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.

Thank you, Tom, and good morning, everyone. As I review the first quarter financial results, including the segment-level contribution to the consolidated results, please refer to the supplemental slides or the MD&A for further details. Our MD&A is included in the Form 10-Q that was filed with the SEC this morning and provides a discussion of our comparative first quarter results. A link to that filing can also be found on our website. As Tom mentioned, the strong financial performance we saw in the first quarter of 2023 was driven by a diverse mix of our business segments, which demonstrates the ability of Priority to perform in varying market conditions. I won't reiterate the financial highlights that Tom already spoke about, but before I go into the segment level results, I do want to provide a few other key metrics as it relates to the consolidated results for the first quarter. For the quarter, we had 10.6% growth in bank card dollar volume across all segments to roughly $15.9 billion. and 12% growth in bank card transaction count to 164 million transactions. If you include ACH, debit, and other volumes, the total payments volume for the quarter was $29.4 billion, which is up 10% from $26.6 billion in the first quarter of 2022. Again, all of those metrics are for the consolidated business. I'll now go into more detail on each of the business segments results for the first quarter. Let's start with SMB payments on slide eight. For the first quarter, the SMB segment had revenue of approximately $155 million, which was a 19% or $25 million increase over the prior year's first quarter. This strong organic revenue growth was driven by a combination of 8% growth in bank card dollar volume to $15.2 billion and 12% growth in bank card transaction count to 163.4 million transactions. We averaged just under 260,000 merchants during the quarter, which is almost 7% higher than Q1 of 2022. However, we finished the quarter with just over 257,000 merchants as a result of certain resellers closing a number of inactive accounts in March. Despite those measures, the ending merchant count still grew over 5% from the prior year. The growth in our merchant base continues to be driven by strong boarding trends, where new monthly merchant boards averaged almost 5,100 throughout the quarter. That compares to an average of just under $4,700 per month in the first quarter of 2022 and an average of just over $4,700 per month for all of 2022. Continuing with SMB on the next page and moving down to P&L to focus on profitability, adjusted gross profit increased by $2.5 million, or 8%, to $35.4 million for the quarter. The underlying improvement was even better when recognizing the year-over-year comparative quarterly gross profit and related gross margin performance was negatively impacted by the timing of the recognition of certain incentives and other fees that benefited the Q1 2022 period more than Q1 of this year. If you normalize for the net impact of those differences, we saw an approximate 40 basis point decline in gross margins in Q1 of 2023, which is consistent with prior quarters and continues to be driven by a combination of our larger reseller partners growing at a faster pace while also attracting higher commission rates. Lastly for SMB, quarterly operating income of $12 million represents a 4% decline from the prior year's first quarter. Consistent with my comments on gross profit, the comparative quarterly operating profit on a year-over-year basis was negatively impacted by the timing of certain fee recognition. In addition, the first quarter had $3 million of higher operating expenses, which were mostly headcount related as compared to last year. When combined with the $2.5 million increase in gross profit, It resulted in a $500,000 decline in operating income for the quarter. Moving to B2B payments, revenue of $2.8 million in the first quarter was a decrease of just over 50% from the prior year. This decrease was largely the result of the previously discussed reduction in revenue from managed services due to the final wind-down of certain programs with a large customer. I know we've spoken about this on the last few earnings calls, but to provide some additional context, The managed services wind down had a $2.3 million impact on revenue from Q1 of last year to Q1 this year. Given the timing of the wind down in late 2022, Q2 will have a similar headwind from a year-over-year comparison standpoint, but that impact will lessen with each successive quarter this year. Separately, the CPX business saw an $800,000 decrease in revenue over that same time period as a result of certain contract termination fees recognized in 2022. If you normalize for that item, the CPX business was up modestly in Q1 with 9.5% growth in ACH volume and 6.5% growth in issuing volume. With respect to B2B's profitability on slide 11, adjusted gross profit declined to $2 million as a result of the managed services wind down. But as we indicated as an expectation on our last earnings call, the adjusted gross profit margins increased by over 17 percentage points during the quarter as the lower margin managed services business rolled off leaving behind the higher margin CPX business. For the quarter, the B2B segment had an operating loss of $800,000 as operating expenses remained stable but were impacted by the lower gross profit. Moving to the enterprise segment on the next page, Q4 revenue of $27.3 million was an increase of almost $10 million, or 57%, from $17.3 million in Q1 of 2022. The themes from the past several quarters have continued, as favorable trends in new monthly enrollments, an increase in the number of billed clients, growth in deposit balances, and the benefit of rising interest rates all contributed to the strong first quarter revenue growth. As shown on the next slide, adjusted gross profit for the enterprise segment increased by 64% to $25.7 million, while adjusted gross profit margins expanded to 94.1%. Operating income for the enterprise segment also benefited from operating leverage as exemplified by profit growth significantly outpacing revenue growth for the quarter. Given the broader market environment and the increasing need for better banking as a service alternatives, we remain very optimistic about the revenue and earnings opportunities inherent in the enterprise segment and really throughout priority as we bring the passport offering and its benefits to more of our clients and end markets. Operating expenses are shown on page 14 in total 46.2 million for the quarter an increase of just under 13% from the prior year. As discussed on prior calls, this change was driven by the impact of increased expenses in the business throughout 2022, resulting from investments in personnel and technology to support our top-line growth and also position us for continued growth. Salaries and benefits of $19.1 million increased 19% from Q1 last year as a result of headcount and wage increases during fiscal 2022. We finished Q1 of this year with approximately 900 employees, including 320 in India, which is compared to approximately 870 at the end of 2022 and just under 840 at the end of Q1 2022. I also want to highlight that the $19.1 million of salaries and benefits in Q1 was a modest increase from $16.9 million in Q4 and was largely the result of grow-over from hires made during the fourth quarter along with certain expenses that are typically higher at the beginning of the year, including stock compensation expense and benefits. For the balance of the year, we remain focused on leveraging the investments made to date in the team and technology to manage our operating expense base. SG&A of $9.1 million increased 21% from $7.5 million in Q1 of 2022. Again, continued investment in business expansion drove that level of growth, but consistent with my comments on salaries and benefits, We will continue to focus on our cost structure throughout the following quarters to drive operating efficiencies. Depreciation and amortization of $18 million for the quarter increased modestly from the comparable quarter last year and was consistent with Q4 levels. Moving to the next slide, adjusted EBITDA for the quarter was $37.6 million, which was an increase of 24.1% from $30.3 million in Q1 of 2022. Working down the EBITDA walk on this slide, interest expense of $17.7 million for the quarter was an increase of $6.2 million from Q1 2022 levels as a result of the impact of the rising interest rate environment and the floating rate nature of our existing debt. However, as I detailed on our last earnings call, we have a natural hedge in place for the floating rate debt given the interest income we generate on the deposits. At the end of 2022, that natural hedge covered about 90% of the debt. but at the end of Q1, it covered 100% of the debt as our deposit balances grew throughout the quarter. If you include the floating rate component of our preferred stock, the natural hedge at the end of Q1 covered about 70% of our floating rate liabilities. The further adjustments derived at adjusted EBITDA for Q1 include non-cash stock compensation expense of $1.9 million and approximately $600,000 of other adjustments consisting of certain non-cash or non-recurring expenses. While not listed on the page, for the last 12-month or LTM period ending on March 31st, adjusted EBITDA of $147.3 million represents $7 million of growth from the $140.3 million we had at the end of 2022 and $13 million of growth since March of 2022. Moving to the outstanding debt slide on page 16, our debt levels have continued to decline, and we finished the quarter with $615.7 million of gross debt which is down from $623.2 million at the end of 2022. Our net debt of $599.8 million is down by $4.9 million compared to the balance at the end of 2022. From a liquidity standpoint, we had $33.5 million of borrowing capacity under our revolving credit facility, in addition to $15.9 million of unrestricted cash on the balance sheet at quarter end. On slide 17, The preferred stock on our balance sheet totaled $235.4 million at March 31st and is net of $20.3 million of unaccreted discounts and issuance costs. The first quarter preferred dividend of $11.3 million is comprised of $6.1 million paid in cash and $4.4 million of a PIC component. This is supplemented on our income statement with the accretion of discounts and issuance costs of just over $800,000. Before turning the call back over to Tom, I want to take a minute to reaffirm our revenue adjusted EBITDA guidance for the full year of 2023. As noted in our earnings release, we continue to forecast 12% to 14% growth in revenue to a range of $740 million to $755 million for the year and adjusted EBITDA growth of 14% to 18%, which would result in a range of $160 million to $165 million for the full year. With that, I'll now turn the call back over to Tom for his closing comments.

Thank you, Tim. As we wrap up our Q1 review, I wanted to reinforce a few of the more meaningful attributes that will continue to set priority apart from others in the FinTech and payment sector. First, as our performance demonstrates, we are built for efficiency and our platform can support a diverse portfolio of software and payment assets that perform in challenging economic environments. Second, our lean, focused technology stack is built for the future of payments and the accelerating convergence with banking functions that will drive above market growth with minimal, if any, investment. Our products are positioned to capture new sources of revenue from banking and financial services embedded in emerging modern commerce business models. If there are those that question the veracity of this view, perhaps you might consider the recently announced partnership between Apple and Goldman Sachs to deliver banking function to Apple Card users, or Twitter's reported intention to embed payments and banking into its commercial network, to name a few. Meshing payments and banking functionalities will inevitably be table stakes in our sector. Last, we're an organization that continues to operationalize vision. What I mean by this statement is that beyond the unwavering work ethic and commitment of our technology service and sales, and operational support teams, we have dedicated effort and personnel to be at the forefront of evolving strategy and customer trends to deliver results day in and day out. We believe it is our clear, informed vision and passion to execute that will deliver the long-term value our shareholders should expect. We appreciate you all taking the time to participate in today's call and the ongoing support of our investors and analysts. Operator, we'd now like to open the call for questions.

Question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the key. To withdraw question queue, please press star then two. The first question is from Brian Kinslinker of Alliance Global Partners. Please go ahead.

Hi, good morning, guys. Thanks for taking my questions in solid numbers. Transaction volumes have held up really nicely in light of the economy in numbers, especially that we've seen for other companies. Can you remind us roughly the percentage of revenue from consumer and retail, which I think is relatively low as a percentage of consumer payments? And then how are transaction dollar volumes in those verticals performing compared to your other verticals?

So, and just to clarify your question, you're speaking specifically about the retail SIC codes in the SMB acquiring space?

Correct.

Got it, got it. You know, Brian, really across verticals are, our volume has been consistent. There's certainly been no drop in retail. And it's kind of up in line with our overall performance. The results, as you can kind of gauge from our new merchant boards, have increased year over year from high 4,000s to consistently now over 5,100. We're just winning market share in the acquiring space. If anything, we've continued to diversify our reselling partner channels. With some of the acquisitions we did earlier in 22, we've also increased our you know, our direct sales activities. So the market share growth has really been the catalyst for, you know, our continued consistency in the SMB arena relative to our peers. I mean, Tim can give you, we're just going to drill down into a little bit of specifics on the SIC codes that you noted.

Yeah, Brian, there's obviously more that goes into kind of broader consumer retail, but if I just look at, what we categorize as retail trade compared to healthcare, legal services, or other types of services. Volumes in just straight retail, Q1 of this year versus Q1 of last year, were up over 10%. Oh, wow. And what percentage of your revenue is consumer retail? That retail, that same categorization, it's just under 25% of the volume. Great. And then...

I want to follow up on the comment on your merchant acquiring. You mentioned this quarter closing some non-active merchants, so I'm clear on this quarter. But I started to review, you've been adding 14,000 to 15,000 merchants per quarter, but net ads consistently been around 5,000 per quarter based on the total you report each quarter for the last many quarters. Can you talk about the churn? Are these small customers? Are they sometimes sizable customers? Are they generally non-active? And for the ones that aren't non-active, why do customers leave us at all?

I mean, look, obviously we have some customers. It's a competitive marketplace, so we'll lose some high-volume processing customers. But overall, our book is exceedingly diverse There's not a single merchant that would, you know, come close to approaching even 1% of our volume. So, you know, in the SMB space. So most merchants are, you know, you're talking they're in the tenths or, you know, hundredths of a percentage of our volume. So the impact is kind of muted here. from a standpoint of an individual large merchant leaving. We tend to clear out the dead wood, if you will. The merchants that tend to leave us, and look, you can look at our attrition on a revenue and volume basis, and it's consistently in the 10 percent, if not lower, range on a static pool basis. And what that indicates to you is merchants who are processing don't tend to leave. And we find that's because they rely on our technology to run their business. We're not a terminal provider. We don't chase after small merchants. Our merchants typically are processing bank card volume alone nearly $30,000 a month, which is on the higher end. of the small merchant segment in the U.S. Statistically, we found that merchants that are processing less than $10,000 a month will leave you at twice the rate of merchants doing more than $10,000. And what that indicates historically is those are merchants that just, they don't use technology because they're very small, and they don't necessarily value it as much. So, you know, the penny here or there seems to be you know, important to them and they'll leave for, you know, for just pure price. So we tend to focus our distribution channels away from that. I think you've heard us talk about this. We're very focused on making the relationship with priority with our resellers, with our ISVs, you know, consultative in that we give them tools to really maximize their merchant networks. And, you know, the stats prove out that while it's, takes a little more painstaking detail, that long game is a winner. So hopefully I gave you some insight as to, one, how we think about it and what's driving those results.

Great. Switching gears to the enterprise side, I'm wondering if you can help break down the growth has been great. So maybe break down the revenue growth between existing customers that are spending more or driving more fees versus new logos versus higher interest rates?

Yeah, I can maybe start on the back end of that first. So if you think about the interest rates and the deposit balances, obviously we saw a nice growth in deposit balances throughout the quarter from kind of the traditional enterprise business we've had historically, but also with the growth in Passport, right? You heard Tom mention you know, 18 new program managers, you know, came on board, you know, during the quarter, right, and that benefits the deposit balances in enterprise as well with the new passport offering. So, you know, the combined effect of interest rates and deposit balances, we had, you know, $5 million of interest income in the quarter. You know, that compares to $7.5 million of all of last year. You know, so you can start to extrapolate what that means for the, you know, the balance of this year given where the interest rate environment sits with the Fed activities.

Yeah. And then maybe commenting on the other components of your question, we have, you may recall that we mentioned in the full year earnings some of the, when talking about Passport, some of the impact from SVB's fallout and how quickly we were able to onboard, you know, new logos. Certainly a portion of the growth is from that. But we've also seen, let's say on a, let me give you some kind of timeline. The growth from existing customers on a year-over-year basis is probably 70%. Great.

Thank you for that color on the video.

Yeah, and I'll say that, so think about that as, you know, from Q1 2022 levels to present levels.

Okay. Great. Last question I've got. Normally companies ask, normally companies get questions on M&A. If I think about M&A, the last several years you've taken strategic opportunities to divest businesses at times to de-lever. Is that right now something that is of priority? Is it not really? Just trying to understand, is there an opportunity potentially with your asset base to de-lever at all?

Well, look, I... Certainly there is, right? If you were to just look at, you know, we provide our financials a segment level detail. And, you know, we've purposely built the business as a single engine passport to collect, store, and send money with applications devoted to FinTech payment business segments, right, to serve customers in those segments, right? MX Merchant, the MX Merchant POS suite in SMB, CPX in the B2B vertical, and then, of course, CFTPay and the Passport API in the enterprise segment. So each of those business segments are detachable without deconstructing the engine that operates the business. So we're always considerate of what's the intrinsic value of those segments to folks that operate in those segments and we compete with and may find that we offer some tools that they may not have. I'll say that that's something that we're always considerate of, and we built the business to enable that way of thinking. And if we see levels that we think make sense to either divest of an asset or even to divest of a portion of an asset. We're going to do it if it makes sense. And yes, we would use that money to reduce debt and then probably a portion of it to figure out where we want to redeploy that capital to higher returns.

Great. Thanks so much, guys. Thanks, Bob.

Please press star then one. The next question is from Taylor Johns of CGI. Please go ahead.

Good morning, guys, and thank you for taking my questions. I know you mentioned that some competitors are retrenching in light of the economy. Meanwhile, you guys are moving forward with investments. So I'm just wondering if you're seeing any new opportunities to take share from some of those competitors and what that landscape is like.

Yeah. Look, we are. Probably the sector that has gotten our attention the most is B2B. In the B2B payment space, there's been obviously a lot of enthusiasm around the segment in past years. And some companies, they raise a lot of money. They've maybe not realized their growth goals and have not driven bottom line performance. We think there's going to be a really excellent opportunity to acquire assets in that space. So we're diligently looking at opportunities there. There's a, I would say, just broadly speaking in FinTech, and we've already done a few of these partnerships, I think, you know, as they continue to evolve. These are emerging companies that are software applications that have realized markets, okay? So these are not, you know, what I would describe as solutions looking for a problem to solve. These are companies that You know, really just got caught in kind of the current environment for venture capital and financing where they're early stage, good applications in good sectors with, you know, real performance potential, but are shy of cash flow positives and need, you know, a little bit of assistance to get to the next level. We're evaluating a number of opportunities there where we come in as an operating partner and help them realize very quickly synergies for infrastructure, you know, things as simple as their AWS contract, their database framework and database management. Of course, we have all the, you know, the back office capability, HR, you know, finance, et cetera. And help these companies, I'll call it streamline, so they can focus on their core application we can help them reduce off X, and then, of course, leverage them through our distribution to drive to cash flow positive. There's a lot of opportunities that are emerging with that type of profile, and they are because the venture capital funds that had supported them are not in a position to keep funding them, and they need sources of not just more stable capital, But more importantly, an accelerant that can help them maximize the cash they have and get their distribution to market more quickly. So sectors that interest us are real estate. We've already shown we're successful there. We've got a good track record. We think there's a lot to do in real estate. We think there's a lot to do in construction. which kind of is a variant of the real estate market. And we've already done something in construction. The healthcare segment is another that we've just started something small and growing, but we're continuing to look at opportunities there for a few reasons. One, it's just very dislocated generally. in terms of how payment reconciliation is managed. And, you know, the macro trends are actually unique in healthcare. The inflationary impact in healthcare tends to lag the macroeconomic inflation by a couple of years because of the way healthcare contracts are structured. So we think there's some additional macroeconomic tailwinds could benefit that segment. So those are the areas that have caught our interest right now that we're looking to probably place a few bets.

Thank you so much for that color. That was really helpful. And just another question, wondering if you could talk a little bit more about some of your new products, specifically including which you feel present the greatest opportunity as of right now.

Yeah, I appreciate that. Well, look, the first one, I kind of alluded to them in our comments. The MX Merchant POS suite is, you know, we think is going to really energize our distribution. There are a suite of terminals that are integrated to our MX Gateway that will enable all of the software functionality of our MX Merchant application on handheld terminals. And the terminals can be standalone, so they can work like a handheld POS at the table or at checkout, so very slick in that regard. They can also be semi-integrated, where they'll work with MX Merchant, even if you have, let's say, a different POS, so they can inject into the point of sale that clients are using, and then a full-on enterprise, which is both the mobile terminal device and then works with all of our POS applications, which are MX Retail or MX Merchant Retail, MX Merchant Restaurant, Salon, which will be coming out soon, and then Charity. As I mentioned, we also are going deep in the construction space, so You know, we expect to launch a product called MX Merchant Build in the coming quarter. So that's, I think, one of the really energizing things that are going on at Priority. And, you know, as I noted, we know it's needed. You can see just by virtue of the number of distribution partners that have signed up to start to sell that product as it comes to market through our – through our wholesale distribution efforts. We've tested it in-house. That test has gone well. As I noted, just in the first quarter alone, we were selling internally over a couple hundred. So when you consider it, we really only had it going for a couple quarters. You're looking at 100 a month is pretty good numbers from a POS standpoint. And then the other that we think is the game changer is is injecting banking into all of these segments. That you can not only have your merchant processing and your front end technology managing your business at priority, but you'll get your passport account, which can be instantly funded with your batches. If you're running transactions through our gateway, we'll be able to fund those transactions in five minutes. into your passport account. And that money is available for businesses to acquire supplies, make other purchases, whatever they need to do to manage their money. And it's going to operate like your standard business bank account. Be able to write checks, have a debit card linked to make purchases with a full reporting front end, reporting portal that will look Very much like your high-end bank account at a money center bank. And I would submit probably superior to a lot of the smaller regional community bank offerings that merchants have accessibility to. So those are the two things we're most excited about. And I think uniquely, for priority, and I really want to underscore this point, is that's all going to flow straight to the bottom line. Those tools are built. They're already operating at scale in other segments of our business, called the banking as a service capability. So these are not heavy OpEx and CapEx spend items for us. They're leveraging scaled, excellently designed infrastructure to deliver these solutions to our customer base.

Thank you so much. That was really helpful insight, and thanks for taking my questions.

Thanks for the great questions.

This concludes our question and answer session. I would like to turn the conference back over to Tom Priore for any closing remarks.

All right. Well, on behalf of the team at Priority, We want to thank everybody for taking the time to participate in this morning's call. Special thanks to the analysts that continue to evangelize priority. And, of course, to our supportive investors. We'll keep delivering results. Thanks very much.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.