Repay (RPAY) Q3 2025: Supplier Network Grows 60%, B2B Momentum Drives Double-Digit Profit
Repay’s Q3 2025 results show a business pivoting decisively toward B2B payments, with supplier network expansion and embedded solutions fueling over 20% underlying business payments profit growth. Margin compression and working capital timing temper the free cash flow outlook, but operational investments and product innovation position Repay for normalized growth into 2026.
Summary
- B2B Expansion Outpaces Consumer: Supplier network and AP platform adoption drive core business payments growth.
- Margin Compression Emerges: Larger enterprise clients and payment modality mix reduce gross profit margins.
- Operational Leverage Builds: Automation, AI, and software integrations underpin improving sales pipelines and future scalability.
Performance Analysis
Repay delivered normalized revenue and gross profit growth of 5% and 1% respectively in Q3, with business payments outpacing consumer payments as B2B segment profit rose 12% year over year (excluding political media headwinds and lapping a 2024 client loss). The underlying business payments growth, adjusted for these impacts, exceeded 20%—a clear sign of traction in accounts payable (AP) automation and supplier enablement. Consumer payments, while stable, showed only modest improvement, with softness persisting in automotive subverticals and the segment still absorbing the impact of client roll-offs.
Gross profit margins compressed by 3.4 percentage points year over year, driven by a higher mix of enterprise clients benefiting from volume discounts, increased ACH and check volumes, and higher average transaction values that raised assessment fees. This margin dynamic, coupled with timing in working capital, led management to lower free cash flow conversion guidance for Q4 to above 50%, down from a prior 60% outlook. Still, Q3 free cash flow conversion was robust at 67%, and adjusted EBITDA margins remained strong at 40%.
- B2B Supplier Growth Accelerates: Supplier network reached 524,000, up 60% YoY, supporting AP platform momentum.
- Consumer Payments Lags on Client Losses: Segment profit up just 1% YoY, with softness in auto lending and used car verticals.
- Margin Dilution from Enterprise Mix: Volume discounts, ACH/check adoption, and higher transaction values weighed on profitability.
Capital allocation was active, with $38 million in share buybacks (8% of shares YTD) and $74 million of convertible debt retired at a discount, maintaining balance sheet flexibility ahead of 2026 maturities.
Executive Commentary
"Our core growth strategy is built on our drive to optimize digital payment flows across our consumer and business payment verticals. We embed our payment technology into software platforms for a seamless experience. And during the second half of 2025, we remain focused on the path of returning to sustainable growth as we exit the year."
John Morris, Co-Founder and Chief Executive Officer
"Our Q3 growth was impacted by approximately 4% as we continue to lap the previously discussed client losses from 2024. When excluding these impacts, Q3 gross profit increased mid single digit year over year. During Q3, our gross profit margins compressed approximately 3.4% year over year. Our gross profit margins were impacted from lapping one-off client losses and contributions from political media, a larger mix of clients with volume discounts as our client-based volumes continue to grow significantly and we continue to ramp enterprise clients with volume pricing."
Rob Hauser, Chief Financial Officer
Strategic Positioning
1. B2B Payments and Supplier Network Scale
Repay’s B2B strategy is centered on expanding its supplier network and embedded AP automation. The supplier base reached 524,000, up 60% year over year, and integrations with platforms like Blackbaud and Youze are deepening reach in education, nonprofit, and hospitality. The focus on total pay adoption and AP platform growth is translating into double-digit normalized profit increases, highlighting the business payments segment as Repay’s primary growth engine.
2. Consumer Payments: Stability Amid Subvertical Pressure
Consumer payments remains steady but uninspiring, with gross profit up just 1% year over year after adjusting for client attrition. The team is leveraging new software partnerships (now 188 in total) and integrations with platforms like Alpha Systems and FUSE to enhance digital wallet capabilities and client onboarding. However, softness in automotive and used car lending persists, and growth is heavily dependent on new client ramp and improved implementation workflows.
3. Technology and Automation as Core Differentiators
Operational investments in AI and automation are improving both client experience and implementation speed. Real-time API observability, AI-assisted onboarding, and dynamic wallet solutions are reducing manual processes and increasing uptime. These technology-driven efficiencies are expected to support scalable growth and higher productivity as Repay targets larger enterprise clients and more complex workflows.
4. Capital Allocation and Balance Sheet Flexibility
Repay is prioritizing organic growth investments, debt reduction, and opportunistic buybacks. The company repurchased 8% of its shares year to date and retired $74 million in debt at a discount, maintaining $346 million in liquidity. With a net leverage ratio of 2.5x and upcoming 2026 convertible note maturities, management is focused on preserving flexibility to address obligations while remaining open to M&A in both consumer and business payments.
5. Navigating Margin Compression and Client Mix Shifts
Margin headwinds are structural, as Repay’s move upmarket brings volume discounts and a higher ACH/check mix. These shifts, while dilutive to gross profit margin, reflect successful enterprise client acquisition and broader payment modality adoption—key to long-term platform stickiness and total payment volume growth.
Key Considerations
Q3 2025 marks a strategic inflection point as Repay’s B2B business outpaces consumer payments, but margin compression and working capital timing introduce new complexities for investors to monitor.
Key Considerations:
- B2B Outperformance: Supplier network and AP platform growth are critical levers for future profit expansion.
- Margin Structure Under Pressure: Enterprise client mix, volume discounts, and ACH/check adoption are compressing gross profit margins.
- Technology Investments: AI and automation are improving client onboarding and operational scalability, but require ongoing capital allocation.
- Capital Allocation Discipline: Active buybacks and debt reduction balance near-term shareholder returns and long-term financial flexibility.
- Consumer Segment Reliant on New Wins: Stability masks underlying softness in key subverticals, with growth tied to implementation pace and new client ramp.
Risks
Repay faces structural margin headwinds as it targets larger enterprise clients and expands ACH/check volumes, potentially limiting profitability even as total payment volumes rise. Working capital timing and client loss lapping introduce volatility to free cash flow, while ongoing softness in consumer lending verticals could dampen segment recovery. Regulatory changes in interchange and data requirements (such as Visa’s CEDT rollout) add further operational complexity and compliance risk.
Forward Outlook
For Q4 2025, Repay guided to:
- 6% to 8% normalized gross profit growth
- Free cash flow conversion above 50%
For full-year 2025, management maintained a focus on:
- Organic growth investments and disciplined capital allocation
Management highlighted several factors that will shape Q4 and beyond:
- Gross profit growth will be at the low end of the range due to ongoing margin compression.
- Q4 will benefit from fully lapping 2024 client losses, but reported growth will be impacted by the absence of political media contributions.
Takeaways
Repay’s Q3 results reinforce a strategic pivot toward B2B payments, with supplier network and AP platform adoption outpacing consumer segment recovery. Margin compression from client mix and payment modality shifts is likely to persist, requiring investors to focus on volume growth and operational leverage as key drivers of long-term value.
- B2B Platform Scale: Supplier network expansion and AP platform traction underpin the company’s most promising growth vector.
- Margin Headwinds Structural: Enterprise mix and ACH/check adoption are here to stay, making operational efficiency and technology investments crucial.
- 2026 Outlook Hinges on Execution: Investors should watch for further B2B monetization, consumer subvertical stabilization, and management’s ability to sustain free cash flow amid margin and working capital challenges.
Conclusion
Repay’s Q3 2025 demonstrates tangible progress in B2B payments and supplier enablement, offset by persistent margin and consumer segment pressures. The company’s technology investments and disciplined capital allocation offer a credible path to normalized growth, but margin headwinds and operational execution will remain in focus as 2026 approaches.
Industry Read-Through
Repay’s results signal accelerating adoption of embedded payments and AP automation across vertical SaaS and enterprise clients, a trend likely to benefit other B2B-focused payment processors and software integrators. Margin compression from enterprise client mix and payment modality shifts is emerging as a sector-wide reality, reinforcing the need for operational efficiency and technology-driven differentiation. The transition away from traditional Level 2/3 data requirements toward richer, embedded transaction data (as seen with Visa’s CEDT program) will require industry-wide investments in integration and compliance, favoring platforms with deep ERP connectivity and flexible architecture.