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Repay Holdings Corp (NASDAQ:RPAY)
Q2 2020 Earnings Call
Aug 10, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and 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 and in our most recent Form 10-K filed with the SEC. Actual results might differ materially from any forward-looking statements that we may 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 non -- to certain non-GAAP financial measures. An explanation of these non-GAAP financial measures as well as reconciliation of these non-GAAP measures to the nearest GAAP financial measures can be found in our earnings release available on 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, Co-Founder and Director

Thank you, operator. And good afternoon, everyone. We hope everyone has continued to stay safe and healthy during this difficult and challenging period.

As you can see from our release, the value proposition to our business has become an even more evident since the onslaught of the COVID-19 pandemic. For the second quarter, we reported 63% growth in both card payment volume and gross profit. On an organic basis, we saw gross profit growth of 21%, compared to the second quarter of 2019.

For today's call, I wanted to first give an update on our business in the second quarter as well as how trends have been more recently. I also wanted to spend a few minutes reviewing some recent announcements we have made and how they further our near and long-term growth strategies. Lastly, Tim will review our results in more detail and talk about the remainder of the year.

Now, to review our trends for the second quarter and how we think about REPAY in today's environment. During the quarter and into July we have experienced increased demand for our offerings in several of our businesses across existing and new clients as our customers have accelerated implementation of electronic payment capability.

Our loan repayment business continues to exhibit resiliency as it has throughout the crisis as more customers and lenders adopt and implement remote electronic payments. Our instant funding product, which is our product that allows lenders to send funds directly to borrowers bank accounts through eligible debit and prepaid cards has continued to see an increase in demand as lenders and borrowers shift from physical disbursements to electronic. While B2B volumes dip in April that business rebounded nicely in early May and is now back to pre-COVID levels.

As mentioned previously, our TriSource business was more impacted than others due to some retail exposure, so it has taken longer to rebound. However, TriSource volumes begin to meaningfully recover in late May and are now nearing pre-COVID levels.

Next, I wanted to mention a few recent business announcements, and how those tie into our strategies for near and long-term growth. The majority of our growth is derived from further penetration of our existing client base. We expect our growth in 2020 we will continue to be driven by extended usage and increased adoption with our existing clients for which we have industry-leading volume retention. A significant portion of our organic growth comes from these existing customers and we expect that to continue to be the case in the near and long term.

In addition to existing customer growth, we expect to continue to experience new client wins in existing and new verticals, driven by direct sales force. This will be aided by software integrations, of which we organically added six new partners during the quarter. This brings our total to 82 integrations at the end of June.

During the quarter, we added six new credit unions due to acceleration of our sales efforts, as well as gaining solid traction with our Symitar and Correlation integrations. This helped us achieve record new closed sales for gross profit in the quarter, following a record-setting first quarter.

A few of our recently announced integration partnerships, TurnKey Lender, Inovatec and Katabat, all service a variety of verticals that we already address, further expanding our penetration. Katabat focuses on receivables management and debt collection, which is the smaller business for us. So we are hopeful this new partnership can help us increase growth. Turnkey Lender and Inovatec have a strong presence in Canada, as well as the US, which makes this relationship even more valuable and exciting. As Tim will describe further, we are still focused on finding operational efficiencies and continue to execute our previously announced cost actions.

Now moving to M&A, which has always been and will continue to be a driver of growth for the company. A few weeks ago, we announced the acquisition of cPayPlus, an accounts payable automation provider to a variety of industries with concentrations in automotive, property management and field services. The company's technology platform efficiently executes its clients' outbound AP payments via virtual card, ACH or check. cPayPlus or CPP boasts an impressive list of ERP integrations in the automotive vertical, including dealer track and dealer bill, as well as the property management and field services industries.

CPP currently maintains over 26,000 enrolled supplier relationships. This acquisition is beneficial to our growth strategy for many reasons, including, it provides access to the $10 trillion plus AP automation space, which is experiencing rapid growth and a strengthening thesis. cPayPlus as well as REPAY's existing B2B business has experienced favorable trends as a result of the COVID-19 pandemic. cPayPlus's existing automotive property management and field services ERP integrations present an estimated virtual card payment volume opportunity of $540 billion. We also intend to employ our technology integration oriented competencies to quickly unlock more of the estimated $10 trillion plus market for SMB AP automation. With the acquisition of CPP we now have 90 software integrations.

CPP is complementary to our business as the majority of our B2B business is focused on software automation and payment solutions around the AR side of transactions. The acquisition of CPP will enable us to provide both AP automation and payment solutions to REPAY's existing client base. We believe this will especially be the case with our B2B and automotive customers. And AR, coupled with AP makes REPAY a one-stop shop, which we expect to accelerate go forward sales across all of our business lines.

Finally, we are thrilled to have Darin Horrocks, cPayPlus' CEO and Seth Barnard, cPayPlus' CTO, join REPAY, serving as leaders within the B2B business. Our M&A pipeline remains active as we continue to look for targets in current verticals, along with attractive new verticals that are large, growing and underserved.

Another key driver I'd like to mention is that, due to our recent Mercedes wins and other internal sales initiatives within our auto business, we are now more actively addressing the prime lending market, including captives. This, along with our CPP acquisition has expanded our TAM to approximately $3 trillion.

To wrap up, I wanted to take the opportunity to say that I continue to be inspired by the incredible work of our team during this period. Their health, well-being, as well as that of our other stakeholders continues to remain top of mind. Their dedication, as well as the diversity of our business and the unique solutions we offer has continued to position us well during these times.

I'll now turn the call over to Tim to discuss Q2 results in detail and to go over our outlook for the year. Tim?

Tim Murphy -- Chief Financial Officer

Thank you, John. Now let's move on to our Q2 financial results before I review our updated financial guidance for the remainder of 2020.

Despite the tough macroeconomic environment in the second quarter due to the COVID pandemic, REPAY delivered strong results across all of our key metrics. For the second quarter, card payment volume was $3.6 billion, an increase of 63% over the prior year second quarter. Total revenue was $36.5 million, an increase of 68% over the prior year second quarter. Note, that our second quarter volume and revenue are typically down from Q1 due to the seasonality in Q1 related to tax refunds. Please also note that we are now tracking virtual card payment volume in our metrics. TriSource, APS and Ventanex contributed approximately $11.2 million of revenue during the second quarter.

Moving on to expenses in the quarter. Other cost of services were $8.7 million, compared to $4.6 million in the second quarter of 2019. The increase was primarily due to the additions of TriSource, APS and Ventanex. However, when excluding those additions, the amount was essentially flat in Q2.

Gross profit was $27.8 million, an increase of 63% over the prior year second quarter. On an organic basis, gross profit increased 21% in the second quarter of 2020, compared to the second quarter of 2019. As a reminder, gross profit is a key metric for us as this is how we price new customer deals and how we structure our sales team incentives.

SG&A was $19 million, compared to $8.5 million in the second quarter of 2019. The increase was primarily due to increased hiring, share-based compensation and added operating costs from our acquisitions.

Second quarter pro forma net loss was $8.4 million, compared to net income of $4.2 million in the second quarter of 2019. The decrease was mainly the result of fair value adjustments related to our tax receivable asset, which resulted from the follow-on offering in exchange of the Corsair units, as well as the higher SG&A described previously.

Second quarter adjusted net income was $9.9 million or $0.14 per share. Please note, this includes a tax effect adjustment. Lastly, second quarter adjusted EBITDA was $16.2 million, an increase of 55% over the prior year second quarter. Second quarter adjusted EBITDA as a percentage of total revenue was 44% compared to 49% in the prior year second quarter. This increase in adjusted EBITDA is a result of both organic growth, as well as contributions from TriSource, APS and Ventanex. As a reminder TriSource, APS and Ventanex EBITDA margins are slightly below our loan repayment business.

As John mentioned, on July 23 we announced the acquisition of cPayPlus up to $16 million, of which $8 million was paid at closing. The remaining $8 million may become payable in the third quarter of 2021 depending upon the achievement of certain growth targets. The closing of the acquisition was financed with cash on hand and will not materially impact net leverage.

On June 2, we closed our follow-on offering where we issued 9.2 million shares of REPAY's Class A common stock at $20 per share. Proceeds from the offering were used for general corporate purposes, including the purchase of cPayPlus and to acquire an equivalent number of outstanding units representing limited liability company interest of Hawk Parent Holdings for cash, which resulted in $4 million net new shares.

On July 27, our warrant redemption period expired. As a result of all warrant-related transaction the company received approximately $87 million in cash and issued approximately 8 million shares. So our cash and liquidity positions remain very strong. As of July 31, we had $186 million of cash on the balance sheet, $30 million of undrawn revolver capacity and $46 million of undrawn delayed-draw term loan capacity for a total liquidity amount of $262 million. Our pro forma net leverage is now approximately 1.2 times, which is well below our current net leverage covenant of 5.5 times.

As of July 31, we had approximately 79.3 million shares outstanding on an as converted basis. This reflects the new shares from the warrants described previously, but does not include unvested shares. Our fully diluted shares, including unvested shares equal approximately 82 million shares.

Finally, moving on to our outlook for the remainder of the year. In our first quarter call we laid out three illustrative scenarios that make assumptions on macroeconomic and market specific drivers that may impact our business over the remainder of the year. Some assumptions in scenario one have played out, but due to the recent virus spread this summer, not all have.

However, since our first quarter call, we believe we have additional clarity on how merchants, consumers and businesses are reacting to this environment, giving us enough confidence to provide an updated guidance range for the year. This range assumes no further unforeseen COVID related impacts, which could create substantial economic duress in the second half of the year. That being said, we now expect card payment volume to be between $14.5 billion to $15 billion, total revenue to be between $145.5 million and $155 million, gross profit to be between $110 million and $115 million and adjusted EBITDA to be between $62 million and $66 million.

In terms of cost actions, we continue to focus on three key areas, hiring prioritization, operating expense management and vendor cost management. To date, we have experienced approximately $2 million in savings from these actions and will remain prudent in closely managing costs in the coming months.

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'll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Sanjay Sakhrani with KBW. Please proceed with your question.

Sanjay Sakhrani -- KBW -- Analyst

Thanks. Good afternoon. So, I guess I heard you guys say that you're not assuming any unforeseen related, COVID related impacts. So maybe you could just talk a little bit more about some of the assumptions you're making around share gains and some of the spooling of new relationships? And I was just wondering if there was any details on sort of July and August trends as well?

Tim Murphy -- Chief Financial Officer

Hey, thanks for the question. This is Tim. So we -- in our original scenario analysis, the scenario one was a Q3 recovery. We're in Q3 now and we've seen this virus surge over the summer, so we're just trying to be practical with those comments around some of the uncertainty. Although we do have confidence enough to put out these ranges, and we have seen strong volume trends continue through July into early August, particularly within loan repayments, that continue to be very strong. But again, we're mindful of some of the events around us right now.

Some of the new customer wins that we experienced in Q1 and Q2 are being rolled out and some of those potentially could be implemented faster than we anticipate, which actually can provide potential upside to it. But again, we we wanted to just be mindful of events around us.

Sanjay Sakhrani -- KBW -- Analyst

Anything on the July and August trends? I mean, are you seeing any kind of further strength?

Tim Murphy -- Chief Financial Officer

Yeah, yeah. July has been strong and early August has also been strong, again, driven by loan repayments, as we mentioned, B2B, which really dipped in April has come back strong and is now actually above pre-COVID levels. But we continue to see TriSource coming back, it's nearing pre-COVID levels, but it's just taking longer to return because of some of the retail exposure it has. But within loan repayment, specifically, at B2B, it's been -- we've seen really strong trends in July and early August.

Sanjay Sakhrani -- KBW -- Analyst

Got it. And then, John, maybe you could just give us an update on the M&A environment. Clearly there has been a pretty significant resurgence in valuations across fintech and tech in general. So maybe just curious to get your perspective on that? And I think I heard you talk about getting into prime auto lending, maybe you could just talk about how that opportunities unfolded? Thanks.

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

Sure. Thank you for your time. So we see -- from our perspective, we have always had our own organic M&A pipeline. We continue to build that, we actually brought on an additional team member in July to help us there as we continue to build out our initiatives there. We are able to see many different things in the market, obviously, we try our best to be selective. We never want to do a deal that doesn't meet some of the things we look for and some of the criteria we look for. We are seeing some things, we see some things that could be actionable as we were choosing to do that. We think we try our best to be selective there, as I said. So valuations, depending on the asset, depending on the vertical could be a little bit different. And so, we would expect that they would not be a historic lows, but we do see some opportunity, especially wheb we think long-term and we think the value that we can take and create with those particular assets, especially around technology and in our sales initiatives that we put behind our integrated partners as well on.

On the captive auto finance market, yes, we wanted to mention that, because it's an area we've touched on, obviously, we were -- we have many of those in our pipeline as far as the ability to pursue don't translate that into they're going to automatically happen and things like that, those are longer sales cycles. It's a market that if you looked at our loan repayment vertical, those were not really included in those addressable markets. So we thought it was appropriate also to mention those. We do think -- as we look out in the next few years those opportunities will potentially come to market at some of those come out of contract. And we think our -- we have some great technology and offerings to, just as we did with Mercedes we will be able to bring additional value to the marketplace there and hopefully come out with some wins as we go through that process.

Sanjay Sakhrani -- KBW -- Analyst

Thank you. Good luck for that.

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

Thanks.

Operator

Our next question comes from the line of Joseph Vafi with Canaccord. Please proceed with your question.

Joseph Vafi -- Canaccord -- Analyst

Hi, guys. Good results. Thanks for taking my question. I was wondering if you can kind of drill down a little bit more on the auto loan book and what you're seeing there in kind of puts and takes in those portfolios in terms of maybe kind of -- as you talk about growth and expansion with those clients, perhaps offset by maybe a little bit more in delinquent payments going on given the pandemic. And then I have a follow-up.

Tim Murphy -- Chief Financial Officer

Yeah. Hi, Joe. Thank you. So we did see delinquencies increase in auto in late March into April and early May. We think with a lot of our customers those have leveled off. They're actually a lot of instances where we've been deploying some of our payment tools to help with collections to reduce delinquencies. So that -- we continue to see strength there.

And then auto, more generally, origination were down around that time as well. We think those came back really strong in May and now into early August given that there is more demand for used cars, and there is more people out on the roads are going back to work and not using public transportation as much. Also maybe moving out of the city into the suburbs requires maybe a second vehicle. So we think there's a lot of demand drivers there. We've seen that -- we are seeing that with our customers, we're hearing that from them, we're seeing in the volumes as well. And we also think there's just a continued shift to card payments within auto, which, again, is one of our biggest organic growth drivers. So we think that there was a bit of a dip there related to delinquencies and originations, but that has come back nicely.

Joseph Vafi -- Canaccord -- Analyst

Okay. That's helpful. And then maybe we just kind of touch on the strategic relationships. I mean it's -- there's a lot of them that you've announced recently. And clearly, they sound attractive. I was wondering if you could kind of quantify how they may contribute to the P&L moving forward or basically how to frame the strategic relationship opportunity as it evolves. Thanks so much.

Tim Murphy -- Chief Financial Officer

Yeah. So we see these software partnerships as key part of our distribution strategy. We do have a direct sales force, which we like, we don't necessarily rely at all on ISOs or agents. But we do -- we do have these software relationships as referral partners and they can be anywhere from having 50 to 100 merchants or lenders on their platform to 500 plus or even larger. And so, we just think that this allows us to address all different parts of these end markets from small merchants to enterprise large merchants. And it's a way for us to access them more efficiently. So we think it's just -- it's become a very, very core part of our organic growth strategy. We're up to 90 now with the cPayPlus acquisition, we have internal resources focused on finding new partnerships, but also further penetrating existing partnerships. We now have relationships with software providers in Canada, which will facilitate distribution there.

And again, the ones we're adding each quarter are just across all verticals, which, again, is part of the growth strategy. So that's kind of something we're continue to remain focused on and provide resources toward. And we think that's really going to set us up nicely going in 2021.

Joseph Vafi -- Canaccord -- Analyst

Great. Thanks so much guys.

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

Yes. Also as we've -- what we've said is, our goal is to try to add one to three per quarter. And as you can see we had a little bit more than that in the second quarter, prior to our acquisition of cPayPlus. So we're excited about that, it is a key driver for us, it does help us as we try to accelerate growth and become key -- critical part of our relationships as we drive growth with our direct sales force.

Joseph Vafi -- Canaccord -- Analyst

Great. Thanks, John.

Operator

Our next question comes from the line of Peter Heckmann with D.A. Davidson. Please proceed with you question.

Peter Heckmann -- D.A. Davidson -- Analyst

Hey, good afternoon, everyone. I was wondering on the acquisitions, you said about $11.2 million of contribution. The impact there was primarily in TriSource and I guess could you estimate what might it have been, had it not been for the pandemic would have added another $300,000, $4000,000, $500,000?

Tim Murphy -- Chief Financial Officer

Yeah. So that was primarily TriSource and that's probably a good estimate. I would say it would probably be end up somewhere between $11.5 million and $12 million had we not had that disruption, but yes, most of it is coming from TriSource.

Peter Heckmann -- D.A. Davidson -- Analyst

Got it, got it. And then just in terms of the cadence of thinking about third quarter or fourth quarter, maybe the timing of any additional government stimulus? Anything we should be thinking about there.

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

Yeah. I mean I think there is obviously a lot of attention being paid to additional stimulus now. We do you think that previous package helped us toward the end of April and then providing strength into May. I think there will be some form of the extension of the enhanced unemployment which we think will benefit our customers customer or the consumer. We think that the -- there is currently -- I think there will be an extension of the moratorium on evictions and then the forbearance on student loans. It's kind of unclear how the payroll tax holiday will impact us, but -- yeah, we think that did help in Q2 and so we think certainly that could help going into Q3 depending on what form that takes.

And then as I mentioned earlier, we had a really, really strong sales month in Q1 and Q2. When we say new closed sales we mean recurring not the gross profit. Those are being implemented and rolled out today. So as I said earlier, we think that really benefits at the end of Q3 and Q4 and then sets us up well for 2021, because we will get the full 12 months of recurring monthly gross profit on all of those new implementations. So those -- that's kind of some of the moving pieces in the next couple of quarters.

Peter Heckmann -- D.A. Davidson -- Analyst

Okay. Okay, that's helpful. I'll get back in the queue. Thanks.

Operator

Our next question comes from the line of Timothy Chiodo with Credit Suisse. Please proceed with your question.

Timothy Chiodo -- Credit Suisse -- Analyst

Great, thanks. Good afternoon, everybody. John, Tim, Jake, the topic I want to touch on is your medium-term growth outlook and we've typically talked about this as mid-teens organic growth. And I know that in the slides and earlier in your comments you mentioned, it continues to be heavily weighted toward growth with your existing clients and further penetrating that base. It does appear to us though that there could be an opportunity to sort of bolster that medium term number or at least add a larger component of new merchant additions. When I think about that, I think of March and April being record months for new wins. I think about the Mercedes Benz signing, the new credit unions that you mentioned this quarter and also the opportunity you have within Symitar for additional credit union customers. Just wanted to think, if you could maybe quantify a little bit how you break down that mid-teens in terms of the components? Clearly, existing is the largest but the opportunity that may be new additions could be a bigger part of that growth algorithm longer term.

Tim Murphy -- Chief Financial Officer

Yeah. So historically we've seen that about 75% of that existing customer. Excuse me, organic growth comes from existing customers. We are accelerating our new sales efforts to your point with all -- with the new verticals we've added with a lot -- we've added a lot of software partners recently and then Mercedes being a big win. So I do think that there could be more coming from new. So maybe that 70% drops a bit, but we still think the biggest growth driver is expanding usage and adoption of cards. These verticals are just so under-penetrated from a cars perspective and we think the last few months have been a real catalyst to accelerate that. And there -- the markets themselves are so large and we think that, that's still going to be a majority of organic growth opportunity. But I do think that with our additional software partners and we've added a lot to our sales organization, both direct sales reps and sales support folks to facilitate that. So I do think that that will become a bigger part of the organic coming from new, to your point. It might take a few quarters to really see that in the numbers, but I do you think that's probably right.

Timothy Chiodo -- Credit Suisse -- Analyst

Okay, great...

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

Yeah. Tim, I want to supplement that -- I want to supplement that with the B2B side. Obviously, as we continue to enhance our offering there, as I mentioned on the call, with our cPayPlus offering as we integrate that in and combine that with our AR solutions. We think that could set us up well for the latter part of this year and into next year for new sales growth as well.

Timothy Chiodo -- Credit Suisse -- Analyst

Great point. Thank you, John. My quick follow-up is on Mercedes which you referenced earlier, noticed that, the branding and the logo is up on the Mercedes-Benz Financial Services website clearly displaying the option to pay via REPAY. And I was just wondering if you could give us any update not asking you to quantify that specific customer in any way, but just in general how it going in the early days of ramping with the Mercedes new customers.

Tim Murphy -- Chief Financial Officer

It's going very well. Like you said, they are basically marketing our solution and being very open with that on their site, which we are happy about. We think that speaks to the strength of the offering. We know that there has been really strong adoption of card across all the different channels. And when I say channels, I mean, like IVR and mobile and text, which are -- we don't think it really had any full scale way previously meeting Mercedes. And so this is a more a prime customer touched on in the call, and they require really high quality technology, they like to be able to do things efficiently, quickly and oftentimes in their mobile device. And so I think that's really been actually pretty high opening from Mercedes and not having access to those tools previously, and we're starting to see that in the numbers. So it's going very well so far.

Timothy Chiodo -- Credit Suisse -- Analyst

Okay. Thanks a lot for taking my questions.

Tim Murphy -- Chief Financial Officer

Absolutly.

Timothy Chiodo -- Credit Suisse -- Analyst

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

Craig Maurer -- Autonomous Research -- Analyst

Yeah, good evening, John and Tim, thanks. Wanted to ask two questions. First, Tim, if you -- I'm not going to ask for guidance, but if you can think out to '21, we're looking at from guidance the cadence of payment volume growth slowing down materially as you have some really big pumps to grow over. But are we looking at something returning back to the well north of 20% range in 2021 or are we looking -- or are we thinking high teens is the natural growth rate there. Curious to get your opinion. And secondly, if you could characterize the different pricing or yield that you're looking at when comparing the used car market versus the captives? Thanks.

Tim Murphy -- Chief Financial Officer

Yeah. So in terms of volume growth and cadence there. I mean, as I mentioned, the most impacted part of our business has been TriSource, which does have a lot of volume. The volume is lower margin and so as you can see our gross profit margins are actually up pretty significantly in Q2 versus Q1, but the volume has come down. And so, we're just being trying to be thoughtful about how we think that ramps back up in Q3 and Q4, assuming it does fully ramp-up by the end of the year to the levels we anticipated, that will set us up nicely from a volume perspective going into 2021. I also mentioned that we are now tracking virtual card payment volume in our numbers. We had some of that with Ventanex, but now we have the bigger opportunity there with cPayPlus and so you'll see virtual card payment volume come into the numbers now, and there'll be -- because cPayPlus is growing so quickly that will become a more material part of 2021. So with those two factors in mind, I could see there would be somewhat of an acceleration in the growth for the second half of this year into early next year.

But again, we're just kind of -- with our current guidance for 2020 being mindful and practical of the events around us. And so -- but those are a couple of points I'd like to make just on TriSource impacting us more. And then cPayPlus's virtual card volume coming into 2021 as well. And then in terms of auto take rates, certainly the larger volume opportunity might come with a lower rate but, of course, there's upward volume to go get and if we can find ways to add services like these channels and just get more and more of that volume, we think the actual gross profit dollars resulting from that will be meaningful and potentially larger than if they're at a higher take with the lower volume customers. So we still like that and we still like the way that works out from a gross profit dollars perspective, and we've always been consistent in saying that gross profit is our primary metric and we can work with our vendors on reducing cost of processing to try to bring more of that revenue take to gross profit even with those larger customers that have lower revenue take rates.

Craig Maurer -- Autonomous Research -- Analyst

All right. Thanks so much.

Operator

Our next question comes from the line of Andrew Jeffrey with SunTrust. Please proceed with your question.

Andrew Jeffrey -- SunTrust -- Analyst

Hi, good afternoon, gentlemen. It's actually Truist Securities now. So a couple of questions, and I appreciate the time. First of all, John, I wonder if you could address one of the things that I think has distinguished REPAY in the debit card loan repayment space is the specialization of the ISV integrations. Is there an analog in B2B, I assume that a lot of the ERP integrations are standard ERP providers. But I'm thinking about cPayPlus and integration in the dealer track, for example, in auto. Is there any opportunity to build a really differentiated offering B2B analogous to what you've achieved in loan repayments?

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

Yeah. So -- Hi, Andrew. Good evening. B2B is a little bit different than the loan repayment piece of this. We do think there is cross-sell opportunity with our existing customers and the ability to create some unique integration opportunities there. But B2B is a little bit different. As we say on our AP automation or our APS business, that's the AR side and we do rely on various integrations here, but also integrations we partner with some channel partners there who help us drive growth situation. That will continue to be the case. Well, we think that there is an opportunity there is to continue to enhance that offering with the AP automation, coupled with the AR piece of that with those same channel partners to drive growth there.

And there is -- we think there is some opportunity on the, what we call, dealer management system side, loan management system side to add some AP automation features to that. Although many times loan management systems are not always the accounting ERP systems. So, those could be a little bit different from that perspective, but we have seen even from the press release, we've seen a couple of positive signs from existing customers talking about -- inquiring about our ability to do that. Remember, these are financial institution non-banks on the lending side, generally speaking, and many are still finding ways for automation, just like we talked about what happening in the spring. All businesses had to deal with electronic payments abilities.

So we -- again we need to continue to enhance our offering, integrate our new acquisition together as we lay out -- continue to lay out our strategy there. We're very intentional as to why we want to do that. We see the opportunity there, but we'll obviously -- the proof will be in our ability to execute, but we like the opportunity there.

Andrew Jeffrey -- SunTrust -- Analyst

Okay. Thanks for that. And then I wonder from a borrower perspective behavior standpoint, do you think some of the growth you see in the installed base is a result of new consumers paying or repaying loans with the debit card for the first time. I wonder if there is a ramp, an accelerated shift like that's away from check-based [Indecipherable] and that's some of the growth you're seeing in the installed base.

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

Sure. This is John. So here's one thing we definitely for sure saw, because it was a brand new volume is our -- you heard us talk about our instant funding where our funding loans directly. With our Visa debit, MasterCard, send direct to consumers' bank account. We knew that was not happening before, because it's a new product for us when we had new product for the lender. What we think and what we've seen historically is, if you fund the loan that way, you most -- usually you repay the loan that way. So we think that's a positive future sign as we talk about organic growth for our existing customers. If that continues to accelerate or continues to drive adoption and funding, we think that can create additional opportunities in the payments as well. We do actually think based on some of the things we saw, again, remember, we just see the payments, sometimes we don't see all of their payments, for example, we would never -- we would see their cash or there check in the loan repayment side, but we did see -- we can see volume, right? And we do think that some trends have definitely shifted and we do think that's very positive for us on a long-term side. It could pull forward some things that we would think -- we thought would probably take a little while longer to do over time. So, so far we see a positive strength there.

Andrew Jeffrey -- SunTrust -- Analyst

Okay. The pandemic is accelerating a lot of trends that are already in motion. I appreciate the help. Thanks. Our next question comes the line of Rob Napoli with William Blair. Please proceed with your question.

Robert Napoli -- William Blair -- Analyst

Thank you. Good afternoon, John and Tim. Hope you guys are well. So I just -- maybe a follow-up on the B2B strategy and bringing those three businesses you acquired together. And do you have the team you need? Do you have all the technology you need? Do you need to bring on something else to try to bring that together? And then, where do you stand as far as additional ERP integrations for the B2B business, can you do that organically or do you have to acquire it?

Tim Murphy -- Chief Financial Officer

So -- Hi, Bob, it's Tim. So we think that one of the things we liked about cPayPlus was the management team there and the foundry of that business have been in B2B payments for a very long time, several decades. So that really adds to our management strength to help us execute there. We know that some of the merchants at APS have been asking for an AP solution, so there's is probably a direct cross-sell there that has already started happening. They are just -- they are choosing these accounting ERP as really just one payment solution and we want to make it more efficient and automated anyway they can. So that's something that we're seeing.

And then, as John said, we've had couple of inbounds following the announcement of cPayPlus from lenders that have been looking to automate their AP. So we're already seeing it happening, and we think that Darin and Seth are really going to help there. We think they have a lot of great industry contacts to continue to hire additional strong B2B talent. So that's very much in near-term initiative. And so with the pieces are coming together and we are already starting to see movement in terms of cross sell. So just really good positive momentum there.

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

Yeah, Bob, we will continue to have to invest in talent and technology and we can organically do that, we have the ability to do all of those things, especially with this last piece we put here. But let me also say, if we find some opportunities that we think we can accelerate the future we would look to act on that if it were something that would fit well with us or open up a couple of verticals that we thought will be significant. I would say, kind of sub verticals inside of B3B. But that's all kind of subject to finance and things that we think will fit well with us. Anything that we think would help us provide and accelerate our opportunities there we would look at that.

Robert Napoli -- William Blair -- Analyst

Thank you. And the team from the cPayPlus came from FLEETCOR. They have a pretty good virtual card business, you talked about virtual card, what is your -- are you partnering on the virtual card today or -- and which builds around virtual card technology and capabilities?

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

Yeah. So today -- remember, we have a little bit of passive virtual card in our healthcare offering. So we have the ability to bring our own sponsor banks in those relationships, we can still outsource some of the platform processing. But we would look to obviously enhance that and build many of those features and functionalities ourselves or at least the extent we can control the entire customer relationship.

Some of those you inherit some existing relationships out there and we will look over time to build critical mass behind our own offering.

Robert Napoli -- William Blair -- Analyst

Okay. Thank you. And then just last question, do you track the -- I mean how do you view your sales, the first year-to-date this year versus last year? I mean, obviously, a lot of things have been implemented. But if you look at the revenue, annual ARR, how are you looking at the new business that you've signed and how this is compared to a year ago.

Tim Murphy -- Chief Financial Officer

We look at gross profit -- monthly gross profit quotas by sales and that's recurring monthly gross profit. And so we look at that and we've expanded our direct sales force, both organically and through acquisitions. And we are hitting or often months exceeding the gross profit quota goals. So we're well beyond where we were year-to-date last year, just given the broader opportunity across multiple verticals, the increased number of sales folks and also the increased number of software integrations.

So there's a lot of different avenues for us to win business now and we're seeing that. So I'd say we're ahead of it, that's how we tracked and monitored in terms of monthly gross profit quotas.

Robert Napoli -- William Blair -- Analyst

Okay. Thank you. Appreciate it.

Operator

[Operator Instructions] Our next question comes from Mike Grondahl with Northland Securities. Please proceed with your question.

Mike Grondahl -- Northland Securities -- Analyst

Hey, good afternoon guys. Two things, anything to call out on the mechanics with all of the mortgage activity that's out there. I think the main impetus for that was sort of mortgage payments, the integrations with Fiserv and Black Knight. And then also, Canada, any update on things north of the border?

Tim Murphy -- Chief Financial Officer

Yeah. So the mortgage business has been active and a lot of refinancing activity and Ventanex does really well in that type of environment. They're typically not processing monthly principal payments, but there processing kind of a unique complex transactions like, if there is a refinancing they switch lenders our switched servicers, that's what they do. They've actually just experienced a couple of nice customer wins to be able to do that for them. And they're working on some integrations within mortgage as well. So our business is doing nicely. And then, we now have all the pieces in place in Canada, including few software integrations, we've been building out our sales team there. And so we're starting to see some real traction there to. And again, that's another growth driver going into 2021.

Mike Grondahl -- Northland Securities -- Analyst

Got it. Okay. Thank you.

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

A little bit longer sales cycle in the mortgage servicing side, but as much as that market has -- had to adjust to this, the whole pandemic itself as well. But we have seen positive -- we've had lots of additional conversations, our pipeline looks strong there. So we're excited about what the future looks like in that area with some of the offerings we can do and some of the key integrations there. Just a little bit longer sales cycle [Indecipherable].

Mike Grondahl -- Northland Securities -- Analyst

Okay. Thanks, guys.

Operator

As there are no further questions in the queue, I would like to turn the call back over to Mr. Morris for any closing remarks.

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

Yeah. So, thank you so much everyone for your time today. Really appreciate you joining us. We hope you continue to be safe and healthy. We look forward to giving you an update on our third quarter call in November. Have a wonderful pleasant evening. Thank you for your time. Good bye.

Operator

[Operator Closing Remarks]

Duration: 47 minutes

Call participants:

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

Tim Murphy -- Chief Financial Officer

Sanjay Sakhrani -- KBW -- Analyst

Joseph Vafi -- Canaccord -- Analyst

Peter Heckmann -- D.A. Davidson -- Analyst

Timothy Chiodo -- Credit Suisse -- Analyst

Craig Maurer -- Autonomous Research -- Analyst

Andrew Jeffrey -- SunTrust -- Analyst

Robert Napoli -- William Blair -- Analyst

Mike Grondahl -- Northland Securities -- Analyst

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