Priority Technology Holdings, Inc.

Good morning, and welcome to the Priority Technology Holdings Third 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 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 investor 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 third quarter 2023 earnings call. I'd like to start today by discussing some of the trends we're currently seeing in the business and then provide an update on important developments at priority, including the successful integration process of our August acquisition of Plastic. Consistent with what we saw in the first half of the year, during the third quarter we continued to execute in all three segments of our business, delivering strong results in SMB acquiring, B2B, and enterprise payments. We remain committed to our unified commerce vision of combining payments and banking on a single platform accelerated by the strength of our diverse business lines that were positioned to benefit from higher interest rates and the current macroeconomic environment. Total accounts operating on our commerce platform now exceed 820,000, processing over $118 billion in transaction volume on a last 12-month basis, while administrating in excess of $850 million in average daily deposits. We're excited about our 2023 progress to date and working hard to close out the year strongly and position ourselves to accelerate in 2024. As you saw in our announcement earlier today, we maintained our positive momentum with strong financial results in the third quarter. Our Q3 revenue of $189 million increased 14% from the prior year. This led to a 23.6 percent increase in adjusted gross profit to 72.3 million and a 28 percent improvement in adjusted EBITDA to 45 million. Adjusted gross profit margin of 38.3 percent increased 310 basis points from the prior year quarter, highlighting the strong operating leverage of our purpose-built platform. On a year-to-date basis, revenue increase 14.4% to $556.3 million, leading to a 22% gain in adjusted gross profit to $202.4 million. Now, combined with a 230 basis point increase in adjusted gross profit margin in the first nine months of 2023 to 36.4%, we generated a 23% increase in adjusted EBITDA thus far in 2023. As you can see from our published guidance this morning, we expect to end the year strong as current growth and margin trends in our business channels continue. As a result, we project to deliver full-year revenue of between $755 to $765 million, an increase of approximately 15% over 2022. And more importantly, we're increasing our full year adjusted EBITDA guidance from our previously estimated 160 to $165 million range to 167 to 170 million, a 20 plus percent increase over 2022. Our confidence reflects the value our customers see in our product and technology offering, the strength of our diverse sales channel performance, and the efficiency of our operating teams that continue to deliver. A notable example contributing to our outlook is accelerating operating trends in the plastic B2B channel. Since closing on August 1st, our teams went to work synergizing operations and embracing revenue growth initiatives that mitigated drag on EBITDA from the acquisition and demonstrated once again that we're uniquely built to systematically absorb and operate software and payment assets to quickly drive profits. Now for those of you who are new to Priority, slide six highlights the architecture of our proprietary unified commerce platform that combines robust payments and banking functionality to monetize the merchant and partner networks we serve. Our growing customer base combined with current uncertain 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' expectations by refining the experience of our partners to make working with Priority seamless and simple, Our performance illustrates that partners consistently choose the unified commerce applications in SMB, B2B, and enterprise payment segments that best fit their business, adopt the Passport financial tools that fit their needs, and are moving their money with priority. We're laser focused on the continued innovation of our SaaS payment suite of services, and Passport Commerce Engine, and eager to meet the evolving needs of our growing portfolio of customers. At this point, I'd like to hand it over to Tim who will provide further insight into our segment-level performance during the quarter, along with current trends in each that factored into our guidance for the full year.