Priority Technology Holdings, Inc.

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to Priority Technology First Quarter 2022 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press the star, then the 1 key on your touch-tone telephone. If you require operating systems at any time, please press star, then 0. I would now like to hand the conference over to your speaker host, Chris Catman. Please go ahead, sir.

Good morning, and thank you for joining us. With me today are Tom Priori, Chairman and Chief Executive Officer of Priority Technology Holdings, and Mike Volkamer, Chief Financial Officer. Before we provide our prepared remarks, I would like to remind all participants that our comments today will include forward-looking statements, which involve a number of risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. The companyometer takes no obligation to update or revise the forward-looking statements, whether it is a result of new information, future events, or otherwise. We provide a detailed discussion of the various risk factors in our SEC filings, and we encourage you to review these filings. Additionally, we may refer to non-GAAP measures, including but not limited to EBITDA and adjusted EBITDA, during the call. Reconciliations of our non-GAAP performance and liquidity measures to the appropriate GAAP measures can be found in our press release and SEC filings available in the Investors section of our website. With that, I would like to turn the call over to our Chairman and CEO, Tom Priori.

Thank you, Chris. and thanks to everyone for joining us for our first quarter 2022 earnings call. As you saw in our earnings release, we once again reported exceptional results for the quarter, rapidly growing both our top and bottom line during the period. For the second quarter in a row, we saw a total quarterly revenue increase by more than 35 percent from the prior year to a record 153 million in Q1. Our strong top line results drove a roughly 65% increase in gross profit to $51.8 million and a 68% improvement in adjusted EBITDA to $30.3 million. These results were underpinned by a 610 basis point expansion in gross margin to 33.8%, despite the drag from the reduction in our specialized merchant acquiring segment noted in previous earnings calls. Importantly, When adjusted for the acquisition of Fincera and the risk pairing of our specialized acquiring segment, our revenue grew organically by 30.9%, and adjusted EBITDA grew by 63.5% for the quarter. Our strong growth and profitable trends have continued through the second quarter as well. Mike will go into the segment-level detail on our first quarter results shortly. Before he does that, Let's look at slide five and some of the company's performance statistics. As we've previously highlighted, our native platform efficiently serves the SMB, B2B, and enterprise payment markets at scale, supporting over 245,000 active merchant accounts, more than 360,000 active bank deposit accounts, and processing total annual payment volume of over $90 billion, with roughly 88% derived by integrated software products. With our strong foundation and robust pipeline of business, we remain confident in our ability to generate revenue between $650 to $665 million and EBITDA of $145 to $150 million that we projected for 2022. As slide six summarizes, our native technology core has been purpose-built to collect, store, and send money by combining robust payment functionality with banking-as-a-service capability in a single offering to monetize the merchant networks we serve. Leveraging our Priority Passport platform, we're poised to deliver a full suite of proprietary payment and banking solutions into the SMB and B2B markets and provide enterprise partners the ability to embed payments and banking features into their core offering to monetize their payment networks. Ongoing market adoption of each of these three business segments has contributed to our increasingly strong overall results, as well as our continued confidence in our 2022 outlook. Our largest segment, SMB payments, continues to outperform its peers, reporting year-over-year bank card volume growth of 18.5% and revenue growth of 19.2% in Q1. To help demonstrate SMB's outperformance in the industry, on the slide, we've included the growth rates of the top five non-bank merchant acquirers in the U.S., As you can see, priority is growing at multiples of its closest peers. As our results illustrate, our acquiring product and service offering resonates with SMBs and consistently wins in the marketplace. Our fast-growing B2B payment segment once again reported an exceptional quarter as it continued to add new partner channels on the strength of our CPX product. We expect that recently announced partnerships with CISPRO, a leading ERP manufacturing and distribution industries with over 15,000 licensed companies globally and representing over $60 billion of addressable AP spend, Premier Healthcare, a $70 billion healthcare GPO marketplace serving over 4,000 hospitals and 225,000 providers. Tri-County Bank with $10 billion in assets serving customers in Central and Southern California. And Century Bank serving the New Mexico and Texas markets with $4.6 billion in assets will add valuable transaction volume in the coming months to complement our growing middle market customer base. CPX will provide these customers with a seamless suite of automated payable solutions, delivering the benefits of automation, revenue creation, and enhanced product experience. For the quarter, our B2B segment delivered year-over-year revenue growth of 68.6% in Q1, and operating income increased $800,000. In addition to the partnerships I've mentioned, our currently contracted pipeline sits at $610 million, positioning the business to deliver consistent winning results. Lastly, our enterprise payment segment, which provides embedded payments and banking solutions to monetize legacy platforms and accelerate software partners' strategies to monetize payments, reported year-over-year revenue growth of $16.7 million in Q1 and $5.2 million increase in operating income. Enterprise Payments is currently supporting over 20 active integrations, managing over 360,000 deposit accounts and over a half a billion in deposits. Our enterprise segment is consistently piling up integration wins in sectors like real estate and construction technology, treasury software systems, and legacy payment operating platforms. At this point, I'd like to hand it over to Mike, who will provide further insight into our performance during the quarter, along with trends in each business segment.