10-Q: Repay Holdings Reports Q2 Loss Amid Goodwill Impairment

Repay Holdings Corporation reported a significant net loss of $108.0 million for the second quarter of 2025, primarily driven by a $103.8 million goodwill impairment charge, despite a slight revenue increase.

Summary

• Repay Holdings Corporation reported a net loss of $108.0 million for the three months ended June 30, 2025, a significant increase from a net loss of $4.2 million in the same period last year.
• The substantial loss was primarily due to a non-cash goodwill impairment loss of $103.8 million, predominantly affecting the Consumer Payments segment ($103.2 million).
• Revenue for the second quarter of 2025 increased slightly by 0.9% to $75.6 million, up from $74.9 million in Q2 2024, driven by new and existing clients, partially offset by client losses and reduced political media spending.
• For the six months ended June 30, 2025, total revenue decreased by 1.7% to $153.0 million, compared to $155.6 million in the prior year period.
• Adjusted EBITDA decreased by 5.7% to $31.8 million for Q2 2025 (from $33.7 million in Q2 2024) and by 6.1% to $65.0 million for H1 2025 (from $69.2 million in H1 2024).
• Adjusted Net Income declined by 12.3% to $19.1 million for Q2 2025 (from $21.8 million in Q2 2024) and by 10.8% to $39.4 million for H1 2025 (from $44.1 million in H1 2024).
• The company repurchased approximately 4.8 million shares for $22.6 million during Q2 2025 under its Share Repurchase Program, which was increased to $75 million on May 8, 2025.
• As of August 7, 2025, $23.0 million remained available under the Share Repurchase Program, with an additional 3.1 million shares repurchased since June 30, 2025.

Sentiment

Score: 2

Explanation: The sentiment is highly negative due to the substantial net loss driven by a significant goodwill impairment charge, coupled with declines in key profitability metrics like Adjusted EBITDA and Adjusted Net Income. While there was slight Q2 revenue growth, the overall financial picture for the period is concerning.

Positives

• Revenue for the three months ended June 30, 2025, increased by 0.9% year-over-year, driven by newly signed clients and growth from existing clients.
• Selling, general and administrative expenses decreased by 6.8% to $32.9 million in Q2 2025, primarily due to a $3.6 million decrease in equity compensation expenses and a $0.5 million decrease in software and technology expenses.
• Depreciation and amortization expenses decreased by 4.9% to $25.5 million in Q2 2025, mainly due to a reduction in software amortization.
• The Business Payments segment showed revenue growth of 3.8% in Q2 2025 and 8.4% in H1 2025, indicating strength in this area.
• The company expanded its Share Repurchase Program to $75 million and actively repurchased shares, signaling confidence in its valuation and returning capital to shareholders.

Negatives

• Reported a significant net loss of $108.0 million for Q2 2025, a substantial deterioration from a $4.2 million net loss in Q2 2024.
• Incurred a non-cash goodwill impairment loss of $103.8 million in Q2 2025, primarily impacting the Consumer Payments segment, reflecting a decrease in fair value due to changes in discount rates and comparable company multiples.
• Adjusted EBITDA decreased by 5.7% in Q2 2025 and 6.1% in H1 2025, indicating a decline in core operational profitability.
• Adjusted Net Income fell by 12.3% in Q2 2025 and 10.8% in H1 2025, further highlighting reduced profitability.
• Total revenue for the six months ended June 30, 2025, decreased by 1.7% year-over-year, impacted by previously announced client losses and reduced political media spending.
• Interest expense significantly increased to $3.1 million in Q2 2025 (from $0.9 million in Q2 2024) and $6.2 million in H1 2025 (from $1.8 million in H1 2024) due to a higher outstanding principal balance under convertible senior notes.
• Consumer Payments segment gross profit decreased by 0.2% in Q2 2025 and 2.6% in H1 2025, despite revenue growth in Q2, indicating margin pressure or increased costs within the segment.
• Business Payments segment gross profit decreased by 5.0% in Q2 2025, despite revenue growth, also suggesting margin pressure.

Risks

• Exposure to economic conditions and political risk affecting the consumer loan market, receivables management industry, and consumer/commercial spending, including bank failures, inflationary pressures, evolving U.S. trade policies, and general economic slowdown or recession.
• Changes in the payment processing market, including competitive landscape, technology evolution, or regulatory changes.
• Changes in the vertical markets targeted, including the regulatory environment applicable to clients.
• Ability to retain, develop, and hire key personnel.
• Risks relating to relationships within the payment ecosystem.
• Risk of not being able to execute growth strategies, including identifying and executing acquisitions.
• Risks relating to data security.
• Changes in accounting policies applicable to the company.
• Risk of not being able to maintain effective internal controls.
• Payment obligations under the Tax Receivable Agreement (TRA) could be substantial and potentially exceed actual tax benefits realized, with no assurance of financing these obligations.

Future Outlook

The company continues to monitor the current macroeconomic environment, characterized by heightened inflation, evolving U.S. trade policies, supply chain issues, and slower growth, which may include increased unemployment or recession. These factors could adversely affect payment volumes from the consumer loan market, receivables management industry, and consumer/commercial spending. The company intends to continue strategically targeting verticals where its tailored payment solutions, deep market knowledge, and integrated solutions can drive growth by attracting new clients and fostering long-term relationships. The impact of the recently enacted One Big Beautiful Bill Act (OBBBA) tax reform legislation is being evaluated but is not expected to materially impact the estimated annual effective tax rate in 2025.

Management Comments

• 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 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.
• 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 six months of 2025 may not be necessarily indicative of their impact on our results for the remainder of 2025.
• We expect that our cash flow from operations, current cash and cash equivalents and available borrowing capacity will be sufficient to fund our operations and planned capital expenditures and to service our debt obligations for the next twelve months and the following five years.
• We currently expect that we will remain in compliance with the restrictive covenants under the 2026 Notes, the 2029 Notes and the Second Amended Credit Agreement, prospectively.

Industry Context

The company operates in the payment processing market, serving industry-oriented vertical markets with specific transaction processing needs. It faces challenges from macroeconomic conditions such as inflation and potential recession, which can impact consumer and commercial spending and payment volumes. The industry is characterized by ongoing technology evolution and regulatory changes, requiring continuous adaptation and innovation. The company's strategy focuses on tailoring integrated payment solutions to client needs and leveraging deep vertical market knowledge to drive growth, competing with other Independent Sales Organizations (ISOs) and payment facilitators.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to assess performance against global benchmarks. Therefore, a direct comparison to industry standards with specific entities is not possible based solely on the provided document.

Management Changes

Legal Proceedings

• The company is a party to various claims and lawsuits incidental to its business, but does not expect any currently pending legal proceeding to have a material adverse effect on its financial position, liquidity, results of operations, or cash flows.

Related Party Transactions

• The company held Tax Receivable Agreement (TRA) payables for related parties of $25.9 million as of June 30, 2025, and $27.5 million as of December 31, 2024. These amounts are owed to holders of Post-Merger Repay Units.

Stakeholder Impact

• Shareholders: Experienced a significant net loss and goodwill impairment, which negatively impacts equity value. However, the expanded share repurchase program could provide some support for share price.
• Employees: Share-based compensation expenses decreased, and the company continues to manage its incentive plans.
• Customers: The company continues to provide integrated payment processing solutions and aims to attract new clients and grow existing relationships.
• Creditors: The company maintains compliance with restrictive covenants under its credit agreements and convertible senior notes, and expects to have sufficient liquidity to service debt obligations.

Next Steps

• Continue to monitor and adapt to macroeconomic conditions, including inflation and potential recession.
• Focus on attracting new clients and fostering long-term client relationships by tailoring payment solutions and leveraging deep vertical market knowledge.
• Evaluate the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) tax reform legislation.
• Manage the Share Repurchase Program, with $23.0 million remaining capacity as of August 7, 2025.

Key Dates

Recommendation

The significant goodwill impairment loss of $103.8 million, leading to a substantial net loss of $108.0 million for the quarter, indicates a material deterioration in the company's valuation and financial health. Despite a slight revenue increase in Q2, the overall six-month revenue declined, and key profitability metrics (Adjusted EBITDA and Adjusted Net Income) also decreased. These factors suggest underlying operational challenges and a re-evaluation of asset values, making the stock a 'sell' for investors seeking stability and positive financial performance.

Keywords

Payment processing, FinTech, Consumer payments, Business payments, Goodwill impairment, SEC filing, Quarterly report, Financial results, Share repurchase, Convertible notes, Electronic payments, Accounts payable automation