0001653558false00016535582024-05-092024-05-09

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
 
May 9, 2024
Date of Report (Date of earliest event reported)
PRTH-Black-H-RGB (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,Georgia30004
(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 classTrading SymbolName of each exchange on which registered
Common stock, $0.001 par valuePRTHNasdaq 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 May 9, 2024, Priority Technology Holdings, Inc. ("Priority") issued a press release announcing its financial results for the quarter ended March 31, 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 May 9, 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 March 31, 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 NumberDescription
104The 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: May 9, 2024
 
  
 PRIORITY TECHNOLOGY HOLDINGS, INC.
  
 By: /s/ Timothy O'Leary
 Name: Timothy O'Leary
 Title: Chief Financial Officer



EXHIBIT 99.1                        
image_0.jpg

Priority Investor Inquiries:
Chris Kettmann
chris.kettmann@dentonsglobaladvisors.com
(773) 497-7575

Priority Technology Holdings, Inc. Announces First Quarter Financial Results
Strong First Quarter Growth Driven by Performance Across Unified Commerce Platform
ALPHARETTA, GA - May 9, 2024 -- Priority Technology Holdings, Inc. (NASDAQ: PRTH) ("Priority" or the "Company"), the platform for unified commerce that delivers integrated payments and banking services at scale, today announced its first quarter 2024 financial results including strong year-over-year diversified revenue growth.
Highlights of Consolidated Results
First Quarter 2024 Compared with First Quarter 2023
Financial highlights of the first quarter of 2024 compared with the first quarter of 2023, are as follows1:
•Revenue of $205.7 million increased 11.2% from $185.0 million
•Adjusted gross profit (a non-GAAP measure2) of $76.4 million increased 21.2% from $63.1 million
•Adjusted gross profit margin (a non-GAAP measure2) of 37.1% increased 300 basis points from 34.1%
•Operating income of $28.0 million increased 66.3% from $16.8 million
•Adjusted EBITDA (a non-GAAP measure2) of $46.3 million increased 23.1% from $37.6 million
(1)Certain amounts/percentages may not add mathematically 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 delivered record results in the first quarter on strong performance in each business segment of our unified commerce platform," said Tom Priore, Chairman & CEO of Priority. "Our growth in the quarter and ongoing consistency reinforces the unique attributes of our operating infrastructure, diversity of our business segments and robust demand for our products. We are laser focused on the continued innovation of our SaaS Payments and Banking suite of services and Accelerated Commerce Engine and are eager to meet the evolving needs of our growing portfolio of customers and enterprise partners."
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Full Year 2024 Financial Guidance
Priority's outlook remains strong and we are reaffirming our full year 2024 guidance:
•Revenue forecast to range between $875 million to $890 million, a growth rate of 16% to 18%, compared to fiscal 2023 results
•Adjusted EBITDA (a non-GAAP measure) forecast to range between $193 million to $198 million, a growth rate of 15% to 18% compared to fiscal 2023 results
•Adjusted gross profit (a non-GAAP measure) forecast to range between $325 million and $335 million, a growth rate of 18% to 22% compared to fiscal 2023 results

Conference Call
Priority's leadership will host a conference call on Thursday, May 9, 2024 at 11:00 a.m. EDT to discuss its first 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/ievzjr9d 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 May 16, 2024 at 2:00 p.m. EDT. To listen to the audio replay, dial (877) 344-7529 or (412) 317-0088 and enter conference ID number 4087946. 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 March 31,
20242023
Revenues$205,719 $185,028 
Cost of revenue (excluding depreciation and amortization)(129,298)(121,966)
Adjusted gross profit$76,421 $63,062 
Adjusted gross profit margin37.1 %34.1 %
Depreciation and amortization of revenue generating assets(3,900)(2,959)
Gross profit$72,521 $60,103 
Gross profit margin35.3 %32.5 %

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.

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

(in thousands)Three Months Ended March 31,
20242023
Net income (loss)$5,193 $(506)
Interest expense20,880 17,699 
Income tax expense (benefit)2,582 (133)
Depreciation and amortization15,253 18,048 
EBITDA43,908 35,108 
Selling, general and administrative (non-recurring)798 437 
Non-cash stock-based compensation1,634 1,936 
Non-cash other losses— 159 
Adjusted EBITDA$46,340 $37,640 
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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 March 31,
20242023
Selling, general and administrative expenses (non-recurring):
Certain legal fees450 376 
Professional, accounting and consulting fees189 61 
Other expenses, net159 — 
$798 $437 

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 1,000,000 active customers across its SMB, B2B and Enterprise channels processing $120 billion in annual transaction volume and providing administration for $980 million in deposits. Priority’s purpose-built technology enables clients to collect, store, lend and send money and provides customers the acceptance and AP payment applications and Passport financial tools that best optimize their cash flow and maximize working capital. 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 Loss
(in thousands, except per share amounts)

Three Months Ended March 31,
20242023
Revenues$205,719$185,028
Operating expenses
Cost of revenue (excludes depreciation and amortization)129,298121,966
Salary and employee benefits22,15019,048
Depreciation and amortization15,25318,048
Selling, general and administrative10,9959,118
Total operating expenses177,696168,180
Operating income28,02316,848
Other (expense) income
Interest expense(20,880)(17,699)
Other income, net632212
Total other expense, net(20,248)(17,487)
Income (loss) before income taxes7,775(639)
Income tax expense (benefit)2,582(133)
Net income (loss)5,193(506)
Less: Dividends and accretion attributable to redeemable senior preferred stockholders(12,662)(11,295)
Less: Return on redeemable NCI in consolidated subsidiary(581)—
Net loss attributable to common stockholders(8,050)(11,801)
Other comprehensive loss
Foreign currency translation adjustments(13)24 
Comprehensive loss$(8,063)$(11,777)
Loss per common share:
Basic and diluted$(0.10)$(0.15)
Weighted-average common shares outstanding:
Basic and diluted78,021 78,133 


6

Priority Technology Holdings, Inc.
Unaudited Consolidated Balance Sheets

(in thousands)
March 31, 2024December 31, 2023
Assets
Current assets:
Cash and cash equivalents$34,290 $39,604 
Restricted cash12,658 11,923 
Accounts receivable, net of allowances67,137 58,551 
Prepaid expenses and other current assets13,699 13,273 
Current portion of notes receivable, net of allowance1,972 1,468 
Settlement assets and customer/subscriber account balances752,590 756,475 
Total current assets882,346 881,294 
Notes receivable, less current portion4,549 3,728 
Property, equipment and software, net48,120 44,680 
Goodwill376,112 376,103 
Intangible assets, net261,658 273,350 
Deferred income taxes, net24,405 22,533 
Other noncurrent assets12,767 13,649 
Total assets$1,609,957 1,615,337 
Liabilities, Redeemable Senior Preferred Stock, Redeemable NCI, and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued expenses$49,329 $52,643 
Accrued residual commissions35,965 33,025 
Customer deposits and advance payments4,090 3,934 
Current portion of long-term debt6,712 6,712 
Settlement and customer/subscriber account obligations753,850 755,754 
Total current liabilities849,946 852,068 
Long-term debt, net of current portion, discounts and debt issuance costs631,352 631,965 
Other noncurrent liabilities16,704 18,763 
Total liabilities1,498,002 1,502,796 
Redeemable senior preferred stock, net of discounts and issuance costs264,240 258,605 
Redeemable non-controlling interests in consolidated subsidiary5,837 — 
Stockholders' deficit:
Preferred stock— — 
Common stock76 77 
Treasury stock, at cost(18,491)(12,815)
Additional paid-in capital— — 
Accumulated other comprehensive loss(42)(29)
Accumulated deficit(141,412)(134,951)
Total stockholders' deficit attributable to stockholders of PRTH(159,869)(147,718)
Non-controlling interest1,747 1,654 
Total stockholders' deficit(158,122)(146,064)
Total liabilities, redeemable senior preferred stock, redeemable NCI and stockholders' deficit$1,609,957 $1,615,337 

7

Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Cash Flows

(in thousands)

Three Months Ended March 31,
20242023
Cash flows from operating activities:
Net income (loss)$5,193 $(506)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of assets15,253 18,048 
Stock-based, ESPP and incentive units compensation1,633 1,936 
Amortization of debt issuance costs and discounts1,065 903 
Deferred income tax(1,872)(5,716)
Change in contingent consideration972 229 
Other non-cash items, net(259)14 
Change in operating assets and liabilities:
Accounts receivable (8,339)81 
Prepaid expenses and other current assets(425)481 
Income taxes (receivable) payable— 8,666 
Notes receivable(266)(163)
Accounts payable and other accrued liabilities1,590 3,916 
Customer deposits and advance payments157 250 
Other assets and liabilities, net(1,395)(462)
Net cash provided by operating activities13,307 27,677 
Cash flows from investing activities:
Additions to property, equipment and software(6,610)(5,046)
Notes receivable, net(1,059)178 
Acquisitions of assets and other investing activities— (2,715)
Net cash used in investing activities(7,669)(7,583)
Cash flows from financing activities:
Repayments of long-term debt(1,678)(1,550)
Repayments of borrowings under revolving credit facility— (6,000)
Repurchases of Common Stock and shares withheld for taxes (421)(777)
Dividends paid to redeemable senior preferred stockholders(7,027)(11,435)
Settlement and customer/subscriber accounts obligations, net1,918 79,258 
Payment of contingent consideration related to business combination(3,071)(1,959)
Net cash (used in) provided by financing activities(10,279)57,537 
Net change in cash and cash equivalents and restricted cash:
Net (decrease) increase in cash and cash equivalents, and restricted cash(4,641)77,631 
Cash and cash equivalents and restricted cash at beginning of period796,223 560,610 
Cash and cash equivalents and restricted cash at end of period$791,582 $638,241 
Reconciliation of cash and cash equivalents, and restricted cash:
Cash and cash equivalents$34,290 $15,882 
Restricted cash12,658 11,012 
Cash and cash equivalents included in settlement assets and customer/subscriber account balances744,634 611,347 
Total cash and cash equivalents, and restricted cash$791,582 $638,241 


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Priority Technology Holdings, Inc.
Unaudited Reportable Segments' Results

(in thousands)
Three Months Ended March 31,
 20242023
SMB Payments:  
Revenue$143,751 $154,933 
Operating expenses131,368 142,922 
Operating income$12,383 $12,011 
Operating margin8.6 %7.8 %
Depreciation and amortization$8,802 $10,846 
Key indicators:
Merchant bankcard processing dollar value$14,788,095 $15,220,715 
Merchant bankcard transaction count175,228 163,406 
B2B Payments:
Revenue$21,115 $2,786 
Operating expenses21,908 3,635 
Operating loss$(793)$(849)
Operating margin(3.8)%(30.5)%
Depreciation and amortization$1,640 $125 
Key indicators:
B2B issuing dollar volume$227,811 $198,456 
B2B issuing transaction count240 280 
Enterprise Payments:
Revenue$40,853 $27,309 
Operating expenses15,306 14,646 
Operating income$25,547 $12,663 
Operating margin62.5 %46.4 %
Depreciation and amortization$4,356 $6,690 
Key indicators:
Average billed clients703,887 465,219 
Average monthly new enrollments53,551 45,948 
Operating income of reportable segments$37,137 $23,825 
Less: Corporate expense(9,114)(6,977)
Consolidated operating income$28,023 $16,848 
Corporate depreciation and amortization$455 $387 


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May 9, 2024 Priority Technology Holdings, Inc. (Nasdaq: PRTH) Supplemental Slides: 1Q 2024 Earnings Call

 
Disclaimer 2 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 Adjusted Gross Profit, 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. See Appendix 1 of this presentation for a reconciliation of Adjusted Gross Profit to Gross Profit as per GAAP and Priority’s earnings press release for more details.

 
Key 1st Quarter 2024 Highlights 3 1 Adjusted Gross Profit, Adjusted Gross Profit margin and Adjusted EBITDA referred to in this presentation are non-GAAP measures. See slide 2 for further details. $96 $140 $168 $193 $5 2021 2022 2023 2024 $515 $664 $756 $875 $15 2021 2022 2023 2024 ~$120B+ in LTM Total Volume Q1 2024 RESULTS ~$980MM Deposits NET REVENUE +11%a ADJ GROSS PROFIT1 +21% ADJ EBITDA1 +23% OPERATING INCOME +66% Q1 2024 KEY METRICS CONTINUED STRONG MOMENTUM ~1MM Total Accounts TOTAL REVENUE (In Millions) ADJUSTED EBITDA1 (In Millions) $875 - $890 $193 - $198 Guidance Range Guidance Range

 
Q1 2024 Consolidated Results 4 1 Adjusted Gross Profit, Adjusted Gross Profit margin and Adjusted EBITDA referred to in this presentation are non-GAAP measures. See slide 2 for further details. Revenue increased 11% to $205.7 million Adj Gross Profit1 increased 21% to $76.4 million Adj Gross Profit margin1 increased 300 basis points to 37.1% Adjusted EBITDA1 increased 23% to $46.3 million $63.1M $76.4M 34.1% 37.1% $37.6M $46.3M $185.0M $205.7M Q1 23 Q1 24 Q1 23 Q1 24 Q1 23 Q1 24Q1 23 Q1 24 11% 21% 300BP 23%

 
Unified Commerce Platform 5 PayablesAcquiring Banking A PB Full featured POS & Merchant Acquiring Solutions that Accelerate your Cash Flow & work seamlessly with our … … Passport Financial Toolset that automates reconciliation, streamlines financial operations & provides full transparency to surplus cash … … helping you optimize your Working Capital by leveraging our integrated bill payment & financing solutions. Accelerated Commerce Engine Is a single API for Acquiring, Banking & Payable solutions to accelerate your commerce network that can easily integrate into your enterprise systems ACE Play Video Play Video Play Video Play Video

 
Financial Results 6

 
SMB Highlights – 1Q 2024 7 1 Adjusted Gross Profit, Adjusted Gross Profit margin and Adjusted EBITDA referred to in this presentation are non-GAAP measures. See slide 2 for further details. Revenue $143.8MM (7%) YoY Adj. Gross Profit1 $31.6MM (11%) YoY Adj. Gross Profit Margin1 22.0% (90) Bps YoY ➢ Revenue is 7% lower than Q1 2023 (up over 8% y-o-y excl. large reseller) but improved 3% sequentially from Q4 2023 ➢ Bankcard $ Volumes decreased 3% to $14.8 billion (up 8% y-o-y excl. large reseller) ➢ New monthly boards averaged 4.3K during quarter 1Q 2024 Segment Highlights Operating Income $12.4MM +3% YoY

 
B2B Highlights – 1Q 2024 8 1 Adjusted Gross Profit, Adjusted Gross Profit margin and Adjusted EBITDA referred to in this presentation are non-GAAP measures. See slide 2 for further details. Revenue $21.1MM +658% YoY Adj. Gross Profit1 $6.2MM +220% YoY Adj. Gross Profit Margin1 29.6% (4,040) bps YoY ➢ Revenue growth driven by both Plastiq ($17.3 million) and CPX (+61% y-o-y) ➢ Adjusted Gross Profit Margin declined y-o-y but improved 470 bps from Q4 2023 1Q 2024 Segment Highlights Operating Income ($0.8)MM +7% YoY

 
Enterprise Highlights – 1Q 2024 9 1 Adjusted Gross Profit, Adjusted Gross Profit margin and Adjusted EBITDA referred to in this presentation are non-GAAP measures. See slide 2 for further details. Revenue $40.9MM +50% YoY Adj. Gross Profit1 $38.6MM +50% YoY Adj. Gross Profit Margin1 94.5% +50 bps YoY 1Q 2024 Segment Highlights Operating Income $25.5MM +102% YoY ➢ CFTPay Avg Monthly New Enrollments of 54K increased 17% from 46K ➢ CFTPay Avg Number of Billed Clients increased 51% to 704K from 465K ➢ Increases in Passport program managers, deposit balances and interest rates continues to drive growth

 
Consolidated Operating Expenses – 1Q 2024 10 1 Adjusted Gross Profit, Adjusted Gross Profit margin and Adjusted EBITDA referred to in this presentation are non-GAAP measures. See slide 2 for further details. Salaries & Benefits $22.2MM +16% YoY SG&A $11.0MM +21% YoY Depreciation & Amortization $15.3MM (15%) YoY ➢ Higher Salaries and Benefits expense driven by merit increases, certain performance based non-recurring bonuses, and headcount adds related to the Plastiq acquisition ➢ Increase in SG&A expenses primarily due to certain software maintenance expenses incurred to further support the overall growth of the Company 1Q 2024 Highlights

 
Adjusted EBITDA1 Walk 11 1 Adjusted Gross Profit, Adjusted Gross Profit margin and Adjusted EBITDA referred to in this presentation are non-GAAP measures. See slide 2 for further details. Adjusted EBITDA experienced strong growth in Q1 2024 ➢ Q1 2024 Adjusted EBITDA of $46.3 million increased 23% from $37.6 million in Q1 2023 EBITDA Walk (in Millions) 2024 2023 LTM Q1 Q1 Q1 2024 Consolidated net income (loss) (GAAP) 5.2$ (0.5)$ 4.4$ Add: Interest expense 20.9 17.7 79.3 Add: Depreciation and amortization 15.3 18.0 65.6 Add: Income tax expense (benefit) 2.6 (0.1) 11.2 EBITDA (non-GAAP) 43.9 35.1 160.5 Further adjusted by: Add: Non-cash stock-based compensation 1.6 1.9 6.5 Add: Non-recurring expenses: Gain on sale of PRET/Payix, net of NCI - - 0.1 Legal, professional, accounting and other SG&A 0.8 0.6 10.0 Adjusted EBITDA (non-GAAP) 46.3$ 37.6$ 177.0$

 
Capital Structure & Liquidity 12 1 Adjusted Gross Profit, Adjusted Gross Profit margin and Adjusted EBITDA referred to in this presentation are non-GAAP measures. See slide 2 for further details. 2 Represents $7.1MM of outstanding cash dividend net of $7.0MM payment of the cash portion of dividend outstanding at 12/31/2023 | Dividend payable for the three months ended 03/31/2024 was paid on 04/01/2024 Outstanding Debt Balance as of December 31, 2023 $654.4 (+/-) Net Revolver Borrowings -- (+/-) Net Term Loan Borrowings ($1.7) Balance as of March 31, 2024 $652.7 Senior Redeemable Preferred Stock Balance as of December 31, 2023 $258.6 (+/-) Dividend Payable2 $0.1 (+/-) PIK Dividend $4.7 (+/-) Accretion $0.9 Balance as of March 31, 2024 $264.2 Total Debt of $652.7 million at end of Q1 2024 declined from $654.4 million in Q4 2023 ➢ Net Debt of $618.4 million increased $3.6 million compared to Q4 2023 due to lower cash balances ➢ Revolver Capacity at the end of Q1 2024 was $65.0 million ➢ LTM Adj. EBITDA1 of $177.0 million at end of Q1 2024 Preferred Stock of $264.2 million, Net of $16.0 million of Unaccreted Discounts and Issuance Costs 1st Quarter (dollars in Millions) 2024 Dividend: Payment in Kind 4.70$ Cash 7.12 11.82 Accretion 0.84 12.66$

 
Pending Recapitalization (Q2 2024) 13 1 Adjusted Gross Profit, Adjusted Gross Profit margin and Adjusted EBITDA referred to in this presentation are non-GAAP measures. See slide 2 for further details. Sources (est.) New $70MM Revolver -- New $835MM Term Loan $835.0 Cash on Hand $0.7 Total Sources $835.7 Pro Forma Capitalization Q1 2024 Adjustments PF Q1 2024 Unrestricted Cash $34.3 ($0.7) $33.6 Revolver -- -- -- Term Loan $652.7 $182.3 $835.0 Senior Debt $652.7 $835.0 Preferred Equity $280.2 ($170.0) $110.2 Total Capitalization $932.9 $945.2 LTM Adj. EBITDA1 as of Q1 2024 $177.0 $177.0 Senior Leverage, Net 3.49x 4.53x Senior + Pref Leverage, Net 5.08x 5.15x Uses (est.) Refinance Senior Debt $652.7 Redeem Preferred Equity $170.0 Transaction Fees $13.0 Total Uses $835.7 Refinance Existing Debt of $652.7 million and Redeem approximately $170 million of Preferred Equity with new $835.0 million Term Loan in Q2 2024 – targeted to close in May 2024 (subject to legal documentation) ➢ Lower interest rate on the Term Loan by 100 bps ➢ Improve annualized free cash flow by over $5.5 million with lower cash dividend on Preferred Equity ➢ Extend debt maturity profile by 4 years (2031 maturity of Term Loan)

 
Appendix

 
Appendix 1 – Adjusted Gross Profit Reconciliation The reconciliation of adjusted gross profit to its most comparable GAAP measure is provided below: SMB B2B Enterprise Total SMB B2B Enterprise Total Revenues $ 143.8 $ 21.1 $ 40.9 $ 205.7 $ 154.9 $ 2.8 $ 27.3 $ 185.0 Cost of revenue (excluding depreciation and amortization) (112.2) (14.9) (2.2) (129.3) (119.5) (0.8) (1.6) (122.0) Adjusted Gross Profit 31.6 6.2 38.6 76.4 35.4 2.0 25.7 63.1 Adjusted Gross Profit Margin 22.0% 29.6% 94.5% 37.1% 22.9% 70.0% 94.0% 34.1% Depreciation and amortiztion of revenue generating assets (1.8) (0.8) (1.4) (3.9) (1.6) (0.1) (1.2) (3.0) Gross profit $ 29.8 $ 5.5 $ 37.2 $ 72.5 $ 33.8 $ 1.9 $ 24.5 $ 60.1 Gross profit margin 20.7% 25.9% 91.2% 35.3% 21.8% 66.5% 89.6% 32.5% (in Millions) (in Millions) Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

 
v3.24.1.u1
Cover
May 09, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date May 09, 2024
Entity Registrant Name Priority Technology Holdings, Inc.
Entity Incorporation, State or Country Code DE
Entity File Number 001-37872
Entity Tax Identification Number 47-4257046
Entity Address, Address Line One 2001 Westside Parkway
Entity Address, Address Line Two Suite 155
Entity Address, City or Town Alpharetta,
Entity Address, State or Province GA
Entity Address, Postal Zip Code 30004
City Area Code 800
Local Phone Number 935-5961
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common stock, $0.001 par value
Trading Symbol PRTH
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001653558
Amendment Flag false
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