Financial Performance and Key Metrics Changes - Priority reported a 6% increase in net revenue, with adjusted gross profit and adjusted EBITDA growing by 10% and 6% respectively [5][9] - Adjusted EPS increased by $0.10, or 56% year-over-year, reaching $0.28 in Q3 [5] - The company ended Q3 with over 1.7 million customer accounts, up from 1.4 million in the previous quarter [6] - Annual transaction volume increased by nearly $4 billion to $144 billion, with average account balances improving by almost $200 million to $1.6 billion [6][10] - Adjusted gross profit margin improved to 39.2%, a 140 basis point increase from the prior year [10] Business Segment Performance Changes - Merchant Solutions revenue grew by 2% to $161.9 million, with core portfolio growth of 4% and contributions from Boom Commerce [19] - Payables segment revenue increased by 13.6% to $25.2 million, with buyer-funded revenues growing by 11.8% and supplier-funded revenues by 21.3% [20] - Treasury Solutions revenue rose by 18.2% to $55.7 million, driven by strong enrollment trends and increased billed clients [22] - Payables and Treasury Solutions accounted for nearly 63% of adjusted gross profit, reflecting a strategic shift towards higher-margin segments [18] Market Data and Key Metrics Changes - The company experienced stable merchant attrition, indicating macroeconomic factors affecting spending [6] - Revenue growth expectations for the full year were revised down to 8-10%, from a previous range of 10-12.5% [7] - The company raised the low end of its full-year gross profit guidance to $370 million, while adjusted EBITDA guidance was slightly improved to $223 million-$228 million [7][29] Company Strategy and Industry Competition - The company is focusing on expanding its commerce platform and enhancing its service offerings in higher-margin segments [12][13] - Recent acquisitions, including Boom Commerce and Dealer Merchant Services, are aimed at strengthening capabilities in automotive commerce and expanding distribution [14] - The reclassification of operating segments to Merchant Solutions, Payables, and Treasury Solutions reflects the evolving business mix and client base [8] Management's Comments on Operating Environment and Future Outlook - Management noted that Q3 was not among the best performing quarters, but emphasized internal growth and strategic investments [31] - The company is committed to maintaining cost discipline while investing in higher growth segments [13][32] - Preliminary expectations for 2026 include high single-digit revenue growth and adjusted gross margins expanding by 75 to 100 basis points [30][60] Other Important Information - The company generated $29 million in free cash flow for the quarter, totaling $71 million year-to-date [27] - Debt at the end of the quarter was $1 billion, with $157 million of available equity [25] - The company is focused on debt reduction while evaluating strategic acquisition opportunities [28] Q&A Session Summary Question: When did the company start seeing same-store sales weakness? - Management noted that signs of weakness began in August and accelerated in September, particularly in the restaurant, construction, and wholesale trade sectors [35][36] Question: What was the impact of lower revenue from specialized acquiring and historical residual purchases? - The impact was approximately $2 million on a year-over-year basis, down from $4.5 million in the first half of the year [38] Question: How much of the Merchant Solutions segment is still in specialized acquiring? - Specialized acquiring has grown quarter over quarter, but it remains a year-over-year headwind [54] Question: What drives the acceleration in gross profit guidance for Q4? - The acceleration is driven by higher organic growth in the Merchant Solutions segment and the full quarter impact of recent acquisitions [58]

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.