Group 1 - Priority Technology Holdings, Inc. held its Q1 2025 Earnings Conference Call on May 6, 2025, at 11:00 AM ET [1] - The call featured key participants including Tom Priore, Chairman and CEO, and Tim O'Leary, CFO [3] - Meghna Mehra, Managing Director at ICR, introduced the call and the participants [2][3] Group 2 - The company emphasized that the remarks during the call would include forward-looking statements, which are subject to risks and uncertainties [4] - There is no obligation for the company to update or revise these forward-looking statements based on new information or future events [4] - The call may reference non-GAAP measures such as EBITDA and adjusted EBITDA, with reconciliations available in the press release and SEC filings [5]

Financial Data and Key Metrics Changes - The company reported a 9% increase in net revenue, reaching $224.6 million, with adjusted gross profit growing by 14% to $87.3 million and adjusted EBITDA increasing by 11% to $51.3 million [4][6] - Adjusted EPS rose by $0.19 year over year, reaching $0.22 for the quarter [21][22] - Annual transaction volume increased by $5 billion to over $135 billion, and account balances under administration improved to $1.3 billion [5][6] Business Segment Data and Key Metrics Changes - The SMB segment generated Q1 revenue of $151.7 million, a 5.3% increase year over year, with adjusted gross profit of $33.1 million, up 3.9% [12][13] - B2B revenue grew by 12.1% to $23.9 million, with adjusted gross profit increasing by 17.8% to $7.3 million [15][17] - The Enterprise segment saw revenue of $50.1 million, a 22.2% increase, with adjusted gross profit also rising by 22.2% to $46.9 million [18] Market Data and Key Metrics Changes - The company noted a 0.3% decline in U.S. GDP during Q1, with consumer spending growth slowing to 1.8% from 4% [25][26] - The company reported that its core acquiring channels produced 10% organic revenue growth, while countercyclical segments grew by 12% to 22% [27][28] Company Strategy and Development Direction - The company aims to gain market share in the acquiring segment while strengthening countercyclical assets like automated payables and CFT Pay [26][27] - The focus is on investing efficiently in new verticals with large total addressable markets (TAMs) that are still early in the adoption of integrated payment and banking solutions [26][28] - The company is positioned to benefit from the fallout of less stable banking as a service providers [64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 10% to 14% top-line revenue growth for 2025, despite potential headwinds from lower interest rates and macroeconomic uncertainty [5][22] - The company is actively working to remediate a material weakness related to automated controls, with substantial progress reported [23] Other Important Information - The company ended the quarter with $117.6 million in available liquidity, including $70 million of borrowing capacity under its revolving credit facility [19] - The company has made a $10 million prepayment on its term loan during the quarter, reducing debt levels to $935.5 million [19][20] Q&A Session Summary Question: Can you provide details on the increase in SG&A and salaries? - Management clarified that SG&A increased by 26% year over year when normalizing for non-recurring items, with significant costs related to cloud migration and headcount additions [31][32] Question: What percentage of gross profit comes from B2B and enterprise? - Management confirmed that over 62% of gross profit now comes from B2B and enterprise segments, with a significant portion also from recurring revenues [34][35] Question: Can you elaborate on the Minnesota Wild contract win? - Management highlighted that the contract was won due to the ability to optimize cash flow and provide banking transparency, which is crucial for sports franchises [39][41] Question: How did the one less day in Q1 impact revenue? - Management acknowledged that the one less day did impact daily revenue, particularly in the SMB segment, and noted other unusual influences on volume [43][44] Question: What are the considerations for segment growth in Q2? - Management indicated that shifts in interest rates could impact growth, particularly in high-margin interest income [48] Question: How has consumer behavior changed post-tariffs? - Management noted no material changes in consumer behavior yet, with a resilient portfolio that includes recession-resistant sectors [54][56] Question: What opportunities exist in the embedded finance space? - Management stated that the company is well-positioned to capture opportunities from the fallout of less stable banking service providers [64]

Priority Technology (PRTH) came out with quarterly earnings of $0.22 per share, beating the Zacks Consensus Estimate of $0.20 per share. This compares to loss of $0.10 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 10%. A quarter ago, it was expected that this company would post earnings of $0.06 per share when it actually produced earnings of $0.18, delivering a surprise of 200%.Over the last four quarters, the company has s ...

Revenue Performance - Consolidated revenue for Q1 2025 was $224.6 million, an increase of $18.9 million or 9.2% from $205.7 million in Q1 2024[121] - Merchant card fees revenue increased to $167.1 million, up $9.1 million or 5.8% from $157.9 million in Q1 2024, driven by higher transaction counts and card values[123] - Money transmission services revenue rose to $37.4 million, an increase of $8.3 million or 28.5% from $29.1 million in Q1 2024, attributed to new customer enrollments[124] - Total revenues from the SMB Payments segment were $151.7 million, a 5.3% increase from $144.0 million in Q1 2024, driven by increased card processing activity[139] - B2B Payments segment revenue increased to $23.9 million for Q1 2025, up 12.1% from $21.3 million in Q1 2024, driven by higher issuing dollar volume[142] - Enterprise Payments segment revenue reached $50.1 million in Q1 2025, reflecting a 22.2% increase from $41.0 million in Q1 2024, primarily due to growth in billed clients and new customer enrollments[145] Operating Expenses - Total operating expenses for Q1 2025 were $192.0 million, an increase of $14.3 million or 8.1% from $177.7 million in Q1 2024[127] - Salary and employee benefits expense increased by $3.6 million or 16.4% to $25.8 million in Q1 2025, due to merit increases and higher headcount[129] EBITDA Performance - Adjusted EBITDA for the SMB Payments segment was $25.7 million, a 2.7% increase from $25.0 million in Q1 2024, driven by revenue growth[140] - Adjusted EBITDA for the B2B Payments segment rose to $3.5 million in Q1 2025, a 101.3% increase from $1.7 million in Q1 2024, attributed to contributions from CPX and Plastiq businesses[143] - Adjusted EBITDA for the Enterprise Payments segment was $42.4 million in Q1 2025, up 22.2% from $34.7 million in Q1 2024, driven by revenue increases[146] - Total consolidated adjusted EBITDA for Q1 2025 was $51.3 million, compared to $46.3 million in Q1 2024, indicating overall growth[147] Cash Flow and Financing - Net cash provided by operating activities decreased to $10.0 million in Q1 2025 from $13.3 million in Q1 2024, primarily due to changes in operating assets and liabilities[155] - Cash used in investing activities was $9.7 million in Q1 2025, up from $7.7 million in Q1 2024, with significant investments in property and acquisitions[156] - Net cash provided by financing activities was $47.3 million in Q1 2025, contrasting with $10.3 million used in Q1 2024, driven by changes in customer fund obligations[157] - As of March 31, 2025, the company had cash totaling $47.6 million, an increase from $34.3 million at the same time in 2024[152] Debt and Tax - Outstanding debt obligations decreased to $935.5 million as of March 31, 2025, down from $945.5 million at December 31, 2024, due to an unscheduled principal payment[158] - Interest expense for Q1 2025 was $23.2 million, an increase of $2.3 million or 11.0% from $20.9 million in Q1 2024, due to higher outstanding balances[133] - Effective tax rate for Q1 2025 was 21.4%, down from 33.2% in Q1 2024, primarily due to changes in valuation allowances[134] Merchant Processing - Merchant bankcard processing dollar value increased to $15.3 billion in Q1 2025, up $506.0 million from $14.8 billion in Q1 2024[138]

Priority Technology Holdings, Inc. (Nasdaq: PRTH) Supplemental Slides: Q1 2025 Earnings Call May 2025 Important Notice Regarding Forward-Looking Statements and Non-GAAP Measures This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products a ...

Priority Technology Holdings, Inc. Reports First Quarter Financial Results Strong First Quarter Growth Driven by Performance Across Unified Commerce Platform ALPHARETTA, GA - May 6, 2025 -- Priority Technology Holdings, Inc. (NASDAQ: PRTH) ("Priority" or the "Company"), the payments and banking fintech that streamlines collecting, storing, lending, and sending money to unlock revenue opportunities, today announced its first quarter 2025 financial results including strong year-over-year diversified revenue g ...

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, incl ...

Core Viewpoint - Priority Technology Holdings, Inc. (PRTH) has experienced a significant stock decline of 31.8% over the past three months, contrasting with a 4.6% decline in the industry and a 4.9% fall in the Zacks S&P 500 composite [1][4] Group 1: Stock Performance - Over the past year, PRTH's stock has surged by 150%, indicating it is currently in a correction phase [4] - The stock's recent correction may present an appealing opportunity for investors [4] Group 2: Market Position and Growth Potential - The global mobile payment market is projected to reach $88.5 billion in 2024, with a compound annual growth rate (CAGR) of 38% from 2025 to 2030, positioning PRTH to benefit from this growth [5] - In Q4 2024, PRTH reported a 13.9% year-over-year increase in revenue, with merchant bankcard processing dollar value and B2B issuing dollar volume rising by 6.6% and 13.5%, respectively [6] - The enterprise payments segment saw a 37% year-over-year growth in average billed clients, with average monthly new enrollments increasing by 7.8% [7] - PRTH's ability to provide seamless transactions is expected to enhance customer acquisition and market share in the expanding mobile payment market [8] Group 3: Valuation Metrics - PRTH shares are currently priced at 10.3 times forward 12-month earnings per share, significantly lower than the industry average of 32.7 times [9] - The trailing 12-month EV-to-EBITDA ratio for PRTH is 6.7 times, well below the industry's average of 22.8 times [12] Group 4: Financial Outlook - The Zacks Consensus Estimate for PRTH's 2025 revenues is $985.5 million, indicating a 12% growth from the previous year, with a similar growth forecast for 2026 [14] - Earnings per share for 2025 are estimated at 69 cents, reflecting a year-over-year growth of 35.3%, with a projected 58% increase for 2026 [14] Group 5: Competitive Landscape - PRTH faces intense competition in the payments industry, particularly from larger players like Payoneer Global Inc. and Corpay, Inc., which may impact its market share [15] - Competitors possess more resources and brand value, potentially leading to pricing pressures and challenges in customer retention and acquisition [16] Group 6: Risks to Growth - The termination of referral partner agreements or industry consolidation could adversely affect PRTH's growth trajectory [17] - A lack of innovation may hinder PRTH's ability to achieve top-line growth, negatively impacting stock performance [17] Group 7: Investment Considerations - The expanding mobile payment market and PRTH's discounted stock price make it an attractive option for investors [18] - A strong liquidity position supports PRTH's financial stability, with a current ratio of 1.05, although it is lower than the industry's 1.65 [11] - Caution is advised as PRTH is currently in a correction phase, suggesting that investors should monitor share price adjustments before making investment decisions [19]

Priority Technology Holdings (NASDAQ: PRTH ) is positioned to profit from the highly competitive market of integrated payment solutions, especially in small and medium-sized businesses (SMB) and B2B markets. I know at least ten companies from differentI am a finance and investment enthusiast with a strong focus on fundamental analysis, valuation, and long-term growth potential, particularly in the AI, fintech, and tech sectors. My background includes academic studies in finance and economics, along with exp ...

Financial Data and Key Metrics Changes - The company reported the strongest revenue performance in its history for both Q4 and the full year, with net revenue growing by 16% and adjusted EBITDA increasing by 21% for the full year 2024 [7][10] - Q4 revenue reached $227.1 million, a 14% increase from the prior year, leading to a 15% increase in adjusted gross profit to $83.9 million and a 16% improvement in adjusted EBITDA to $51.7 million [9][10] - For the full year 2024, total revenue was $879.7 million, with adjusted gross profit increasing to $328.1 million and adjusted EBITDA reaching $204.3 million [10][30] Business Segment Data and Key Metrics Changes - The SMB segment generated Q4 revenue of $155.7 million, an 11.1% increase year-over-year, with adjusted gross profit of $32 million, up 0.4% from the previous year [18][20] - The B2B segment reported revenue of $23.7 million, a 10.9% increase, with adjusted gross profit rising to $6.4 million, reflecting a 24% growth [22][23] - The Enterprise segment saw Q4 revenue of $48.7 million, a 27% increase, with adjusted gross profit also increasing by 27% to $45.6 million [24][25] Market Data and Key Metrics Changes - The company processed over $130 billion in annual transaction volume during the prior 12 months, with approximately 1.2 million total customer accounts on its commerce platform [7][10] - Bank card dollar volume in the SMB segment was $15.5 billion for the quarter, up 6.6% from the prior year [18][19] Company Strategy and Development Direction - The company aims to sustain momentum in its acquiring, payables, and Enterprise segments, with a revenue growth forecast of 10% to 14% for 2025 [8][36] - The focus remains on refining customer experiences and innovating SaaS payments and banking solutions to meet evolving customer needs [12][41] - The company is positioned as a consolidator in the payments and financial technology space, targeting opportunities in sectors with legacy technology and inefficient operations [41][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth despite potential headwinds from lower interest rates and a challenging macroeconomic environment [8][36] - The company noted that over 63% of adjusted gross profit in Q4 came from recurring revenues, indicating a shift towards a more stable revenue model [17][18] - Management highlighted the importance of maintaining a disciplined approach to capital allocation, balancing debt paydown with potential M&A opportunities [50][58] Other Important Information - The company redeemed its preferred stock during the quarter, which resulted in a fourth-quarter preferred dividend of only $2.65 million [31][35] - A material weakness in internal controls over financial reporting was disclosed, but it did not result in a restatement of financial results [33][35] Q&A Session Summary Question: Capital allocation strategy between debt paydown and increased CapEx or SG&A - Management emphasized the importance of balancing debt paydown with M&A opportunities, while also considering the shift from CapEx to OpEx as platforms migrate to the cloud [50][52] Question: Impact of recent rate cut forecasts on guidance - Management confirmed that they have factored in the expected rate cuts into their 2025 guidance, adopting a conservative approach [54][56] Question: Impact of tariffs on businesses served - Management noted that while tariffs may create inflation, they have not seen significant negative impacts on the acquiring side, and demand for B2B solutions is increasing [67][68] Question: Reasons for declining gross margin percentage in consumer payments - Management explained that the decline is partly due to residual purchases running off and a one-time inventory write-off of $3.5 million, but core margins have actually expanded [71][78] Question: Magnitude of CapEx to OpEx shift - Management estimated a $4 million impact from the CapEx to OpEx shift for 2025, which will affect underlying profitability [110] Question: Guidance on adjusted EPS expectations - Management indicated that adjusted EPS for 2025 could approach $1 per share based on normal growth trends [120]