Priority Technology Holdings, Inc.

Good day and welcome to the Priority Technology Holdings third 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 a touch-tone phone. To withdraw your question, please press star and 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 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 Priory.

Thank you, Chris. And thanks everyone for joining us for our third quarter 2024 earnings call. I'll begin today's call by highlighting the continued positive results and trends we're seeing throughout our business. And then Tim and I will provide an update on key developments within each segment and priority overall. As you saw in this morning's press release, in the third quarter, we once again reported record financial results that were driven by the strength of our unified commerce platform, that delivers sophisticated product solutions across our segments and dedicated business teams that are committed to our partner's success. Moving to slide three, in the third quarter, we sustained our positive momentum throughout all three segments of the business, delivering consistently strong results in SMB acquiring, B2B payables, and enterprise payments. Our unified commerce platform that streamlines collecting, storing, lending and sending money with solutions for acquiring payables and banking and creates revenue and operational success for businesses continues to resonate with our customers, which is reflected in our organic growth performance. Our diverse business lines continue to benefit from historically elevated interest rates and to perform in evolving macroeconomic environments. As of the end of Q3, total customer accounts operating on our commerce platform exceed 1.1 million as we process nearly 127 billion in annual transaction volume during the prior 12 months while administrating over 1.1 billion in average daily account balances during the quarter. As you'll see on slide four, revenue of 227 million increased by more than 20% from the prior year. This led to a similar increase in adjusted gross profit to $86 million and a 22% improvement in adjusted EBITDA to $54.6 million. Adjusted gross profit margin of 37.9% decreased 40 basis points from the prior year quarter, but that is largely the result of the plastic acquisition during Q3. If you exclude the partial quarter impact, adjusted gross profit margins actually increased by 16 basis points from last year. Referring back to slide three, you may have noted that we continue to expect that robust growth and margin trends in our business channels will deliver full-year revenue of $875 to $883 million, an increase of approximately 16 percent over 2023. More significantly, based on continued improvement in our operating margins, we're increasing our full-year adjusted EBITDA guidance to $204 million, an 18% to 21% increase over 2023. Our improved guidance is informed by our strong year-to-date performance highlighted on slide five, reflecting 17% revenue growth to $652.6 million, that drove more than 21% adjusted gross profit expansion to $244.1 million and 23% improvement in adjusted EBITDA to $152.5 million. Our growing partner base continues to see great value in our product and technology offering, and our diverse sales channel performance remains strong across the board. Now, for those of you who are new to the company, slides six and seven highlight the market orientation of the priority commerce engine that streamlines collecting, storing, lending, and sending money and our acquiring payables and banking solutions. The result is a personalized financial tool set that our customers can leverage how they like to accelerate their cash flow and optimize their working capital. Our customers in current market conditions reinforce our belief that systems facilitating payments and banking solutions to accept and distribute funds in multi-party environments will be critical as businesses put greater demand on software and payment solution providers to unlock value. 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 business or connect to our API to leverage these features in their own applications. We remain intently focused on the continued innovation in our SaaS payments and banking solutions that are powered by the Priority Commerce Engine and are eager to meet the evolving needs of our growing portfolio of customers and enterprise partners. I would encourage you to play the short one to two minute videos embedded in slide six and seven in the product links to gain a full appreciation of the value and how they're being reflected to our growing customer base. 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 further increase our strong guidance for full year 2024.