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Did Priority Technology beat or miss consensus estimates last quarter?

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- **Revenue Growth**: Q3 2025 revenue up 6% to $241.4M, with Payables/Treasury Solutions driving 14%/18% growth. Full year guide $950-965M (+8-10%).
- **Margin Expansion**: Gross profit margin 39.2% (vs. 38.2% Q2), Payables/Treasury 63% of gross profit.
- **Strategic Acquisitions**: $50M residual financing facility and DMS acquisition, deposits under admin +$200M to $1.6B.
- **Debt Reduction**: $15M Q3 debt paydown, targeting 4.35x leverage with $1.17/share 2026 free cash flow.
- **Risk Management**: Merchant Solutions Q3 same-store sales down 2%, but Payables/Treasury offsetting with 28.5% margins.

**【CEO Summary Section】**
- **Revenue Growth**: Q3 2025 revenue of $241.4 million (+6% YoY), driven by Payables & Treasury Solutions (+14% and +18% YoY). Full year guidance revised to $950-965 million (+8-10%).
- **Segment Reclassification**: Shifted to Merchant Solutions, Payables, and Treasury Solutions to reflect evolving customer base. Payables/Treasury now 63% of gross profit (vs. 40% in 2023).
- **Strategic Moves**: Acquired Boom Commerce and DMS, launched $50M residual financing facility. Q3 deposits under admin grew $200M to $1.6B.

**【CFO Financial Commentary】**
- **Gross Profit Margin**: 39.2% (vs. 38.2% Q2, +140bps YoY). Payables/Treasury margins 28.5% vs. 21.9% for Merchant Solutions.
- **Expense Control**: Operating expenses +20.2% YoY ($26.1M) due to acquisitions, but free cash flow $29M/Q3 ($71M LTM).
- **Debt Management**: Reduced net debt by $15M Q3, targeting 4.35x leverage. 2026 free cash flow ~$1.17/share.

**【Q&A Highlights】**
- **Merchant Solutions Weakness**: Q3 same-store sales down in restaurants, construction, and wholesale trade. Residual portfolio drag moderating to $2M/Q4 vs. $4.5M H1.
- **2026 Outlook**: High single-digit revenue growth, 75-100bps margin expansion. Treasury Solutions +20%+ growth from CFTPay and Passport programs.
- **Expense Trends**: Salaries +20% YoY due to acquisitions, but moderating to $1M/Q4. SG&A +26.7% YoY from legal and marketing.

Priority Technology Holdings, Inc. (PRTH) Q3 2025 Earnings Call Transcript

- **Revenue Beat**: Q2 $239.8M (+9% YoY), narrowing full-year guidance to $970M-$990M. 
- **Profit Expansion**: Adjusted EBITDA $56M (+9% YoY), with 10-12.5% growth expected. 
- **Segment Strength**: B2B (+14%), Enterprise (+21%) drive margin expansion to 38.5%. 
- **Debt Optimization**: $1B term loan refinancing saves $7M/year. 
- **Q2 Momentum**: 1.6M customer accounts, $140B LTM transaction volume. 
- **Countercyclical Play**: B2B payables and CFTPay enrollment accelerate in uncertain macro environment.

**【CEO Summary Section】**
- **Revenue Growth**: Q2 revenue of $239.8M (+9% YoY), with full-year guidance narrowed to $970M-$990M, up from $965M-$1B. 
- **Profit Expansion**: Adjusted EBITDA of $56M (+9% YoY), with full-year guidance midpoint at $225M. 
- **Customer Growth**: 1.6M total customer accounts (+23% QoQ), LTM transaction volume $140B (+$5B QoQ). 
- **Connected Commerce Platform**: Emphasized bundled payments/banking solutions for SMBs, B2B payables, and Enterprise segments. 
- **Guidance Update**: 10-12.5% top-line growth, driven by B2B (+14% Q2) and Enterprise (+21% Q2) segments. 

**【CFO Financial Commentary】**
- **Segment Performance**: 
  - **SMB**: $163.2M (+5% YoY), 62% of adjusted gross profit from recurring revenue. 
  - **B2B**: $25M (+14% YoY), 29.1% gross margin (vs 25% last year). 
  - **Enterprise**: $52.7M (+21% YoY), 94.4% gross margin. 
- **Cost Management**: Salaries up 22%, but B2B opex down 13% YoY. 
- **Debt Refinancing**: $1B term loan at -100bps rate, saving $7M/year. 
- **Liquidity**: $120.6M available, net leverage 4.1x (down from 4.2x). 

**【Q&A Key Highlights】**
- **SMB Growth Drivers**: 
  - Core portfolio +9.5% YoY, offsetting 4-5% drag from residual purchases. 
  - Larger ISOs adding volume, same-store sales decline moderate. 
- **2025 Guidance Assumptions**: 
  - 2 rate cuts, moderating SMB headwinds, new customer wins. 
  - 13.5% H2 growth implied vs 9% YTD. 
- **Capital Allocation**: 
  - Prefunded tuck-in acquisition, focus on deleveraging. 
  - No plans to use share repurchase authorization. 
- **Macroeconomic Resilience**: 
  - B2B payables (+21% Q2) and CFTPay enrollment accelerate in uncertain environments. 
  - SMB portfolio resilient due to focus on essential retail categories (auto parts, gas stations).

Priority Technology (PRTH)-7 Aug 25-2025 Q2 Earnings call transcript

- **Q1 Growth Outperforms Expectations**: 9% revenue increase, 11% EBITDA expansion, and $5 billion transaction volume growth reflect strong execution across segments.
- **Countercyclical Strength**: 62% of gross profit from recurring revenue, with B2B (+12%) and Enterprise (+22%) leading growth.
- **Leverage Reduction**: Net debt down 4.2x, free cash flow of $80 million+ to support deleveraging and strategic opportunities.
- **Tariff Mitigation Success**: B2B supplier-funded revenue up 35% YoY, driven by companies optimizing payables to offset tariffs.
- **Cloud Efficiency Gains**: Annualized savings of $1 million+ from public cloud migration, enhancing operational scalability.


**【CEO Summary Section】**
- **Q1 2025 Financial Highlights**: Revenue grew 9% YoY to $224.6 million, driven by B2B and Enterprise segments. Adjusted EBITDA increased 11% to $51.3 million, with margins expanding 170 basis points. Annual transaction volume reached $135 billion, up $5 billion YoY.
- **Unified Commerce Platform**: Streamlines collecting, storing, lending, and sending money. CFTPay and Passport account balances rose to $1.3 billion, reflecting countercyclical growth in payables solutions.
- **2025 Guidance**: Revenue expected to grow 10%-14% to $965-$1 billion, with adjusted EBITDA of $220-$230 million. Confidence driven by higher-margin segments and recurring revenue (62% of adjusted gross profit).

**【CFO Financial Commentary】**
- **Segment Performance**: 
  - **SMB**: Revenue $151.7 million (+5.3%), adjusted gross profit $33.1 million (+3.9%). Margins 21.8%, impacted by residual portfolio attrition.
  - **B2B**: Revenue $23.9 million (+12.1%), adjusted gross profit $7.3 million (+17.8%). Supplier-funded revenue grew 35% YoY.
  - **Enterprise**: Revenue $50.1 million (+22.2%), driven by CFTPay enrollment and account balance growth.
- **Liquidity & Leverage**: Debt reduced to $935.5 million, net leverage 4.2x (vs. 4.3x at year-end 2024). Free cash flow expected ~$80 million, prioritizing debt reduction and strategic M&A.
- **Expense Management**: SG&A up 16.4% YoY to $25.8 million, driven by cloud migration and marketing. Operating expenses in B2B down 14% YoY, reflecting operational efficiency.

**【Q&A Key Takeaways】**
- **Economic Resilience**: 62% of adjusted gross profit from recurring revenue, mitigating transactional volatility. SMB portfolio skewed toward resilient end markets (restaurants, retail, professional services).
- **Tariff Impact**: B2B segment (+12% YoY) benefits from companies optimizing payables to offset tariffs. Supplier-funded revenue growth highlights demand for cash flow solutions.
- **Cloud Migration**: $1 million+ annualized savings expected from public cloud transition, enhancing scalability and engineering efficiency.
- **Material Weakness Update**: Substantial progress in remediating data ingestion controls, with formal certification pending 2025 audit.


Priority Technology (PRTH)-6 May 25-2025 Q1 Earnings call transcript

- **FY2024 Record Growth**: Revenue $879.7M (+16%), EBITDA $204.3M (+21%). Q4 revenue $227.1M (+14%), EBITDA $51.7M (+16%).
- **2025 Outlook**: Target $965M-$1B revenue (+10%-14%), $220M-$230M EBITDA (+8%-13%). Enterprise (+27%) and B2B (+11%) lead growth.
- **Strategic Priorities**: Cloud migration ($4M OpEx shift), debt deleveraging (<4x net leverage), and M&A readiness.
- **Segment Highlights**: Enterprise EBITDA +27%, B2B EBITDA +100%, SMB EBITDA +6% despite margin headwinds.
- **Risk Management**: Conservative deposit growth assumptions, $2.7M SOX costs, and 100bps rate sensitivity in Q4.


**【CEO Summary Section】**
- **Record Financial Performance**: FY2024 revenue reached $879.7M (+16% YoY), adjusted EBITDA $204.3M (+21%), and transaction volume $130B. Q4 revenue $227.1M (+14% YoY), EBITDA $51.7M (+16% YoY).
- **2025 Guidance**: Revenue $965M-$1B (+10%-14%), EBITDA $220M-$230M (+8%-13%). Growth driven by B2B (+10%+), Enterprise (+27%), and SMB (+11%).
- **Strategic Focus**: Unified commerce platform, cross-selling payables/banking, and cloud migration for efficiency. Debt paydown ($10M Q1) and M&A readiness for 4x net leverage target.

**【CFO Financial Commentary】**
- **Segment Growth**: 
  - **Enterprise**: Q4 revenue $48.7M (+27% YoY), EBITDA $42M (+27%). Driven by enrollment trends and higher balances.
  - **B2B**: Q4 revenue $23.7M (+11%), EBITDA $2.4M (+100%). Plastiq +8%, CPX +26%.
  - **SMB**: Q4 revenue $155.7M (+11%), EBITDA $26.6M (+6%). Margins impacted by inventory write-offs ($3.5M) and legacy portfolio runoff.
- **Cost Shift**: $4M annualized OpEx increase from CapEx-to-OpEx migration (e.g., cloud transition). 2025 EBITDA growth tempered by $2.7M SOX compliance costs.
- **Liquidity**: $70M revolver availability, $58.6M cash. Preferred stock redeemed ($2.65M dividend), reducing interest burden.

**【Q&A Key Themes】**
- **Capital Allocation**: Debt paydown ($10M Q1) balanced with M&A opportunities. 2025 net leverage <4x (mid-EBITDA guidance).
- **Interest Rate Impact**: 2025 guidance factors 100bps rate cuts. Deposit growth conservative, but 2024 Q4-Q3 rate delta ($0.61M) shows sensitivity.
- **SMB Margin Challenges**: 2024 gross margin 20.5% vs. 22.7% YoY due to $3.5M write-offs. Normalized margin flat, but legacy portfolio runoff creates 100bps headwind.
- **B2B Momentum**: Plastiq +8%, CPX +26%. Cross-selling strategies (e.g., bundling Plastiq/CPX) driving upmarket expansion.
- **Enterprise Resilience**: 93.6% gross margin, recurring revenue 63%. Countercyclical to macro, benefiting from working capital needs.


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