entered into and consummated an asset purchase agreement with a strategic distribution partner for a purchase price of approximately $
On March 30, 2026, the Company entered into a stock purchase agreement with Hearst KUBRA Holdings, Inc., a Delaware corporation, KUBRA Holdings, Inc., a Delaware corporation (“Kubra US”) and KUBRA Data Transfer Ltd., an Ontario corporation (“Kubra Canada” and together with Kubra US, “KUBRA”), pursuant to which the Company will acquire all of the issued and outstanding capital stock of KUBRA (the “Acquisition”). Under the terms of the stock purchase agreement, the aggregate consideration to be paid by REPAY at closing is approximately $
2. Basis of Presentation and Summary of Significant Accounting Policies
Unaudited Interim Condensed Consolidated Financial Statements
These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited condensed consolidated financial statements and accompanying notes, which are included in the Annual Report on Form 10-K for the year ended December 31, 2025.
The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and with instructions to Form 10-Q and Rule 10-01 of SEC Regulation S-X as they apply to interim financial information. Accordingly, the interim condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements, although the Company believes that the disclosures made are adequate to make the information not misleading. The Company uses the accrual basis of accounting whereby revenues are recognized when earned, usually upon the date services are rendered, and expenses are recognized at the date services are rendered or goods are received.
The interim condensed consolidated financial statements are unaudited, but in the Company’s opinion include all adjustments of a normal recurring nature or a description of the nature and amount of any adjustments other than normal recurring adjustments, operations and cash flows as of and for the periods presented. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Repay Holdings Corporation and its majority-owned subsidiary, Hawk Parent Holdings LLC, along with Hawk Parent Holdings LLC’s wholly owned subsidiaries: Hawk Intermediate Holdings, LLC, Hawk Buyer Holdings, LLC, Repay Holdings, LLC, M&A Ventures, LLC, Repay Management Holdco Inc., Repay Management Services LLC, Sigma Acquisition, LLC, Wildcat Acquisition, LLC, Marlin Acquirer, LLC, REPAY International LLC, REPAY Canada Solutions ULC, TriSource Solutions, LLC
5
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
(“TriSource”), Mesa Acquirer, LLC, CDT Technologies LTD (“Ventanex”), Viking GP Holdings, LLC, cPayPlus, LLC (“cPayPlus”), CPS Payment Services, LLC, Media Payments, LLC, Custom Payment Systems, LLC, Electronic Payment Providers, LLC, Internet Payment Exchange, LLC, Stratus Payment Solutions, LLC, Clear Payment Solutions, LLC, Harbor Acquisition LLC, Payix Holdings Incorporated and Payix Incorporated. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported Condensed Consolidated Statements of Operations during the reporting period. Actual results could differ materially from those estimates.
Segment Reporting
The Company reports operating results through
Recently Issued Accounting Pronouncements not yet Adopted
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued Accounting Standards Update No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)” (“ASU 2024-03”). ASU 2024-03 requires an entity to disclose specified information about certain costs and expenses in the notes to financial statements at each interim and annual reporting period. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, with early adoption permitted. The Company is currently in the process of evaluating the effects of ASU 2024-03 on its Consolidated Financial Statements.
Induced Conversions of Convertible Debt Instruments
In November 2024, the FASB issued Accounting Standards Update No. 2024-04, “Debt - Debt with Conversion and Other Options (Subtopic 470-20)” (“ASU 2024-04”). ASU 2024-04 clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for annual periods beginning after December 15, 2025, with early adoption permitted for all entities that have adopted the amendments in Accounting Standards Update No. 2020-06. The Company is currently in the process of evaluating the effects of ASU 2024-04 on its Consolidated Financial Statements.
Measurement of Credit Losses for Accounts Receivable and Contract Assets
In July 2025, the FASB issued Accounting Standards Update No. 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”). ASU 2025-05 provides (1) all entities with a practical expedient and (2) entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, with early adoption permitted. The Company is currently in the process of evaluating the effects of ASU 2025-05 on its Consolidated Financial Statements.
Accounting for Internal-Use Software
In September 2025, the FASB issued Accounting Standards Update No. 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”). ASU 2025-06 removes all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40 and requires an entry to start capitalizing software costs when both of the following occur: (1) Management has authorized and committed to funding the software
project; (2) It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). ASU 2025-06 is effective for annual periods beginning
6
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
after December 15, 2027, with early adoption permitted as of the beginning of an annual reporting period. The Company is currently in the process of evaluating the effects of ASU 2025-06 on its Consolidated Financial Statements.
Interim Reporting
In December 2025, the FASB issued Accounting Standards Update No. 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements” (“ASU 2025-11”). ASU 2025-11 includes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities and for interim reporting periods within annual reporting periods beginning after December 15, 2028, for entities other than public business entities, with early adoption permitted. The Company is currently in the process of evaluating the effects of ASU 2025-11 on its Consolidated Financial Statements.
3. Revenue
Disaggregation of revenue
The Company’s revenue is from two types of relationships: (i) direct relationships and (ii) indirect relationships.
|
|
Three Months Ended March 31, 2026 |
|
|||||||||||||
($ in thousands) |
|
Consumer Payments |
|
|
Business Payments |
|
|
Elimination of intersegment revenues (1) |
|
|
Total |
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Direct relationships (2) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Indirect relationships |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total Revenue |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
Three Months Ended March 31, 2025 |
|
|||||||||||||
($ in thousands) |
|
Consumer Payments |
|
|
Business Payments |
|
|
Elimination of intersegment revenues (1) |
|
|
Total |
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Direct relationships (2) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Indirect relationships |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total Revenue |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
When the Company’s right to consideration for performance is contingent upon a future event or satisfaction of additional performance obligations, the amount of revenues the Company has recognized in excess of the amount the Company has billed to the client is recognized as a contract asset. The contract asset balance was $
As of March 31, 2026 and December 31, 2025, the Company recorded deferred commissions of $
7
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
4. Earnings Per Share
During the three months ended March 31, 2026 and 2025, basic and diluted net loss per common share are the same since the inclusion of the assumed exchange of all limited liability company interests of Hawk Parent (“Post-Merger Repay Units”), unvested share-based awards, outstanding stock options, outstanding employee stock purchase plan (“ESPP”) purchase rights and the Company’s convertible senior notes would have been anti-dilutive.
The following table summarizes net income (loss) attributable to the Company and the weighted average basic and diluted shares outstanding:
|
|
Three Months Ended March 31, |
|
|||||
($ in thousands, except per share data) |
|
2026 |
|
|
2025 |
|
||
Net income (loss) attributable to the Company |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
||
Weighted average shares of Class A common stock outstanding - basic and diluted |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Loss per share of Class A common stock outstanding - basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
For the three months ended March 31, 2026 and 2025, the following common stock equivalent shares were excluded from the computation of the diluted loss per share, since their inclusion would have been anti-dilutive:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Post-Merger Repay Units exchangeable for Class A common stock |
|
|
|
|
|
|
||
Unvested share-based awards of Class A common stock (1) |
|
|
|
|
|
|
||
Outstanding stock options for Class A common stock |
|
|
|
|
|
|
||
Outstanding ESPP purchase rights for Class A common stock |
|
|
|
|
|
|
||
Senior notes convertible into Class A common stock |
|
|
|
|
|
|
||
Share equivalents excluded from loss per share |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Shares of the Company’s Class V common stock do not participate in the earnings or losses of the Company and, therefore, are not participating securities. As such, separate presentation of basic and diluted earnings per share of Class V common stock under the two-class method has not been presented. Each share of the Company’s Class V common stock gives the holder the right to vote the number of shares corresponding to the number of Post-Merger Repay Units held by that holder, but shares of Class V common stock have no economic rights.
8
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
5
The following table summarizes, by level within the fair value hierarchy, estimated fair values of the Company’s assets and liabilities measured at fair value on a recurring or nonrecurring basis or disclosed, but not carried, at fair value in the Condensed Consolidated Balance Sheets as of the dates presented. There were no transfers into, out of, or between levels within the fair value hierarchy during any of the periods presented.
|
|
March 31, 2026 |
|
|||||||||||||
($ in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other assets |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Borrowings |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Tax receivable agreement |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total liabilities |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
December 31, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other assets |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Borrowings |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Tax receivable agreement |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total liabilities |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
Cash and cash equivalents contains cash on hand, demand deposit accounts, money market accounts and short term investments with original maturities of three months or less. They are classified within Level 1 of the fair value hierarchy, under Accounting Standard Codification (“ASC”) 820, Fair Value Measurements (“ASC 820”), as the price is obtained from quoted market prices in an active market. The carrying amounts of the Company’s cash and cash equivalents approximate their fair values due to the short maturities and highly liquid nature of these accounts.
Restricted Cash
Restricted cash is classified within Level 1 of the fair value hierarchy under ASC 820, as the primary component is cash that is used as collateral for debts. The carrying amounts of the Company’s restricted cash approximate their fair values due to the highly liquid nature.
Other assets
Other assets contain a minority equity investment in a privately-held company. The Company elected a measurement alternative for measuring this investment under ASC 321, Investments – Equity Securities, in which the carrying amount is adjusted based on any observable price changes in orderly transactions. The investment is classified as Level 2 as observable adjustments to value are infrequent and occur in an inactive market.
Borrowings
The revolving credit facility and convertible senior notes are measured at amortized cost, which the carrying value is unpaid principal net of unamortized debt discount and debt issuance costs (“DDIC”). The estimated fair value of the revolving credit facility approximates the unpaid principal because its interest rate approximates market interest rates. The estimated fair value of convertible senior notes is determined using the quoted prices from over-the-counter markets. The
9
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
estimated fair value of the Company’s borrowings is classified within Level 2 of the fair value hierarchy, as the market interest rates and quoted prices are generally observable and do not contain a high level of subjectivity.
The following table provides the carrying value and estimated fair value of borrowings. See Note 8. Borrowings for further discussion on borrowings.
|
|
March 31, 2026 |
|
|||||||||||||
($ in thousands) |
|
Principal Amount |
|
|
Unamortized DDIC |
|
|
Carrying Value |
|
|
Fair Value |
|
||||
2029 Notes |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
Revolving credit facility |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Total borrowings |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
December 31, 2025 |
|
|||||||||||||
($ in thousands) |
|
Principal Amount |
|
|
Unamortized DDIC |
|
|
Carrying Value |
|
|
Fair Value |
|
||||
2026 Notes |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
2029 Notes |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Revolving credit facility |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Total borrowings |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tax Receivable Agreement
Upon the completion of the Business Combination, the Company entered into the TRA with holders of Post-Merger Repay Units. As a result of the TRA, the Company established a liability in its consolidated financial statements. The Company elected to measure TRA at fair value under ASC 825, Financial Instruments - Fair Value Option, to better align its economic value with the Company’s risk management strategies. The fair value of TRA is based on estimates of discounted future cash flows associated with the estimated payments to the Post-Merger Repay Unit holders. These inputs are not observable in the market; thus, the TRA is classified within Level 3 of the fair value hierarchy, under ASC 820. The change in fair value is re-measured at each reporting period with the change in fair value being recognized in accordance with ASC 805, Business Combinations, which is recorded within Change in fair value of tax receivable liability in the Company’s Condensed Consolidated Statements of Operations.
The Company used a discount rate, also referred to as the Early Termination Rate, as defined in the TRA, to determine the present value, based on a , pursuant to the TRA. A rate of
The following table provides a rollforward of the TRA related to the acquisition and exchanges of Post-Merger Repay Units. See Note 12. Taxation for further discussion on the TRA.
|
|
Three Months Ended March 31, |
|
|||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
||
Balance at beginning of period |
|
$ |
|
|
$ |
|
||
Purchases |
|
|
— |
|
|
|
|
|
Payments |
|
|
( |
) |
|
|
( |
) |
Accretion expense |
|
|
|
|
|
|
||
Valuation adjustment |
|
|
|
|
|
|
||
Balance at end of period |
|
$ |
|
|
$ |
|
||
10
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
6. Intangible Assets
The Company holds definite and indefinite-lived intangible assets. As of March 31, 2026 and December 31, 2025, the indefinite-lived intangible assets consist of
Intangible assets consisted of the following:
($ in thousands) |
|
Gross Carrying Value |
|
|
Accumulated Amortization |
|
|
Net Carrying Value |
|
|
Weighted Average Useful Life (Years) |
|
||||
Client relationships |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
||||
Channel relationships |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Software costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trade name |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Balance as of March 31, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Client relationships |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
||||
Channel relationships |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Software costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trade name |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Balance as of December 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
||||
The Company’s amortization expense for intangible assets was $
The estimated amortization expense for the next five years and thereafter in the aggregate is as follows:
($ in thousands) |
|
Estimated Future Amortization Expense |
|
|
Remainder of 2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
7
There were no changes in the carrying amount of goodwill for either the Consumer Payments or Business Payments segment during the three months ended March 31, 2026. As of March 31, 2026 and December 31, 2025, accumulated impairment losses were $
8. Borrowings
Second Amended Credit Agreement
On July 10, 2024, the Company entered into a Second Amended and Restated Revolving Credit Agreement (the “Second Amended Credit Agreement”) with certain financial institutions, as lenders, and Truist Bank, as administrative agent. The Second Amended Credit Agreement establishes a $
11
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
(defined below) (subject to certain exceptions for adequate liquidity). The maturity date may be extended, subject to certain terms and conditions.
On January 26, 2026, the Company borrowed $
As of March 31, 2026, the Company had $
Convertible Senior Notes
On January 19, 2021, the Company issued $
On July 8, 2024, the Company issued $
During the three months ended March 31, 2026, the conversion contingencies of the convertible senior notes were not met, and the conversion terms of the 2029 Notes were not significantly changed. The Company’s interest expense on the convertible senior notes was $
12
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
The following table summarizes the total borrowings under the credit agreements and convertible senior notes:
($ in thousands) |
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Non-current indebtedness: |
|
|
|
|
|
|
||
Revolving Credit Facility (1) |
|
$ |
|
|
$ |
— |
|
|
Convertible senior notes: |
|
|
|
|
|
|
||
2026 Notes |
|
|
— |
|
|
|
|
|
2029 Notes |
|
|
|
|
|
|
||
Total borrowings (2) |
|
|
|
|
|
|
||
Less: Current maturities of long-term debt |
|
|
— |
|
|
|
|
|
Less: Debt issuance cost (3) |
|
|
|
|
|
|
||
Total non-current borrowings |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
The following is a summary of principal maturities of long‑term debt for each of the next five years ending December 31 and in the aggregate:
($ in thousands) |
|
|
|
|
2026 |
|
$ |
— |
|
2027 |
|
|
— |
|
2028 |
|
|
— |
|
2029 |
|
|
|
|
2030 |
|
|
— |
|
|
|
$ |
|
|
|
|
|
|
|
9. Commitments and Contingencies
Legal Matters
The Company is a party to various claims and lawsuits incidental to its business. In the Company’s opinion, the liabilities, if any, which may ultimately result from the outcome of such matters, individually or in the aggregate, are not expected to have a material adverse effect on its financial position, liquidity, results of operations or cash flows.
Leases
The Company has commitments under operating leases for real estate leased from third parties under non-cancelable operating leases. The Company’s leases typically have lease terms between
During both the three months ended March 31, 2026 and 2025, the Company recognized sublease income of $
13
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
The components of lease cost are presented in the following table:
|
|
Three Months Ended March 31, |
|
|||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
||
Components of total lease costs: |
|
|
|
|
|
|
||
Operating lease cost |
|
$ |
|
|
$ |
|
||
Short-term lease cost |
|
|
|
|
|
|
||
Total lease cost |
|
$ |
|
|
$ |
|
||
Amounts reported in the Condensed Consolidated Balance Sheets were as follows:
($ in thousands) |
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Operating leases: |
|
|
|
|
|
|
||
ROU assets |
|
$ |
|
|
$ |
|
||
Lease liability, current |
|
|
|
|
|
|
||
Lease liability, long-term |
|
|
|
|
|
|
||
Total lease liabilities |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Weighted-average remaining lease term (in years) |
|
|
|
|
|
|
||
Weighted-average discount rate (annualized) |
|
|
% |
|
|
% |
||
Other information related to leases are as follows:
|
|
Three Months Ended March 31, |
|
|||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
||
ROU assets obtained in exchange for lease liabilities: |
|
|
|
|
|
|
||
Operating leases |
|
|
— |
|
|
|
— |
|
The following table presents a maturity analysis of the Company’s operating leases liabilities as of March 31, 2026:
($ in thousands) |
|
|
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total undiscounted lease payments |
|
|
|
|
Less: Imputed interest |
|
|
|
|
Total lease liabilities |
|
$ |
|
|
10. Related Party Transactions
The Company held TRA payables for related parties of $
14
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
11. Share Based Compensation
Omnibus Incentive Plan
At the 2019 Annual Shareholders Meeting of Thunder Bridge, the shareholders considered and approved the 2019 Omnibus Incentive Plan (the “Incentive Plan”) which resulted in the reservation of
Under this plan, the Company currently has four types of share-based compensation awards outstanding: performance stock units (“PSUs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance-based stock options (“PSOs”).
Share-Based Awards
The following table summarizes share-based compensation expense and the related income tax benefit recognized for the Company’s share-based compensation awards. Share-based compensation expenses are recorded within Selling, general and administrative in the Company’s Condensed Consolidated Statement of Operations.
|
|
Three Months Ended March 31, |
|
|||||
($ in millions) |
|
2026 |
|
|
2025 |
|
||
Share-based compensation expense |
|
$ |
|
|
$ |
|
||
Income tax benefit |
|
|
|
|
|
|
||
Activity for RSAs for the three months ended March 31, 2026 was as follows:
|
|
Class A Common Stock |
|
|
Weighted Average Grant Date Fair Value |
|
||
Unvested at December 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Forfeited (1) |
|
|
|
|
|
|
||
Vested |
|
|
|
|
|
|
||
Unvested at March 31, 2026 |
|
|
|
|
$ |
|
||
|
|
|
|
|
|
|
||
15
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
Activity for RSUs for the three months ended March 31, 2026 was as follows:
|
|
Class A Common Stock |
|
|
Weighted Average Grant Date Fair Value |
|
||
Unvested at December 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
— |
|
|
|
— |
|
Forfeited |
|
|
— |
|
|
|
— |
|
Vested |
|
|
— |
|
|
|
— |
|
Unvested at March 31, 2026 |
|
|
|
|
$ |
|
||
|
|
|
|
|
|
|
||
|
|
Class A Common Stock (1) |
|
|
Weighted Average Grant Date Fair Value |
|
||
Unvested at December 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Forfeited |
|
|
|
|
|
|
||
Vested |
|
|
— |
|
|
|
— |
|
Unvested at March 31, 2026 |
|
|
|
|
$ |
|
||
|
|
|
|
|
|
|
||
For PSUs, RSAs, and RSUs vested during the three months ended March 31, 2026, the total fair value, based upon the Company’s Class A common stock price at the date vested, was $
Stock Options
Activity for PSOs for the three months ended March 31, 2026 was as follows:
|
|
Options |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining Contractual Term (in years) |
|
|
Aggregate Intrinsic Value |
|
||||
Outstanding at December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
$ |
( |
) |
|||
Granted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Forfeited |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Outstanding at March 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Options vested and exercisable at March 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|||
The Company recognized compensation expense for PSOs of $
Inducement Award
On September 8, 2025, the Company granted an inducement award of
16
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
in four equal annual installments commencing September 8, 2026. Compensation expense is recognized on a graded vesting basis over the requisite service period.
Employee Stock Purchase Plan
On August 18, 2021, the Company’s stockholders approved the Repay Holdings Corporation 2021 Employee Stock Purchase Plan. The purpose of the ESPP is to provide eligible employees with the opportunity to purchase the Company’s Class A common stock through accumulated payroll deductions. A total of
12. Taxation
Repay Holdings Corporation is taxed as a corporation and is subject to paying corporate federal, state and local taxes on the income allocated to it from Hawk Parent, based upon Repay Holding Corporation’s economic interest held in Hawk Parent, as well as any stand-alone income or loss it generates. Hawk Parent is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Hawk Parent is not subject to U.S. federal and certain state and local income taxes. Hawk Parent’s members, including Repay Holdings Corporation, are liable for federal, state and local income taxes based on their allocable share of Hawk Parent’s pass-through taxable income.
The Company’s effective tax rate was (
The Company recognized adjustments of $
Deferred tax assets, net of $
17
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
The Company did not recognize any adjustment to the deferred tax asset (“DTA”) and offsetting deferred tax liability (“DTL”) recorded as a result of the ceiling rule limitation arising under Code Sec. 704(c) for the three months ended March 31, 2026, to account for the portion of the Company’s outside basis in the partnership interest that it will not recover through tax deductions. As the ceiling rule causes taxable income allocations to be in excess of 704(b) book allocations the DTL will unwind, leaving only the DTA, which may only be recovered through the sale of the partnership interest in Hawk Parent. The Company has concluded, based on the weight of all positive and negative evidence, that all of the DTA associated with the ceiling rule limitation is not likely to be realized. As such, a
Tax Receivable Agreement Liability
Pursuant to the Company’s election under Section 754 of the Code, the Company expects to obtain an increase in its share of the tax basis in the net assets of Hawk Parent when Post-Merger Repay Units are redeemed or exchanged for Class A common stock of Repay Holdings Corporation. The Company intends to treat any redemptions and exchanges of Post-Merger Repay Units as direct purchases for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that the Company would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.
On July 11, 2019, the Company entered into a TRA that provides for the payment by the Company of
As of March 31, 2026, the Company had a liability of $
13. Segments
The Company organizes its business structure around
Consumer Payments
The Consumer Payments segment provides payment processing solutions (including debit and credit card processing, ACH processing and other electronic payment acceptance solutions, as well as our loan disbursement product) that enable the Company’s clients to collect payments and disburse funds to consumers and includes the Company’s clearing and settlement solutions (“RCS”) offering. RCS is the Company’s proprietary clearing and settlement platform through which the Company markets customizable payment processing programs to other Independent Sales Organizations (“ISOs”) and payment facilitators. The strategic vertical markets served by the Consumer Payments segment primarily include personal loans, automotive loans, receivables management, credit unions, mortgage servicing, consumer healthcare
18
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
and diversified retail. The Consumer Payments segment represented approximately
Business Payments
The Business Payments segment provides payment processing solutions (including accounts payable automation, debit and credit card processing, virtual credit card processing, ACH processing and other electronic payment acceptance solutions) that enable the Company’s clients to collect or send payments to other businesses. The strategic vertical markets served within the Business Payments segment primarily include retail automotive, education, field services, governments and municipalities, healthcare, media, HOA management and hospitality. The Business Payments segment represented approximately
The following table presents revenue, cost of services and gross profit for each reportable segment.
|
|
Three Months Ended March 31, |
|
|||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
||
Revenue |
|
|
|
|
|
|
||
Consumer Payments |
|
$ |
|
|
$ |
|
||
Business Payments |
|
|
|
|
|
|
||
Elimination of intersegment revenues (1) |
|
|
( |
) |
|
|
( |
) |
Total revenue |
|
$ |
|
|
$ |
|
||
Cost of services (exclusive of depreciation and amortization) |
|
|
|
|
|
|
||
Consumer Payments |
|
$ |
|
|
$ |
|
||
Business Payments |
|
|
|
|
|
|
||
Total cost of services (exclusive of depreciation and amortization) |
|
$ |
|
|
$ |
|
||
Gross profit (2) |
|
|
|
|
|
|
||
Consumer Payments |
|
$ |
|
|
$ |
|
||
Business Payments |
|
|
|
|
|
|
||
Elimination of intersegment revenues |
|
|
( |
) |
|
|
( |
) |
Total gross profit |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Total other operating expenses (3) |
|
$ |
|
|
$ |
|
||
Total other income (expense) |
|
|
( |
) |
|
|
( |
) |
Loss before income tax (expense) benefit |
|
|
( |
) |
|
|
( |
) |
Income tax (expense) benefit |
|
|
( |
) |
|
|
|
|
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Revenue and costs of services are attributed directly to each segment. There is no significant concentration of revenue or assets in foreign countries as of March 31, 2026. The CODM reporting package does not include interest income (expense), net, depreciation and amortization, income tax benefit (expense) and discrete asset details of the operating segments as this information is not considered by the CODM for resource allocation or other segment analysis purposes.
14. Subsequent Events
Management has evaluated subsequent events and their potential effects on these unaudited condensed consolidated financial statements.
19
REPAY HOLDINGS CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements
On
In general terms, the Rights Agreement imposes significant dilution upon any person or group (other than the Company, certain related persons and other exceptions as set forth in the Rights Agreement) that is or becomes the beneficial owner of
This description of the Rights Agreement does not purport to be complete and should be read together with the entire Rights Agreement, which was included as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 14, 2026, and incorporated by reference hereto.
20
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For purposes of this section, "Repay", the “Company", "we", or "our" refer to Repay Holdings Corporation and its subsidiaries, unless the context otherwise requires. Certain figures have been rounded for ease of presentation and may not sum due to rounding.
Forward-Looking Statements
Statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including those set forth under Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. See “Cautionary Note Regarding Forward-Looking Statements” in this Form 10-Q for a discussion of certain uncertainties, risks and assumptions associated with forward-looking statements.
Overview
We provide integrated payment processing solutions to industry-oriented markets in which clients have specific transaction processing needs. We refer to these markets as “vertical markets” or “verticals.” Our proprietary, integrated payment technology platform reduces the complexity of the electronic payments process for businesses, while enhancing their consumers’ overall experience. We are a payments innovator, differentiated by our proprietary, integrated payment technology platform and our ability to reduce the complexity of the electronic payments for businesses. We intend to continue to strategically target verticals where we believe our ability to tailor payment solutions to our client needs, our deep knowledge of our vertical markets and the embedded nature of our integrated payment solutions will drive strong growth by attracting new clients and fostering long-term client relationships.
We report our financial results based on two reportable segments.
Consumer Payments – Our Consumer Payments segment provides payment processing solutions (including debit and credit card processing, ACH processing and other electronic payment acceptance solutions, as well as our loan disbursement product) that enable our clients to collect payments from and disburse funds to consumers and includes our RCS offering. RCS is our proprietary clearing and settlement platform through which we market customizable payment processing programs to other ISOs and payment facilitators. The strategic vertical markets served by our Consumer Payments segment primarily include personal loans, automotive loans, receivables management, credit unions, mortgage servicing, consumer healthcare and diversified retail.
Business Payments – Our Business Payments segment provides payment processing solutions (including accounts payable automation, debit and credit card processing, virtual credit card processing, ACH processing and other electronic payment acceptance solutions) that enable our clients to collect payments from or send payments to other businesses. The strategic vertical markets served within our Business Payments segment primarily include retail automotive, education, field services, governments and municipalities, healthcare, media, HOA management and hospitality.
Macroeconomic Conditions
We have been monitoring the current economic environment in the U.S. and globally – characterized by heightened inflation (including changes in wages), evolving U.S. trade policies, supply chain issues and slower growth. Such macroeconomic conditions may continue to evolve in ways that are difficult to fully anticipate and may also include increased levels of unemployment and/or a recession. Some or all of these market factors have and could continue to adversely affect our payment volumes from the consumer loan market, the receivables management industry and consumer and commercial spending. The effect of these events on our financial condition, results of operations and cash flows is uncertain and cannot be predicted at this time. Finally, the impact of all of these various events on our results in the first three months of 2026 may not be necessarily indicative of their impact on our results for the remainder of 2026.
21
Business Combination
The Company was formed upon closing of the merger of Hawk Parent with a subsidiary of Thunder Bridge, a special purpose acquisition company, on July 11, 2019. On the closing of the Business Combination, Thunder Bridge changed its name to “Repay Holdings Corporation.”
Key Factors Affecting Our Business
Key factors that we believe impact our business, results of operations and financial condition include, but are not limited to, the following:
Key Components of Our Revenues and Expenses
Revenues
Revenue. As our clients process increased volumes of payments, our revenues increase as a result of the fees we charge for processing these payments. Most of our revenues are derived from volume-based payment processing fees (“discount fees”) and other related fixed per transaction fees. Discount fees represent a percentage of the dollar amount of each credit or debit transaction processed and include fees relating to processing and services that we provide. The transaction price for such processing services is determined, based on the judgment of management, considering factors such as margin objectives, pricing practices and controls, client segment pricing strategies, the product life cycle and the observable price of the service charged to similarly situated clients. During the three months ended March 31, 2026 and 2025, our chargeback rate was less than 1% of our card payment volume.
Expenses
Costs of services. Costs of services primarily include commissions to our software integration partners and other third-party processing costs, such as front and back-end processing costs and sponsor bank fees.
Selling, general and administrative. Selling, general and administrative expenses include salaries, share-based compensation and other employment costs, professional service fees, rent and utilities, and other operating costs.
Depreciation and amortization. Depreciation expense consists of depreciation on our investments in property, equipment and computer hardware. Depreciation expense is recognized on a straight-line basis over the estimated useful life of the asset. Amortization expense for software development costs and purchased software is recognized on the straight-line method over a three-year estimated useful life, between eight to ten years estimated useful life for client relationships and channel relationships, and between two to five years estimated useful life for non-compete agreements.
Interest income. Interest income consists of interest received on our cash and cash equivalents.
Interest expense. Interest expense consists of interest paid in respect of our indebtedness under the convertible senior notes and revolving credit facility, as well as amortization of deferred debt issuance costs.
Change in fair value of tax receivable liability. This amount represents the change in fair value of the tax receivable agreement liability. The TRA liability is carried at fair value; so, any change to the valuation of this liability is recognized through this line in other expense. The change in fair value can result from the redemption or exchange of Post-Merger Repay Units for Class A common stock of Repay Holdings Corporation, through accretion of the discounted fair value of the expected future cash payments, changes to income tax rates, or changes to the discount rate, or Early Termination Rate, used to determine the fair value of the liability.
22
Results of Operations (Unaudited)
|
|
Three Months Ended March 31, |
|
|||||
($ in thousands, except per share data) |
|
2026 |
|
|
2025 |
|
||
Revenue |
|
$ |
80,794 |
|
|
$ |
77,325 |
|
Operating expenses |
|
|
|
|
|
|
||
Costs of services (exclusive of depreciation and amortization shown separately below) |
|
|
19,307 |
|
|
|
18,664 |
|
Selling, general and administrative |
|
|
35,954 |
|
|
|
36,987 |
|
Depreciation and amortization |
|
|
25,540 |
|
|
|
25,294 |
|
Total operating expenses |
|
|
80,801 |
|
|
|
80,945 |
|
Loss from operations |
|
|
(7 |
) |
|
|
(3,620 |
) |
Other income (expense) |
|
|
|
|
|
|
||
Interest income |
|
|
415 |
|
|
|
1,356 |
|
Interest expense |
|
|
(3,844 |
) |
|
|
(3,107 |
) |
Change in fair value of tax receivable liability |
|
|
(4,563 |
) |
|
|
(3,022 |
) |
Other income (loss), net |
|
|
(2 |
) |
|
|
(227 |
) |
Total other income (expense) |
|
|
(7,994 |
) |
|
|
(5,000 |
) |
Loss before income tax (expense) benefit |
|
|
(8,001 |
) |
|
|
(8,620 |
) |
Income tax (expense) benefit |
|
|
(2,033 |
) |
|
|
452 |
|
Net loss |
|
$ |
(10,034 |
) |
|
$ |
(8,168 |
) |
Less: Net loss attributable to non-controlling interest |
|
|
(94 |
) |
|
|
(221 |
) |
Net loss attributable to the Company |
|
$ |
(9,940 |
) |
|
$ |
(7,947 |
) |
|
|
|
|
|
|
|
||
Weighted-average shares of Class A common stock outstanding - basic and diluted |
|
|
82,517,843 |
|
|
|
89,005,725 |
|
|
|
|
|
|
|
|
||
Loss per Class A share attributable to the Company - basic and diluted |
|
$ |
(0.12 |
) |
|
$ |
(0.09 |
) |
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
Revenue
Total revenue was $80.8 million for the three months ended March 31, 2026, and $77.3 million for the three months ended March 31, 2025, an increase of $3.5 million or 4.5%. This increase was the result of newly signed clients and the growth of our existing clients.
Cost of Services
Costs of services were $19.3 million for the three months ended March 31, 2026, and $18.7 million for the three months ended March 31, 2025, an increase of $0.6 million or 3.2%. This increase was the result of newly signed clients and the growth of our existing clients.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $36.0 million for the three months ended March 31, 2026, and $37.0 million for the three months ended March 31, 2025, a decrease of $1.0 million or 2.7%, primarily due to a 2.1 million decrease in transaction expenses and a $0.3 million decrease in equity compensation expenses, partially offset by a $1.3 million increase in legal expenses.
Depreciation and Amortization Expenses
Depreciation and amortization expenses were $25.5 million for the three months ended March 31, 2026, and $25.3 million for the three months ended March 31, 2025, an increase of $0.2 million or 0.8%, primarily driven by an increase in software amortization.
Interest Income
Interest income was $0.4 million for the three months ended March 31, 2026, and $1.4 million for the three months ended March 31, 2025, due to lower average interest rates earned on our cash and cash equivalents.
23
Interest Expense
Interest expense was $3.8 million for the three months ended March 31, 2026, and $3.1 million for the three months ended March 31, 2025, due to a higher outstanding principal balance under the convertible senior notes and revolving credit facility.
Change in Fair Value of Tax Receivable Liability
We incurred a loss, related to accretion expense and fair value adjustment of the tax receivable liability of $4.6 million for the three months ended March 31, 2026, compared to a $3.0 million loss for the three months ended March 31, 2025, an increase of $1.6 million. This increase was due to a higher fair value adjustments related to the tax receivable liability, primarily as a result of accretion, adjustment to the net present value as a result of payments made, and changes to the discount rate, or Early Termination Rate, used to determine the fair value of the liability.
Income Tax Expense and Benefit
Income tax expense was $2.0 million for the three months ended March 31, 2026. This was a result of the operating loss incurred by us, primarily driven by the change in fair value of the tax receivable liability, stock-based compensation deductions and the amortization of assets acquired in the Business Combination and prior acquisitions, partially offset by stock-based compensation expense net tax shortfall, which is required to be recorded discretely in the interim period in which they occur. The income tax benefit was $0.5 million for the three months ended March 31, 2025, which was a result of the operating loss incurred by us, primarily driven by the change in fair value of the tax receivable liability, stock-based compensation deductions and the amortization of assets acquired in the Business Combination and prior acquisitions, offset by stock-based compensation expense net tax shortfall.
Segments
We provided our services through two reportable segments: (1) Consumer Payments and (2) Business Payments.
The following table presents our segment revenue and selected performance measures.
|
|
Three Months Ended March 31, |
|
|||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
||
Revenue |
|
|
|
|
|
|
||
Consumer Payments |
|
$ |
75,068 |
|
|
$ |
71,942 |
|
Business Payments |
|
|
12,991 |
|
|
|
10,988 |
|
Elimination of intersegment revenues (1) |
|
|
(7,265 |
) |
|
|
(5,605 |
) |
Total revenue |
|
$ |
80,794 |
|
|
$ |
77,325 |
|
Gross profit (2) |
|
|
|
|
|
|
||
Consumer Payments |
|
$ |
60,282 |
|
|
$ |
56,709 |
|
Business Payments |
|
|
8,470 |
|
|
|
7,557 |
|
Elimination of intersegment revenues (1) |
|
|
(7,265 |
) |
|
|
(5,605 |
) |
Total gross profit |
|
$ |
61,487 |
|
|
$ |
58,661 |
|
|
|
|
|
|
|
|
||
Total gross profit margin (3) |
|
76% |
|
|
76% |
|
||
24
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
Consumer Payments
Revenue for the Consumer Payments segment was $75.1 million for the three months ended March 31, 2026 and $71.9 million for the three months ended March 31, 2025, representing a $3.1 million or 4.3% year-over-year increase. This increase was the result of newly signed clients and the growth of our existing clients.
Gross profit for the Consumer Payments segment was $60.3 million for the three months ended March 31, 2026 and $56.7 million for the three months ended March 31, 2025, representing a $3.6 million or 6.3% year-over-year increase. This increase was the result of newly signed clients and the growth of our existing clients.
Business Payments
Revenue for the Business Payments segment was $13.0 million for the three months ended March 31, 2026 and $11.0 million for the three months ended March 31, 2025, representing a $2.0 million or 18.2% year-over-year increase. This increase was the result of the growth from newly signed clients and existing clients, as well as political media spending in the first quarter of 2026.
Gross profit for the Business Payments segment was $8.5 million for the three months ended March 31, 2026 and $7.6 million for the three months ended March 31, 2025, representing a $0.9 million or 11.9% year-over-year increase. This increase was the result of the growth from newly signed clients and existing clients, as well as political media spending in the first quarter of 2026.
25
Non-GAAP Financial Measures
This report includes certain non-GAAP financial measures that management uses to evaluate our operating business, measure our 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 gain on extinguishment of debt, non-cash impairment loss, non-cash change in fair value of assets and liabilities, share-based compensation charges, transaction expenses, 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 non-cash change in fair value of assets and liabilities, share-based compensation expense, transaction expenses, 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 we exclude amortization from acquisition-related intangibles from our non-GAAP expenses, management believes that it is important for investors to understand that such intangibles were recorded as part of purchase accounting and contribute to revenue generation.
Adjusted Net Income per share is a non-GAAP financial measure that represents Adjusted Net Income divided by the weighted average number of shares of Class A common stock outstanding (on an as-converted basis assuming conversion of the outstanding Post-Merger Repay Units) for the three months ended March 31, 2026 and 2025 (excluding shares subject to forfeiture).
We believe 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 our 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 our 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 we calculate our 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 our other financial results presented in accordance with GAAP.
The following tables set forth a reconciliation of our results of operations for the three months ended March 31, 2026 and 2025.
26
REPAY HOLDINGS CORPORATION
Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA
For the three months ended March 31, 2026 and 2025
(Unaudited)
|
Three Months Ended March 31, |
|
|
|||||
($ in thousands) |
2026 |
|
|
2025 |
|
|
||
Revenue |
$ |
80,794 |
|
|
$ |
77,325 |
|
|
Operating expenses |
|
|
|
|
|
|
||
Costs of services (exclusive of depreciation and amortization shown separately below) |
$ |
19,307 |
|
|
$ |
18,664 |
|
|
Selling, general and administrative |
|
35,954 |
|
|
|
36,987 |
|
|
Depreciation and amortization |
|
25,540 |
|
|
|
25,294 |
|
|
Total operating expenses |
$ |
80,801 |
|
|
$ |
80,945 |
|
|
Loss from operations |
$ |
(7 |
) |
|
$ |
(3,620 |
) |
|
Other income (expense) |
|
|
|
|
|
|
||
Interest income |
|
415 |
|
|
|
1,356 |
|
|
Interest expense |
|
(3,844 |
) |
|
|
(3,107 |
) |
|
Change in fair value of tax receivable liability |
|
(4,563 |
) |
|
|
(3,022 |
) |
|
Other income (loss), net |
|
(2 |
) |
|
|
(227 |
) |
|
Total other income (expense) |
|
(7,994 |
) |
|
|
(5,000 |
) |
|
Loss before income tax (expense) benefit |
|
(8,001 |
) |
|
|
(8,620 |
) |
|
Income tax (expense) benefit |
|
(2,033 |
) |
|
|
452 |
|
|
Net loss |
$ |
(10,034 |
) |
|
$ |
(8,168 |
) |
|
|
|
|
|
|
|
|
||
Add: |
|
|
|
|
|
|
||
Interest income |
|
(415 |
) |
|
|
(1,356 |
) |
|
Interest expense |
|
3,844 |
|
|
|
3,107 |
|
|
Depreciation and amortization (a) |
|
25,540 |
|
|
|
25,294 |
|
|
Income tax expense (benefit) |
|
2,033 |
|
|
|
(452 |
) |
|
EBITDA |
$ |
20,968 |
|
|
$ |
18,425 |
|
|
|
|
|
|
|
|
|
||
Non-cash change in fair value of assets and liabilities (b) |
|
4,563 |
|
|
|
3,022 |
|
|
Share-based compensation expense (c) |
|
5,020 |
|
|
|
6,045 |
|
|
Transaction expenses (d) |
|
258 |
|
|
|
782 |
|
|
Restructuring and other strategic initiative costs (e) |
|
1,867 |
|
|
|
3,511 |
|
|
Other non-recurring charges (f) |
|
1,686 |
|
|
|
1,390 |
|
|
Adjusted EBITDA |
$ |
34,362 |
|
|
$ |
33,175 |
|
|
|
|
|
|
|
|
|
||
27
REPAY HOLDINGS CORPORATION
Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income
For the three months ended March 31, 2026 and 2025
(Unaudited)
|
Three Months Ended March 31, |
|
|
|||||
($ in thousands) |
2026 |
|
|
2025 |
|
|
||
Revenue |
$ |
80,794 |
|
|
$ |
77,325 |
|
|
Operating expenses |
|
|
|
|
|
|
||
Costs of services (exclusive of depreciation and amortization shown separately below) |
$ |
19,307 |
|
|
$ |
18,664 |
|
|
Selling, general and administrative |
|
35,954 |
|
|
|
36,987 |
|
|
Depreciation and amortization |
|
25,540 |
|
|
|
25,294 |
|
|
Total operating expenses |
$ |
80,801 |
|
|
$ |
80,945 |
|
|
Loss from operations |
$ |
(7 |
) |
|
$ |
(3,620 |
) |
|
Other expenses |
|
|
|
|
|
|
||
Interest income |
|
415 |
|
|
|
1,356 |
|
|
Interest expense |
|
(3,844 |
) |
|
|
(3,107 |
) |
|
Change in fair value of tax receivable liability |
|
(4,563 |
) |
|
|
(3,022 |
) |
|
Other income (loss), net |
|
(2 |
) |
|
|
(227 |
) |
|
Total other income (expense) |
|
(7,994 |
) |
|
|
(5,000 |
) |
|
Loss before income tax (expense) benefit |
|
(8,001 |
) |
|
|
(8,620 |
) |
|
Income tax (expense) benefit |
|
(2,033 |
) |
|
|
452 |
|
|
Net loss |
$ |
(10,034 |
) |
|
$ |
(8,168 |
) |
|
|
|
|
|
|
|
|
||
Add: |
|
|
|
|
|
|
||
Amortization of acquisition-related intangibles (g) |
|
19,809 |
|
|
|
19,329 |
|
|
Non-cash change in fair value of assets and liabilities (b) |
|
4,563 |
|
|
|
3,022 |
|
|
Share-based compensation expense (c) |
|
5,020 |
|
|
|
6,045 |
|
|
Transaction expenses (d) |
|
258 |
|
|
|
782 |
|
|
Restructuring and other strategic initiative costs (e) |
|
1,867 |
|
|
|
3,511 |
|
|
Other non-recurring charges (f) |
|
1,686 |
|
|
|
1,390 |
|
|
Non-cash interest expense (h) |
|
559 |
|
|
|
845 |
|
|
Pro forma taxes at effective rate (i) |
|
(4,326 |
) |
|
|
(6,442 |
) |
|
Adjusted Net Income |
$ |
19,402 |
|
|
$ |
20,314 |
|
|
|
|
|
|
|
|
|
||
Shares of Class A common stock outstanding (on an as-converted basis) (j) |
|
87,803,726 |
|
|
|
94,358,268 |
|
|
Adjusted Net Income per share |
$ |
0.22 |
|
|
$ |
0.22 |
|
|
28
|
|
Three Months Ended March 31, |
|
|||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
||
Acquisition-related intangibles |
|
$ |
19,809 |
|
|
$ |
19,329 |
|
Software |
|
|
5,520 |
|
|
|
5,482 |
|
Amortization |
|
$ |
25,329 |
|
|
$ |
24,811 |
|
Depreciation |
|
|
211 |
|
|
|
483 |
|
Total Depreciation and amortization (1) |
|
$ |
25,540 |
|
|
$ |
25,294 |
|
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Weighted average shares of Class A common stock outstanding - basic |
|
|
82,517,843 |
|
|
|
89,005,725 |
|
Add: Non-controlling interests |
|
|
|
|
|
|
||
Weighted average Post-Merger Repay Units exchangeable for Class A common stock |
|
|
5,285,883 |
|
|
|
5,352,543 |
|
Shares of Class A common stock outstanding (on an as-converted basis) |
|
|
87,803,726 |
|
|
|
94,358,268 |
|
Adjusted EBITDA for the three months ended March 31, 2026 and 2025 was $34.4 million and $33.2 million, respectively, representing a 3.6% year-over-year increase. Adjusted Net Income for the three months ended March 31, 2026 and 2025 was $19.4 million and $20.3 million, respectively, representing a 4.5% year-over-year decrease. Net loss attributable to the Company for the three months ended March 31, 2026 and 2025 was $9.9 million and $7.9 million, respectively, representing a 25.2% increase.
The increase in Adjusted EBITDA for the three months ended March 31, 2026 were primarily due to the organic growth of our business from newly signed clients, the growth of existing clients and cost savings initiatives. The decreases in Adjusted Net Income and net loss attributable to the Company for the three months ended March 31, 2026 were primarily due to the change in fair value of tax receivable liability, increased interest expense, and lower interest income.
Seasonality
We have experienced in the past, and may continue to experience, seasonal fluctuations in our revenues as a result of consumer spending and political media spending patterns. Revenues during the first quarter of the calendar year tend to increase in comparison to the remaining three quarters of the calendar year. This increase is due to consumers’ receipt of tax refunds and the increases in repayment activity levels that follow. In addition, Business Payments revenue from clients in our media payments business is cyclical. Revenue connected to political advertising spending increases significantly during the third and fourth quarter of election years, such as the mid-term and presidential election cycles. Operating
29
expenses show less seasonal fluctuation, with the result that net income is subject to the similar seasonal factors as our revenues.
Liquidity and Capital Resources
We have historically financed our operations and working capital through net cash from operating activities. As of March 31, 2026, we had $43.8 million of cash and cash equivalents and available borrowing capacity of $140.0 million under the Second Amended Credit Agreement. This balance does not include restricted cash, which reflects cash accounts holding reserves for potential losses and client settlement funds of $43.0 million as of March 31, 2026.
Our primary cash needs are to fund working capital requirements, invest in technology development, fund acquisitions and related contingent consideration, including the anticipated cash consideration for the proposed acquisition of KUBRA, make principal and interest payments on, refinance or repurchase our outstanding indebtedness, repurchase stock under our Share Repurchase Program, and pay tax distributions to members of Hawk Parent. The KUBRA transaction represents a significant near-term use of cash; however, we have obtained committed financing pursuant to executed commitment letters, which is expected to fund the cash consideration at closing, subject to customary conditions. We expect that our cash flow from operations, current cash and cash equivalents and available borrowing capacity will be sufficient to fund our operations, planned capital expenditures, acquisitions, commitment letters and to service our debt obligations for the next twelve months and the following five years.
We are a holding company with no operations and depend on our subsidiaries for cash to fund all of our consolidated operations, including future dividend payments, if any. We depend on the payment of distributions by our current subsidiaries, including Hawk Parent, which distributions may be restricted by law or contractual agreements, including agreements governing their indebtedness. For a discussion of those considerations and restrictions, refer to Part I, Item 1A “Risk Factors - Risks Related to Our Class A Common Stock” in our Annual Report on Form 10-K for the year ended December 31, 2025.
On May 16, 2022, our board of directors approved a share repurchase program under which we may repurchase up to $50 million of our outstanding Class A common stock (the “Share Repurchase Program”). On May 8, 2025, our board of directors approved the increase of its authorized Share Repurchase Program to up to $75 million. The Share Repurchase Program has no expiration date but may be modified, suspended or discontinued at any time at our discretion. As of March 31, 2026, we have $23.0 million remaining capacity under the Share Repurchase Program.
The following table presents a summary of cash flows from operating, investing and financing activities for the periods indicated:
|
|
Three Months Ended March 31, |
|
|
|||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
||
Net cash provided by operating activities |
|
$ |
16,823 |
|
|
$ |
2,503 |
|
|
Net cash used in investing activities |
|
|
(33,951 |
) |
|
|
(10,537 |
) |
|
Net cash used in financing activities |
|
|
(51,715 |
) |
|
|
(19,484 |
) |
|
Cash Flow from Operating Activities
Net cash provided by operating activities was $16.8 million and $2.5 million for the three months ended March 31, 2026 and 2025, respectively, which reflects net income as adjusted for non-cash operating items including depreciation and amortization, share-based compensation, and changes in working capital accounts.
Cash Flow from Investing Activities
Net cash used in investing activities was $34.0 million for the three months ended March 31, 2026, due to a purchase of intangible assets and the capitalization of software development activities.
Net cash used in investing activities was $10.5 million for the three months ended March 31, 2025, due to the capitalization of software development activities.
30
Cash Flow from Financing Activities
Net cash used in financing activities was $51.7 million for the three months ended March 31, 2026, due to the repayments of the 2026 Notes, a payment under the TRA and the payments for tax withholding related to shares vesting under the Incentive Plan, partially offset by the withdrawal from the revolving credit facility.
Net cash used in financing activities was $19.5 million for the three months ended March 31, 2025, due to the due to a payment under the TRA and the payments for tax withholding related to shares vesting under the Incentive Plan.
Indebtedness
Second Amended Credit Agreement
On July 10, 2024, we entered into the Second Amended Credit Agreement with certain financial institutions, as lenders, and Truist Bank, as administrative agent. The Second Amended Credit Agreement establishes a $250.0 million senior secured revolving credit facility. This facility matures on the earlier of (a) July 10, 2029, (b) the date that is 91 days prior to the maturity date of the 2026 Notes (subject to certain exceptions for adequate liquidity) and (c) the date that is 91 days prior to the maturity date of the 2029 Notes (subject to certain exceptions for adequate liquidity). The maturity date may be extended, subject to certain terms and conditions.
As of March 31, 2026, the Second Amended Credit Agreement provided for a revolving credit facility of $250.0 million. As of March 31, 2026, we had $110.0 million drawn against the revolving credit facility. We paid $0.1 million and $0.2 million in fees related to unused commitments for the three months ended March 31, 2026 and 2025, respectively.
Convertible Senior Notes
On January 19, 2021, we issued $440.0 million in aggregate principal amount of 0.00% Convertible Senior Notes due 2026 (the “2026 Notes”) in a private placement to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). $40.0 million in aggregate principal amount of such 2026 Notes were sold in the 2026 Notes offering in connection with the full exercise of the initial purchasers’ option to purchase such additional 2026 Notes pursuant to the purchase agreement. Upon conversion, we had the option to choose to pay or deliver cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock. The 2026 Notes matured on February 1, 2026. On July 8, 2024, we used approximately $200.0 million of proceeds from the offering of 2029 Notes and approximately $5.1 million of cash on hand to repurchase $220.0 million in aggregate principal amount of the 2026 Notes. On August 22, 2025, we repurchased $73.5 million in aggregate principal amount of the 2026 Notes. On or about February 2, 2026, we repaid $146.5 million of the remaining aggregate principal amount of the 2026 Notes using $110.0 million borrowing under the revolving credit facility and approximately $36.5 million of cash on hand. The 2026 Notes were satisfied and discharged in full at such time.
On July 8, 2024, we issued $287.5 million aggregate principal amount of 2.875% Convertible Senior Notes due 2029 (the “2029 Notes”) in a private placement to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act. $27.5 million aggregate principal amount of the 2029 Notes were sold in connection with the full exercise of the initial purchasers’ option to purchase such additional 2029 Notes offering pursuant to the purchase agreement. We will settle any conversions of the 2029 Notes by paying cash up to the aggregate principal amount of the 2029 Notes to be converted and cash, shares of Class A common stock or a combination of cash and shares, at our election, in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the 2029 Notes being converted. The 2029 Notes bear interest at a fixed rate of 2.875% per year, payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2025. The 2029 Notes will mature on July 15, 2029, unless earlier repurchased, redeemed, or converted in accordance with their terms.
As of March 31, 2026, we had borrowings outstanding of $390.6 million, net of deferred issuance costs, under the 2029 Notes and the revolving credit facility. We were in compliance with the related restrictive covenants. Additionally, we currently expect that we will remain in compliance with the restrictive covenants under the 2029 Notes and the Second Amended Credit Agreement, prospectively.
31
Tax Receivable Agreement
Upon the completion of the Business Combination, we entered into the TRA with holders of Post-Merger Repay Units. As a result of the TRA, we established a liability in our condensed consolidated financial statements. Such liability, which will increase upon the redemptions or exchanges of Post-Merger Repay Units for our Class A common stock, generally represents 100% of the estimated future tax benefit, if any, relating to the increase in tax basis that will result from redemptions or exchanges of the Post-Merger Repay Units for shares of Class A common stock pursuant to the Exchange Agreement and certain other tax attributes of the Company and tax benefits of entering into the TRA, including tax benefits attributable to payments under the TRA.
Under the terms of the TRA, we may elect to terminate the TRA early but will be required to make an immediate payment equal to the present value of the anticipated future cash tax savings. As a result, the associated liability reported on our condensed consolidated financial statements may be increased. We expect that the payment obligations required under the TRA will be substantial. The actual increase in tax basis, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including the timing of redemptions or exchanges by the holders of Post-Merger Repay Units, the price of our Class A common stock at the time of the redemption or exchange, whether such redemptions or exchanges are taxable, the amount and timing of the taxable income we generate in the future, the tax rate then applicable and the portion of our payments under the TRA constituting imputed interest. We expect to fund the payment of the amounts due under the TRA out of the cash savings that we actually realize in respect of the attributes to which TRA relates. However, the payments required to be made could be in excess of the actual tax benefits that we realize and there can be no assurance that we will be able to finance our obligations under the TRA.
Critical Accounting Policies and Recently Issued Accounting Pronouncements
There have been no significant changes to our critical accounting policies and critical accounting estimates for the three months ended March 31, 2026. See Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2025, for a complete discussion of critical accounting policies and critical accounting estimates.
For information related to recent accounting pronouncements and the impact of these pronouncements on our condensed consolidated financial statements, see Note 2. Basis of Presentation and Summary of Significant Accounting Policies, to our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Effects of Inflation
While inflation may impact our revenues and cost of services, we believe the effects of inflation, if any, on our results of operations and financial condition have not been significant. However, there can be no assurance that our results of operations and financial condition will not be materially impacted by inflation in the future.
Interest Rate Risk
Interest rates are highly sensitive to many factors, including U.S. fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control. Interest rate risk is the exposure to loss resulting from changes in the level of interest rates and the spread between different interest rates. We are exposed to market risk from changes in interest rates on debt, which bears interest at variable rates. Our revolving credit facility under the Second Amended Credit Agreement has floating interest rates. We are exposed to changes in the level of interest rates and to changes in the relationship or spread between interest rates for its floating rate debt. Our floating rate debt requires payments based on variable interest rates such as the federal funds rate, prime rate, eurocurrency rate, and SOFR. Therefore, increases in interest rates may reduce our net income or loss by increasing the cost of debt. As of March 31, 2026, we had convertible senior notes and revolving credit facility indebtedness of $390.6 million, net of deferred issuance costs outstanding. As of December 31, 2025, we had convertible senior notes of $426.5 million, net of deferred issuance costs, outstanding. The borrowings under the Second Amended Credit Agreement accrue interest at either base rate, described above under “Liquidity and Capital Resources — Indebtedness,” plus a margin of 0.75% to 1.75% or at an adjusted SOFR rate plus a margin of 1.75% to 2.75% under the Second Amended Credit Agreement, in each case depending on the total net leverage ratio, as defined in the Second Amended Credit Agreement.
32
We may incur additional borrowings from time to time for general corporate purposes, including working capital and capital expenditures.
Foreign Currency Exchange Rate Risk
Invoices for our services are denominated in U.S. dollars and Canadian dollars. We do not expect our future operating results to be significantly affected by foreign currency exchange rate risk.
ITEM 4. CONTROLS AND PROCEDURES
Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on the evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
33
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time we are named as a defendant in legal actions arising from our normal business activities. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, we do not believe any currently pending legal proceeding to which we are a party will have a material adverse effect on our business, prospects, financial condition, cash flows or results of operations.
ITEM 1A. RISK FACTORS
There have been no material changes with respect to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, except as set forth below:
Delaware law, our governing documents and our stockholder rights plan contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
Our certificate of incorporation, bylaws and Delaware General Corporation Law (“DGCL”) contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors and therefore depress the trading price of our Class A common stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of our board of directors or taking other corporate actions, including effecting changes in management. Among other things, our certificate of incorporation and bylaws include provisions regarding:
As a Delaware corporation, we are generally subject to provisions of Delaware law, including the DGCL. Although we have elected not to be governed by Section 203 of the DGCL, certain provisions of our certificate of incorporation, in a manner substantially similar to Section 203 of the DGCL, prohibit certain of our stockholders (other
34
than those stockholders who are party to a stockholders’ agreement with us) who hold 15% or more of our outstanding capital stock from engaging in certain business combination transactions with us for a specified period of time unless certain conditions are met.
In addition, in certain circumstances, the stockholder rights plan adopted by our board of directors in April 2026 would impose significant dilution upon any person or group that is or becomes the beneficial owner of 12.5% or more of our outstanding Class A common stock and thereby make it more difficult for such person or group to acquire the Company.
The Company’s business has been and could be negatively affected because of actions of activist stockholders. Stockholder activism could cause us to incur significant expense, disrupt our business, result in a proxy contest or litigation and impact our stock price.
We have been, and may continue to be, subject to actions from activist stockholders and others that may not align with the Company’s business strategies or may not be in the best interests of all stockholders. Responding to actions by activist stockholders has been, and may continue to be, costly and time-consuming and divert management’s and our board of directors’ attention and resources from our business. Such stockholder activism could give rise to perceived uncertainties as to our future, adversely affect our relationships with our employees, customers, or suppliers and make it more difficult to attract and retain qualified personnel. We may continue to be required to incur significant fees and other expenses related to activist stockholder matters, including costs for third party advisors. We may be subjected to a proxy contest or to litigation by activist investors. Our stock price has been and could be subject to significant fluctuation or otherwise be affected by the events, risks and uncertainties of any stockholder activism. Actions of activist stockholders may cause fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.
Our pending acquisition of KUBRA involves a number of risks, the occurrence of which could adversely affect our business, financial condition, and operating results.
In March 2026, we entered into a stock purchase agreement to acquire KUBRA. The acquisition involves certain risks, the occurrence of which could adversely affect our business, financial condition, and operating results, including:
35
Our acquisitions, including the pending KUBRA acquisition, subject us to a variety of risks relating to the integration and operation of those acquisitions or otherwise that could harm our business and the anticipated benefits from our acquisitions may not be realized on the expected timeline or at all.
We may experience various challenges associated with the integration and operation of our acquired businesses, including the pending KUBRA acquisition, such as:
These challenges and costs and expenses may adversely affect our business, financial condition and results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
The following table summarizes such purchases of Class A common stock made by us or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) of the Exchange Act) for the three months ended March 31, 2026:
|
|
Total Number of Shares Purchased (1) |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) |
|
|
Approximate Dollar Value of Shares that May yet be Purchased Under the Plans or Programs (2) |
|
||||
January 1- 31, 2026 |
|
|
39,148 |
|
|
$ |
3.40 |
|
|
|
— |
|
|
$ |
— |
|
February 1 - 28, 2026 |
|
|
156,712 |
|
|
|
3.12 |
|
|
|
— |
|
|
|
— |
|
March 1 - 31, 2026 |
|
|
306,497 |
|
|
|
2.86 |
|
|
|
— |
|
|
|
— |
|
Total |
|
|
502,357 |
|
|
$ |
2.98 |
|
|
|
— |
|
|
$ |
22,967,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
36
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the three months ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act)
ITEM 6. EXHIBITS
The exhibits listed in the following exhibit index are furnished as part of this report.
EXHIBIT INDEX
Exhibit |
|
|
Number |
|
Exhibit Description |
|
|
|
2.1# |
|
Stock Purchase Agreement, dated March 30, 2026, by and between Repay Holdings Corporation, Hearst KUBRA Holdings, Inc., KUBRA Holdings, Inc., and KUBRA Data Transfer Ltd. (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on March 31, 2026). |
|
|
|
3.1 |
|
Certificate of Corporate Domestication of Repay Holdings Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on July 17, 2019). |
|
|
|
3.2(a) |
|
Certificate of Incorporation of Repay Holdings Corporation (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed on July 17, 2019). |
|
|
|
3.2(b) |
|
Amendment to the Certificate of Incorporation of Repay Holdings Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on June 9, 2022). |
|
|
|
3.3 |
|
Second Amended and Restated Bylaws of Repay Holdings Corporation (incorporated by reference to Exhibit 3.3 to the Company’s Form 10-Q filed on August 8, 2024). |
|
|
|
3.4 |
|
Certificate of Designation for Series A Junior Participating Preferred Stock of Repay Holdings Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on April 14, 2026). |
|
|
|
4.1 |
|
Stockholder Rights Agreement, dated as of April 13, 2026, by and between Repay Holdings Corporation and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on April 14, 2026). |
|
|
|
31.1* |
|
Certification of Principal Executive Officer of Repay Holdings Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
37
|
|
|
31.2* |
|
Certification of Principal Financial Officer of Repay Holdings Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.1** |
|
Certification of Principal Executive Officer of Repay Holdings Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.2** |
|
Certification of Principal Financial Officer of Repay Holdings Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
101* |
|
The following financial statements from the Company’s Form 10‑Q for the quarter ended March 31, 2026, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Changes In Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Unaudited Condensed Consolidated Financial Statements. |
104* |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
|
|
* |
|
Filed herewith. |
** |
|
Furnished herewith. |
# |
|
Certain schedules and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. The descriptions of the omitted schedules and exhibits are contained within the relevant agreement. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the SEC upon request. |
38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
REPAY HOLDINGS CORPORATION |
|
|
(Registrant)
|
|
|
|
Date: May 4, 2026 |
By: |
/s/ John Morris |
|
|
John Morris |
|
|
Chief Executive Officer |
|
|
|
Date: May 4, 2026 |
By: |
/s/ Robert S. Houser |
|
|
Robert S. Houser |
|
|
Chief Financial Officer |
|
|
(Principal Financial Officer) |
39