8-K: REPAY Reports Q3 2025 Results, Refines Outlook Amid Declines

REPAY Holdings Corporation reported Q3 2025 financial results with declines in revenue and profit, refining its Q4 outlook downwards, while emphasizing normalized growth and strategic capital allocation.

Summary

• REPAY reported Q3 2025 revenue of $77.7 million, a 2% decrease from $79.1 million in Q3 2024.
• Gross profit for Q3 2025 was $57.8 million, down 6% from $61.6 million in Q3 2024.
• The company posted a net loss of $6.6 million in Q3 2025, compared to a net income of $3.2 million in Q3 2024.
• Adjusted EBITDA decreased by 11% to $31.2 million in Q3 2025 from $35.1 million in Q3 2024.
• Free Cash Flow significantly declined by 57% to $20.8 million in Q3 2025 from $48.8 million in Q3 2024, with Free Cash Flow Conversion at 67% (down from 139%).
• Normalized revenue growth was 5% year-over-year, and normalized gross profit growth was 1% year-over-year, excluding impacts from client losses and political media spending.
• REPAY retired $73.5 million of convertible notes and repurchased $15.6 million of outstanding shares during Q3 2025.
• The company refined its Q4 2025 outlook, now expecting 6% 8% normalized gross profit growth (previously high single-digit to low double-digit) and Free Cash Flow Conversion to be above 50% (previously 60%).

Sentiment

Score: 4

Explanation: The sentiment is cautiously negative. While the company highlights 'normalized growth' and strategic capital allocation (debt retirement, share repurchases), the reported GAAP and key non-GAAP financial metrics (revenue, gross profit, net income, Adjusted EBITDA, Free Cash Flow) show significant year-over-year declines. Furthermore, the Q4 2025 outlook was lowered, indicating a less optimistic near-term forecast. The positive spin contrasts with the underlying financial performance.

Positives

• Achieved 5% year-over-year normalized revenue growth and 1% normalized gross profit growth, excluding specific impacts.
• Business Payments segment showed strong normalized gross profit growth of approximately 12% year-over-year.
• Expanded integrated software partner relationships to 291, adding five new partners in the quarter.
• Accelerated AP supplier network growth by approximately 59% year-over-year, reaching over 524,000 suppliers.
• Instant funding volumes increased by approximately 36% year-over-year.
• Added 11 new credit unions and financial institutions within the financial institution vertical.
• Successfully retired $73.5 million of convertible notes, reducing future debt obligations.
• Repurchased $15.6 million of outstanding shares during Q3 2025, demonstrating commitment to shareholder returns (total $38.3 million YTD).

Negatives

• Reported revenue declined by 2% year-over-year to $77.7 million.
• Gross profit decreased by 6% year-over-year to $57.8 million.
• Net income shifted to a loss of $6.6 million in Q3 2025 from a profit of $3.2 million in Q3 2024.
• Adjusted EBITDA decreased by 11% year-over-year to $31.2 million.
• Free Cash Flow saw a significant 57% year-over-year decline to $20.8 million.
• Free Cash Flow Conversion dropped substantially to 67% from 139% year-over-year.
• The Q4 2025 outlook for normalized gross profit growth was refined downwards to 6%-8% (from HSD to LDD), and Free Cash Flow Conversion guidance was lowered to above 50% (from 60%).
• Consumer Payments gross profit growth was impacted by previously announced client losses, resulting in only 1% growth.
• Business Payments reported revenue and gross profit declined by 21% and 31% year-over-year, respectively, due to client losses and political media spending impacts.

Risks

• Exposure to economic conditions and political risk affecting the consumer loan market, receivables management industry, and consumer and commercial spending, including bank failures or other adverse events affecting financial institutions.
• Impacts from inflationary pressures, evolving U.S. trade policies, the U.S. government shutdown, or a general economic slowdown or recession.
• Changes in the payment processing market, including competitive landscape, technology evolution, or regulatory changes.
• Changes in the vertical markets REPAY targets, including the regulatory environment applicable to its clients.
• Ability to retain, develop, and hire key personnel.
• Risks relating to REPAY's relationships within the payment ecosystem.
• Risk that REPAY may not be able to execute its growth strategies, including identifying and executing acquisitions.
• Risks relating to data security.
• Changes in accounting policies applicable to REPAY.
• Risk that REPAY may not be able to maintain effective internal controls.

Future Outlook

REPAY refined its financial outlook for fiscal 2025, now expecting Q4 normalized gross profit growth to be between 6% and 8% (a reduction from the prior high single-digit to low double-digit guidance). Free Cash Flow Conversion for Q4 is expected to be above 50% (a reduction from the prior 60% guidance). The company remains focused on returning to sustainable growth.

Management Comments

• "During the third quarter, REPAY achieved solid normalized growth with strong Adjusted EBITDA margins and robust Free Cash Flow generation."
• "We opportunistically deployed capital towards our organic growth initiatives, repurchased shares, and retired a significant portion of convertible notes."
• "These results demonstrate the strategic improvements that are underway."
• "Our core growth strategy is built on our drive to optimize digital payment flows across our Consumer and Business Payments verticals."
• "As we look towards the end of the year, we remain focused on our path of returning to sustainable growth."

Industry Context

REPAY operates in the rapidly evolving payment processing market, capitalizing on secular trends away from cash and checks towards digital payments. The company targets underserved markets like loan repayment, B2B, and healthcare, which have historically lagged in electronic payment adoption. Its focus on vertically-integrated solutions and expanding its AP supplier network aligns with the broader industry shift towards comprehensive digital payment ecosystems and accounts payable automation.

Related Party Transactions

• The Tax Receivable Agreement liability includes amounts held for related parties: $0 as of September 30, 2025, and $2,413 thousand as of December 31, 2024, for the current portion.
• The noncurrent portion of the Tax Receivable Agreement liability includes $22,337 thousand held for related parties as of September 30, 2025, and $25,134 thousand as of December 31, 2024.

Stakeholder Impact

• Shareholders: Impacted by the net loss, decline in Adjusted EBITDA and Free Cash Flow, but also benefited from the $15.6 million share repurchase program in Q3 2025.
• Creditors: Positively impacted by the retirement of $73.5 million in convertible notes, reducing debt obligations.
• Customers: Potential impact from previously announced client losses, but also benefit from new integrated software partners and expanded AP supplier network.
• Employees: Restructuring and other strategic initiative costs suggest ongoing operational adjustments that could affect employees.

Next Steps

• Focus on returning to sustainable growth by optimizing digital payment flows across Consumer and Business Payments verticals.
• Continue opportunistic deployment of capital towards organic growth initiatives.
• Host a conference call on November 10, 2025, at 5:00 pm ET to discuss Q3 financial results and outlook.

Key Dates

Recommendation

The stock is a 'hold' for a seasoned investor. While REPAY reported declines in key financial metrics like revenue, gross profit, net income, Adjusted EBITDA, and Free Cash Flow year-over-year, and lowered its Q4 outlook, the company also highlighted 'normalized' growth figures and demonstrated active capital management through debt retirement and share repurchases. The underlying business segments show some resilience and strategic expansion (e.g., new software partners, AP network growth). The mixed signals suggest a period of transition and strategic adjustments. Investors should monitor the execution of the refined Q4 outlook and the company's ability to translate 'normalized' growth into improved reported financial performance before making significant new investment decisions.

Keywords

Payment Processing, Fintech, Q3 2025 Earnings, Financial Results, Adjusted EBITDA, Free Cash Flow, Convertible Notes, Share Repurchase, Consumer Payments, Business Payments, Software Integrations, AP Automation, Digital Payments