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What changed in Repay Holdings Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Repay Holdings Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+269 added−307 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in Repay Holdings Corp's 2023 10-K

269 paragraphs added · 307 removed · 239 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

80 edited+4 added−5 removed92 unchanged
Biggest changeMany of the vertical markets in which we compete are continuing to shift from legacy payment mediums — primarily cash and check — to electronic forms of payment. We expect to benefit from this trend as our clients increasingly opt to process payments via the electronic forms of payment in which we specialize.
Biggest changeAs our clients’ payment volumes and transactions increase, our revenues increase as a result of the fees we charge for processing these payments. Many of the vertical markets in which we compete are continuing to shift from legacy payment mediums — primarily cash and check — to electronic forms of payment.
The integration of our technology with key software providers in the verticals that we serve, including loan management 4 systems, dealer management systems (“DMS”), collection management systems, and enterprise resource planning software systems, allows us to embed our omni-channel payment processing technology into our clients’ critical workflow software and ensure seamless operation of our solutions within our clients’ enterprise management systems.
The integration of our technology with key software providers in the verticals that we serve, including loan management systems, dealer management systems (“DMS”), collection management systems, and enterprise resource planning software 4 systems, allows us to embed our omni-channel payment processing technology into our clients’ critical workflow software and ensure seamless operation of our solutions within our clients’ enterprise management systems.
In addition, laws prohibiting these activities and other laws, rules and or regulations, including the Telemarketing Sales Rule, may directly impact the activities of certain of our clients, and in some cases may subject us, as the client’s payment processor or provider of certain services, to investigations, fees, fines and disgorgement of funds if we are deemed to have aided and abetted or otherwise provided the means and instrumentalities to facilitate the illegal or improper activities of a client through our services.
In addition, laws prohibiting these activities and other laws, rules and or regulations, including the Telemarketing Sales Rule, may directly impact the activities of certain of our clients, and in some cases may subject us, as the client’s payment processor or provider of certain services, to 12 investigations, fees, fines and disgorgement of funds if we are deemed to have aided and abetted or otherwise provided the means and instrumentalities to facilitate the illegal or improper activities of a client through our services.
Our CMS, developed in conjunction 7 with the Third Party Payment Processors Association, focuses on four main components — board and management oversight, a compliance program with written policies and procedures and employee training and monitoring, responsiveness to consumer complaints and annual compliance audits from an independent third party — and is inclusive of the Electronic Transaction Association guidelines on underwriting and risk.
Our CMS, developed in conjunction with the Third Party Payment Processors Association, focuses on four main components — board and management oversight, a compliance program with written policies and procedures and employee training and monitoring, responsiveness to consumer complaints and annual compliance audits from an independent third party — and is inclusive of the Electronic Transaction Association guidelines on underwriting and risk.
Our incident response team tests these systems each quarter to assess the effectiveness of our disaster recovery plan, including staff readiness and operational capability. Third Party Processors and Sponsor Banks 8 We partner with institutions in the payment chain to provide authorization, settlement and funding services in connection with our clients’ transactions.
Our incident response team tests these systems each quarter to assess the effectiveness of our disaster recovery plan, including staff readiness and operational capability. Third Party Processors and Sponsor Banks We partner with institutions in the payment chain to provide authorization, settlement and funding services in connection with our clients’ transactions.
These institutions include third party processors and sponsor banks, who sit between us, acting as the merchant acquirer or payment processor, and the payment networks, such as Visa, MasterCard and Discover. These processors and vendors in turn have agreements with the payment networks, which permit them to route transaction information through their networks in exchange for fees.
These institutions include third party processors and sponsor banks, who sit between us, acting as the merchant acquirer or payment processor, and the payment networks, such as Visa and MasterCard. These processors and vendors in turn have agreements with the payment networks, which permit them to route transaction information through their networks in exchange for fees.
Any new rules or regulations implemented by the CFPB, and other similar regulatory agencies in other jurisdictions, or pursuant to the Dodd-Frank Act that are applicable to us or our clients’ businesses, or any adverse changes thereto, could increase our cost of doing business or limit our current offerings of integrated payment solutions.
Any new rules or regulations implemented by the CFPB, and other similar regulatory agencies in other jurisdictions, or pursuant to the Dodd-Frank Act that 11 are applicable to us or our clients’ businesses, or any adverse changes thereto, could increase our cost of doing business or limit our current offerings of integrated payment solutions.
Direct Sales Representatives Our sales representatives are organized by vertical market and account size. Direct sales representatives work with our clients and software integration partners to understand our clients’ desired payment solutions and then communicate those desires to our product and technology teams, who build a customized suite of products and payment channels tailored to our clients’ specific needs.
Direct Sales Representatives Our sales representatives are generally organized by vertical market and account size. Direct sales representatives work with our clients and software integration partners to understand our clients’ desired payment solutions and then communicate those desires to our product and technology teams, who build a customized suite of products and payment channels tailored to our clients’ specific needs.
The acquisition of cPayPlus further expanded our business-to-business automation and payment offering to include accounts payable automation and payment solutions for both existing and prospective clients across all business lines. CPS Acquisition On November 2, 2020, we acquired all of the equity interests of CPS Payment Services , LLC, Media Payments, LLC, and Custom Payment Systems, LLC (collectively, “CPS”).
The acquisition of cPayPlus further expanded our business-to-business automation and payment offering to include accounts payable automation and payment solutions for both existing and prospective clients across all business lines. 10 CPS Acquisition On November 2, 2020, we acquired all of the equity interests of CPS Payment Services , LLC, Media Payments, LLC, and Custom Payment Systems, LLC (collectively, “CPS”).
For additional information regarding some of the risks relating to our intellectual property see “Risk Factors — Risks Related to Our Business — We may not be able to successfully manage our intellectual property and may be subject to infringement claims.” in Part I, Item 1A of this Annual Report on Form 10-K.
For additional information regarding some of the risks relating to our intellectual property see “Risk Factors — Risks Related to Our Business — We may not be able to successfully manage our intellectual property and are subject to infringement claims.” in Part I, Item 1A of this Annual Report on Form 10-K.
The acquisition of CPS enhanced our business-to-business accounts payable automation offerings and introduced our solutions to new verticals including education, government, and media sectors. 10 BillingTree Acquisition On June 15, 2021, we acquired all of the equity interests of BT Intermediate, LLC (together with its subsidiaries, “BillingTree”).
The acquisition of CPS enhanced our business-to-business accounts payable automation offerings and introduced our solutions to new verticals including education, government, and media sectors. BillingTree Acquisition On June 15, 2021, we acquired all of the equity interests of BT Intermediate, LLC (together with its subsidiaries, “BillingTree”).
Our business may also be subject to the Fair Credit Reporting Act of 1970, 11 as amended by the Fair and Accurate Credit Transactions Act of 2003, which regulates the use and reporting of consumer credit information and imposes disclosure requirements on entities who take adverse action based on information obtained from credit reporting agencies.
Our business may also be subject to the Fair Credit Reporting Act of 1970, as amended by the Fair and Accurate Credit Transactions Act of 2003, which regulates the use and reporting of consumer credit information and imposes disclosure requirements on entities who take adverse action based on information obtained from credit reporting agencies.
One of our priorities is to maintain and enhance our culture as we grow in employee size and integrate new team members. We participate in an annual employee engagement and feedback survey which allows all full-time employees to anonymously give us feedback on our workplace culture, employee programs, and more.
One of our priorities is to maintain and enhance our culture as we grow and integrate new team members. We participate in an annual employee engagement and feedback survey which allows all full-time employees to anonymously give us feedback on our workplace culture, employee programs, and more.
Competitive Conditions and Market Trends We compete with a variety of payment processing companies that have different business models, go-to-market strategies and technical capabilities. In our Consumer Payments segment, our primary competitors include ACI Worldwide, Paymentus, PayNearMe, and PayScout.
Competitive Conditions and Market Trends We compete with a variety of payment processing companies that have different business models, go-to-market strategies and technical capabilities. In our Consumer Payments segment, our primary competitors include ACI Worldwide, Paymentus, PayNearMe, PayScout and TabaPay.
Many of the vertical markets in which we compete are continuing to shift from legacy payment mediums — primarily cash and check — to electronic forms of payment. In addition, the COVID-19 pandemic and the resulting changes in consumer behavior has led to an accelerated shift to electronic payments.
Many of the vertical markets in which we compete are continuing to shift from legacy payment mediums — primarily cash and check — to electronic forms of payment. In addition, 9 the COVID-19 pandemic and the resulting changes in consumer behavior has led to an accelerated shift to electronic payments.
Volumes and revenues during the first quarter of the calendar year tend to increase 9 in comparison to the remaining three quarters of the calendar year on a same store basis. This increase is due to consumers’ receipt of tax refunds and the increases in repayment activity levels that follow.
Volumes and revenues during the first quarter of the calendar year tend to increase in comparison to the remaining three quarters of the calendar year on a same store basis. This increase is due to consumers’ receipt of tax refunds and the increases in repayment activity levels that follow.
To ensure we stay competitive in the talent market, we strive to make it clear to our employees 14 that we value and appreciate them, and reward high performance. We foster a culture of rewards and recognition and incentivize our employees with opportunities for growth within the company.
To ensure we stay competitive in the talent market, we strive to make it clear to our employees that we value and appreciate them, and reward high performance. We foster a culture of rewards and recognition and incentivize our employees with opportunities for growth within the company.
To the extent we are 12 processing payments or providing services for a client suspected of violating such laws, rules and regulations, we may face enforcement actions and, as a result, incur losses and liabilities that may adversely affect our business.
To the extent we are processing payments or providing services for a client suspected of violating such laws, rules and regulations, we may face enforcement actions and, as a result, incur losses and liabilities that may adversely affect our business.
The acquisition of Paymaxx has been highly complementary to our earlier acquisition of Sigma and has bolstered our position in the niche automotive finance market. As part of the acquisition, we acquired increased distribution capabilities in the form of an internal sales force and numerous DMS integrations.
The acquisition of Paymaxx has been highly complementary to our earlier acquisition of Sigma and has bolstered our position in the automotive finance market. As part of the acquisition, we acquired increased distribution capabilities in the form of an internal sales force and numerous DMS integrations.
The acquisition of BillingTree further expanded our position in the healthcare, credit union, and accounts receivable management industries and significantly enhanced our scale and our client diversification. Kontrol Acquisition On June 22, 2021, we acquired substantially all of the assets of Kontrol LLC (“Kontrol”).
The acquisition of BillingTree further expanded our position in the healthcare, credit union, and receivable management industries and significantly enhanced our scale and our client diversification. Kontrol Acquisition On June 22, 2021, we acquired substantially all of the assets of Kontrol LLC (“Kontrol”).
This team also develops, maintains, tests and verifies our incident response plan. Disaster recovery is built into our primary payment gateway through redundant hardware and software applications hosted in two distinct cloud regions.
This team also develops, maintains, tests and verifies our incident 8 response plan. Disaster recovery is built into our primary payment gateway through redundant hardware and software applications hosted in two distinct cloud regions.
We are required to register with the payment networks through these bank partners because we, as a payment processor, are not a “member bank” as defined by the major payment networks’ rules and standards governing access to those networks.
We are required to register with the payment networks through these bank 13 partners because we, as a payment processor, are not a “member bank” as defined by the major payment networks’ rules and standards governing access to those networks.
Payment network rules restrict us from performing funds settlement and require that merchant settlement funds be in the possession of the member 13 bank until the merchant is funded. These restrictions place the settlement assets and liabilities under the control of the member bank.
Payment network rules restrict us from performing funds settlement and require that merchant settlement funds be in the possession of the member bank until the merchant is funded. These restrictions place the settlement assets and liabilities under the control of the member bank.
These payments can be made using any of our payment channels, as further described below. o ACH Processing — Our ACH processing capabilities allow our clients to send and accept traditional and same-day ACH transactions. o ECash – Through third party relationships, we can facilitate customers who want to make payments with cash by converting it into digital payments that are deposited with our clients. o Digital Wallet Services – Enables customers to quickly and easily pay using payment data securely stored in the digital wallets of their mobile devices. • Accounts Payable Automation o Virtual Credit Card Processing — Our virtual credit card product offering enables our clients to automate their payables transactions by sending single-use virtual credit cards to their suppliers. o Enhanced ACH Processing — Provides the same functionality as our standard ACH processing capability, but with the added benefit of incremental transaction and reconciliation data. • Clearing and Settlement – Our RCS business offers ISOs and payment facilitators clearing and settlement solutions for all major card brands • Instant Funding — Our instant funding capabilities allow our clients to transfer funds directly to a consumer’s debit or prepaid card.
These payments can be made using any of our payment channels, as further described below. o ACH Processing — Our ACH processing capabilities allow our clients to send and accept traditional and same-day ACH transactions. o ECash — Through third party relationships, we can facilitate customers who want to make payments with cash by converting it into digital payments that are deposited with our clients. o Digital Wallet Services — Enables consumers to quickly and easily pay using payment data securely stored in the digital wallets of their mobile devices. • Accounts Payable Automation o Virtual Credit Card Processing — Our virtual credit card product offering enables our clients to automate their payables transactions by sending single-use virtual credit cards to their suppliers. o Enhanced ACH Processing — Provides the same functionality as our standard ACH processing capability, but with the added benefit of incremental transaction and reconciliation data. • Clearing and Settlement – Our RCS platform offers ISOs and payment facilitators clearing and settlement solutions for all major card brands. 6 • Instant Funding — Our instant funding capabilities allow our clients to transfer funds directly to a consumer’s debit or prepaid card.
Information contained on our website is not a part of this Annual Report on Form 10-K and the inclusion of our website address in this report is an inactive textual reference only.
Information contained on our website is not a part of this Annual Report on Form 10-K and the inclusion of our website address in this report is an inactive textual reference only. 15
TriSource Acquisition On August 14, 2019, we acquired all of the equity interests of TriSource. Since 2012, we have used TriSource as one of our primary third-party processors for settlement solutions when we facilitate transactions as a merchant acquirer. The acquisition of TriSource has provided further control over our transaction processing ecosystem and accelerated product delivery capabilities.
TriSource Acquisition On August 14, 2019, we acquired all of the equity interests of TriSource Solutions, LLC (“TriSource”). Since 2012, we have used TriSource as one of our primary third-party processors for settlement solutions when we facilitate transactions as a merchant acquirer. The acquisition of TriSource has provided further control over our transaction processing ecosystem and accelerated product delivery capabilities.
We have successfully integrated our technology solutions with numerous, widely-used enterprise management systems in the verticals that we serve, which makes our platform a more compelling choice for the businesses that use them. Moreover, our relationships with our partners help us to develop deep industry knowledge regarding trends in client needs.
We have successfully integrated our technology solutions with numerous, widely-used enterprise management systems in the verticals that we serve, which makes our platform a more compelling choice for the businesses that use them. Moreover, our relationships with our software integration partners help us to develop deep industry knowledge regarding trends in client needs.
Payment Network Rules and Standards Payment networks, such as Visa, MasterCard and American Express, establish their own rules and standards that allocate liabilities and responsibilities among the payment networks and their participants.
Payment Network Rules and Standards Payment networks, such as Visa, MasterCard, Discover and American Express, establish their own rules and standards that allocate liabilities and responsibilities among the payment networks and their participants.
If the client incurring the chargeback is unable to fund the refund to the card-issuing bank, we are required to do so by the rules of the payment networks and our contractual arrangements with our sponsor banks. During the year ended December 31, 2022, we believe our chargeback rate was under 1% of our payment volume.
If the client incurring the chargeback is unable to fund the refund to the card-issuing bank, we are required to do so by the rules of the payment networks and our contractual arrangements with our sponsor banks. During the year ended December 31, 2023, we believe our chargeback rate was under 1% of our payment volume.
Relevant federal privacy laws include the Gramm-Leach-Bliley Act of 1999, which (along with its implementing regulations) restricts certain collection, processing, storage, use and disclosure of personal information, requires notice to individuals of privacy practices and provides individuals with certain rights to prevent the use and disclosure of certain nonpublic or otherwise legally protected information.
Relevant federal data privacy and information security laws include the Gramm-Leach-Bliley Act of 1999, which (along with its implementing regulations) restricts certain collection, processing, storage, use and disclosure of personal information, requires notice to individuals of privacy practices and provides individuals with certain rights to prevent the use and disclosure of certain nonpublic or otherwise legally protected information.
Sales and Distribution Our sales effort primarily consists of two strategies: first, our direct sales representatives, who focus on each of our core verticals, and second, our software integration partners, which enable the direct salesforce to more effectively access new client opportunities and respond to inbound leads.
Sales and Distribution Our sales effort primarily consists of two strategies: first, our direct sales representatives, who focus on each of our core verticals, and second, our software integration partners, which enable the direct sales force to more effectively access new client opportunities and respond to inbound leads.
Privacy and Information Security Regulations We provide services that may be subject to various state and federal privacy laws and regulations.
Privacy and Information Security Regulations We provide services that may be subject to various state and federal data privacy and information security laws and regulations.
We provide integrated payment processing solutions to industry-oriented vertical markets in which businesses have specific and bespoke transaction processing needs. We refer to these markets as “vertical markets” or “verticals.” We are a payments innovator, differentiated by our proprietary, integrated payment technology platform and our ability to reduce the complexity of electronic payments for businesses.
We provide integrated payment processing solutions to industry-oriented vertical markets in which businesses or other organizations have specific transaction processing needs. We refer to these markets as “vertical markets” or “verticals.” We are a payments innovator, differentiated by our proprietary, integrated payment technology platform and our ability to reduce the complexity of electronic payments for businesses.
We are also subject to legal and regulatory requirements which govern the use, storage and distribution of the information we collect from our clients and cardholders while processing transactions.
We are also subject to legal and regulatory requirements which govern the use, storage and distribution of the information we collect from our clients and accountholders while processing transactions.
The transaction marked our expansion into the automotive finance space. We have benefited greatly from Sigma’s deep integrations with automotive finance software platforms, or DMS. PaidSuite Acquisition On September 28, 2017, we acquired substantially all of the assets of PaidSuite, Inc. and PaidMD, LLC (collectively, “PaidSuite”). PaidSuite was an electronic payment solutions provider to the accounts receivable management industry.
Sigma was an electronic payment solutions provider to the automotive finance industry. The transaction marked our expansion into the automotive finance space. We have benefited greatly from Sigma’s deep integrations with automotive finance software platforms, or DMS. PaidSuite Acquisition On September 28, 2017, we acquired substantially all of the assets of PaidSuite, Inc. and PaidMD, LLC (collectively, “PaidSuite”).
When we facilitate a transaction as a merchant acquirer, we utilize third party processors such as Global Payments, Inc. Under such processing arrangements, the third-party processors and vendors receive processing fees, which are typically based on the number of transactions processed.
When we facilitate a transaction as a merchant acquirer, we utilize third party processors primarily for authorization such as Global Payments, Inc. Under such processing arrangements, the third-party processors and vendors receive processing fees, which are typically based on the number of transactions processed.
We plan to continue to drive operating leverage in our non-technology personnel expenditures, as we believe that, in general we can process larger payment volumes without significant increases to our personnel and operating expenses. Strategic Acquisitions From January 1, 2016 through December 31, 2022, we have successfully acquired eleven businesses.
We plan to continue to drive operating leverage in our personnel expenditures, as we believe that, in general, we can process larger payment volumes without significant increases to our personnel and operating expenses. Strategic Acquisitions From January 1, 2016 through December 31, 2023, we have successfully acquired eleven businesses.
The strategic vertical markets served within our Business Payments segment primarily include retail automotive, education, field services, governments and municipalities, healthcare, HOA management and hospitality. Our Business Payments segment represented approximately 15% of our total revenue after any intersegment eliminations for the year ended December 31, 2022.
The strategic vertical markets served within our Business Payments segment primarily include retail automotive, education, field services, governments and municipalities, healthcare, HOA management and hospitality. Our Business Payments segment represented approximately 13% of our total revenue after any intersegment eliminations for the year ended December 31, 2023.
We intend to continue to strategically target verticals where we believe our ability to tailor payment solutions to our clients’ needs and the embedded nature of our integrated payment solutions will drive strong growth by attracting new clients and fostering long-term client relationships.
We intend to continue to strategically target verticals where we believe our ability to tailor payment solutions to our clients’ needs, our deep knowledge of our vertical markets and the embedded nature of our integrated payment solutions will drive strong growth by attracting new clients and fostering long-term client relationships.
We also maintain a sales support team that supports the onboarding process. Software Integration Partners As of December 31, 2022, we were integrated with approximately 240 software partners that are providers of our clients’ primary enterprise management systems. Our integrations ensure seamless delivery of our full suite of payment processing capabilities to our clients.
We also maintain a sales support team that supports the onboarding process. Software Integration Partners As of December 31, 2023, we were integrated with approximately 262 software partners that are providers of our clients’ primary enterprise management systems. Our integrations are intended to ensure seamless delivery of our full suite of payment processing capabilities to our clients.
We also compete in our Consumer Payments segment against many traditional merchant acquirers, such as financial institutions, affiliates of financial institutions and payment processing companies in the payment processing industry, including Bank of America Merchant Services, Elavon (a subsidiary of U.S. Bancorp), Wells Fargo Merchant Services, Global Payments, WorldPay (a subsidiary of Fidelity National Information Services) and Fiserv.
We also compete in our Consumer Payments segment against many traditional merchant acquirers, such as financial institutions, affiliates of financial institutions and payment processing companies, including Bank of America Merchant Services, Elavon (a subsidiary of U.S. Bancorp), Wells Fargo Merchant Services, Global Payments, WorldPay and Fiserv.
Our integrated model fosters long-term relationships with our clients, which supports our volume retention rates that we believe are above industry averages. As of December 31, 2022, we maintained approximately 240 integrations with various software providers. Segments Starting from December 31, 2022, we report our financial results based on two reportable segments, Consumer Payments and Business Payments.
Our integrated model fosters long-term relationships with our clients, which supports our volume retention rates that we believe are above industry averages. As of December 31, 2023, we maintained approximately 262 integrations with various software providers. Segments We report our financial results based on two reportable segments, Consumer Payments and Business Payments.
In 2022, 80% of participants responded that REPAY is a great place to work. Our employees’ feedback from the annual surveys have allowed us to be certified as a Great Place to Work® for the last seven consecutive years.
In 2023, 83% of participants responded that REPAY is a great place to work. Our employees’ feedback from the annual surveys have allowed us to be 14 certified as a Great Place to Work® for the last seven consecutive years.
Business Payments Our Business Payments segment provides payment processing solutions (including accounts payable automation, debit and credit card processing, virtual credit card processing, Automated Clearing House (“ACH”) processing and other electronic payment acceptance solutions) that enable our clients to collect or send payments to other businesses.
Business Payments Our Business Payments segment provides payment processing solutions (including accounts payable automation, debit and credit card processing, virtual credit card processing, ACH processing and other electronic payment acceptance solutions) that enable our clients to collect or send payments to other businesses.
Continue to Drive Operational Efficiencies As we continue to grow, we expect to become a more significant partner to our sponsor banks, third party processors and software integration partners, which we expect will give us greater leverage as we expand our contractual relationships with them.
Continue to Drive Operational Efficiencies As we continue to grow, we expect to become a more significant partner to our sponsor banks, third party processors and other key vendor relationships, which we expect will give us greater leverage as we expand our contractual relationships with them.
The CPRA also establishes a privacy enforcement agency known as the California Privacy Protection Agency. Other states are expected to enact in new similar laws and regulations in the near future.
The CPRA also establishes a privacy enforcement agency known as the California Privacy Protection Agency. At least 12 other states have enacted similar laws and regulations, and other states are expected to enact new similar laws and regulations in the near future.
We are also subject to certain economic and trade sanctions programs that are administered by OFAC that prohibit or restrict transactions to or from (or transactions dealing with) narcotics traffickers, terrorists, terrorist organizations, certain individuals, specified countries, their governments and, in certain circumstances, their nationals.
We are also subject to certain economic and trade sanctions programs that are administered by Office of Foreign Assets Control (“OFAC”) that prohibit or restrict transactions to or from (or transactions dealing with) narcotics traffickers, terrorists, terrorist organizations, certain individuals, specified countries, their governments and, in certain circumstances, their nationals.
The acquisition of Kontrol grew our accounts payable automation business and enabled us to leverage our existing B2B technology infrastructure to increase our virtual card volume. Payix Acquisition On December 29, 2021, we acquired Payix Holdings Incorporated (together with its subsidiary, “Payix”).
The acquisition of Kontrol grew our accounts payable automation business and enabled us to leverage our existing B2B technology infrastructure to optimize processing costs. Payix Acquisition On December 29, 2021, we acquired Payix Holdings Incorporated (together with its subsidiary, “Payix”).
Segments to our consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Consumer Payments Our Consumer Payments segment provides payment processing solutions (including debit and credit card processing, ACH processing and other electronic payment acceptance solutions, as well as our loan disbursement product) that enable our clients to collect payments and disburse funds to consumers and includes our clearing and settlement solutions (“RCS”) and Blue Cow Software business (“BCS”).
Segments to our consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Consumer Payments Our Consumer Payments segment provides payment processing solutions (including debit and credit card processing, Automated Clearing House (“ACH”) processing and other electronic payment acceptance solutions, as well as our loan disbursement product) that enable our clients to collect payments and disburse funds to consumers and includes our clearing and settlement solutions (“RCS”) offering.
For additional information on our segments, see Note 16.
For additional information on our segments, see Note 15.
We have created a proprietary process that decreases processing delays typically associated with traditional fund disbursements. 6 The above payment acceptance and funding methods are processed through our proprietary payment channels: • Web-based o Virtual Terminal — A terminal that provides virtual payment access for processing of ACH or card transactions. o Hosted Payment Page — A client-branded terminal that enables ACH and card transaction processing. o Online Client Portal — A consumer-facing, client-specific website that gives a client’s customer the ability to pay online and view account information anywhere, anytime.
The above payment acceptance and funding methods are processed through our proprietary payment channels: • Web-based o Virtual Terminal — A terminal that provides virtual payment access for processing of ACH or card transactions. o Hosted Payment Page — A client-branded terminal that enables ACH and card transaction processing. o Online Client Portal — A consumer-facing, client-specific website that gives a client’s customer the ability to pay online and view account information anywhere, anytime.
Because we are not a licensed money transmitter, we have entered into custodial agreements with banks or other financial institutions who will hold our clients’ funds in trust. See “Risk Factors—Risks Related to Our Business – We rely on other service and technology providers.
Under the applicable contractual arrangements, our clients are generally required to prefund these payments. Because we are not a licensed money transmitter, we have entered into custodial agreements with banks or other financial institutions who will hold our clients’ funds in trust. See “Risk Factors—Risks Related to Our Business – We rely on other service and technology providers.
As we further integrate our solution into our clients’ workflows, we will look to continue to innovate on our solution set and broaden our suite of services.
Strengthen and Extend Our Solution Portfolio through Continued Innovation As we further integrate our solution into our clients’ workflows, we will look to continue to innovate on our solution set and broaden our suite of services.
The transaction accelerated our growth into the accounts receivable management space via client and software integration partner relationships. Paymaxx Acquisition On December 15, 2017, we acquired substantially all of the assets of Paymaxx Pro, LLC (“Paymaxx”).
PaidSuite was an electronic payment solutions provider to the receivable management industry. The transaction accelerated our growth into the receivable management space via client and software integration partner relationships. Paymaxx Acquisition On December 15, 2017, we acquired substantially all of the assets of Paymaxx Pro, LLC (“Paymaxx”).
Since a significant portion of our revenue is derived from volume-based payment processing fees, card payment volume is a key operating metric that we use to evaluate our business. We processed approximately $25.6 billion of total card payment volume in 2022. Our year-over-year card payment volume growth was approximately 25% in 2022 and 35% in 2021.
Since a significant portion of our revenue is derived from volume-based payment processing fees, card payment volume is a key operating metric that we use to evaluate our business. We processed approximately $25.7 billion of total card payment volume in 2023.
Our diversity and inclusion initiatives are periodically reviewed and discussed at the board level. We offer a comprehensive benefits package, which goes into effect on a person’s first day of employment, including 100% coverage of employee healthcare premiums and several benefits at no cost to our employees, including life insurance, telehealth, mental health and work-life balance resources.
We offer a comprehensive benefits package, which goes into effect on a person’s first day of employment, including 100% coverage of employee healthcare premiums and several benefits at no cost to our employees, including life insurance, telehealth, mental health and work-life balance resources. We perform a thorough review of our benefits package annually.
Our payment processing solutions enable consumers and businesses in these verticals to make payments using electronic payment methods, rather than cash or check, which have historically been the primary methods of payment in these verticals.
We provide payment processing solutions to clients primarily operating in the personal loans, automotive loans, receivables management, and business-to-business verticals. Our payment processing solutions enable consumers and businesses in these verticals to make payments using electronic payment methods, rather than cash or check, which have historically been the primary methods of payment in these verticals.
Our acquisition of TriSource Solutions, LLC (“TriSource”) and our continued investment in our technology capabilities position us to provide value-added services that will address the evolving needs of our clients as they seek to best serve their customers.
Our continued investment in our technology capabilities (including our RCS platform) positions us to provide value-added services and emerging payment solutions that will address the evolving needs of our clients as they seek to best serve their customers.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. We strive to create and maintain a special culture at REPAY that focuses on our values of excellence, passion, integrity, respect, and innovation. Our strong emphasis on culture is intended to empower our employees to make decisions and develop themselves personally and professionally.
We strive to create and maintain a special culture at REPAY that focuses on our values of excellence, passion, integrity, respect, innovation, and positive attitude. Our strong emphasis on culture is intended to empower our employees to make decisions and develop themselves personally and professionally.
In addition, various states, including California, Colorado, Connecticut, Utah and Virginia, have recently enacted laws concerning privacy, data protection and information security.
In addition, various states have recently enacted laws concerning privacy, data protection and information security.
The acquisition of Payix expanded our position in the large and growing automotive finance market and provided further access to software integrations with leading loan management system and DMS integrations. Government Regulation We operate in an increasingly complex and ever evolving legal and regulatory environment.
The acquisition of Payix expanded our position in the personal and automotive finance markets, as well as accelerated our expansion in the buy now, pay later (“BNPL”) market, and provided further access to software integrations with leading loan management systems and DMS integrations. Government Regulation We operate in an increasingly complex and ever evolving legal and regulatory environment.
When we facilitate a client’s payment to its suppliers or vendors, we typically utilize the services of third party program managers, such as Wex Inc. and Comdata Inc. (a subsidiary of FleetCor Technologies, Inc.), who have arrangements with banks to operate card issuance programs.
When we facilitate a client’s payment to its suppliers or vendors, we typically utilize the services of third party program managers, such as Wex Inc., who have arrangements with banks to operate card issuance programs. Under such arrangements, the program manager and issuing bank retain a portion of the interchange generated by each transaction.
New employees are welcomed through our virtual new hire onboarding experience, which consists of at-home equipment, welcome gift packages, an onboarding plan with consistent communication, and human resources orientation, ensures our new hires have the support they need.
New employees are welcomed through our new hire onboarding experience, which consists of a comprehensive equipment package, welcome gift packages, an onboarding plan with consistent communication, human resources orientation, and formalized 30-60-90 day check-ins with their manager, ensures our new hires have the support they need.
In our Business Payments segment, our primary competitors include AvidXchange, Corporate Spending Innovations (a division of Edenred), Nvoicepay (a division of FleetCor Technologies), Paya and Zelis.
In our Business Payments segment, our primary competitors include AvidXchange, Edenred Pay (a division of Edenred), Corpay (a division of FleetCor Technologies), Paya (a division of Nuvei Corporation) and Fortis.
Acquisitions Our historical acquisition activity has allowed us to access new markets, acquire industry talent, broaden our product suite, and supplement organic growth. Our current acquisition strategy focuses on integrated payments companies serving attractive vertical markets and opportunities to broaden our product offerings. From January 1, 2016 through December 31, 2022, we have completed eleven acquisitions, which are described below.
Acquisitions Our historical acquisition activity has allowed us to access new markets, expand our presence in existing markets, acquire industry talent, broaden our product suite, and supplement organic growth. Our current acquisition strategy focuses on integrated payments companies serving attractive vertical markets and opportunities to broaden our product offerings.
Ventanex Acquisition On February 10, 2020, we acquired all of the equity interests of CDT Technologies, LTD. d/b/a Ventanex (“Ventanex”). The acquisition of Ventanex accelerated our entry into the healthcare payments vertical. cPayPlus Acquisition On July 23, 2020, we acquired all of the equity interest of cPayPlus, LLC (“cPayPlus”).
The acquisition of Ventanex accelerated our entry into the mortgage and healthcare payments verticals. cPayPlus Acquisition On July 23, 2020, we acquired all of the equity interest of cPayPlus, LLC (“cPayPlus”).
These acquisitions were of payment companies and are representative of the acquisitions we envision consummating in the future. Sigma Acquisition Effective as of January 1, 2016, we acquired substantially all of the assets of Sigma Payment Solutions, Inc. (“Sigma”). Sigma was an electronic payment solutions provider to the automotive finance industry.
From January 1, 2016 through December 31, 2023, we have completed eleven acquisitions, which are described below. These acquisitions were of payment companies and are representative of the acquisitions we envision consummating in the future. Sigma Acquisition Effective as of January 1, 2016, we acquired substantially all of the assets of Sigma Payment Solutions, Inc. (“Sigma”).
We perform a thorough review of our benefits package annually. Among other benefits, we continue to offer an Employee Stock Purchase Plan (“ESPP”). The ESPP is highly valued because it gives our employees the opportunity to become shareholders in REPAY at a discounted price.
Among other benefits, we continue to offer an Employee Stock Purchase Plan (“ESPP”). The ESPP is highly valued because it gives our employees the opportunity to become shareholders in REPAY at a discounted price. The financial future of our employees is important to us, which is why we have a generous 401(k)-employer match and performance-based bonus program.
Human Capital Our employees are a critical component of our success. As of December 31, 2022, we employed approximately 579 full-time employees throughout the U.S. and Canada. We have 12 office locations in the U.S. and have a remote employee presence in 42 states.
Human Capital Our employees are a critical component of our success. As of December 31, 2023, we employed approximately 512 full-time employees throughout the U.S. We have 7 office locations with an employee presence and have a remote employee presence in 33 states. None of our employees are represented by a labor union or covered by a collective bargaining agreement.
Operations We believe that we have developed an effective operations system, including our proprietary onboarding, compliance and client oversight processes, which is structured to enhance the performance of our platform and support our clients.
Operations We believe that we have developed an effective operations system, including our proprietary onboarding, compliance and client oversight processes, which is structured to enhance the performance of our platform and support our clients. 7 Client and Transaction Risk Management We target clients that we identify as low-risk through the development of underwriting policies and transaction management procedures to manage approval of new accounts and to establish ongoing monitoring of client accounts.
APS Acquisition On October 14, 2019, we acquired substantially all of the assets of American Payment Services of Coeur D’Alene, LLC, North American Payment Solutions LLC, and North American Payment Solutions Inc. (collectively, “APS”) . The acquisition of APS meaningfully expanded our addressable market by enabling us to access the business-to-business vertical.
We now generally refer to our clearing and settlement product offerings as RCS. APS Acquisition On October 14, 2019, we acquired substantially all of the assets of American Payment Services of Coeur D’Alene, LLC, North American Payment Solutions LLC, and North American Payment Solutions Inc. (collectively, “APS”) .
The financial future of our employees is important to us, which is why we have a generous 401(k)-employer match and performance-based bonus program. To promote personal and professional growth, we encourage our employees to pursue ongoing training and career development opportunities, and we provide tuition assistance and reimbursement for certain pre-approved continuing education programs and professional certifications.
To promote personal and professional growth, we encourage our employees to pursue ongoing training and career development opportunities, and we provide tuition assistance and reimbursement for certain pre-approved continuing education programs and professional certifications.
The personal loans vertical is predominately characterized by installment loans, which are typically utilized by consumers to finance everyday expenses. The automotive loans vertical predominantly includes subprime automotive loans, automotive title loans and automotive buy-here-pay-here loans and also includes near-prime and prime automotive loans.
The personal loans vertical is predominately characterized by installment loans, which are typically utilized by consumers to finance everyday expenses. The automotive loans vertical includes a diversified client base across the entire credit spectrum.
Our Consumer Payments segment represented approximately 85% of our total revenue after any intersegment eliminations for the year ended December 31, 2022.
Our Consumer Payments segment also previously included our Blue Cow Software business (“BCS”), which was sold on February 15, 2023. Our Consumer Payments segment represented approximately 87% of our total revenue after any intersegment eliminations for the year ended December 31, 2023.
We have also partnered with diverse organizations and higher education programs, to identify a more diverse pool of qualified candidates for recruitment. We continue to evaluate our diversity and inclusion program and are in various phases of implementing several strategic initiatives, which we believe will help us cultivate a more diverse workforce and inclusive environments.
We have also partnered with diverse organizations and higher education programs to identify a more diverse pool of qualified candidates for recruitment. Our diversity and inclusion initiatives are periodically reviewed and discussed at the board level.
New Vertical and Geographic Expansion We also expect that we will find attractive growth potential in certain verticals in which we currently have limited operations or do not operate. Though we offer highly customized payment solutions to our clients, our core technology platform 5 is comprehensive and can be utilized to penetrate other strategic vertical markets.
Though we offer highly customized payment solutions to our clients, our core technology platform is comprehensive and can be utilized to penetrate other strategic vertical markets.
As of December 31, 2022, we had over 23,000 clients. Our top 10 clients, with an average tenure of approximately seven years, contributed to approximately 15% and 14% of total gross profit during the year ended December 31, 2022 and the year ended December 31, 2021, respectively.
Our top 10 clients, with an average tenure of approximately seven years, contributed approximately 18% and 15% of total gross profit during the year ended December 31, 2023 and the year ended December 31, 2022, respectively. Our leading competitive position and differentiated solutions have enabled us to realize unique advantages in fast-growing and strategically important segments of the payments market.
In addition, our business model allows us to benefit from the growth of our clients and software integration partners. As our clients’ payment volumes and transactions increase, our revenues increase as a result of the fees we charge for processing these payments.
For new clients, we intend to continue to focus a significant portion of our sales efforts on large enterprise clients. In addition, our business model allows us to benefit from the growth of our clients and software integration partners.
Several departments across the Company hold annual training summits where team members have an opportunity to collaborate with fellow colleagues, participate in department-specific training and further enhance their skillsets. Our compensation strategy gives us competitive advantages by offering competitive salaries, bonus potential and employee ownership opportunities for a meaningful portion of our employees through equity incentive grants.
Several departments across the Company hold annual training summits where team members have an opportunity to collaborate with fellow colleagues, participate in department-specific training and further enhance their skillsets. We also believe it is important to celebrate exceptional employees so we provide multiple opportunities for performance-based awards and peer-to-peer recognition.
The strategic vertical markets served by our Consumer Payments segment primarily include personal loans, automotive loans, receivables management, credit unions, mortgage servicing, consumer healthcare, diversified retail and energy related software services. The BCS business was sold on February 15, 2023.
RCS is our proprietary clearing and settlement platform through which we market customizable payment processing programs to other ISOs and payment facilitators. The strategic vertical markets served by our Consumer Payments segment primarily include personal loans, automotive loans, receivables management, credit unions, mortgage servicing, consumer healthcare and diversified retail.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn the event of an acceleration of our indebtedness, we could be forced to apply all available cash flows to repay such debt, which would reduce or eliminate distributions to us, which could also force us into bankruptcy or liquidation.
Biggest changeIn the event of an acceleration of our indebtedness, we could be forced to apply all available cash flows to repay such debt, which would reduce or eliminate distributions to us, which could also force us into bankruptcy or liquidation. 29 We may not have the ability to raise the funds necessary to settle conversions of the 2026 Notes, or to repurchase the 2026 Notes upon a fundamental change, and our future debt may contain, limitations on our ability to pay cash upon conversion or repurchase of the 2026 Notes.
Although we expect to continue to execute our acquisition strategy: 24 • we may not be able to identify suitable acquisition candidates or acquire additional assets on favorable terms; • we may compete with others to acquire assets, which competition may increase, and any level of competition could result in decreased availability or increased prices for acquisition candidates; • competing bidders for such acquisitions may be larger, better-funded organizations with more resources and easier access to capital; • we may experience difficulty in anticipating the timing and availability of acquisition candidates; • we may not be able to obtain the necessary financing, on favorable terms or at all, to finance any of our potential acquisitions; • potential acquisitions may be subject to regulatory approvals, which may cause delays and uncertainties; and • we may not be able to generate cash necessary to execute our acquisition strategy.
Although we expect to continue to execute our acquisition strategy: • we may not be able to identify suitable acquisition candidates or acquire additional assets on favorable terms; • we may compete with others to acquire assets, which competition may increase, and any level of competition could result in decreased availability or increased prices for acquisition candidates; • competing bidders for such acquisitions may be larger, better-funded organizations with more resources and easier access to capital; • we may experience difficulty in anticipating the timing and availability of acquisition candidates; 24 • we may not be able to obtain the necessary financing, on favorable terms or at all, to finance any of our potential acquisitions; • potential acquisitions may be subject to regulatory approvals, which may cause delays and uncertainties; and • we may not be able to generate cash necessary to execute our acquisition strategy.
Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware, or if such court does not have subject matter jurisdiction, any other court located in the State of Delaware with subject matter jurisdiction, will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, other employees or stockholders to us or our stockholders, (iii) any action asserting a claim against us or our officers or directors arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim against us or any of our directors or officers governed by the internal affairs doctrine of the law of the State of Delaware.
Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware, or if such court does not have subject matter jurisdiction, any other court located in the State of Delaware with subject matter jurisdiction, will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, other employees or stockholders to us or our stockholders, (iii) any action asserting a claim against us or our officers or directors arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action 34 asserting a claim against us or any of our directors or officers governed by the internal affairs doctrine of the law of the State of Delaware.
Any human error, fraud, malice, accidental technological failure or attacks against us or our contracted third parties could hurt our reputation, force us to incur significant expenses in remediating the resulting impacts, expose us to uninsured liability, result in the loss of our sponsor bank relationships or our ability to participate in the payment networks, subject us to 16 lawsuits, fines or sanctions, distract our management, increase our costs of doing business and/or materially impede our ability to conduct business.
Any human error, fraud, malice, accidental technological failure or attacks against us or our contracted third parties could hurt our reputation, force us to incur significant expenses in remediating the resulting impacts, expose us to uninsured liability, result in the loss of our sponsor bank relationships or our ability to participate in the payment networks, subject us to lawsuits, fines or sanctions, distract our management, increase our costs of doing business and/or materially impede our ability to conduct business.
The actual increase in our allocable share of Hawk Parent’s tax basis in its assets, as well as the amount and timing of any payments under the Tax 31 Receivable Agreement, will vary depending upon a number of factors, including the timing of exchanges, the market price of the Class A common stock at the time of the exchange, the extent to which such exchanges are taxable and the amount and timing of the recognition of our income.
The actual increase in our allocable share of Hawk Parent’s tax basis in its assets, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of exchanges, the market price of the Class A common stock at the time of the exchange, the extent to which such exchanges are taxable and the amount and timing of the recognition of our income.
However, as discussed below, 30 Hawk Parent’s ability to make such distributions may be subject to various limitations and restrictions including, but not limited to, restrictions on distributions that would either violate any contract or agreement to which Hawk Parent is then a party, including debt agreements, or any applicable law, or that would have the effect of rendering Hawk Parent insolvent.
However, as discussed below, Hawk Parent’s ability to make such distributions may be subject to various limitations and restrictions including, but not limited to, restrictions on distributions that would either violate any contract or agreement to which Hawk Parent is then a party, including debt agreements, or any applicable law, or that would have the effect of rendering Hawk Parent insolvent.
In the sections of the Risk Factors entitled “Risks Related to Our Ownership Structure” and “Risks Related to Our Class A Common Stock,” “we,” us” and “our” refer only to Repay Holdings Corporation excluding, unless the context requires otherwise or as expressly stated, its subsidiaries. 15 Risks Related to Our Business The payment processing industry is highly competitive.
In the sections of the Risk Factors entitled “Risks Related to Our Ownership Structure” and “Risks Related to Our Class A Common Stock,” “we,” us” and “our” refer only to Repay Holdings Corporation excluding, unless the context requires otherwise or as expressly stated, its subsidiaries. Risks Related to Our Business The payment processing industry is highly competitive.
Any claim from third parties may result in a limitation on our ability to use the intellectual property subject to these claims. Additionally, in recent 23 years, individuals and groups have been purchasing intellectual property assets for the sole purpose of making claims of infringement or other violations and attempting to extract settlements from companies like us.
Any claim from third parties may result in a limitation on our ability to use the intellectual property subject to these claims. Additionally, in recent years, individuals and groups have been purchasing intellectual property assets for the sole purpose of making claims of infringement or other violations and attempting to extract settlements from companies like us.
Additionally, as our products and services evolve, and as regulators continue to increase their scrutiny of compliance with these obligations, we may be subject to a variety of additional laws and regulations, or we may be required to further revise or expand our compliance management system, including the procedures we use to verify the identity of our clients and their end customers and to monitor transactions.
Additionally, as our products and services evolve, and as regulators continue to increase their scrutiny of compliance with these obligations, we may be subject to a variety of additional laws and regulations, or we may be 26 required to further revise or expand our compliance management system, including the procedures we use to verify the identity of our clients and their end customers and to monitor transactions.
However, Hawk Parent may elect to settle such exchange in cash in lieu of delivering shares of our Class A common stock pursuant to the terms of the Exchange Agreement. 32 In addition, we have reserved a total of 13,826,728 shares of Class A common stock for issuance under our Repay Holdings Corporation Omnibus Incentive Plan (as amended, the “Incentive Plan.”).
However, Hawk Parent may elect to settle such exchange in cash in lieu of delivering shares of our Class A common stock pursuant to the terms of the Exchange Agreement. In addition, we have reserved a total of 13,826,728 shares of Class A common stock for issuance under our Repay Holdings Corporation Omnibus Incentive Plan (as amended, the “Incentive Plan.”).
If consumers and businesses in our primary vertical markets do not increase their 17 use of cards as payment methods for their transactions or if the mix of payment methods changes in a way that is adverse to us, such developments may have a material adverse effect on our business, financial condition and results of operations.
If consumers and businesses in our primary vertical markets do not increase their use of cards as payment methods for their transactions or if the mix of payment methods changes in a way that is adverse to us, such developments may have a material adverse effect on our business, financial condition and results of operations.
Certain state laws impose similar privacy obligations as well as 27 obligations to provide notification of security breaches of personal information to affected individuals, state officers, consumer reporting agencies and businesses and governmental agencies. The applicable regulatory framework for privacy issues is evolving and is likely to continue doing so for the foreseeable future, which creates uncertainty.
Certain state laws impose similar privacy obligations as well as obligations to provide notification of security breaches of personal information to affected individuals, state officers, consumer reporting agencies and businesses and governmental agencies. The applicable regulatory framework for privacy issues is evolving and is likely to continue doing so for the foreseeable future, which creates uncertainty.
If a court were to find these exclusive-forum provisions to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations. 34 ITEM 1B. UNRESOLVE D STAFF COMMENTS. None.
If a court were to find these exclusive-forum provisions to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations. ITEM 1B. UNRESOLVE D STAFF COMMENTS. None.
A meaningful portion of our clients are consumer lenders that provide personal loans and automotive loans to consumers that have varying degrees of credit risk. The regulatory environment that these clients operate in is very complex 26 because applicable regulations are often enacted by multiple agencies in the state and federal governments.
A meaningful portion of our clients are consumer lenders that provide personal loans and automotive loans to consumers that have varying degrees of credit risk. The regulatory environment that these clients operate in is very complex because applicable regulations are often enacted by multiple agencies in the state and federal governments.
Even if we are able to defend a claim successfully, the litigation could damage our reputation, consume substantial amounts of our management’s time and attention, and require us to change our client service and operations in ways that could increase our costs and decrease the effectiveness of our anti-fraud program.
Even if we are able to 20 defend a claim successfully, the litigation could damage our reputation, consume substantial amounts of our management’s time and attention, and require us to change our client service and operations in ways that could increase our costs and decrease the effectiveness of our anti-fraud program.
Our property and business interruption insurance may not be adequate to compensate us for all losses or failures that may occur. 20 At present, our critical operational systems, such as our payment gateway, are fully redundant, while certain of our less critical systems are not. Therefore, certain aspects of our operations may be subject to interruption.
Our property and business interruption insurance may not be adequate to compensate us for all losses or failures that may occur. At present, our critical operational systems, such as our payment gateway, are fully redundant, while certain of our less critical systems are not. Therefore, certain aspects of our operations may be subject to interruption.
We rely on sponsor banks and, in certain cases, third-party processors to access the payment card networks, such as Visa, MasterCard and Discover, that enable our ability to offer to our clients the acceptance of credit cards and debit cards, and we must pay fees for such services.
We rely on sponsor banks and, in certain cases, third-party processors to access the payment card networks, such as Visa and MasterCard, that enable our ability to offer to our clients the acceptance of credit cards and debit cards, and we must pay fees for such services.
Generally, our agreements with software integration partners are not exclusive and these partners retain the right to refer potential clients to other payment processors. In addition, our agreements with software integration partners do not generally prohibit these partners from providing payment processing solutions to clients (including by acquiring a competing payment processing business).
Generally, our agreements with software integration partners are not exclusive and these partners retain the right to refer potential clients to other payment processors. In addition, our agreements with 19 software integration partners do not generally prohibit these partners from providing payment processing solutions to clients (including by acquiring a competing payment processing business).
These increases in tax basis may increase (for tax purposes) depreciation and amortization deductions and therefore reduce the amount of income or franchise tax that we would otherwise be required to pay in the future had such exchanges never occurred.
These increases in tax basis may increase (for tax 31 purposes) depreciation and amortization deductions and therefore reduce the amount of income or franchise tax that we would otherwise be required to pay in the future had such exchanges never occurred.
The termination by our service or technology providers of their arrangements with us or their failure to perform their services efficiently and effectively may adversely affect our relationships with our clients and, if we cannot find alternate providers quickly, may cause those clients to terminate their relationships with us.
The termination by our service or technology providers of their arrangements with us or their failure to perform their services efficiently and 21 effectively may adversely affect our relationships with our clients and, if we cannot find alternate providers quickly, may cause those clients to terminate their relationships with us.
To the extent we are processing payments or providing products and services for a client suspected of violating such laws, rules and regulations, we may face enforcement actions and incur losses and liabilities that may adversely affect our business.
To the extent we are processing payments or providing products and services for a client suspected of 27 violating such laws, rules and regulations, we may face enforcement actions and incur losses and liabilities that may adversely affect our business.
Our technology offerings must also integrate with a variety of network, hardware, mobile and software platforms and technologies, and we need to continuously modify and enhance our products and services to adapt to changes and innovation in these technologies.
Our technology offerings must also integrate with a variety of network, hardware, mobile and software platforms and technologies, and we need to continuously modify and enhance our 17 products and services to adapt to changes and innovation in these technologies.
We have a number of contractual protections and other means of recourse 19 to mitigate those risks, including collateral or reserve accounts that we may require our clients to maintain for these types of contingencies.
We have a number of contractual protections and other means of recourse to mitigate those risks, including collateral or reserve accounts that we may require our clients to maintain for these types of contingencies.
If we fail to expand into new vertical markets and increase our penetration into existing vertical markets, we may not be able to continue to grow our revenues and earnings. We may not be able to successfully manage our intellectual property and may be subject to infringement claims.
If we fail to expand into new vertical markets and increase our penetration into existing vertical markets, we may not be able to continue to grow our revenues and earnings. We may not be able to successfully manage our intellectual property and are subject to infringement claims.
A misuse of such data or a cybersecurity breach (including a ransomware attack) could harm our reputation and deter clients from using electronic payments generally and our services specifically, thus reducing our revenue.
A misuse of such data or a 16 cybersecurity breach (including a ransomware attack) could harm our reputation and deter clients from using electronic payments generally and our services specifically, thus reducing our revenue.
Risks Related to Our Indebtedness 28 Our level of indebtedness could adversely affect our ability to meet our obligations under our indebtedness, react to changes in the economy or our industry and to raise additional capital to fund operations.
Risks Related to Our Indebtedness Our level of indebtedness could adversely affect our ability to meet our obligations under our indebtedness, react to changes in the economy or our industry and to raise additional capital to fund operations.
These threats, and errors or delays in the processing of payment transactions, system outages or other difficulties, could result in failure to process transactions or provide ancillary services, additional operating and development costs, diversion of technical and other resources, loss of revenue, clients and software integration partners, loss of client and cardholder data, harm to our business or reputation, exposure to fraud losses or other liabilities and fines and other sanctions imposed by payment networks.
These threats, and errors or delays in the processing of payment transactions, system outages or other difficulties, could result in failure to process transactions or provide ancillary services, additional operating and development costs, diversion of technical and other resources, loss of revenue, clients and software integration partners, loss of client and accountholder data, harm to our business or reputation, exposure to fraud losses or other liabilities and fines and other sanctions imposed by payment networks.
In the ordinary course of business, we are the subject of various claims and legal proceedings and may become the subject of claims, litigation or investigations, including commercial disputes and employee claims, such as claims of age discrimination, sexual harassment, gender discrimination, immigration violations or other local, state and federal labor law violations, and from time to time may be involved in governmental or regulatory investigations or similar matters arising out of our current or future business.
In the ordinary course of business, we are the subject of various claims and legal proceedings and may become the subject of claims, litigation or investigations, including commercial disputes and employee claims, such as claims of age discrimination, sexual harassment, gender discrimination or local, state and federal labor law violations, and from time to time may be involved in governmental or regulatory investigations or similar matters arising out of our current or future business.
Changes to statutes, regulations or industry standards, including interpretation and implementation of statutes, regulations or standards, could 25 increase our cost of doing business or affect the competitive balance.
Changes to statutes, regulations or industry standards, including interpretation and implementation of statutes, regulations or standards, could increase our cost of doing business or affect the competitive balance.
We are responsible for data security for us and for third parties with whom we partner, including with respect to rules and regulations established by the payment networks, such as Visa, MasterCard and Discover, and debit card networks. These third parties include our clients, software integration partners and other third-party service providers and agents.
We are responsible for data security for us and for third parties with whom we partner, including with respect to rules and regulations established by the payment networks, such as Visa, MasterCard, Discover and American Express, and debit card networks. These third parties include our clients, software integration partners and other third-party service providers and agents.
We have established systems and procedures to detect and reduce the impact of business fraud, but these measures may not be effective, and incidents of fraud could increase in the future. During the year ended December 31, 2022, we believe our chargeback rate was less than 1% of payment volume.
We have established systems and procedures to detect and reduce the impact of business fraud, but these measures may not be effective, and incidents of fraud could increase in the future. During the year ended December 31, 2023, we believe our chargeback rate was less than 1% of payment volume.
We may need to provide financial concessions to maintain relationships with current software integration partners or to attract potential software integration partners from our competitors.
We may need to provide financial concessions to maintain or enhance relationships with current software integration partners or to attract potential software integration partners from our competitors.
The loss of intellectual property protection or the inability to license or otherwise use third-party intellectual property could harm our business and ability to compete. We may also be subject to costly litigation if our services and technology are alleged to infringe upon or otherwise violate a third party’s proprietary rights.
The loss of intellectual property protection or the inability to license or otherwise use third-party intellectual property could harm our business and ability to compete. We are also subject to costly litigation if our services and technology are alleged to infringe upon or otherwise violate a third party’s proprietary rights.
Among other things, our certificate of incorporation and bylaws include provisions regarding: • a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors (until our 2024 annual meeting of stockholders, at which time this provision will terminate); 33 • the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the requirement that directors may only be removed from the board of directors for cause (until our 2024 annual meeting of stockholders, at which time this provision will terminate); • a prohibition on stockholder action by written consent (except in limited circumstances), which forces stockholder action to be taken at an annual or special meeting of stockholders and could delay the ability of stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors; • the requirement that a special meeting of stockholders may be called only by our board of directors, the chairman of our board of directors or our chief executive officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • controlling the procedures for the conduct and scheduling of our board of directors and stockholder meetings; • the ability of our board of directors to amend our bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend our bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Among other things, our certificate of incorporation and bylaws include provisions regarding: • the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the requirement that directors may only be removed from the board of directors for cause (until our 2024 annual meeting of stockholders, at which time this provision will terminate); • a prohibition on stockholder action by written consent (except in limited circumstances), which forces stockholder action to be taken at an annual or special meeting of stockholders and could delay the ability of stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors; • the requirement that a special meeting of stockholders may be called only by our board of directors, the chairman of our board of directors or our chief executive officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • controlling the procedures for the conduct and scheduling of our board of directors and stockholder meetings; • the ability of our board of directors to amend our bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend our bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
To provide our merchant acquiring services, we are registered through our sponsor banks with the Visa, MasterCard and Discover networks as a service provider for member institutions. As such, we, our sponsor banks and many of our clients are subject to complex and evolving payment network rules.
To provide our merchant acquiring services, we are registered through our sponsor banks with the Visa and MasterCard networks as a service provider for member institutions. As such, we, our sponsor banks and many of our 18 clients are subject to complex and evolving payment network rules.
Smaller tax refunds to consumers, due to the absence of additional stimulus or similar impacts or otherwise, could also negatively impact our results of operations. The U.S. and international markets are experiencing uncertain and volatile economic conditions, including from the impacts of the COVID-19 pandemic, sustained inflation, recession concerns and supply chain disruptions.
Smaller tax refunds to consumers, due to the absence of additional stimulus or similar impacts or otherwise, could also negatively impact our results of operations. The U.S. and international markets are experiencing uncertain and volatile economic conditions, including from the impacts of sustained inflation, recession concerns and supply chain disruptions.
A sustained deterioration in general economic conditions, particularly in the United States, continued uncertainty for an extended period of time, due to the COVID-19 pandemic or otherwise, persistent inflation or further increases in interest rates, could adversely affect our financial performance by reducing the number or aggregate volume of transactions made using electronic payments.
A sustained deterioration in general economic conditions, particularly in the United States, continued uncertainty for an extended period of time, persistent inflation or further increases in interest rates, could adversely affect our financial performance by reducing the number or aggregate volume of transactions made using electronic payments.
We operate in a rapidly changing industry. Accordingly, our risk management policies and procedures may not be fully effective to identify, monitor, manage and remediate our risks associated with providing payment processing solutions. Some of our risk evaluation methods depend upon information provided by others and public information regarding markets, clients or other matters that are otherwise inaccessible by us.
Accordingly, our risk management policies and procedures may not be fully effective to identify, monitor, manage and remediate our risks associated with providing payment processing solutions. Some of our risk evaluation methods depend upon information provided by others and public information regarding markets, clients or other matters that are otherwise inaccessible by us.
We have been required, and expect to be required in the future, to make concessions when renewing contracts with our software integration partners, and such concessions can have a material impact on our financial condition or operating performance.
We have been required, and expect to be required in the future, to make concessions with our software integration partners (including when renewing contracts or when needed to incentivize the software integration partner to update or enhance the integration), and such concessions can have a material impact on our financial condition or operating performance.
Hawk Parent has outstanding an aggregate of 7,861,271 Post-Merger Repay Units as of February 22, 2023. Pursuant to the Exchange Agreement, Repay Unitholders have the right to elect to exchange such Post-Merger Repay Units into shares of our Class A common stock on a one-for-one basis, subject to the terms of the Exchange Agreement.
Hawk Parent has outstanding an aggregate of 5,844,095 Post-Merger Repay Units as of February 22, 2024. Pursuant to the Exchange Agreement, Repay Unitholders have the right to elect to exchange such Post-Merger Repay Units into shares of our Class A common stock on a one-for-one basis, subject to the terms of the Exchange Agreement.
We are currently registered with payment networks through our sponsor banks. If these sponsorships are terminated and we are unable to secure a replacement sponsor bank within the applicable wind down period, we will not be able to process electronic payment transactions.
If these sponsorships are terminated and we are unable to secure a replacement sponsor bank within the applicable wind down period, we will not be able to process electronic payment transactions.
We may need to incur additional indebtedness to finance payments under the Tax Receivable Agreement to the extent our cash resources are insufficient to meet our obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise. Such indebtedness may have a material adverse effect on our financial condition.
We may need to incur additional indebtedness to finance payments under the Tax Receivable Agreement to the extent our cash resources are insufficient to meet our obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise.
If our policies and procedures are not fully effective or we are not always successful in capturing all risks to which we are or may be exposed, we may suffer harm to our reputation or be subject to litigation or regulatory actions that materially increase our costs and limit our ability to grow and may cause us to lose existing clients.
If our policies and procedures are not fully effective or we are not always successful in capturing all risks to which we are or may be exposed, we may suffer harm to our reputation or be subject to litigation or regulatory actions that materially increase our costs and limit our ability to grow and may cause us to lose existing clients. 22 We may not be able to continue to expand our share in our existing vertical markets or continue to expand into new vertical markets, which would inhibit our ability to grow and increase our profitability.
Risks Related to our Class A Common Stock Future issuances or sales of substantial amounts of our Class A common stock in the public market, or the perception that such issuances or sales may occur, could cause the market price for our Class A common stock to decline.
Such indebtedness may have a material adverse effect on our financial condition. 32 Risks Related to our Class A Common Stock Future issuances or sales of substantial amounts of our Class A common stock in the public market, or the perception that such issuances or sales may occur, could cause the market price for our Class A common stock to decline.
There can be no assurance that our strategies for overcoming potential reluctance to change payment processing providers or to initiate a relationship with us will be successful, and this resistance may adversely affect our growth and our business overall.
There can be no assurance that our strategies for overcoming potential reluctance to change payment processing providers or to initiate a relationship with us will be successful, and this resistance may adversely affect our growth and our business overall. Our sales efforts to large enterprises involve considerable time and expense with long and unpredictable sales cycles.
If we cannot keep pace with rapid developments and changes in our industry, the use of our products and services could decline, causing a reduction in our revenues. The electronic payments market is subject to constant and significant changes.
Department of Health and Human Services Office for Civil Rights. See “Risks Related to Regulation” below. If we cannot keep pace with rapid developments and changes in our industry, the use of our products and services could decline, causing a reduction in our revenues. The electronic payments market is subject to constant and significant changes.
Additionally, to the extent that we need funds and Hawk Parent and/or any of its subsidiaries are restricted from making such distributions under applicable law or regulation or under the terms of any financing arrangements, or Hawk Parent is otherwise unable to provide such funds, it could materially adversely affect our liquidity and financial condition.
Additionally, to the extent that we need funds and Hawk Parent and/or any of its subsidiaries are restricted from making such distributions under applicable law or regulation or under the terms of any financing arrangements, or Hawk Parent is otherwise unable to provide such funds, it could materially adversely affect our liquidity and financial condition. 30 Hawk Parent is treated as a partnership for U.S. federal income tax purposes and, as such, generally is not subject to any entity-level U.S. federal income tax.
For example, the closing price per share of our Class A common stock on The Nasdaq Capital Market ranged from a low of $4.38 to a high of $19.54 during the period from January 3, 2022 to December 30, 2022.
For example, the closing price per share of our Class A common stock on The Nasdaq Capital Market ranged from a low of $5.68 to a high of $10.29 during the period from January 3, 2023 to December 29, 2023.
We have in the past discovered, and may in the future discover, material weaknesses and other areas of our internal controls that need improvement. We continue to work to improve our internal controls. We cannot be certain that these measures will ensure that we implement and maintain adequate controls over our financial processes and reporting in the future.
We continue to work to improve our internal controls. We cannot be certain that these measures will ensure that we implement and maintain adequate controls over our financial processes and reporting in the future.
As a result, the success of an investment in our common stock will depend entirely upon future appreciation in its value. There is no guarantee that our Class A common stock will maintain its value or appreciate in value.
As a result, the success of an investment in our common stock will depend entirely upon future appreciation in its value.
This market is characterized by rapid technological evolution, new product and service introductions, evolving industry standards, changing client needs and the entrance of new competitors, including products and services that enable card networks and banks to transact with consumers directly. To remain competitive, we continually pursue initiatives to develop new products and services to compete with these new market entrants.
This market is characterized by rapid technological evolution, new product and service introductions, evolving industry standards, changing client needs and the entrance of new competitors, including products and services that enable card networks and banks to transact with consumers directly. For example, in July 2023, the U.S.
We rely on sponsor banks in order to process electronic payment transactions, and such sponsor banks have substantial discretion with respect to certain elements of our business practices.
We rely on sponsor banks in order to process electronic payment transactions, and such sponsor banks have substantial discretion with respect to certain elements of our business practices. If these sponsorships are terminated and we are not able to secure new sponsor banks, we will not be able to conduct our business.
If these sponsorships are terminated and we are not able to secure new sponsor banks, we will not be able to conduct our business. 18 Because we are not a bank, we are not eligible for membership in the Visa, MasterCard and other payment networks, and are, therefore, unable to directly access these payment networks, which are required to process transactions.
Because we are not a bank, we are not eligible for membership in the Visa, MasterCard and other payment networks, and are, therefore, unable to directly access these payment networks, which are required to process transactions. We are currently registered with payment networks through our sponsor banks.
Third parties may have, or may eventually be issued, patents that could be infringed by our products, services or technology. Any of these third parties could make a claim of infringement, breach or other violation of third-party intellectual property rights against us with respect to our products, services or technology.
Some of these third parties have made, and any of these third parties could make in the future, a claim of infringement, breach or other violation of third-party intellectual property rights against us with respect to our products, services or technology.
A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. 28 We have in the past discovered, and may in the future discover, material weaknesses and other areas of our internal controls that need improvement.
Delaware law and our governing documents contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
There is no guarantee that our Class A common stock will maintain its value or appreciate in value. 33 Delaware law and our governing documents contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
We experienced senior management turnover in 2022 as a result of the departures of our chief operating officer and our chief revenue officer. It is possible that the loss of the services of these executives or other senior executives or key managers could have a material adverse effect on our business, financial condition and results of operations.
It is possible that the loss of the services of senior executives or key managers could have a material adverse effect on our business, financial condition and results of operations.
In addition, upon conversion of the 2026 Notes, unless we elect to cause to be delivered solely shares of our Class A common stock to settle such conversion, we will be required to make cash payments in respect of the 2026 Notes being converted. 29 However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of the 2026 Notes surrendered therefor or to pay cash with respect to the 2026 Notes being converted.
In addition, upon conversion of the 2026 Notes, unless we elect to cause to be delivered solely shares of our Class A common stock to settle such conversion, we will be required to make cash payments in respect of the 2026 Notes being converted.
These conditions make it extremely difficult for us to accurately forecast and plan future business activities. Together, these circumstances create an environment in which it is challenging for us to predict future operating results.
These conditions make it extremely difficult for us to accurately forecast and plan future business activities. Together, these circumstances create an environment in which it is challenging for us to predict future operating results. If these uncertain business, macroeconomic or political conditions continue or further decline, our business, financial condition and results of operations could be materially adversely affected.
Hawk Parent is treated as a partnership for U.S. federal income tax purposes and, as such, generally is not subject to any entity-level U.S. federal income tax. Instead, taxable income is allocated to Repay Unitholders (including us). Accordingly, we will be required to pay income taxes on our allocable share of any net taxable income of Hawk Parent.
Instead, taxable income is allocated to Repay Unitholders (including us). Accordingly, we will be required to pay income taxes on our allocable share of any net taxable income of Hawk Parent.
This benchmark replacement may also include administrative and operational changes that affect our borrowing practices under the Amended Credit Agreement. Future operating flexibility is limited by the restrictive covenants in the Amended Credit Agreement, and we may be unable to comply with all covenants in the future.
We may also incur future debt obligations that might subject us to additional restrictive covenants that could affect our financial and operational flexibility. Future operating flexibility is limited by the restrictive covenants in the Amended Credit Agreement, and we may be unable to comply with all covenants in the future.
The loss of key personnel or the loss of our ability to attract, recruit, retain and develop qualified employees, could adversely affect our business, financial condition and results of operations.
If we cannot or do not license the infringed technology on reasonable terms or substitute similar technology from another source, our revenue and earnings could be adversely impacted. 23 The loss of key personnel or the loss of our ability to attract, recruit, retain and develop qualified employees, could adversely affect our business, financial condition and results of operations.
Even if we have an agreement for indemnification against such costs, the indemnifying party, if any in such circumstance, may be unable to uphold its contractual obligations. If we cannot or do not license the infringed technology on reasonable terms or substitute similar technology from another source, our revenue and earnings could be adversely impacted.
Even if we have an agreement for indemnification against such costs, the indemnifying party, if any in such circumstance, may be unable to uphold its contractual obligations.
If these uncertain business, macroeconomic or political conditions continue or further decline, our business, financial condition and results of operations could be materially adversely affected. 22 Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks associated with providing payment processing solutions.
Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks associated with providing payment processing solutions. We operate in a rapidly changing industry.
These challenges and costs and expenses may adversely affect our business, financial condition and results of operations.
These challenges and costs and expenses may adversely affect our business, financial condition and results of operations. Actual or perceived adverse developments affecting financial institutions could have a material and adverse impact on our business, financial condition or results of operations. In our business, we maintain relationships with financial institutions in various capacities.
Removed
Security breaches may be subject to scrutiny from governmental agencies such as the CFPB, the FTC and the U.S. Department of Health and Human Services Office for Civil Rights. See “Risks Related to Regulation” below.
Added
Further, certain of our sponsor banks have experienced, and could in the future experience, cybersecurity incidents that could disrupt our operations, expose us to liability and protracted and costly litigation and damage our reputation. Security breaches may be subject to scrutiny from governmental agencies such as the CFPB, the FTC and the U.S.
Removed
The COVID-19 pandemic and the measures implemented to mitigate the spread of the virus have had and may continue to have an adverse effect on our business, results of operations and financial condition.
Added
Federal Reserve launched its FedNow Service that enables individuals and businesses to send instant payments through their depositary institution accounts. To remain competitive, we continually pursue initiatives to develop new products and services to compete with these new market entrants.
Removed
The COVID-19 pandemic and the mitigation efforts by governments and other parties to attempt to control the spread of the virus (including its variants) have adversely impacted the U.S. and global economy, leading to significant changes in consumer and business spending and economic activity and disruptions and volatility in the U.S. and global capital markets.
Added
One of the factors affecting our growth and financial performance is the adoption of our solutions by large enterprise clients. As part of our sales efforts, we invest considerable time and expense evaluating the specific organizational needs of potential clients and educating these potential clients about the technical capabilities and value of our solutions.
Removed
We are diligently working to ensure that we can continue to operate with minimal disruption, mitigate the impact of the pandemic on our employees’ health and safety and address potential business interruptions on ourselves and our clients. However, we cannot assure you that we will continue to be successful in these efforts.
Added
Because large enterprises tend to have more consumers impacted by a change in payment processing providers, they often evaluate our solutions and our technology platform at multiple levels within their organization, each of which often have specific requirements, and typically involve their senior management.
Removed
Although we have experienced increased demand for some of our service offerings as a result of an accelerated shift to electronic payments, we believe that the COVID-19 pandemic, the mitigation efforts and the resulting economic impact have had, and may continue to have, an overall adverse effect on our business, results of operations and financial condition.
Added
As a result, our sales efforts to large enterprises span over considerable time and require greater expense with long and unpredictable sales cycles, which may cause our results of operations to fluctuate. Our revenue is sensitive to shifts in payment mix. Most of our revenues are derived from volume-based payment processing fees and other related fixed per transaction fees.
Removed
The actual further effect in any given future period is difficult to estimate, and it will depend on numerous evolving factors and future developments that we are not able to predict, including: the duration, spread and severity of the outbreak (including whether there are continued variants or other waves of infection); the nature, extent and effectiveness of mitigation measures; the administration of vaccines and the availability of therapeutic treatments; the extent and duration of the effect on the economy, unemployment, consumer confidence and consumer and business spending; and how quickly and to what extent normal economic and operating conditions can resume. 21 The effects of the COVID-19 pandemic, the mitigation efforts and the resulting economic impact on our business, results of operations and financial condition have included and may continue to include the following with respect to the key industry-oriented “vertical” markets that we serve: • A decrease in the origination of personal or automotive loans and a decrease in payments as a result of changes in consumer behavior following receipt of government stimulus, tax credits or extra unemployment benefits. • A decrease in the amount of business-to-business payments as a result of the overall economic slowdown and reduction in business spending.
Added
In general, we receive more revenue for card-based payments than for ACH payments. Accordingly, if more of our client’s customers start paying by ACH or other payment methods with lower transaction fees, it may have a material and adverse impact on our results of operations.
Removed
The above effects have resulted in and are likely to continue to result in an adverse impact on the amount of fees we can earn for processing payments and other transactions on behalf of our clients. There may be a delay in the timing of when our business is impacted by these matters.
Added
Third parties may have, or may eventually be issued, patents that could be infringed by our products, services or technology.
Removed
As an example, we earned incremental fees from processing loan payments or payoffs that result from consumers’ receipt of additional government stimulus or extra unemployment benefits, but our business, results of operations and financial condition in subsequent periods were and could continue to be adversely affected from reduced loan originations as result of such combination of government action and consumer behavior.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWorth, Texas Leased 7,900 Middleton, Massachusetts Leased 3,600 Tempe, Arizona Leased 7,500 Sandy, Utah Leased 5,200 Sarasota, Florida Leased 8,900 Scottsdale, Arizona Leased 9,800
Biggest changeWorth, Texas Leased 7,900 Tempe, Arizona Leased 7,500 Sandy, Utah Leased 5,200
ITEM 2. PRO PERTIES. The following table sets forth selected information concerning our principal facilities, as of December 31, 2022. Location Owned/Leased Approximate Square Footage Corporate Headquarters: Atlanta, Georgia Leased 8,700 Additional Facilities: Atlanta, Georgia Leased 13,300 Bettendorf, IA Leased 12,900 Chattanooga, Tennessee Leased 1,000 The Colony, Texas Leased 14,100 East Moline, Illinois Leased 7,500 Ft.
ITEM 2. PRO PERTIES. The following table sets forth selected information concerning our principal facilities, as of December 31, 2023. Location Owned/Leased Approximate Square Footage Corporate Headquarters: Atlanta, Georgia Leased 8,700 Additional Facilities: Atlanta, Georgia Leased 13,300 Bettendorf, IA Leased 12,900 The Colony, Texas Leased 14,100 East Moline, Illinois Leased 800 Ft.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−1 removed2 unchanged
Biggest changeRepay Holdings Corporation S&P 500 Index S&P Information Technology Index July 17, 2018 $ 100.00 $ 100.00 $ 100.00 December 31, 2018 102.59 89.23 84.92 December 31, 2019 151.81 114.99 125.72 December 31, 2020 282.38 133.69 178.79 December 31, 2021 194.51 169.64 238.42 December 31, 2022 83.42 136.66 169.49 Recent Sales of Unregistered Securities None. 36 Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table summarizes purchases of Class A common stock made by the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) of the Exchange Agent) in connection with tax withholdings, under the ESPP and pursuant to our share repurchase program for the three months ended December 31, 2022: Total Number of Shares Purchased (1) (2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May yet be Purchased Under the Plans or Programs October 1-31, 2022 12,479 $ 6.25 — $ 43,000,000 November 1-30, 2022 467,558 (3) 7.78 397,593 (3,000,000 ) December 1-31, 2022 5,940 8.19 — — Total 485,977 $ 7.75 397,593 $ 40,000,000 (1) Includes 72,133 shares that we withheld pursuant to the Incentive Plan and the ESPP in order to satisfy employees’ tax withholding and payment obligations in connection with the vesting of awards of restricted stock under the Incentive Plan and share purchases under the ESPP, which, in each case, we withheld at fair market value on the applicable vesting date or purchase date.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers The following table summarizes purchases of Class A common stock made by the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) of the Exchange Agent) in connection with tax withholdings, under the ESPP and pursuant to our share repurchase program for the three months ended December 31, 2023: Total Number of Shares Purchased (1) (2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May yet be Purchased Under the Plans or Programs October 1-31, 2023 5,612 $ 5.91 — $ 40,000,000 November 1-30, 2023 161,406 $ 7.10 112,682 (824,475 ) December 1-31, 2023 227,514 $ 7.56 225,687 (1,703,949 ) Total 394,532 $ 7.35 338,369 $ 37,471,576 (1) Includes 56,163 shares that we withheld pursuant to the Incentive Plan and the ESPP in order to satisfy employees’ tax withholding and payment obligations in connection with the vesting of awards of restricted stock under the 38 Incentive Plan and share purchases under the ESPP, which, in each case, we withheld at fair market value on the applicable vesting date or purchase date.
The Share Repurchase Program has no expiration date but may be modified, suspended or discontinued at any time at our discretion. Repurchases under the Share Repurchase Program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases depending on market conditions and corporate needs.
The Share Repurchase Program has no expiration date but may be modified, suspended or discontinued at any time at our discretion. Repurchases under the Share Repurchase Program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases depending on market conditions and corporate needs. ITEM 6. [Reserved]. 39
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAR EHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our Class A common stock is traded on Nasdaq under the symbol “RPAY”. As of February 22, 2023, the closing price for our Class A common stock was $8.91.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAR EHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our Class A common stock is traded on Nasdaq under the symbol “RPAY”. As of February 22, 2024, the closing price for our Class A common stock was $8.33.
(2) Includes 397,593 shares purchased pursuant to the Share Repurchase Program. On May 16, 2022, our board of directors approved the Share Repurchase Program under which we may repurchase up to $50 million of our outstanding Class A common stock.
(2) Includes 338,369 shares purchased pursuant to the Share Repurchase Program. On May 16, 2022, our board of directors approved the Share Repurchase Program under which we may repurchase up to $50 million of our outstanding Class A common stock.
The stock performance graph and table assume an initial investment of $100 on July 17, 2018, and that all dividends of the S&P 500 Index and S&P Information Technology Index, were reinvested. The performance graph and table are not intended to be indicative of future performance.
The stock performance graph and table assume an initial investment of $100 on December 31, 2018 and that all dividends of the S&P 500 Index and S&P Information Technology Index, were reinvested. 37 The performance graph and table are not intended to be indicative of future performance.
The number of record holders does not include beneficial owners of our securities whose shares are held in the names of various security brokers, dealers and registered clearing agencies. Dividends We have never declared or paid cash dividends on our Class A common stock.
The number of record holders does not include beneficial owners of our securities whose shares are held in the names of various security brokers, dealers and registered clearing agencies. Dividends We have never declared or paid cash dividends on our Class A common stock. We currently do not intend to pay cash dividends in the foreseeable future.
Holders As of February 22, 2023, there were 12 holders of record of our Class A common stock, 24 holders of record of our Class V common stock and 24 holders of record of Post-Merger Repay Units (not including the Company).
Holders As of February 22, 2024, there were 14 holders of record of our Class A common stock, 19 holders of record of our Class V common stock and 19 holders of record of Post-Merger Repay Units (not including the Company).
We currently do not intend to pay cash dividends in the foreseeable future. 35 Performance The following graph compares the total shareholder return from July 17, 2018, the date on which our Class A common shares commenced trading on the Nasdaq, through December 31, 2022 of (i) our Class A common stock, (ii) the Standard and Poor’s 500 Stock Index (“S&P 500 Index”) and (iii) the Standard and Poor’s 500 Information Technology Index (“S&P Information Technology Index”).
Performance The following graph compares the total shareholder return from December 31, 2018 through December 31, 2023 of (i) our Class A common stock, (ii) the Standard and Poor’s 500 Stock Index (“S&P 500 Index”) and (iii) the Standard and Poor’s 500 Information Technology Index (“S&P Information Technology Index”).
Removed
(3) Includes 15,000 shares purchased in the open market in November 2022 by a corporation controlled by John A. Morris, our Chief Executive Officer, who could be deemed an affiliated purchaser. ITEM 6. [Reserved]. 37
Added
Repay Holdings Corporation S&P 500 Index S&P Information Technology Index December 31, 2018 $ 100.00 $ 100.00 $ 100.00 December 31, 2019 147.98 128.88 148.04 December 31, 2020 275.25 149.83 210.54 December 31, 2021 189.60 190.13 280.75 December 31, 2022 81.31 153.16 199.59 December 31, 2023 86.26 190.27 312.15 Recent Sales of Unregistered Securities None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following tables set forth a reconciliation of our results of operations for the years ended December 31, 2022, 2021 and 2020 . 45 REPAY HOLDINGS CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA Year Ended December 31, ($ in thousands) 2022 2021 2020 Revenue $ 279,227 $ 219,258 $ 155,036 Operating expenses Costs of services (exclusive of depreciation and amortization shown separately below) 64,826 55,484 41,447 Selling, general and administrative 149,061 120,053 87,302 Depreciation and amortization 107,751 89,692 60,807 Change in fair value of contingent consideration (3,300 ) 5,846 (2,510 ) Impairment loss 8,090 2,180 — Total operating expenses $ 326,428 $ 273,255 $ 187,046 Loss from operations $ (47,201 ) $ (53,997 ) $ (32,010 ) Interest expense (4,375 ) (3,679 ) (14,445 ) Loss on extinguishment of debt — (5,941 ) — Change in fair value of warrant liabilities — — (70,827 ) Change in fair value of tax receivable liability 66,871 (14,109 ) (12,439 ) Other (expense) income (135 ) 97 (3 ) Other loss (245 ) (9,099 ) — Total other income (expense) 62,116 (32,731 ) (97,714 ) Income (loss) before income tax (expense) benefit 14,915 (86,728 ) (129,724 ) Income tax (expense) benefit (6,174 ) 30,691 12,358 Net income (loss) $ 8,741 $ (56,037 ) $ (117,366 ) Add: Interest expense 4,375 3,679 14,445 Depreciation and amortization (a) 107,751 89,692 60,807 Income tax expense (benefit) 6,174 (30,691 ) (12,358 ) EBITDA $ 127,041 $ 6,643 $ (54,472 ) Loss on extinguishment of debt (i) — 5,941 — Loss on termination of interest rate hedge (j) — 9,080 — Non-cash change in fair value of warrant liabilities (k) — — 70,827 Non-cash change in fair value of contingent consideration (b) (3,300 ) 5,846 (2,510 ) Non-cash impairment loss (c) 8,090 2,180 — Non-cash change in fair value of assets and liabilities (d) (66,871 ) 14,109 12,439 Share-based compensation expense (e) 20,532 22,311 19,446 Transaction expenses (f) 18,993 19,250 10,924 Restructuring and other strategic initiative costs (g) 7,870 4,578 1,103 Other non-recurring charges (h) 12,294 3,262 1,794 Adjusted EBITDA $ 124,649 $ 93,200 $ 59,551 46 REPAY HOLDINGS CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income Year Ended December 31, ($ in thousands) 2022 2021 2020 Revenue $ 279,227 $ 219,258 $ 155,036 Operating expenses Costs of services (exclusive of depreciation and amortization shown separately below) 64,826 55,484 41,447 Selling, general and administrative 149,061 120,053 87,302 Depreciation and amortization 107,751 89,692 60,807 Change in fair value of contingent consideration (3,300 ) 5,846 (2,510 ) Impairment loss 8,090 2,180 — Total operating expenses $ 326,428 $ 273,255 $ 187,046 Loss from operations $ (47,201 ) $ (53,997 ) $ (32,010 ) Interest expense (4,375 ) (3,679 ) (14,445 ) Loss on extinguishment of debt — (5,941 ) — Change in fair value of warrant liabilities — — (70,827 ) Change in fair value of tax receivable liability 66,871 (14,109 ) (12,439 ) Other (expense) income (135 ) 97 (3 ) Other loss (245 ) (9,099 ) — Total other income (expense) 62,116 (32,731 ) (97,714 ) Income (loss) before income tax (expense) benefit 14,915 (86,728 ) (129,724 ) Income tax (expense) benefit (6,174 ) 30,691 12,358 Net income (loss) $ 8,741 $ (56,037 ) $ (117,366 ) Add: Amortization of acquisition-related intangibles (l) 89,473 79,932 52,126 Loss on extinguishment of debt (i) — 5,941 — Loss on extinguishment of interest rate hedge (j) — 9,080 — Non-cash change in fair value of warrant liabilities (k) — — 70,827 Non-cash change in fair value of contingent consideration (b) (3,300 ) 5,846 (2,510 ) Non-cash goodwill impairment loss (c) 8,090 2,180 — Non-cash change in fair value of assets and liabilities (d) (66,871 ) 14,109 12,439 Share-based compensation expense (e) 20,532 22,311 19,446 Transaction expenses (f) 18,993 19,250 10,924 Restructuring and other strategic initiative costs (g) 7,870 4,578 1,103 Other non-recurring charges (h) 12,294 3,262 1,794 Non-cash interest expense (m) 2,835 2,536 — Pro forma taxes at effective rate (n) (18,871 ) (39,219 ) (11,883 ) Adjusted Net Income $ 79,786 $ 73,769 $ 36,900 Shares of Class A common stock outstanding (on an as-converted basis) (o) 96,684,629 91,264,512 73,373,106 Adjusted Net Income per share $ 0.83 $ 0.81 $ 0.50 (a) See footnote (l) for details on our amortization and depreciation expenses.
Biggest changeThe following tables set forth a reconciliation of our results of operations for the years ended December 31, 2023, 2022 and 2021 . 45 REPAY HOLDINGS CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA Year Ended December 31, ($ in thousands) 2023 2022 2021 Revenue $ 296,627 $ 279,227 $ 219,258 Operating expenses Costs of services (exclusive of depreciation and amortization shown separately below) $ 69,703 $ 64,826 $ 55,484 Selling, general and administrative 148,653 149,061 120,053 Depreciation and amortization 103,857 107,751 89,692 Change in fair value of contingent consideration — (3,300 ) 5,846 Loss on business disposition 10,027 — — Impairment loss 75,800 8,090 2,180 Total operating expenses $ 408,040 $ 326,428 $ 273,255 Loss from operations $ (111,413 ) $ (47,201 ) $ (53,997 ) Interest (expense) income, net (1,048 ) (4,245 ) (3,599 ) Loss on extinguishment of debt — — (5,941 ) Change in fair value of tax receivable liability (6,619 ) 66,871 (14,109 ) Other (loss) income (455 ) (510 ) (9,082 ) Total other income (expense) (8,122 ) 62,116 (32,731 ) Income (loss) before income tax benefit (expense) (119,535 ) 14,915 (86,728 ) Income tax benefit (expense) 2,115 (6,174 ) 30,691 Net income (loss) $ (117,420 ) $ 8,741 $ (56,037 ) Add: Interest expense (income), net 1,048 4,245 3,599 Depreciation and amortization (a) 103,857 107,751 89,692 Income tax (benefit) expense (2,115 ) 6,174 (30,691 ) EBITDA $ (14,630 ) $ 126,911 $ 6,563 Loss on business disposition (i) 10,027 — — Loss on extinguishment of debt (j) — — 5,941 Loss on termination of interest rate hedge (k) — — 9,080 Non-cash change in fair value of contingent consideration (b) — (3,300 ) 5,846 Non-cash impairment loss (c) 75,800 8,090 2,180 Non-cash change in fair value of assets and liabilities (d) 7,494 (66,871 ) 14,109 Share-based compensation expense (e) 22,156 20,532 22,311 Transaction expenses (f) 8,523 18,993 19,250 Restructuring and other strategic initiative costs (g) 11,908 7,870 4,578 Other non-recurring charges (h) 5,528 12,294 3,262 Adjusted EBITDA $ 126,806 $ 124,519 $ 93,120 46 REPAY HOLDINGS CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income Year Ended December 31, ($ in thousands) 2023 2022 2021 Revenue $ 296,627 $ 279,227 $ 219,258 Operating expenses Costs of services (exclusive of depreciation and amortization shown separately below) $ 69,703 $ 64,826 $ 55,484 Selling, general and administrative 148,653 149,061 120,053 Depreciation and amortization 103,857 107,751 89,692 Change in fair value of contingent consideration — (3,300 ) 5,846 Loss on business disposition 10,027 — — Impairment loss 75,800 8,090 2,180 Total operating expenses $ 408,040 $ 326,428 $ 273,255 Loss from operations $ (111,413 ) $ (47,201 ) $ (53,997 ) Interest (expense) income, net (1,048 ) (4,245 ) (3,599 ) Loss on extinguishment of debt — — (5,941 ) Change in fair value of tax receivable liability (6,619 ) 66,871 (14,109 ) Other (loss) income (455 ) (510 ) (9,082 ) Total other income (expense) (8,122 ) 62,116 (32,731 ) Income (loss) before income tax benefit (expense) (119,535 ) 14,915 (86,728 ) Income tax benefit (expense) 2,115 (6,174 ) 30,691 Net income (loss) $ (117,420 ) $ 8,741 $ (56,037 ) Add: Amortization of acquisition-related intangibles (l) 81,642 89,473 79,932 Loss on business disposition (i) 10,027 — — Loss on extinguishment of debt (j) — — 5,941 Loss on extinguishment of interest rate hedge (k) — — 9,080 Non-cash change in fair value of contingent consideration (b) — (3,300 ) 5,846 Non-cash impairment loss (c) 75,800 8,090 2,180 Non-cash change in fair value of assets and liabilities (d) 7,494 (66,871 ) 14,109 Share-based compensation expense (e) 22,156 20,532 22,311 Transaction expenses (f) 8,523 18,993 19,250 Restructuring and other strategic initiative costs (g) 11,908 7,870 4,578 Other non-recurring charges (h) 5,528 12,294 3,262 Non-cash interest expense (m) 2,848 2,835 2,536 Pro forma taxes at effective rate (n) (23,564 ) (18,871 ) (39,219 ) Adjusted Net Income $ 84,942 $ 79,786 $ 73,769 Shares of Class A common stock outstanding (on an as-converted basis) (o) 96,850,559 96,684,629 91,264,512 Adjusted Net Income per share $ 0.88 $ 0.83 $ 0.81 (a) See footnote (l) for details on our amortization and depreciation expenses.
The actual increase in tax basis, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including the timing of redemptions or exchanges by the holders of Post-Merger Repay Units, the price of our Class A common stock at the time of the redemption or exchange, whether such redemptions or exchanges are taxable, the amount and timing of the taxable income we generate in the future, the tax rate then applicable and the portion of our payments under the TRA constituting imputed interest.
The actual increase in tax basis, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including the timing of redemptions or exchanges by the holders of Post-Merger Repay Units, the price of our Class A common stock at the time of the redemption or exchange, whether such redemptions or 51 exchanges are taxable, the amount and timing of the taxable income we generate in the future, the tax rate then applicable and the portion of our payments under the TRA constituting imputed interest.
Management also typically utilizes third party valuation specialists to assist in the determination of the fair value of assets acquired and liabilities assumed. Fair value estimates are based on assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Management also typically utilizes third 52 party valuation specialists to assist in the determination of the fair value of assets acquired and liabilities assumed. Fair value estimates are based on assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Therefore, in estimating fair value, management uses a discount rate, also referred to as the early termination rate, to determine the present value based on a risk-free rate plus a spread pursuant to the TRA. A significant increase or decrease in the discount rate could result in a lower or higher balance, respectively, as of the measurement date.
Therefore, in estimating fair value, management uses a discount rate, also referred to as the early termination rate, to determine the present value based on a risk-free rate plus a spread pursuant to the TRA. A significant increase or decrease in the discount rate could result in a lower or higher balance, respectively, as of the measurement date. 53
(l) For the years ended December 31, 2022 and 2021, reflects amortization of client relationships, non-compete agreement, software, and channel relationship intangibles acquired through the Business Combination, and client relationships, non-compete agreement, and software intangibles acquired through our acquisitions of TriSource, APS, Ventanex, cPayPlus, CPS, BillingTree, Kontrol and Payix.
(l) For the years ended December 31, 2023, 2022 and 2021, reflects amortization of client relationships, non-compete agreement, software, and channel relationship intangibles acquired through the Business Combination, and client relationships, non-compete agreement, and software intangibles acquired through our acquisitions of TriSource, APS, Ventanex, cPayPlus, CPS, BillingTree, Kontrol and Payix.
Upon conversion, the Company may choose to pay or deliver cash, shares of the Company’s Class A 51 Common Stock, or a combination of cash and shares of the Company’s Class A Common Stock. The 2026 Notes will mature on February 1, 2026, unless earlier converted, repurchased or redeemed.
Upon conversion, the Company may choose to pay or deliver cash, shares of the Company’s Class A Common Stock, or a combination of cash and shares of the Company’s Class A Common Stock. The 2026 Notes will mature on February 1, 2026, unless earlier converted, repurchased or redeemed.
We may also from time to time depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to prepay outstanding debt or repurchase our outstanding debt through open market purchases, 49 privately negotiated purchases, or otherwise.
We may also from time to time depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to prepay outstanding debt or repurchase our outstanding debt through open market purchases, privately negotiated purchases, or otherwise.
Adjusted Net Income per share is a non-GAAP financial measure that represents Adjusted Net Income divided by the weighted average number of shares of Class A common stock outstanding (on an as-converted basis assuming conversion of the outstanding Post-Merger Repay Units) for the years ended December 31, 2022, 2021 and 2020 (excluding certain shares that were subject to forfeiture).
Adjusted Net Income per share is a non-GAAP financial measure that represents Adjusted Net Income divided by the weighted average number of shares of Class A common stock outstanding (on an as-converted basis assuming conversion of the outstanding Post-Merger Repay Units) for the years ended December 31, 2023, 2022 and 2021 (excluding certain shares that were subject to forfeiture).
We depend on the payment of distributions by our current subsidiaries, including Hawk Parent, which distributions may be restricted by law or contractual agreements, including agreements governing their indebtedness.
We depend on the payment of distributions by our current subsidiaries, including Hawk Parent, which distributions may be restricted by law or contractual agreements, including agreements 49 governing their indebtedness.
Segments We provided our services through two reportable segments: (1) Consumer Payments and (2) Business Payments. The following table presents our segment revenue and selected performance measures.
Segments We provided our services through two reportable segments: (1) Consumer Payments and (2) Business Payments. 43 The following table presents our segment revenue and selected performance measures.
Adjusted Net Income is a non-GAAP financial measure that represents net income prior to amortization of acquisition-related intangibles, as adjusted to add back certain charges deemed to not be part of normal operating expenses, non-cash charges and/or non-recurring charges, such as loss on extinguishment of debt, loss on termination of interest rate hedge, non-cash change in fair value of contingent consideration, non-cash change in fair value of assets and liabilities, share-based compensation expense, transaction expenses, restructuring and other strategic initiative costs, other non-recurring charges, non-cash interest expense and net of tax effect associated with these adjustments.
Adjusted Net Income is a non-GAAP financial measure that represents net income prior to amortization of acquisition-related intangibles, as adjusted to add back certain charges deemed to not be part of normal operating expenses, non-cash charges and/or non-recurring charges, such as loss on business disposition, loss on extinguishment of debt, loss on termination of interest rate hedge, non-cash change in fair value of contingent consideration, non-cash impairment loss, non-cash change in fair value of assets and liabilities, share-based compensation expense, transaction expenses, restructuring and other strategic initiative costs, other non-recurring charges, non-cash interest expense and net of tax effect associated with these adjustments.
There have been no significant changes in our application of accounting estimates during the year ended December 31, 2022. Revenue Recognition The consideration to be received in our contracts with clients consists of variable consideration where the timing and quantity of transactions to be processed is not determinable at contract inception.
There have been no significant changes in our application of accounting estimates during the year ended December 31, 2023. Revenue Recognition The consideration to be received in our contracts with clients consists of variable consideration where the timing and quantity of transactions to be processed is not determinable at contract inception.
Adjusted EBITDA is a non-GAAP financial measure that represents net income prior to interest expense, tax expense, depreciation and amortization, as adjusted to add back certain charges deemed to not be part of normal operating expenses, non-cash charges and/or non-recurring charges, such as loss on extinguishment of debt, loss on termination of interest rate hedge, non-cash change in fair value of contingent consideration, non-cash change in fair value of assets and liabilities, share-based compensation charges, transaction expenses, restructuring and other strategic initiative costs and other non-recurring charges.
Adjusted EBITDA is a non-GAAP financial measure that represents net income prior to interest expense, tax expense, depreciation and amortization, as adjusted to add back certain charges deemed to not be part of normal operating expenses, non-cash charges and/or non-recurring charges, such as loss on business disposition, loss on extinguishment of debt, loss on termination of interest rate hedge, non-cash change in fair value of contingent consideration, non-cash impairment loss, non-cash change in fair value of assets and liabilities, share-based compensation charges, transaction expenses, restructuring and other strategic initiative costs and other non-recurring charges.
Amortization expense for software development costs and purchased software is recognized on the straight-line method over a three-year estimated useful life, between eight to ten years estimated useful life for client relationships and channel relationships, and between two to five years estimated useful life for non-compete agreements. Interest expense.
Amortization expense for software development costs and purchased software is recognized on the straight-line method over a three-year estimated useful life, between eight to ten years estimated useful life for client relationships and channel relationships, and between two to five years estimated useful life for non-compete agreements. Interest (expense) income, net.
Cash provided by operating activities for the years ended December 31, 2022, 2021 and 2020, reflects net income as adjusted for non-cash operating items including depreciation and amortization, share-based compensation, and changes in working capital accounts.
Cash provided by operating activities for the years ended December 31, 2023, 2022 and 2021, reflects net income as adjusted for non-cash operating items including depreciation and amortization, share-based compensation, and changes in working capital accounts.
For discussion on Adjusted EBITDA, Adjusted Net income, and net income (loss) attributable to the Company for the year ended December 31, 2021 compared to the year ended December 31, 2020, see Part II, Item 7 of the Company’s 2021 Form 10-K.
For discussion on Adjusted EBITDA, Adjusted Net income, and net income (loss) attributable to the Company for the year ended December 31, 2022 compared to the year ended December 31, 2021, see Part II, Item 7 of the Company’s 2022 Form 10-K.
(o) Represents the weighted average number of shares of Class A common stock outstanding (on an as-converted basis assuming conversion of outstanding Post-Merger Repay Units) for the years ended December 31, 2022, 2021 and 48 2020. These numbers do not include any shares issuable upon conversion of our 2026 Notes.
(o) Represents the weighted average number of shares of Class A common stock outstanding (on an as-converted basis assuming conversion of outstanding Post-Merger Repay Units) for the years ended December 31, 2023, 2022 and 2021. These numbers do not include any shares issuable upon conversion of our 2026 Notes.
Net cash used in investing activities was $397.3 million for the year ended December 31, 2021, due to the acquisitions of BillingTree, Kontrol and Payix, as well as the capitalization of software development activities.
Net cash used in investing activities was $39.5 million for the year ended December 31, 2022, due to the capitalization of software development activities. Net cash used in investing activities was $397.3 million for the year ended December 31, 2021, due to the acquisitions of BillingTree, Kontrol and Payix, as well as the capitalization of software development activities.
These services are stand-ready obligations, as the timing and quantity of transactions to be processed is not determinable. We follow the requirements of ASC 606-10-55-36 through -40, Revenue from Contracts with Customers, Principal Agent Considerations , in determining the gross versus net revenue recognition for performance obligation(s) in the contract with a client.
Accordingly, the total transaction price is variable. These services are stand-ready obligations, as the timing and quantity of transactions to be processed is not determinable. We follow the requirements of ASC 606-10-55-36 through -40, Revenue from Contracts with Customers, Principal Agent Considerations , in determining the gross versus net revenue recognition for performance obligation(s) in the contract with a client.
We paid $0.6 million and $0.4 million in fees related to unused commitments for the years ended December 31, 2022 and 2021, respectively. See Note 10. Borrowings to the financial statements in Item 8 of this Annual Report on Form 10-K for more information.
We paid $0.5 million and $0.6 million in fees related to unused commitments for the years ended December 31, 2023 and 2022, respectively. See Note 10. Borrowings to the financial statements in Item 8 of this Annual Report on Form 10-K for more information.
Since a significant portion of our revenue is derived from volume-based payment processing fees, card payment volume is a key operating metric that we use to evaluate our business. We processed approximately $25.6 billion of total card payment volume for the year ending December 31, 2022, and our year-over-year card payment volume growth was approximately 25%.
Since a significant portion of our revenue is derived from volume-based payment processing fees, card payment volume is a key operating metric that we use to evaluate our business. We processed approximately $25.7 billion of total card payment volume for the year ending December 31, 2023, and our year-over-year card payment volume growth was approximately 0.1%.
The strategic vertical markets served by our Consumer Payments segment primarily include personal loans, automotive loans, receivables management, credit unions, mortgage servicing, consumer healthcare, diversified retail and energy related software services.
The strategic vertical markets served by our Consumer Payments segment primarily include personal loans, automotive loans, receivables management, credit unions, mortgage servicing, consumer healthcare and diversified retail.
We believe our chargeback rate was less than 1% of our card payment volume, during the years ended December 31, 2022, 2021 and 2020. Expenses Costs of services . Costs of services primarily include commissions to our software integration partners and other third-party processing costs, such as front and back-end processing costs and sponsor bank fees.
Our chargeback rate was less than 1% of our card payment volume, during the years ended December 31, 2023, 2022 and 2021. Expenses Costs of services . Costs of services primarily include commissions to our software integration partners and other third-party processing costs, such as front and back-end processing costs and sponsor bank fees. Selling, general and administrative .
Our performance obligation in our contracts with clients is the promise to stand-ready to provide front-end authorization and back-end settlement payment processing services ("processing services") for an unknown or unspecified quantity of transactions and the consideration received is contingent upon the client’s use (e.g., number of transactions submitted and processed) of the related processing services. 52 Accordingly, the total transaction price is variable.
Our performance obligation in our contracts with clients is the promise to stand-ready to provide front-end authorization and back-end settlement payment processing services (“processing services”) for an unknown or unspecified quantity of transactions and the consideration received is contingent upon the client’s use (e.g., number of transactions submitted and processed) of the related processing services.
For the year ended December 31, 2021, reflects impairment loss related to trade names write-offs of TriSource, APS, Ventanex, cPayPlus and CPS. (d) Reflects the changes in management’s estimates of the fair value of the liability relating to TRA.
For the year ended December 31, 2021, reflects impairment loss related to trade names write-offs of TriSource, APS, Ventanex, cPayPlus and CPS. (d) For the year ended December 31, 2023, reflects the changes in management’s estimates of (i) the fair value of the liability relating to the TRA, and (ii) non-cash insurance reserve.
For a discussion of those considerations and restrictions, refer to Part II, Item 1A “Risk Factors - Risks Related to Our Class A Common Stock.” As of December 31, 2022, our material contractual obligations primarily consist of operating leases liabilities and contingent considerations. See Note 5. Business Combinations and Note 12.
For a discussion of those considerations and restrictions, refer to Part II, Item 1A “Risk Factors - Risks Related to Our Class A Common Stock.” As of December 31, 2023, our material contractual obligations primarily consist of operating leases liabilities. See Note 11.
Income Tax Expense and Benefit The income tax expense was $6.2 million for the year ended December 31, 2022, reflecting the expected income tax expense on the income generated over the same period.
Income Tax Benefit and Expense The income tax benefit was $2.1 million for the year ended December 31, 2023, reflecting the expected income tax benefit on the loss generated over the same period.
This increase was due to larger fair value adjustments related to the tax receivable liability, primarily as a result of changes to the discount rate, or Early Termination Rate, used to determine the fair value of the liability.
This decrease was due to smaller fair value adjustments related to the tax receivable liability, primarily as a result of accretion and changes to the discount rate, or Early Termination Rate, used to determine the fair value of the liability.
This was a result of the operating income incurred by the Company, primarily driven by the change in fair value of the tax receivable liability and contingent consideration, offset by stock-based compensation deductions and the amortization of assets acquired in the Business Combination and prior acquisitions.
This was a result of the operating loss incurred by the Company, primarily driven by the change in fair value of the tax receivable liability, impairment loss, loss on business disposition, stock-based compensation deductions and the amortization of assets acquired in the Business Combination and prior acquisitions.
Cash Flows The following table presents a summary of cash flows from operating, investing and financing activities for the periods indicated: Year Ended December 31, ($ in thousands) 2022 2021 2020 Net cash provided by operating activities $ 74,223 $ 53,330 $ 28,487 Net cash used in investing activities (39,541 ) (397,335 ) (145,980 ) Net cash (used in) provided by financing activities (17,459 ) 313,840 186,097 Cash Flow from Operating Activities Net cash provided by operating activities was $74.2 million for the year ended December 31, 2022.
Cash Flows The following table presents a summary of cash flows from operating, investing and financing activities for the periods indicated: Year Ended December 31, ($ in thousands) 2023 2022 2021 Net cash provided by operating activities $ 103,614 $ 74,223 $ 53,330 Net cash used in investing activities (24,088 ) (39,541 ) (397,335 ) Net cash (used in) provided by financing activities (28,944 ) (17,459 ) 313,840 Cash Flow from Operating Activities Net cash provided by operating activities was $103.6 million for the year ended December 31, 2023.
As of December 31, 2022, we had $64.9 million of cash and cash equivalents and available borrowing capacity of $165.0 million under the Amended Credit Agreement. This balance does not include restricted cash, which reflects cash accounts holding reserves for potential losses and client settlement funds of $28.7 million as of December 31, 2022.
As of December 31, 2023, we had $118.1 million of cash and cash equivalents and available borrowing capacity of $185.0 million under the Amended Credit Agreement. This balance does not include restricted cash, which reflects cash accounts holding reserves for potential losses and client settlement funds of $26.0 million as of December 31, 2023.
Net cash provided by financing activities was $313.8 million for the year ended December 31, 2021, due to proceeds from the issuance of new shares in the Equity Offering, and proceeds from the 2026 Notes, offset by repayment of the outstanding revolver balance related to the Successor Credit Agreement, repayments of the Term Loan principal balance under the Successor Credit Agreement and the cPayPlus earnout payment.
Net cash used in financing activities was $17.5 million for the year ended December 31, 2022, due to the shares repurchased under the Incentive Plan, ESPP and Share Repurchase Program, as well as the Ventanex earnout payment. 50 Net cash provided by financing activities was $313.8 million for the year ended December 31, 2021, due to proceeds from the issuance of new shares in the Equity Offering, and proceeds from the 2026 Notes, offset by repayment of the outstanding revolver balance related to the Successor Credit Agreement, repayments of the Term Loan principal balance under the Successor Credit Agreement and the cPayPlus earnout payment.
See additional information below for an analysis of our amortization expenses: Year ended December 31, ($ in thousands) 2022 2021 2020 Acquisition-related intangibles $ 89,473 $ 79,932 $ 52,126 Software 15,921 8,464 7,467 Reseller buyouts — — 58 Amortization $ 105,394 $ 88,396 $ 59,651 Depreciation 2,357 1,296 1,156 Total Depreciation and amortization (1) $ 107,751 $ 89,692 $ 60,807 (1) Adjusted Net Income is adjusted to exclude amortization of all acquisition-related intangibles as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions (see corresponding adjustments in the reconciliation of net income to Adjusted Net Income presented above).
See additional information below for an analysis of our amortization expenses: Year ended December 31, ($ in thousands) 2023 2022 2021 Acquisition-related intangibles $ 81,642 $ 89,473 $ 79,932 Software 19,789 15,921 8,464 Amortization $ 101,431 $ 105,394 $ 88,396 Depreciation 2,426 2,357 1,296 Total Depreciation and amortization (1) $ 103,857 $ 107,751 $ 89,692 (1) Adjusted Net Income is adjusted to exclude amortization of all acquisition-related intangibles as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions (see corresponding adjustments in the reconciliation of net income to Adjusted Net Income presented above).
Consumer Payments – Our Consumer Payments segment provides payment processing solutions (including debit and credit card processing, ACH processing and other electronic payment acceptance solutions, as well as our loan disbursement product) that enable our clients to collect payments and disburse funds to consumers and includes our clearing and settlement solutions (“RCS”) and Blue Cow Software business (“BCS”).
Consumer Payments – Our Consumer Payments segment provides payment processing solutions (including debit and credit card processing, ACH processing and other electronic payment acceptance solutions, as well as our loan disbursement product) that enable our clients to collect payments and disburse funds to consumers and includes our RCS offering.
Net cash provided by operating activities was $53.3 million for the year ended December 31, 2021. Net cash provided by operating activities was $28.5 million for the year ended December 31, 2020.
Net cash provided by operating activities was $74.2 million for the year ended December 31, 2022. Net cash provided by operating activities was $53.3 million for the year ended December 31, 2021.
Selling, general and administrative . Selling, general and administrative expenses include salaries, share-based compensation and other employment costs, professional service fees, rent and utilities and other operating costs. Depreciation and amortization . Depreciation expense consists of depreciation on our investments in property, equipment and computer hardware.
Selling, general and administrative expenses include salaries, share-based compensation and other employment costs, professional service fees, rent and utilities and other operating costs. Depreciation and amortization . Depreciation expense consists of depreciation on our investments in property, equipment and computer hardware. Depreciation expense is recognized on a straight-line basis over the estimated useful life of the asset.
See the reconciliation of basic weighted average shares outstanding to the non-GAAP Class A common stock outstanding on an as-converted basis for each respective period below: Year Ended December 31, 2022 2021 2020 Weighted average shares of Class A common stock outstanding - basic 88,792,453 83,318,189 52,180,911 Add: Non-controlling interests Weighted average Post-Merger Repay Units exchangeable for Class A common stock 7,892,176 7,946,323 21,192,195 Shares of Class A common stock outstanding (on an as-converted basis) 96,684,629 91,264,512 73,373,106 Adjusted EBITDA for the years ended December 31, 2022 and 2021 was $124.6 million and $93.2 million, respectively, representing a 33.7% year-over-year increase.
See the reconciliation of basic weighted average shares outstanding to the non-GAAP Class A common stock outstanding on an as-converted basis for each respective period below: 48 Year Ended December 31, 2023 2022 2021 Weighted average shares of Class A common stock outstanding - basic 90,048,638 88,792,453 83,318,189 Add: Non-controlling interests Weighted average Post-Merger Repay Units exchangeable for Class A common stock 6,801,921 7,892,176 7,946,323 Shares of Class A common stock outstanding (on an as-converted basis) 96,850,559 96,684,629 91,264,512 Adjusted EBITDA for the years ended December 31, 2023 and 2022 was $126.8 million and $124.5 million, respectively, representing a 1.8% year-over-year increase.
(2) Gross profit margin represents total gross profit / total revenue. Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Consumer Payments Revenue for the Consumer Payments segment was $248.2 million for the year ended December 31, 2022 and $194.0 million for the year ended December 31, 2021, representing a $54.2 million or 27.9%year-over-year increase.
(2) Gross profit margin represents total gross profit / total revenue. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Consumer Payments Revenue for the Consumer Payments segment was $275.7 million for the year ended December 31, 2023 and $248.2 million for the year ended December 31, 2022, representing a $27.5 million or 11.1% year-over-year increase.
Change in Fair Value of Tax Receivable Liability We incurred a gain, related to accretion expense and fair value adjustment of the tax receivable liability of $66.9 million for the year ended December 31, 2022 compared to a net loss of $14.1 million for the year ended December 31, 2021, an increase of $81.0 million.
Change in Fair Value of Tax Receivable Liability We incurred a net loss, related to accretion expense and fair value adjustment of the tax receivable liability of $6.6 million for the year ended December 31, 2023 compared to a gain of $66.9 million for the year ended December 31, 2022, a decrease of $73.5 million.
(h) For the year ended December 31, 2022, reflects one-time settlement payments to certain clients and partners, payments made to third-parties in connection with expansion of our personnel, non-recurring performance incentives to employees, franchise taxes and other non-income based taxes, other payments related to COVID-19, non-cash rent expense, loss on termination of lease and loss on disposal of fixed assets.
For the year ended December 31, 2022, reflects one-time payments to certain clients and partners, payments made to third-parties in connection with a significant expansion of our personnel, franchise taxes and other non-income based taxes, other payments related to COVID-19 and non-cash rent expense.
The income tax benefit was $30.7 million for the year ended December 31, 2021, which reflected the expected income tax benefit to be received on the net earnings related to the Company’s economic interest in Hawk Parent.
The income tax expense was $6.2 million for the year ended December 31, 2022, which reflected the expected income tax expense to be received on the net earnings related to our economic interest in Hawk Parent.
In December 2021, we increased our existing senior secured credit facilities by $60.0 million to a $185.0 million revolving credit facility pursuant to an amendment to the Amended Credit Agreement.
Indebtedness Amended Credit Agreement In February 2021, we entered into the Amended Credit Agreement, which established a $125.0 million senior secured revolving credit facility in favor of Hawk Parent. In December 2021, we increased our existing senior secured credit facilities by $60.0 million to a $185.0 million revolving credit facility pursuant to an amendment to the Amended Credit Agreement.
To determine the fair value of long-lived assets, included ROU assets, we utilize the valuation technique or techniques deemed most appropriate based on the nature of the asset or asset group, which may include the use of quoted market prices, prices for similar assets or other valuation techniques such as discounted future cash flows or earnings. 53 The determination of fair value is considered a critical accounting estimate because the valuation techniques mentioned use significant estimates and assumptions, including projected future cash flows, discount rates and growth rates.
To determine the fair value of long-lived assets, included ROU assets, we utilize the valuation technique or techniques deemed most appropriate based on the nature of the asset or asset group, which may include the use of quoted market prices, prices for similar assets or other valuation techniques such as discounted future cash flows or earnings.
Adjusted Net Income for the years ended December 31, 2022 and 2021 was $79.8 million and $73.8 million, respectively, representing a 8.2% year-over-year increase. Our net income (loss) attributable to the Company for the years ended December 31, 2022 and 2021 was $12.8 million and ($50.1) million, respectively, representing a 125.6% year-over-year increase.
Adjusted Net Income for the years ended December 31, 2023 and 2022 was $84.9 million and $79.8 million, respectively, representing a 6.5% year-over-year increase. Our net income (loss) attributable to the Company for the years ended December 31, 2023 and 2022 was ($110.5) million and $12.8 million, respectively, representing a 960.8% year-over-year decrease.
This increase was the result of newly signed clients, the growth of our existing clients, as well as the acquisitions of BillingTree, Kontrol and Payix. For the year ended December 31, 2022, incremental revenues of approximately $37.9 million are attributable to BillingTree, Kontrol and Payix.
This increase was the result of newly signed clients and the growth of existing clients. For the year ended December 31, 2022, incremental revenues of approximately $8.6 million are attributable to BCS.
Cash Flow from Financing Activities 50 Net cash used in financing activities was $17.5 million for the year ended December 31, 2022, due to the shares repurchased under the Incentive Plan, ESPP and Share Repurchase Program, as well as the Ventanex earnout payment.
Cash Flow from Financing Activities Net cash used in financing activities was $28.9 million for the year ended December 31, 2023, due to the repayment of the outstanding revolving credit facility balance, shares repurchased under the Incentive Plan, ESPP and Share Repurchase Program, as well as the CPS earnout payment.
Additionally, we currently expect that we will remain in compliance with the restrictive financial covenants prospectively. Tax Receivable Agreement Upon the completion of the Business Combination, we entered into that certain Tax Receivable Agreement (the “Tax Receivable Agreement” or “TRA”) with holders (other than the Company) of limited liability company interests of Hawk Parent (the “Post-Merger Repay Units”).
Tax Receivable Agreement Upon the completion of the Business Combination, we entered into that certain Tax Receivable Agreement (the “Tax Receivable Agreement” or “TRA”) with holders (other than the Company) of limited liability company interests of Hawk Parent (the “Post-Merger Repay Units”). As a result of the TRA, we established a liability in our consolidated financial statements.
During the year ended December 31, 2022, we repurchased 1,078,141 shares for a total of approximately $10.0 million under the Share Repurchase Program.
During the year ended December 31, 2023, we repurchased 338,369 shares for a total of approximately $2.5 million under the Share Repurchase Program.
In February 2023, we further amended the Amended Credit Agreement to replace LIBOR with term SOFR as the interest rate benchmark. In February 2023, we repaid in full the entire amount of $20.0 million of the outstanding revolving credit facility. The undrawn capacity of the existing revolving credit facility under the Amended Credit Agreement became $185.0 million after the repayment.
We currently expect that we will remain in compliance with the restrictive financial covenants of the Amended Credit Agreement, prospectively. In February 2023, we further amended the Amended Credit Agreement to replace LIBOR with term SOFR as the interest rate benchmark. In February 2023, we repaid in full the entire amount of $20.0 million of the outstanding revolving credit facility.
(b) Reflects the changes in management’s estimates of future cash consideration to be paid in connection with prior acquisitions from the amount estimated as of the most recent balance sheet date. (c) For the year ended December 31, 2022, reflects impairment loss related to trade names write-offs of BillingTree and Kontrol.
(b) Reflects the changes in management’s estimates of future cash consideration to be paid in connection with prior acquisitions from the amount estimated as of the most recent balance sheet date.
Results of Operations Year ended December 31, ($ in thousands) 2022 2021 2020 Revenue $ 279,227 $ 219,258 $ 155,036 Operating expenses Costs of services (exclusive of depreciation and amortization shown separately below) $ 64,826 $ 55,484 $ 41,447 Selling, general and administrative 149,061 120,053 87,302 Depreciation and amortization 107,751 89,692 60,807 Change in fair value of contingent consideration (3,300 ) 5,846 (2,510 ) Impairment loss 8,090 2,180 — Total operating expenses $ 326,428 $ 273,255 $ 187,046 Loss from operations $ (47,201 ) $ (53,997 ) $ (32,010 ) Interest expense (4,375 ) (3,679 ) (14,445 ) Loss on extinguishment of debt — (5,941 ) — Change in fair value of warrant liabilities — — (70,827 ) Change in fair value of tax receivable liability 66,871 (14,109 ) (12,439 ) Other (expense) income (135 ) 97 (3 ) Other loss (245 ) (9,099 ) — Total other income (expense) 62,116 (32,731 ) (97,714 ) Income (loss) before income tax (expense) benefit 14,915 (86,728 ) (129,724 ) Income tax (expense) benefit (6,174 ) 30,691 12,358 Net income (loss) $ 8,741 $ (56,037 ) $ (117,366 ) Net loss attributable to non-controlling interest (4,095 ) (5,953 ) (11,769 ) Net income (loss) attributable to the Company $ 12,836 $ (50,084 ) $ (105,597 ) Weighted-average shares of Class A common stock outstanding - basic 88,792,453 83,318,189 52,180,911 Weighted-average shares of Class A common stock outstanding - diluted 110,671,731 83,318,189 52,180,911 Income (loss) per Class A share - basic $ 0.14 $ (0.60 ) $ (2.02 ) Income (loss) per Class A share - diluted $ 0.12 $ (0.60 ) $ (2.02 ) Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Revenue Total revenue was $279.2 million for the year ended December 31, 2022 and $219.3 million for the year ended December 31, 2021, an increase of $60.0 million or 27.4%.
The change in fair value can result from the redemption or exchange of Post-Merger Repay Units for Class A common stock of Repay Holdings Corporation, through accretion of the discounted fair value of the expected future cash payments, or changes to the discount rate, or Early Termination Rate, used to determine the fair value of the liability. 41 Results of Operations Year ended December 31, ($ in thousands, except per share data) 2023 2022 2021 Revenue $ 296,627 $ 279,227 $ 219,258 Operating expenses Costs of services (exclusive of depreciation and amortization shown separately below) $ 69,703 $ 64,826 $ 55,484 Selling, general and administrative 148,653 149,061 120,053 Depreciation and amortization 103,857 107,751 89,692 Change in fair value of contingent consideration — (3,300 ) 5,846 Loss on business disposition 10,027 — — Impairment loss 75,800 8,090 2,180 Total operating expenses $ 408,040 $ 326,428 $ 273,255 Loss from operations $ (111,413 ) $ (47,201 ) $ (53,997 ) Interest (expense) income, net (1,048 ) (4,245 ) (3,599 ) Loss on extinguishment of debt — — (5,941 ) Change in fair value of tax receivable liability (6,619 ) 66,871 (14,109 ) Other (loss) income (455 ) (510 ) (9,082 ) Total other income (expense) (8,122 ) 62,116 (32,731 ) Income (loss) before income tax benefit (expense) (119,535 ) 14,915 (86,728 ) Income tax benefit (expense) 2,115 (6,174 ) 30,691 Net income (loss) $ (117,420 ) $ 8,741 $ (56,037 ) Net loss attributable to non-controlling interest (6,930 ) (4,095 ) (5,953 ) Net income (loss) attributable to the Company $ (110,490 ) $ 12,836 $ (50,084 ) Weighted-average shares of Class A common stock outstanding - basic 90,048,638 88,792,453 83,318,189 Weighted-average shares of Class A common stock outstanding - diluted 90,048,638 110,671,731 83,318,189 Income (loss) per Class A share - basic $ (1.23 ) $ 0.14 $ (0.60 ) Income (loss) per Class A share - diluted $ (1.23 ) $ 0.12 $ (0.60 ) Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenue Total revenue was $296.6 million for the year ended December 31, 2023 and $279.2 million for the year ended December 31, 2022, an increase of $17.4 million or 6.2%.
Commitments and Contingencies to the financial statements in Item 8 of this Annual Report on Form 10-K for more information related to contingent considerations and operating leases liabilities, respectively. Contingent considerations are associated with the acquisition of CPS, which include approximately $1.0 million due within the next twelve months.
Commitments and Contingencies to the financial statements in Item 8 of this Annual Report on Form 10-K for more information related to operating leases liabilities. Based on our current lease terms, $1.6 million of operating lease liabilities are due within the next twelve months, and the remaining lease liabilities of $7.2 million are due within the next ten years.
For the year ended December 31, 2022, incremental revenues of approximately $1.1 million are attributable to the acquisition of Kontrol. Gross profit for the Business Payments segment was $30.4 million for the year ended December 31, 2022 and $23.8 million for the year ended December 31, 2021, representing a $6.6 million or 28.0% year-over-year increase.
For the year ended December 31, 2022, incremental gross profit of approximately $8.4 million is attributable to BCS. Business Payments Revenue for the Business Payments segment was $38.1 million for the year ended December 31, 2023 and $42.6 million for the year ended December 31, 2022, representing a $4.5 million or 10.6% year-over-year decrease.
As of December 31, 2022, we had convertible senior debt outstanding of $433.1 million, net of deferred issuance costs, under the 2026 Notes, and revolving credit facility debt outstanding of $18.2 million, net of deferred issuance costs, under the Amended Credit Agreement. We were in compliance with the related restrictive financial covenants.
As of December 31, 2023, we had convertible senior debt outstanding of $434.2 million, net of deferred issuance costs, under the 2026 Notes. We were in compliance with the related restrictive financial covenants. Additionally, we currently expect that we will remain in compliance with the restrictive financial covenants prospectively.
Cash Flow from Investing Activities Net cash used in investing activities was $39.5 million for the year ended December 31, 2022, due to the capitalization of software development activities.
Cash Flow from Investing Activities Net cash used in investing activities was $24.1 million for the year ended December 31, 2023, due to the capitalization of software development activities and purchases of intangible assets, partially offset by cash received from the disposition of BCS.
The effect of these events on our financial condition, results of operations and cash flows is uncertain and cannot be predicted at this time. 38 In addition, the ultimate impact of the COVID-19 pandemic on our results remains uncertain.
The effect of these events on our financial condition, results of operations and cash flows is uncertain 40 and cannot be predicted at this time. Finally, the impact of all of these various events on our results in 2023 may not be necessarily indicative of their impact on our results in 2024.
RCS is our proprietary clearing and settlement platform through which we market customizable payment processing programs to other ISOs and payment facilitators. BCS provides enterprise resource planning software solutions that are customized to propane and fuel oil dealers; however, BCS was sold on February 15, 2023.
RCS is our proprietary clearing and settlement platform through which we market customizable payment processing programs to other ISOs and payment facilitators. Our Consumer Payments segment also previously included our BCS business, which was sold on February 15, 2023.
Gross profit for the Consumer Payments segment was $148.6 million for the year ended December 31, 2021 and $106.0 million for the year ended December 31, 2020, representing a $42.6 million or 40.2% year-over-year increase. This increase was the result of newly signed clients, the growth of existing clients, as well as the acquisitions of BillingTree, Ventanex and Payix.
Gross profit for the Consumer Payments segment was $216.1 million for the year ended December 31, 2023 and $195.5 million for the year ended December 31, 2022, representing a $20.6 million or 10.5% year-over-year increase. This increase was the result of newly signed clients and the growth of existing clients.
For the year ended December 31, 2021, incremental gross profit of approximately $6.0 million is attributable to Ventanex, CPS, cPayPlus and Kontrol. 44 Non-GAAP Financial Measures This report includes certain non-GAAP financial measures that our management uses to evaluate our operating business, measure our performance and make strategic decisions.
For revenue and gross profit by segments for the year ended December 31, 2022 compared to the year ended December 31, 2021, see Part II, Item 7 of our 2022 Form 10-K, which is incorporated herein by reference. 44 Non-GAAP Financial Measures This report includes certain non-GAAP financial measures that our management uses to evaluate our operating business, measure our performance and make strategic decisions.
Impairment Loss We incurred an impairment loss of $8.1 million for the year ended December 31, 2022, due to trade names write-offs related to BillingTree, Kontrol and Payix. We incurred an impairment loss of $2.2 million for the year ended December 31, 2021, due to trade names write-offs related to TriSource, APS, Ventanex, cPayPlus and CPS.
The fair value of the Business Payments reporting unit was primarily impacted by a change in the discount rate. We incurred an impairment loss of $8.1 million for the year ended December 31, 2022, due to trade names write-offs related to BillingTree, Kontrol and Payix.
(f) Primarily consists of (i) during the year ended December 31, 2022, professional service fees and other costs incurred in connection with the acquisitions of BillingTree, Kontrol and Payix, (ii) during the year ended December 31, 2021, professional service fees and other costs incurred in connection with the acquisitions of Ventanex, cPayPlus, CPS, BillingTree, Kontrol and Payix, as well as professional service expenses related to the January 2021 equity and convertible notes offerings and (iii) during the year ended December 31, 2020, professional service fees and other costs incurred in connection with the acquisition of CPS, and additional transaction expenses incurred in connection with the Business Combination and the acquisitions of TriSource, 47 APS, Ventanex and cPayPlus, as well as professional service expenses related to the June and September 2020 equity offerings.
(f) Primarily consists of (i) during the year ended December 31, 2023, professional service fees and other costs incurred in connection with the disposition of BCS, (ii) during the year ended December 31, 2022, professional service fees and other costs incurred in connection with the acquisitions of BillingTree, Kontrol and Payix and (iii) during the year ended December 31, 2021, professional service fees and other costs incurred in connection 47 with the acquisitions of Ventanex, cPayPlus, CPS, BillingTree, Kontrol and Payix, as well as professional service expenses related to the January 2021 equity and convertible notes offerings (g) Reflects costs associated with reorganization of operations, consulting fees related to our processing services and other operational improvements, including restructuring and integration activities related to our acquired businesses, that were not in the ordinary course during the years ended December 31, 2023, 2022 and 2021.
(j) Reflects realized loss of our interest rate hedging arrangement which terminated in conjunction with the repayment of Term Loans. (k) Reflects the mark-to-market fair value adjustments of the warrant liabilities.
(i) Reflects the loss recognized related to the disposition of BCS. (j) Reflects write-offs of debt issuance costs relating to Term Loans. (k) Reflects realized loss of our interest rate hedging arrangement which terminated in conjunction with the repayment of Term Loans.
These increases in Adjusted EBITDA, Adjusted Net Income and net income (loss) attributable to the Company for the year ended December 31, 2022 are primarily due to the organic growth of our business, along with contributions from acquisitions.
These increases in Adjusted EBITDA and Adjusted Net Income and for the year ended December 31, 2023 were primarily due to the organic growth of our business, which was partially offset from the disposition of BCS and declines in our media payments business.
For the year ended December 31, 2021, reflects one-time payments to certain clients and partners, other payments related to COVID-19, non-cash rent expense and loss on disposal of fixed assets.
For the year ended December 31, 2021, reflects one-time payments to certain clients and partners, other payments related to COVID-19, payments made to third-parties in connection with expansion of our personnel, franchise taxes and other non-income based taxes and non-cash rent expense. Beginning in the year ended December 31, 2023, no longer reflects non-cash rent expense.
Additionally, to be consistent with the current year presentation, for the year ended December 31, 2021 and 2020, reflects payments made to third-parties in connection with expansion of our personnel, franchise taxes and other non-income based taxes. (i) Reflects write-offs of debt issuance costs relating to Term Loans.
Additionally, for the year ended December 31, 2022, reflects one-time severance payments. (h) For the year ended December 31, 2023, reflects payments made to third-parties in connection with an expansion of our personnel, franchise taxes and other non-income based taxes and one-time payments to certain partners.
The strategic vertical markets served within our Business Payments segment primarily include retail automotive, education, field services, governments and municipalities, healthcare, HOA management and hospitality. Macroeconomic Conditions and COVID-19 We have been monitoring the current economic environment in the U.S. and globally – characterized by heightened inflation (including changes in wages), rising interest rates, supply chain issues and slower growth.
Macroeconomic Conditions We have been monitoring the current economic environment in the U.S. and globally – characterized by heightened inflation (including changes in wages), rising interest rates, supply chain issues, slower growth and recent banking system volatility.
Costs of Services Costs of services were $55.5 million for the year ended December 31, 2021 and $41.4 million for the year ended December 31, 2020, an increase of $14.1 million or 33.9%. For the year ended December 31, 2021, incremental costs of services of approximately $8.4 million are attributable to BillingTree, Kontrol and Payix.
Costs of Services Costs of services were $69.7 million for the year ended December 31, 2023 and $64.8 million for the year ended December 31, 2022, an increase of $4.9 million or 7.5%.
As of December 31, 2022, the Amended Credit Agreement provides for a revolving credit facility of $185.0 million. As of December 31, 2022, we had $20.0 million drawn against the revolving credit facility at a variable interest rate of 2.25% plus 1-month LIBOR due 2026.
The undrawn capacity of the existing revolving credit facility under the Amended Credit Agreement became $185.0 million after the repayment. As of December 31, 2023, the Amended Credit Agreement provides for a revolving credit facility of $185.0 million. As of December 31, 2023, we had $0 million drawn against the revolving credit facility.
For the year ended December 31, 2022, incremental costs of services of approximately $7.5 million are attributable to BillingTree, Kontrol and Payix. Selling, General and Administrative Selling, general and administrative expenses were $149.1 million for the year ended December 31, 2022 and $120.1 million for the year ended December 31, 2021, an increase of $29.0 million or 24.2%.
For the year ended December 31, 2022, incremental costs of services of approximately $0.2 million are attributable to BCS.
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Consumer Payments Revenue for the Consumer Payments segment was $194.0 million for the year ended December 31, 2021 and $140.8 million for the year ended December 31, 2020, representing a $53.2 million or 37.8% year-over-year increase.
Gross profit for the Business Payments segment was $28.0 million for the year ended December 31, 2023 and $30.4 million for the year ended December 31, 2022, representing a $2.5 million or 8.1% year-over-year decrease.
Year Ended December 31, ($ in thousand) 2022 2021 Revenue Consumer Payments $ 248,191 $ 194,044 Business Payments 42,600 33,818 Elimination of intersegment revenues (11,564 ) (8,604 ) Total revenue $ 279,227 $ 219,258 Gross profit (1) Consumer Payments $ 195,542 $ 148,614 Business Payments 30,423 23,764 Elimination of intersegment revenues (11,564 ) (8,604 ) Total gross profit $ 214,401 $ 163,774 Total gross profit margin (2) 77% 75% Year Ended December 31, ($ in thousand) 2021 2020 Revenue Consumer Payments $ 194,044 $ 140,844 Business Payments 33,818 20,620 Elimination of intersegment revenues (8,604 ) (6,428 ) Total revenue $ 219,258 $ 155,036 Gross profit (1) Consumer Payments 148,614 106,016 Business Payments 23,764 14,001 Elimination of intersegment revenues (8,604 ) (6,428 ) Total gross profit $ 163,774 $ 113,589 Total gross profit margin (2) 75% 73% (1) Gross profit represents revenue less cost of services.
Year Ended December 31, ($ in thousand) 2023 2022 Revenue Consumer Payments $ 275,708 $ 248,191 Business Payments 38,058 42,600 Elimination of intersegment revenues (17,139 ) (11,564 ) Total revenue $ 296,627 $ 279,227 Gross profit (1) Consumer Payments $ 216,096 $ 195,542 Business Payments 27,967 30,423 Elimination of intersegment revenues (17,139 ) (11,564 ) Total gross profit $ 226,924 $ 214,401 Total gross profit margin (2) 77% 77% (1) Gross profit represents revenue less cost of services (exclusive of depreciation and amortization).
(e) Represents compensation expense associated with equity compensation plans, totaling $20.5 million, $22.3 million and $19.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.
For the years ended December 31, 2022 and 2021, reflects the changes in management’s estimates of the fair value of the liability relating to the TRA. (e) Represents compensation expense associated with equity compensation plans.
Change in Fair Value of Contingent Consideration Change in the fair value of contingent consideration was ($3.3) million for the year ended December 31, 2022, which consisted of fair value adjustments related to the contingent consideration for the acquisitions of CPS, Kontrol, and Payix.
Change in Fair Value of Contingent Consideration Change in the fair value of contingent consideration was $0 for the year ended December 31, 2023, due to all contingent considerations being settled in March 2023.
This increase was the result of newly signed clients, the growth of 41 our existing clients, as well as the acquisitions of BillingTree and Kontrol. For the year ended December 31, 2021, incremental revenues of approximately $42.7 million are attributable to BillingTree, Kontrol and Payix.
This increase was the result of newly signed clients and the growth of our existing clients, partially offset by a decrease in our media payments business due to the cyclical political media spending associated with the 2022 mid-term elections in the prior period. For the year ended December 31, 2022, incremental revenues of approximately $8.6 million are attributable to BCS.
Depreciation and Amortization Depreciation and amortization expenses were $107.8 million for the year ended December 31, 2022 and $89.7 million for year ended December 31, 2021, an increase of $18.1 million or 20.1%. The increase was primarily due to a $20.9 million increase in depreciation and amortization of fixed assets and intangibles from the acquisitions of BillingTree, Kontrol, and Payix.
Depreciation and Amortization Depreciation and amortization expenses were $103.9 million for the year ended December 31, 2023 and $107.8 million for year ended December 31, 2022, a decrease of $3.9 million or 3.6%.
These trade names were strategically phased out, and service offerings are marketed under the REPAY name. Interest Expense Interest expense was $4.4 million for the year ended December 31, 2022 and $3.7 million for the year ended December 31, 2021, an increase of $0.7 million or 18.9%.
These trade names were strategically phased out, and service offerings are marketed under the REPAY name. See Note 8. Intangible Assets and Note 9. Goodwill for more information.
Impairment Loss We incurred an impairment loss of $2.2 million for the year ended December 31, 2021, due to trade names write-offs related to TriSource, APS, Ventanex, cPayPlus and CPS as we strategically phased out these trade names and marketed service offerings under the REPAY name.
Impairment Loss We incurred an impairment loss of $75.8 million for the year ended December 31, 2023, due to a $75.7 million goodwill impairment loss related to the Business Payments segment and a $0.1 million trade name write-off related to Media Payments.
Interest expense consists of interest in respect of our indebtedness under the Successor Credit Agreement, which was entered into in connection with the Business Combination and amended in February 2020, and the Amended Credit Agreement, which replaced the Successor Credit Agreement in February 2021. 39 Change in fair value of warrant liabilities.
Interest expense consists of interest paid in respect of our indebtedness under the Amended Credit Agreement. Interest income consists of interest received on our cash and cash equivalents. Change in fair value of tax receivable liability . This amount represents the change in fair value of the tax receivable agreement liability.
Interest Expense Interest expense was $3.7 million for the year ended December 31, 2021 and $14.4 million for the year ended December 31, 2020, a decrease of $10.7 million or 74.5%. This decrease was due to a lower average outstanding principal balance under our Amended Credit Agreement as compared to the average outstanding principal balance under the Successor Credit Agreement.
Interest expense decreased by $0.6 million compared to the prior year period, due to a lower outstanding principal balance under our Amended Credit Agreement. Interest income increased by $2.6 million compared to the prior year period, due to higher average interest rates earned on our cash and cash equivalents.
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Revenue Total revenue was $219.3 million for the year ended December 31, 2021 and $155.0 million for the year ended December 31, 2020, an increase of $64.3 million or 41.4%.
Interest (Expense) Income, net Interest (expense) income, net was ($1.0) million for the year ended December 31, 2023, and included ($3.8) million of interest expense and $2.8 million of interest income. Interest (expense) income, net was ($4.2) million for the year ended December 31, 2022, and included ($4.4) million of interest expense and $0.2 million of interest income.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeForeign Currency Exchange Rate Risk Invoices for our services are denominated in U.S. dollars and Canadian dollars. We do not expect our future operating results to be significantly affected by foreign currency transaction risk. 55
Biggest changeWe may incur additional borrowings from time to time for general corporate purposes, including working capital and capital expenditures. Foreign Currency Exchange Rate Risk Invoices for our services are denominated in U.S. dollars and Canadian dollars. We do not expect our future operating results to be significantly affected by foreign currency transaction risk. 54
The borrowings accrue interest at either base rate, described above under “ Liquidity and Capital Resources — Indebtedness ,” plus a margin of 1.50% to 2.50% or at an adjusted LIBOR rate plus a margin of 2.50% to 3.50% under the Amended Credit Agreement, in each case depending on the total net leverage ratio, as defined in the respective agreements governing the Amended Credit Agreement.
The borrowings accrue interest at either base rate, described above under “ Liquidity and Capital Resources — Indebtedness ,” plus a margin of 1.50% to 2.50% or at an adjusted SOFR rate plus a margin of 2.50% to 3.50% under the Amended Credit Agreement, in each case depending on the total net leverage ratio, as defined in the Amended Credit Agreement.
As of December 31, 2021, we had convertible senior debt of $429.3 million, net of deferred issuance costs, and revolving credit facility borrowings of $19.2 million, net of deferred issuance costs, outstanding.
As of December 31, 2022, we had convertible senior debt of $433.1 million, net of deferred issuance costs, and revolving credit facility borrowings of $18.2 million, net of deferred issuance costs, outstanding.
Therefore, increases in interest rates may reduce our net income or loss by increasing the cost of debt. As of December 31, 2022, we had convertible senior debt of $433.1 million, net of deferred issuance costs, and revolver borrowings of $18.2 million, net of deferred issuance costs, outstanding under the respective credit agreements.
Therefore, increases in interest rates may reduce our net income or loss by increasing the cost of debt. As of December 31, 2023, we had convertible senior debt of $434.2 million, net of deferred issuance costs, outstanding.
Removed
In October 2019, we entered into a $140.0 million notional interest rate swap agreement, and in February 2020, we entered into a $30.0 million notional interest rate swap agreement, then a revised notional amount of $65.0 million beginning on September 30, 2020.
Removed
These interest rate swap agreements reduce a portion of our exposure to market interest rate risk on certain of our variable-rate debt as discussed in Item II, Part 8, Note 11, “Derivatives. ” These interest rate swaps effectively converted $205.0 million of the outstanding term loan into to fixed rate payments for 57 months and 60 months, respectively.
Removed
Both interest rate swaps were settled in January 2021. We may incur additional borrowings from time to time for general corporate purposes, including working capital and capital expenditures. 54 In July 2017, the U.K. Financial Conduct Authority announced its intention to phase out LIBOR rates by the end of 2021.
Removed
The deadline has been mostly extended and most U.S. dollar-denominated LIBOR maturity tenors will continue to be published until June 30, 2023. It is not possible to predict the effect of any changes in the methods by which the LIBOR is determined, or any other reforms to LIBOR that may be enacted in the United Kingdom or elsewhere.
Removed
Such developments may cause LIBOR to perform differently than in the past, including sudden or prolonged increases or decreases in LIBOR, or cease to exist, resulting in the application of a successor base rate under the Amended Credit Agreement, which in turn could have unpredictable effects on our interest payment obligations under the Amended Credit Agreement.

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