Priority Technology Holdings, Inc.

Good day and welcome to the Priority Technology Holdings fourth quarter and 2023 earnings conference call. All participants will be in a 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. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Chris Kettman, 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 Tim O'Leary, Chief Financial Officer. Before giving 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, everyone, for joining us for our fourth quarter and full year 2023 earnings call. I'd like to start today by discussing the continued positive trends we're currently seeing in the business, as well as several important developments at priority, including the successful integration process of our August acquisition of Plastic. As a result of these trends and developments, we're excited to report the strongest results in our history, and we are well positioned to perform even better in 2024 and beyond. Consistent with what we saw through the first nine months of the year, during the fourth quarter, we delivered strong results in SMB acquiring B2B payables and enterprise payments. We remain convinced in the potential of our unified commerce vision, combining payments and banking functionality on a single platform, accelerated by the strength of our diverse business lines that we're positioned to benefit from higher interest rates and to perform in a variety of macroeconomic environments. including the one we're experiencing today. Total customer accounts operating on our commerce platform now exceed 860,000 as we processed approximately 120 billion in transaction volume during 2023, while administering 900 million in deposits at the end of 2023. Looking at our financials, we maintained our positive momentum with strong results in the fourth quarter. Our Q4 revenue of 199.3 million increased over 12% from the prior year. This led to a 20% increase in adjusted gross profit, 72.9 million, and a 12% improvement in adjusted EBITDA to 44.6 million. Adjusted gross profit margin of 36.6% increased 230 basis points from the prior year quarter, highlighting the strong operating leverage of our purpose-built platform. For the full year 2023, revenue increased 14% to $755.6 million, leading to a 21% gain in adjusted gross profit to $275.3 million. Combined with a 220 basis point increase in adjusted gross profit margin during 2023 to 36.4, We generated a 20% increase in adjusted EBITDA over the prior year. As you can see from our results and the strong guidance we put out this morning, not only did we outperform expectations in 2023, but we also expect strong growth and margin trends in our business channels to continue in the year ahead. We project to deliver full-year revenue of $875 million to $890 million, an increase of approximately 16% to 18% over 2023. In addition, we expect to generate full-year adjusted EBITDA of $193 to $198 million, a 15% to 18% increase over 2023. 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. Fueling our strong outlook, we expect the Plastic B2B channel to be an important growth driver in the business, as demonstrated by the success we're seeing so far. Since closing on August 1st, our teams have focused on synergizing operations and embracing revenue growth initiatives, mitigating drag on EBITDA from the acquisition, and demonstrating once again that we are uniquely built to systemically absorb and operate software and payment assets to quickly drive profits. For those of you who are new to the company, slide six highlights the architecture of our proprietary unified commerce platform that is purpose-built to collect, store, lend, and send money, combining robust payments and banking functionality to monetize the commerce networks we serve. Our customers and current market conditions continue to reinforce our belief that systems combining features of both payments and banking to distribute funds in multi-party environments will be critical as businesses put greater demands on software and payment solution providers to accelerate cash flow and optimize working capital. We're committed to meeting our customers' expectations by refining the experience of our partners to make working with priority as seamless and simple as we can. Our performance illustrates that partners consistently choose the unified commerce applications in the SMB, B2B payables, and enterprise segments that best fit their business, adopt the passport financial tools that meet their needs, and move their money with priority. We are highly focused on the continued innovation of our SaaS payment suite of services and the Passport Commerce Engine, and are 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 continue to provide further insights into our segment-level performance during the quarter and the year, along with current trends in each that factored into our guidance for the full year 2024.