Priority Technology Holdings, Inc. Reports First Quarter Financial Results

Published: 2025-05-06 07:33:03 ET PRTH

Published on 05/06/2025 at 07:33

Strong First Quarter Growth Driven by Performance Across Unified Commerce Platform

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 growth.

"Strong first quarter growth in revenue and profits continues to demonstrate the value of our Priority Commerce Engine, purpose built to help our customers accelerate cash flow and optimize working capital. We delivered consistent results across each of our SMB Acquiring, B2B Payables and Enterprise Payments segments," said Tom Priore, Chairman & CEO of Priority. “The blend of the diverse and counter-cyclical aspects of our platform combined with relentless execution to gain market share in traditional payment segments reinforces that Priority's technology, operations and vision have positioned us to excel through the remainder of 2025 and beyond despite an uncertain macro-economic environment.”

Highlights of Consolidated Results

First Quarter 2025 Financial Highlights compared with First Quarter 20241

(1)

Certain amounts/percentages may not compute accurately due to rounding.

(2)

See "Non-GAAP Financial Measures" and the reconciliations of Adjusted Gross Profit (non-GAAP), Adjusted Gross Profit Margin (non-GAAP), Adjusted EBITDA, and Adjusted EPS (non-GAAP) to their most comparable GAAP measures provided within this document for additional information.

Full Year 2025 Financial Guidance

Priority's outlook remains strong and we affirm our full year 2025 guidance as follows:

Conference Call

The Company will host a conference call on Tuesday, May 6, 2025 at 11:00 a.m. EST to discuss its first quarter financial results. Participants can access the call by phone in the U.S. or Canada at (877) 407-0752 or internationally at (201) 389-0912.

The Internet webcast link and accompanying slide presentation can be accessed athttps://viavid.webcasts.com/starthere.jsp?ei=1717257&tp_key=17b579fc0a and will also be posted in the "Investor Relations" section of the Company's website at www.prioritycommerce.com/investors.

An audio replay of the call will be available shortly after the conference call until May 20, 2025, at 11:59 p.m. ET. To listen to the audio replay, dial (844) 512-2921 or (412) 317-6671 and enter conference ID number 13753537. Alternatively, you may access the webcast replay in the "Investor Relations" section of the Company's website at www.prioritycommerce.com/investors.

Non-GAAP Financial Measures

This communication includes certain non-GAAP financial measures that we regularly review to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions. We believe these non-GAAP measures help to illustrate the underlying financial and business trends relating to our results of operations and comparability between current and prior periods. We also use these non-GAAP measures to establish and monitor operational goals. However, these non-GAAP measures are not superior to or a substitute for prominent measurements calculated in accordance with GAAP. Rather, the non-GAAP measures are meant to be a complement to understanding measures prepared in accordance with GAAP.

Adjusted Gross Profit and Adjusted Gross Profit Margin

The Company's adjusted gross profit metric represents revenues less cost of revenue (excluding depreciation and amortization). Adjusted gross profit margin is adjusted gross profit divided by revenues. We review these non-GAAP measures to evaluate our underlying profit trends. The reconciliation of adjusted gross profit to its most comparable GAAP measure is provided below:

(in thousands)

Three Months Ended March 31,

2025

2024

Revenues

224,630

205,719

Cost of revenue (excluding depreciation and amortization)

(137,353

)

(129,298

)

Adjusted gross profit

87,277

76,421

Adjusted gross profit margin

38.9

37.1

Depreciation and amortization of revenue generating assets

(4,668

)

(3,900

)

Gross profit

82,609

72,521

Gross profit margin

36.8

35.3

EBITDA and Adjusted EBITDA

EBITDA and adjusted EBITDA are performance measures. EBITDA is earnings before interest, income tax, and depreciation and amortization expenses ("EBITDA"). Adjusted EBITDA begins with EBITDA but further excludes certain non-cash costs, such as stock-based compensation and the write-off of the carrying value of investments or other assets, as well as debt extinguishment and modification expenses and other expenses and income items considered non-recurring, such as acquisition integration expenses, certain professional fees, and litigation settlements. We review the non-GAAP adjusted EBITDA measure to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions.

The reconciliation of adjusted EBITDA to its most comparable GAAP measure is provided below:

(in thousands)

Three Months Ended March 31,

2025

2024

Net income

8,268

5,193

Interest expense

23,176

20,880

Income tax expense

2,250

2,582

Depreciation and amortization

13,777

15,253

EBITDA

47,471

43,908

Debt modification and extinguishment expenses

—

Selling, general and administrative (non-recurring)

2,199

798

Non-cash stock-based compensation

1,586

1,634

Adjusted EBITDA

51,294

46,340

Further detail of certain of these adjustments, and where these items are recorded in our consolidated statements of operations, is provided below:

(in thousands)

Three Months Ended March 31,

2025

2024

Selling, general and administrative expenses (non-recurring):

Certain legal fees

1,296

450

Professional, accounting and consulting fees

1,044

189

Other expenses, net

159

Litigation settlement

(160

)

—

2,199

798

Adjusted Earnings Per Share (Adjusted EPS)

Adjusted EPS is a performance measure. Adjusted EPS is calculated by dividing adjusted net income (loss) attributable to common shareholders by weighted average number shares outstanding for the respective periods.

Adjusted net income attributable to common shareholders begins with net income (loss) attributable to common shareholders adjusted to exclude various items listed below. We believe that adjusted EPS is a measure that is useful to investors and management in understanding our ongoing profitability and in analysis of ongoing profitability trends.

(in thousands)

Three Months Ended March 31,

2025

2024

Reconciliation of Adjusted EPS

Net income (loss) attributable to common shareholders

8,268

(8,050

)

Debt extinguishment and modification costs

—

Stock based compensation

1,586

1,634

Other non-recurring expenses

2,199

798

Amortization of acquisition related intangible assets

9,314

11,692

Tax impact of adjustments(1)

(3,556

)

(3,670

)

Adjusted net income attributable to common share holders

17,849

2,404

Weighted average common shares outstanding (basic)

78,774

78,021

Effect of dilutive potential common shares

1,083

204

Adjusted Weighted average shares outstanding (diluted)

79,857

78,225

Earnings (loss) per common share:

Basic

0.10

(0.10

)

Diluted

0.10

(0.10

)

Adjusted earnings per common share

Basic

0.23

0.03

Diluted

0.22

0.03

(1)

The tax impact calculated using the blended statutory income tax rate adjusted for discrete items (27.1% and 26.0% for the three months ended March 31, 2025 and March 31, 20204, respectively.)

Priority does not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because it could not do so without unreasonable effort due to the unavailability of the information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, the Company does so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for various cash and non-cash reconciling items that would be difficult to predict with reasonable accuracy. For example, stock-based compensation expense would be difficult to estimate because it depends on the Company's future hiring and retention needs, as well as the future fair market value of the Company's common stock, all of which are difficult to predict and subject to constant change. As a result, the Company does not believe that a GAAP reconciliation would provide meaningful supplemental information about the Company's outlook.

About Priority Technology Holdings, Inc.

Priority is a solution provider in Payments and Banking as a Service operating at scale with over 1.3 million active customers across its SMB, B2B and Enterprise channels processing approximately $135.0 billion in annual transaction volume and providing administration for over $1.3 billion in account balances. Priority is the payments and banking fintech that streamlines collecting, storing, lending, and sending money through its innovative commerce engine to unlock revenue and generate operational success for businesses. Additional information can be found at www.prioritycommerce.com.

Forward-Looking Statements

This press release 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 and services, and other statements identified by words such as "may," "will," "should," "anticipates," "believes," "expects," "plans," "future," "intends," "could," "estimate," "predict," "projects," "targeting," "potential" or "contingent," "guidance," "outlook" or words of similar meaning. These forward-looking statements include, but are not limited to, our 2025 outlook and statements regarding our market and growth opportunities. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive risks, trends and uncertainties that could cause actual results to differ materially from those projected, expressed, or implied by such forward-looking statements. Our actual results could differ materially, and potentially adversely, from those discussed or implied herein.

We caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties disclosed in our SEC filings, including our most recent Annual Report on Form 10-K filed with the SEC on March 6, 2025. These filings are available online at www.sec.gov or www.prioritycommerce.com.

We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the way we expect. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

Priority Technology Holdings, Inc.

Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except per share amounts)

Three Months Ended March 31,

2025

2024

Revenues

224,630

205,719

Operating expenses

Cost of revenue (excludes depreciation and amortization)

137,353

129,298

Salary and employee benefits

25,775

22,150

Depreciation and amortization

13,777

15,253

Selling, general and administrative

15,100

10,995

Total operating expenses

192,005

177,696

Operating income

32,625

28,023

Other (expense) income

Interest expense

(23,176

)

(20,880

)

Debt extinguishment and modification costs

(38

)

—

Other income, net

1,107

632

Total other expense, net

(22,107

)

(20,248

)

Income before income taxes

10,518

7,775

Income tax expense

2,250

2,582

Net income

8,268

5,193

Less: Dividends and accretion attributable to redeemable senior preferred stockholders

—

(12,662

)

Less: Return on redeemable NCI

—

(581

)

Net income (loss) attributable to common stockholders

8,268

(8,050

)

Other comprehensive income (loss)

Foreign currency translation adjustments

(13

)

Comprehensive income (loss)

8,311

(8,063

)

Earnings (loss) per common share:

Basic

0.10

(0.10

)

Diluted

0.10

(0.10

)

Adjusted earnings per common share(1):

Basic

0.23

0.03

Diluted

0.22

0.03

Weighted-average common shares outstanding:

Basic

78,774

78,021

Diluted

79,857

78,225

(1)

Adjusted EPS in a non-GAAP earnings measure. See Adjusted EPS reconciliation for further detail.

Priority Technology Holdings, Inc.

Unaudited Consolidated Balance Sheets

(in thousands)

March 31, 2025

December 31, 2024

Assets

Current assets:

Cash and cash equivalents

47,587

58,600

Restricted cash

11,490

11,090

Accounts receivable, net of allowances

80,280

67,969

Prepaid expenses and other current assets

19,962

22,990

Current portion of notes receivable, net of allowance

2,231

3,638

Settlement assets and customer/subscriber account balances

1,003,034

940,798

Total current assets

1,164,584

1,105,085

Notes receivable, less current portion

6,473

4,919

Property, equipment and software, net

53,718

52,477

Goodwill

386,822

376,091

Intangible assets, net

231,560

240,874

Deferred income taxes, net

26,933

24,697

Other noncurrent assets

21,568

22,717

Total assets

1,891,658

1,826,860

Liabilities, Stockholders' Deficit and NCI

Current liabilities:

Accounts payable and accrued expenses

54,414

62,149

Accrued residual commissions

40,478

37,560

Customer deposits and advance payments

2,506

2,246

Current portion of long-term debt

1,879

9,503

Settlement and customer/subscriber account obligations

1,003,395

940,213

Total current liabilities

1,102,672

1,051,671

Long-term debt, net of current portion, discounts and debt issuance costs

918,944

920,888

Other noncurrent liabilities

26,467

19,326

Total liabilities

2,048,083

1,991,885

Stockholders' deficit:

Preferred stock

—

Common stock

Treasury stock, at cost

(21,077

)

(19,607

)

Additional paid-in capital

1,669

—

Accumulated other comprehensive loss

(133

)

(176

)

Accumulated deficit

(138,866

)

(147,134

)

Total stockholders' deficit attributable to stockholders of Priority

(158,327

)

(166,840

)

Non-controlling interests in consolidated subsidiaries

1,902

1,815

Total stockholders' deficit

(156,425

)

(165,025

)

Total liabilities, stockholders' deficit and NCI

1,891,658

1,826,860

Priority Technology Holdings, Inc.

Unaudited Consolidated Statements of Cash Flows

(in thousands)

Three Months Ended March 31,

2025

2024

Cash flows from operating activities:

Net income

8,268

5,193

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization of assets

13,777

15,253

Stock-based, ESPP and incentive units compensation

1,586

1,633

Amortization of debt issuance costs and discounts

434

1,065

Debt extinguishment and modification costs

—

Deferred income tax

(2,236

)

(1,872

)

Change in contingent consideration

1,006

972

Other non-cash items, net

(20

)

(259

)

Change in operating assets and liabilities:

Accounts receivable

(12,182

)

(8,339

)

Prepaid expenses and other current assets

(73

)

(425

)

Income taxes (receivable) payable

4,429

—

Notes receivable

—

(266

)

Accounts payable and other accrued liabilities

(5,796

)

1,590

Customer deposits and advance payments

260

157

Other assets and liabilities, net

465

(1,395

)

Net cash provided by operating activities

9,956

13,307

Cash flows from investing activities:

Acquisition of business, net of cash acquired

(4,473

)

—

Additions to property, equipment and software

(5,095

)

(6,610

)

Notes receivable, net

(147

)

(1,059

)

Net cash used in investing activities

(9,715

)

(7,669

)

Cash flows from financing activities:

Debt issuance and modification costs paid

(40

)

—

Repayments of long-term debt

(10,000

)

(1,678

)

Repurchases of shares withheld for taxes

(1,470

)

(421

)

Dividends paid to redeemable senior preferred stockholders

—

(7,027

)

Proceeds from exercise of stock options

110

—

Settlement and customer/subscriber accounts obligations, net

59,060

1,918

Payment of contingent consideration related to business combination

(400

)

(3,071

)

Net cash provided by (used in) financing activities

47,260

(10,279

)

Net change in cash and cash equivalents and restricted cash:

Net increase in cash and cash equivalents, and restricted cash

47,501

(4,641

)

Cash and cash equivalents and restricted cash at beginning of period

993,864

796,223

Cash and cash equivalents and restricted cash at end of period

1,041,365

791,582

Reconciliation of cash and cash equivalents, and restricted cash:

Cash and cash equivalents

47,587

34,290

Restricted cash

11,490

12,658

Cash and cash equivalents included in settlement assets and customer/subscriber account balances (restricted in nature)

982,288

744,634

Total cash and cash equivalents, and restricted cash

1,041,365

791,582

Priority Technology Holdings, Inc.

Unaudited Reportable Segments' Results

(in thousands)

Three Months Ended March 31,

2025

2024

SMB Payments:

Revenues

151,690

144,005

Adjusted EBITDA

25,705

25,023

Key Indicators:

Merchant bankcard processing dollar value

15,294,133

14,788,095

Merchant bankcard transaction count

185,539

175,228

Total card processing dollar value

17,685,491

17,098,758

B2B Payments:

Revenues

23,918

21,344

Adjusted EBITDA

3,516

1,747

Key Indicators:

B2B issuing dollar volume

237,290

227,811

B2B issuing transaction count

211

240

Enterprise Payments:

Revenues

50,088

40,990

Adjusted EBITDA

42,442

34,727

Key Indicators:

Average CFTPay billed clients

940,463

703,887

Average CFTPay monthly new enrollments

55,946

53,551

Priority Technology Holdings, Inc.

Unaudited Reportable Segments' Results

(in thousands)

Three Months Ended March 31, 2025

SMB Payments

B2B Payments

Enterprise Payments

Corporate

Total Consolidated

Reconciliation of Adjusted EBITDA to GAAP Measure:

Adjusted EBITDA

25,705

3,516

42,442

(20,369

)

51,294

Interest expense

—

(1,006

)

—

(22,170

)

(23,176

)

Depreciation and amortization

(6,625

)

(1,261

)

(4,642

)

(1,249

)

(13,777

)

Debt modification and extinguishment expenses

—

(38

)

(38

)

Selling, general and administrative (non-recurring)

—

(2,199

)

(2,199

)

Non-cash stock based compensation

)

(84

)

(32

)

(1,466

)

(1,586

)

Income (loss) before taxes

19,076

1,165

37,768

(47,491

)

10,518

Income tax expense

(2,250

)

Net Income

8,268

Three Months Ended March 31, 2024

SMB Payments

B2B Payments

Enterprise Payments

Corporate

Total Consolidated

Reconciliation of Adjusted EBITDA to GAAP Measure:

Adjusted EBITDA

25,023

1,747

34,727

(15,157

)

46,340

Interest expense

)

(973

)

—

(19,906

)

(20,880

)

Depreciation and amortization

(8,586

)

(1,470

)

(4,039

)

(1,158

)

(15,253

)

Selling, general and administrative (non-recurring)

—

(798

)

(798

)

Non-cash stock based compensation

)

(118

)

(32

)

(1,480

)

(1,634

)

Income (loss) before taxes

16,432

(814

)

30,656

(38,499

)

7,775

Income tax expense

(2,582

)

Net Income

5,193

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