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Repay Holdings Corp (NASDAQ:RPAY)
Q4 2019 Earnings Call
Mar 16, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to today's Earnings Conference Call being hosted by REPAY. With us today are John Morris, Co-Founder and Chief Executive Officer, and Tim Murphy, Chief Financial Officer.

During this call, we will be making forward-looking statements about our beliefs and estimates regarding future events and results. These forward-looking statements are subject to risks and uncertainties, including those set forth in the SEC filings related to today's results. Actual results might differ materially from any forward-looking statements that we make today. The forward-looking statements speak only as of today and we do not assume any obligation or intent to update them, except as required by law.

In an effort to provide additional information to investors, today's discussion will also include references to certain non-GAAP financial measures, an explanation of these non-GAAP financial measures, as well as a reconciliation of these non-GAAP measures to the nearest GAAP financial measures can be found in our earnings release, available in the company's IR site.

I would now like to turn the call over to Mr. Morris. Please go ahead.

John Morris -- Chief Executive Officer and Co-Founder, Director

Thank you, operator, and good afternoon everyone. We know that COVID-19 is top of mind right now. So, we wanted to begin with a few preliminary thoughts on the virus and how it may impact our business.

First, the health and well-being of our employees, customers, partners, investors and analysts is always on our minds. We hope everyone is staying healthy and safe during this difficult and challenging times.

Second, as we all know, recent world events are unprecedented. While we don't have complete visibility into future developments, we are monitoring the situation closely. We believe that our diverse merchant base and the resilience of the verticals we serve, as well as the secular shift to the more innovative and integrated payment solutions in which we specialize, provide us with unique characteristics that should help insulate us in any type of macro environment.

Just a few thoughts regarding our loan repayment business. A large majority of the payments, we facilitate, are non-discretionary financial obligations, that are recurring in nature such as auto loan payments. These types of payments are usually set up to be automatically paid and are still very necessary even in an economic downturn. Payment volumes could be adversely impacted in a recession, if consumer credit were to tighten. However, this would likely be somewhat offset by additional lending to higher FICO-score-consumers drifting into the non-prime segment. Additionally, we think debit card penetration would accelerate in this type of environment.

And then, with respect to our B2B business. These types of payments were also not discretionary. These are businesses that need to pay each other for services and goods rendered. This world continues to remain right for digitalization in real-time and we have the full suite of payment solutions to enable that experience.

Today, we are providing our outlook for 2020, which Tim will review shortly. Based on what we currently see in our business, our discussions with our customers and our experience operating this business through various types of environments, we are comfortable with this guidance. We're reporting our first quarter results in May and we'll provide further updates on what we are seeing in our business at that time.

Now, let's dive into a more positive recap of our performance. 2019 was an outstanding and transformative year for REPAY. In July, we became a publicly traded company through our merger with Thunder Bridge, providing us with access to capital and successfully positioning the business for long-term growth. We subsequently closed two highly strategic acquisitions in[Phonetic] TriSource Solutions, which increased our back-end capabilities, and APS Payments, which brought us into the B2B vertical and increased our TAM by over $1 trillion. Looking forward, we are excited about a great year ahead in 2020, which is supported by our strong outlook.

On today's call, I wanted to touch on three key topics: first, recap the fourth quarter and full-year results; second, review our progress against our growth objectives; and lastly, discuss our plans for 2020 and beyond.

First, to move on to our high level financial results. We are pleased with our results in the fourth quarter, which included total volume and gross profit growth of 72% and 67% respectively. On an organic basis, gross profit increased 27% in the fourth quarter and we achieved adjusted EBITDA growth of 52% to $14.7 million compared to the fourth quarter of 2018. Q4 solidified a very successful year for REPAY, which included total volume and gross profit growth of 44% and 43% respectively, as well as adjusted EBITDA growth of 32% to $48.4 million. Organically, we also had a very productive year, reporting 29% organic gross profit growth compared to 2018.

Now, moving on to progress against our growth objectives. We have made significant progress across our key growth categories, which has driven our success.

Starting with organic growth, we continued to address large underserved loan repayment verticals and increased debit penetration with existing customers. We organically added four software partners during the quarter. In addition, we added seven integrations in the B2B space through our acquisition of APS in the fourth quarter. That brings our total to 70 integrations at the end of 2019. These are valuable to our business from a sales and marketing perspective and also contribute to our industry-leading retention rate.

Also, REPAY's direct sales force continues to promote card acceptance by providing thought leadership at key industry conferences and events. Since joining the Jack Henry Symitar Vendor Integration Program in late last year, we've been able to penetrate credit unions, which is a large and underserved market in the auto lending space. On that note, we recently added Corelation as a software partner, who drives innovation in core processing through over 75 of America's credit unions.

Moving on to our international efforts, 2020 will be our second year operating in Canada. The team is very busy building our ecosystem in the country, working on both the front- and the back-end as well as integrations to various software partners. We've also had early success on building our customer pipeline in Canada. This will be another year of building a base for this business and we continue to believe that 2021 will be an inflection point, after which our work will begin to seeing more meaningful contribution. We really think there is a great opportunity in the country to be a clear industry leader.

We also remain focused on finding operational efficiencies across our business. in the fourth quarter, we continued to work with our various processing partners on ways to more effectively and efficiently grow volumes. We are starting to convert merchants away from the APS back-end and third-party gateways to the REPAY platform and expect this process to ramp up in the second half of 2020.

On the M&A front, as you know, during the fourth quarter, we completed the acquisition of APS Payments, which was our second acquisition in 2019, and our first foray into the B2B vertical. We are excited about this new and highly underserved vertical has a very large TAM with many attractive sub-verticals, providing numerous organic and inorganic growth opportunities. Secondly, on the M&A front, we recently announced the acquisition of Ventanex, which brings us significant growth opportunities into the mortgage servicing and B2B healthcare market. The Ventanex's technology platform offers inbound and outbound AP omni-channel payment solutions and complex rules-based processing. It enables its clients to stand and receive funds across numerous payment types, including but not limited to ACH, debit card, credit card, virtual card and check. The Ventanex solution is deeply integrated into its clients' workflow via connectivity with their primary enterprise software solutions, which is definitely an advantage.

The mortgage servicing and B2B healthcare markets are in the early stages of a secular shift from legacy payment mediums to the more innovative and varied payment solutions in which we specialize. Additionally, Ventanex's consumer finance and healthcare B2B focus aligns well with our existing client base. We're in the early stages of exploring potential cross-sell opportunities between both customer sets, including AP functionality, which will provide those customers more robust offerings. More on that during future calls.

Before I turn the call over to Tim, I want to lay out our outlook and priorities for 2020. For the year, we are expecting our gross profit to grow 50% at the midpoint, which will be driven by three levers. First, our existing clients, for which we have industry-leading volume retention.

Second, we will continue to expand usage and win new customers in existing and new verticals by highlighting our proprietary integrated payment technology platform, which reduces complexities for merchants, enhances the customer experience. We currently have 78 individuals on our sales organization, including 50 direct sales reps, up from 40 and 27 at the end of 2018, who will be focused on these efforts. And as I said earlier, as of the end of 2019, we had 70 software partners, who will be assisting this team with referrals. We continue to expect to add one to three per quarter across all of our verticals going forward.

And finally in our 2020 numbers, we will have the full year benefit of TriSource and APS solutions, along with 10.5 months of Ventanex contribution, which we acquired in February. Importantly, supporting these efforts is a total addressable market opportunity of $2.3 trillion, which is underserved today. There is a huge secular shift from cash, checks and ACH to a real-time electronic payment. So, we believe there is a solid runway for organic growth in 2020 and beyond. And of course, our M&A pipeline continues to be active as we look for attractive verticals that are large, growing and underserved, as well as we expand our footprint in current verticals. We are positioned well for these inorganic opportunities.

To wrap up, we are pleased with our performance during the quarter and 2019 as a whole, and are even more excited about what is to come. All of this wouldn't be possible without our incredible team here at REPAY. I would like to thank each and every one of them for all their hard work and determination over the past year and look forward to growing the company alongside them in 2020.

I will now turn the call over to Tim to discuss Q4 and full-year results in detail, and to go over our guidance for 2020. Tim?

Tim Murphy -- Chief Financial Officer

Thank you, John.

Before I dive into our financial results, I wanted to highlight that the company has adopted the new revenue recognition standard, ASC Topic 606 via the modified retrospective method of adoption. The adoption of ASC 606 resulted in presentation changes in our statements of income with revenues and expenses presented net of interchange, network and other fees, in accordance with Topic 606. Under this method, 2018 results are not restated.

To further clarify, in addition to now showing revenue after interchange and network fees, another change resulting from the adoption of 606 was to reduce revenue by certain other processing-related fees of $3.6 million for full-year 2019. While there was no impact to gross profit or earnings due to the adoption of 606, this change to other processing-related fees resulted in full-year '19 gross margins increasing by approximately 250 basis points. Please refer to Slide 6 of the Q4 earnings supplement for additional details.

Now, let's move on to our solid Q4 and full-year financial results, before I review our outlook for 2020. REPAY delivered another strong quarter across all of our key metrics, leading us to exceed or hit the high end of our targets, initially laid out for 2019. For the full year, as compared to 2018, card payment volume increased 44%; total revenue on a combined basis, excluding the impact of 606, increased 28%; gross profit grew 43% and adjusted EBITDA increased 32%. Organically, we also had a very productive year, reporting 29% organic gross profit growth compared to 2018.

For the fourth quarter, card payment volume was $3.4 billion, an increase of 72% over the prior year's fourth quarter. Total revenue, excluding the impact of 606 on a combined basis, was $49.3 million, an increase of 45% over the prior-year fourth quarter. TriSource and APS contributed $6.5 million and $3.2 million of revenue respectively during the fourth quarter.

Moving on to expenses in the quarter. Excluding the impact of 606, interchange and network fees were $15 million compared to $12.5 million in the fourth quarter of 2018. The increase was primarily due to increased card payment volume, which leads to higher interchange and network fees. Including the impact of 606, other cost of services were $9.3 million, and excluding the impact of 606 other cost of services were $9.9 million, compared to $6.9 million in the fourth quarter of 2018. The increase was primarily due to the additions of TriSource and APS. However, when excluding TriSource and APS, the amount was down in Q4, consistent with trends in prior periods.

Gross profit was $24.3 million, an increase of 67% over the prior year's fourth quarter. On an organic basis, gross profit increased 27% in the fourth quarter of 2019 compared to the fourth quarter of 2018. As a reminder, this is a key metric for us, as this is how we price new customer deals and our sales team incentive structure is also based on gross profit.SG&A was $24.8 million compared to $8.1 million in the fourth quarter of 2018. The increase was primarily due to stock compensation expense related to new equity issuances, transaction costs related to our acquisitions, new hires and public company costs.

Fourth quarter pro forma net loss was $7.5 million, compared to net income of $2.1 million in the fourth quarter of 2018. The decrease was mainly the result of the increased SG&A for the reasons just mentioned. Fourth quarter adjusted net income was $12.3 million or $0.20 per share. Please note that for comparability purposes in 2019, we did not include a tax effect adjustment. However, we intend to do so going forward in 2020.

Lastly, fourth quarter adjusted EBITDA was $14.7 million, an increase of 52% over the prior-year fourth quarter. Fourth quarter adjusted EBITDA, as a percentage of processing and service fees, was 43%, excluding the impact of 606, compared to 45% in the prior-year fourth quarter. This slight decrease is primarily a result of additional costs related to becoming a public company such as new legal, accounting and tax resources. Additionally, TriSource and APS EBITDA margins are slightly below our loan repayment business.

As you all know, on February 10, we announced the acquisition of Ventanex for up to $50 million, of which $36 million was paid at closing and the remaining $14 million may be payable through performance-based earnouts. The Ventanex acquisition was financed with a combination of cash on-hand and borrowings under REPAY's existing credit facility. As part of the financing for this transaction, we entered into an agreement with Truist Bank and other members of our existing bank group to amend and upsize our existing credit facility by $115 million to provide additional capacity for growth. Combined pro forma LTM net leverage is estimated to be approximately 3.7 times on a post-transaction basis.

Moving on to our full-year 2020 outlook. Card payment volume is anticipated to be between $15.5 billion and $16 billion. Total revenue is anticipated to be between $155 million and $165 million; this includes the adoption of 606. Gross profit is expected to be between $115 million and $120 million. And adjusted EBITDA is expected to be between $66 million and $70 million.

We will not be providing quarterly guidance, but I wanted to remind you of the seasonality in our business. Volumes 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 in our loan repayments business. This increase is due to consumers' receipt of tax refunds and increases in repayment activity levels that follow.

Finally, I want to give you an update on our share count. We began the quarter with 62.7 million shares outstanding on an as-converted basis. Based upon the achievement of certain performance hurdles toward the end of Q4, we added another 4.3 million shares, ending 2019 with approximately 67 million shares outstanding on as-converted basis. We posted a supplemental deck on our IR site, which includes a slide that lays out our share count.

I'll now turn the call back over to the operator to take your questions. Operator?

Questions and Answers:

Operator

Thank you. At this time, we will be conducting a question-and-answer session.

[Operator Instructions]

Our first questions come from the line of Andrew Jeffrey of SunTrust. Please proceed with your questions.

Andrew Jeffrey -- SunTrust -- Analyst

Hi guys, certainly appreciate you taking the question. Good results in a tough environment for sure. A couple of things, I guess, I'm thinking about B2B for starters, I know, it's a relatively small business for REPAY, but a big market. Could you maybe comment a little bit on what you think about the potential for what we're currently seeing as far as disruptions being a real catalyst for electronic B2B payments? It seems like that would be a pretty important lever for a lot of companies, especially in the downturn to increase efficiency of their accounts payable and receivable functions. Is that something you're sort of looking forward to? Or do you think that's more of a '21 event? But, I'd love to hear high-level thoughts on that.

Tim Murphy -- Chief Financial Officer

Yeah. Thanks, Andrew. We agree with you. We think that there's been a shift[Phonetic] to more real-time payments and electronic payments within B2B. And certainly this type of environment could accelerate that, as people want to move away from checks and want to move to electronic payments, and as you said, automated payments that are efficiently reconciled through their ERP systems. So, it's probably too early to say exactly how long that will take, but we think that it could certainly be an accelerator to electronic, as you mentioned.

John Morris -- Chief Executive Officer and Co-Founder, Director

I also would mention, as we all aware of the COVID-19 situations, the fact that you really can't cut checks from home could increase the thought process around this.

Andrew Jeffrey -- SunTrust -- Analyst

Yeah, I think that's a very good point. And then, good to see the roster of ISVs continue to grow at a healthy pace, which sounds like you added, what, maybe eight to 10 in the quarter. Are those generally along your existing verticals or they concentrated in one vertical market than other auto versus personal, just a sense of how we might expect ISV partnerships? How they've grown and can we expect them to grow going forward?

Tim Murphy -- Chief Financial Officer

Yeah. So, we added 11 in the quarter, four were organic and seven came from the APS acquisition. So, we ended with 70. And so, of the four, I believe fewer in credit unions, one was in personal loans, and I believe one was in auto, and then the other seven would be in B2B.

Andrew Jeffrey -- SunTrust -- Analyst

Got it. Okay. I'll jump back in the queue. Thank you.

Tim Murphy -- Chief Financial Officer

Thank you.

Operator

Our next questions come from the line of Bob Napoli of William Blair. Please proceed with your question.

Bob Napoli -- William Blair -- Analyst

Thank you and good afternoon. Good quarter. Just, and I'm sorry, I'm juggling two calls. I apologize, if this was brought up in the initial comments. Just in your guidance, I mean, how are you -- as far as we progress through the year, what are you seeing like minute-to-minute from the effects of the virus on the business? And what are you hearing from your customers?

Tim Murphy -- Chief Financial Officer

Yeah. Thanks, Bob. So, we have been reaching out to our customers regularly. And so far, what we're hearing is that they have a real need for remote payments. They're looking for more ways to accept payments that are not coming through the store and not coming through cash. And so, they're asking us about how they can adopt our different payment methods and channels. We've also recently seen a slight uptick in demand for our instant funding product, so we can instantly fund a loan to the debit card versus having to hand someone cash in a physical branch location. So, we are hearing that our tools seem to meet the needs of our merchants in this environment, but obviously it's rapidly evolving. And so, it's just something like you mentioned that we're monitoring throughout each day. And in terms of how we think about our outlook, we've taken into account all the inputs and information we have available to us and factored that in. So, that's the latest from our customers.

Bob Napoli -- William Blair -- Analyst

I mean, I would imagine that some of your customers are looking [Indecipherable], have you had discussions, I mean, not sure if you see that right away, but is, are you seeing and maybe it's too early. I think, every day seems like a month, these days. But are you seeing, so you haven't seen any change in trend, you feel like your penetration rate is going up, offsetting any -- some potential decline in business and payments?

Tim Murphy -- Chief Financial Officer

That's right. Yeah. Like you said, it's fast moving, but we're seeing just additional need for our products and additional demand. We have not seen any specific incidents of referrals or deferrals, excuse me -- and we're just really seeing customers trying to figure out how they can give more options for repayment to their borrowers.

Bob Napoli -- William Blair -- Analyst

And then, just last question, on the healthcare business, what is the growth rate of that business? And what is the game plan to really ramp that up?

Tim Murphy -- Chief Financial Officer

Yeah. And so, that's one aspect of the Ventanex acquisition, -- they do mortgage servicing as well as B2B healthcare. That business is growing nicely, probably above our legacy business, in the low-20% range. And we think that it's a dynamic situation right now, obviously around healthcare, but the early read is that you could see increased claims, which could potentially lead to increased payment volume activity.

Bob Napoli -- William Blair -- Analyst

Thank you. Appreciate it.

Operator

Our next question comes from the line of Craig Maurer of Autonomous Research. Please proceed with your questions.

Craig Maurer -- Autonomous Research -- Analyst

Yeah, hi, John and Tim. Hope, everybody is well. Quick question on auto, we're seeing commentary from certain banks suggesting that there has been a titanic shift in activity recently from new car purchases to used car purchases. Considering that you guys are 100% used cars, have you been seeing this in your business? And does this --- how do you think about that for the rest of the year? Thanks.

John Morris -- Chief Executive Officer and Co-Founder, Director

Yeah, yeah. Thank you, Craig. Yeah. We are seeing that. So, these are financial institutions or non-banks. So, non-bank lenders, and as you said, we are focused on used car sales. And so, what we've been seeing is more lending activity as used car sales pick up, and lot of positive commentary around that trend. So, we feel good about that. As you know and as we've discussed, our big focus right now is growing our auto business than growing our B2B business, and that's fits in nicely with that.

Craig Maurer -- Autonomous Research -- Analyst

Thanks a lot.

Operator

Our next question comes from the line of Mike Grondahl of Northland Capital Markets. Please proceed with your questions.

Mike Grondahl -- Northland Capital Markets -- Analyst

Yeah. Thanks guys. Hey, just at a high level, what're you seeing in, kind of, the personal loan space and also with your credit union customers?

Tim Murphy -- Chief Financial Officer

Personal loans, we feel good about. We feel like there's been additional adoption. Like I said, as our personal lenders used more and more of their payment channels and methods, we see the use of debit cards increase. Our debit card penetration has gone up. That's where I mentioned, we've seen a slight uptick in demand for the instant funding product, given recent developments. And so, we feel good about that.

And then, the Jack Henry Symitar Vendor Integration is starting to show some benefits. We've gotten a couple of fairly large credit unions now through that network. And as we mentioned on the call, we've recently signed up another partner called Corelation, which touches over 75 of the Top credit unions across the country. So, now starting to get some good leads from that relationship as well. So, and then, that kind of dovetails nicely with the commentary around auto loans and potential increase in auto loan activity, given the focus on used car sales.

Mike Grondahl -- Northland Capital Markets -- Analyst

Got it. Just to follow-up, with the APS acquisition, that B2B vertical, very large. Any update there? Kind of, obviously you've got the seven integrated partners, you called out. But what else should we be watching there?

John Morris -- Chief Executive Officer and Co-Founder, Director

Yeah. I would say that particular acquisition is on track. We are working through our integration work streams and that's going well. We think there is significant opportunity there. Specifically, we are on the AR side. I think we will look -- as we move through the spring in this particular environment and we think that there is additional opportunities for us to add some unique channel partners as well as some integrations there. If I look longer term, our ability to possibly, as I mentioned in our release, to cross-sell some of our AP automation features as well as to build some of that out over time. So, we see significant opportunity in the whole B2B vertical that we'll continue to invest in over time organically. And if there is an opportunity to add to that inorganically, we would look to do that.

Mike Grondahl -- Northland Capital Markets -- Analyst

Okay. Thank you.

Operator

Our next questions come from the line of Sanjay Sakhrani of KBW. Please proceed with your questions.

Sanjay Sakhrani -- KBW -- Analyst

All right. Thank you guys. Hope, you guys are safe and healthy. I guess, quick question, Tim, on the outlook. Could you help me disaggregate, as we think about the growth rates, how much is coming from organic versus acquired, just for clarity purposes? And then, secondly, are there any qualitative, sort of, backdrop type of data points you could provide that informed you to come up with that guidance?

Tim Murphy -- Chief Financial Officer

Yes. So, thanks for the questions. I'll point you to the earnings supplements. We actually put a bridge in the earning supplement Slide 11 and we wanted to show you for gross profit. If you'd look at the midpoint of our range, you can see that's an increase of $39 million; $15 million of that is coming from organic growth and $24 million is coming from growth from acquired entities. So, it's total growth of 50%, but it implies organic growth of about 20%. So, we still feel really good about organic growth. Obviously, we're seeing a big benefit of the full year of the acquired entities. But organic is still strong and it's driven by a lot of the same factors we've been talking about, which is increased debit penetration with existing customers; increasing our software relationships, which provide us access to new customers in existing verticals; and then, just focusing on expanding our sales force, as John mentioned, we have significantly increased our sales force, both from a direct sales rep perspective as well as a sales organization and infrastructure perspective. And we think all that helps facilitate organic growth.

Sanjay Sakhrani -- KBW -- Analyst

Got it. And I guess, and just in terms of the qualitative factors, that might be informing your guidance because you mentioned you're incorporating what you're seeing today.

Tim Murphy -- Chief Financial Officer

Yes. Yeah, we are surveying our top customers and talking to our sales people. We have looked at some of the data around tax refunds. As you know, like I mentioned on the call, our business is somewhat tied to tax refunds, and consumers taking those refunds and making -- larger than typical payments are actually paying off loans. We think the data on that has been strong. Tax return volume data has been strong. We see that some of it may slip a little bit into Q2, if there are delays in refund processing. But in terms of the overall outlook, we think the volume is strong year-over-year. So, that's something that we've looked at recently as well.

Sanjay Sakhrani -- KBW -- Analyst

Okay. And I guess, just following up on that, if we look at past examples of stuff like this, where there might be an epidemic or a natural event like a hurricane, that probably has impacted some of your merchants. I'm curious, is there anything that you can disaggregate from that, that sort of was a fallout as a result? Was there a slowdown and then a sharp pickup? I mean, maybe anything that you can qualitatively give us in terms of that, would be helpful.

Tim Murphy -- Chief Financial Officer

Yeah, I mean I think that they may experience short-term decrease in repayment activity, just because of the immediate disruption. What they do is they then shift to trying to figure out the most efficient way to get repaid and we help solve that problem for them, which is why we're seeing some of them reach out to us now, trying to figure out how to get access to more efficient remote non-cash payment methods. And we think that, that will help accelerate debit penetration. And so, we've seen in the past, where that may be a short-lived phenomenon, where they are declining repayments just because of immediate disruptive nature of whatever that event may be. But then, as they offer more payment options for their customers which we help and facilitate, we see that pick up fairly quickly.

Sanjay Sakhrani -- KBW -- Analyst

Got it. And I guess, final question, sorry, on capital management. Obviously, the stock has been hit a little bit hard. It looks like it's up quite a bit in the aftermarket that may not be that bad. But if we think about sort of capital priorities, I assume it's still sort of slanted toward acquisitions, and inorganic growth to the extent that there are opportunities. When we look at, is that true, number one, part one? And number 2 is, if we look at sort of the M&A pipeline, have the valuations actually gotten more attractive and might lead you down a path to be more aggressive here or is it still pretty stable to where things were a couple of weeks ago? Thank you.

Tim Murphy -- Chief Financial Officer

Yeah. So, on the first point, we are still focused on growth. And so, from a capital deployment perspective, we would want to focus on M&A opportunities, just facilitating organic growth through hiring sales and technology people. I think that the pipeline is active. It remains full. We've seen probably some short-term decrease in valuations as everyone has, but we're not sure how long that will last. And that's not really driving us being particularly aggressive around any of these situations, it's more about finding the right target and making sure it's a great strategic fit and that's an attractive valuation. So, that's how we generally look at it.

Sanjay Sakhrani -- KBW -- Analyst

Great. Thank you, guys.

Operator

Our next questions come from the line of Joseph Vafi of Canaccord Genuity. Please proceed with your questions.

Joseph Vafi -- Canaccord Genuity -- Analyst

Hey guys, good afternoon. Good results in what's turning into a tough environment.I thought, maybe, will just follow up on the M&A side of things. It looks like you've recently done some -- a lot of touchpoints on the M&A side moving into a lot of new markets. And just wondering, when you think about M&A from here, are you thinking about bolstering presences in existing markets where you are in or have recently entered in, or are there new markets that still makes sense just thinking that REPAY sits in more of a middle market situation, where M&A moves the needle more than perhaps for a bunch of big acquiree[Phonetic]?

Tim Murphy -- Chief Financial Officer

Yeah. Thanks, Joe. We think both. We looked at existing verticals and we've got some targets in mind that it could make sense for us, as John said, in the B2B space. I mean we've now recognized some competitors within the ERPs. And so, it would be a combination of looking at players in the existing space than also just looking at the attributes of new verticals. So, as we look at large verticals that are growing quickly, that are underserved from a payment perspective, that are highly focused on integrated payments, that have attractive margins and that could use our technology to enhance their product offering. And so, when we think about new verticals, that's how we think about from an attribute perspective. And if it were to check all the attributes, then we would be interested in, and it wouldn't have to be an existing vertical.

Joseph Vafi -- Canaccord Genuity -- Analyst

Okay, that's helpful. And then, I know you mentioned in some of your prepared comments about perhaps certain groups of consumers and borrowers might drift into more of a sub-prime category. I was wondering if you could perhaps explain the mechanism how that may, kind of, accrue to you over time and how that might work with your customer base?

Tim Murphy -- Chief Financial Officer

Yeah. And so, what we're referencing there was, in a period of tightening where banks may be cutting credit to certain FICO score borrowers, those borrowers still need loans. And so, if they, -- for example, in an auto loan, if they could no longer get a bank auto loan, they may come to our customers to get an auto loan. And so, if there were any decrease in repayment activity in that type of environment, we think there actually could be a slight offset by having new originations. And those originations would be to higher credit borrowers that would be more likely to repay. And so, that's really the trend that we were mentioning and that's something that we saw and heard from our customers in the last downturn.

Joseph Vafi -- Canaccord Genuity -- Analyst

Sure. And then, maybe just one quick final one. I don't know if I heard organic payment volume number for Q4, I might have missed it, there were a couple of calls going on. Thanks a lot, and good quarter, guys.

Tim Murphy -- Chief Financial Officer

Thank you. Yeah. We mentioned organic gross profit growth in Q4 about 27% and organic volume growth was in the low-20s.

Joseph Vafi -- Canaccord Genuity -- Analyst

Great, thank you.

Operator

Our next questions come from the line of Mark Palmer of BTIG. Please proceed with your questions.

Mark Palmer -- BTIG -- Analyst

Yes. Gentlemen, thank you. Just a housekeeping. And then, first of all, what was the company's leverage ratio and cash balance at the quarter end?

Tim Murphy -- Chief Financial Officer

Yes. So, it was about 3.7 times net and it's about $25 million of cash. And so, that includes -- that's pro forma for the acquisition of Ventanex.

Mark Palmer -- BTIG -- Analyst

Okay. Thank you. And as you're thinking about M&A, what are you comfortable with regard to that leverage ratio, where it could go to that you'd still feel like you're in good stead?

Tim Murphy -- Chief Financial Officer

Yeah. I mean, we are cognizant of the 4 times level, really wouldn't want to push much beyond that. It would have to be a really, really strategic deal for us that we saw a path to de-levering down closer to 3 times within, call it, 12 months to 18 months. But, we're probably comfortable, right around 4 times net leverage. And so, we would just have to consider that as part of funding any potential acquisition.

Mark Palmer -- BTIG -- Analyst

Okay. Thank you, very much.

Operator

Our next questions come from the line of Joseph Foresi of Cantor Fitzgerald. Please proceed with your questions.

Daniel Reagan -- Cantor Fitzgerald -- Analyst

Hi, this is Daniel Regan on, on behalf of Joe Foresi. So, I was just wondering how we should think about the impact of the APS and Ventanex integrations as it pertains to margins in 2020 and the levers involved in hitting the adjusted EBITDA range?

Tim Murphy -- Chief Financial Officer

Yeah. And so, if you'll notice, the margins in 2020 based on the outlook are in the 72% to 73% range and that compares to about 75% in 2019. And so, as we've mentioned, from a gross margin perspective, TriSource and Ventanex were a little bit below our legacy business. And so, there, that is contributing to the gross profit margin declining slightly. From an organic perspective in our legacy loan repayment business, we don't see any margin compressions. This is really due to the mix shift related to the acquisitions and those integrations are growing nicely. And as we mentioned, we're starting to convert -- just starting to convert merchants from APS's back-end and gateway to our back-end and gateway, and we see that really ramping up in the second half of the year. And that should help with slight margin pick up going into 2021. That total dollar amount of the synergies on the APS side is not too large overall relative to the rest of the business, but it share along for us nicely[Phonetic].

Daniel Reagan -- Cantor Fitzgerald -- Analyst

Got it. Okay, great. And then, it sounds like REPAY is mostly shielded from COVID-19, due to the recurring nature of the business, but potentially could see negative impacts coming from a weaker consumer, if it were to come to that. I'm just curious, what your expectations are for the next few months, and then, also as it relates to the full year?Thank you.

Tim Murphy -- Chief Financial Officer

Yeah. I mean, based on the information we have today, available to us, and as mentioned, after surveying our customers and looking at some industry data around trends in tax refunds and other data sources, we feel comfortable with what we put out today. We really are able to forecast or project how quickly this will spread. It's a very fast-moving situation as we've mentioned and it's evolving each and every day. So, but based on the information we have available to us now, this is where we feel comfortable.

Daniel Reagan -- Cantor Fitzgerald -- Analyst

Perfect. Thank you.

Operator

[Operator Instructions]Our next questions come from the line of Timothy Chiodo of Credit Suisse. Please proceed with your questions.

Timothy Chiodo -- Credit Suisse -- Analyst

Thanks. Hey, John, Tim, question on the ISV adds. So, you talked about 11 of them, four of them organic. Just focusing on the four organic and along [Indecipherable] previously, when you look at the other payment platforms that might be working with those ISVs, are there any or are you the only partner that's working with them? And it's just a matter of penetrating debit or is there someone in there that perhaps you could gain share from? Maybe just give us a little bit of that landscape in terms of who else is in there, if anyone?

John Morris -- Chief Executive Officer and Co-Founder, Director

Yeah, this is John. So, very few of them were exclusive[Phonetic]. We may be the preferred provider in many situations. Specifically say like Symitar, we would not be the only one there. But how we are using our integrations specifically for adding to the additional payment channels, to enhance the consumer experience or through the repayment of auto loans for credit unions, it's quite unique in itself probably. So, that integrations as well as the Corelation integration, we mentioned, that those have both added to our pipeline opportunities significantly by having those integrations. So, we are seeing more opportunity there.

And from a competitive perspective, it does just open up opportunities for us as a way to enhance that. To give you a little bit of, as we were soliciting some of our customers as well, and because of the virus, it's actually, specifically I remember a credit union indicating that it didn't have the ability to take a remote transaction. So, it's opened up some opportunities for us there to help them and have their ability to be able to have remote and a virtual payment from that perspective. So, we see positive things on all those integrations. They've become referral partners as well. And obviously, that's your core ERP systems. So overall, very positive. As you saw in our guidance, we still just guide to one to three a quarter, and we still want to stay on pace with that. You can't exactly control timing. There will be times when we are better, all right at the top end of that range possibly or maybe sometimes at the bottom end of that range. But overall, we have a good pipeline of those and our integrations to those. So far, so good there.

Timothy Chiodo -- Credit Suisse -- Analyst

Great. Okay. And a quick follow-up, I know you mentioned the organic growth and gross profit for the guide implies around the 20% level. What is that number on net revenue growth, do you have that? And also I believe the gross profit growth was 29% on a like-for-like basis organically in 2019. And that seems like 900 basis points of deceleration. Maybe you could comment a little bit on that?

Tim Murphy -- Chief Financial Officer

Yeah, it was 27% in the fourth quarter, as mentioned, it was 29% for the full year. Again, we feel good and also note that 20% at the midpoint. And so, the high-end implied higher gross profit growth. And so, we still feel really good about that. There is some level of conservatism there. And so, we think 20% is strong.

It's blended.

Timothy Chiodo -- Credit Suisse -- Analyst

Okay, all right, right on. Yeah and absolutely aligned with what you guys have laid out in terms of a medium-term guide, in terms of a high-to mid-teens revenue growth, with maybe slightly faster in gross profit. As long as it's still the case, I think it'll all make sense. Thanks a lot.

Tim Murphy -- Chief Financial Officer

Thank you.

Operator

[Operator Closing Remarks]

Duration: 45 minutes

Call participants:

John Morris -- Chief Executive Officer and Co-Founder, Director

Tim Murphy -- Chief Financial Officer

Andrew Jeffrey -- SunTrust -- Analyst

Bob Napoli -- William Blair -- Analyst

Craig Maurer -- Autonomous Research -- Analyst

Mike Grondahl -- Northland Capital Markets -- Analyst

Sanjay Sakhrani -- KBW -- Analyst

Joseph Vafi -- Canaccord Genuity -- Analyst

Mark Palmer -- BTIG -- Analyst

Daniel Reagan -- Cantor Fitzgerald -- Analyst

Timothy Chiodo -- Credit Suisse -- Analyst

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