Repay Holdings (RPAY) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01The payment processing industry is highly competitive. Such competition could adversely affect the fees we receive, and as a result, our margins, business, financial condition and results of operations
2. 02Unauthorized disclosure of client or consumer data, whether through breach of our computer systems, computer viruses or otherwise, could expose us to liability and protracted and costly litigation and damage our reputation
3. 03If 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
4. 04If our vertical markets do not increase their acceptance of electronic payments or if there are adverse developments in the electronic payment industry in general, our business, financial condition and results of operations may be adversely affected
5. 05Industry consolidation within our vertical markets can adversely affect our growth or results
6. 06Potential clients or software integration partners may be reluctant to switch to, or develop a relationship with, a new payment processor, which may adversely affect our growth
7. 07Our sales efforts to large enterprises involve considerable time and expense with long and unpredictable sales cycles
8. 08Our revenue is sensitive to shifts in payment mix
9. 09If we fail to comply with the applicable requirements of payment networks and industry self-regulatory organizations, those payment networks or organizations could seek to fine us, suspend us or terminate our registrations through our sponsor banks
10. 10Because 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
11. 11To acquire and retain clients, we depend on our software integration partners that integrate our services and solutions into software used by our clients
12. 12software integration partners do not generally prohibit these partners from providing payment processing solutions to clients (including by acquiring a competing payment processing business)
13. 13Failure to effectively manage risk and prevent fraud could increase our chargeback liability and other liability
14. 14Our systems and those of our third-party providers may fail due to factors beyond our control, which could interrupt our service, resulting in our inability to process payments or provide ancillary services, loss of business, increase in costs and exposure to liability
15. 15We rely on other service and technology providers. If such providers fail in or discontinue providing their services or technology to us, our ability to provide services to clients may be interrupted, and, as a result, our business, financial condition and results of operations could be adversely impacted
16. 16effectively 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
17. 17We are subject to economic and political risk, the business cycles of our clients and software integration partners and the overall level of consumer and commercial spending, which could negatively impact our business, financial condition and results of operations
18. 18Our 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
19. 19Certain payment funding methods expose us to the credit and/or operating risk of our clients
20. 20We 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
21. 21We may not be able to successfully manage our intellectual property and are subject to infringement claims
22. 22The 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
23. 23We have been the subject of various claims and legal proceedings and may become the subject of claims, litigation or investigations which could have a material adverse effect on our business, financial condition or results of operations
24. 24We may not be able to successfully execute our growth strategies
25. 25Our acquisitions subject us to a variety of risks that could harm our business and the anticipated benefits from our acquisitions may not be realized on the expected timeline or at all
26. 26Actual or perceived adverse developments affecting financial institutions could have a material and adverse impact on our business, financial condition or results of operations

Risks Related to Regulation

1. 27anti-money laundering, counter-terrorist financing, restrictions on foreign assets, banking and lending, and import and export restrictions
2. 28The businesses of many of our clients are strictly regulated in every jurisdiction in which they operate, and such regulations, and our clients’ failure to comply with them, could have an adverse effect on our clients’ businesses and, as a result, our results of operations
3. 29The combination of these factors could materially adversely affect the business of our clients and may force our consumer lender or receivables management clients to change their business models. As a result, we may need to be nimble and quickly respond to the evolving needs of the vertical markets that we serve
4. 30We may be required to become licensed under state money transmission statutes
5. 31We must comply with laws and regulations prohibiting unfair or deceptive acts or practices, and any failure to do so could materially and adversely affect our business
6. 32Governmental regulations designed to protect or limit access to or use of consumer information could adversely affect our ability to effectively provide our products and services
7. 33Changes in tax laws or their judicial or administrative interpretations, or becoming subject to additional U.S., state or local taxes that cannot be passed through to our clients, could negatively affect our business, financial condition and results of operations
8. 34Failure to maintain effective systems of internal and disclosure control could have a material adverse effect on our results of operation and financial condition

Risks Related to Our Indebtedness

1. 35Our 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
2. 36Future 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
3. 37merge or consolidate with other companies or transfer all or substantially all of our assets
4. 38flows to repay such debt, which would reduce or eliminate distributions to us, which could also force us into bankruptcy or liquidation
5. 39The conditional conversion feature of the 2026 Notes and the 2029 Notes, if triggered, may adversely affect our financial condition and operating results
6. 40Provisions in the indentures could delay or prevent an otherwise beneficial takeover of the Company

Risks Related to Our Ownership Structure

1. 41We are a holding company and our only material asset is our interest in Hawk Parent, and we are accordingly dependent upon distributions made by our subsidiaries to pay taxes, make payments under the Tax Receivable Agreement, meet our financial obligations under the 2026 Notes or the 2029 Notes and pay dividends
2. 42In certain cases, payments under the Tax Receivable Agreement may exceed the actual tax benefits we realize or be accelerated

Risks Related to our Class A Common Stock

1. 43Future 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
2. 44Our stock price may be volatile, which could negatively affect our business and operations
3. 45Because we do not currently intend to pay dividends, holders of our Class A common stock will benefit from an investment in our Class A common stock only if it appreciates in value
4. 46Delaware 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