Shares of Priority Technology (PRTH) have gained 10.1% over the past four weeks to close the last trading session at $7.72, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $12.8 indicates a potential upside of 65.8%.The average comprises five short-term price targets ranging from a low of $10.00 to a high of $16.00, with a standard deviation of $2.17. While the lowest estimate i ...

Priority Technology Holdings, Inc. (NASDAQ:PRTH) is one of the 12 Best Fintech Stocks to Buy According to Analysts. On October 2, Priority Technology Holdings, Inc. (NASDAQ:PRTH) reported that it has successfully closed its acquisition of certain assets of DMSJV, LLC, also referred to as Dealer Merchant Services (DMS). As part of the transaction, Priority Technology Holdings, Inc. (NASDAQ:PRTH) acquired largely all of the assets, including revenue agreements and customer relationships. DMS is a vertically ...

Priority Technology (PRTH) closed the last trading session at $7.65, gaining 0.3% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $12.6 indicates a 64.7% upside potential.The mean estimate comprises five short-term price targets with a standard deviation of $2.3. While the lowest estimate of $10.00 indicates a 30.7% increase from the current price level, the most optimistic analyst ...

Priority Technology (PRTH) shares soared 5.2% in the last trading session to close at $7.65. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 3.5% loss over the past four weeks.The stock recorded this price increase as the company benefits from a favorable shift in its business mix, and the scaling of higher-margin enterprise and B2B businesses.This company is expected to post quarterly earnings of $0.30 per share in its upcoming ...

Momentum investing is essentially the opposite of the tried-and-tested Wall Street adage -- "buy low and sell high." Investors following this investing style typically avoid betting on cheap stocks and waiting long for them to recover. They believe instead that one could make far more money in lesser time by "buying high and selling higher."Who doesn't like betting on fast-moving trending stocks? But determining the right entry point isn't easy. Often, these stocks lose momentum once their valuation moves a ...

Summary of Priority Technology (PRTH) FY Conference Call Company Overview - **Company Name**: Priority Technology - **Industry**: Fintech, Payments, and Banking - **Established**: 20 years ago, celebrating its anniversary in August 2025 - **Business Segments**: - Merchant acquiring - B2B payables - Enterprise payments - **Core Services**: A comprehensive commerce engine for collecting, storing, lending, and sending money, including traditional payment methods and virtual/physical card issuance [4][5][6] Financial Performance - **Annual Payments Volume**: Approximately $140 billion [7] - **Customer Accounts**: About 1.4 million accounts with $1.6 billion in customer funds under administration [8] - **Revenue Model**: - Transaction-based revenue - 62% of adjusted gross profit from recurring revenue [10][11] - **Recent Financial Highlights**: - Q2 net revenue increased by 9% - Adjusted gross profit rose by 13% - Adjusted EBITDA grew by 9% - EPS of $0.26, up 15% year-over-year [25][26] Market Position and Growth Potential - **Total Addressable Market (TAM)**: - B2C market in the US: $6 trillion - B2B market in the US: Nearly $20 trillion, largely underpenetrated [13][15] - **Market Share**: Fifth largest non-bank merchant acquirer in the US [18][19] - **Growth Strategy**: - Focus on B2B segment and enterprise solutions - High customer growth rate of 2,500 to 3,000 new customers per month [29] - Emphasis on integrated solutions for cash flow optimization and working capital [21][22] Competitive Landscape - **Competitors**: Traditional acquirers like Fiserv, TSYS, and newer entrants like Stripe [7] - **Market Trends**: Increasing demand for integrated payment solutions across various sectors, including healthcare and construction [30][34] Risks and Challenges - **Execution Risks**: Importance of maintaining delivery and operational precision to sustain growth [35][36] - **Economic Sensitivity**: Potential impacts from economic cycles and tariff policies, though currently positioned to benefit from such conditions [47][48] Capital Allocation and M&A Strategy - **Debt Management**: Recently refinanced debt to reduce capital costs and improve liquidity [39][40] - **M&A Focus**: Targeting countercyclical segments and early-stage conversion opportunities within fintech [41][42] - **Investment Areas**: Payroll, benefits, construction technology, and property technology [45][46] Investor Insights - **Valuation Perspective**: Analysts suggest that certain business lines are undervalued, indicating potential for higher market valuation [50][51] - **Shareholder Commitment**: CEO holds over 60% of shares, indicating strong alignment with shareholder interests [52] Conclusion Priority Technology is positioned for growth within the fintech space, leveraging its diversified service offerings and strong market presence. The company is focused on executing its growth strategy while managing risks associated with economic fluctuations and operational execution.

Financial Data and Key Metrics Changes - The company reported a 9% increase in net revenue for Q2 2025, reaching $239.8 million, with adjusted gross profit growing by 13% to $92.4 million and adjusted EBITDA increasing by 9% to $56 million [4][5][6] - Adjusted EPS rose by $0.15 year over year to $0.26, and adjusted gross profit margin improved by 135 basis points to 38.5% [4][6] - For the year-to-date, revenue grew by 9% to $464.4 million, with adjusted gross profit up 14% to $179.7 million and adjusted EBITDA up 10% to $107.3 million [6][12] Business Line Data and Key Metrics Changes - The SMB segment generated Q2 revenue of $163.2 million, a 5.2% increase year over year, with adjusted gross profit remaining consistent at $35.4 million [12][14] - B2B revenue grew by 14.4% year over year to $25 million, with adjusted gross profit increasing by 30.8% to $7.3 million [15][16] - The Enterprise segment saw a revenue increase of 20.6% to $52.7 million, with adjusted gross profit rising by 22.6% to $49.7 million [17][18] Market Data and Key Metrics Changes - The company ended Q2 with over 1.6 million total customer accounts, up from 1.3 million in the previous quarter [4] - Annual transaction volume increased by nearly $5 billion to $140 billion [4] - Average account balances under administration improved to $1.4 billion from $1.3 billion [4] Company Strategy and Development Direction - The company is focused on its Connected Commerce platform, which integrates payments and banking capabilities to enhance operational success for customers [5][10] - There is a strategic emphasis on expanding recurring revenue, which now represents 62% of total adjusted gross profit, indicating a shift towards more stable revenue streams [24][25] - The company is also pursuing tuck-in acquisitions to enhance its service offerings and capitalize on favorable market conditions [21][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 10% to 12.5% revenue growth for 2025, citing strong growth trends and a favorable business mix [5][22] - The company anticipates moderating headwinds in the SMB segment and expects to see an acceleration of growth in the second half of the year [22][32] - Management noted that the economic environment has not significantly impacted performance, with resilience observed in various customer segments [38][56] Other Important Information - The company successfully refinanced its debt, lowering interest rates and extending maturities, which is expected to save approximately $7 million in annual interest expenses [20][21] - A material weakness related to automated controls has been substantially remediated, with testing currently underway [23] Q&A Session Summary Question: What was the core growth net of the VAMP and the residual headwind versus the 1Q growth? - Core growth was 9.5% for the quarter, slightly down from 10% in Q1, driven by strong performance in larger ISOs despite some attrition in lower-end accounts [30][31] Question: Can you talk about the underlying assumptions at the low end versus the high end of the revised 2025 revenue guide? - The acceleration in the second half is expected due to moderating headwinds in SMB and the onboarding of large customers, with potential upside from deposit balances [32][34] Question: Have you seen any shift in volume trends given the softening jobs and business sentiment? - The portfolio has performed well, with resilience noted in various sectors, although same store sales have been a headwind [38] Question: How have you been thinking about capital allocation in the near and longer term? - The allocation strategy remains focused on deleveraging while being opportunistic in acquisitions, particularly in a favorable market [39] Question: Can you describe the go-to-market strategy of larger ISOs? - The company leads with a technology suite that allows for flexibility in solutions, emphasizing high-quality customer service as a key component [60][63]

Q2 2025 Financial Performance - Priority Technology Holdings' total revenue increased by 9% to $239.8 million in Q2 2025[14] - Adjusted Gross Profit increased by 13% to $92.4 million, with Adjusted Gross Profit margin increasing by 135 basis points to 38.5%[16, 17] - Adjusted EBITDA increased by 9% to $56.0 million[20] - Year-to-date revenue increased by 9% to $464.4 million[24] - Year-to-date Adjusted Gross Profit increased by 14% to $179.7 million, with Adjusted Gross Profit margin increasing by 150 basis points to 38.7%[26, 27] - Year-to-date Adjusted EBITDA increased by 10% to $107.3 million[30] Segment Performance in Q2 2025 - SMB revenue was $163.2 million, a 5% year-over-year increase, with Adjusted Gross Profit of $35.4 million and Adjusted EBITDA of $27.7 million[47] - B2B revenue was $25.0 million, a 14% year-over-year increase, with Adjusted Gross Profit of $7.3 million and Adjusted EBITDA of $3.8 million[53] - Enterprise revenue was $52.7 million, a 21% year-over-year increase, with Adjusted Gross Profit of $49.7 million and Adjusted EBITDA of $45.6 million[59] - B2B and Enterprise segments represented approximately 62% of Adjusted Gross Profit[44] Capital Structure and Guidance - As of June 30, 2025, the company's total debt balance was $935.5 million, with a net debt of $884.9 million and a net leverage ratio of 4.1x[68, 69] - The company revised its 2025 financial guidance, projecting total revenue between $970 million and $990 million, Adjusted Gross Profit between $365 million and $380 million, and Adjusted EBITDA between $222.5 million and $227.5 million[9, 74, 76]

Company Performance - Priority Technology (PRTH) reported quarterly earnings of $0.26 per share, exceeding the Zacks Consensus Estimate of $0.25 per share, and showing a significant improvement from a loss of $0.12 per share a year ago, resulting in an earnings surprise of +4.00% [1] - The company posted revenues of $239.81 million for the quarter ended June 2025, which was 0.82% below the Zacks Consensus Estimate, but an increase from $219.87 million in the same quarter last year [2] - Over the last four quarters, Priority Technology has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance - Priority Technology shares have declined approximately 42.1% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The current Zacks Rank for Priority Technology is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.30 on revenues of $254.3 million, and for the current fiscal year, it is $1.06 on revenues of $979.6 million [7] - The outlook for the Technology Services industry, where Priority Technology operates, is currently in the top 38% of over 250 Zacks industries, suggesting a favorable environment for performance [8]

[Commonly Used or Defined Terms](index=3&type=section&id=Commonly%20Used%20or%20Defined%20Terms) This section defines key terms and acronyms used throughout the report for clarity and consistency - This section provides definitions for key terms and acronyms used throughout the report, such as '2018 Plan', 'AOCI', 'B2B', 'ESPP', 'GAAP', 'ISO', 'ISV', 'LIBOR', 'MTL', 'NCI', 'SMB', and various credit agreements and company entities[7](index=7&type=chunk) [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited consolidated financial statements and management's analysis of financial performance [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Priority Technology Holdings, Inc. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, changes in stockholders' deficit, cash flows, and comprehensive notes detailing accounting policies, acquisitions, revenues, debt, and segment information [Unaudited Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | |---|---|---|---| | Total Assets | $2,027,420 | $1,826,860 | +$200,560 | | Total Liabilities | $2,171,554 | $1,991,885 | +$179,669 | | Total Stockholders' Deficit | $(144,134) | $(165,025) | +$20,891 | | Settlement Assets | $1,125,934 | $940,798 | +$185,136 | | Settlement Obligations | $1,127,266 | $940,213 | +$187,053 | [Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Revenues | $239,812 | $219,867 | $464,442 | $425,586 | | Operating income | $37,350 | $33,174 | $69,975 | $61,197 | | Net income | $10,879 | $994 | $19,147 | $6,187 | | Basic EPS | $0.14 | $(0.23) | $0.24 | $(0.33) | | Diluted EPS | $0.14 | $(0.23) | $0.24 | $(0.33) | [Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Deficit%20and%20Non-Controlling%20Interest) Changes in Stockholders' Deficit and NCI (in thousands) | Metric | December 31, 2024 | June 30, 2025 | |---|---|---| | Total Stockholders' Deficit Attributable to Stockholders of Priority | $(166,840) | $(146,115) | | Non-controlling interests in consolidated subsidiaries | $1,815 | $1,981 | | Total Stockholders' Deficit | $(165,025) | $(144,134) | - The total stockholders' deficit decreased by **$20,891 thousand** from December 31, 2024, to June 30, 2025, primarily driven by net income and equity-classified stock-based compensation, partially offset by treasury stock repurchases for taxes[13](index=13&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | |---|---|---| | Net cash provided by operating activities | $27,080 | $42,007 | | Net cash used in investing activities | $(21,145) | $(20,598) | | Net cash provided by financing activities | $178,091 | $18,149 | | Net increase in cash and cash equivalents and restricted cash | $184,026 | $39,558 | | Cash and cash equivalents at end of period | $50,564 | $34,626 | | Restricted cash at end of period | $14,205 | $12,625 | | Cash and cash equivalents included in settlement assets | $1,113,121 | $788,530 | [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the figures presented in the consolidated financial statements, covering significant accounting policies, recent acquisitions, revenue disaggregation, settlement assets, debt obligations, income taxes, stock-based compensation, segment performance, and subsequent events [1. Basis of Presentation and Significant Accounting Policies](index=10&type=section&id=1.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) - Priority Technology Holdings, Inc. operates as a payments and banking fintech, aiming to streamline money management and optimize working capital for businesses through merchant services, payables, and banking/treasury solutions[23](index=23&type=chunk) Allowance for Expected Losses (in thousands) | Category | June 30, 2025 | December 31, 2024 | |---|---|---| | Accounts Receivable | $5,219 | $3,045 | | Settlement Assets | $8,578 | $7,936 | - Recently issued accounting standards (ASU 2024-01, ASU 2023-09, ASU 2024-03) are expected to impact disclosures but not the Company's results of operations, financial position, or cash flows[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) [2. Acquisitions](index=12&type=section&id=2.%20Acquisitions) - On January 21, 2025, Priority acquired **100%** of Payslate Inc. (Letus business) for **$9.0 million**, consisting of cash, deferred, and contingent consideration. This acquisition aims to expand the Company's Enterprise Payments rent payment business in the United States and Canada[35](index=35&type=chunk) Payslate Acquisition Purchase Consideration (in thousands) | Item | Amount | |---|---| | Cash | $4,627 | | Deferred consideration | $4,282 | | Contingent consideration | $104 | | Less: cash acquired | $(175) | | **Total purchase consideration, net of cash acquired** | **$8,838** | - The Letus business contributed **$0.4 million** in revenue and a net loss of **$0.2 million** to the Enterprise Payments segment for the six months ended June 30, 2025[37](index=37&type=chunk) [3. Revenues](index=13&type=section&id=3.%20Revenues) Consolidated Revenues by Type (in thousands) | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Merchant card fees | $180,483 | $169,246 | $347,562 | $327,193 | | Money transmission services | $39,273 | $31,340 | $76,722 | $60,484 | | Outsourced services and other services | $16,853 | $16,256 | $33,855 | $31,921 | | Equipment | $3,203 | $3,025 | $6,303 | $5,988 | | **Total revenues** | **$239,812** | **$219,867** | **$464,442** | **$425,586** | Consolidated Revenues by Segment (Six Months Ended June 30, 2025, in thousands) | Segment | Merchant Card Fees | Money Transmission Services | Outsourced and Other Services | Equipment | Total | |---|---|---|---|---|---| | SMB Payments | $306,307 | — | $2,310 | $6,303 | $314,920 | | B2B Payments | $41,257 | — | $7,694 | — | $48,951 | | Enterprise Payments | $1,575 | $76,722 | $24,449 | — | $102,746 | | Eliminations | $(1,577) | — | $(598) | — | $(2,175) | | **Total revenues** | **$347,562** | **$76,722** | **$33,855** | **$6,303** | **$464,442** | - Interest income on customer funds, totaling **$14.1 million** for Q2 2025 and **$26.7 million** for H1 2025, is included in outsourced services and other services revenue[41](index=41&type=chunk) [4. Settlement Assets and Obligations](index=15&type=section&id=4.%20Settlement%20Assets%20and%20Obligations) - Settlement assets and obligations primarily include funds due from merchants, card settlement funds from networks, and customer/subscriber account balances from money transmitter services[48](index=48&type=chunk)[51](index=51&type=chunk) Consolidated Settlement Assets and Obligations (in thousands) | Category | June 30, 2025 | December 31, 2024 | |---|---|---| | **Settlement Assets, net of estimated losses** | | | | Card settlements due from merchants, net | $1,481 | $2,587 | | Card settlements due from networks | $11,332 | $12,307 | | MTL Customer cash and cash equivalents (restricted) | $1,113,121 | $924,174 | | **Total settlement assets** | **$1,125,934** | **$940,798** | | **Settlement Obligations** | | | | MTL Customer account obligations | $1,095,509 | $897,497 | | Subscriber account obligations | $17,612 | $26,677 | | Due to customers' payees | $14,145 | $16,039 | | **Total settlement obligations** | **$1,127,266** | **$940,213** | - Allowance for estimated losses on settlement assets increased to **$8.6 million** as of June 30, 2025, from **$7.9 million** as of December 31, 2024[53](index=53&type=chunk) [5. Notes Receivable](index=16&type=section&id=5.%20Notes%20Receivable) - Notes receivable increased to **$10.0 million** as of June 30, 2025, from **$8.6 million** as of December 31, 2024, with a weighted-average interest rate of **16.0%**[54](index=54&type=chunk) Notes Receivable Activity (in thousands) | Activity | Amount | |---|---| | Balance at January 1, 2025 | $8,557 | | Principal payments (H1 2025) | $(1,798) | | Advances during the period (H1 2025) | $3,228 | | Balance at June 30, 2025 | $9,987 | Notes Receivable Principal Payments Due (in thousands) | Twelve months ending June 30, | Amount | |---|---| | 2026 | $3,283 | | 2027 | $1,867 | | 2028 | $2,402 | | 2029 | $2,435 | | After 2029 | — | | **Total** | **$9,987** | [6. Property, Equipment and Software](index=17&type=section&id=6.%20Property,%20Equipment%20and%20Software) Property, Equipment and Software, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | |---|---|---| | Computer software | $115,355 | $104,683 | | Equipment | $14,513 | $11,571 | | Leasehold improvements | $2,734 | $2,718 | | Furniture and fixtures | $1,382 | $1,365 | | Less: Accumulated depreciation | $(77,992) | $(70,258) | | Capital work in-progress | $1,537 | $2,398 | | **Property, equipment and software, net** | **$57,529** | **$52,477** | Depreciation Expense (in thousands) | Period | 2025 | 2024 | |---|---|---| | Three Months Ended June 30, | $4,075 | $3,428 | | Six Months Ended June 30, | $7,937 | $6,598 | [7. Goodwill and Other Intangible Assets](index=18&type=section&id=7.%20Goodwill%20and%20Other%20Intangible%20Assets) Goodwill by Segment (in thousands) | Segment | June 30, 2025 | December 31, 2024 | |---|---|---| | SMB Payments | $124,139 | $124,139 | | Enterprise Payments | $251,118 | $244,712 | | B2B Payments | $7,240 | $7,240 | | **Total** | **$382,497** | **$376,091** | - Goodwill increased by **$6.4 million** from December 31, 2024, to June 30, 2025, primarily due to the Letus business acquisition (**$6.07 million**) and foreign currency translation adjustment (**$0.34 million**)[58](index=58&type=chunk) Other Intangible Assets, Net (June 30, 2025, in thousands) | Intangible Asset | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Weighted-average Useful Life | |---|---|---|---|---| | ISO and referral partner relationships | $182,339 | $(55,932) | $126,407 | 14.6 | | Residual buyouts | $143,862 | $(111,247) | $32,615 | 6.2 | | Customer relationships | $110,658 | $(96,522) | $14,136 | 8.4 | | Merchant portfolios | $83,350 | $(67,036) | $16,314 | 6.5 | | Technology | $59,384 | $(30,007) | $29,377 | 8.5 | | Trade names | $7,611 | $(3,525) | $4,086 | 10.9 | | Money transmission licenses | $2,100 | — | $2,100 | Indefinite | | **Total** | **$592,694** | **$(367,659)** | **$225,035** | **9.5** | [8. Debt Obligations](index=19&type=section&id=8.%20Debt%20Obligations) Outstanding Debt Obligations (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | |---|---|---| | Term facility | $935,537 | $945,537 | | Revolving credit facility | — | — | | **Total debt obligations** | **$935,537** | **$945,537** | | Less: current portion of long-term debt | $(4,254) | $(9,503) | | Less: unamortized debt discounts and deferred financing costs | $(14,266) | $(15,146) | | **Long-term debt, net** | **$917,017** | **$920,888** | Interest Expense (in thousands) | Period | 2025 | 2024 | |---|---|---| | Three Months Ended June 30, | $23,054 | $21,710 | | Six Months Ended June 30, | $46,230 | $42,590 | - The Company was in compliance with all covenants in the 2024 Credit Agreement as of June 30, 2025[66](index=66&type=chunk) [9. Income Taxes](index=20&type=section&id=9.%20Income%20Taxes) Consolidated Effective Income Tax Rates | Period | 2025 | 2024 | |---|---|---| | Three Months Ended June 30, | 28.9% | 71.7% | | Six Months Ended June 30, | 25.8% | 45.2% | - The effective tax rates differed from the statutory rate of **21.0%** primarily due to an increase in the valuation allowance against certain business interest carryover deferred tax assets and forecasted nondeductible expenses[67](index=67&type=chunk) - The Company continues to record a full valuation allowance against non-deductible interest expense and net deferred tax assets acquired as part of the Payslate acquisition[69](index=69&type=chunk) - The Company is evaluating the impact of the 'One Big Beautiful Bill Act' (OBBBA), enacted July 4, 2025, which extends or reinstates certain provisions of the 2017 Tax Cuts and Jobs Act[71](index=71&type=chunk) [10. Stockholders' Deficit](index=21&type=section&id=10.%20Stockholders'%20Deficit) - The Board of Directors amended the share repurchase program on May 5, 2025, increasing the authorization to **5,000,000 shares** for a total of **$40.0 million**[72](index=72&type=chunk) - As of June 30, 2025, the Company had purchased **1,309,374 shares** for **$5.8 million** under this plan, with no shares repurchased since December 2022[72](index=72&type=chunk) [11. Stock-based Compensation](index=21&type=section&id=11.%20Stock-based%20Compensation) Stock-based Compensation Expense (in thousands) | Compensation Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Stock-based compensation expense | $1,597 | $1,730 | $3,081 | $3,258 | | Incentive units compensation expense | $79 | $85 | $166 | $178 | | Liability-classified compensation expense | $1,502 | — | $1,502 | — | | ESPP compensation expense | $28 | $14 | $43 | $26 | | **Total** | **$3,206** | **$1,829** | **$4,792** | **$3,462** | - As of June 30, 2025, **3,033,500 shares** were available for issuance under the 2018 Equity Incentive Plan[75](index=75&type=chunk) - The 2021 Employee Stock Purchase Plan (ESPP) was amended on June 13, 2025, to increase available shares by **200,000**, with **219,587 shares** available as of June 30, 2025[77](index=77&type=chunk)[78](index=78&type=chunk) [12. Related Party Transactions](index=22&type=section&id=12.%20Related%20Party%20Transactions) - No subsequent activity occurred for the three and six months ended June 30, 2025, regarding the redemption of PHOT preferred units held by the CEO and COO[81](index=81&type=chunk) [13. Commitments and Contingencies](index=22&type=section&id=13.%20Commitments%20and%20Contingencies) - The Company has minimum annual commitments for third-party processing fees of approximately **$14.0 million** in 2025 and **$22.9 million** in 2026[82](index=82&type=chunk) - Deferred consideration liabilities related to completed acquisitions increased to **$16.4 million** as of June 30, 2025, from **$10.7 million** at December 31, 2024[86](index=86&type=chunk) - A class action lawsuit settlement for **$19.5 million** was granted final approval, with no contribution from the Company[88](index=88&type=chunk) [14. Fair Value](index=24&type=section&id=14.%20Fair%20Value) - The carrying value of notes receivable, net, approximated fair value at **$10.0 million** as of June 30, 2025, and **$8.6 million** as of December 31, 2024, classified within Level 3 of the fair value hierarchy[92](index=92&type=chunk) - The fair value of the term facility was estimated at **$936.7 million** as of June 30, 2025, and **$944.4 million** as of December 31, 2024, classified within Level 2 of the fair value hierarchy[94](index=94&type=chunk) [15. Segment Information](index=24&type=section&id=15.%20Segment%20Information) - The Company operates in three reportable segments: SMB Payments, B2B Payments, and Enterprise Payments. Adjusted EBITDA is used by the chief operating decision makers to measure segment profit or loss and allocate resources[96](index=96&type=chunk)[97](index=97&type=chunk)[99](index=99&type=chunk) Segment Adjusted EBITDA (Three Months Ended June 30, 2025, in thousands) | Segment | Revenue from external customers | Segment Adjusted EBITDA | |---|---|---| | SMB Payments | $162,788 | $27,749 | | B2B Payments | $24,668 | $3,770 | | Enterprise Payments | $52,356 | $45,558 | | **Total Consolidated** | **$239,812** | **$77,077** | Segment Adjusted EBITDA (Six Months Ended June 30, 2025, in thousands) | Segment | Revenue from external customers | Segment Adjusted EBITDA | |---|---|---| | SMB Payments | $314,029 | $53,454 | | B2B Payments | $48,356 | $7,286 | | Enterprise Payments | $102,057 | $88,001 | | **Total Consolidated** | **$464,442** | **$148,741** | [16. Earnings (Loss) per Common Share](index=29&type=section&id=16.%20Earnings%20(Loss)%20per%20Common%20Share) Earnings (Loss) per Common Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Net income (loss) attributable to common stockholders (in thousands) | $10,879 | $(17,629) | $19,147 | $(25,679) | | Basic Earnings (loss) per common share | $0.14 | $(0.23) | $0.24 | $(0.33) | | Diluted Earnings (loss) per share | $0.14 | $(0.23) | $0.24 | $(0.33) | - For the three and six months ended June 30, 2025, the Company had **0.9 million** and **1.1 million** dilutive securities, respectively, included in diluted EPS. All potentially dilutive securities were anti-dilutive for the same periods in 2024[105](index=105&type=chunk) [17. Subsequent Events](index=29&type=section&id=17.%20Subsequent%20Events) - On July 31, 2025, the Company entered into a new credit agreement providing a **$1,000 million** senior secured first lien term loan and a **$100.0 million** senior secured revolving credit facility, used to refinance existing debt, accelerate deferred considerations, acquire non-controlling interests, and for corporate purposes[107](index=107&type=chunk) - On July 31, 2025, the Company accelerated a **$19.0 million** payment of deferred consideration related to the Plastiq acquisition[108](index=108&type=chunk) - On July 31, 2025, the Company purchased the noncontrolling interest in its subsidiary Plastiq, Powered by Priority, LLC, for **$6.0 million**[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, including a detailed analysis of revenues, operating expenses, and other income/expenses for the three and six months ended June 30, 2025, compared to the prior year. It also discusses critical accounting policies, liquidity, capital resources, and the impact of new accounting pronouncements [Revenues](index=32&type=section&id=Revenues_MD%26A) - Consolidated revenue increased by **9.1%** to **$239.8 million** for the three months ended June 30, 2025, and to **$464.4 million** for the six months ended June 30, 2025, driven by growth across all segments[124](index=124&type=chunk)[125](index=125&type=chunk) Revenue by Type (in thousands) | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | |---|---|---|---|---|---|---| | Merchant card fees | $180,483 | $169,246 | $11,237 | $347,562 | $327,193 | $20,369 | | Money transmission services | $39,273 | $31,340 | $7,933 | $76,722 | $60,484 | $16,238 | | Outsourced services and other services | $16,853 | $16,256 | $597 | $33,855 | $31,921 | $1,934 | | Equipment | $3,203 | $3,025 | $178 | $6,303 | $5,988 | $315 | | **Total revenues** | **$239,812** | **$219,867** | **$19,945** | **$464,442** | **$425,586** | **$38,856** | - Money transmission services revenue saw a significant increase of **25.3%** for the three months ended June 30, 2025, primarily due to new customer enrollments and average billed clients[129](index=129&type=chunk) [Operating Expenses](index=34&type=section&id=Operating%20Expenses_MD%26A) Operating Expenses (in thousands) | Operating Expense | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | |---|---|---|---|---|---|---| | Cost of revenue (excludes D&A) | $147,399 | $138,118 | $9,281 | $284,752 | $267,416 | $17,336 | | Salary and employee benefits | $27,060 | $22,119 | $4,941 | $52,835 | $44,269 | $8,566 | | Depreciation and amortization | $14,093 | $15,244 | $(1,151) | $27,870 | $30,497 | $(2,627) | | Selling, general and administrative | $13,910 | $11,212 | $2,698 | $29,010 | $22,207 | $6,803 | | **Total operating expenses** | **$202,462** | **$186,693** | **$15,769** | **$394,467** | **$364,389** | **$30,078** | - Salary and employee benefits expense increased by **22.3%** for the three months ended June 30, 2025, due to merit increases, increased headcount for growth, the Letus business acquisition, and higher stock-based compensation[137](index=137&type=chunk) - Depreciation and amortization expense decreased by **7.6%** for the three months ended June 30, 2025, primarily due to the full amortization of certain intangible assets[139](index=139&type=chunk) [Other Expense, net](index=35&type=section&id=Other%20Expense,%20net_MD%26A) Other (Expense) Income, Net (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | |---|---|---|---|---|---|---| | Interest expense | $(23,054) | $(21,710) | $(1,344) | $(46,230) | $(42,590) | $(3,640) | | Debt extinguishment and modification costs | — | $(8,623) | $8,623 | $(38) | $(8,623) | $8,585 | | Other income, net | $1,006 | $668 | $338 | $2,113 | $1,300 | $813 | | **Total other expense, net** | **$(22,048)** | **$(29,665)** | **$7,617** | **$(44,155)** | **$(49,913)** | **$5,758** | - Interest expense increased by **6.2%** for the three months ended June 30, 2025, due to an increased outstanding balance of the term loan facility, partially offset by a decrease in interest rates[144](index=144&type=chunk) - Debt extinguishment and modification costs were significantly lower in 2025 compared to 2024, contributing to an overall improvement in other expense, net[143](index=143&type=chunk) [Income Tax (Benefit) Expense](index=35&type=section&id=Income%20Tax%20(Benefit)%20Expense_MD%26A) Income Tax Expense and Effective Tax Rate (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | |---|---|---|---|---|---|---| | Income before income taxes | $15,302 | $3,509 | $11,793 | $25,820 | $11,284 | $14,536 | | Income tax expense | $4,423 | $2,515 | $1,908 | $6,673 | $5,097 | $1,576 | | Effective tax rate | 28.9% | 71.7% | | 25.8% | 45.2% | | - The effective tax rate for 2025 changed primarily due to an increase in the valuation allowance against certain business interest carryover deferred tax assets[146](index=146&type=chunk) - The Company is evaluating the provisions of the recently enacted 'One Big Beautiful Bill Act' (OBBBA) and its potential impact on financial statements[148](index=148&type=chunk) [Segment Results](index=36&type=section&id=Segment%20Results_MD%26A) [SMB Payments](index=36&type=section&id=SMB%20Payments) SMB Payments Segment Performance (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | |---|---|---|---| | Revenues | $163,230 | $155,101 | +$8,129 | | Adjusted EBITDA | $27,749 | $28,597 | $(848) | | Merchant bankcard processing dollar value | $16,150,363 | $15,801,626 | +$348,737 | | Total card processing dollar value | $18,667,898 | $18,253,900 | +$413,998 | - Revenue increased by **5.2%** due to higher merchant card fee rates, increased card processing dollar value, and transaction count. Adjusted EBITDA decreased by **3.0%** due to mix-related margin compression and other operating expenses[152](index=152&type=chunk)[154](index=154&type=chunk) [B2B Payments](index=37&type=section&id=B2B%20Payments) B2B Payments Segment Performance (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | |---|---|---|---| | Revenues | $25,033 | $21,881 | +$3,152 | | Adjusted EBITDA | $3,770 | $1,530 | +$2,240 | | B2B issuing dollar volume | $220,227 | $249,454 | $(29,227) | | B2B issuing transaction count | 223 | 242 | (19) | - Revenue increased by **14.4%** driven by increases in total card volume processed and incentive income, despite decreases in issuing dollar volume and transaction count[157](index=157&type=chunk) - Adjusted EBITDA surged by **146.4%**, contributed by growth in both supplier-funded business (incentive income) and buyer-funded business (increased processing volume)[159](index=159&type=chunk) [Enterprise Payments](index=37&type=section&id=Enterprise%20Payments) Enterprise Payments Segment Performance (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | |---|---|---|---| | Revenues | $52,658 | $43,670 | +$8,988 | | Adjusted EBITDA | $45,558 | $37,244 | +$8,314 | | Average CFTPay billed clients | 992,279 | 762,873 | +229,406 | | Average CFTPay new enrollments | 57,818 | 55,416 | +2,402 | - Revenue increased by **20.6%** due to higher billed clients, new customer enrollments, new integrated partners, the acquisition of the Letus business, and growth in interest income[162](index=162&type=chunk) - Adjusted EBITDA increased by **22.3%**, primarily driven by the strong revenue growth in the segment[164](index=164&type=chunk) [Critical Accounting Policies and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There have been no material changes to the Company's critical accounting policies and estimates as of June 30, 2025, compared to those discussed in the Annual Report on Form 10-K for the year ended December 31, 2024[169](index=169&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) [Cash Provided by Operating Activities](index=40&type=section&id=Cash%20Provided%20by%20Operating%20Activities) - Net cash provided by operating activities decreased to **$27.1 million** for the six months ended June 30, 2025, from **$42.0 million** in the prior year, primarily due to a decrease in interest expense and changes in operating assets and liabilities[175](index=175&type=chunk) [Cash Used in Investing Activities](index=40&type=section&id=Cash%20Used%20in%20Investing%20Activities) - Net cash used in investing activities was **$21.1 million** for the six months ended June 30, 2025, a slight increase from **$20.6 million** in the prior year. This was mainly for additions to property, equipment and software (**$13.0 million**), notes receivable (**$1.4 million**), business acquisition (**$4.5 million**), and investments in unconsolidated entities (**$2.3 million**)[176](index=176&type=chunk) [Cash Provided by Financing Activities](index=41&type=section&id=Cash%20Provided%20by%20Financing%20Activities) - Net cash provided by financing activities significantly increased to **$178.1 million** for the six months ended June 30, 2025, compared to **$18.1 million** in the prior year. This was driven by changes in net obligations for customer funds (**$190.9 million**) and proceeds from stock option exercises (**$0.3 million**), partially offset by debt repayments and deferred consideration payments[177](index=177&type=chunk) [Long-term Debt](index=41&type=section&id=Long-term%20Debt) - Outstanding debt obligations decreased by **$10.0 million** to **$935.5 million** as of June 30, 2025, from **$945.5 million** at December 31, 2024, due to an unscheduled principal payment[178](index=178&type=chunk) - The Company was in compliance with all covenants in the 2024 Credit Agreement as of June 30, 2025[180](index=180&type=chunk) [Effect of New Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted](index=41&type=section&id=Effect%20of%20New%20Accounting%20Pronouncements%20and%20Recently%20Issued%20Accounting%20Pronouncements%20Not%20Yet%20Adopted) - This section refers to Note 1, 'Basis of Presentation and Significant Accounting Policies,' for a discussion of recently issued accounting pronouncements not yet adopted[181](index=181&type=chunk) [Item 3. Qualitative and Quantitative Disclosures about Market Risk](index=41&type=section&id=Item%203.%20Qualitative%20and%20Quantitative%20Disclosures%20about%20Market%20Risk) This section refers to the Annual Report for detailed market risk disclosures, noting no material changes in market risk exposures since December 31, 2024 - The Company's exposures to market risk have not changed materially since December 31, 2024, with detailed disclosures available in the Annual Report on Form 10-K[182](index=182&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal controls over financial reporting related to automated controls for third-party data. Despite this, management believes the financial statements fairly present the company's financial condition - The Company's disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal controls over financial reporting related to the design and operation of certain automated controls for third-party data[184](index=184&type=chunk)[186](index=186&type=chunk) - Despite the material weakness, management believes that the consolidated financial statements and related financial information in this Form 10-Q fairly present the Company's financial condition, results of operations, and cash flows[185](index=185&type=chunk) - No other material changes in internal control over financial reporting occurred during the three and six months ended June 30, 2025[188](index=188&type=chunk) [PART II. OTHER INFORMATION](index=43&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, and other miscellaneous disclosures [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, which are not expected to materially affect financial results. However, if an unfavorable outcome becomes probable and estimable, an accrual could be material - The Company is involved in certain legal proceedings and claims arising in the ordinary course of business, which are not expected to have a material effect on its results of operations, financial condition, or cash flows[190](index=190&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the Annual Report for a comprehensive discussion of risk factors, noting that additional unknown or immaterial risks could also adversely affect the business - Investors should carefully consider the risk factors discussed in the Company's Annual Report on Form 10-K, as additional unknown or immaterial risks may also materially adversely affect the business[191](index=191&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred. The company's purchases of its common stock during the three months ended June 30, 2025, were primarily for tax withholding obligations related to restricted stock awards [Issuer Purchases of Equity Securities](index=43&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) Issuer Purchases of Equity Securities (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | |---|---|---|---|---| | April 1-30, 2025 | 20,348 | $6.82 | — | 690,296 | | May 1-31, 2025 | 3,434 | $7.26 | — | 5,690,626 | | June 1-30, 2025 | 94,364 | $7.96 | — | 5,690,626 | | **Total** | **118,146** | **$7.75** | **—** | | - The shares purchased represent shares withheld to satisfy employees' tax withholding obligations related to the vesting of restricted stock awards[193](index=193&type=chunk) [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) This section discloses a Rule 10b5-1 trading arrangement adopted by Sean Kiewiet, Chief Strategy Officer, for the sale of 600,000 shares of common stock Rule 10b5-1 Trading Arrangement | Officer or Director Name and Title | Action | Plan Type | Date | Number of Shares to be sold | Expiration | |---|---|---|---|---|---| | Sean Kiewiet, Chief Strategy Officer | Adopted | Rule 10b5-1 | March 11, 2025 | 600,000 | August 31, 2026 | [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including various agreements, certificates, plans, and certifications, providing supporting documentation for the report - The exhibits include various agreements (e.g., Contribution Agreement, Merger Agreements, Credit and Guaranty Agreement), corporate documents (e.g., Certificate of Incorporation, Bylaws), equity plans (e.g., 2018 Equity Incentive Plan, 2021 Employee Stock Purchase Plan), and certifications (e.g., CEO/CFO certifications)[197](index=197&type=chunk)[198](index=198&type=chunk)