Repay Holdings Corp (RPAY) stock intrinsic value fair value estimate & owner earnings analysis

Repay processes electronic payments for lenders, collection agencies, credit unions, healthcare providers, auto dealers, municipalities and other businesses. It earns a fee on each dollar or transaction processed and pays commissions to the software providers that embed Repay in their products (about 294 integrations as of December 31, 2025). In 2025 revenue was $309.3 million, down 1.2% from $313.0 million, with Consumer Payments about 85% of revenue and Business Payments about 15%. No client is above 10% of volume or profit. The business changed on June 1, 2026, when Repay closed the acquisition of KUBRA, a business serving utilities, governments and insurers. It was paid for in cash, about $354 million, funded with a new $500 million term loan priced at 5.5% over the SOFR benchmark rate plus the existing $287.5 million of 2.875% convertible notes due 2029. Total debt is now about $787.5 million and cash was about $84 million at June 30, 2026. Because of this, earlier years describe a much less indebted company, and we value the combined business as it now stands. How we measured earnings. We start from operating cash flow, remove swings in working capital, then subtract stock compensation and the capital spending needed to stay in business. Repay's capitalized software development (about $41.5 million in 2025) is treated as a real, recurring cost. The $242.7 million impairment in 2025 (mostly goodwill in Consumer Payments) and about $102 million a year of depreciation and amortization are non-cash and are added back, but they signal that past acquisitions have not earned what was paid for them; a $75.8 million impairment was also taken in 2023. For that reason we credit no growth in any case, and we treat repeated write-offs as a risk in the low case. Owner earnings on this basis, per year, were about $(7.5) million in 2020, $27.5 million in 2021, $22.3 million in 2022, $16.6 million in 2023, $52.9 million in 2024 and $40.8 million in 2025. The 2023 to 2025 window is the base for the standalone business because it follows the 2023 sale of a business unit and the 2024 refinancing; 2025 is the median year on this basis. Adding back the small interest actually paid in those years gives standalone earnings before interest of about $17.7 million, $57.8 million and $50.0 million (median $50.0 million). We did not use the latest quarters to set this level. The trailing change and our assumption. Standalone owner earnings before interest fell about 13.5% in 2025 ($57.8 million to $50.0 million). We assume no change from that level, not a rebound. The 2025 slip traces to identifiable items in the filing: revenue down $3.8 million, legal and litigation fees up $3.4 million and interest income down $1.9 million. Operating cash flow in the first half of 2026 was $57.1 million versus $35.6 million a year earlier, which supports holding the level, but we do not raise it on that basis. Other items outside operating cash flow. Repay owes former owners under a tax receivable agreement carried at $200.9 million at December 31, 2025, and paid $16.3 million on it in 2025 from financing activities, so it is not in owner earnings. We deduct the full $200.9 million in every case. We do not deduct debt; instead the new interest cost is charged against earnings. Annual interest is about $55 million: $500 million at roughly 9.4% (5.5% plus a SOFR rate near 3.9%) is about $46.9 million, and the convertible notes cost about $8.3 million. Interest paid in 2025 was only $9.1 million. The 2029 convertible notes convert at $13.02 a share, well above any value we derive, so we assume no share issuance from them. Value is measured per 95.1 million shares: 89.9 million Class A shares plus 5.3 million exchangeable units. KUBRA's contribution. In June 2026, its first month, KUBRA added about $20.8 million of revenue and about $2.9 million of net income (about $34.8 million a year), before the acquisition financing. That is one month of data, so it carries real uncertainty, and we do not credit growth for it. Management has said it has already identified about $4.5 million of annual cost savings in place; we include this only in the high case. Low case: value of about $(2.27) per share. Standalone earnings before interest fall back to $36.9 million, the middle of the four years 2022 to 2025, which include the heavy-spending years 2022 and 2023, and KUBRA delivers only half of its June pace ($17.4 million). After roughly $55 million of interest, that leaves about $(0.9) million a year, so the business is worth about $(15) million, and after the $200.9 million tax receivable obligation the company appears to owe more than it is worth, by roughly $216 million. The term loan must be repaid or refinanced no later than shortly before the convertible notes mature in 2029, and management describes pro forma leverage at about 3.7 times, which makes this outcome a real risk rather than a remote one. Business Payments revenue already fell 8.5% in 2025 on previously announced client losses and the absence of 2024 election-year media spending. Middle case: about $3.07 per share. Standalone earnings before interest of $50.0 million, plus KUBRA at $34.8 million, less $55.2 million of interest, gives about $29.6 million a year, held flat. At 6% that is worth about $493 million; after the $200.9 million tax receivable obligation, about $292 million, or $3.07 a share. We credit no growth: much of Repay's revenue growth through 2022 came with acquisitions, several of which have since been partly written off, and revenue slipped in 2025. Management's 2026 revenue and profit guidance and its 10 to 12 percent organic growth goal are not used, because they are targets on adjusted measures, not results. High case: about $5.23 per share. Standalone earnings return to the 2024 level of $57.8 million (achieved in the past), KUBRA holds its June pace of $34.8 million, and the $4.5 million of announced savings is realized, for $97.1 million before interest and about $41.9 million after $55.2 million of interest. At 6% that is about $698 million, or about $497 million after the tax receivable obligation. What would make this wrong: KUBRA's June result may not be representative; the interest rate on the term loan floats with SOFR; and the size of the tax receivable payments depends on future taxable income. We could not confirm KUBRA's capital spending or stock compensation from the filings available, so its earnings contribution is measured from reported net income alone. The low-cost 2.875% coupon on the convertible notes also ends when they are repaid or refinanced in 2029, which would raise interest costs beyond what we assume. Margin-of-safety price: $1.20 a share, roughly 60% below the middle case. The company is highly leveraged after a large acquisition, has a history of write-offs, has just one month of results for the largest new piece, and the low case is below zero. The margin-of-safety price is set low enough to allow for the low case proving partly true.