RPAY - NASDAQ

Good afternoon. I'd like to welcome everyone to Repay's Second Quarter 2024 Earnings Conference Call. This call is being recorded today, August 8, 2024. I'd like to turn the session over to Grant [ph] Grisante, Head of Investor Relations at Repay. Stewart, you may proceed.

Thank you. Good afternoon, and welcome to our second quarter 2024 earnings conference call. 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. Those forward-looking statements are subject to risks and uncertainties, including those set forth in the SEC filings related to today's results and in our most recent Form 10-K. Actual results may differ materially from any forward-looking statements that we make today. Forward-looking statements speak only as of today, and 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, today's discussion will also include references to certain non-GAAP financial measures. Reconciliations and other explanations of those non-GAAP financial measures can be found in today's press release and the earnings supplement, which are available in the company's IR site. With that, I would now like to turn the call over to John.

Thanks, Stewart. Good afternoon, everyone. Thank you for joining us today. In Q2, we experienced another quarter of profitable growth with gross profit growth of 7%, adjusted EBITDA growth of approximately 10% and free cash flow conversion of 57%, representing 90% plus growth year-over-year with each metric performing in line to our expectations. Our year-to-date results represent a strong first half of the year with double-digit adjusted EBITDA growth as we aim to capture new payment flows with payment vertical expertise across our Consumer and Business Payments segments. During the quarter, we continued to make progress on our three main strategic initiatives that will drive growth in 2024 and beyond. As a reminder, they include our go-to-market efficiency, client implementations and a focus on product. In Q2, Consumer Payments gross profit growth was 7%. Our solid performance in Q2 represents the continued execution of our growth algorithm, which includes growth coming from existing clients as well as signing new clients over the past several quarters. Our growth is also aided by the ongoing secular tailwinds within our Consumer Payments verticals. We've added many new clients to our platform in Q2, including nine new credit unions, bringing our total credit union clients to 300 out of the roughly 5,000 credit unions in the U.S. We are directly integrating our payment platform into multiple core credit union and financial institution software systems, representing a differentiated solution in the marketplace, which is leading to a healthy sales pipeline to address the thousands of financial institutions in the United States. We added three new software partners during the quarter, while also further strengthening our existing software partnerships. In May, we became a certified integrating partner with Corelation's KeyStone platform, a leading core processor for credit unions. And in June, we announced the enhanced integration with CU Answers, a 100% credit union-owned service organization that provides core processing solutions and services for hundreds of credit unions across the U.S. Within CU Answers' platform, Repay released several new features and products such as real-time payment posting and tracking, enabling both the members and business operations of credit unions to benefit from a streamlined loan repayment modalities. Additionally, the accounts receivable management vertical continues to be an attractive opportunity with multiple years of growth ahead as we began implementation of one of the largest outsourced accounts receivable management and loan servicing providers in the U.S. During implementations, we are focused on increasing technology and workflow connectivity within our client systems to deliver an embedded solution. The investments being made towards integration and connectivity enhancements are resulting in better consumer experiences and satisfaction leading to the long-term client and partner relationships. And lastly, in value-added services, our Instant Funding product continues to see healthy growth with transaction volume up approximately 21% year-over-year. This product offers an incredible opportunity for our clients to set themselves apart in the marketplace by delivering quick, convenient and secure funding experiences to their customers. Over the medium term, we are continuing to evaluate new areas of expanding our Instant Funding capabilities. We also had a productive quarter in our Business Payments segment, which grew gross profit by 11% year-over-year. We feel very good about our top of the funnel pipeline as our go-to-market approach has continued to win new enterprise clients, which can, in some cases, lead to longer signing to go-live timing. Gross profit growth was driven by strength in our core AP business, the ramp of new clients during the quarter and incremental political media contributions leading to the presidential collection cycle during the second half of the year. In AR, we continue to focus on optimizing payment acceptance, while strengthening our client base through our direct sales team and ERP partners. Within AP, we added four new software partners and enhanced integrations with several existing software partners while also growing our supplier network to over 300,000 suppliers. Our real-time vendor enablement process continues to grow the supplier base while also driving additional network effects by vertical. During the quarter, we signed many new clients across our verticals, including several within health care, such as Grady Health Systems, a leading public health care system in the U.S. with nine facilities serving the residents of Atlanta, Georgia. Repay was able to swiftly implement Grady Health, quickly making them a meaningful client in Business Payments. And now our payment specialist team is focused on the real-time vendor enablement process to drive more virtual card adoption. And throughout the first half of the year, we continue to gain traction, and we are building a healthy sales pipeline from our recent software integrations such as Sage Intacct, Microsoft Dynamics, Quadient, EnergyCAP and Inflo. A great example of our vertical go-to-market strategy with these software partnerships is HIA, an ERP and accounting solution with unique functionality designed with hospitality industry. After completing the payment integration with HIA, Repay went live with our first HIA client in early 2023, and we are now providing our AP solution to an expanding list of hundreds of properties across the U.S. We have been able to grow Repay by expanding our services, leveraging our now 273 integrated software partners across Repay, guiding our clients through a seamless onboarding process and constantly evolving our tech platform. As we look into the future, our platform will continue to scale as we automate manual processing. The scaling of our platform and investments we've made in sales, product and technology over the past several years will enable us to continue expanding free cash flow conversion into the second half of the year and beyond. Additionally, we are very pleased to have recently completed our convertible notes offering to fortify our balance sheet by addressing half of our 2026 debt maturities, while also successfully expanding and upsizing our revolving credit facility. These transactions provide us with financial flexibility to continue focusing on profitable growth and accelerating cash generation. Our capital allocation priorities remain focused on creating value to our shareholders by investing into organic growth opportunities while continuing to be open to accretive strategic M&A. With that, I'll turn the call over to Tim to go over our Q2 financials, our recent balance sheet updates in further detail and our outlook for 2024. Tim?

Thank you, John. Now let's go over our Q2 financial results before I review our financial guidance for 2024. In the second quarter, Repay delivered solid results across our key metrics. Revenue was $74.9 million, an increase of 4% over the prior year second quarter. And as a reminder, the seasonality related to tax refunds during Q1 creates lower processing activity and revenue on a quarter-over-quarter basis. In Q2, gross profit grew by 7% year-over-year as we continue to benefit from processing cost optimization and automation initiatives. As John mentioned, our Consumer Payments segment reported gross profit growth of 7% in Q2 and 8% in the first half, while our Business Payments segment gross profit grew 11% in Q2 and 14% in the first half. Adjusted EBITDA was $33.7 million, representing 10% growth in Q2 and 13% growth in the first half. Q2 adjusted EBITDA margins were approximately 45%, improving sequentially as we have maintained relatively stable SG&A costs on a quarter-over-quarter basis, while simultaneously working to align our sales, implementation and support teams throughout the year. Second quarter adjusted net income was $21.8 million, or $0.22 per share. Lastly, Q2 free cash flow was $19.3 million, representing 57% free cash flow conversion and 90-plus percent year-over-year free cash flow growth. Free cash flow conversion was in line to our internal expectations and remains on track to further improve during the second half of the year. As of June 30, we had approximately $147 million of cash on the balance sheet. In early July, Repay enhanced our overall capital structure by staggering the maturity of our outstanding debt while opportunistically taking advantage of market dynamics. We repurchased at a discount $220 million principal amount of our $440 million convertible notes with an upcoming maturity in 2026, while concurrently issuing a new $287.5 million convertible note due in 2029 with 2.875% Q1. We also entered a capped call transaction increasing the effect of conversion price to $20.42 per share, providing significant dilution protection. We repurchased approximately 3.9 million shares as part of the transaction, which will reduce our overall pro forma share count and help partially offset the interest expense impact to adjusted EPS moving forward. In addition, we extended and upsized our revolver to $250 million, bringing our total pro forma liquidity to $392 million. As a result of these transactions, Repay's total pro forma outstanding debt is $507.5 million with net leverage of approximately 2.7x. We continue to expect net leverage to naturally decline throughout this year from our strong profitability and cash flow generation, excluding any potential M&A. Moving on to our thoughts for the remainder of 2024. Our year-to-date results are driven by our growth algorithm on growth with the existing clients, the full year contribution from clients that began ramping during the prior year and growth from signed new clients with a measured implementation timeline. As we move into the second half of the year, we are reiterating our 2024 outlook and continue to expect revenue to be between $214 million and $220 million, gross profit between $245 million and $250 million and adjusted EBITDA to be between $139 million and $142 million. We expect roughly 44% adjusted EBITDA margins and anticipate adjusted EBITDA to grow faster than revenue and gross profit during the year. We expect our free cash flow conversion to accelerate throughout the year with Q3 free cash flow conversion being greater than our full year free cash flow conversion target of approximately 60%. As a reminder, free cash flow conversion is calculated by dividing free cash flow by adjusted EBITDA. As we demonstrated in the first half of 2024, we plan to reduce overall CapEx spending, giving us the confidence to accelerate our free cash flow conversion throughout 2024, leading to full year free cash flow growth of 60-plus percent year-over-year and sustained mid- to high teens growth thereafter. Across the business, we are seeing the sales pipeline developed from our software integrations and partnerships, giving us confidence for our multiyear growth opportunities. The planning assumptions around our 2024 outlook include a measured ramp of the previously announced auto captive win that is expected to go live this quarter while lapping a strong contribution from enterprise clients during 2023. As a reminder, our Q3 and Q4 quarterly cadence is expected to benefit from the incremental contributions of our political media business in the Business Payments segment. We continue to expect healthy growth related to the presidential election cycle in 2024, but due to the timing of media spending, the contribution was more back half weighted than previously anticipated. Also, our free cash flow conversion is expected to accelerate throughout the year similar to the quarterly cadence that we saw in 2023. As you can see from our strong first half results and the full year 2024 outlook, our investments towards our sales, product from technology are leading to an acceleration of free cash flow conversion. We remain focused on profitable growth by finding efficiencies across the business where we can scale processes while also maintaining prudent investments towards innovation and automation. I'll now turn the call back over to the operator to take your questions. Operator?

Thank you. Ladies and gentlemen, we will now be conducting the question-and-answer session. [Operator Instructions] Our first question comes from Ramsey El-Assal of Barclays. Please go ahead.

Hi. Thanks for taking my question this evening. On free cash flow conversion, I mean, it's obviously had a really great improvement and continues to do so. What – how should we think about the normalized level where that will land? What is the sort of steady state free cash flow conversion that you have in your mind over time?

Yes. We do feel really good about that. We accelerated significantly in Q2 off of what we thought was a strong Q1 and we expect it to continue to accelerate throughout the year. As we said, we think there can be sustained mid- to high teens growth in free cash flow, which our target for this year is 60%. So that would start to put us toward the mid-60s. And if you do that math on mid- to high teens, you can see where that kind of points us to 2026 and beyond. So we feel good about the 60% target for this year, good about visibility into mid- to high teens growth thereafter, and you can kind of understand where that takes us from a conversion perspective. And that is happening because we're showing adjusted EBITDA growth faster than top line, and we're showing a reduction in CapEx. And as we talked about previously, we think CapEx on this year to, call it, 13% to 14% of revenue and longer term, can get that down to 10% to 12% of revenue, and those combined get us to that mid- to high teens growth.

Got it. Perfect. And a follow-up for me. Could you give us just your view on the overall health of the consumer today? It's such an odd sort of cycle we're in, but specifically on the sort of personal financing side of the business, are you seeing any tightening or loosening at the top of the funnel? What is your view of what's happening out there?

Yes. We're seeing consistent trends into Q3. We continue to see healthy but somewhat moderating consumer environment that's consistent with what we'd expect. There's no noticeable difference in any of the subverticals, like as you mentioned, personal finance. I think it's a similar environment there where there's been some tightening over the last year plus, and that's continuing. So I wouldn't say anything noticeably different, very consistent trends going into Q3 off of Q2, and we feel good about that.

Sure.

And Ramsey, I would add as well – Ramsey, I would add as well is that we continue to emphasize that predominantly on the consumer side that these are nondiscretionary spend items just because of the nature of the financial obligations there. So we continue to see that kind of leads into some of the Tim's comments around consistency.

Good point. Thank you.

Our next question comes from Sanjay Sakhrani of KBW. Please go ahead.

This is actually Steven Kwok filling in for Sanjay. But thanks for taking my questions. The first one I had was just a follow-up around what macro trends are you assuming within the guide? And then as we went through the quarter and into July and August, any deviating trends that you're seeing? Thanks.

Yes. We don't see any major change to our macro assumptions from prior quarters. Like I said, there's been very consistent trends into Q3 coming off of Q2. We see generally a healthy consumer in the nondiscretionary end markets within consumer. And so our macro assumptions really haven't changed from prior periods. And like I said, the trends into the quarter have been consistent as well.

Got it. Got it. And then just perhaps if you could provide any updates around M&A pipeline, given the leverage ratio? And just want to see if there's anything that's out there that's perhaps interesting.

Yes, I can start and maybe John can jump in. We feel good about the refi we just did and our balance sheet is in great shape. We upsized our revolver to $250 million. We have a lot of liquidity and capacity in general, and that gives us confidence to pursue M&A. We have a healthy pipeline. We have an internal team that sources and executes deals, and we're looking at opportunities across both Consumer and Business Payments. Likely would be a size range of a tuck-in type of opportunity as we're looking at multiple different size deals, but likely, given that we'd want to maintain now leverage around 4 to 4.5x and not go above that, it would likely be a tuck-in, if we did it with all debt. And then we would look to bring that leverage ratio down with visibility to get it back down below 3x and call it 12 to 18 months. So we're looking at a lot of opportunities, and we have a healthy pipeline.

Yes, I would just add a little color there. Obviously, we've been patient over the last couple of years looking for the right valuation, right opportunities. And we actually think that, as Tim indicated, we have really healthy dialogues out there. We think that the private world, more and more attractive assets will be coming as well as some of the things we see today, but we will be disciplined. We think we're – our balance sheet sets up really strong for anything that's an opportunity that we think is highly accretive to our shareholders, then that's something we would definitely be looking at that would give us long-term value creation.

Got it. And I'm not sure if you can share this with us, but is there any specific verticals or product capabilities that you're looking at?

If you just look at – we like to do things that we have a lot of attributes we look at, obviously, embedded payments specifically and obviously, something in payments. So similar things we've done in the past, something that would be complementary to where we existing are – where we are, as Tim mentioned, potentially something of a tuck-in basis. But as you know, right, we don't get to choose when something comes to market or is for sale, but we'll keep – continue to be disciplined there.

Yes. I'll add some of the attributes. In addition to the financial profile, which obviously we like large growing underserved verticals and healthy retention statistics and integrated payments. So we look for businesses that would bring us additional software partnerships for distribution. On the AP side, we would look for a large supplier network to augment our existing supplier network and additional software relationships in subverticals within AP. So those are the types of attributes we're looking for as we're sourcing deals, and we do see some out there that have some of those so far.

Awesome. Great. Thanks for taking my questions.

The next question comes from Peter Heckmann of D.A. Davidson. Please go ahead.

Hi, good afternoon. Thanks for taking the question. I have several companies reporting earnings, so I apologize if I missed it. But within Business Payments, did you talk about kind of what was the growth rate there, excluding media spend-related – any political over the election? And then secondly, do you think you have the right distribution channel in place in terms of both signing up direct clients and going through ISVs to really get the revenue accelerated to kind of that mid- to high teens range?

Yes. So we did – we have segment – breaking out the segments and we talked about the reported growth in Business Payments of 11% in Q2 and 14% in the first half, we still think that's a business that can grow in the high teens. The media contribution will be back half weighted. And so we think that there's probably more in the back half than there was initially anticipated, just given the dynamics with the candidates and what's happened in the last few weeks, but we see a lot of positive momentum there that should drive that political media growth in the back half. So we have, like I said, really healthy pipelines building, a lot of distribution coming through our software relationships, and we think that's – those are healthy signs.

Yes. We want to continue to invest in our integrated partners and the net new. As you heard us say before, we think there's many years of growth there with existing partnerships, but also the net new ones that we've spoke to in the past, examples be like a Blackbaud where we continue to – we think we have multiple years of growth as we help them monetize payments and drive out – drive the efficiencies, especially around payables and just the – how commerce moves. So we think there's lots of opportunity. We want to continue to invest there organically. We think it's a really good return on shareholder value to continue to do that.

Pete, does that conclude your questions? Our next question comes from Joe Vafi of the Canaccord Genuity. Please go ahead.

This is Pallav Saini on for Joe. Thanks for taking our questions. First of all, we talked about the flexibility on the balance sheet. Is there a desire to accelerate the investments in the organic business given the multiple growth opportunities you have in front of you? If so, where would you like to increase the investments? And I have follow-up.

Yes, I'll start. Tim, you can add in as well. So as I've mentioned on our call, we – some of our 2024 goals are continue to drive our go-to-market efficiency, which obviously, we think, obviously, these three things drive organic growth. Our client implementations, which will continue to drive efficiencies there and then overall, our focus on product. Those things we have been doing and we have been investing. And we've mentioned as well, enterprise sales, driving in our enterprise sales, additional investments there, which we're currently doing, and we'll do more there. And then as just mentioned in a few comments before, driving our overall ISV relationships, product enhancements into those and new features, functionalities on behalf of existing clients and net new. And then overall, enterprise software, helping monetize the overall payment flows and the efficiencies through that, we think that's a multiyear growth opportunity for us. And we're investing in all of those, but we'd like to continue to accelerate investment into those.

Great. Thank you. And just a follow-up, can you give us a sense of how much incremental revenue you're assuming from the presidential election later this year?

Sure. So we've said, it's consistent with what we said before, which we expect about 20% growth off of the 2022 cycle and 2022 cycle was, call it, about $6 million, so 20% on top of that. And we're now expecting about, call it, 85% of that amount to come in the back half of the year. And so that's very consistent with what we've been saying. We're not seeing a difference in the total amount, just the timing has shifted a little bit, like I said, given the dynamics with the candidates. But in the past couple of weeks, a lot has changed, and I think that that change has been like largely in our favor.

Got it. Thank you.

Our next question comes from Charles Nabhan of Stephens. Please go ahead.

Hi, good afternoon, and thank you for taking my question. Most of my questions have been asked, but I wanted to ask about Instant Funding. I know 21% growth is still very strong, but it's a bit of a deceleration from last couple of quarters. I know you said not a lot has changed from a consumer or macro standpoint. But I wanted to ask, is that just a matter of lapping challenging comps? Or how should we think about that deceleration in growth within Instant Funding as well as the go-forward growth rate within that business?

Yes. So we – it's a function of lapping. We signed and ramped a very large personal lending client in the early part of 2023, and they were fully ramped in Q2 of last year, and they adopted our Instant Funding product almost right away. And so they contributed a lot to Instant Funding last year, and we're now lapping that, Q2 is the first full quarter of lapping. So I would expect this to be a similar level of growth. We will move beyond the lapping of that large enterprise win and then we're also – we're signing new clients for this product. I do think there's demand for it, and there should be adoption as more clients go completely digital with not only their acceptance of payments but their funding of loans. So the deceleration is purely a function of lapping that large client in Q2, and I think we'll see pretty consistent trends moving forward. It's not anything underlying within the business or within macro, it's more about lapping.

Got it. And as a follow-up, you had mentioned the auto – the large auto captive was going live this quarter. Just wanted to get a little more color in terms of the financial impact, if we should expect a full quarter impact in the third quarter and how that will contribute to the sequential or cadence of growth as we move through the year and into next year?

Yes. So we're excited about that. We're excited to get them live in processing. It will take them time to ramp and bring over their volume from the existing processor, but that's happening as they go live. But we've not modeled any material contribution for them in the second half of this year. So there's not anything material given the measured ramp we're expecting, but I would think that it could be more material in 2025 and 2026, which is why we've spent a lot of dollars and time and effort to get them live to give us the multi-years of growth. So nothing material for the rest of this year, but full year benefit of them being fully ramped in 2025 and 2026 will be helpful for us.

Got it. Appreciate the color guys. Thank you.

Thank you. [Operator Instructions] Our next question comes from Rufus Hone of BMO Capital Markets.

Hi, guys. Thanks. Just one question. I wanted to come back to the organic gross profit growth outlook. So excluding the political media and thinking about the back half of the year, I think your guidance contemplates sort of a mid- to high single-digit organic growth trajectory, excluding the political media. In the first quarter, you did 10%. That decelerated this quarter to 5%. So I was wondering if you could put a finer point, I guess, on what pieces made up that 5 point deceleration. Was it just lapping? Thank you.

Some of it is lapping a large client that I just mentioned in terms of the Instant Funding comment. Some of it's got to do with implementation delays. Just as a good example is the auto captive. There were some implementation delays in the B2B space as well with enterprise clients. So I think it's a combination of lapping and some of the implementation delays that we're trying to be more proactive in getting clients live faster. Grady is a great example of that, that we mentioned on the call, they are live very quickly and have become a large customer of ours. So I think it's just a function of those couple of points.

Okay. And so do you think the five points is a fair shot for the rest of the year? Or do you think it will pick up into the second half?

I mean I think it's – I think the math you're doing is generally consistent, and I think we have a lot of opportunities to drive growth in the outer years. We talked about some of them on the call like the auto captive, like the mortgage debit opportunity, that's not – we have not really embedded much contribution from that at all, the numbers either and then potential acceleration in the core AP business within Business Payments segment. So there are multiyear growth opportunities across both segments of our business. And like John said, we're investing in enterprise sales and consumer and enterprise software embedded payments, enterprise software and business payments to allow for that.

Great, thanks very much.

Our next question comes from Andrew Schmidt of Citi. Please go ahead.

Hi, guys. Thanks for taking my questions. Sorry, I joined late. I apologize if this was asked. Obviously, a lot of questions in the B2B payment space in terms of supplier acceptance. Maybe you could just drill down what you're seeing in terms of virtual card acceptance. Obviously, you guys have a pretty, I think, rigorous supplier enablement program. But maybe just shine a light on that to see if there's any difference in terms of supplier acceptance rates, adverse payment selection, things like that, that would be helpful. Thank you very much.

Yes. I mean that's an issue we're aware of. We don't think that's widespread across our supplier base. We're not seeing it in a material way. And like you said, we have a real-time vendor enablement process that's proprietary and unique to us, and that's very helpful in the acceptance of digital payments and specifically virtual cards within the supplier base. And we also have what we call is our TotalPay solution, which when we pitch a client, we're pitching them to outsource all of their payables. So not just their virtual card payments, but we want to do their virtual card payments, their enhanced ACH payments, their regular ACH payments and if we have to, we'll default to checks. But I think because of our enablement process, we drive greater digital adoption and that process along with – the enablement process along with TotalPay put us in a really good position with our suppliers in terms of digital penetration. So it's an issue we're aware of and we're monitoring, but it's not widespread across our base. And like I said, we have a couple of tools we think are effective in that way.

Got it. Thank you very much. And I think in the quarter, there was an ERP system that was maybe down for some time in the auto industry. Wondering if you guys – I know you guys are fairly diversified. Wondering if you saw any impacts from that in terms of origination volume or anything like that that you observed?

We are aware of that. Yes, we – obviously, it was very impactful to them to the software partner and to the dealers – the dealerships themselves. Fortunately, for us, we did not experience any material impacts. We were monitoring it very closely, talking to the software provider and talking to the auto dealerships. And like I said, we were on top of it and did not have any material impacts. There was downtime, which impacted the dealers, but we were able to keep the payments flowing and running and had a lot of uptime in terms of the payments running through the system.

Yes. We should also note there specifically around we are the back office part of that, so not the front side of the AR side of auto. So it has a little bit more flexibility from that perspective and as well as we're just barely penetrated in that world, and that's just one of our software partners in that world. So – but no impact from our – financial impact from us specifically around that.

Perfect. Thank you for that. And if I could just squeeze one more in. The existing client growth, obviously, a function of that is continued penetration in terms of just cash, ACH to card, et cetera. Where are we at kind of post-pandemic? Is there still a lot of room to push card acceptance rates up in your verticals? Or have we reached a higher penetration point where that growth factor will be less of a driver? Thank you.

Yes, I'll start, Tim. If you can add – you want to add to that. So specifically, on the payable side, we think our – we think we can have one of the best-in-class solutions for – that drives the overall embedded enterprise software embedded solution, both into the accounting systems or just the overall enterprise software platforms that drive the workflows and our ability to seamlessly do all payment types and modalities, that one-stop shop, we think there's great value to that. It's fully embedded. It's fully – and when it's embedded like that as well, it allows you to move the funds no matter which modality. We think there's great value in driving those efficiencies. And we see that market having many years of growth opportunity there, which is why you heard me talk earlier about us continuing to invest in the enterprise software partnerships. We think there's lots of years of growth there. We think just our solution alone adds value to the overall efficiency and automation process. And that, we're finding ways to continue to monetize that, not just – it's not just a virtual card monetization opportunity. And we still see a significant amount of overall just paper check in that world. Still – as you would expect, still very large and multiple years of organic opportunity there.

Perfect. Thank you very much John.

I'll add to that, too.

Please.

There's – we still disclose good data on that in our investor presentation that's posted to our IR site. There's a slide – Slide 14 that shows the overall U.S. consumer payment market is, call it, approaching 80% card penetration. And you can see some of our verticals are in the teens or even mortgage is a great example that's in the single digits in terms of card acceptance. And that's why we're so focused on the Black Knight mortgage debit acceptance initiative that is not contributing this year, but we expect to contribute for the next several years. And there's – some of these penetration rates are in like a single digit to the teens relative to close to 80% for the overall market. So that speaks to the opportunity to continue to find existing customer growth.

Absolutely. It's good to see the progress in that relationship. Thank you, John. Thank you, Tim. Appreciate the comments.

Just one more comment overall. We've all talked about the digital transformation, which is absolutely real. And amazingly, most of this has started on the consumer side, which we've all experienced. And the business back office is really catching up in a good way, several ways it has to drive its efficiencies. But that's consumer who also works in many of these back offices now also expects things to be done more efficiency. So, all the right ingredients are setting us up well for many years of opportunity here.

Thank you.

Ladies and gentlemen, with no further questions in the question queue, we have reached the end of the question-and-answer session. I will now hand over to Mr. John Morris for closing remarks.

Thank you everyone. I really appreciate your time today. Our first half of the year demonstrates our solid execution towards our 2024 outlook and accelerating free cash flow as we've indicated. We will continue to make progress on our strategic initiatives and driving multiple years of growth opportunities across Repay, while maintaining our focus on profitable growth. Thank you again for joining us today.