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United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 8-K
 
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
November 7, 2024
Date of Report (Date of earliest event reported)

Copy of Priority_Full-Color (2).jpg


Priority Technology Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)
 
Delaware   001-37872   47-4257046
(State or other jurisdiction of incorporation)    (Commission File Number)    (I.R.S. Employer Identification No.) 
 
2001 Westside Parkway  
Suite 155
Alpharetta, Georgia 30004
(Address of Principal Executive Offices)    (Zip Code) 
 
Registrant's telephone number, including area code: (800) 935-5961 
 
(Former name or former address, if changed since last report) 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
☐      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common stock, $0.001 par value PRTH Nasdaq Global Market



Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of (1933 §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

                                        Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02.      Results of Operations and Financial Condition.
On November 7, 2024, Priority Technology Holdings, Inc. ("Priority") issued a press release announcing its financial results for the quarter ended September 30, 2024. A copy of that press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.  
Item 7.01. Regulation FD Disclosure.
On November 7, 2024, Priority will hold an earnings conference call and webcast at 11:00 a.m. (Eastern Time) to discuss the financial results for the quarter ended September 30, 2024. The press release referenced in Item 2.02 contains information about how to access the conference call and webcast. A copy of the slide presentation to be used during the earnings call and webcast is furnished as Exhibit 99.2 to this Current Report on Form 8-K. The slide presentation also will be available on our website, www.prioritycommerce.com under the "Investor Relations" section.
The information in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended.
Item 9.01.    Financial Statements and Exhibits.
(d) Exhibits – The following exhibit is furnished as part of this Current Report on Form 8-K.
Exhibit Number Description
104 The cover page from this Current Report on Form 8-K, formatted in Inline XBRL



SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Dated: November 7, 2024
  
   
  PRIORITY TECHNOLOGY HOLDINGS, INC.
   
  By: /s/ Timothy O'Leary
  Name: Timothy O'Leary
  Title: Chief Financial Officer


EX-99.1 2 ex991-prthq32024earningsre.htm EX-99.1 Document

EXHIBIT 99.1                        
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Priority Investor Inquiries:
Chris Kettmann
Chris.Kettmann@dgagroup.com
(773) 497-7575

Priority Technology Holdings, Inc. Announces Third Quarter Financial Results
Strong Third Quarter Growth Driven by Performance Across Unified Commerce Platform
ALPHARETTA, GA - November 7, 2024 -- Priority Technology Holdings, Inc. (NASDAQ: PRTH) ("Priority" or the "Company"), the payments and banking fintech that streamlines collecting, lending, and sending money to unlock revenue opportunities, today announced its third quarter 2024 financial results including strong year-over-year diversified revenue growth.
Highlights of Consolidated Results
Third Quarter 2024 Compared with Third Quarter 2023
Financial highlights of the third quarter of 2024 compared with the third quarter of 2023, are as follows1:
•Revenue of $227.0 million increased 20.1% from $189.0 million
•Adjusted gross profit (a non-GAAP measure2) of $86.0 million increased 18.9% from $72.3 million
•Adjusted gross profit margin (a non-GAAP measure2) of 37.9% decreased 40.0 basis points from 38.3%
•Operating income of $38.1 million increased 62.0% from $23.5 million
•Adjusted EBITDA (a non-GAAP measure2) of $54.6 million increased 21.5% from $45.0 million
(1)Certain amounts/percentages may not compute accurately due to rounding.
(2)See "Non-GAAP Financial Measures" and the reconciliations of Adjusted Gross Profit (non-GAAP), Adjusted Gross Profit Margin (non-GAAP), and Adjusted EBITDA, to their most comparable GAAP measures provided below for additional information.

"We reported record results in the third quarter as we sustained our positive momentum, delivering consistently strong results in SMB Acquiring, B2B Payables and Enterprise Payments," said Tom Priore, Chairman & CEO of Priority. “Our continued execution reinforces that Priority’s technology, operations and decision making have positioned us to excel through the remainder of 2024 and beyond to deliver a thriving ecosystem of financial solutions that accelerate revenue and optimize working capital for businesses.”
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Full Year 2024 Financial Guidance
Priority's outlook remains strong and our adjusted full year 2024 guidance is as follows:
•Revenue forecast affirmed to range between $875 million to $883 million, a growth rate of 16% to 17%, compared to fiscal 2023 results
•Adjusted gross profit (a non-GAAP measure) forecast affirmed to range between $325 million to $330 million, a growth rate of 18% to 20% compared to fiscal 2023 results
•Adjusted EBITDA (a non-GAAP measure) forecast increased to a range between $200 million to $204 million, from $196 million to $200 million, a growth rate of 19% to 21% compared to fiscal 2023 results


Conference Call
Priority's leadership will host a conference call on Thursday, November 7, 2024 at 11:00 a.m. EST to discuss its third quarter financial results. Participants can access the call by phone in the U.S. or Canada at (833) 636-1319 or internationally at (412) 902-4286.
The Internet webcast link and accompanying slide presentation can be accessed at https://edge.media-server.com/mmc/p/5gtz5go8 and will also be posted in the "Investor Relations" section of the Company's website at www.prioritycommerce.com.
An audio replay of the call will be available shortly after the conference call until November 14, 2024 at 2:00 p.m. EST. To listen to the audio replay, dial (877) 344-7529 or (412) 317-0088 and enter conference ID number 2890176. Alternatively, you may access the webcast replay in the "Investor Relations" section of the Company's website at www.prioritycommerce.com.

Non-GAAP Financial Measures
This communication includes certain non-GAAP financial measures that we regularly review to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions. We believe these non-GAAP measures help to illustrate the underlying financial and business trends relating to our results of operations and comparability between current and prior periods. We also use these non-GAAP measures to establish and monitor operational goals. However, these non-GAAP measures are not superior to or a substitute for prominent measurements calculated in accordance with GAAP. Rather, the non-GAAP measures are meant to be a complement to understanding measures prepared in accordance with GAAP.
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Adjusted Gross Profit and Adjusted Gross Profit Margin
The Company's adjusted gross profit metric represents revenues less cost of revenue (excluding depreciation and amortization). Adjusted gross profit margin is adjusted gross profit divided by revenues. We review these non-GAAP measures to evaluate our underlying profit trends. The reconciliation of adjusted gross profit to its most comparable GAAP measure is provided below:
(in thousands) Three Months Ended September 30,
2024 2023
Revenues $ 227,049  $ 189,015 
Cost of revenue (excluding depreciation and amortization) (141,070) (116,682)
Adjusted gross profit $ 85,979  $ 72,333 
Adjusted gross profit margin 37.9  % 38.3  %
Depreciation and amortization of revenue generating assets (4,207) (3,000)
Gross profit $ 81,772  $ 69,333 
Gross profit margin 36.0  % 36.7  %

EBITDA and Adjusted EBITDA
EBITDA and adjusted EBITDA are performance measures. EBITDA is earnings before interest, income tax, and depreciation and amortization expenses ("EBITDA"). Adjusted EBITDA begins with EBITDA but further excludes certain non-cash costs, such as stock-based compensation and the write-off of the carrying value of investments or other assets, as well as debt extinguishment and modification expenses and other expenses and income items considered non-recurring, such as acquisition integration expenses, certain professional fees, and litigation settlements. We review the non-GAAP adjusted EBITDA measure to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions.

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The reconciliation of adjusted EBITDA to its most comparable GAAP measure is provided below:

(in thousands) Three Months Ended September 30,
2024 2023
Net income (loss) $ 10,608  $ (87)
Interest expense 23,246  19,997 
Income tax expense 4,899  4,328 
Depreciation and amortization 13,733  17,275 
EBITDA 52,486  41,513 
Debt extinguishment and modification 43  — 
Non-recurring gain —  (166)
Selling, general and administrative (non-recurring) 696  2,114 
Non-cash stock-based compensation 1,416  1,501 
Adjusted EBITDA $ 54,641  $ 44,962 


Further detail of certain of these adjustments, and where these items are recorded in our consolidated statements of operations, is provided below:

(in thousands) Three Months Ended September 30,
2024 2023
Selling, general and administrative expenses (non-recurring):
Certain legal fees 552  656 
Professional, accounting and consulting fees 128  1,364 
Other expenses, net 16  94 
$ 696  $ 2,114 
Priority does not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because it could not do so without unreasonable effort due to the unavailability of the information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, the Company does so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for various cash and non-cash reconciling items that would be difficult to predict with reasonable accuracy. For example, stock-based compensation expense would be difficult to estimate because it depends on the Company's future hiring and retention needs, as well as the future fair market value of the Company's common stock, all of which are difficult to predict and subject to constant change. As a result, the Company does not believe that a GAAP reconciliation would provide meaningful supplemental information about the Company's outlook.



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About Priority Technology Holdings, Inc.
Priority is a solution provider in Payments and Banking as a Service operating at scale with over 1.1 million active customers across its SMB, B2B and Enterprise channels processing approximately $127 billion in annual transaction volume and providing administration for over $1.1 billion in account balances. Priority is the payments and banking fintech that streamlines collecting, storing, lending, and sending money through its innovative commerce engine to unlock revenue and generate operational success for businesses. Additional information can be found at www.prioritycommerce.com.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services, and other statements identified by words such as "may," "will," "should," "anticipates," "believes," "expects," "plans," "future," "intends," "could," "estimate," "predict," "projects," "targeting," "potential" or "contingent," "guidance," "outlook" or words of similar meaning. These forward-looking statements include, but are not limited to, our 2024 outlook and statements regarding our market and growth opportunities. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive risks, trends and uncertainties that could cause actual results to differ materially from those projected, expressed, or implied by such forward-looking statements. Our actual results could differ materially, and potentially adversely, from those discussed or implied herein.
We caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties disclosed in our SEC filings, including our most recent Annual Report on Form 10-K filed with the SEC on March 12, 2024. These filings are available online at www.sec.gov or www.prioritycommerce.com.
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the way we expect. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.
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Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss)
(in thousands, except per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Revenues $ 227,049 $ 189,015 $ 652,635 $ 556,333
Operating expenses
Cost of revenue (excludes depreciation and amortization) 141,070 116,682 408,486 353,929
Salary and employee benefits 21,748 20,129 66,017 58,286
Depreciation and amortization 13,733 17,275 44,230 53,303
Selling, general and administrative 12,413 11,423 34,620 31,328
Total operating expenses 188,964 165,509 553,353 496,846
Operating income 38,085 23,506 99,282 59,487
Other (expense) income
Interest expense (23,246) (19,997) (65,836) (55,461)
Debt extinguishment and modification costs (43) — (8,666) —
Other income, net 711 732 2,011 1,319
Total other expense, net (22,578) (19,265) (72,491) (54,142)
Income before income taxes 15,507 4,241 26,791 5,345
Income tax expense 4,899 4,328 9,996 6,550
Net income (loss) 10,608 (87) 16,795 (1,205)
Less: Dividends and accretion attributable to redeemable senior preferred stockholders (5,121) (12,192) (36,348) (35,252)
Less: Return on redeemable NCI in consolidated subsidiary — — (639) —
Net income (loss) attributable to common stockholders 5,487 (12,279) $ (20,192) $ (36,457)
Other comprehensive income ( loss)
Foreign currency translation adjustments (28) (65) (37) (34)
Comprehensive income (loss) $ 5,459 $ (12,344) $ (20,229) $ (36,491)
Earnings (loss) per common share:
Basic $ 0.07  $ (0.16) $ (0.26) $ (0.47)
Diluted $ 0.07  $ (0.16) $ (0.26) $ (0.47)
Weighted-average common shares outstanding:
Basic 77,973  78,381  77,910  78,270 
Diluted 80,095  78,381  77,910  78,270 


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Priority Technology Holdings, Inc.
Unaudited Consolidated Balance Sheets

(in thousands)
September 30, 2024 December 31, 2023
Assets
Current assets:
Cash and cash equivalents $ 41,072  $ 39,604 
Restricted cash 13,398  11,923 
Accounts receivable, net of allowances 73,393  58,551 
Prepaid expenses and other current assets 19,103  13,273 
Current portion of notes receivable, net of allowance 2,567  1,468 
Settlement assets and customer/subscriber account balances 879,361  756,475 
Total current assets 1,028,894  881,294 
Notes receivable, less current portion 3,727  3,728 
Property, equipment and software, net 51,603  44,680 
Goodwill 376,091  376,103 
Intangible assets, net 248,819  273,350 
Deferred income taxes, net 25,477  22,533 
Other noncurrent assets 25,058  13,649 
Total assets $ 1,759,669  1,615,337 
Liabilities, Redeemable Senior Preferred Stock, Redeemable NCI, and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued expenses $ 67,009  $ 52,643 
Accrued residual commissions 35,818  33,025 
Customer deposits and advance payments 4,205  3,934 
Current portion of long-term debt 8,350  6,712 
Settlement and customer/subscriber account obligations 875,815  755,754 
Total current liabilities 991,197  852,068 
Long-term debt, net of current portion, discounts and debt issuance costs 808,081  631,965 
Other noncurrent liabilities 19,241  18,763 
Total liabilities 1,818,519  1,502,796 
Redeemable senior preferred stock, net of discounts and issuance costs 105,098  258,605 
Stockholders' deficit:
Preferred stock —  — 
Common stock 77  77 
Treasury stock, at cost (19,278) (12,815)
Additional paid-in capital —  — 
Accumulated other comprehensive loss (66) (29)
Accumulated deficit (146,571) (134,951)
Total stockholders' deficit attributable to stockholders of Priority (165,838) (147,718)
Non-controlling interests in consolidated subsidiaries 1,890  1,654 
Total stockholders' deficit (163,948) (146,064)
Total liabilities, redeemable senior preferred stock, redeemable NCI and stockholders' deficit $ 1,759,669  $ 1,615,337 

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Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended September 30,
2024 2023
Cash flows from operating activities:
Net income (loss) $ 16,795  $ (1,205)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of assets 44,230  53,303 
Stock-based, ESPP and incentive units compensation 4,878  5,183 
Amortization of debt issuance costs and discounts 2,250  2,812 
Debt extinguishment and modification costs 8,666  — 
Deferred income tax (2,944) (2,432)
Change in contingent consideration 3,280  906 
Other non-cash items, net (37) (169)
Change in operating assets and liabilities:
Accounts receivable (15,712) 17,931 
Prepaid expenses and other current assets (2,808) (2,630)
Income taxes (receivable) payable (3,000) 498 
Notes receivable (883) (668)
Accounts payable and other accrued liabilities 12,864  302 
Customer deposits and advance payments 271  3,802 
Other assets and liabilities, net (5,998) (4,953)
Net cash provided by operating activities 61,852  72,680 
Cash flows from investing activities:
Acquisition of business, net of cash acquired —  (28,182)
Additions to property, equipment and software (17,044) (15,268)
Notes receivable, net (216) 151 
Acquisitions of assets and other investing activities (7,474) (7,925)
Net cash used in investing activities (24,734) (51,224)
Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of issue discount 830,200  — 
Debt issuance and modification costs paid (6,901) (807)
Repayments of long-term debt (656,460) (4,650)
Borrowings under revolving credit facility —  44,000 
Repayments of borrowings under revolving credit facility —  (23,500)
Redemption of PHOT redeemable NCI (2,130) — 
Repurchases of shares withheld for taxes (1,208) (1,018)
Redemption of senior preferred stock (136,936) — 
Redemption of accumulated unpaid dividend on redeemable senior preferred stock (30,819) — 
Dividends paid to redeemable senior preferred stockholders (22,099) (17,908)
Settlement and customer/subscriber accounts obligations, net 116,065  165,610 
Payment of contingent consideration related to business combination (4,996) (4,698)
Net cash provided by financing activities 84,716  157,029 
Net change in cash and cash equivalents and restricted cash:
Net increase in cash and cash equivalents, and restricted cash 121,834  178,485 
Cash and cash equivalents and restricted cash at beginning of period 796,223  560,610 
Cash and cash equivalents and restricted cash at end of period $ 918,057  $ 739,095 
Reconciliation of cash and cash equivalents, and restricted cash:
Cash and cash equivalents $ 41,072  $ 24,595 
Restricted cash 13,398  13,890 
Cash and cash equivalents included in settlement assets and customer/subscriber account balances 863,587  700,610 
Total cash and cash equivalents, and restricted cash $ 918,057  $ 739,095 
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Priority Technology Holdings, Inc.
Unaudited Reportable Segments' Results
(in thousands)

Three Months Ended September 30, Nine Months Ended September 30,
  2024 2023 2024 2023
SMB Payments:    
Revenues $ 158,770  $ 140,241  $ 457,875  $ 443,122 
Adjusted EBITDA $ 28,644  $ 27,613  $ 82,265  $ 84,449 
Key Indicators:
Merchant bankcard processing dollar value $ 15,517,131  $ 14,150,995  $ 46,096,861  $ 44,483,491 
Merchant bankcard transaction count 195,786  178,721  564,855  522,470 
B2B Payments:
Revenues $ 22,143  $ 13,985  $ 65,368  $ 19,744 
Adjusted EBITDA $ 1,933  $ 1,359  $ 5,209  $ 1,877 
Key Indicators:
B2B issuing dollar volume $ 255,323  $ 221,456  $ 732,589  $ 636,361 
B2B issuing transaction count 256  267  738  829 
Enterprise Payments:
Revenues $ 47,099  $ 35,174  $ 131,758  $ 93,919 
Adjusted EBITDA $ 40,940  $ 29,757  $ 112,911  $ 77,853 
Key Indicators:
Average billed clients 832,351  590,578  766,370  525,274 
Average monthly new enrollments 62,875  56,269  57,281  51,864 


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Priority Technology Holdings, Inc.
Unaudited Reportable Segments' Results
(in thousands)

Three Months Ended September 30, 2024
SMB Payments B2B Payments Enterprise Payments Corporate Total Consolidated
Reconciliation of Adjusted EBITDA to GAAP Measure:
Adjusted EBITDA $ 28,644  $ 1,933  $ 40,940  $ (16,876) $ 54,641 
Interest expense —  (1,066) —  (22,180) (23,246)
Depreciation and amortization (6,939) (1,261) (4,304) (1,229) (13,733)
Debt modification and extinguishment expenses —  —  —  (43) (43)
Selling, general and administrative (non-recurring) —  —  —  (696) (696)
Non-cash stock based compensation (4) (73) (33) (1,306) (1,416)
Income (loss) before taxes $ 21,701  $ (467) $ 36,603  $ (42,330) $ 15,507 




Nine Months Ended September 30, 2024
SMB Payments B2B Payments Enterprise Payments Corporate Total Consolidated
Reconciliation of Adjusted EBITDA to GAAP Measure:
Adjusted EBITDA $ 82,265  $ 5,209  $ 112,911  $ (47,853) $ 152,532 
Interest expense (1) (3,280) —  (62,555) (65,836)
Depreciation and amortization (24,065) (3,992) (12,431) (3,742) (44,230)
Debt modification and extinguishment expenses —  —  —  (8,666) (8,666)
Selling, general and administrative (non-recurring) —  —  —  (2,131) (2,131)
Non-cash stock based compensation (12) (299) (98) (4,469) (4,878)
Income (loss) before taxes $ 58,187  $ (2,362) $ 100,382  $ (129,416) $ 26,791 
.
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Priority Technology Holdings, Inc.
Unaudited Reportable Segments' Results
(in thousands)

Three Months Ended September 30, 2023
SMB Payments B2B Payments Enterprise Payments Corporate Total Consolidated
Reconciliation of Adjusted EBITDA to GAAP Measure:
Adjusted EBITDA $ 27,613  $ 1,359  $ 29,757  $ (13,767) $ 44,962 
Interest expense —  (498) (62) (19,437) (19,997)
Depreciation and amortization (9,136) (719) (5,947) (1,473) (17,275)
Selling, general and administrative (non-recurring) —  —  —  (2,114) (2,114)
Non-cash stock based compensation (114) (36) (66) (1,285) (1,501)
Other non-recurring gain, net —  —  —  166  166 
Income (loss) before taxes $ 18,363  $ 106  $ 23,682  $ (37,910) $ 4,241 


Nine Months Ended September 30, 2023
SMB Payments B2B Payments Enterprise Payments Corporate Total Consolidated
Reconciliation of Adjusted EBITDA to GAAP Measure:
Adjusted EBITDA $ 84,449  $ 1,877  $ 77,853  $ (40,484) $ 123,695 
Interest expense —  (498) (293) (54,670) (55,461)
Depreciation and amortization (27,553) (756) (18,571) (6,423) (53,303)
Selling, general and administrative (non-recurring) —  —  —  (4,410) (4,410)
Non-cash stock based compensation (408) (237) (195) (4,343) (5,183)
Other non-recurring gain, net —  —  —  7  7 
Income (loss) before taxes $ 56,488  $ 386  $ 58,794  $ (110,323) $ 5,345 

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EX-99.2 3 q32024_prthsupplementals.htm EX-99.2 q32024_prthsupplementals
Priority Technology Holdings, Inc. (Nasdaq: PRTH) Supplemental Slides: 3Q 2024 Earnings Call November 2024

 
prioritycommerce.com 2 Disclaimer Important Notice Regarding Forward-Looking Statements and Non-GAAP Measures This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services, and other statements identified by words such as “may,” “will,” “should,” “anticipates,” “believes,” “expects,” “plans,” “future,” “intends,” “could,” “estimate,” “predict,” “projects,” “targeting,” “potential” or “contingent,” “guidance,” “anticipates,” “outlook” or words of similar meaning. These forward-looking statements include, but are not limited to, Priority Technology Holdings, Inc.’s (“Priority”, “we”, “our” or “us”) 2024 outlook and statements regarding our market and growth opportunities. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive risks, trends and uncertainties that could cause actual results to differ materially from those projected, expressed, or implied by such forward-looking statements. Our actual results could differ materially, and potentially adversely, from those discussed or implied herein. We caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward- looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this presentation in the context of the risks and uncertainties disclosed in our Securities and Exchange Commission (“SEC”) filings, including our Annual Report on Form 10-K filed with the SEC on March 12, 2024. These filings are available online at www.sec.gov or www.prioritycommerce.com. We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the way we expect. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. The forward-looking statements included in this presentation are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. This presentation includes certain non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and that may be different from non- GAAP financial measures used by other companies. Priority believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends of the Company. These non-GAAP measures should not be considered in isolation from, or as an alternative to, financial measures determined in accordance with GAAP. See the footnotes on the slides where these measures are discussed and the slides at the end of this presentation for a reconciliation of such non-GAAP financial measures to the most comparable GAAP numbers. Additionally, we present guidance for Adjusted EBITDA and Adjusted EBITDA as percentage of revenue, non-GAAP measures without reconciliation due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations. See more information in Priority’s earnings press release. Adjusted Gross profit referred throughout this presentation is a non-GAAP measure calculated by subtracting Cost of services (excluding depreciation and amortization) from Revenue. Adjusted Gross profit margin referred throughout this presentation is a non-GAAP measure calculated by dividing Adjusted Gross Profit discussed above by Revenue. Adjusted EBITDA referred to throughout this presentation is a non-GAAP measure calculated as net income prior to interest expense, tax expense, depreciation and amortization expense, adjusted to add back certain non-cash charges and / or non-recurring charges deemed to not be part of normal operating expenses. Adjusted EBITDA margin referred throughout this presentation is a non-GAAP measure calculated by dividing Adjusted EBITDA discussed above by Revenue. See Appendix 1 – 2 of this presentation for a reconciliation of Adjusted Gross Profit to Gross Profit as per GAAP, a reconciliation of Adj. EBITDA to GAAP Income (loss) before Taxes and Priority’s earnings press release for more details.

 
prioritycommerce.com $153 $96 $140 $168 $47 $4 2021 2022 2023 2024 $653 $515 $664 $756 $222 $8 2021 2022 2023 2024 3 Key 3rd Quarter 2024 Highlights Q3 2024 RESULTS CONTINUED STRONG MOMENTUM Q3 2024 KEY METRICS TOTAL REVENUE (In Millions) ADJUSTED EBITDA1 (In Millions) $875 - $883 $200 - $204 Guidance Range Guidance Range YTD Actual YTD Actual NET REVENUE +20% ADJ GROSS PROFIT1 +19% ADJ EBITDA1 +22% OPERATING INCOME +62% >$1.1B Account Balances >1.1M Total Accounts ~$127B LTM Total Volume 1 Adjusted Gross Profit, Adjusted Gross Profit margin, Adjusted EBITDA and Adjusted EBITDA margin referred to in this presentation are non-GAAP measures. See slide 2 for further details

 
prioritycommerce.com 4 Q3 2024 Consolidated Results $72.3M $86.0M 38.3% 37.9% $45.0M $54.6M $189.0M $227.0M Q3 23 Q3 24 Q3 23 Q3 24 Q3 23 Q3 24Q3 23 Q3 24 20% 19% 40bp 22% Adjusted EBITDA1 increased 22% to $54.6 million Adj Gross Profit margin1 decreased 40 basis points to 37.9% Adj Gross Profit1 increased 19% to $86.0 million Revenue increased 20% to $227.0 million 1 Adjusted Gross Profit, Adjusted Gross Profit margin, Adjusted EBITDA and Adjusted EBITDA margin referred to in this presentation are non-GAAP measures. See slide 2 for further details

 
prioritycommerce.com 5 YTD Q3 2024 Consolidated Results $202.4M $244.1M 36.4% 37.4% $123.7M $152.5M $556.3M $652.6M Q3 23 Q3 24 Q3 23 Q3 24 Q3 23 Q3 24Q3 23 Q3 24 17% 21% 100bp 23% Adjusted EBITDA1 increased 23% to $152.5 million Adj Gross Profit1 increased 21% to $244.1 million Revenue increased 17% to $652.6 million 1 Adjusted Gross Profit, Adjusted Gross Profit margin, Adjusted EBITDA and Adjusted EBITDA margin referred to in this presentation are non-GAAP measures. See slide 2 for further details Adj Gross Profit margin1 increased 100 basis points to 37.4%

 
prioritycommerce.com 6 Acquiring Banking & Treasury Payables Risk & Compliance Insights The Priority Commerce Engine (PCE) is an innovative tech platform that seamlessly embeds acquiring, banking, and payables solutions into your existing applications. With our modern API and complimentary, ready-built product suites, PCE is designed to help your business launch quickly, scale with confidence, and drive value and growth through every money movement. Priority Commerce: One Connection is all You Need PCE Overview

 
prioritycommerce.com 7 Merchant Services Full featured POS & merchant acquiring solutions that accelerate your cash flow to capture revenue opportunities for businesses Payables Optimize your working capital and earn cash back by leveraging our payables & financing solutions while automating reconciliation Banking & Treasury Solutions Passport automates reconciliation, streamlines financial operations & provides full transparency to your liquidity PCE Overview Priority: Your trusted partner Our mission is to deliver a personalized, easy-to-adopt financial toolset to accelerate cash flow and optimize working capital for businesses.

 
prioritycommerce.com Section 2 8 Third Quarter 2024 Financial Results

 
prioritycommerce.com 9 Q3 2024 Segment Highlights ➔ Revenue growth of 13% is reflective of organic growth ➔ Bankcard $ Volumes increased 10% to $15.5 billion ➔ New monthly boards averaged 3.4K during quarter Revenue $158.8MM +13% YoY Adj. Gross Profit1 $35.6MM +3% YoY | 22.4% Margin Adj. EBITDA1 $28.6MM +4% YoY | 18.0% Margin SMB Highlights – Q3 2024 1 Adjusted Gross Profit, Adjusted Gross Profit margin, Adjusted EBITDA and Adjusted EBITDA margin referred to in this presentation are non-GAAP measures. See slide 2 for further details

 
prioritycommerce.com 10 Q3 2024 Segment Highlights ➔ $8.2 million of Revenue growth driven primarily by contribution from Plastiq ➔ Adjusted Gross Profit Margin increased 300+ bps sequentially from Q2 2024 due to margin expansion at Plastiq Revenue $22.1MM +58% YoY Adj. Gross Profit1 $6.3MM +24% YoY | 28.5% Margin Adj. EBITDA1 $1.9MM +42% YoY | 8.7% Margin B2B Highlights – Q3 2024 1 Adjusted Gross Profit, Adjusted Gross Profit margin, Adjusted EBITDA and Adjusted EBITDA margin referred to in this presentation are non-GAAP measures. See slide 2 for further details

 
prioritycommerce.com 11 Q3 2024 Segment Highlights ➔ CFTPay Avg Monthly New Enrollments of 63K increased 12% from 56K in Q3 2023 ➔ CFTPay Avg Number of Billed Clients increased 41% to 832K from 591K in Q3 2023 ➔ Growth in balances offset the impact of the 50 bps Fed rate cut in September Revenue $47.1MM +34% YoY Adj. Gross Profit1 $44.1MM +35% YoY | 93.6% Margin Adj. EBITDA1 $40.9MM +38% YoY | 86.9% Margin Enterprise Highlights – Q3 2024 1 Adjusted Gross Profit, Adjusted Gross Profit margin, Adjusted EBITDA and Adjusted EBITDA margin referred to in this presentation are non-GAAP measures. See slide 2 for further details

 
prioritycommerce.com 12 Q3 2024 Segment Highlights ➔ Higher Salaries and Benefits driven largely by timing of the Plastiq acquisition. On a sequential basis, Salaries and Benefits expense decreased 2% due to continued expense discipline ➔ Increase in SG&A expenses primarily incurred to further support the overall growth of the Company Salaries & Benefits $21.7MM +8% YoY SG&A $12.4MM +9% YoY Depreciation & Amortization $13.7MM (21%) YoY Consolidated Operating Expenses – Q3 2024

 
prioritycommerce.com 13 Adjusted EBITDA experienced strong growth in Q3 2024 ➔ Q3 2024 Adjusted EBITDA of $54.6 million increased 22% from $45.0 million in Q3 2023 Adjusted EBITDA1 Walk 1 Adjusted Gross Profit, Adjusted Gross Profit margin, Adjusted EBITDA and Adjusted EBITDA margin referred to in this presentation are non-GAAP measures. See slide 2 for further details EBITDA Walk (in Millions) 2024 2023 LTM Q3 Q3 Q3 2024 Consolidated net income (loss) (GAAP) 10.6$ (0.1)$ 16.7$ Add: Interest expense 23.2 20.0 86.5 Add: Depreciation and amortization 13.7 17.3 59.3 Add: Income tax expense (benefit) 4.9 4.3 11.9 EBITDA (non-GAAP) 52.5 41.5 174.4 Further adjusted by: Add: Non-cash stock-based compensation 1.4 1.5 6.5 Add: Non-recurring expenses: Debt extinguishment and modification costs 0.0 - 8.7 Legal, professional, accounting and other SG&A 0.7 2.1 7.4 Other Non-recurring expenses - (0.2) 0.3 Adjusted EBITDA (non-GAAP) 54.6$ 45.0$ 197.2$

 
prioritycommerce.com 14 Total Debt of $832.9 million at end of Q3 2024 decreased from $835.0 million in Q2 2024 ➔ Net Debt of $791.8 million decreased $8.5 million compared to Q2 2024 due to higher cash balances ➔ Revolver Capacity at the end of Q3 2024 was $70.0 million ➔ LTM Adj. EBITDA1 of $197.2 million at end of Q3 2024 Capital Structure & Liquidity Outstanding Debt Balance as of June 30, 2024 $835.0 (+/-) Net Revolver Borrowings -- (+/-) Net Term Loan Borrowings ($2.1) Balance as of September 30, 2024 $832.9 Senior Redeemable Preferred Stock Balance as of June 30, 2024 $105.7 (+/-) Dividend Payable2 ($2.8) (+/-) PIK Dividend $1.9 (+/-) Accretion $0.3 Balance as of September 30, 2024 $105.1 Preferred Stock of $105.1 million, Net of $5.6 million of Unaccreted Discounts and Issuance Costs 1 Adjusted Gross Profit, Adjusted Gross Profit margin, Adjusted EBITDA and Adjusted EBITDA margin referred to in this presentation are non-GAAP measures. See slide 2 for further details 2 Represents $2.8MM of outstanding cash dividend at June 30, 2024 | Dividend payable for the three months ended 9/30/2024 was paid on 10/01/2024 3rd Quarter (dollars in Millions) 2024 Dividend: Payment in Kind 1.90$ Cash 2.88 4.79 Accretion 0.34 5.12$

 
prioritycommerce.com Section 3 15 Appendix

 
prioritycommerce.com SMB B2B Enterprise Eliminations Total SMB B2B Enterprise Eliminations Total Revenues $ 158.8 $ 22.1 $ 47.1 $ (1.0) $ 227.0 $ 140.2 $ 14.0 $ 35.2 $ (0.4) $ 189.0 Cost of revenue (excluding depreciation and amortization) (123.2) (15.8) (3.0) 1.0 (141.1) (105.8) (8.9) (2.4) 0.4 (116.7) Adjusted Gross Profit 35.6 6.3 44.1 (0.0) 86.0 34.5 5.1 32.8 (0.0) 72.3 Adjusted Gross Profit Margin 22.4% 28.5% 93.6% 37.9% 24.6% 36.6% 93.2% 38.3% Depreciation and amortiztion of revenue generating assets (1.9) (0.7) (1.6) -- (4.2) (1.6) (0.4) (1.0) -- (3.0) Gross profit $ 33.7 $ 5.6 $ 42.4 $ (0.0) $ 81.8 $ 32.9 $ 4.7 $ 31.7 $ (0.0) $ 69.3 Gross profit margin 21.2% 25.4% 90.1% 36.0% 23.5% 33.7% 90.2% 36.7% SMB B2B Enterprise Eliminations Total SMB B2B Enterprise Eliminations Total Revenues $ 457.9 $ 65.4 $ 131.8 $ (2.4) $ 652.6 $ 443.1 $ 19.7 $ 93.9 $ (0.5) $ 556.3 Cost of revenue (excluding depreciation and amortization) (354.8) (47.3) (8.8) 2.4 (408.5) (337.9) (10.3) (6.1) 0.4 (353.9) Adjusted Gross Profit 103.1 18.1 123.0 (0.0) 244.1 105.2 9.4 87.8 (0.0) 202.4 Adjusted Gross Profit Margin 22.5% 27.6% 93.3% 37.4% 23.7% 47.6% 93.5% 36.4% Depreciation and amortiztion of revenue generating assets (5.5) (2.2) (4.4) -- (12.0) (5.0) (0.8) (3.2) -- (9.0) Gross profit $ 97.6 $ 15.9 $ 118.5 $ (0.0) $ 232.1 $ 100.2 $ 8.6 $ 84.6 $ (0.0) $ 193.4 Gross profit margin 21.3% 24.3% 90.0% 35.6% 22.6% 43.6% 90.1% 34.8% Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 (in Millions) (in Millions) Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 (in Millions) (in Millions) 16 The reconciliation of adjusted gross profit to its most comparable GAAP measure is provided below: Appendix 1 – Adjusted Gross Profit1 Reconciliation Note: Certain dollar amounts may not add mathematically due to rounding 1Adjusted Gross Profit, Adjusted Gross Profit margin, Adjusted EBITDA and Adjusted EBITDA margin referred to in this presentation are non-GAAP measures. See slide 2 for further details.

 
prioritycommerce.com SMB B2B Enterprise Corporate Total SMB B2B Enterprise Corporate Total Adjusted EBITDA $ 28.6 $ 1.9 $ 40.9 $ (16.9) $ 54.6 $ 27.6 $ 1.4 $ 29.8 $ (13.8) $ 45.0 Adjusted EBITDA Margin 18.0% 8.7% 86.9% 24.1% 19.7% 9.7% 84.6% 23.8% Interest Expense -- (1.1) -- (22.2) (23.2) -- (0.5) (0.1) (19.4) (20.0) Depreciation and Amortization (6.9) (1.3) (4.3) (1.2) (13.7) (9.1) (0.7) (5.9) (1.5) (17.3) Debt Modification and Extinguishment Expenses -- -- -- (0.0) (0.0) -- -- -- -- -- Selling, General and Administrative (Non-Recurring) -- -- -- (0.7) (0.7) -- -- -- (2.1) (2.1) Non-Cash Stock Based Compensation (0.0) (0.1) (0.0) (1.3) (1.4) (0.1) (0.0) (0.1) (1.3) (1.5) Non-Cash Other Losses -- -- -- -- -- -- -- -- 0.2 0.2 Income (Loss) Before Taxes $ 21.7 $ (0.5) $ 36.6 $ (42.3) $ 15.5 $ 18.4 $ 0.1 $ 23.7 $ (37.9) $ 4.2 Income (Loss) Before Taxes % of Revenue 13.7% (2.1%) 77.7% 6.8% 13.1% 0.8% 67.3% 2.2% SMB B2B Enterprise Corporate Total SMB B2B Enterprise Corporate Total Adjusted EBITDA $ 82.3 $ 5.2 $ 112.9 $ (47.9) $ 152.5 $ 84.4 $ 1.9 $ 77.9 $ (40.5) $ 123.7 Adjusted EBITDA Margin 18.0% 8.0% 85.7% 23.4% 19.1% 9.5% 82.9% 22.2% Interest Expense (0.0) (3.3) -- (62.6) (65.8) (0.0) (0.5) (0.3) (54.7) (55.5) Depreciation and Amortization (24.1) (4.0) (12.4) (3.7) (44.2) (27.6) (0.8) (18.6) (6.4) (53.3) Debt Modification and Extinguishment Expenses -- -- -- (8.7) (8.7) -- -- -- -- -- Selling, General and Administrative (Non-Recurring) -- -- -- (2.1) (2.1) -- -- -- (4.4) (4.4) Non-Cash Stock Based Compensation (0.0) (0.3) (0.1) (4.5) (4.9) (0.4) (0.2) (0.2) (4.3) (5.2) Non-Cash Other Losses -- -- -- -- -- -- -- -- 0.0 0.0 Income (Loss) Before Taxes $ 58.2 $ (2.4) $ 100.4 $ (129.4) $ 26.8 $ 56.5 $ 0.4 $ 58.8 $ (110.3) $ 5.3 Income (Loss) Before Taxes % of Revenue 12.7% (3.6%) 76.2% 4.1% 12.7% 2.0% 62.6% 1.0% Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 ($ in Millions) ($ in Millions) Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 ($ in Millions) ($ in Millions) 17 The reconciliation of adjusted EBITDA to its most comparable GAAP measure is provided below: Appendix 2 – Adjusted EBITDA1 Reconciliation Note: Certain dollar amounts may not add mathematically due to rounding 1Adjusted Gross Profit, Adjusted Gross Profit margin, Adjusted EBITDA and Adjusted EBITDA margin referred to in this presentation are non-GAAP measures. See slide 2 for further details.

 
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