Its SPAC Merger Behind It, Paya Reports Growth ‘Momentum’ From ACH

Paya Holdings Inc. is known for its base in integrated payments and for its processing concentration in card-not-present transactions. But what also became clear early Monday is its growing strength in bringing capability for automated clearing house payments to its roster of clients. “We have good momentum there,” said chief financial officer Glenn Renzulli during a morning conference call to discuss the Atlanta-based company’s third-quarter results, its first such meeting as a publicly traded entity.

Paya’s ACH volume climbed 19% in the quarter compared to the same period in 2019, while the company’s total payment volume grew 7.6% to $8.66 billion. Executives expect that momentum to build throughout the December quarter owing to an ACH deal with a “large” new client. “The fourth quarter has a nice lift [ahead] tied to that ACH win,” Renzulli told analysts on the call. Paya’s client base is concentrated in wholesalers, health-care companies, and government and educational entities.

Paya’s integrated-payments unit, where it works with developers to weave payment acceptance into business-management software, remains the larger and more profitable of its two divisions, posting $30.4 million in revenue for the quarter, up from $29.6 million last year. Its other unit, payment services, logged $21.4 million in revenue, up slightly from $21 million a year ago. In this unit, ACH revenue climbed 7% while “traditional” card-based processing revenue remained “flat” the company said.

Jeff Hack, Paya’s chief executive, pointed to ongoing recovery from a low point in the spring brought on by the impact of the Covid-19 pandemic. “April was our worst month,” Hack said. Now, he added, the “main drivers” for the business are “continued penetration of the installed base of our software partners and ACH.”

Just after the quarter ended, Paya closed on its acquisition of The Payment Group , which integrates payments into software for utilities, municipalities, and other government units. Terms of the transaction were not announced. That and deals to come will bolster results in future quarters, Hack said.  “The acquisition pipeline is good,” he told the equity analysts on the call.

The September quarter was Paya’s last as a private company. It started trading Oct. 19 on the Nasdaq following a so-called SPAC merger with a blank-check company called Fintech Acquisition Corp III. These special acquisition company deals are becoming an increasingly popular method to take companies public while avoiding a traditional initial public offering. 

Paya reported net income for the quarter of $1.6 million, a turnaround from a $600,000 loss in the year-ago period. The stock was trading at $11.41 per share at mid-morning Monday, down slightly from Friday but above its $10.09 low.