Priority Technology (PRTH) 7 Nov 24 2024 Q3 Earnings call transcript

In a recent earnings call, Priority Technology Holdings, a leading provider of unified commerce solutions, reported record financial results for the third quarter of 2024, showcasing the company's continued growth and strong positioning in the market. The call, led by Chairman and CEO, Tom Priore, and CFO, Tim O'Leary, highlighted the company's robust performance across all segments, including SMB Acquiring, B2B Payables, and Enterprise Payments.

Key Themes and Trends

Priority Technology Holdings has seen consistent growth across all business segments, with a particular emphasis on its unified commerce platform that delivers sophisticated product solutions and dedicated business teams focused on partner success. The company's diverse business lines have benefited from historically elevated interest rates and have shown resilience in evolving macroeconomic environments. As of the end of Q3, Priority Technology Holdings boasts over 1.1 million customer accounts operating on its commerce platform, processing nearly $127 billion in annual transaction volume and managing over $1.1 billion in average daily account balances.

Financial Highlights

Revenue for the third quarter reached a record $227 million, marking a more than 20% increase from the prior year. This growth was reflected in a similar increase in adjusted gross profit to $86 million and a 22% improvement in adjusted EBITDA to $54.6 million. Although adjusted gross profit margins decreased by 40 basis points from the prior year, this was largely attributed to the acquisition of Plastiq during Q3. Excluding the partial quarter impact, adjusted gross profit margins actually increased by 16 basis points from last year.

Looking Ahead

For the full year 2024, Priority Technology Holdings expects to achieve revenue of $875 million to $883 million, representing an increase of approximately 16% over 2023. More significantly, the company has raised its adjusted EBITDA guidance to $200 million to $204 million, a 18% to 21% increase over 2023. These optimistic projections are based on the company's strong year-to-date performance and its continued improvement in operating margins.

Investor and Analyst Insights

During the call, analysts posed several questions, touching on topics such as the impact of the recent election results on the company's outlook and potential revenue drivers for 2025. The company's management team provided insightful responses, emphasizing their strategic positioning and optimism for the future.

Impact of Election Results

Regarding the recent election results, Priority Technology Holdings expressed confidence in its ability to navigate the changing macroeconomic environment. The company expects to capitalize on potential regulatory shifts, particularly in the debt resolution sector, which could lead to increased market opportunities.

Revenue Drivers for 2025

For the year ahead, Priority Technology Holdings identified several revenue drivers, including the continued growth of its B2B segment and the potential for increased adoption of embedded finance solutions. The company's strategic focus on innovation and expanding its unified commerce offerings positions it well for future growth.

Conclusion

Priority Technology Holdings' strong third quarter performance and optimistic outlook for the future underscore the company's strategic positioning and resilience in the face of economic uncertainty. With a focus on innovation, customer-centric solutions, and a robust financial performance, Priority Technology Holdings is poised for continued success in the evolving landscape of commerce and payments.