Priority Technology Holdings, Inc.

Good morning and welcome to the Priority Technology Holdings fourth quarter and full year 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Chris Kettman. Please go ahead.

Good morning, and thank you for joining us. With me today are Tom Priori, Chairman and Chief Executive Officer of Priority Technology Holdings, and Tim O'Leary, Chief Financial Officer. Before we give 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 company undertakes no obligation to update or revise the forward-looking statements, whether as 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 fourth quarter and full year 2022 earnings call. Before going into our financial results, I would like to highlight a few key takeaways about the current business trends as you absorb the Q4 performance and project it into 2023. First and foremost, the business is performing the way we anticipated, consistently growing market share and SMB acquiring and producing strengthening results in B2B and enterprise payments. While other companies are paring back in response to uncertain macroeconomic conditions, and the recent banking turmoil, we're driving forward on the strength of our counter-cyclical business lines that were positioned to benefit from higher interest rates and the current economic environment. Second, not only are we outperforming our peers, but the key metrics in our business have continued to improve. Our full year 2022 growth rates and margin expansion are representative of the first quarter trends we have seen to date in 2023. Last, our decision in 2022 to accelerate investment in Passport, our unified commerce API combining full featured payments and banking as a service, is proving somewhat prescient. given the recent struggle of the banking sector and the general crisis of confidence in banks among businesses of all sizes. I'll speak in more detail on this topic toward the conclusion of our call, but suffice to say that the current pace of new partners' adoption of Passport to collect, store, and send money will fuel results in the quarters and years ahead. With that as a backdrop, let's dig into the numbers. As you saw in our earnings release, we continued our positive momentum with an exceptionally strong fourth quarter to close out a strong 2022. Our fourth quarter revenue increased 23% from the prior year to a record $177.6 million, which led to a 25% increase in gross profit to $61 million and a 21% improvement in adjusted EBITDA to $39.8 million. For the year, revenue increased 29% to $664 million, growing organically by 23% in the fourth quarter and 19.1% in 2022. Full-year adjusted gross profit and EBITDA both grew 46%. with adjusted gross profit reaching $226.9 million and adjusted EBITDA coming in within our target at $140.3 million for the full year 2022. Adjusted gross margin of 34.2% increased 410 basis points from 2021, demonstrating the operating leverage of our purpose-built platform. As I earlier noted, we anticipate that our strong fourth quarter performance and established trends in our business channels will continue. As such, we are expecting to deliver consistent double-digit top-line and bottom-line growth, projecting revenue of $740 to $755 million and adjusted EBITDA of $160 to $165 million for the full year 2023. For those of you who are new to the company, slide seven highlights the architecture of our proprietary unified commerce platform that is purpose-built to collect, store, and send money, combining robust payments and banking functionality to monetize the merchant networks we serve. Our customers and the current market conditions continue to reinforce our belief that systems combining features of both payments and banking to accelerate cash flow and distribute funds to multi-party environments will be critical as businesses put greater demands on software and payment solution providers. We are committed to meeting their growing demand by simplifying the customer experience for our partners and making working with priority as easy as one, two, three. Partners simply choose the application that best fits their business, whether that is a small business operator choosing from MX Merchant and the MX POS suite, an FI or a middle market customer adopting CPX for automated payables, or an enterprise partner connecting to us via our API They select the passport financial tools that best fit their needs and begin to move money. At this point, I'd like to hand it over to Tim, who will provide further insights into our segment-level performance during the fourth quarter and full year, along with current trends in each that inform our guidance for the upcoming year.