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]

Q1 2025 Financial Performance - Priority Technology Holdings' Q1 2025 total revenue increased by 9% to $2246 million[8, 13, 14] - Adjusted Gross Profit increased by 14% to $873 million[8, 15, 16] - Adjusted EBITDA increased by 11% to $513 million[8, 19, 20] - Adjusted Gross Profit margin increased by 170 basis points to 389%[17] Segment Performance - SMB revenue increased by 5% year-over-year to $1517 million with Adjusted Gross Profit of $331 million[38] - B2B revenue increased by 12% year-over-year to $239 million with Adjusted Gross Profit of $73 million[43] - Enterprise revenue increased by 22% year-over-year to $501 million with Adjusted Gross Profit of $469 million[49] Financial Position - The company repaid $10 million of outstanding Term Loan during Q1 2025[59, 61] - The company has ample liquidity of $1176 million, comprised of $476 million of unrestricted cash and unfunded $700 million Revolver at the end of Q1 2025[61]

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 ...

Core Viewpoint - The article emphasizes the importance of value investing and highlights Priority Technology (PRTH) as a strong value stock based on its financial metrics and Zacks Rank [1][3][6]. Company Analysis - Priority Technology (PRTH) has a Zacks Rank of 1 (Strong Buy) and a Value grade of A, indicating it is among the best value stocks currently available [3]. - The P/S ratio for PRTH is 0.61, significantly lower than the industry average of 1.59, suggesting it is undervalued relative to its peers [4]. - PRTH's P/CF ratio stands at 6.07, compared to the industry's average of 23.08, further indicating its undervaluation based on cash flow performance [5]. - Over the past 12 months, PRTH's P/CF has fluctuated between a high of 12.06 and a low of 3.30, with a median of 6.45, showcasing its cash flow stability [5]. - The combination of these metrics suggests that PRTH is likely undervalued and presents an impressive value opportunity at the moment [6].

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]

Group 1 - Priority Technology Holdings (NASDAQ: PRTH) is well-positioned to benefit from the competitive landscape of integrated payment solutions, particularly targeting small and medium-sized businesses (SMB) and B2B markets [1] - The company operates in a sector with at least ten competitors, indicating a robust market environment [1] Group 2 - The analysis emphasizes the importance of fundamental analysis, valuation, and long-term growth potential in sectors such as AI, fintech, and technology [1] - The focus is on business fundamentals, earnings trends, and competitive positioning to assess publicly traded companies [1]

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]

Financial Performance - The company reported the strongest revenue performance in its history for both Q4 and the full year, with Q4 revenue of $227.1 million, a 14% increase year-over-year, and full-year revenue of $879.7 million, a 16% increase [7][9][10] - Adjusted gross profit for Q4 was $83.9 million, up 15% from the prior year, and adjusted EBITDA was $51.7 million, reflecting a 16% improvement [9][10][28] - For the full year, adjusted gross profit increased by 19% to $328.1 million, and adjusted EBITDA grew by 21% to $204.3 million [10][28] Business Segment Performance - 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% [18][20] - The B2B segment saw revenue of $23.7 million, a 10.9% increase, with adjusted gross profit rising 24% to $6.4 million [22][23] - The Enterprise segment reported 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 - The company processed over $130 billion in annual transaction volume and managed over $1.2 billion in average daily account balances [7] - The percentage of adjusted gross profit from recurring revenues reached over 63% in Q4, nearly doubling since early 2022 [17] Company Strategy and Industry Competition - The company aims to sustain momentum in its acquiring, payables, and Enterprise segments, projecting 10% to 14% revenue growth for 2025 [8][36] - The focus remains on innovation in SaaS payments and banking solutions, with a commitment to refining customer experiences [12][41] - The company is positioned as an undervalued player compared to industry peers, with a strategy to leverage its public currency for potential acquisitions [18][42] Management Commentary 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 is actively working to address a material weakness in internal controls over financial reporting, which did not affect the financial results [34][35] Other Important Information - The company redeemed its preferred stock, resulting in a fourth-quarter preferred dividend of $2.65 million [31] - A $10 million prepayment on the term loan was made post-quarter end, with plans to continue reducing the cost of capital [32][36] Q&A Session Summary Question: Capital allocation strategy between debt pay down and increased spending - Management will continue to evaluate the best use of capital, balancing debt pay down with potential M&A opportunities [50] Question: Impact of interest rate cuts on guidance - Management has factored in expected interest rate cuts into their 2025 guidance, taking a conservative approach [54][56] Question: Impact of tariffs on business - Management noted that tariffs have not significantly impacted the acquiring side, but there is increased demand for B2B strategies due to constrained working capital [67] Question: Explanation of gross margin decline in consumer payments - Management clarified that organic margins have increased, and the decline is due to residual purchases running off [73][78] Question: Magnitude of CapEx to OpEx shift - The expected impact from the CapEx to OpEx shift in 2025 is approximately $4 million [110]

Financial Data and Key Metrics Changes - The company reported a record revenue performance for both Q4 and the full year, with Q4 revenue of $227.1 million, a 14% increase year-over-year, and full-year revenue of $879.7 million, reflecting a 16% growth [6][7][9] - Adjusted gross profit for Q4 increased by 15% to $83.9 million, while adjusted EBITDA grew by 16% to $51.7 million [6][7] - For the full year, adjusted gross profit rose by 19% to $328.1 million, and adjusted EBITDA increased by 21% to $204.3 million [7][9] Business Line Data and Key Metrics Changes - The SMB segment generated Q4 revenue of $155.7 million, up 11.1% year-over-year, with adjusted gross profit of $32 million, a slight increase of 0.4% [11][13] - The B2B segment saw revenue of $23.7 million, a 10.9% increase, with adjusted gross profit rising by 24% to $6.4 million [14][15] - The Enterprise segment reported Q4 revenue of $48.7 million, a 27% increase, with adjusted gross profit also increasing by 27% to $45.6 million [15][16] Market Data and Key Metrics Changes - The company processed over $130 billion in annual transaction volume and managed over $1.2 billion in average daily account balances [5] - The percentage of adjusted gross profit from recurring revenues reached over 63% in Q4, nearly doubling since early 2022 [10] Company Strategy and Development Direction - The company aims to achieve 10% to 14% top-line revenue growth in 2025, targeting a revenue range of $965 million to $1 billion, and adjusted EBITDA growth of 8% to 13% [5][22] - The focus remains on innovation in SaaS payments and banking solutions, with a commitment to refining customer experiences and enhancing operational efficiencies [8][24] - The management emphasizes the importance of being opportunistic in acquisitions, particularly in sectors facing challenges [25][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining momentum despite potential headwinds from lower interest rates and a challenging macroeconomic environment [5][22] - The company is actively working to remediate identified weaknesses in internal controls over financial reporting, which did not affect the financial results [20][21] Other Important Information - The company redeemed its preferred stock, resulting in a fourth-quarter preferred dividend of $2.65 million [18] - The transition from CapEx to OpEx is expected to impact expenses, with an estimated $4 million effect in 2025 [80] Q&A Session Summary Question: Capital allocation strategy between debt pay down and increased spending - Management will continue to evaluate the best use of capital, balancing debt pay down with potential M&A opportunities [32][33] Question: Impact of interest rate cuts on guidance - The company has factored in conservative estimates regarding deposit growth and interest rate impacts into its 2025 guidance [35][37] Question: Impact of tariffs on business - Management noted that tariffs have not significantly impacted the acquiring side, but there is increased demand for buyer-funded strategies in the B2B segment [45][46] Question: Decline in gross margin percentage for consumer payments - The decline is attributed to residual purchases running off, but core margins have actually expanded when adjusted for one-time write-offs [49][56] Question: Magnitude of CapEx to OpEx shift - The shift is expected to have a $4 million impact on OpEx in 2025 as the company migrates to a public cloud environment [80] Question: Adjusted EPS expectations for 2025 - The company anticipates adjusted EPS could approach $1 per share based on normal growth trends [88][89]