Triumph Financial Inc (TFIN) Q3 2024 Earnings Call Highlights: Strategic Partnerships and ...

Release Date: October 16, 2024 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Triumph Financial Inc (NASDAQ:TFIN) has successfully launched TriumphPay with C.H. Robinson, indicating strong partnerships and network expansion. The company is leveraging artificial intelligence and machine learning to automate invoice purchasing, enhancing operational efficiency. Triumph Financial Inc (NASDAQ:TFIN) has demonstrated the ability to fund transactions outside of traditional banking hours, providing a competitive edge.

The company reported a significant increase in non-interest bearing deposits, particularly from mortgage warehouse servicing, reducing reliance on wholesale funding. TriumphPay's fee revenue has grown over 30% year-over-year, even amidst a prolonged freight recession, showcasing resilience and value addition. Negative Points The freight market remains challenging with no short-term turnaround expected, impacting Triumph Financial Inc (NASDAQ:TFIN)'s core business environment. There is a noted decline in the independent owner-operator base, which could affect the company's addressable market for LoadPay. Triumph Financial Inc (NASDAQ:TFIN) lost a factoring client who moved their relationship off the network, impacting network volume growth.

The company faces challenges in onboarding new factoring clients despite adding brokers to its network, indicating potential market saturation or competitive pressures. The prolonged freight recession has masked potential growth and profitability, creating uncertainty around future performance. Q & A Highlights Q: Given the market conditions and the shrinking independent owner-operator base, do you expect this trend to continue, or will the independent truck driver base stabilize or recover? A: Kimberly Fisk, COO: The small carrier will not leave the market permanently. They may temporarily park their trucks or lease to larger carriers, but they will return as independents when market conditions improve. Aaron Graft, CEO: The small trucker is essential to the market ecosystem, and despite current challenges, they will return when the spot market offers better rewards.

Q: With C.H. Robinson's volumes coming online, can you provide insights into the expected payment volume through TPay and the onboarding pipeline for factoring companies? A: Melissa Forman-Barenblit, President of TriumphPay: We are excited about C.H. Robinson's onboarding, which will significantly contribute to our pipeline. Most of their truckload volume will be on our platform by Q1 2025. Aaron Graft, CEO: We are focusing on integrating new entrants into our network, and despite a recent drop in network transactions, we expect long-term growth.

Story continues Q: What are your thoughts on the monetization of TriumphPay in 2025, given the cautious outlook on the freight markets? A: Melissa Forman-Barenblit, President of TriumphPay: Despite the freight recession, we have increased revenue by over 30% annually. We remain cautious but continue to provide value to our clients, allowing us to grow revenue. Aaron Graft, CEO: We are monetizing TriumphPay effectively, and if market conditions improve, our growth will accelerate. Q: Can you discuss the current revenue model for LoadPay and any plans for additional services? A: Aaron Graft, CEO: LoadPay's revenue primarily comes from interchange fees, but we plan to offer additional services like small dollar advances. With our data and technology, we can provide advanced products and other features, which we expect to roll out in 2025.

Q: Can you elaborate on the NextGen Audit offering and its impact on client upgrades and pricing? A: Melissa Forman-Barenblit, President of TriumphPay: NextGen Audit enhances our existing audit solution with features like POD validation and improved indexing. Many clients are upgrading early, allowing us to charge higher rates, contributing to our fee revenue growth. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. View comments