Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Triumph Financial Inc (NASDAQ:TFIN) has achieved a significant milestone by touching 50% of all brokered freight transactions in the United States.
• The company has eclipsed over $100 billion in total payments since the creation of its payment segment.
• Triumph Financial Inc (NASDAQ:TFIN) is targeting a market share increase to 60% to 65% by the end of 2025, indicating strong growth ambitions.
• The company is leveraging AI and machine learning to improve efficiency, with 75% of invoices for small carriers being processed without human intervention.
• Triumph Financial Inc (NASDAQ:TFIN) has a high gross margin of over 90% in its new Intelligence segment, due to utilizing its own data.

Negative Points

• There is uncertainty regarding the exact impact of new partnerships and products on EBITDA margin and revenue growth.
• Noninterest expenses are expected to increase due to compensation resets and investments in new segments.
• The freight market remains challenging, with a significant drop in new client applications compared to previous years.
• The Intelligence segment is not expected to generate meaningful revenue until the back end of 2026.
• The company acknowledges that the value of network transactions is not as high as initially anticipated due to technical integration challenges.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with EQBK.

Q: Can you provide quantified ranges for payment volume and revenue growth towards the end of 2025, especially with CHRW coming online? A: Melissa Forman-Barenblit, Executive Vice President and President of TriumphPay, highlighted the goal of achieving 60% to 65% market share by the end of the year. Revenue from new deals and products is expected in the second half of the year. Aaron Graft, CEO, added that while the exact impact on EBITDA margin or revenue growth is uncertain, the company is focused on improving EBITDA margins despite ongoing investments.

Q: How is AI impacting Triumph Financial's value proposition and product moat? A: Aaron Graft explained that AI and machine learning have significantly improved the company's ability to process invoices without human intervention, achieving a 75% automation rate for small carriers. This advancement is part of their broader strategy to enhance network transactions and maintain a competitive edge in the market.

Q: What is the go-to-market strategy for the new Intelligence segment, and what revenue ramp can be expected? A: Aaron Graft stated that the initial focus will be on the 560 existing TriumphPay customers, with plans to expand beyond that. The Intelligence segment aims to leverage Triumph's extensive data to provide valuable insights to customers, with a gross margin over 90%. Revenue growth is anticipated in 2025, but significant contributions are expected by the end of 2026.

Q: How should we think about the pace of noninterest expense increases in 2025? A: W. Bradley Voss, CFO, indicated modest growth in noninterest expenses, primarily driven by compensation resets, healthcare cost inflation, and investments in the Intelligence segment and operational resources for Factoring-as-a-Service and LoadPay.

Q: What are the expectations for LoadPay adoption and its impact on revenue? A: Aaron Graft and Todd Ritterbusch discussed the potential for LoadPay to capture 100% of a carrier's spend through integration with fuel cards and debit card features. The average interchange rate is about 1.9%, and the company aims for between 5,000 and 10,000 active users by the end of 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.