Priority Technology Holdings, Inc.

Greetings and welcome to the Priority Technology Holdings Q1 2025 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Meghna Meera, Managing Director, ICR. Thank you. You may begin.

Good morning, and thank you for joining us. With me today are Tom Priori, Chairman and Chief Executive Officer of Priority Technology Holdings, and Timo 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 SAC 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 findings available in the investor section of our website. With that, I would like to turn the call over to our Chairman and CEO, John Priore.

Thank you, Meghna, and thanks to everyone for joining us for our first quarter 2025 earnings call. I'll begin today's call by highlighting our aggregate performance that reinforces our consistent revenue and adjusted EBITDA guidance for 2025, before handing it over to Tim, who will provide segment-level performance, key trends and developments within each of our business segments, and priority overall. This morning, we reported strong growth in both revenue and profit, despite the economic uncertainty over the impact of tariffs and government cuts that emerged in Q1. Summarized on slide three, Priority had a solid Q1 by every key financial metric, growing net revenue by 9%, generating adjusted gross profit and adjusted EBITDA growth of 14% and 11% respectively, and increasing adjusted EPS by 19 cents year over year. We ended the first quarter with over 1.3 million total customer accounts operating on our commerce platform, up from 1.2 million at the end of the year. Annual transaction volume increased by $5 billion to over $135 billion, and account balances under administration improved to $1.3 billion versus $1.2 billion at year end 2024. Then we'll walk through the full year 2025 guidance specifics and some of the more noteworthy trends we are seeing within our SMB acquiring, B2B payables, and enterprise payment segments later in the call. Based on strong growth trends and continued favorable shift in business mix, I'm confident that the company can achieve 10 to 14% top line revenue growth to a range of $965 million to $1 billion and generate adjusted EBITDA of $220 to $230 million in 2025. This confidence comes from the value of our unified commerce platform, which streamlines collecting, storing, lending, and sending money that is delivering revenue and operational success to our customers, despite likely headwinds related to lower interest rates and a somewhat murky macroeconomic environment. Turning our attention to our Q1 results noted on slide four, revenue of $224.6 million increased 9% from the prior year. This led to a 14% increase in adjusted gross profit to $87.3 million and an 11% improvement in adjusted EBITDA to 51.3 million. Adjusted gross profit margin of 38.9% increased 170 basis points from the prior year's quarter. For those of you who are new to priority, slide five highlights our vision for unified commerce. The priority commerce engine is purpose-built to streamline collecting, storing, lending, and sending money, and delivers a flexible financial toolset for merchant services, payables, and banking and treasury solutions to accelerate cash flow and optimize working capital for businesses. I would encourage you to play the short one- to two-minute videos embedded in the product link on this slide to gain a more fulsome appreciation for their value and how they are being leveraged by our growing customer base. While our financial performance demonstrates that partners consistently choose priority to help power their business, I thought it would be useful for investors to gain a deeper appreciation of why we are emerging as a go-to solution provider for embedded finance solutions using an implementation framework we typically see within our enterprise payment segment. Slide six highlights a typical partner integration to our payments and banking API. Importantly, this framework is consistently applied whether the partner is a sports management software company, a debt resolution provider leveraging CFTPay, a payment facilitator, or a property management technology company. Customers connect and can access all routes for digital payment acceptance, as well as lockbox for checks, create FDIC pass-through insured full feature virtual bank accounts, and virtual and physical card issuing, bill payment, and automated payables options at their own pace. Our tightly coupled platform creates two important benefits for Priority's long-term prospects. First, it allows our partners to choose your adventure, as we like to say, and evolve their offering to respond to opportunities as we add features in collaboration with their goals. Both parties have a clear line of sight to quantify and access revenue growth opportunities. This creates loyalty and gives us the ability to grow with our partners' businesses. Now, second, by maintaining operational workflow consistency across implementation in diverse industry segments, we can clearly identify our operational metrics in key areas like compliance, payment operations, risk, application support and the like to ensure that we scale cost efficiently. We're committed to meeting our customers where they are and by refining the experience for our partners in order to make working with priority seamless and easy. Now, this vision explains why we've been able to continually transform priority into a high performing payments and banking fintech with consistently strong recurring revenue prospects. Our customers and 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 demands on software and payment solution providers to unlock value in existing and developing channels. At this point, I'd like to hand it over to Tim who will provide further insight into the health of our business segments along with current trends in each that factored into our first quarter results and confidence for sustained performance in 2025.