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)

[Executive Summary](index=1&type=section&id=Executive%20Summary) Priority Technology Holdings, Inc. presents its strong Q2 2025 financial results and updated full-year 2025 guidance [Second Quarter 2025 Consolidated Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Consolidated%20Financial%20Highlights) Priority Technology Holdings, Inc. reported strong second-quarter 2025 financial results, driven by performance across its Unified Commerce Platform - The company's strong Q2 2025 results are attributed to the continued success of its Connected Commerce platform, with over **9% revenue growth** and **13% adjusted gross profit growth**[2](index=2&type=chunk) - Adjusted gross profit from recurring revenue represents **62% of total**, indicating a stable and predictable revenue base[2](index=2&type=chunk) Q2 2025 Consolidated Financial Highlights | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | | Revenue | $239.8 | $219.9 | 9.1% | | Adjusted Gross Profit | $92.4 | $81.7 | 13.0% | | Adjusted Gross Profit Margin | 38.5% | 37.2% | +135 bps | | Operating Income | $37.4 | $33.2 | 12.6% | | Adjusted EBITDA | $56.0 | $51.6 | 8.7% | | Adjusted EPS | $0.26 | $0.11 | 136.4% | [Full Year 2025 Financial Guidance Update](index=2&type=section&id=Full%20Year%202025%20Financial%20Guidance%20Update) Priority Technology Holdings, Inc. updated its full-year 2025 financial guidance, narrowing ranges for revenue and adjusted EBITDA - The company expects an acceleration of organic growth in the second half of 2025 due to sales pipeline timing, year-over-year comparatives, and moderating headwinds[4](index=4&type=chunk) Full Year 2025 Financial Guidance | Metric | New FY 2025 Guidance (Millions) | Original FY 2025 Guidance (Millions) | Growth Rate (vs FY 2024) | | :-------------------- | :----------------------------- | :---------------------------------- | :----------------------- | | Revenue | $970 - $990 | $965 - $1,000 | 10.2% - 12.5% | | Adjusted Gross Profit | $365 - $380 | $360 - $385 | N/A | | Adjusted EBITDA | $222.5 - $227.5 | $220 - $230 | N/A | [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) Priority Technology Holdings, Inc. will host a conference call on August 7, 2025, to discuss its second-quarter financial results - A conference call to discuss Q2 2025 financial results will be held on Thursday, August 7, 2025, at **10:00 a.m. EDT**[5](index=5&type=chunk) - Access to the live webcast and accompanying slide presentation is available via the company's investor relations website[6](index=6&type=chunk) - An audio replay of the call will be available until **August 21, 2025**[7](index=7&type=chunk) [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles key non-GAAP financial measures used by the company to assess performance [Non-GAAP Measures Introduction](index=2&type=section&id=Non-GAAP%20Measures%20Introduction) The company uses non-GAAP financial measures like Adjusted Gross Profit and Adjusted EBITDA to evaluate business trends and performance - Non-GAAP measures are used to evaluate business and trends, measure performance, prepare financial projections, allocate resources, and make strategic decisions[8](index=8&type=chunk) - These non-GAAP measures are intended to complement GAAP measures and illustrate underlying financial and business trends, but are not superior to or a substitute for GAAP[8](index=8&type=chunk) [Adjusted Gross Profit and Adjusted Gross Profit Margin Reconciliation](index=3&type=section&id=Adjusted%20Gross%20Profit%20and%20Adjusted%20Gross%20Profit%20Margin%20Reconciliation) Adjusted gross profit, defined as revenues less cost of revenue (excluding D&A), is reconciled for Q2 and H1 2025 and 2024 - Adjusted gross profit excludes depreciation and amortization from cost of revenue to evaluate underlying profit trends[10](index=10&type=chunk) Adjusted Gross Profit and Margin Reconciliation | (in thousands) | 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 | | Cost of revenue (excluding depreciation and amortization) | (147,399) | (138,118) | (284,752) | (267,416) | | **Adjusted gross profit** | **$92,413** | **$81,749** | **$179,690** | **$158,170** | | **Adjusted gross profit margin** | **38.5%** | **37.2%** | **38.7%** | **37.2%** | | Depreciation and amortization of revenue generating assets | (4,911) | (3,941) | (9,597) | (7,842) | | Gross profit | $87,502 | $77,808 | $170,093 | $150,328 | | Gross profit margin | 36.5% | 35.4% | 36.6% | 35.3% | [EBITDA and Adjusted EBITDA Reconciliation](index=3&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Reconciliation) EBITDA and Adjusted EBITDA, which excludes non-cash and non-recurring items, are reconciled for Q2 and H1 2025 and 2024 - Adjusted EBITDA starts with EBITDA and excludes non-cash costs (e.g., stock-based compensation) and non-recurring expenses (e.g., acquisition integration, litigation settlements) to provide a clearer view of operational performance[11](index=11&type=chunk) EBITDA and Adjusted EBITDA Reconciliation | (in thousands) | 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 | $10,879 | $994 | $19,147 | $6,187 | | Interest expense | 23,054 | 21,710 | 46,230 | 42,590 | | Income tax expense | 4,423 | 2,515 | 6,673 | 5,097 | | Depreciation and amortization | 14,093 | 15,244 | 27,870 | 30,497 | | **EBITDA** | **$52,449** | **$40,463** | **$99,920** | **$84,371** | | Debt modification and extinguishment expenses | — | 8,623 | 38 | 8,623 | | Selling, general and administrative (non-recurring) | 395 | 636 | 2,594 | 1,435 | | Non-cash stock-based compensation | 3,206 | 1,829 | 4,792 | 3,462 | | **Adjusted EBITDA** | **$56,050** | **$51,551** | **$107,344** | **$97,891** | [Adjusted Earnings Per Share (Adjusted EPS) Reconciliation](index=5&type=section&id=Adjusted%20Earnings%20Per%20Share%20%28Adjusted%20EPS%29%20Reconciliation) Adjusted EPS, a performance measure excluding non-recurring and non-cash items, is reconciled for Q2 and H1 2025 and 2024 - Adjusted EPS is calculated by adjusting net income for items such as accelerated accretion expense, debt extinguishment costs, stock-based compensation, other non-recurring expenses, and amortization of acquisition-related intangible assets, along with their tax impact[13](index=13&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) Adjusted Earnings Per Share Reconciliation | (in thousands, except per share) | 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 shareholders | $10,879 | $(17,629) | $19,147 | $(25,679) | | Accelerated accretion expense and excise tax attributable to redeemable senior preferred stockholders | — | 9,549 | — | 9,549 | | Debt extinguishment and modification costs | — | 8,623 | 38 | 8,623 | | Stock based compensation | 3,206 | 1,829 | 4,792 | 3,462 | | Other non-recurring expenses | 395 | 636 | 2,594 | 1,435 | | Amortization of acquisition related intangible assets | 9,417 | 11,425 | 18,731 | 23,117 | | Tax impact of adjustments | (3,244) | (5,855) | (6,800) | (9,526) | | **Adjusted net income attributable to common shareholders** | **$20,653** | **$8,578** | **$38,502** | **$10,981** | | Weighted average common shares outstanding (diluted) | 79,837 | 78,139 | 79,968 | 78,180 | | **Adjusted earnings per common share (Diluted)** | **$0.26** | **$0.11** | **$0.48** | **$0.14** | [Forward-Looking Non-GAAP Measures Disclosure](index=6&type=section&id=Forward-Looking%20Non-GAAP%20Measures%20Disclosure) The company does not reconcile forward-looking non-GAAP measures to GAAP due to the difficulty in estimating future reconciling items - Reconciliation of forward-looking non-GAAP measures to GAAP is not provided due to the unreasonable effort required to estimate future reconciling items like stock-based compensation expense[16](index=16&type=chunk) - The company primarily plans, forecasts, and analyzes future periods on a non-GAAP basis[16](index=16&type=chunk) [About the Company](index=7&type=section&id=About%20the%20Company) Priority Technology Holdings, Inc. provides a unified commerce engine offering payments and banking solutions for businesses - Priority provides a unified commerce engine that combines payables, merchant services, and banking and treasury solutions[19](index=19&type=chunk) - The platform helps businesses accelerate cash flow, optimize working capital, reduce costs, and unlock new revenue opportunities[19](index=19&type=chunk) [Forward-Looking Statements Disclaimer](index=7&type=section&id=Forward-Looking%20Statements%20Disclaimer) This press release contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially - The press release includes forward-looking statements regarding future financial and operating results, plans, objectives, and intentions[21](index=21&type=chunk) - These statements are subject to significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially[21](index=21&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, and the company disclaims any obligation to publicly update or revise them[23](index=23&type=chunk) [Investor Relations Contact](index=7&type=section&id=Investor%20Relations%20Contact) Investor inquiries for Priority Technology Holdings, Inc. can be directed to the provided email address - Investor inquiries should be sent to **priorityIR@icrinc.com**[24](index=24&type=chunk) [Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited consolidated statements of operations, balance sheets, and cash flows for the reported periods [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=8&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) The unaudited consolidated statements of operations show increased net income for Q2 and H1 2025, driven by revenue growth Consolidated Statements of Operations and Comprehensive Income (Loss) | (in thousands, except per share) | 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 | | Total operating expenses | 202,462 | 186,693 | 394,467 | 364,389 | | Operating income | 37,350 | 33,174 | 69,975 | 61,197 | | Income before income taxes | 15,302 | 3,509 | 25,820 | 11,284 | | Net income | 10,879 | 994 | 19,147 | 6,187 | | Net income (loss) attributable to common stockholders | 10,879 | (17,629) | 19,147 | (25,679) | | Basic EPS | $0.14 | $(0.23) | $0.24 | $(0.33) | | Diluted EPS | $0.14 | $(0.23) | $0.24 | $(0.33) | [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show an increase in total assets and liabilities as of June 30, 2025, primarily due to settlement activities Consolidated Balance Sheets | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :-------------- | :---------------- | | **Assets** | | | | Cash and cash equivalents | $50,564 | $58,600 | | Settlement assets | 1,125,934 | 940,798 | | Total current assets | 1,305,885 | 1,105,085 | | Goodwill | 382,497 | 376,091 | | Intangible assets, net | 225,035 | 240,874 | | **Total assets** | **$2,027,420** | **$1,826,860** | | **Liabilities, Stockholders' Deficit and NCI** | | | | Settlement obligations | 1,127,266 | 940,213 | | Total current liabilities | 1,229,171 | 1,051,671 | | Long-term debt, net | 917,017 | 920,888 | | **Total liabilities** | **$2,171,554** | **$1,991,885** | | Total stockholders' deficit | (144,134) | (165,025) | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements of cash flows indicate decreased operating cash flow but increased financing cash flow in H1 2025 Consolidated Statements of Cash Flows | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 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 and restricted cash at end of period | $1,177,890 | $835,781 | - The significant increase in net cash provided by financing activities in H1 2025 was largely driven by settlement obligations, which provided **$190,863 thousand**[30](index=30&type=chunk) [Reportable Segments' Results (Unaudited)](index=11&type=section&id=Reportable%20Segments%27%20Results%20%28Unaudited%29) This section details the unaudited financial performance of Priority's SMB, B2B, and Enterprise Payments segments [Segment Performance Overview (SMB, B2B, Enterprise)](index=11&type=section&id=Segment%20Performance%20Overview%20%28SMB%2C%20B2B%2C%20Enterprise%29) Priority's SMB, B2B, and Enterprise Payments segments show diversified performance in revenue and Adjusted EBITDA for Q2 and H1 2025 Segment Performance Overview **Three Months Ended June 30, 2025 vs 2024:** | Segment | Q2 2025 Revenue (Thousands) | Q2 2024 Revenue (Thousands) | Revenue Change (%) | Q2 2025 Adj. EBITDA (Thousands) | Q2 2024 Adj. EBITDA (Thousands) | Adj. EBITDA Change (%) | | :---------------- | :-------------------------- | :-------------------------- | :----------------- | :------------------------------ | :------------------------------ | :--------------------- | | SMB Payments | $163,230 | $155,101 | 5.2% | $27,749 | $28,597 | -3.0% | | B2B Payments | $25,033 | $21,881 | 14.4% | $3,770 | $1,530 | 146.4% | | Enterprise Payments | $52,658 | $43,670 | 20.6% | $45,558 | $37,244 | 22.3% | **Six Months Ended June 30, 2025 vs 2024:** | Segment | H1 2025 Revenue (Thousands) | H1 2024 Revenue (Thousands) | Revenue Change (%) | H1 2025 Adj. EBITDA (Thousands) | H1 2024 Adj. EBITDA (Thousands) | Adj. EBITDA Change (%) | | :---------------- | :-------------------------- | :-------------------------- | :----------------- | :------------------------------ | :------------------------------ | :--------------------- | | SMB Payments | $314,920 | $299,105 | 5.3% | $53,454 | $53,620 | -0.3% | | B2B Payments | $48,951 | $43,225 | 13.2% | $7,286 | $3,276 | 122.4% | | Enterprise Payments | $102,746 | $84,660 | 21.4% | $88,001 | $71,971 | 22.3% | - Enterprise Payments showed strong growth in average CFTPay billed clients (**992,279 in Q2 2025** vs **762,873 in Q2 2024**) and monthly new enrollments (**57,818 in Q2 2025** vs **55,416 in Q2 2024**)[32](index=32&type=chunk) - B2B issuing dollar volume decreased in both Q2 and H1 2025 compared to 2024, despite revenue and Adjusted EBITDA growth in the segment[32](index=32&type=chunk) [Reconciliation of Adjusted EBITDA to GAAP Measure by Segment](index=12&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA%20to%20GAAP%20Measure%20by%20Segment) Detailed reconciliations of Adjusted EBITDA to GAAP Income (loss) before taxes are provided for each reportable segment and corporate overhead - The reconciliation tables provide a detailed breakdown of adjustments from Adjusted EBITDA to Income (loss) before taxes for each segment and the corporate overhead[34](index=34&type=chunk)[36](index=36&type=chunk) - Corporate expenses, including interest, depreciation, non-recurring SG&A, and stock-based compensation, significantly impact the consolidated income before taxes[34](index=34&type=chunk)[36](index=36&type=chunk)

Core Insights - Priority Technology Holdings, Inc. (PRTH) is set to report its second-quarter 2025 results on August 7, with revenue expectations of $241.8 million, reflecting a 10% year-over-year increase, and earnings per share (EPS) estimated at 25 cents, indicating over 100% growth from the previous year [1][7] Financial Performance - The consensus estimate for Q2 revenues is $241.8 million, with an EPS of $0.25, both showing strong year-over-year growth [7] - PRTH's first-quarter earnings surprise was 10%, indicating a positive trend in financial performance [2] - The company has shown a 9% year-over-year revenue increase in Q1 2025, with gross margin and adjusted EBITDA rising by 14% and 11%, respectively [16] Market Position - PRTH's current P/E ratio stands at 5.45X, significantly lower than the industry average of 22.89X, suggesting it is undervalued compared to peers [11] - Despite a 45.2% increase in stock price over the past year, PRTH has underperformed compared to its industry, which saw a 69.3% rise [8] Growth Drivers - The global digital payment market is projected to grow at a CAGR of 21.4% from 2025 to 2030, providing PRTH with opportunities to capture market share [15] - The company's platform is designed to foster long-term partnerships and enhance operational efficiency across various industry segments [5][19] Challenges - PRTH faces potential margin pressures from changes in card fees and banking regulations, as well as operational disruptions from delays in the rollout of its One Priority system [18][20] - The company currently has an Earnings ESP of 0.00% and a Zacks Rank of 3, indicating a low probability of an earnings beat in the upcoming report [4][7]

Market Overview - The market remains resilient in June, maintaining positions above the Nasdaq and S&P 500's 21-day moving averages, despite a recent dip [2] - Investors are encouraged to stay engaged with the stock market and continue purchasing strong stocks even amid bearish sentiment [2] Company Insights: Priority Technology Holdings, Inc. (PRTH) - PRTH is a financial technology company focused on payments and banking, serving 1.3 million active customers and handling approximately $135 billion in annual transaction volume [4] - The company is projected to grow its revenue by 11% in 2025 and 2026, reaching $1.09 billion, nearly doubling its 2021 total [8] - PRTH's adjusted earnings are expected to increase by 108% in FY25, from $0.51 to $1.06 per share, with a further 33% growth anticipated in 2026 [9] - The stock has increased by 70% over the past 12 months and is currently trading at approximately $7.80, which is 60% below its average Zacks price target [10] Company Insights: OppFi (OPFI) - OppFi partners with community banks to provide financial products to underserved middle-income Americans, utilizing a tech-enabled digital finance platform [11] - The company is projected to grow its earnings by 30% this year and 14% next year, reaching $1.41 per share in 2026 [15] - OppFi's revenue is expected to expand by 10% and 7% in the next two years, reaching $618.1 million [15] - The stock has surged 300% over the past three years, significantly outperforming its industry, and is currently trading at around $13, which is 45% below its highs [18][19]

Market Overview - The stock market is experiencing a new wave of uncertainty due to geopolitical tensions and weaker-than-expected economic data, particularly in U.S. retail sales for May [1][2] - The Israel-Iran conflict has escalated, contributing to investor unease [1] - The upcoming Federal Reserve meeting is a focal point, with expectations that weak economic data may lead to a more dovish stance from policymakers [2] Investment Strategy - In the current volatile market environment, a value investing approach focusing on fundamentally strong companies with reasonable prices is recommended [3] - Companies with high earnings yields are highlighted as potential investment opportunities [3] Earnings Yield Insights - Earnings yield is a key metric for assessing potential returns, calculated by dividing earnings per share by stock price [4] - A higher earnings yield may indicate undervaluation, while a lower yield could suggest overvaluation [5] - Comparing earnings yield to the yield on 10-year Treasury bonds can help determine investment worthiness [5] Screening Criteria - The primary screening criterion is an earnings yield greater than 10% [6] - Additional parameters include estimated EPS growth exceeding the S&P 500 and an average daily trading volume of at least 100,000 shares [7][6] - Stocks must also have a current price of $5 or more [8] Selected Stocks - Five stocks with earnings yields above 10% and strong growth potential have been identified: - **Aris Mining Corporation (ARMN)**: Expected earnings growth of 226% and 81% for 2025 and 2026, respectively, with a Zacks Rank 1 [10] - **Quanex Building Products Corporation (NX)**: Projected earnings growth of 19.6% and 14% for 2025 and 2026, respectively, also with a Zacks Rank 1 [11] - **Heritage Insurance Holdings, Inc. (HRTG)**: Anticipated earnings growth of 62% and 13% for 2025 and 2026, respectively, with a Zacks Rank 1 [12] - **Popular, Inc. (BPOP)**: Expected earnings growth of 17% and 20% for 2025 and 2026, respectively, holding a Zacks Rank 1 [13] - **Priority Technology Holdings Inc. (PRTH)**: Projected earnings growth of 108% and 34% for 2025 and 2026, respectively, with a Zacks Rank 1 [14]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than the traditional "buying low and selling high" approach, aiming for quicker profits [1] Group 1: Momentum Investing Strategy - Investors are attracted to fast-moving stocks, but determining the right entry point can be challenging, as stocks may lose momentum if future growth does not justify their high valuations [2] - A safer strategy involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify promising stocks [3] Group 2: Case Study - Priority Technology (PRTH) - PRTH has shown a four-week price change of 5.7%, indicating growing investor interest and recent price momentum [4] - Over the past 12 weeks, PRTH gained 0.8%, with a beta of 1.51, suggesting it moves 51% more than the market in either direction [5] - PRTH has a Momentum Score of B, indicating a favorable time to invest, and it has a Zacks Rank 1 (Strong Buy) due to upward revisions in earnings estimates [6][7] - The stock is trading at a Price-to-Sales ratio of 0.71, meaning investors pay 71 cents for each dollar of sales, indicating a reasonable valuation [7] Group 3: Additional Opportunities - Besides PRTH, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, suggesting further investment opportunities [8] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]

Core Insights - The article discusses the author's academic and professional background in Machine Learning, Economics, and Finance, highlighting affiliations with prestigious institutions and experience in financial advisory, particularly in banking and mergers & acquisitions [1]. Group 1 - The author holds a PhD in Machine Learning with a focus on Economics and Finance [1]. - The author has academic affiliations with IESE Business School, ESADE Business School, and the Barcelona Supercomputing Center [1]. - The professional experience includes working at Deloitte Financial Advisory, specializing in banking and mergers & acquisitions [1]. Group 2 - The author's interests include machine learning and generative AI applications in finance and economics [1]. - The author is proficient in programming languages such as Python, R, and SQL [1].

Market Overview - Wall Street experienced significant gains in May, with the S&P 500 increasing by 6.2% and the Nasdaq rising by 9.6%, marking the best month for both indices since late 2023 [1] - Investor optimism was fueled by a temporary pause on new trade tariffs announced by Trump, alleviating fears regarding trade tensions with China and the EU [1] Geopolitical Risks - Despite the temporary relief, the threat of tariffs remains, as China accused the U.S. of violating their trade truce by tightening controls on AI chip exports and student visas, which has raised tensions again [2] - The interconnectedness of the U.S. and Chinese economies means that even minor disputes can significantly impact market stability [2] Investment Strategy - In uncertain times, investors are turning to value investing, focusing on companies with strong fundamentals that are undervalued [3] - Value stocks with high earnings yield can provide attractive returns, especially during periods of market volatility [4] Earnings Yield - Earnings yield is calculated by dividing a company's annual earnings per share (EPS) by its current stock price, indicating potential returns for investors [5] - A higher earnings yield suggests a stock may be undervalued compared to its peers, while a lower yield may indicate overvaluation [5][7] Stock Screening Criteria - A primary screening criterion for selecting stocks is an earnings yield greater than 10%, supplemented by estimated EPS growth, average daily volume, and current price thresholds [8][9][10] - Stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) are expected to outperform their peers [10] Selected Value Stocks - Five value stocks with earnings yields exceeding 10% have been identified as appealing options amid rising U.S.-China tensions: AngloGold Ashanti (AU), Orchid Island Capital (ORC), LATAM Airlines (LTM), Priority Technology (PRTH), and Allianz (ALIZY) [11] - All five stocks show strong projected EPS growth through 2026 and meet liquidity, price, and growth criteria [11] Company Highlights - **AngloGold Ashanti (AU)**: Expected earnings growth of 95% in 2025 and 6.7% in 2026, with a Zacks Rank of 1 and a Value Score of A [12] - **Orchid Island Capital (ORC)**: Projected earnings growth of 394% in 2025 and 24.5% in 2026, Zacks Rank 1, Value Score B [13] - **LATAM Airlines (LTM)**: Anticipated earnings growth of 27.5% in 2025 and 20% in 2026, Zacks Rank 1, Value Score A [14] - **Priority Technology (PRTH)**: Expected earnings growth of 108% in 2025 and 34% in 2026, Zacks Rank 1, Value Score A [15] - **Allianz (ALIZY)**: Projected earnings growth of 16.4% in 2025 and 9% in 2026, Zacks Rank 1, Value Score B [16]

Core Viewpoint - Priority Technology (PRTH) shows potential for significant upside, with a mean price target of $12.80 indicating a 67.1% increase from the current price of $7.66 [1] Price Targets and Analyst Estimates - The mean estimate consists of five short-term price targets with a standard deviation of $2.77, indicating variability among analysts [2] - The lowest estimate of $10 suggests a 30.6% increase, while the highest estimate predicts a surge of 108.9% to $16 [2] - Analysts' price targets can often mislead investors, as empirical research shows they rarely indicate actual stock price movements [7][10] Earnings Estimates and Analyst Agreement - Analysts have shown increasing optimism regarding PRTH's earnings prospects, with a strong consensus in revising EPS estimates higher [11] - The Zacks Consensus Estimate for the current year has risen by 1.9% over the past month, with one estimate increasing and no negative revisions [12] - PRTH holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates [13]