Repay (NASDAQ:RPAY) executives said the company is positioning itself as a broader provider of consumer bill payment, bill presentment and communications services following its acquisition of KUBRA, while targeting an acceleration in organic growth and using cash flow to reduce leverage.
Speaking at the 46th Annual Canaccord Growth Conference, Chief Executive Officer John Morris said the combined company serves large billers across consumer finance, utilities, municipalities and government. The company’s offerings span bill creation and presentment, customer communications and payment processing across digital, print, mobile, text and voice channels.
Second-Quarter Growth and Cash Flow
Chief Financial Officer Rob Houser said Repay delivered 6% organic growth in the second quarter. Political media activity contributed 2 percentage points of that growth, while the company’s consumer business grew approximately 4% organically during the period.
Repay expects to exit the year with reported organic growth of 10% to 12%, Houser said. Excluding political media activity, that exit-rate outlook would be about 7% to 9%. Management expects growth to increase during the second half as new consumer business comes online and the company laps prior customer losses related to mergers and acquisitions involving those clients.
Houser said the B2B payments business grew 33% in the quarter, or 19% excluding political media. The company expects B2B growth excluding political media to remain in the mid-teens during the second half of the year.
The company generated $27.4 million in free cash flow during the second quarter, representing a 75% conversion rate, according to Houser. Repay expects free cash flow conversion of about 30% for the full year, with interest expense from the term loan used to acquire KUBRA affecting results in the second half.
Political media is part of Repay’s B2B payables platform, Morris said. He said the company facilitates payments for political advertising, adding that the business has an every-other-year cycle but produces strong margins and cash flow. Houser said Repay has guided for $8 million to $10 million of political media revenue in the third and fourth quarters, tied in part to the midterm election cycle.
KUBRA Expands Consumer Platform
Management said KUBRA accounted for about one month of ownership in Repay’s second-quarter results. On a pro forma basis, KUBRA grew 6% in the second quarter and is expected to grow at a mid-single-digit rate for the year, Houser said. He characterized its utility and government billing business as non-seasonal and focused on recurring, non-discretionary bills.
Repay’s legacy consumer business represented roughly 45% of revenue before the acquisition, while KUBRA represents another approximately 45%, Houser said. Both will be reported in the consumer segment going forward. The B2B business accounts for about 10% of revenue.
For the year, Repay expects to own KUBRA for roughly seven months and has guided for $150 million to $154 million in revenue from the acquired business, Houser said. He also described KUBRA’s pro forma net revenue as roughly $240 million and said its EBITDA margin profile is approximately 18% to 20%.
The acquisition adds communications and bill-presentment capabilities that carry a lower margin profile than Repay’s historical payment-processing operations. Houser said this contributed to the company’s expected gross-profit margin changing from 79% to 70%, but he said the change did not reflect pricing pressure.
Management sees opportunities to cross-sell KUBRA’s communications, digital and print bill-presentment services into Repay’s existing consumer customer base. Houser said the combined platform can support both paper and digital delivery, enabling customers to reduce paper billing while maintaining required print capabilities in utility and government markets.
Synergies, Leverage and Technology
Repay has committed to achieving $8 million in annualized run-rate synergies in 2026 and more than $20 million by the end of 2028. Houser said the company had already identified $4.5 million in annualized synergies shortly after closing the acquisition.
He said early savings opportunities include common reporting platforms, cloud infrastructure and improved purchasing terms resulting from the combined company’s scale. Repay expects KUBRA to become 25% free-cash-flow accretive in 2028, driven in part by synergies and debt reduction.
Net leverage was about 3.9 times at the close of the acquisition and had declined to 3.7 times following the company’s cash-generating quarter, Houser said. Repay’s goal is to reduce net leverage below 3 times within 18 months of owning KUBRA.
The company also expects capital expenditures to decline as a percentage of revenue, targeting less than 10% by 2028. Houser said both businesses have already made substantial investments in cloud platforms and technology modernization.
Morris said Repay is using artificial intelligence in technology development and integration work, including through Claude, and is exploring AI-enabled voice interactions for consumers. He said the company’s near-term priorities are executing the KUBRA integration, realizing synergies, restoring organic growth to the high-single-digit to low-double-digit range and reducing debt through free cash flow.
About Repay (NASDAQ:RPAY)
Repay Holdings Corp. (Nasdaq: RPAY) is a specialized financial technology company that delivers integrated payment solutions to businesses operating within key vertical markets. The company’s platform enables merchants and service providers to accept a range of payment types, including credit and debit cards, automated clearing house (ACH) transfers and electronic checks. Repay’s offerings are designed to seamlessly integrate with third-party software applications, such as enterprise resource planning, customer relationship management and point-of-sale systems, empowering industries such as utilities, telecommunications, automotive finance, healthcare, insurance, property management and education.
Tracing its roots to the formation of Pinnacle Payment Systems in 1997, Repay expanded its capabilities through strategic acquisitions, including Southeastern Integrated Solutions and Payliance, before completing a business combination with Thunder Bridge Acquisition II in 2019 to become a publicly traded company on the Nasdaq.
