Priority Technology Holdings, Inc.

Good day, and welcome to the Priority Technology Holdings second quarter 2024 earnings 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 your question, 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 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 FCC 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 second quarter 2024 earnings call. I'd like to start today by highlighting the positive trends we continue to see throughout Priority. And then Tim and I will provide an update on important developments within each segment and the broader enterprise. As you saw in this morning's press release, in the second quarter we again reported record financial results by capitalizing on our leading unified commerce platform that delivers elegant product solutions across our segment and dedicated customer service that is committed to our partner's success. Building on the positive momentum we saw to start the year, we delivered exceptional results in SMB acquiring, B2B payables, and enterprise payments in the second quarter. Our unified commerce vision continues to resonate with customers, combining payments and banking functionality on a single platform, accelerated by the strength of our diverse business lines that were positioned to benefit from historically elevated 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 exceed 1 million. As we process nearly 125 billion in annual transaction volume during the prior 12 months, while administrating over 1 billion in average daily deposits during the quarter. Slide four highlights our consistent financial performance during the second quarter. Revenue of $219.9 million increased by over 21% from the prior year. This led to a 22% increase in adjusted gross profit to $81.7 million and a 25% improvement in adjusted EBITDA to $51.6 million. Adjusted gross profit margin of 37.2% increased 40 basis points from the prior year quarter. highlighting the strong and improving operating leverage of our organization. Encouragingly, our purely organic growth trends are equally strong, posting a top-line revenue increase of 17.5% and bottom-line improvement in adjusted EBITDA of 25.7% during Q2, which Tim will speak to in greater detail during his remarks. As you can see from our strong Q2 results, combined with the increase of our full-year EBITDA guidance, we continue to expect that the robust growth and margin trends in our business channels will deliver full-year revenue of $875 to $883 million, an increase of approximately 16% over 2023, and generate full-year adjusted EBITDA of $196 to $200 million. a 16% to 19% increase over 2023. Our guidance is informed by our year-to-date performance highlighted on slide 5, reflecting 16% revenue growth to $425.6 million. That drove 22% adjusted gross profit expansion to $158.2 million and 24% improvement in adjusted EBITDA to $97.9 million. Year-to-date organic growth is consistent with Q2 at 17% revenue growth and 27% EBITDA growth. Our growing partner base continues to see value in our product and technology offering, and our diverse sales channels remain consistent with strong performance. Now, for those of you who are new to the company, slide six highlights the market orientation of of our proprietary unified commerce platform. It's purpose-built to collect, store, lend, and send money, combining elegant payments and banking functionality to monetize the commerce networks we serve. Our customers and current market conditions reinforce our belief that systems facilitating payments and banking solutions 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 remain committed to meeting our customers where they are by refining the experience for our partners to make working with priority seamless and easy. Our financial performance demonstrates that partners consistently choose the unified commerce applications and acquiring payables and banking that best fit their businesses to accelerate cash flow and optimize their working capital. We are incredibly focused on the continued innovation of our SaaS payments and banking suite of services that are powered by Priority's accelerated commerce engine and are eager to meet the evolving needs of our growing portfolio of customers and enterprise partners. At this point, I'd like to hand it over to Tim, who will provide further insights into our segment-level performance during the quarter, along with current trends in each that factored into our confidence to deliver on our strong guidance for the full year 2024.