SCHEDULE: Repay Holdings: Shareholder Activism Intensifies

Veradace Partners LP, a significant shareholder, has withdrawn director nominations and announced its intent to withhold votes from current Repay Holdings Corporation directors, citing governance concerns and dissatisfaction with recent strategic decisions.

Summary

• Veradace Partners LP, holding 8.2% of Repay Holdings Corporation's Class A shares, has withdrawn its director nominations for the upcoming 2026 annual meeting.
• The firm intends to withhold votes from all current members of Repay's Board of Directors.
• This action stems from a belief that urgent governance changes are needed to prevent further shareholder value destruction.
• Specific concerns include the Board's rejection of Forager Capital's $4.80 per share acquisition proposal, the decision to acquire KUBRA, and management compensation practices.
• Veradace highlights that over 50% of Class A common stock traded at prices significantly lower than the Forager proposal, indicating shareholder dissatisfaction.
• The company's compensation practices, including granting 6.1 million shares (6.7% of outstanding) in Q1 2026 at a weighted average price of $2.84, are criticized as excessive dilution, especially given a 52% share price decline in 2025 and the first revenue decline in company history.
• Veradace also notes that Repay's updated guidance for KUBRA suggests lower-than-expected performance, with annualized EBITDA projections for KUBRA falling below 2025 EBITDA levels and a 5% growth rate.
• The firm believes new, independent directors are needed to comprise the majority of Repay's Board.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this as a strongly negative sentiment due to intense shareholder activism, withdrawal of director nominations, and explicit intent to withhold votes, signaling deep dissatisfaction with management and board actions.

Negatives

• Veradace Partners LP has withdrawn director nominations and will withhold votes from current Repay directors.
• Shareholder value is perceived to be at risk due to current governance and strategic decisions.
• The Board rejected a $4.80 per share acquisition proposal from Forager Capital, which Veradace believes significantly undervalues the company.
• Significant share price declines (52% in 2025) and the first revenue decline in company history are noted.
• Management compensation practices are criticized for excessive dilution (6.7% of outstanding shares granted in Q1 2026) at a low stock price ($2.84), despite underperformance.
• The acquisition of KUBRA is questioned, with updated guidance suggesting underperformance relative to initial expectations and 2025 levels.
• Over 50% of Class A common stock traded at prices below the Forager proposal, indicating shareholder dissatisfaction.

Risks

• Potential for continued shareholder dissatisfaction and activism if governance issues are not addressed.
• Risk of further share price decline if strategic decisions, such as the KUBRA acquisition, do not yield expected results.
• The company's ability to attract and retain talent may be impacted by compensation concerns and governance issues.
• The withholding of votes by a significant shareholder could lead to instability or challenges in board effectiveness.
• The KUBRA acquisition may not meet projected financial targets, leading to value destruction.

Future Outlook

Veradace Partners LP intends to withhold votes from all current members of the Board at the Issuer's 2026 annual meeting of stockholders, expressing dissatisfaction with the Board's governance and strategic decisions. They believe urgent changes are needed to prevent further shareholder value destruction and hope to constructively engage with the Company to improve governance.

Management Comments

• "We continue to believe urgent changes to the governance of the Company are necessary to prevent the further destruction of shareholder value, and to make this clear to the Board, we intend to WITHHOLD our votes from all current members of the Board at the Annual Meeting."
• "A board that refuses to entertain discussions with a potential buyer offering a substantial premium seems like bad governance to us."
• "Apparently the Board believes that doubling dilution to compensate management is the sort of pay structure that is aligned with a 52% decline in share price in 2025 and the first revenue decline year in company history."
• "Apparently, in the 3 months since the deal was announced, at which time the Board and management vigorously defended it, KUBRA has gone from an industry growth business to a no-growth to declining asset."
• "We are deeply concerned the current Board is not looking after shareholders interests."
• "We believe new, truly independent directors should comprise the majority of Repay's Board."
• "We still hope to constructively engage with the Company to improve governance that appears severely lacking."

Industry Context

StockSavvy.ai notes that this filing reflects a growing trend of shareholder activism in the tech and software sectors, where investors are increasingly scrutinizing executive compensation, acquisition strategies, and board composition, particularly when faced with underperformance or perceived undervaluation.

Comparison to Industry Standards

• The dilution rate of 6.7% in Q1 2026 is more than double the trailing 4-year average of 3.2%, indicating a significant deviation from historical norms and potentially higher than industry averages for companies of similar size and growth stage.
• The rejection of a $4.80 per share acquisition proposal, which Veradace believes offers a substantial premium, contrasts with industry practices where such offers are typically engaged with, especially if they represent a significant uplift to the current market price.
• The implied annualized EBITDA for KUBRA ($47.1mm - $51.4mm) is noted to be below the 2025 EBITDA ($49mm) and below what would be expected with a 5% growth rate, suggesting that the acquired asset may not be performing as initially projected or that the market's perception of its growth potential has diminished since the acquisition announcement.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for continued value destruction if governance and strategic issues are not resolved; dissatisfaction indicated by share trading patterns and Veradace's actions.
• Management: Facing criticism over compensation practices and performance, potentially leading to pressure for changes or improved results.
• Board of Directors: Under direct pressure from a significant shareholder, with a stated intent to withhold votes, potentially impacting future composition and decision-making.

Next Steps

• Veradace Partners LP will withhold votes from all current members of the Board at the Issuer's 2026 annual meeting of stockholders.
• Veradace hopes to constructively engage with the Company to improve governance.
• The company's board will need to address the concerns raised by Veradace Partners LP to potentially regain shareholder confidence.

Key Dates

Recommendation

While Veradace Partners LP's activism highlights significant governance and strategic concerns, the company's core business and the potential for KUBRA to eventually contribute positively warrant a hold. Investors should monitor the board's response to shareholder pressure and the performance of the KUBRA acquisition. The current situation presents risks but also potential catalysts for change if the board adapts.

Keywords

Repay Holdings Corporation, Schedule 13D, Veradace Partners LP, Shareholder Activism, Director Nominations, Withhold Votes, Corporate Governance, KUBRA Acquisition, Shareholder Value, Management Compensation, Dilution, Forager Capital, Class A Common Stock