Priority's Q2 2025: Unpacking Contradictions in SMB Growth and Capital Strategy

Revenue Growth and Profitability:
- Priority Technology Holdings reported a 9% increase in net revenue for Q2 2025, reaching $239.8 million, along with a 13% increase in adjusted gross profit to $92.4 million and a 9% improvement in adjusted EBITDA to $56 million.
- The growth was driven by strong performance across all business segments, particularly in B2B and Enterprise segments, and a favorable shift in business mix towards higher-margin recurring revenues.

SMB Segment Performance:
- The SMB segment generated $163.2 million in revenue, which is 5.2% higher than the previous year's second quarter, although there were headwinds from attrition of historical residual purchases and lower specialized acquiring revenue.
- The core portfolio of the SMB segment grew by 9.5%, driven by strong performance from larger ISOs, while new monthly board averages remained consistent.

B2B and Enterprise Segment Growth:
- The B2B segment saw a 14.4% revenue increase, while the Enterprise segment grew by 20.6%, driven by strong enrollment trends, increases in billed clients, and higher account balances.
- This growth was attributed to increased focus on larger customers and bank referral partners, as well as strong performance in CFTPay and Passport, with a significant contribution from recurring revenue sources.

Adjusted EBITDA and Liquidity:
- Priority's adjusted EBITDA for the LTM period ended June 30th was $213.7 million, representing a $4.5 million sequential quarterly increase from the prior period.
- The company's balance sheet showed $120.6 million in available liquidity, including $70 million of borrowing capacity, which was raised through the issuance of new senior credit facilities to refinance existing debt on favorable terms.