Repay Holdings Corporation Price & Performance (RPAY)

During this call, we will be making forward looking statements about our beliefs and estimates regarding future events and results. Those forward looking statements are subject to risks and uncertainties including those set forth in the SEC filings related to today's results and our most recent Form 10 ks.

Actual results may differ materially from any forward looking statements that we make today. Forward looking statements speak only as of today, we do not assume any obligation or intend to update them. Except as required by law. In an effort to provide additional information to investors, we today's discussion will also reference certain non GAAP financial measures. Reconciliations and other explanations of those non GAAP financial measures can be found in today's press release and in the earnings supplement. Each of which are available on the company's IR site. With that, I would now like to turn the call over to John.

Thanks, Stuart. Good afternoon, everyone. Thank you for joining us today. On today's call, we plan to cover three main topics. First, a review of the fourth quarter twenty twenty four Second, recap of our progress and accomplishments in 2024. And lastly, the announcement related to a strategic review including a review of our overall strategic alternatives. First on Q4, replay closed out the year with another quarter of profit will grow. While gross profit growth showed steady growth, adjusted EBITDA increased approximately 9% and free cash flow conversion improved to 64% Our full year results showcased our durable business model with gross profit growth of six strong double digit adjusted dividend growth and accelerating free cash flow conversion from 42% in 2023 to 75% in 2024. In Q4 and throughout 2024, the Consumer Payments segment executed on our core growth profile, which includes growth from existing clients, as well as signed new clients during the year.

Core consumer payments continues to benefit from the ongoing secular tailwinds of processing more digital payments for clients across our verticals.

We continue to see the demand for our clients to adopt more payment making Repay a powerful one stop payment platform to optimize payment flows while offering value added services. Within the Consumer Payment segment, we added four new software partnerships while further strengthening our existing partners, bringing our total software Our go to market and customer support teams leverage these relationships to develop our robust sales pipeline and help improve our overall client experiences. We added several new clients to our platform in Q4, including 16 new credit unions, bringing our total credit union clients to three twenty nine.

Our Premise technology is directly integrated into more credit union software systems, which is driving a healthy sales pipeline into the 5,000 plus credit unions and regional financial institutions across The U. S. A great example of a recent win is FinFed Credit Union.

One of the nation's largest credit unions that serves approximately 3,000,000 members. Prepaid is excited to go live with CONFRAD to enhance their members' payment experience giving them 20 fourseven digital capabilities while making automotive payments. In addition to new client wins, we made great strides in 2024 to position Repay for vertical specific growth opportunities ahead. Such as expanding our software partnerships within the accounts receivable management vertical.

We're also making progress with the credit card servicing industry. A newer subvertical clients are selecting Rebay as our payment technology provider because our payment capabilities providing greater flexibility convenience for their users.

And lastly, in value added services, instant funding product continues to see healthy growth in Q4 transaction volumes up approximately 34% year over year.

Our clients primarily use this product today to differentiate themselves Over the medium term, the instant funding product can become an additional revenue stream with other verticals as we continue to evaluate new areas to expand the capabilities.

Our consumer payments growth was partially impacted from select factors the quarter. Some of these factors were outside of our control such as the full quarter impact of the previously mentioned RCS client that is rolling off due to being purchased by another processor. Lapping the contributions from a large personal lender in 2023, and a client loss within the Lending Communication Solutions business.

To begin moving their transaction processing in house.

Over the past year, have been building momentum within our enterprise sales team.

Making key hires, which has translated into incremental contributions during 2024. Our core consumer bookings grew nicely year over year, giving us confidence in accelerating growth from new client wins. As we move into 2025, we remain confident in executing our go to market client implementation and product initiatives.

We are also laser focused on improving our overall client experiences.

Which can lead to improved overall client retention, as well as additional value added service opportunities with existing clients to further enhance the core consumer payments growth algorithm at Rebay.

Now shifting over to our business payments segment. During the fourth quarter, our business payments gross profit grew 60% year over year.

Gross profit growth was driven by strength in our core AP business, solid contributions from the political media vertical, and the ramp up of live new clients during the quarter.

Throughout 2024, our AP business benefited from our direct sales team and software partners producing robust sales pipeline across the healthcare property management and municipality verticals. We enhanced integrations with existing software partners and added several software partnerships such as Blackbaud in the education vertical OTAAIR in the hospitality vertical and most recently Lightspeed DMS in the automotive vertical. Repay collaboration with Lightspeed DMS expands our reach within automotive industry by extending our vendor payment skip automation functionality to a wide range of retailers and dealerships.

Our sales teams are leaning into over our over 100 software partnerships and integrations to cultivate enterprise relationships develop extensive client pipeline. By combining these partnerships with our go to market sales teams, our normalized business payment bookings continues to build while also increasing our supplier network 38% year over year. To now over 360,000 suppliers.

During the fourth quarter, we signed several new enterprise clients including Fairview Health Services. Fairview Health Services is an award winning nonprofit healthcare network with a care portfolio footprint of over 50 clinics hospitals and medical centers in Minnesota, We're excited to start ramping these volumes with our total Repay solution while also enhancing Fairview's fraud prevention processes along the way.

In addition to new wins, our Business Payments segment was positively impacted from the continued ramp of many existing enterprise clients such as Grady Health UF Health Systems. Within our political media vertical, we benefited from the onboarding of several new clients and the strong ad spending during the twenty twenty four presidential election cycle. During the quarter, our B2B growth was partially impacted from a large client being acquired and generally AR softness. ARR represents a large opportunity We are dedicating less resources to AR in order to focus on the strong AP growth opportunity Within AR, we remain focused on enhancing our existing ERP partnerships and optimizing payment acceptance within these existing client bases. In addition, as we focus on accelerating growth, management made the strategic decision to migrate a group of existing AP clients onto our Total Paid solution to better serve and address future monetization opportunities for these clients' entire AP spending volumes.

This client migration initiative like other operational and strategic initiatives, was part of our focused approach on driving long term profitable growth.

Our core AP business increased in the low teens in Q4 when excluding the one off client attrition and strategic migration of clients. We remain confident in the sales pipeline as our go to market approach continues to build our software partners and enterprise clients, while also enhancing our growth profile with additional monetization efforts within our TotalPay solution leading to an acceleration in growth during the second half of twenty twenty five and into 2026. Now onto the next topic, a review of our progress in the full year 2024. From a financial perspective, we demonstrated revenue and gross profit growth of 6% adjusted EBITDA growth of 11% and improved reported free cash flow conversion to 75%. From an operating and go to market perspective, we have made great progress as well the focus of our sales and distribution resources, We have been able to grow Repay by leveraging our two eighty software partners, up from two sixty two at the end of twenty twenty three. We scaled operations by further aligning our internal sales, implementation and support team.

Realized efficiencies through process automation added talented team members in select roles of our organization. In addition, Repay recently announced the integration with Worth.ai and our merchant underwriting and onboarding processes.

By directly embedding Work.ai into Repay's workflows, we can spend less time on manual aspects of merchant underwriting and onboarding while also helping to mitigate KYB risk.

On the product side, we implemented new debit acceptance offerings.

And as we look to the future, we work in continuous development of new potential capabilities such as RTP, We also continue to explore ways of providing value added services to clients such as expanding Insta funding into new areas of the company. And from a capital management standpoint, we significantly increased our cash generation profile while strengthening our balance sheet by refinancing our convertible notes to provide ample liquidity and financial flexibility. In addition, we repurchased shares in a disciplined way during 2024. As we reflect on the accomplishments we achieved in 2024, and turn to 2025, We remain dedicated to the best payment experience for our clients and creating value by facilitating the ongoing secular shift to more digital payment flows.

As always, our focus is on creating value. Our shareholders. Since becoming a public company in 2019, Prepaid has made eight acquisitions. These strategic acquisitions helped us expand our consumer payment segment into six verticals, and 180 software partners.

While also diversifying Repay a leading business payment platform that represents approximately 20% of our revenue mix today.

Including 100 software partners, and a growing supplier network of over 360,000.

Over the past several years, we have been committed to our core values of profitable growth and improving cash flow generation while also being disciplined with our M and A even strategically divesting an asset during that time. Prepaid has built our technology platform scale both organically and inorganically with the potential to benefit from additional opportunities ahead.

As mentioned previously during the November earnings call, I am continuing to evaluate all aspects of our company and taking the necessary actions to realize shareholder value.

With the Board support, we have commenced a comprehensive strategic review with the assistance of outside of BioHorse to assess the full range alternatives aimed at capturing shareholder value.

The review includes evaluating opportunities to further strengthen Repay space adjacent end markets go to market strategy, relationships, This strategic review may also include consideration of various [indiscernible] Including M and A, we take private or sell the company for other structural changes, transactions, alternatives that could enhance shareholder value.

We do not intend to comment further or provide updates regarding regarding the strategic review until it has been completed unless the company determines that additional disclosure is appropriate or required.

As we are undergoing the review of our business, our capital allocation priorities remain focused on creating value for our shareholders while maintaining a strong balance sheet with ample liquidity and financial flexibility.

Our approach is as follows. [indiscernible] In 2025, we plan to make targeted sales go to market and relationship management and investments to strengthen our position and accelerate our organic growth in 2026 and 2027. To continue managing CapEx as a percentage of revenue, while maintaining prudent investments towards technology and product. To address the $220,000,000 convertible note, due in February 2026, with this capital allocation framework in mind. Additionally, we continue to be open to accretive strategic M and A and we will continue to have the authorized share buyback program where we have opportunistically repurchased shares in the past. With that, I'll turn it over to Tim to go over our Q4 full year twenty twenty four financials. [indiscernible] Thank you, John.

Now let's go over our financial results for Q4 and full year 2024. In the fourth quarter and full year 2024, BP delivered solid results across our key metrics. Revenue was $78,300,000 in Q4, representing an increase of 3% year over year.

Full year revenue increased 6% year over year. In Q4, gross profit grew by 2% year over year.

Consumer Payments segment gross profit declined approximately 5% during Q4 and grew 3% in full year 2024, Our business payments segment gross profit grew 60% in Q4 and 40% for the full year. As John mentioned, our gross profit growth was impacted by select client losses and the strategic technology migration of targeted business payment volumes to our total base solution. We believe these are isolated to specific situations while our core growth remains healthy. Excluding these impacts, reported gross profit growth would have been approximately 10% in Q4.

Q4 adjusted EBITDA was $36,500,000 representing 9% growth in Q4 and 11% growth for the full year. Q4 and full year adjusted EBITDA margins were approximately 4745% respectively demonstrating our disciplined approach to managing operating expenses while being able to support sales, implementation and client service teams across the company.

Fourth quarter adjusted net income was $22,400,000 or $0.24 per share. Q4 reported free cash flow was $23,500,000 dollars representing 64% free cash flow conversion.

Our full year 2024 free cash flow conversion was 75% Throughout 2024, free cash flow benefited from our continued growth while also seeing the flow through from managing both operating expenses and CapEx. During 2024, free cash flow was favorably impacted by over $20,000,000 in positive net working capital changes that we expect to reverse in Q1 twenty twenty five. As of December 31, we had approximately $190,000,000 of cash on the balance sheet with access to $250,000,000 of undrawn revolver capacity for a total liquidity amount of $440,000,000 Prepaid's net leverage is approximately 2.3 times with total outstanding debt of $507,500,000 comprised of a $220,000,000 convertible note to in February 2026 to the 0% coupon and $287,500,000 compared to in 2029 with a 2.875% coupon.

Net leverage will continue to naturally benefit from our strong profitability and cash flow generation. As John mentioned in his opening remarks, we have initiated a strategic review of our company, including exploring strategic alternatives with our Board support. As part of this dynamic, we are refraining from providing a 2025 outlook Before opening for questions, I want to reiterate with respect to the company's strategic review, the Board and management team are committed to improving operations and driving shareholder value. Management remains focused on prudently running the business and executing on our capital allocation priorities during this time. The company cannot provide assurance that exploring strategic alternatives will result in any transaction or particular outcome. As you understand, we will not be communicating anything additional about the strategic review process while it is ongoing. Again, we do remain focused on managing the business We'll not be taking any questions on the review process or 2025 outlook. Thank you. I'll now turn the call back over to the operator to take your questions. Operator? Great. Thank you. It may be necessary to pick up your handset before pressing the star keys. First question is from Ramsey El Assal from Barclays.

Hi, gentlemen. Thank you for taking my question this evening. I appreciate it.

I wanted to ask about some of the client losses that you've called out across the business, the sort of attrition, I should should characterize it as attrition. Are you seeing any changes in the drivers of attrition? I think you called out [indiscernible] tricky period where you're seeing more of that than usual? Or is there anything changing in the end market of your customers basically that would make you think that is maybe may see more attrition than you have in the past.

Hi, Rich. This is John. Good evening.

No, we're not seeing any changes, the specific ones that I called out Two of those were clients that actually got acquired One of those was in the consumer side of the business and one of those is in the business payment side.

They were important clients to us.

But they required nothing we could have changed about that.

And then the third one was NeoLending Communications Solutions, they brought that in house We don't see any trend associated with that either.

Okay.

Enough. And then a follow-up from me. On Slide seven, as you're talking about your consumer payments performance in the quarter, you called out seeing pockets of consumer softness I'm just curious if you could elaborate a little bit more on what those might be? Those are related to what we've talked about in the past.

With auto and ARM. Just continuation of what we saw previously. So nothing incremental to that, but just the dynamics and the challenges within the auto space around used car sales, used car affordability, and then the arm recovery that we anticipate we have not seen. And so there's just a continuation of the depressed volumes in ARM space that we talked about previously.

Got it. Okay. So continuation of trends. All right. Appreciate it. Thank you. The next question is from Sanjay Sakhrani from KBW. Please go ahead. [indiscernible] I guess maybe starting with how we think about 2025. I know you guys are refraining from providing specific guidance. But just as we think about the trend lines of growth ex any strategic actions. Could you just talk about sort of direction relative to 2024 you're expecting the segments to operate? I'd say overall, if we think about Q4, I mentioned that if you strip out the client losses and the strategic migration that reported gross profit growth would have been approximately 10% And then there's the some of the softness that we just talked about in consumer verticals around auto and arm And so when you take all those things together, I think the growth rate looks similar to how it on a normalized basis how it looked earlier in 2024. In the first half of twenty twenty four, the growth rate was call it mid to high single digits. And so I think all those pieces together build back up to that. So again, we're not providing a 2025 outlook that's the way I would think about it.

When you strip out the losses and some of the consumer macro impacts unlike business payments, should continue to grow as as the clip that it is or do we expect that to slow? I mean, how should we think about that?

We talked about the elements of that. There's a client loss there's the lack we're not as focused on the AR portion of that business We're still trying to upgrade and maintain the existing integrations, but really more focused on core AP and core AP is growing call low to mid teens And so that's how I think about that business is growing at that pace if you strip out the the loss. And then like I said, we're not as focused on the AR portion. The AR portion is important to us.

And we have a lot of strong integrations there. But we're really investing going forward in the we would call core AP.

Okay.

Great. And then John, maybe you could just talk about sort of what led to the decision making process of getting to the strategic review and And I know there's no deadline or specific timeline, but like maybe you could just tell us how we should look at it from the outside in terms of like thinking about progress being made, maybe you could give us a little bit more color on that Yes, sure.

So if you recall back in the November earnings call, I really am committed to evaluating all aspects of the company really drive and realize share order value.

So with the Board's support, we commenced this comprehensive strategic review, which is comprehensive with the assistance of outside advisors. We're going to look at the full range of alternatives that in order to capture an overall share order value. We're committed to that.

And we think We will that will end in a very positive outcome. For our shareholders.

And those aspects could outlook reviewing our go to market strategies Our overall capital allocation strategy and our strategic alternatives and Okay, great.

May I ask just one question for Tim. Just on the free cash flow conversion, obviously, you had that one time benefit sort of gets reversed in the first fourth quarter.

We think about free cash flow conversion, should we think about it on an adjusted basis to be comparable in 2025? Or does that is that affected by other stuff this year? [indiscernible] I would think of it that way. I mean, if you look at the earnings show us some detail on that. On Slide six. And so I think if you strip out the impacts from this year, And then also strip them out from what we expect to reverse in Q1 of next year, you would see a comparable conversion. And overall, we are showing, as we talked about previously, faster adjusted EBITDA growth than top line and a continued reduction of CapEx as a percentage of revenue.

So which should lead to continued strong free cash flow conversion when you strip out the working capital impacts in both periods.

Okay. Great. Thank you. The next question is from Joseph Daffy Hey guys, good afternoon. Thanks for the questions.

Anything going on in on the competitive landscape any update on your your focus on mortgage vertical. I know there was a lot going on with some of the with some of the card networks. Thanks a lot.

Yes. Hi, Joe. From a competitive perspective, as you know, last year, we we continue to invest in our enterprise sales, our product and our technology.

So we're well positioned there. Obviously, we're seeing strength in our sales pipelines. That obviously drives the overall our ability to compete in both sides of the business. So we we find ourselves well positioned there, but we'll of this strategic review, we'll obviously make sure that All things are true. The overall end markets, still are very positive on as well. And I think you mentioned mortgage on the mortgage side as we mentioned Last year and really in our November call, that's kind of a multiyear organic opportunity for us. That's still progressing as we indicated then. Where clients are rolling that out as we move throughout this year.

I'd add in B2B within AP, we've been calling out wins within the healthcare and hospital vertical recently. We're having a lot of success there. And so this speaks to the approach of being vertical specific within AP and you can see our solution is is now winning in those verticals. We're not areas such as healthcare, hospitals, auto dealerships, property management and we're seeing positive traction there and those particular end markets.

Great. Thanks, guys. Next question is from Andrew Schmidt from Citi.

Hey, John. Hey, Tim. Thanks for taking the questions this evening. So I wanted to ask just another macro question, but perhaps more specifically on the personal lending vertical. Maybe talk about your expectations there versus the the prior year? And then anything you're seeing in terms of demand or supply side trends to be aware of in the coming year?

I'd say trends are pretty similar to what we've talked about previously. Personal loans, there is some positive momentum and positive developments around origination activity. Based on our conversations with clients and some of the names we track publicly, there do seem to be indications that there loosening their underwriting standards and opening up to originations, I do think there's demand for that. And so they're looking to meet that demand. So I would say generally that's what we're seeing in personal not that different from what we said from prior periods, but a little bit of positive momentum there.

Got it.

Thank you, Tim. That's great to hear. And then, the total pay volume migration, just walk through the mechanics of that in terms of it sounded like that was driver of the of the P2P payments results this quarter in terms of coming in a little bit lower. But just trying to understand what the mechanics look like, like and what's going on under the hood?

So we've identified certain clients that were really focused on virtual cards and we want to be able to monetize the total payment volume And so where there were instances where there were effectively virtual card only clients, we were looking to migrate them to our total pay solution. And as part of that, there was some volume lost But we were that was a strategic shift. We were aware of those potential losses and that we were aware of those impacts could happen. But the idea that once that volume has been converted there's a greater monetization opportunity to not only monetize virtual cards, but also paid ACH. And so we think that we're aware that there could be impacts, but we're willing to make that strategic move for the future modernization benefits of having all of that total payment volume on our on our platform.

Got it.

Makes a lot of sense, Tim. Are you seeing I understand the strategic shift, it makes sense to offer the broad range of payment modalities, but are you seeing a broader shift from virtual card to ACH within the broader supplier base, just the kind of the common question in terms of payment acceptance costs and trends and things like that? Thanks a lot.

We still see healthy adoption trends within virtual card, but we are promoting the Payday CH option more regularly. And we are only able to do that when we have the total payment volume. And they're on TotalPay solution. So that is again a strategic move to be able to capture more of that more of that spend versus just the virtual card. And we are seeing that happen. And again, we're promoting it. We want that to happen. We think it's nice to have the balance between virtual card and paid ACH And if we have to, we can default to sending regular ACH or check, but again, we think being able to capture the TPV and monetize similar rates on virtual card, but then incrementally add paid ACH wins for us in the future.

Yes. Andrew, let me add some additional color there.

Our net new wins are are all green space in a lot of times. So that's that shift itself we're actually bringing them to the virtual quarter piece sometimes for the first time.

So we're those net new wins we talk about a lot of times, those are just never have outsourced payables before.

And to the extent we can get again, we're seeing really nice growth in TPV. We don't disclose that separately, but we're seeing that trend and we just need to be able to capture more of it and monetize it.

Got it.

Thank you, John. Thank you, Tim. Appreciate the comments. Next question is from Pete Heckmann from D. A. Davidson.

Hey, good afternoon. I just wanted to confirm, but in terms of these client losses that you've the three client losses that you've explained Were those fully reflected in the fourth quarter or you expect a little bit of additional revenue to run off Next quarter. One of them was we mentioned last quarter, but this quarter was the full full quarter impact. And then the other is yes, we've experienced the full runoff this quarter. So There will be a lapping effect in the back half of next year, but we'll see the impacts of those in the first half of of twenty twenty five. Back half of this year.

Got it. Got it. And then in terms of the some of the attrition on related to the total Repay [indiscernible] I guess, is that was that fully reflected in the fourth quarter or was there a little bit more to go? Yes, that's been reflected in the fourth quarter. All right. That's all I got. Thank you. Our next question is from Rufus Hone.

From BMO Capital Markets. Please go ahead.

Hey guys, thanks. Maybe sticking with the organic growth organic gross profit growth ex political, I know you touched on it from a high level, but you sort of put a finer point on the deceleration you saw from the third quarter into the fourth quarter?

So sort of bridging from that plus 1% organic growth last quarter to the minus nine this quarter. Thanks.

Again, that was the largely related to the client losses we mentioned and then the strategic migration of the the AP volume There was a little bit, I guess, I'd say, of additional softness in the AR part of B2B. That's why we've emphasized AP. But as I mentioned, when you ship out those impacts and then you take into account some of the ongoing arm and auto macro impacts it should get us back to a level that we saw earlier in 2024. So if you look at the normalized growth rates in the Q1 and Q2 of twenty twenty four, I would think that's more indicative of where we'd be.

And obviously, it's in order to get to that number, already normalizing for the political, which was in the fourth quarter which political for us will not be in 2025. Got it.

And maybe just as a follow-up, but Was there any offsetting benefit from the ramp in the the auto captive customer you called out last quarter and the mortgage debit acceptance customer?

That is the client is still ramping, but I wouldn't say it materially offset any of the other impacts.

Okay, got it.

Thanks.

Your next question comes from Charles Navin from Stephens.

Hi, good afternoon and thank you for taking my question. Had a quick one on the consumer segment. On Slide seven, you indicated that the headwind from the client losses in Q4 was roughly 5%.

So if I add that back to The gross profit decline this quarter were roughly flat.

My question is, as we assuming some normalization over the course of the year, you maybe help us understand how much of that is going to be coming from macro improvement versus new bookings? I know you have a number of go live scheduled for this year.

Yes. So again, the client losses don't take into account the the macro impacts from arm and auto that I mentioned earlier. So that that the client losses get you to flat and those macro impacts get you to call it low single digits and then you have the ramp of the captive auto win, you have the ramp of the previously signed accounts, you have the really strong bookings that John mentioned all of which would get you higher. So again, we're not providing a 25 outlook here, but that's how I would frame it up.

Got it.

Color. And as a follow-up, you had indicated in the strategic review that M and A was was also an option. So just to drill into that as well as your product roadmap, Could you maybe talk a little about what would be on your wish list if you were to go the M and A route?

I guess any comments around what's on your product roadmap organically would be helpful as well. So from an M and A perspective, [indiscernible] consumer bill pay. We're in some large consumer bill pay verticals today in terms of auto and mortgage and personal, There are others who are not in such as insurance or government or utilities. So those could be interest and we see some targets in those spaces. There's some consumer end markets we're not in that are more general commerce, I would say, And then I would say in B2B, we'd be focused on [indiscernible] So there are a lot of sort of tuck in opportunities within AP that could get us into additional verticals and grow our supplier network. So I'd say either existing or new consumer Repay verticals broader consumer commerce and then B2B AP.

Yes, I'll add a couple of things to that. Always anything that you could add to our software partners would embed payments that we fit well into those could potentially increase our verticals or complement our existing verticals adjacent verticals as I mentioned in our strategic review And then Something that would we would always be I find it would be very attractive, something to get your drive overall scale, something that could drive our overall distributions. Those could be software partners or just ways that we could really drive a flywheel effect of driving overall distribution.

Got it. Appreciate the color. Thank you. Next question is from Timothy Quiotta from UBS.

Hey, thank you for taking the question. Tim, you mentioned earlier paid ACH and I just wanted to drill into that more from an industry perspective. When we think about paid ACH, typically it's paid because you're able to attach information and add value to a typical ACH payment. So the question would be, number one is, is there anything different about the data that you can or cannot attach to an ACH payment in your enhanced ACH offering relative to what you could attach to a card?

And then second is within the various other bank based payment rails, is there any difference you would call out or reason why you would or would not, whether it's cost or timing, etcetera, associated with either something like an RTP or FedNow or something along those lines?

Relative to the traditional ACH? Thanks.

Yes.

I mean, again, the supplier is willing to pay a fee because they're getting enhanced data relative to a regulatory So it may not be as robust seamless as a card transaction, but it is more so than a regular ACH and they're willing to pay for that. I think the difference is just the fee to them is lower. So it's higher than regular ACH, but lower than card. And then like we've said, our economics are better because our cost of processing ACH is lower. So for us, we kind of net out in the same place even though it's but it's better for the supplier because they pay less and get more data. So it's pretty nuanced in terms of what that data is. But it's really a win win for both of us. They're paying less and getting rich data and we're ending up with a similar net economic situation.

So enriched data which makes obviously makes reconciliation a lot easier the bulk payment of things as well as the overall embedded part of that which makes reconciliation as well and the tie down back to the original invoice is a whole lot easier and easier to reconcile. Thanks Tim and John. A minor follow-up though, but is it safe to say that more of the suppliers are set up to receive that information with the virtual card relative to the number that are set up to receive that information with an ACH. Payment or is that something that you solve for?

Yes, we intend to solve for that through our supplier enablement And so again, we like owning the 360,000 plus supplier network. We do our own proprietary form of supplier enablement where we have really hands on real time approach and that allows us to determine the optimal way to pay and how they want to be paid. And so so we like owning that network. We like owning the enablement process and that gives us visibility into the best way to pay. Tim, long term, bigger picture long term, if you think about The world of automation, the world of overall cyber and fraud we think the world we think what we add in the value around cybersecurity, around the making and sending of payments is going to be even more important if I look out over the next three years or so.

We have great value just in that piece alone. As you can imagine, the mailing of checks A check-in itself has your routing and account number on it.

Right? And so our ability to drive value around security of that transaction we think is something we'll see more and more of as [indiscernible] Continues to elevate itself with dynamism. Thank you, Tim and John. Our next question here is from Mike Grondahl from Northland Securities.

Hey guys, thanks. Kind of a high level question, but double digit top line growth has been really elusive tough to get back to What has been the biggest hurdles to get back to that? Is it sales, Is it the end markets? Is it this client retention? Could you just kind of walk us through why that's been so hard?

I think the client the timing of the client losses is a big factor as we said earlier.

They're hitting us in Q3 and really to a larger extent in Q4. I think the timing of that you have the continued macro impacts in auto and arm. Which layer onto that. And then we've mentioned some impacts in the AR part of B2B. And so those are all factors that I was describing where I bridged from the normalized growth back to where the what we showed in early twenty twenty four. Now We did mention that we've had really strong bookings across both consumer and business payments. We've been selling enterprise accounts in consumer and then embedding payments into enterprise software and B2B We are ramping some accounts that signed last year that will have more of an impact this year. So there is momentum within go to market There are strong signs within bookings and ramping. But there have been some impacts that have really hit a lot in Q3 and to a greater extent in Q4.

Let me add into that. As part of this comprehensive strategic review, as you heard me mention earlier, Our goal is to find ways to accelerate growth. And so that's one of the many things we'll be reviewing And we're confident we will find opportunities there.

Hey, that's helpful guys. Next question is from Janice Faucette. From Morgan Stanley Investment Management. Please go ahead.

Hi.

This is Chipali Tumaskar on for James.

So you mentioned wanting to drive further distribution. I wanted to understand how you're thinking about the current opportunity set the partner network. Expanding the partner base? And if so, what segments or verticals are you interested in expanding based off of where you're seeing the most demand right now?

Yes, sure. So now up to two eighty of those partners 180 on the consumer side, about 100 on the business payment side. You can see we also added to that during the quarter. So both the answer to that question is both. We want to continue to Obviously, drive our overall penetration into our existing partners and we think there's a lot of lot of opportunity there. We continue to add that as we go to market and find additional strategic relationships. We want to do that And we've talked about overall enterprise software platforms we think there's a significant opportunity as we look out the next two to five years on driving helping them drive the monetization as we embed our software into their core platforms Our ability to do that both on the AP and the AR side We think there's a significant opportunity out there for us. So we'll continue to invest in both of those and produce really positive outcomes for us as we look out over the years.

I'll add to that that, like John said, we're investing in both and we do add new software relationships each quarter, but there is a pretty significant opportunity within the existing base to increase penetration to your point. And there's some software relationships where we may be 10% or less penetrated And so we think there's an opportunity to find ways to jointly market and jointly promote the solution to increase the penetration of existing in addition to adding new.

And we said in the past as well on the enterprise software platforms on the B2B payable side, we've said that's a multiyear organic growth opportunity for us.

Thank you.

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