Repay Holdings' CFO Timothy Murphy said the tight labor market continues to be one of the payment firm’s biggest headwinds, even as some payments players have recently pared jobs.
The labor market is “strong, which for the economy is good, but as a company we’re having to deal with wage inflation and competitive dynamics where people are potentially having competing offers," Murphy said in an interview last month. “That’s the biggest challenge we’re facing across our company.”
The competition has led the Atlanta-based digital payments company to take a number of aggressive steps to hire and retain workers. Given the fierce competition for talent, “if you’re a high performer and we want to keep you we have to do something,” he said.
For instance, in the past 12 months or so it has begun offering retention packages with increased pay, as well as bonuses if certain high-performing employees agree to stay with the firm for certain lengths of time. The packages can come in response to a competitive offer or proactively, he said.
In addition, with the pool of job candidates for technology and product development positions particularly thin, Repay has contracted with the Ireland-based consultancy firm Protego Technologies to hire workers with the expertise it needs on a longer term contract basis. “If we’re having trouble finding U.S.based developers we can go through Protego,” he said. So far the firm has brought on board over 35 people through that system and plans to up that number “substantially,” he said.
Also, across the firm this year the company is on average giving raises of at least 5% to its workers, he said in a Wednesday email. “It’s not just a salary increase of 3% anymore. You have to be thoughtful about it,” he said. A 5% hike roughly matches the Federal Reserve’s preferred measure of inflation — the core personal consumption expenditures price index — which rose 5.2% in March.
Murphy expects Repay, which has seen its workforce grow to about 600 from about 450 a year ago including acquisitions but not contract workers, to continue to add to its headcount, mainly in the areas of sales, products and technology. Repay's continued push for growth comes as payments players PayPal, Klarna and Bolt all recently moved to restructure their businesses, highlighting increased pressures from rising interest rates, inflation and less plentiful capital, according to a Payments Dive report Thursday. But in a Wednesday email Murphy said there was "no major change in competitive dynamics, and no slow down in growth for our core markets."
Ahead of the SPAC surge
Before joining Repay as a CFO in 2014, Murphy was director of corporate development at Amaya, a provider of technology-based products to the gaming and entertainment industries, according to LinkedIn. Earlier in his career he was also an analyst at BearingPoint, formerly KPMG Consulting, and was an associate in investment banking at Credit Suisse.
Back in 2019 he was at the finance helm when Repay went public via a special purpose acquisition company (SPAC) deal. That transaction closed before a surge of SPAC deals that has tapered off this year. It also came 13 years after the firm launched as a specialist in real-time card processing for loan repayments including in the consumer auto and home mortgage spaces, and business-to-business payments.
Looking back, Murphy said Repay had a timing advantage in going the SPAC route before the market got crowded. “It was a much less understood product but it worked out really well for us,” he said, adding that the capital structure stemming from the SPAC have been "washed out" of the company's financials.
One of the benefits was that there was less competition as the company sought analysts to cover it. The process can sometimes be more difficult for SPACS that don’t have the same built-in following that traditional initial public offerings have due to their ties to the bank groups that bring them public, he said.
Since then SPACs have come under regulatory scrutiny, with the Securities and Exchange Commission (SEC) in March proposing tougher disclosure rules for them aimed at ensuring the same protections offered to investors in traditional initial offerings. Critics such as the CFA Institute say the so-called blank check companies pose risks from celebrity hype, conflicts of interest and lack of basic information.
Murphy said the process is sometimes faster than an IPO but it is initially more complex in terms of the reporting requirements that the company manages related to warrants that are not typically part of an IPO as well as earnouts related to the merger element. But in his company's case, he's confident investors had the information and disclosures they needed understand the company.
"I don’t know what other SPACs do but I can say what we did was very transparent,” Murphy said, adding that he wasn't clear that the SEC’s move to require more stringent disclosures was necessary. “I think a little bit of what they’ve done may be somewhat of an overreach but I understand their intent.”
This year Murphy said the company will focus on organic growth, bringing its leverage down and integrating the eight acquisitions it has made since going public. He also believes that some of its consumer lenders may be more likely to use Repay's payments platform to quickly collect on loans in a more volatile environment, which would benefit its business. It’s “somewhat counter-cyclical,” he said.
In the first quarter Repay reported total revenue of $67.6 million, a 42% increase over the year-earlier period, and net income of $12.9 million, compared to a net loss of $18 million in the year-earlier period.