Priority Technology (US:PRTH)2023-03-23 20:32Financial Data and Key Metrics Changes - The company reported a fourth quarter revenue of $177.6 million, a 23% increase from the prior year, and a full year revenue increase of 29% to $664 million, with organic growth of 23% in Q4 and 19.1% for the full year [70][71] - Adjusted gross profit for Q4 increased by 25% to $61 million, while adjusted EBITDA rose by 21% to $39.8 million [70] - The company finished the quarter with $623.2 million of gross debt and $604.7 million of net debt, reflecting a year-over-year decline in debt levels [27] Business Line Data and Key Metrics Changes - The SMB payments segment had Q4 revenue of approximately $150 million, a 23% increase year-over-year, driven by a 7% growth in bankcard dollar volume [39] - The Enterprise segment reported Q4 revenue of $24.9 million, a 46% increase from $17.1 million in Q4 2021, with adjusted gross profit increasing by 50% to $23.3 million [19][20] - The B2B payments segment saw a revenue decrease of 48% to $2.8 million due to the wind down of certain Managed Services programs [44] Market Data and Key Metrics Changes - The company experienced almost 15% growth in bankcard dollar volume across all segments to roughly $62 billion for the full year, with a 10.5% increase in transaction count to 640 million [38] - The average ticket size increased slightly to $96.50, with total payment volume for the year reaching $112.8 billion [38] Company Strategy and Development Direction - The company is focused on accelerating investment in its banking product initiatives, particularly the Priority Passport offering, to provide a full suite of proprietary payment and banking solutions [4][5] - The management emphasized the importance of embedded finance, predicting that businesses will increasingly prefer integrated financial solutions over traditional banking [5][6] - The company aims to leverage its investments in technology and personnel to drive growth and margin expansion in 2023 [48][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current banking crisis, suggesting that it will drive more businesses to alternative solutions that offer greater transparency and speed [6][8] - The company anticipates continued double-digit growth in revenue and adjusted EBITDA for 2023, projecting revenue between $740 million and $755 million [71] - Management highlighted the importance of their unified commerce platform in meeting the evolving demands of businesses in the current economic environment [72] Other Important Information - The company has a natural hedge in place for almost 90% of its floating rate debt, which helps mitigate the impact of rising interest rates [25] - The company finished Q4 with approximately 870 employees, reflecting a 10% increase in headcount from the previous year [21] Q&A Session Summary Question: What are the trends in merchant acquiring? - Management confirmed that trends in merchant acquiring have remained strong, with continued high volumes observed in the first two months of the quarter [57] Question: How will salary and benefits expenses grow relative to revenue? - Management indicated that salary and benefits expenses will grow at a slower rate than revenue, aiming for margin expansion [63] Question: What is the expected interest expense for 2023? - The estimated interest expense for 2023 is projected to be in the low to mid-$60 million range, with some offset from interest income generated by deposits [64] Question: What is the outlook for CFTPay? - Management noted that while growth in CFTPay is expected, they are selective about the partners they onboard to ensure quality and compliance [80]