Paya’s Boss Says the Acquisitive Processor Could Go Big on Future Deals

Paya Holdings Inc. has been among the payments industry’s more acquisitive processors, and on Friday morning its chief executive made plain the company isn’t ruling out bigger deals. “You can see our balance sheet, our leverage, and the powder is certainly there to do larger transactions,” chief executive Jeff Hack told equity analysts during a call to discuss the company’s second-quarter results.

The Atlanta-based company, known for its concentration in integrated payments—the weaving of payments capability into business software—closed a deal early this year for VelocIT Business Solutions, a developer of business software. The price was not disclosed, but earlier acquisitions have similarly suited the company’s focus in payments integration.

Now, Hack says, Paya may be ready to hunt for bigger game. “With medium and larger deals, we continue to work on them,” he noted, without spelling out his dollar criteria for “medium and larger.” “It’s something we are prepared to do. We like our track record in M&A. We’d like to see it play out bigger.”

Paya, which went public last year as the result of a merger with a special purpose acquisition company, has so far hewn to a strict set of criteria for deals. Indeed, Hack said in March his acquisition targets are companies with proprietary technology that can open new markets for Paya or that can serve as an extension of the company’s current solutions. Companies in adjacent verticals also represent possible acquisition opportunities, he added.

Earlier deals include those for Paragon Payment Systems and The Payment Group. Paya processes in five primary markets: business-to-business, health care, non-profits, governments, and education.

But, as with all other processors, Paya is also confronting the challenge of rising inflation, which hit 9.1% in June, the biggest 12-month increase since November 1981. Here, top Paya officials say the company’s client mix helps. “Non-profits, government, and health care do not have as volatile an impact from inflation,” noted chief financial officer Glenn Renzulli during Friday’s call.

For the latest quarter, Paya posted $12.3 billion in payment volume consisting of both card and automated clearing house activity, up 14.7% year-over-year. Card volume grew 7%, but ACH volume increased 27%. Revenue totaled $72.5 million, up 13.5%. Net income of $1.7 million reversed a loss of $3.1 million in the year-ago quarter.