Priority Technology (PRTH)2025-03-06 13:22Revenue Growth - Consolidated revenue for the year ended December 31, 2024, was $879.7 million, an increase of $124.1 million or 16.4% from $755.6 million in 2023[174] - Merchant card fees revenue increased by $75.2 million or 12.6% to $670.4 million in 2024, driven by the acquisition of Plastiq and increased transaction counts[176] - Money transmission services revenue rose by $32.0 million or 32.6% to $130.1 million in 2024, primarily due to an increase in customer enrollments[177] - Outsourced services and other services revenue increased by $17.4 million or 35.1% to $67.0 million in 2024, attributed to higher interest income and additional revenues from the B2B Payments segment[178] - B2B Payments segment revenue increased to $89.1 million for the year ended December 31, 2024, up 116.5% from $41.2 million in 2023, driven by the acquisition of Plastiq and increased interest revenue[199] - Enterprise Payments segment revenue reached $180.4 million in 2024, a 36.6% increase from $132.2 million in 2023, attributed to higher customer enrollments and growth in interest income[202] Operating Expenses - Total operating expenses for 2024 were $746.3 million, an increase of $72.2 million or 10.7% from $674.1 million in 2023[180] - Adjusted EBITDA from the SMB Payments segment was $108.9 million in 2024, a slight decrease of $0.6 million or 0.6% from $109.5 million in 2023[197] - Adjusted EBITDA for the B2B Payments segment rose to $7.6 million in 2024, a 245.5% increase from $2.2 million in 2023, primarily due to higher revenues despite increased operating expenses[200] - Adjusted EBITDA for the Enterprise Payments segment was $154.9 million in 2024, reflecting a 39.8% increase from $110.9 million in 2023, driven by revenue growth offset by increased salaries[203] Net Income and Financial Performance - Net income for 2024 was $24.0 million, a significant increase of $25.3 million from a net loss of $1.3 million in 2023[190] - Operating income improved to $133,421 in 2024, up 63.7% from $81,524 in 2023[258] - The company reported a basic and diluted loss per common share of $0.31 for 2024, improving from a loss of $0.63 in 2023[258] - The total shareholders' deficit attributable to shareholders increased to $(166,840) in 2024 from $(147,718) in 2023[256] Cash Flow and Working Capital - Working capital improved to $53.4 million at December 31, 2024, compared to $29.2 million at the end of 2023, with cash and cash equivalents increasing to $58.6 million from $39.6 million[207] - Net cash provided by operating activities was $85.6 million in 2024, a 5.3% increase from $81.3 million in 2023, driven by net income growth[211] - Net cash used in investing activities decreased to $35.5 million in 2024 from $55.7 million in 2023, with no business acquisitions in 2024 compared to $28.2 million spent on acquiring Plastiq in 2023[212] - Total cash and cash equivalents, and restricted cash at the end of 2024 reached $993,864 thousand, up from $796,223 thousand in 2023[268] Debt and Financing - Long-term debt obligations increased to $945.5 million in 2024 from $654.4 million in 2023, marking a $291.1 million rise[215] - The company entered into a $835.0 million term facility and a $70.0 million revolving credit facility under the 2024 Credit Agreement, with the term facility maturing in May 2031[216] - As of December 31, 2024, the company had $945.5 million in outstanding borrowings under its Credit Agreement, with a potential cash interest expense fluctuation of approximately $9.5 million per year for a hypothetical 1.00% change in the SOFR rate[228][229] Tax and Valuation - The effective tax rate decreased to 35.6% in 2024 from 118.3% in 2023, primarily due to a reduction in valuation allowance against deferred tax assets[188] - The company recognized interest and penalties associated with uncertain tax positions as a component of income tax expense[351] Internal Controls and Compliance - The company has identified a material weakness in internal control over financial reporting related to automated controls for data transformation from third-party processors, affecting revenue and expense determinations[246] - The company’s internal control over financial reporting was found to be ineffective as of December 31, 2024, due to identified deficiencies[245] Asset Management - Total current assets increased to $1,105,085 in 2024, up 25.5% from $881,294 in 2023[256] - Total liabilities rose to $1,991,885 in 2024, an increase of 32.5% from $1,502,796 in 2023[256] - The company’s total assets grew to $1,826,860 in 2024, up 13.1% from $1,615,337 in 2023[256] Business Operations and Strategy - The company aims to enhance its payment solutions through its proprietary Priority Commerce Engine, focusing on optimizing cash flow and working capital for customers[270] - The Company’s B2B Payments segment enables customers to automate accounts payable and other commercial payments functions[284] Acquisitions and Goodwill - The acquisition of Plastiq was completed on July 31, 2023, for a total purchase consideration of approximately $37.0 million, including $28.5 million in cash[366][367] - The fair value of the acquired intangible assets includes $13.0 million for customer relationships, $7.0 million for referral partner relationships, $6.5 million for technology, and $3.9 million for trade name[369] - The company tests goodwill and indefinite-lived intangibles for impairment annually, concluding no impairment for the years ended December 31, 2024, 2023, and 2022[316]