Q2 2021 Repay Holdings Corp Earnings Call

Greetings and welcome to todays earnings conference call of being hosted by repay with US today are John Morris Co founder and Chief Executive Officer, and Tim Murphy, Chief Financial Officer.

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

Actual results may differ materially from any forward looking statements that we may make today.

The forward looking statements speak only as of today, and we do not assume any obligation or intent to update them, except as required by law.

And in an effort to provide additional information to investors. Today's discussion will also include references to certain non-GAAP financial measures and explanation of these non-GAAP financial measures are as well as a reconciliation of these non-GAAP measures to the nearest GAAP financial measures can be found on our earnings release and earnings supplement each of which are available on the company's IR site.

I would now like to turn the call over to Mr. Morris. Please go ahead.

Thank you operator, and good afternoon, everyone.

On today's call I want to open with an update on our business for the second quarter, followed by a review of how we're executing on our growth strategies.

I'll, then turn it over to Tim to discuss our second quarter financials in more detail and thoughts on the remainder of 2021.

During the second quarter, we experienced solid results across all of our businesses, which included card payment volume growth of 28%.

Revenue growth of 33%, which included 16% organic growth for the quarter.

And gross profit growth of 29%.

18% of which was organic.

Please note. These organic growth rates are based off of a tough comp in Q2 of the last year as the stimulus payments went out in April and May of 2020.

We also reported adjusted EBITDA growth of 26% and the second quarter.

We've made significant strides and building out our b to b business to capture more of the large and underpenetrated market.

On the BTB of health care side, we recently signed the group purchasing agreement through Cps for advance of accounts payable solutions with Premier and.

A leading healthcare improvement company disagree.

And this agreement will provide premier members with advanced automation capabilities for AP disbursements and they bring to health care providers and hospitals to streamline internal workflows and realized savings through revenue generating rebates.

During the quarter, we also launched our vendor payments automation solution into axiomatic in stage 100, leading ERP companies.

Which will enable businesses to seamlessly pay vendors and a simple secure way, while also reducing unnecessary cost.

And actively promoting the AR AP cross sell and most recently at the <unk> annual summit and.

We now have a very full cross sell pipeline.

We're seeing incredible results for our <unk> clients, 1 of our new Cps customers, So and if I went live within 1 week of signing a contract.

And the first month, we help them generate well over $100000 and monthly rebates based on the supplier payments, we were able to facilitate.

Late in the second quarter, we announced our fifth BTB payments acquisition with the addition of control payables and integrated AP automation solutions provider, serving clients and a variety of end markets, including construction of food production software manufacturing and education.

Control utilizes its 25, plus ERP integrations and network of over 30000 suppliers to deliver efficiencies to its clients AP workflows, ultimately executing outbound payments using a variety of payment modalities with a focus on virtual cards.

With these acquisitions and repay now has more than 3300 clients and <unk> and over 80, BTB software integration and representing approximately 15 vertical end markets.

On the AP side, we've grown our supplier network to over 92000, and an increase of approximately 30% from last quarter.

The BTB payments market is expected to grow to 200 trillion and the next decade from the 123 and it is today.

And we believe that we are uniquely positioned to capture significant share in this growing market.

Unlike much of our competition, we're able to provide payments and software solutions on both sides of the transaction, meaning both AR and AP automation.

We have recently posted the presentation and webcast on our IR site or Jake more our EVP of corporate development strategy reviews of our <unk> business and the addressable opportunity in greater detail.

And lastly on the <unk> side, we recently created and filled of new role and the organization for V. P F <unk> strategy and business development.

Our new B to B leader brings an incredible amount of experience from his prior roles as a head of business development strategy of <unk> and also a director of <unk> payment solutions and partnerships at visa.

We're thrilled to welcome him to the repay family and look forward to getting his perspective and guidance on how the <unk> to accelerate our efforts and the BW space.

On the loan repayment side, we've seen a rebound and personal loan volume over the past few months.

Post stimulus and tax season, largely driven by increasing consumer demand holiday travel and back to school preparation.

Our lending clients are also finding ways to engage more digitally with their customers, which fits very well with our payment technology.

We continue to grow our existing customers as they consistently find value and the services we provide.

Eating linear tech firms like loan depot, and leverage our communication solutions and back and payment processing capabilities to deliver great mortgage servicing experiences for their borrowers.

We continue the expansion with lending partners and Canada with the addition of personal and financial Kennedy, leading provider of responsible lending solutions for a near prime borrowers.

We're working with fear of stone to help enhance their customer experience through our opt in text to pay technology, giving borrowers even greater loan repayment flexibility.

Auto is still 1 of the fastest growing areas of our business with strong macro tailwind elevated used car prices and increasing demand.

And these are long duration loans with increasing digital engagement, which leads to greater repayment activity.

And speaking of digital engagement, our instant funding product continues to experience significant adoption and each month and the second quarter breaking the record of the previous month in terms of loan funding amounts. We've seen this trend continue throughout July.

We view this as a positive indicator for personal loan volume growth as these funded loans will eventually need to be repay.

Moving on the billing tree, we closed the acquisition on June 15th which was earlier than we expected and the integration is going very well.

Recently posted the presentation and webcast on the billing to the acquisition on our IR site, which I would encourage you to review.

As we've previously discussed the acquisition enhances our position and large and attractive growth markets, including healthcare credit unions accounts receivable management and energy.

It also expands our scale and has highly complementary business profile of that is focused on integrated payments with strong distribution capabilities, both direct and through Isps and.

In fact, the billing tree will see announced a partnership with credit management Company full service accounts receivable management solutions provider for the health care market.

The power frictionless payments for healthcare systems providers and patients.

Look forward to working with them to accelerate digital payments and the health care industry.

This transaction clearly further expands our software partner relationships and creates opportunities for meaningful cost synergies some of which we have already begun to realize.

That said billing triage bone and a very talented team of payment experts and technologists and we look forward to working with them to grow the business together.

Our tri sourced processing business has been performing very well.

And strategically valuable to our own our own back end processing platform, which gives us a unique capabilities to control of the customer experience and areas such as billing and reporting.

We recently signed would force National Bank is a customer and hired a senior sales executive with many years of experience selling processing services and in order to capitalize on our differentiated position and the processing value chain.

With forest chose us because of our ability to customize their merchant services program.

As mentioned previously try source of enhances our M&A strategy by allowing us the ability to move and acquired companies backend processing to try source, thereby eliminating the third party processing costs.

We've executed on that strategy with Aps and this is also of synergy we expect to realize with billing tree.

I'll now briefly provide an update on our growth strategies.

I ask the integrations continue to be of strong growth channel for us during the quarter. We added 34, new integrations and many of which were related to the control deal, bringing our total to 209 as of June 30th.

The recent ISP addition was provider of unified platform for credit and collections process management and they.

They are north of 400 customers and sort of clients both in the U S. In Canada. The bond of customers can now leverage repay processing solution would provide us all and 1 loan repayment and customer service application.

We now have over 180 credit Union customers combined with billing tree, representing approximately 2 million collective members visited and exciting growth area for our business.

M&A continues to be an important growth driver for our business. Our pipeline remains very active across key areas, such as b to B and health care.

We're also very pleased with our ability to integrate a majority of the 7 acquisitions, we've made since going public a little over 2 years ago.

We have also remained busy on the hiring front to prepare for the many organic growth opportunities that we currently have and the business.

With that I'll turn it over to Tim to discuss the financials in greater detail Tim.

Yeah.

Thank you John now, let's move on to our Q2 financial results before I review, our financial guidance for 2020.1.

As John mentioned and the second quarter repay delivered strong results across all of our key metrics.

Card payment volume was $4.6 billion and increase of 28% over the prior year second quarter total revenue was $48.4 million and increase of 33% over the prior year second quarter.

The pay plus Cps billing treat and control contributed approximately $6 million of incremental revenue during the second quarter we.

We had 16 days of billing true benefit, which contributed approximately $2.4 million of revenue.

Moving on to expenses in the quarter.

The other cost of services were $12.7 million compared to $8.7 million and the second quarter of 2012 of.

The incremental other cost of services from CPAP, plus Cps billing treat and control for $1.6 million for Q2.

Gross profit was $35.7 million and increase of 29% over the prior year second quarter as John mentioned on an organic basis, we saw gross profit growth of 13% compared to the second quarter of 2020.

We are very pleased with this trend to continue to see positive momentum into early Q3.

This organic growth was primarily driven by strength across our loan repayment of verticals as well as continued outperformance on Tri source backend processing business of <unk> business is also performing nicely, particularly within the mortgage servicing.

SG&A was $29.5 million compared to 19 million and the second quarter of 2020.

Second quarter, adjusted net income was $14 million or <unk> 16 per share.

Lastly, the.

Second quarter, adjusted EBITDA was $20.4 million and increase of 26% over the prior year second quarter.

Second quarter adjusted EBITDA as a percentage of total revenue was 42% compared to 44% and the prior year second quarter.

The slight decrease in margin as a result of increased investment and sales technology and product.

Continue putting in place the proper infrastructure for accelerated organic growth into 2022.

Combined net leverage is approximately 2.8 times on a post billing true transaction basis.

Very comfortable level, which will allow us to continue to fund organic and inorganic opportunities.

As of June 30, we had 120 million of cash on the balance sheet and access to $125 million of Undrawn revolver capacity for a total liquidity amount of $245 million.

As of June 30, we had approximately 99 million shares outstanding on a fully diluted basis.

Finally, moving on to our outlook for 2021.

Due to the strong results, we've experienced across our business and year to date, we are increasing our expectations for volume revenue and gross profit for the year.

And now expect volume to be between $23 billion and $20.8 billion.

Total revenue to be between $214 million of 10 and $22 million.

And gross profit between $160 million of 166 million.

Lastly, we are slightly increasing the midpoint for adjusted EBITDA to be between $92 million and $96 million.

As I mentioned previously we believe there are strategic opportunities to reinvest profits and the functional areas such as sales technology and product.

Also in key growth verticals, such as beauty and.

In order to establish the proper infrastructure for accelerated organic growth into next year and beyond.

Finally, as the economic recovery continues we expect more of this increased contribution to occur in Q4.

As with prior quarters. This range assumes no further unforeseen COVID-19 related impacts, which could create substantial economic duress during the year.

We're very pleased with our results from the first half of 2020, 1, particularly of the organic growth and look forward to and exciting remainder of the year.

I'll now turn the call back over to the operator to take your questions operator.

Thank you at this time really be conducting a question and answer session. If you'd like to ask a question. Please press star 1 on your telephone keypad, a confirmation kind of indicate your line is and the question. Hugh you May Press star 2 if you'd like to remove your question from the queue.

Participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.

Our first question comes from Ramsey El <unk> with Barclays. Please proceed with your question.

Hi, gentlemen, thanks for taking my questions. This evening.

Wanted to ask about the organic gross profit growth, which came in ahead of our expectations. I think you said about 13% can you.

And kind of share with us your latest thoughts on that sort of organic growth profit growth organic gross profit mid to high teens target for the full year has that changed in your minds at all given the outperformance and the quarter.

Hey, this is Tim thanks for the question.

And we feel really good about this as we mentioned on the call. We actually think it could be stronger going into Q3 and Q4 like John said that the Q2.2020 comp was pretty difficult given the stimulus payments and we think Q3 and Q4.

It would get a little bit easier from there and so we do feel good about high teens to 20% organic growth and the back half of the year and and particularly going into next year.

Great.

And I wanted to ask about.

Gratulation of closing the billing tree acquisition, a little early can you give us your updated view there on on synergies, where youre seeing the most opportunities and maybe a little commentary on kind of timing.

Yes, sure. So we are already realizing certain personnel synergies there is just certain.

Rolls identified early on and so that is in process.

The we will continue that throughout the remainder of the year and then towards the end of this year, we'll start to move the back end processing to our platform in which case then we'll start to realize those processing cost synergies. So we're very much on target for that personnel coming first as I mentioned processing coming towards the end of the year into early next year and.

And then hope to stay on track with fully realizing the 5 million that we estimated previously by the end of 2022.

Okay, alright, perfect. Thanks, so much for your comments today.

Absolutely.

Thank you. Our next question comes from Timothy Chiodo with Credit Suisse. Please proceed with your question.

Great. Thanks, a lot for taking the question the <unk>.

<unk> within the <unk> segment that you've touched on I was hoping you could give us a little more context on what the status quo is within the underlying merchant base of those Isps in terms of what they're currently doing in terms of ACTH enhanced ACTH card check.

And that type of context would be great and then also the extent to which any of those and the integrations are more exclusive maybe than others and then.

A quick follow up.

Yes, so Tim we we think we're still kind of early days in terms of virtual card adoption. There is still a lot of check and ACTH enhanced <unk> as sort of a fairly new product.

And we're rolling that out as well.

So theres still a ton of white space and opportunity to further penetrate virtual cards, that's something that we're really excited about 1 of the reasons. We bought these companies and these verticals with these integrations is because we felt like that was the major major opportunity and so and we have a full team of supplier enablement folks that are working on that every.

Day, and we're also increasing our supplier network as we mentioned we're up to 92000 and quickly marching toward a 100000, plus and the big part of that is of.

Getting the virtual heart adoption to increase as having that network that is enabled to accept electronic payments and particularly virtual cards. So we think theres a lot of runway there for growth.

We have no typically have exclusive relationships and these software partners, we'd like to consider ourselves the preferred provider.

Which case, we get just better access to customers and information that way and so that's how we like to go to market, but it's not often exclusive and especially on the btb's basis, mostly accounting ERP systems. So they are generally or are not going to be and exclusive exclusivity on that site, but 1 thing I will mention is so.

We are a bit we've been big partners with Sage and <unk> within the <unk> merchant acquiring for some time now we now have the ability to do accounts payable within each of those integrations, which we think is pretty unique so again, even though they're not exclusive of where 1 of the few if not only providers that can provide both merchant and acquiring and AP automation and <unk>.

And then we think that's the way we can really win.

Right perfect. That's really helpful. Tim. Thank you. So much quick minor follow up you guys gave a lot of great context on the call around growth and organic growth I apologize if I missed it but did you have and dimension card payment volume organic growth for Q2.

Yes, we didn't mention it but.

We estimate it's about similar to the organic GP, so and the low teens.

Perfect Alright, thanks for both of those I appreciate the time.

Yes.

Thank you. Our next question comes from Andrew Schmidt with Citi. Please proceed with your question.

Hey, John Hey, Tim.

Thanks for taking my question here.

Yeah, good good organic growth organic growth profit growth here on the second quarter definitely at the.

Our expectations, but I wanted to dig a little bit and to the outlook and it sounds like the quality of commentary implies that things are running a little bit better unexpected, but if you look at the.

Outlook, maybe of absorb some of the B 4 investments and things like that and obviously there.

Probably some conservatism built in there so.

Curious can you help just bridge the gap between the it sounds like more bullish commentary on the.

The quantitative Alex on the back half thanks.

Yes, we do feel very good about the results and Q2, particularly organic growth and as I. Just mentioned earlier, we think that should continue and even accelerate and the back half of the year that being said we were just monitoring of the recovery within the loan repayments and we know that our largest lenders have started more aggressively originating.

And that demand is picking up although we don't always have perfect visibility of our control as to when that flows through to our own repayment volume, but it depends on the duration of the loan and the repayment schedule. So it's really of Matt. We don't think of as a matter of if it's really more of a matter of when and so we think some of that volume may end up flowing into early 2022.

And again Thats something we are closely monitoring and so that's 1 of the reasons for the for the guide being where it is.

Got it that makes a lot of sense and Sterling prudent.

And then a question on M&A. So clearly it seems like the <unk> will continue to be of focus here.

Do you when you look on your M&A pipeline is it more about building out verticals or building out capabilities and.

Can you talk a little bit about kind of what youre thinking from an M&A pipeline perspective. Thanks.

Yes sure this is John.

And it's both obviously we.

The key integrations will be very important if we find things with some significant key integrations would you see as well there's some sub verticals inside of that debt. We think if we could complement some sub verticals we're already in.

And the <unk> space that would be very complimentary for us.

And obviously, we're always looking for.

Technology that can help drive additional automation and so all of those different areas.

We love, what we're seeing and the <unk> space is enormous white space. We've confirmed it is and our pipeline and this and our prospects.

We gave you a couple of examples.

Showing you of new customers, we brought on.

The immediate opportunity for us to convert that into a really good situation for our customer. So the value add is is on both sides, where we can add significant value immediately.

For someone who has really never been using the AP automation solution. So we see an enormous opportunity to continue to invest there.

And we see the opportunities there to actually.

And make sure we're spending wisely on our shareholders' dollars, but we really think theres a rate of really good opportunity and the near term.

As we look out and to the future there.

And I would add on the AP side of the <unk> 1 of the other important elements. In addition to integrations and just verticals as the supplier network and so looking for opportunities to broaden the supplier network either in existing verticals or potentially new verticals of something that we think about a lot and we look at targets within the <unk> AP.

Got it thank you Jonathan and Tim I appreciate the comments.

Okay.

Thank you. Our next question comes from Sanjay Zuk, Ronnie with <unk>. Please proceed with your question.

Hi, This is actually Steven Kwok filling in for Sanjay. Thanks for taking my questions. The first question I of half, but just around the relationships on the buy now pay later side given that it's been the hot topic post the squares acquisition of half of the pay.

Yes, so we have several existing relationships and that space.

And we view that really is and installment loan and a lot of cases, and we process for a lot of installment lenders some of which have been.

Considered point of sale of lenders in the past and maybe shifted their business model to be more e-commerce focused which would fit with buy now pay later.

Very active pipeline and that area, both from the U S and Canada to bring on additional customers and again, we think that we have a really nice customized solution to to install and lenders and that fits really well and buy now pay later and so we have existing customers that are growing and we're sourcing new customers as well.

Got it and you also noted that.

Busy on the hiring of the funds to the paths of the organic opportunities that you see just wondering how should we think about the operating margins over the near to intermediate term.

So I think the 42% 42% of 43% is probably a good range in terms of adjusted EBITDA margins, we do want to invest and growth we have a very large addressable market.

The opportunity across a number of different verticals and so we think just building out our sales team our technology team and product is very important to put ourselves and are positioned to address that.

Going into next year and beyond so I'd say, where we are this quarter and kind of 42% to 43% is probably a good way to think about it.

Alright, Thanks for taking my question.

Thank you. Our next question comes from Joseph <unk> with Canaccord. Please proceed with your question.

Yeah.

Yes.

Hey, guys good results and nice to see the pedal to the metal continuing on on.

On the M&A front just.

Just I'll start off with 1 on cash.

And of strategic question it looks like.

Total out on the call about the it'll be Tonight, and we've seen more.

And I'll focus on the M&A front on the to be how do you see the business and a couple of years relative to payment volume on.

On b versus perhaps more on the consumer side versus where it is now and then all of the follow up after that.

Yes, it's about 20% today post the billing team and.

And we see that growing.

A lot of other parts of our business are growing nicely as well so.

It's growing faster than those so that's why we think it can continue to be a bigger part of the mix. So I would say it starts to move back up into the mid 20% to 30% range of if were sticking with organic of course, if we make acquisitions that could become an even bigger part of the mix. So we definitely want beat of either become bigger.

It's the second largest vertical behind loan repayments today and expected to continue to grow.

Okay, and then just secondly, the eye.

The integration is kind of following up on Tim's question earlier of the RSP integrations.

The continuing a lot of it's on.

On the M&A side, and you're getting those via M&A.

Just wondering what you see the natural cadence being on ISP integration on an organic.

Ganic basis relative to your growing base, considering your cross sell.

And the other opportunities thanks a lot.

Yes, we do see a lot of that growth this quarter did come from acquisitions, but organically. We also added several partners across loan repayments credit unions other kind of core verticals. So.

We would see that maybe and the 2 to 3 to 5 additional partners organically each quarter.

And then of course, if we do additional M&A that could continue and accelerated pace, but we do have a nice pipeline within our loan repayment verticals.

And some of the other verticals outside of just <unk> and so we would expect to continue to add there.

Great. Thanks, a lot guys.

Thank you.

Our next question comes from Andrew Jeffrey with true of Securities. Please proceed with your question.

I appreciate you taking the question. This afternoon is a follow up on the.

A couple of questions that have come before on your growing ISP.

Partnership network, John can you comment a little bit on relative productivity sort of.

How much of your volume growth is coming from.

And I'll call them sort of legacy ICU relationships show from those <unk> hatch and perhaps before the IPO versus new signings and and acquired Isps and I guess, what I'm getting out of and I Wonder if there is room for growing productivity across that entire footprint over the next couple of years.

Yes sure there is so obviously.

Prior to the IPO, we our existing verticals were actually really strong and and are still delivering.

New wins for Us on me.

Any of those companies are ISP Isps were actually grow and themselves. So we're still getting great wins from that we're also doubling back and trying to through marketing efforts and relationships. They are trying to obviously extract more wins out of those portfolios and thats the market and part of that is paying off the new additions is.

Well, we are laying out game plans on each 1 of those and you're actually getting better at it. So we can continue to partner with them to drive additional growth sales out of those as opposed on the loan repayment side than on the.

And as well as on the <unk> side as we drive relationships from that piece of it so organically and when we look at the different parts of our business. That's 1 area that we know that there is pent up demand and there is great opportunity as we get better at driving new sales growth through our channel partners there.

Okay. Thank you.

Moving to see Matt and then.

Can you just take a step back and and I think the.

The slide and your Investor presentation Slide 12 is really helpful. As we think about your business.

Can you talk about sort of relative yield.

The for the categories 3 and.

I'm just trying to think about it for.

For example, <unk> growth faster, perhaps than some of your other businesses what the impact is the yield.

Trying to frame that up as we model forward.

Yeah, I'll take that so yes, we will.

Take it piece by piece.

Loan repayment is probably somewhere a little bit north of a 100 basis points and talking about net revenue yield our take rate.

<unk> is probably right around 100.

The BW merchant acquiring space is probably a little bit lower than that so for the AP side is maybe a little bit higher if we think about virtual cards and so on average call. It 100 basis points I'd say health care is probably in that same range, maybe slightly lower.

But then arm is probably somewhere in the 125 to 130 basis points, which is why you see our overall take rate moving up from historically it was right around 100 basis points for a while and now it's.

And maybe 105 basis points, this quarter and moving up probably a little bit more as.

Billy and true becomes a bigger part of the mix. So I would say somewhere in kind of the 2 to 105 to 110 basis points on a combined basis as we bring and full billing true contribution.

Okay, and that's super helpful and if I could just sneak 1 last quick 1 and militaries organic billings <unk> revenue growth compared to the overall business higher and lower the chain.

It's similar it's kind of mid teens mid to high teens.

And so they're growing nicely.

Probably the fastest growing part of our business is <unk>, but we thought the launch we had really nice growth and also strong take rate like we talked you talked about and margins.

Either volume or even maybe a little bit higher than the corporate average.

That helps a lot and thank you very much.

Okay.

Thank you. Our next question comes from Craig Maurer with Autonomous. Please proceed with your question.

Yeah, Hi, thanks for taking the questions guys.

2 questions on some of your traditional verticals first.

Could you discuss what youre seeing in your healthcare vertical as we are seeing.

Reports and evidence that things like elective health care is definitely re accelerated.

And secondly, the.

And maybe what your partners are telling you and the auto finance segment as well.

Chip shortages are still heavily impacting supply change I know youre more and to the used car business. However, with Mercedes Benz you have entered into captive and are looking to grow there. Thanks.

Yes, so on the healthcare side, we have heard the same thing and from.

Our customers on elective procedures.

And that was coming back really strongly I guess, we have to monitor just what's happening with COVID-19 variant and the hospitals.

Hospital debt situation, and how that could impact electric procedures, and hopefully thats temporary and its.

Continues to come back to where it was when we went out and kind of surveyed some customers. So we think that's a really positive there's probably a lot of pent up demand that we see.

Could see going into next year within the.

Health care space in General and Health care right now we are in several different areas, where and the consumer payment driven part of health care, where they're just paying of provider.

Directly we are in the space, where the the insurance provider is paying out to through a third party administrator to a provider of such.

Disbursements, that's where we would see a lot of elective procedures benefiting us and then we're also doing a lot of AP payments for large hospital systems debt pay their suppliers with virtual cards and so we.

We think there is a lot of potential recovery going into the back half of the share of next year and health care and general and then on auto lending Youre right were more focused on used cars Mercedes is of great customer large customer growth.

Most of our business there is and used cars and hasnt been impacted as much wood chip shortages and we haven't seen any material volume declines from Mercedes either.

Thanks, a lot.

Yes.

Thank you. Our final question is from Bob Napoli with William Blair. Please proceed with your question.

Thank you and good afternoon.

On the growth rates for loan repayments.

And what is what are you seeing for year over year payment.

Payment volume growth for personal loans and auto loans and how has that trended is that going to be.

The important and getting debt acceleration you're talking about.

Yeah.

And on a normalized basis personal loans is probably in the mid teens and autos and auto has continued even throughout the COVID-19 to be kind of 25% and so.

With personal loans coming back that is a very important part of the organic growth outlook that I mentioned earlier and we do see it coming back we do see origination is happening.

Do see demand there, it's just really a matter of timing for us as to when that flows through our repayment volume in the back half of the year going into 2022, and then so if that can get back to a normalized kind of mid teens growth rate and you combine that with the auto business. That's how we get to that organic growth outlook.

Okay.

Thank you and then on the BTB payments business.

So you've made 5 acquisitions for an EAP side.

And different verticals and the.

1 on the merchant acquiring side, what does that organization look like and I and.

I didn't catch who you hired from did the your visa debt. I mean is there are each of these businesses John reporting up to you or.

How is that the organization being structured.

From a leadership perspective.

Yes sure Bob.

Have a great new hire that we mentioned here and.

We're excited about having him on our team from an overall leadership perspective that will be reporting directly to me, we will separate out the loan repayment and the <unk> verticals.

We're looking to have some announcement on that later on this month.

And just couldnt get it all squeezed and before this call, but we absolutely know who are leaders going to be there and as we continue to bring those teams together. We're just trying to have some conversations internally around that.

Super excited though as you can imagine we've.

We've been very blessed with some great team members, there and <unk>.

And technology solutions are superior to what we're seeing and the marketplace. So look for us to give some more clarity on that as we.

Bring some of our teams together.

On that piece of it but we know what we're doing and where we're headed on that piece of it and we will we'll be showing it out a little bit more clarity as we move through this year.

And then on the cross sell side 1 of another player in the market and made a large acquisition on the AUR side obviously.

Believing and the cross sell between AR and AP.

Are you.

How confident are you on the cross sell are you big enough and the merchant acquiring side.

To make that relevant.

Are you looking to make acquisitions on the.

Ah side too.

Balance that out I mean, so what's the cross sell.

What are you seeing from cross sell how easy is the cross sell.

And can you at least on it.

And.

Okay.

Go ahead.

No just hoping I mean.

Can you give us like metrics and the future on how successful you are being or give us some thoughts on on the.

And how that's going to work.

And we see it across a lot of of verticals and in fact, we see a lot of our lenders wanting to use our AP capabilities, that's something that they like the idea of having just a 1 stop shop for payments and general.

We also see it within the <unk> merchant acquiring and then the <unk> AP automation, where for example within stage of <unk>.

We now can.

Provide both services to a single customer and our team was just out of the <unk> annual summit and getting a lot of really positive feedback on the ability to do that and have just 1 payment provider for both sides.

So they are building, a pretty robust pipeline and sage and <unk> and now we can do both AR and AP and like I said, we're also selling that to our lending customers and we're seeing really nice uptake. There. So it's real it's happening we of our salespeople out there building pipelines and and executing on that.

Thank you and then last question on the virtual card.

Side of the business another player in the space is showing some pretty dramatic increases in revenue per transaction now theyre more on the SMB space and I think you are.

More of mid market.

Do you have that same opportunity what is the penetration rate of virtual card.

Today for your <unk> business and what can that be or is it are you not going to see the same type of benefits if somebody might and the SMB space.

Because you have the right yes.

Yes.

The companies that we acquired 1 of the reasons, we like some of them because they had and ice virtual card penetration of already so they werent checker ACTH focused of a virtual card focused so I think ours are.

Our existing penetration may be a little bit of higher than average maybe across all of our business is somewhere in the kind of high teens to 20% with the ability to go much higher.

So we're kind of starting off probably of higher based and a company that's been more focused on <unk> for example.

But we also have supplier enablement folks in house, who are experts at this we don't outsource that we do it ourselves which is why we were able to get to those rates and think we can bring them higher and so we certainly do think there is room for more adoption and we have now of a team of people doing that and to your earlier question.

And within the BW, we're bringing all of the businesses together on the same technology platform and looking to employ the same supplier enablement strategy, which we think could be effective across those businesses.

And so we've just been more focused on virtual card probably from the beginning within <unk> and not as much ACTH, but there is absolutely room to increase and obviously the deal size and the volume is much greater the deal sizes, we are pursuing.

Okay.

Thank you I appreciate it.

Thank you. Our next question comes from James Faucette with Morgan Stanley. Please proceed with your question.

Yes. Thanks, I wanted to ask a follow up question on the B to B I'm, just curious as you're kind of putting together.

Solutions and talking to customers of how much real competition are you running into versus really putting together solutions and offering.

Facilities that may be your customers hadn't seen before I'm just you know.

And I think a lot of times and B to B, we get asked a lot about.

Everybody is talking about <unk> and and the competition, but I don't really have a great sense of how much you actually run into the other suppliers.

Yes, when were talking about the AP side of the business.

And specifically virtual cards.

Oftentimes when you're with larger merchants enterprise sized customers.

You could be running into them using the banks as legacy partners and we're taking share away from banks, we might see invoice pay and we might see CSI, but in most cases the majority of the cases, it's still wide open and the customer has not taken electronic payments or excuse me they have not made of electronic payments to supply.

And so it's just the wide open space. So we.

We use from time and time and larger customers see some legacy banks and then those other names I mentioned, but oftentimes, we're just competing against paper methods of payment and checks versus moving them to electronic which we would like to focus on virtual card.

And and our ability to deliver a total pay solution, where we it's the 1 stop shop for all of their payment modalities.

And we find that even at enterprise level, they may be using a 1.

Processing way of processing is a different way, obviously theres, just writing checks and that they may be using of purchasing card to bring it all under 1 umbrella with the superior technology of the ability to track and trace and invoice along with the actual payment throughout its payment lifecycle and back into the ERP system.

We're not seeing anything that competes with our offering and the marketplace as we think it and we have superior technology at least today.

That's really useful color and then in terms of revenue and revenue visibility and growth.

How is growth right now split between expansion with existing customers or a growth of their own volumes versus adding new customers and and.

And.

How much evolution are we seeing on in terms of the contribution.

Yes.

Yes, I'd say, it's still probably 2 thirds of existing customers.

But that has that has evolved over time as we've added a lot more ISP partners. So what is the amount of ISP partners. We have today and the growing sales force, we are adding more new customers, which we think is of very good thing and we now of course have access to a lot more verticals to do so.

The majority of it is still just existing customer penetration, particularly within the loan repayments for the switch or some of the lower penetrated verticals and.

And other areas where the.

Card acceptance, maybe somewhere in the teens Theres, just a lot of room to run with our existing customers. So that's still the majority of it but as we continue to add ISP partners and to grow our sales force, you'll probably see more new customer wins as well.

And so on our <unk> side there'll be there may be some legacy customers remember, we obviously we acquired some of these companies that were predominantly just virtual court as we rollout our total pay solution to some of those older customers and theirs.

Great opportunity and upside from those as well.

And that's really good thank you very much.

Okay.

Thank you ladies and gentlemen, we have reached the end of the question and answer session. I will now turn the call over to John Morris for closing remarks.

Thank you everyone for your questions today and for your time.

As we reported we're super excited about our second quarter results and the outlook, we have for the rest of the year and even into 2022.

And our business continues to perform well our organic growth opportunities are there our pipelines are strong and we're excited about what's in our implementation pipelines as well and the opportunities. We continue to see this organically and the white space of this is the markets, we serve and the specifically and the <unk> space and the loan repayment space well.

Continuing to drive the opportunities for our ISP channels, and we see significant opportunities. There we want to continue to invest and the business organically. We think that's a really good investment for our shareholders.

And we're super excited about our new team members that have joined us from the acquisitions as well as our existing team members the continuing to help us deliver superior results and.

And we're very grateful for that so thank you for your time of day and look forward to speaking with you individually when the opportunity arises.

This.

Today's conference and you may disconnect. Your lines at this time. Thank you for your participation and have a wonderful evening.