Priority Technology Holdings, Inc.

Good morning and welcome to the Priority Technology Holdings first quarter 2023 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 touch-tone 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 Priory, 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 first quarter 2023 earnings call. Before walking you through our financial results, I'd like to highlight some key takeaways about current business trends. First, when reporting full-year earnings back in March, we noted that business has been performing consistent with our Q4 trends. Even better, activity began to accelerate toward the end of March, and we ended the quarter on a substantially high note. We continued to grow market share on SMB acquiring and generated excellent results in both B2B and enterprise payments. While other companies were pulling back in response to uncertain macroeconomic conditions and the recent banking turmoil, we remained committed to our vision for the convergence of payments and banking, driving priority aggressively forward on the strength of our counter-cyclical business lines that were positioned to benefit from higher interest rates and the macroeconomic pullback. Second, we continue to outperform our peers both from a growth and margin expansion perspective. In doing so, we continue to strengthen our competitive market position for the future. Importantly, our second quarter performance remains on a similar trajectory to what we saw in the first quarter. Last, our decision last year to accelerate investment in Passport, our unified commerce API, combining full featured payments and banking as a service, continues to be rewarded in the marketplace. especially as underfunded fintechs and banking-as-a-service providers have come under pressure, and a crisis in confidence in banks continues among businesses of all sizes. We believe that numbers demonstrate that priority is well built to thrive in a somewhat dislocated environment. And the current pace of our new partner adoption of Passport to collect, store, and send money will drive results going forward. With that as a backdrop, let's dig into the numbers. As you saw in our earnings release, we continued our positive momentum with a very impressive start to the year. Our first quarter revenue organically increased 21% from the prior year to a record 185 million. This led to a 22% increase in adjusted gross profit to 63.1 million and a 24% improvement in adjusted EBITDA to 37.6 million. Adjusted gross margin of 34.1% increased 30 basis points from the prior year quarter, demonstrating the operating leverage of our purpose-built platform. As I noted earlier, we anticipate that our strong first quarter performance and established trends in our business channels will continue. As such, we remain confident in our ability to deliver consistent double-digit top-line and bottom-line growth, projecting revenue of $740 to $755 million. and adjust the EBITDA of 160 to 165 million for the full year 2023. For those of you who are new to Priority, slide five highlights the architecture of our proprietary unified commerce platform. It is purpose-built to collect, store, and send money, combining robust payment and banking functionality to monetize the merchant networks we serve. Our growing customer base combined with current market conditions continue to reinforce our belief that systems combining features of both payments and banking to accelerate cash flow and distribute funds in multi-party environments will be critical as businesses put greater demands on software and payment solution providers. We're committed to meeting our customers' growing demands by simplifying the experience for our partners, making working with priority as simple as possible. Partners simply choose the application that best fits their business, whether that the small business operator choosing from the MX merchant POS suite, an FI or middle market customer adopting CPX for automated payables, or an enterprise partner connecting to us via our API, they can select the Passport financial tools that fit their needs and begin to move money. We continue to stay on the cutting edge of payment technology by innovating our SaaS payment suite of services and Passport Commerce Engine to meet the evolving needs of our customers. As evidence of this in the first quarter alone, we have 18 new program managers activating on Passport and have deployed nearly 220 MX Merchant POS terminals from our direct sales channels. During the quarter, we've also signed 28 resellers to our MX Merchant POS distributor program that will be rolling out in the early third quarter. Importantly, we're on track in the end of Q2 and beginning of Q3 to initiate the rollout of financial tools like instant funding, checking, debit card issuing, and other banking as a service tools across our channels. At this point, I'd like to hand it over to Tim, who will provide further insight into our segment level performance during the first quarter, along with current trends in each that inform our guidance for the upcoming year.