Repay (RPAY) Q3 2026 earnings review
Repay's business payments grow fast, but its consumer unit stalls
Election advertising and the KUBRA acquisition carried Repay, a bill-payment processor, while its main consumer division stood still. Sales from businesses owned a year ago grew 14%, as political media and Business Payments masked near-zero growth in Consumer Payments. Chief executive John Morris raised the KUBRA cost-savings target, but a $14 million bank partnership outflow pushed free cash flow to minus $21 million.
| Underlying sales growth excl. political media | +5% Consumer Payments +0.3%; Business Payments +40% |
|---|---|
| Reported revenue | $153.4M +97% from a year ago (includes $65M from KUBRA) |
| Free cash flow | -$21.1M +$20.8M a year ago; -$14M bank channel investment |
| Full-year baseline growth and cash plan | Cut growth excl. political 5–6% (was 7–9%); cash conversion 20–25% (was 30%) |
⚖️ Verdict: 🔴 Bearish
The story got worse because the promised second-half rebound in Consumer Payments failed to appear and cash generation fell behind the debt-paydown plan. Finance chief Robert Houser cut the full-year growth target excluding political media from 7–9% to 5–6% and lowered the cash conversion outlook, lifting net debt to 3.8 times profit. The good news: KUBRA grew 8% and the accounts-payable supplier network expanded 68%.
The question now is whether Repay can generate enough cash to bring debt below 3 times profit by the end of 2027 once midterm election spending ends. Either the new bank partnership and KUBRA cost savings replace political revenue and reverse the cash drain, or sluggish consumer bill volume keeps debt high. Fourth-quarter Consumer Payments growth and free cash flow will show which path holds.
🐂 Bull Case
Business Payments and Supplier Additions Picked Up Speed
Repay's Business Payments division helps companies pay suppliers electronically instead of by paper check. Chief executive John Morris said "Business Payments delivered exceptional results" as underlying sales excluding political media grew 40% from a year ago.
A new "investment in a bank reseller channel partnership, which we expect to be a meaningful contributor going forward" added $3 million of revenue in the quarter. Even without that $3 million boost, underlying segment sales grew 15% by our math, while the accounts-payable network added 147,000 suppliers from last quarter to pass 878,000, up 68% from a year ago.
What to watch: fourth-quarter Business Payments sales excluding the bank partnership. Another quarter near 15% growth would show that supplier additions are turning into steady transaction revenue.
KUBRA Revenue and Cost Savings Are Ahead of Plan
Repay bought KUBRA, a utility and government billing business, in June 2026 to double its size and cut overlapping costs. Morris said "KUBRA grew ahead of our expectations, and we are capturing cost synergies ahead of schedule" during its first full quarter inside the payments group.
KUBRA added about $65 million of third-quarter revenue, up 8% from a year ago after growing 5% in June. Management also raised its year-end target for annual cost savings to $11 million from $8 million, and selling, general and administrative overhead fell by 4.4 percentage points of revenue from a year ago to 40.9%.
What to watch: fourth-quarter KUBRA revenue against the $150–154 million seven-month target set last quarter. By our math, KUBRA needs $64–68 million in the fourth quarter to hit that range.
🐻 Bear Case
Consumer Payments Stalled and Forced an Outlook Cut
Consumer Payments is Repay's largest business, collecting loan, utility and healthcare bills from individuals. Management had counted on new enterprise customers going live in the second half to lift growth from 4% in the second quarter.
Instead, underlying sales in Consumer Payments grew just 0.3% from a year ago. "Consumer Payments reported organic revenue growth that did not meet our expectations," Morris said. Election advertising in the media payments unit supplied 9 percentage points of the company's 14% underlying sales growth, allowing finance chief Robert Houser to keep the headline 10–12% full-year target while cutting the target excluding political media from 7–9% to 5–6%.
- Consumer Payments underlying sales growth: 0.3%, down from 4% in Q2 and 8% in Q4 2025
- Political media contribution: 9 percentage points of the 14% company underlying growth
- Full-year underlying growth plan excluding political media: cut to 5–6% from 7–9%
This matters because election spending vanishes in 2027, leaving the stalled consumer division to carry the business. Even the reduced 5–6% full-year plan requires fourth-quarter underlying growth excluding political media to reach about 9% by our math, up from 5% this quarter.
What to watch: fourth-quarter Consumer Payments underlying growth. A reading below 5% would show that new enterprise customers are still not offsetting weakness in existing accounts.
A Channel Investment Pushed Cash Flow Negative
Paying down the debt taken on to buy KUBRA is Repay's top capital priority. That plan depends on turning adjusted EBITDA — operating profit before interest, taxes, depreciation and one-offs — into free cash flow.
Free cash flow turned negative at minus $21.1 million in the third quarter, compared with positive $20.8 million a year ago. Capital spending nearly tripled to $31.0 million as Repay put $14 million into a bank reseller partnership, while cash interest paid over the first nine months jumped to $27.9 million from $9.1 million and late customer payments tied up $9.6 million.
Houser cut the full-year target for the share of profit that turns into cash from 30% to 20–25%, "reflecting a $19 million bank channel partnership investment in the second half of the year; however, we remain on track to reduce net leverage below 3.0x by year-end 2027." Because cash went out the door, net debt rose to 3.8 times trailing profit from 3.7 times last quarter.
What to watch: fourth-quarter free cash flow, which by our math must rebound to about $27 million to meet the lowered full-year plan. Missing that figure would mean the working-capital drain did not reverse by year-end as promised.
KUBRA Mix Lowered the Gross Margin by Nine Points
KUBRA brings large utility and government billing contracts, but its operations include lower-margin bill printing and professional services. Bringing a full quarter of KUBRA onto the books changed Repay's cost structure.
Total gross margin fell 9.5 percentage points from a year ago to 64.9%, as the cost of services rose from 25.6% of revenue to 35.1%. Within Consumer Payments, where KUBRA sits, gross margin dropped from 77.5% a year ago to 66.0%. Adjusted EBITDA margin also fell 7.0 percentage points to 33.2%, because KUBRA's lower gross margin outweighed the early overhead savings.
What to watch: Consumer Payments gross margin in the fourth quarter. A drop below 66% would show that pricing or transaction mix is worsening beyond the one-time addition of KUBRA.
Risks this quarter didn't answer
Four standing concerns and milestones from prior quarters got no new numbers in the third-quarter earnings release.
- Auto loan and consumer credit volumes: not broken out in the release; call remarks or the quarterly filing will show whether auto softness drove the 0.3% consumer reading.
- KUBRA print-and-mail revenue share: not separated from digital payments; the quarterly filing's revenue disaggregation table will show the mix.
- 2029 debt maturity wall: no update on refinancing the $288 million convertible notes before the $500 million term loan's springing maturity in April 2029.
- December 7 Investor Day: not mentioned in the release; multi-year synergy and margin targets await that event.
💲 Other KPIs
Uncollected customer bills rose 18.2% from last quarter and more than doubled from $33.2 million at the end of 2025. The bill-payment provider said receivables from political media, the new bank partnership and KUBRA professional services held back third-quarter operating cash flow, and it expects those balances to reverse by year-end.
Adjusted net income per share grew 19.0% from $0.21 a year ago, after staying flat in the first two quarters of 2026. That measure adds back $29.2 million of acquisition intangible amortization; including all charges, Repay's GAAP net loss widened to $9.3 million ($0.11 per share) as interest expense jumped fivefold to $15.5 million.
The share count used for adjusted profit per share — which includes partnership units exchangeable into common stock — rose 1.0% from 87.9 million a year ago. Treasury stock remained unchanged at 13.4 million shares for a fourth straight quarter, as management kept buybacks on hold to focus on debt reduction.
🔮 Guidance
Unchanged. The plan still calls for about 60% reported revenue growth at the $495 million middle of the range, including seven months of KUBRA. By our math, that leaves about $160.1 million for the fourth quarter, up 103.7% from a year ago and up 4.4% from the third quarter.
Unchanged. Management kept this target for the fourth consecutive quarter because higher election advertising made up for the slowdown in Consumer Payments. By our math, hitting the 11% middle of the range requires fourth-quarter underlying sales growth of nearly 20% from a year ago, up from 14% in the third quarter.
Cut. The payments group lowered its baseline growth target by 2.5 percentage points at the middle of the range after Consumer Payments grew only 0.3% in the third quarter. By our math, even the lower 5.5% midpoint leaves about 8.8% growth for the fourth quarter, requiring a step-up from 5% in the third quarter.
Unchanged. The middle of the range ($172.25 million) represents 34.0% growth from 2025, helped by lifting the year-end KUBRA cost-savings target from $8 million to $11 million. By our math, that leaves $50.7 million for the fourth quarter, up 56.5% from a year ago on a 31.7% margin.
Cut. The share of adjusted EBITDA expected to turn into free cash flow dropped by 7.5 percentage points at the middle of the range, following a $19 million second-half investment in the bank reseller partnership. By our math, the new target implies $38.8 million of full-year free cash flow, leaving $27.1 million (53.4% conversion) for the fourth quarter.
Cut. Excluding technology, merger and integration costs, cash conversion was also lowered by 7.5 percentage points at the middle of the range for the same bank partnership investment. By our math, the 27.5% midpoint implies $47.4 million of adjusted free cash flow for the year and $31.4 million for the fourth quarter.
❓ Key Questions
Why did Consumer Payments stall despite new client launches?
Last quarter management said enterprise clients from its backlog were going live and would lift Consumer Payments toward 10% growth by year-end. Instead, growth fell from 4% to 0.3%. Investors need to know whether implementations slipped or existing loan and auto clients shrank.
What are the terms of the $19 million bank partnership?
Repay spent $14 million on a bank reseller channel partnership in Q3, plans $19 million for the second half, and booked $3 million of revenue from it. Management has not disclosed how the cash is accounted for or what annual revenue it guarantees.
How much of the fourth-quarter cash rebound depends on receivables?
By our math, hitting the lowered 20–25% cash conversion plan requires $27 million of fourth-quarter free cash flow after minus $21 million in Q3. How much of that comes from collecting the $9.6 million working-capital build versus lower software capital spending?
What is the KUBRA print-and-mail revenue share and margin?
KUBRA grew 8% in Q3, but company gross margin fell 9.5 percentage points to 65%. Without a split between KUBRA's paper billing and digital payments, readers cannot tell how much of KUBRA's growth comes from low-margin print work.