Repay Holdings Corporation (RPAY) Q3 2021 Earnings Call Transcript

Image source: The Motley Fool.

Repay Holdings Corporation (RPAY 3.70%)
Q3 2021 Earnings Call
Nov 9, 2021, 5:30 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 filing 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 certain non-GAAP financial measures. An explanation of those non-GAAP financial measures are as well as a reconciliation of these non-GAAP measures to the newest GAAP financial measures can be found in our earnings release and earnings supplement, each of which are available on the company's IR site.

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

John Morris -- Chief Executive Officer and Co-Founder

Thank you, operator. And good afternoon, everyone. Thank you for joining us today to review our third quarter, which will be one of our best since becoming a public company over two years ago.

During the quarter, we reported card payment volume growth of 48%, total revenue growth of 62%, and gross profit growth of 69%, which included 15% organic growth. We also reported adjusted EBITDA growth of 73% in the third quarter.

Our highly integrated payment technology has been purpose-built to address the increasingly connected economy. The secular trends toward frictionless digital payments were a contributing factor to our growth in the quarter and continue to be a tailwind that will drive our business for years to come. In fact, approximately 95% of our volume is now comprised of a combination of card-not-present and recurring transactions.

These trends were aided by an incredible effort from our direct sales team, as well as our sales through our ISV integrations, which continue to be a strong growth channel for us. We currently have 214 software integrations, which represents an increase of 127% year-over-year. We have built a really strong sales pipeline as demand grows for our digital payment solutions.

The powerful trends driving our business and numerous valuable sales channels are also aided by the fact that the $5.3 trillion market we currently address has been and continues to be underserved from a payments perspective. These verticals still rely heavily on paper forms of payment.

Our technology helps convert these paper payments to digital for both money-in and money-out transactions, meaning both acceptance and outbound supplier payments. We are growing adoption and taking share in these verticals, due to our enhanced payment technology.

The B2B space remains wide open and represents the largest opportunity to increase penetration, with a focus on virtual cards. We're making significant progress in B2B due to the five acquisitions we've completed and integrated to create a powerful best-in-class offering in the market. This is supported by superior distribution through our 80-plus B2B software integrations, representing approximately 15 vertical end markets.

We now have over 3,500 clients in our B2B business. And on the AP side, we've grown our supplier network to over 105,000, an increase of approximately 14% from last quarter. Crossing 100,000 suppliers is a major milestone for our AP business. We have a full supplier-enablement team that is working to grow that number every day, which will allow us to increase our virtual card adoption within our customer base.

We're also increasing virtual card penetration through our TotalPay solution, which came through our acquisitions of cPayPlus and CPS last year. This solution allows us to automate 100% of our customers' outbound payments, no matter the payment modality.

As a reminder, our AP business is focused on medium to enterprise-size customers and is growing approximately 30% annually. These B2B verticals have a long runway for growth due to low card penetration rates, which we estimate to be in the low to mid-teens.

In addition to increasing virtual card adoption within our customer base, we also are seeing early success in cross-selling our combined AP and AR capabilities. We've been close partners with Sage and Acumatica within B2B merchant acquiring for some time. We now have the ability to do accounts payable within each of those integrations, which we think is pretty unique. We currently have several signed with an active and growing pipeline of clients for both sides of the transaction, meaning AR and AP and expect that number to increase dramatically next year.

In addition to cross-selling within our B2B customer base, we are seeing increasing interest from our lenders wanting to use our AP capabilities. They really value the idea of a one-stop shop for payments in general.

In September, we announced our strategic partnership with Veem, an AR and AP automation provider serving small and medium-sized businesses. This commercial partnership agreement allows us to further expand our B2B offering by giving us the ability to deliver cross-border payment options. This provides us another opportunity to expand our payment options and is especially an attractive partnership when it comes to our TotalPay offering that I mentioned a few moments ago. We're in the process of testing this technology with international vendors and expect to go to market with this offering in the first quarter of next year.

The partnerships we signed earlier this year are starting to really bear fruit. In the spring, we announced our inclusion in the CDK Global Partner Program. We are now processing AP within several auto dealers as part of this program and also building a very healthy pipeline through that connection. As a reminder, CDK Global is the largest global provider of automotive dealership solutions with 15,000 retail locations in North America.

Another relationship we discussed was with Billtrust's BPN Network. We have successfully added BPN as a new payment modality within our TotalPay solution and now have live payments through that channel.

As you can see, we continue to expand our TotalPay solution as we add additional payment modalities, as well as expand our access to various networks such as BPN and grow our supplier network. We're seeing tremendous success and growth in our B2B business, but equally as important, our clients are seeing real value in the services we provide.

For instance, when we signed up a large eight-hospital 2,200-plus bed health system for our AP TotalPay solution, we were able to get the program up and running in less than two weeks. Their vendor participation increased over 16 times. And for a company that is currently processing about $9 million in vendor payments each month, they are generating approximately $1 million in additional earnings annually from the cash rebates and reduced check printing costs. That's real savings and tangible proof that REPAY is helping make a material impact to their businesses overall.

Moving on to loan repayment side of our business, which is comprised of consumer-driven payments across auto loans, personal loans, mortgage and credit unions. One of the fastest-growing and exciting areas of this business continues to be the auto loan repayments due to the recent tailwinds such as elevated used car prices, increased demand and digital engagement. These long-duration loans have greater repayment stats and our sales activity has picked up recently as dealers and lenders map out their customer-engagement strategies which will include payments. Our high-quality BP connected payment technology has become part of this engagement strategy.

We continue to see gradual rebound in personal loan volume as stimulus impacts wear off and consumers take on new loans for funding increasing consumption activities, particularly as we enter the holiday season. Our lending clients are continuing to find ways to engage more digitally with their customers, which fits very well with our payment technology.

On that topic, we recently announced an expanded integration with GOLDPoint Systems, a loan management software company, to help lenders electronically send funds directly to borrowers' bank accounts in real-time, driving digital transformation and providing consumers with instant access to funds. GOLDPoint users will be able to access instant funding in tandem with card and ACH processing for payment acceptance across all channels.

Our instant funding business is still going strong and we are seeing increased adoption. Recently, we announced our extended integration with Inovatec, which will streamline the funding process for lenders on the Inovatec system in the US and Canada. The integration will enable lenders to instantly fund loans from the same interface they use today without having to switch systems or platforms.

In addition, beginning next year, we will enable Inovatec lenders to offer remote cash acceptance, which will further increase the convenient options for borrowers to make payments. We expect this partnership to help accelerate growth in Canada.

We've also recently signed an exciting new partnership with Finicity, a Mastercard company, to offer consumer permission lending data insights to merchants, so they can make predictive lending decisions and verifications.

On the mortgage side, MSR values and trading continues to pick up momentum, which increases the value and need for our STX network. Our focus on first-time payments for originators through our Ellie Mae partnership fills a gap in the marketplace and we see good momentum and receptivity for mortgage customers. We believe that our emphasis on creating efficiencies for our mortgage servicers continues to create organic growth opportunities both within our existing customer base and with new customers.

Our TriSource processing business, which we've renamed REPAY Clearing and Settlement, or RCS, continues to perform nicely. It's strategically valuable to own our back-end processing platform, which gives us unique capabilities to control the customer experience in areas such as billing and reporting. We see very strong sales momentum with processing customer prospects and expect to experience additional new wins going into 2022.

We saw a lot of progress on both our existing B2B and consumer payments businesses. We also continue to look to further expand our end markets through M&A as well as organically. M&A continues to be an important growth driver for our business. Our pipeline remains very active across key areas such as B2B and healthcare. We are also seeing some interesting opportunities in existing loan repayment verticals. We're very pleased with our ability to integrate a majority of the seven acquisitions we've made since going public a little over two years ago.

Our integration of BillingTree is going well. Towards the end of this year, into early 2022, we're converting the back-end processing to our platform, in which case we'll start to realize those processing cost synergies. We've already made solid progress in realizing the OpEx cost savings and we're very much on track to hit the total $5 million synergies target that we estimated previously by the end of next year.

In addition to adding many talented team members in ISV integrations, this acquisition has allowed us to further expand our position into healthcare, credit unions and accounts receivable management. We now have over 190 credit union customers combined with BillingTree, representing approximately 2.2 million collective members. This continues to be an exciting growth area for our business.

To wrap-up I'm incredibly pleased with our performance this quarter and even more excited about the future for our company. Our focus on both B2B and consumer payments verticals has positioned us well in the market. We continue to feel great about the long runway ahead for organic and inorganic growth and the strong recent additions to our team will help us address these large and growing verticals.

With that, I'll turn it over to Tim to discuss the financials in greater detail. Tim?

Tim Murphy -- Chief Financial Officer

Thank you, John. Now, let's move on to our Q3 financial results before I review our financial guidance for 2021. As John mentioned, in the third quarter, REPAY delivered strong results across all of our key metrics. Card payment volume was $5.6 billion, an increase of 48% over the prior year third quarter. Total revenue was $61.1 million, an increase of 62% over the prior-year third quarter. This represents a take rate of approximately 110 basis points, mainly reflecting the benefits of increased virtual card adoption and the strong financial profile of BillingTree. cPayPlus, CPS, BillingTree, and Kontrol contributed approximately $17.8 million of incremental revenue during the quarter.

Moving on to expenses in the quarter. Other cost of services were $15.3 million compared to $10.5 million in the third quarter of 2020. The incremental other cost of services from cPayPlus, CPS, BillingTree, and Kontrol were $3.2 million for Q3.

Gross profit was $45.8 million, an increase of 69% over the prior-year third quarter. As John mentioned, on an organic basis, we saw gross profit growth of 15% compared to the third quarter of 2020 as shown on slide 5 of the Q3 supplement posted to our IR site.

We remain very encouraged by accelerating organic growth, with an exit rate in September of 16% and continued positive momentum into early Q4. This organic growth was primarily driven by strength across our loan repayment verticals as well as continued solid performance from TriSource back-end processing business. We're also seeing a recent pickup in growth of Ventanex due to increased mortgage activity and what appears to be the start of a rebound in elective health procedures.

SG&A was $33.7 million compared to $28.6 million in the third quarter of 2020. Third quarter adjusted net income was $19 million or $0.21 per share.

Lastly, third quarter adjusted EBITDA was $27 million, an increase of 73% over the prior-year third quarter. Third quarter adjusted EBITDA as a percentage of total revenue was 44% compared to 41% in the prior year third quarter. This increase in margin is mainly a result of stronger-than-expected margins of BillingTree, primarily due to solid execution on opex synergy realization. We do still anticipate increased investment in sales, technology, and product to continue putting in place the proper infrastructure for accelerated organic growth into 2022.

Combined net leverage is approximately 2.9 times, a very comfortable level, which will allow us to continue to fund organic and inorganic opportunities. As of September 30, we had $116 million of cash on the balance sheet and access to $125 million of undrawn revolving capacity for a total liquidity amount of $241 million.

During the quarter, we funded approximately $13 million of non-recurring investments such as the cPayPlus earnout and Veem minority investments. As of September 30, we had approximately 99 million shares outstanding on a fully diluted basis.

Finally, moving on to our outlook for 2021. We are pleased with our results year-to-date, particularly the organic growth and expect the momentum to continue throughout the remainder of this year and into 2022 as the economy recovers. Therefore, we are adjusting certain expectations for the year.

We expect volume to be between $20.3 million and $20.8 million, total revenue to be between $216 million and $222 million, gross profit to between $161 million and $166 million, and adjusted EBITDA to be between $93 million and $96 million.

While we don't intend to provide formal 2022 guidance until our Q4 earnings call, given the positive trends we've seen more recently, we would like to provide additional detail on our current outlook for next year.

We expect total top line growth to be approximately 30%. And underlying this, we expect organic growth to be high-teens to 20% for full year 2022. We expect total adjusted EBITDA growth to comfortably exceed 30% in 2022. Again, we feel very good about our performance thus far in 2021 and look forward to finishing the year strong with accelerated growth into 2022.

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

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Peter Heckmann from D.A. Davidson. Please go ahead.

John Rodriguez -- D.A. Davidson Companies -- Analyst

Hi there. This is John on for Pete. One more time, what was the organic growth in the quarter? It looks like it was 12% plus about like $19 million of revenue from the three acquisitions over the last year.

Tim Murphy -- Chief Financial Officer

The organic growth rate for the quarter was 15%.

John Rodriguez -- D.A. Davidson Companies -- Analyst

Awesome. And then--

Tim Murphy -- Chief Financial Officer

Can you repeat the question?

John Rodriguez -- D.A. Davidson Companies -- Analyst

Yeah. Yeah. What was the growth in auto lending business in the quarter as well? I know that you guys last quarter relayed that the auto lending area generated around 25% growth.

Tim Murphy -- Chief Financial Officer

Yes. That's consistent this quarter as well.

John Rodriguez -- D.A. Davidson Companies -- Analyst

Got it. Got it. Now if I can squeeze in one last one. And the growth in the personal lending business?

Tim Murphy -- Chief Financial Officer

The growth in the personal lending business is probably in the low-teens. It's moving back up toward mid-teens. But as we said, the recovery has been gradual.

John Rodriguez -- D.A. Davidson Companies -- Analyst

Got it. Thank you so much.

Operator

Next question comes from Ramsey El-Assal from Barclays. Please go ahead.

Ramsey El-Assal -- Barclays Investment Bank -- Analyst

Hi. Great quarter. I wanted to ask about TriSource and sort of maybe if you could characterize the impact of the Delta variant on the TriSource business to date and sort of what pace of macro recovery are you contemplating in TriSource? Basically, I'm trying to figure out whether there is quite a bit of recovery presumed in that business or whether things -- if the environment cooperates a little more than you anticipated, whether that could represent upside?

John Morris -- Chief Executive Officer and Co-Founder

Yes. This is John. Hi, Ramsey. So, we have and do expect a clear recovery there in the TriSource business. Obviously, there can be some positive seasonality in the fourth quarter as it relates to that. But we also have been very pleased with our organic growth rate in that business from the -- as you recall, that was the first acquisition we made after we went public. And for all those reasons, why we thought it was very good for our overall technology platform, our ability to move and clear and settle funds on all the various card rails, that still remains true. And we're very excited about our competitive advantage in the marketplace and what we're seeing there as far as being a processing customer. Obviously, we being our own customer, we still look at that as a very strong competitive advantage for us as we continue to build out many of our features and functionalities, our ability to really enhance the overall experience. So, market-wise, we see very positive results from what we're seeing there. But overall, we do expect it to be stabilized and rebounded.

Ramsey El-Assal -- Barclays Investment Bank -- Analyst

Great. And I wanted to ask about the -- about your margins next year. Can you talk about potentially sort of business investment plans or anything you're trying to solve for next year? It looks like margins, obviously, came in quite strong in the quarter. And just trying to gauge the puts and takes next year in terms of margins?

Tim Murphy -- Chief Financial Officer

Yeah. So, we feel very good about this quarter as well. You're seeing the impact of BillingTree on the P&L. It's a really positive financial profile. So, you can see that flow through to gross and adjusted EBITDA margins. So, while we would expect that to continue to benefit the business, we do want invest to growth, we do want to invest into accelerated growth in areas like sales, product and technology, which I think maybe would bring the kind of adjusted EBITDA margins probably back to around 43%. They were higher this quarter. And then from a gross margin standpoint, the BillingTree processing cost savings will positively benefit gross margins, and so we see those continuing to pick up.

Ramsey El-Assal -- Barclays Investment Bank -- Analyst

Terrific. Thank you so much.

Operator

The next question comes from Sanjay Sakhrani from KBW. Please go ahead.

Sanjay Sakhrani -- Keefe Bruyette & Woods Inc. -- Analyst

Thanks. Good evening. I guess I was wondering if you could parse apart that 15% organic growth between loan repayment and B2B, just to get a contextual understanding of how sort of each of those businesses are doing? And then as we look into next year, how do you see that mix sort of evolving?

Tim Murphy -- Chief Financial Officer

Yeah. Most of the organic growth is driven by loan repayments. We still haven't gotten to the point where we've lapped the acquisitions in B2B to drive that growth. So, most of it's loan repayments and then, to some extent, TriSource. And then we are seeing a lot of positive momentum in Ventanex. So, we'll see the B2B businesses we acquired last year flow into the organic calculation in Q4 and then into next year. And because they're growing faster than the overall average, that's one reason why we still have confidence in the high-teens to 20%. And so, that's kind of how we think about it. And again, the fast-growing B2B business has set us up for longer organic growth.

Sanjay Sakhrani -- Keefe Bruyette & Woods Inc. -- Analyst

I appreciate that. And then, as we think about the M&A pipeline, I know, John, you sort of mentioned some of the verticals that you're looking, but maybe you could just talk about size and scope?

John Morris -- Chief Executive Officer and Co-Founder

Yeah, sure. Hi, Sanjay. As you know, we've made two acquisitions already this year, one very large, especially for us. The BillingTree acquisition has gone really well so far. Our operating synergies have been there and we've been fortunate to continue to execute well on our plan there. Obviously, going into 2022, finalizing our processing synergies there. We're expecting full-year results there what we expected and what we told you earlier.

But also, if I look at overall M&A, so we wanted to digest that, and we've done a really good job of doing that. That was intentional. But we've also had a very busy summer of seeing, there's active deal flow out there. Jake and our team there have been actively looking at things. We are selective. We do look for key attributes. There's 8 to 10 attributes that we look for that really drive fast growing businesses around similar verticals to where we operate. And we have seen some of those. We have continued to be selective there. But we also see some very attractive things in the marketplace that would be complementary to some of our existing verticals that, when available or when actionable, we would look to take advantage of that, assuming markets allow.

Sanjay Sakhrani -- Keefe Bruyette & Woods Inc. -- Analyst

Great. I guess one last question on loan repayment. Obviously, B2B is going to be a faster-growing space. But as we think about the significant TAM and addressable market, they are still. I'm just curious how you're seeing that unfold because I remember like OEM was a bright spot. That was an opportunity. Maybe you could just talk a little bit about sort of the opportunities you're seeing there? Thanks.

Tim Murphy -- Chief Financial Officer

Yeah. So, yeah, we still feel really good about that part of our business. It's just growing nicely despite some of the COVID impacts. Auto, in particular, is where we're seeing a lot of success we have. We still are targeting certain OEMs. We think that they're still taking a lot of payments via check and ACH. And so, there's an opportunity to move them to digital. There's also a big move to online car sales that typically are also doing their own financing. And so, we're targeting some of those online car dealers as well, and that's another big area of opportunity. And then, of course, within loan repayments, there's other sub-verticals that we really like, such as mortgage and credit unions. So, even within loan repayments, there's a diverse set of opportunities and we like all of them.

Sanjay Sakhrani -- Keefe Bruyette & Woods Inc. -- Analyst

Thanks.

Operator

The next question comes from Andrew Jeffrey from Truist Securities. Please go ahead.

Andrew Jeffrey -- Truist Securities -- Analyst

Hi. Good afternoon, guys. Appreciate you taking the question this afternoon. You threw me off at the 5:30 call, that I'll admit. John, I wanted to pick up a little bit on your comments about the total payment offering and how it allows digitization of all payments in your AP business. Can you talk about -- I think you mentioned perhaps more digital remittances. Can you talk about mix today and how that affects yield and maybe if we're at a steepening point on the curve at which we might see faster digital payments adoption and what that means for your business on a consolidated basis? And correct me if I'm wrong, AP is what, about 10% of the total revenue today, interchanged somewhere in that neighborhood?

Tim Murphy -- Chief Financial Officer

That's right. Yeah. It's about half of the overall B2B business, which is -- total B2B is 20%.

John Morris -- Chief Executive Officer and Co-Founder

Yeah. Hi, Andrew. Yes, our TotalPay solution, if you think about it, the acceleration of automation and the automation of -- from kind of the beginning life cycle of an invoice all the way through the life cycle through the ERP system and then our ability to take that all the way through the payment commerce system and back and helping with the reconciliation of all the data points to go with that, we are set up really well for that.

If we look at our modern technology that we've built, and if you think about it, our target technology platform, we acquired with our cPayPlus platform, which they only started in 2017, and so that's basically three -- almost less than three years old, if you look at the total. And that is a modern technology which takes into account all the different payment modalities that someone would like to pay an invoice with.

So, as we have built the technology to ingest that into our system and out of their ERP systems -- accounting ERP systems, we then use our teams to enhance our vendor enablement and then that drives the virtual card acceptance of an electronic payment there. To the extent that that acceptance is not there, then we have the ability to pay either with enhanced ACH or an ACH. Then we also have the ability to -- if none of those are chosen or desired, we have the ability to deliver them an actual check.

As you've seen recently, we've added our relationship with Veem to have the ability to pay international payments with cross-border. And as you've also seen, we talked about earlier this year and we are now live with the BPN Network if we have the ability to intelligently route those transactions across that network.

It's the TotalPay solution. So, for everything you want to pay as a business, we can help you pay that. We will continue to expand those payment modalities on the -- if someone has a desire to pay something in a certain way, we'll continue to increase that or expand that digital wallet.

If you look at it also from the perspective of on the AR side of that, just like we're paying someone with a virtual card, they actually need to be able to accept a virtual card or, in many cases, someone may actually just want to accept a credit card in general. We continue to drive that in our AR side of our business there with our integrations. And as you heard me say on the call, we've now combined AR and AP as a total solution. So, we were actually combining those -- we think that's a very high-quality value proposition to our customers of a one-stop shop. We can help you complete commerce with the proper financial technology for both coming and going and on your payment side. So, we're positioned well.

We understand all the technical things and the responsibilities of moving and clearing and settling funds, which we think is a very trusted position in the overall value chain, but we also deliver the high-quality integrated automation of technology. We think we're well positioned for that to accelerate growth there. We are generally vertically focused, some sub-verticals inside of that where we continue to expand our overall supplier network. We think there's some exponential effects there as we continue to grow that every single day. And we're excited about being able to continue to deliver on that.

Our AP automation business is growing really well. It's growing faster than our overall business. And as we said as well, our overall B2B business is growing really nicely. So, we think this sets us up really strong coming out of the fourth quarter here. We think there's -- that sets us up really strong for our 2022 outlook and very excited about this. That gives us great confidence in our high teens to 20% overall organic rate.

Andrew Jeffrey -- Truist Securities -- Analyst

Yes. That's helpful. I look forward to sort of hearing more quantification of that cross-sell. I think it is one of the unique attributes that you've built with REPAY.

The other thing I wanted to pick up on a little bit was BillingTree and HCM. Tim, I think you said that -- or RCM, I should say. Tim, you said that perhaps elective procedures are coming back. Can you parse out a little bit BillingTree's growth in that pretty strong 2022 outlook?

And then, I also wonder if that wouldn't be a -- I think you mentioned one hospital system, John, but I wonder if that wouldn't be a pretty good place to emphasize the cross-sell between AP and AR too.

John Morris -- Chief Executive Officer and Co-Founder

Yes. I'll talk to the last piece of this. So, on the healthcare side, we do think -- and that is an initiative we're currently working on, is our ability to cross-sell from the AR side, which is the patient engagement side of our BillingTree acquisition and our customers there, be able to cross-sell them on the AP automation side of that. And we have -- as you saw in an example we gave, there are hospitals in that network and we deliver a really first-class solution. We think it's one of the best solutions out there. And we understand the unique characteristics of hospitals and the things they deal with, but we also know our -- as I've mentioned, our supplier network is also enhanced to deal with some of the things and some of the vendors we see in the healthcare industry.

Tim Murphy -- Chief Financial Officer

Yes. And to add to that, in addition to the consumer-driven healthcare payments with BillingTree and then we have the hospital vendor payments with CPS, we also have a part of our business within Ventanex where we serve TPAs, so third-party administrators that are facilitating outbound payments to providers. And that's where we see positive momentum with elective healthcare procedures particularly because we see that volume picking up going to providers who have given that service. So, we're doing a couple of different parts of healthcare, which we like, in both acceptance side and this outbound payment side. And as John said, there's multiple different avenues for cross-selling there.

Andrew Jeffrey -- Truist Securities -- Analyst

Appreciate it. Thank you.

Operator

The next question comes from Bob Napoli from William Blair. Please go ahead.

Robert Napoli -- William Blair -- Analyst

Good afternoon. And I know you mentioned this a little bit, but I wanted to dig into the take rate improvement. Sort of for the, I guess, third straight quarter the take rate went up 110 basis points and you called out virtual cards. And that does seem to be a very large opportunity, virtual cards or cross-border in the B2B business. Is that -- where are we in that? How much -- is that the primary driver to the improvement in take rate? And does it have legs?

Tim Murphy -- Chief Financial Officer

Yes. Hey, Bob. So, yes, the virtual card adoption increasing, we have better unit economics on that. And so -- sorry, just the higher take rate. As we increase virtual card adoption and penetration, that will benefit the take rate.

Also, this is our first full quarter with BillingTree. If you recall, BillingTree has a take rate of 125 to 130 basis points. So, that's now flowing through. And then cross-border, which is our partnership with Veem, has not -- we're not totally live with that right now. We're testing international vendor payments, but we will go to market with that in Q1. So that's upside. That's not in the 110 basis points or the fourth quarter number even. That's more of a 2022. And we do think that will positively benefit take rate.

Robert Napoli -- William Blair -- Analyst

How much of your business is cross-border in B2B -- of your B2B business is cross-border today? And what do you think it can be?

John Morris -- Chief Executive Officer and Co-Founder

Yes. One of the reasons we formed a commercial relationship with Veem was we were not currently processing cross-border. So as we roll out--

Robert Napoli -- William Blair -- Analyst

At all, OK.

John Morris -- Chief Executive Officer and Co-Founder

Finish our testing and roll that out in the first quarter, we'll give you more color as we see some of the results from that.

Robert Napoli -- William Blair -- Analyst

Great. But we should expect the take rate to move up from 110 basis points generally in 2022 and onward as some of those new products [Indecipherable] and BillingTree -- with the addition of BillingTree.

Tim Murphy -- Chief Financial Officer

Yes. I think 110 basis points is a good number for the foreseeable future. But once cross-border gets some legs and becomes a bigger part of the business and as BillingTree grows and virtual card penetration grows, yes, I think there's opportunity there.

Robert Napoli -- William Blair -- Analyst

Then on the loan repayments, did you see an acceleration through the quarter and into October? I know some of your clients, especially on the consumer side, in particular, had a pretty good ramp-up in loan originations. So, are you seeing an acceleration there?

John Morris -- Chief Executive Officer and Co-Founder

Yes, we are. We are. Which is one of the reasons I mentioned that we exited the quarter with a 16% organic growth. The quarter overall was really strong at 15%, but exited in September at 16%. And we are seeing increased originations with some of our larger lenders. We see the instant funding volume increase; and to us, instant funding is a good leading indicator of origination activity because we're funding new loans. And, I guess, kind of anecdotally, we've heard from our customers that they see originations picking up going into the holiday season.

Robert Napoli -- William Blair -- Analyst

Great. Thank you. Appreciate it.

Operator

The next question comes from Timothy Chiodo from Credit Suisse. Please go ahead.

Timothy Chiodo -- Credit Suisse -- Analyst

Thanks a lot for taking the question. I have one that's somewhat specific to REPAY, also sort of an industry question. And then last one is a follow-up on the origination. So, for the industry one, just want to dig in a little bit into the value proposition. So, when a supplier is offered the various choices to accept payment, enhanced ACH being one of them, maybe at some point down the line enhanced ACH could be working with RTP or a faster payment rail rather than a traditional ACH, but, regardless, if we put one bucket of the enhanced ACH and the other of the virtual card and big picture if we think about components around data and messaging and reconciliation and the other one being speed of settlement and the money goodness, if you will, of the payment, when the suppliers are given the choice of those two, what are the considerations? In other words, why does someone opt for a virtual card rather than ACH at various times?

John Morris -- Chief Executive Officer and Co-Founder

Yes. Hi, Tim. It's John. So, it can vary and it can vary by industry or sub-vertical. Obviously, there's more sensitivities potentially around higher tickets, right? So, higher ticket can obviously drive the need for some type of -- it's less likely to be a virtual card. But it obviously is -- as well it's industry specific. We have a much higher virtual card penetration rate in our auto space. We have a lower participation rate in, say, in our healthcare, on specifically -- and maybe on the TPA side where someone is actually paying an actual medical bill. But we actually see on the vendor payment side, very positive results even in some of our hospitals.

So, it does depend on the average size of the ticket from a virtual card versus a different payment modality. And it also -- what drives that as well is acceptance. If someone actually cannot truly accept a credit card, then that would drive them to a different modality. And that's ultimately why -- why do someone still take checks, right? And it's still greater than 50% of all the payments in B2B.

But you're absolutely correct. We see great value in our overall software and our ability to transmit. As I was talking about, if you just follow the trail of all the data elements of an invoice on a one-by-one basis through its life cycle of clearing and settling all the way back into the reconciliation process as a one-for-one, think about it -- think of it as just a ledger system, we're going there and back and completely a one-for-one ledger against that. There's great value in that, just in that alone because a person doesn't have to touch it in many respects. They just have to verify and quantify that it balances. And that -- just the lack of the ability of a human to actually intervene with it has great value to it.

So, we continue to see that as we expand and we see that. We see the digital transformation happening. We do think that, obviously, the pandemic really -- with everyone working remote and we do think that opened the eyes of the world. And then we do think that tailwind is real and we think that will continue on through 2022, 2023, even in 2024, 2025 as automation continues to happen there.

Timothy Chiodo -- Credit Suisse -- Analyst

Great. Thank you so much, John. My brief follow-up there -- this can be a quicker one. So, you mentioned -- Tim, you mentioned some strengthening or accelerating originations heading -- or expectation of those to happen in the holiday season.

You also mentioned your actual results accelerating exiting September and into early Q4, which is great. I just wanted to follow up on a comment that we had talked about in the past around some of the durations of those loans were extending a little bit. And that was going to maybe bump some of the repayments into Q1 and be supportive of Q1 results as well alongside the continued acceleration in Q4. Is there any update is terms of how that's played out if that's continued to be the case?

Tim Murphy -- Chief Financial Officer

Yeah. We feel great about Q3. And we feel good about Q4 too. But for any originations that are picking up due to a holiday season, for example, that would fall into Q1. And so, if there's a loan being made in -- now or into early December, that's likely a Q1 payment. So, similar concept. For us, it's all about originations though. Even if the duration has been extended a bit, we're still going to get that payment. It's just a matter of timing. And so, we still see that same trend happening.

Timothy Chiodo -- Credit Suisse -- Analyst

Great. Excellent. Thank you both for both of those questions.

Operator

The next question comes from Andrew Schmidt from Citi. Please go ahead.

Andrew Schmidt -- Citigroup -- Analyst

Hi, John. Hi, Tim. Thanks for taking my questions here. First one, I wanted to ask about the B2B business. Is there a way to characterize how fast that's growing on a pro forma basis organic gross profit? Just curious, when we're sort of lapping the CPS and substantially all of your B2B acquisitions in the fourth quarter, what that's going to mean to growth? So, any context around what that currently -- is currently running at on a pro forma basis would be helpful. Thanks.

Tim Murphy -- Chief Financial Officer

Yeah. It's growing about 25% to 30% and the AP business is growing a little bit faster, as John mentioned on the call. And that's becoming a bigger part of the overall mix within B2B. And so, that's one of the reasons again we felt good about providing an initial outlook for next year and feel good about the continued strength in organic growth going to next year, is because we have those B2B assets, particularly on the AP side.

Andrew Schmidt -- Citigroup -- Analyst

Got it. That's helpful. That's pretty encouraging. And then, it's good to see the progress with the cross-sells, the AR and AP bundling when you're going to clients. In your mind, does that create an opportunity if you were to add more AR solutions to be able to sell in, given the progress you've been seeing on cross-selling so far?

Tim Murphy -- Chief Financial Officer

Yeah. So, we do see the value prop with adding AP automation to the AR customer base already. That's one of the easier sells from a cross-sell perspective because that's already a customer they see the immediate need. They do like the one-stop shop of having -- being able to make payments outbound, but also that we're already using -- they're already using us for inbound payments. So, as that growth continues, we do actually think it actually will help with our growth rate by being able to offer both for new onboarding customers.

Andrew Schmidt -- Citigroup -- Analyst

I guess the question more specifically around -- right now, I think your position in AR is more around merchant acquiring and payment acceptance. But if you're having success on the AP side and you're already embedded on the merchant acquiring side, are there opportunities to do more, whether it's cash application, invoicing, things like that? Just curious from a product pipeline perspective as it pertains to the B2B assets.

John Morris -- Chief Executive Officer and Co-Founder

From a product pipeline perspective, we actually think we will -- just like we did with our Veem relationship, we'll continue to expand the payment modalities. That in itself increases your opportunity for additional payment adoption.

Even though we actually do capture the check payments as well, anytime that we can offer a more attractive payment modality that's valued in the value chain, that generally will come with a little bit better margins there. So, that will continue to enhance.

We also think that, overall, if you look at the various different avenues in which a payment can be sent or outbound/inbound, the messaging around that, the ability to have that fully integrated, we think that obviously creates great stickiness from a customer relationship perspective.

But, overall, it really drives the high-quality experience with their vendors. And as we said as well, that -- driving our vendor-supplier network, there's long-term value there as well for us. And those eventually all start paying off as we look out into the future.

Andrew Schmidt -- Citigroup -- Analyst

Got it. That makes a lot of sense. I appreciate that, John. And then, if I could sneak one more in. As it pertains to just the initial sort of commentary regarding 2022 organic risk profit growth, what are you assuming with the personal loan vertical? Are you assuming there is a substantial rebound? Is it pretty much status quo from here? Just any commentary on the embedded assumption there would be helpful. Thanks a lot.

Tim Murphy -- Chief Financial Officer

The assumption is that it continues to recover and eventually gets back to pre-pandemic levels and then growth. We're hearing that in terms of the anecdotal comments I mentioned earlier from our customers about just increased origination activity. We're also hearing a lot of them say that they want to go fully digital.

And so, even if the originations aren't back to where they were, if they're accepting more of the payments digitally, we'll be the one processing those. And so, that's why we like the opportunity for existing customer growth, even outside of the origination commentary. And so, that digital adoption is also an opportunity for organic, combined with the return to pre-COVID origination levels.

Andrew Schmidt -- Citigroup -- Analyst

Okay. Got it. So, the kicker from the stepped-up digitization post-COVID. Okay. That makes a lot of sense.

Tim Murphy -- Chief Financial Officer

Yes.

Andrew Schmidt -- Citigroup -- Analyst

Thanks a lot, guys. I appreciate the comments.

John Morris -- Chief Executive Officer and Co-Founder

Thank you.

Operator

The next question comes from James Faucette from Morgan Stanley. Please go ahead.

James Faucette -- Morgan Stanley -- Analyst

Thank you very much. Most of my questions have been answered. Earlier someone addressed, but I had a couple of clarifying ones. When you look at your growth for next year and you gave a rough breakdown between organic and inorganic, but does that -- just to be clear, that inorganic, does that contemplate any incremental acquisitions? Or is that just what you've already done and baked?

Tim Murphy -- Chief Financial Officer

No. It's what we've already done. We don't forecast future acquisitions.

James Faucette -- Morgan Stanley -- Analyst

Okay. I just want to be sure. And then, one of the interesting things is in, like, your different areas of exposure, there's obviously been ebbs and flows, especially over the last couple of years around things like elective medical procedures. At the same time, we're seeing pretty good growth, it looks like, in the personal loan or the intention to drive personal loan growth in the industry generally. So, can you give a little more color as to what you've seen in terms of your business, how those things are moving around from a demand and opportunity standpoint and how that's impacting your outlook for next year?

Tim Murphy -- Chief Financial Officer

Yeah. So, as we've talked about, personal loans have just been kind of gradually coming back with increasing origination activity each quarter and we continue to see that and expect to see that.

To your point, elective health procedures kind of came back. Prior to Delta, we saw a pretty strong bounce back and then they slowed down. And now, we see them coming back again. So, I think there's an opportunity for increased volume in the healthcare space related to elective procedures going into next year. I think that's an area that hasn't fully rebounded and it has been up and down. And we think that it likely will rebound next year assuming there's not another Delta variant.

So, probably continued gradual in loan repayments and then it's been up and down in healthcare elective procedures. We expect that to actually fully rebound. And then, some of our other areas have just stayed strong, like we've talked about with auto and B2B. So, there are some ups and downs, but we think that there will be a really true normalization next year and we feel good about that.

James Faucette -- Morgan Stanley -- Analyst

That's great. And that's really helpful, especially on your assumptions on some of those things. And then, I'm sorry, I may have missed this and I'm sure it's been asked, but I just was jumping between calls. So, I wanted to ask, on the auto repayment side, obviously, there's a lot of pressures on that market right now. Is that impacting originations at all from your perspective or -- and if so, how meaningfully and how are you building that into your outlook for next year?

Tim Murphy -- Chief Financial Officer

Yes. Good question. So, I think a lot of the pressure is really on the new car space. We do play in that space a little bit with our -- some of our larger relationships. But we're also mostly in the used car space where there really hasn't been as much pressure. And even as used car prices have gone up, the demand has stayed strong. And there really haven't been as many supply chain issues or chip shortage issues in the used car space.

So, from our perspective, we haven't seen a decrease in demand. We haven't seen that flow through to any decreased origination activity. There actually have been higher funding amounts because of the increased prices. And then what we've seen too is that the durations have lengthened out to six or seven years, which helps us as well.

John Morris -- Chief Executive Officer and Co-Founder

I would say, some of our future organic opportunities will be -- would be upstream some, but that's -- those are the things that would be in our pipeline.

James Faucette -- Morgan Stanley -- Analyst

Got it, guys. That's really helpful. Thank you so much.

Tim Murphy -- Chief Financial Officer

Yes.

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Morris for any closing remarks.

John Morris -- Chief Executive Officer and Co-Founder

Yes. Thank you, everyone. Thank you for your time today. We are -- again, we're very excited about our performance in the third quarter and the results we were able to achieve. We're also very excited about where this leads us into our fourth quarter and, obviously, how this sets us up for our 2022 year from an organic perspective. Thank you for all your questions and we look forward to speaking with you again soon.

Operator

[Operator Closing Remarks]

Duration: 52 minutes

Call participants:

John Morris -- Chief Executive Officer and Co-Founder

Tim Murphy -- Chief Financial Officer

John Rodriguez -- D.A. Davidson Companies -- Analyst

Ramsey El-Assal -- Barclays Investment Bank -- Analyst

Sanjay Sakhrani -- Keefe Bruyette & Woods Inc. -- Analyst

Andrew Jeffrey -- Truist Securities -- Analyst

Robert Napoli -- William Blair -- Analyst

Timothy Chiodo -- Credit Suisse -- Analyst

Andrew Schmidt -- Citigroup -- Analyst

James Faucette -- Morgan Stanley -- Analyst

More RPAY analysis

All earnings call transcripts