Repay NASDAQ: RPAY reported a 97% increase in third-quarter revenue, helped by its KUBRA acquisition and strong political media activity, but lowered its normalized growth and free cash flow expectations as its core consumer payments business fell short of projections.
The payments company reiterated its full-year revenue and adjusted EBITDA outlook, saying higher political media revenue and faster-than-expected acquisition synergies were offsetting weaker consumer payments growth. It also raised its political media forecast for 2026 and increased its year-end cost synergy target for KUBRA.
Third-quarter revenue rose to $153.4 million, including a full quarter of KUBRA, Chief Financial Officer Robert Houser said on the Nov. 9 earnings call. Organic revenue growth was 13.6%, including approximately nine percentage points from political media. Excluding political media, normalized organic growth was approximately 5%, up from roughly 4% in each of the first two quarters.
Adjusted EBITDA increased 63% to $50.9 million, while adjusted net income was $22.5 million, or $0.25 per share. Gross profit was $99.5 million, representing a 65% margin, down from 74% a year earlier. Houser attributed almost all of the margin decline to the addition of KUBRA, whose product and payment mix includes lower-margin print and mail services.
Consumer Payments Growth Falls Short
Core consumer payments revenue rose 0.3% organically as revenue from new and prior-year sales materialized more slowly than expected. Repay expects low-single-digit organic growth in the business in the fourth quarter and a return to growth in 2027.
Co-Founder and Chief Executive Officer John Morris said some larger enterprise deals took longer to implement, while the timing and mix of payments also affected revenue. He said the company had changed how it prioritizes deals and made operational and personnel changes under Matt Morrow, who joined in the second quarter to lead the business.
Houser said the company had reviewed its sales pipeline, including the quality of opportunities and the realism of expected closing dates. He said the issue was not customer attrition, but the time needed to build and convert the pipeline. Morris added that bookings exceeded quota during the quarter.
KUBRA and Political Media Drive Growth
KUBRA contributed approximately $65 million in quarterly revenue, up about 8% year over year on a pro forma basis, Houser said. Repay acquired KUBRA in a deal that closed June 1. Morris said the combination allows Repay to serve clients across the billing process, from bill design and presentment to payment processing and settlement.
Repay raised its target for annualized KUBRA cost synergies exiting 2026 to $11 million from $8 million. Houser said the company continues to target more than $20 million in operating and capital expenditure synergies, plus revenue opportunities, exiting 2028.
Business payments revenue grew 99% in the quarter, or 40% excluding political media. Political media contributed $7.1 million in quarterly revenue and $9.7 million for the first nine months of the year. Repay raised its full-year political media revenue forecast to $16 million–$18 million from $8 million–$10 million, citing a particularly active campaign season and market share gains.
Outside political media, Houser said accounts payable growth benefited from monetizing more volume on the platform and bringing new clients live. Business payments also grew at a double-digit rate when both political media and the new bank reseller channel were excluded.
Bank Channel Investment Weighs on Cash Flow
Repay invested $14 million in a bank reseller partnership during the quarter and expects to invest approximately $5 million more in the fourth quarter. The channel contributed approximately $3 million in revenue and $1.3 million in adjusted EBITDA in the third quarter. Houser expects $6 million–$7 million in channel revenue for the full year.
Houser said 52 banks had consented to participate, putting the company ahead of schedule, but Repay still needs to win each relationship and migrate banks to its platform. Morris said the channel gives Repay an opportunity to offer its TotalPay solution to the banks’ commercial customers.
Free cash flow was negative $21.1 million in the quarter, reflecting the bank channel investment, $15 million in interest expense and approximately $11 million in working-capital timing. Houser said elevated political media receivables accounted for most of the working-capital effect and should normalize by year-end.
Full-Year Outlook
Repay maintained its 2026 revenue forecast of $490 million–$500 million and adjusted EBITDA outlook of $168.5 million–$176 million. It lowered its normalized organic growth expectation to 5%–6% from 7%–9%, and reduced its free cash flow target to 20%–25% from 30%, citing the bank channel investment.
The company ended the quarter with $64 million in operating cash and an undrawn $100 million revolving credit facility. Houser said Repay remains on track to reduce pro forma synergized net leverage from approximately 3.8 times at quarter-end to below 3 times by the end of 2027. Management plans to provide more detail on its longer-term financial framework at an investor day on Dec. 7 in New York.
About Repay (NASDAQ:RPAY)
Repay Holdings Corporation, operating under the REPAY brand, is a payments technology company that provides integrated payment processing and accounts receivable solutions to businesses and organizations in specialized industries. Its platform is designed to help clients accept, manage and reconcile electronic payments through a range of digital and automated tools.
REPAY's services include credit and debit card processing, ACH payments, electronic funds transfers, recurring payments, online and mobile payment acceptance, payment disbursements, invoicing and accounts receivable management.
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