Priority Technology Holdings, Inc.

Good morning and welcome to the Priority Technology Holding Second Quarter 2025 earnings conference call. All participants will be in listen-only mode. Did 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 telephone keypad, and to withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Meghna Mera with Investor Relations. 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 Holding, 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. Reconciliation 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, Meghna, and thanks to everyone for joining us for our second quarter of 2025 earnings call. Once again, I'll begin today's call by highlighting our aggregate performance that reinforces our strong revenue and adjusted EBITDA guidance for 2025 before handing it over to Tim. We'll provide segment-level performance, key trends and developments within each of the business segments, and priority overall. This morning, we reported continued solid growth in both revenue and profit, despite lingering economic uncertainty over the impact of tariffs and government cuts that extended into the second quarter. Summarized on slide three, priority had a strong Q2 by every key financial metric, growing net revenue by 9%, generating adjusted gross profit and adjusted EBITDA growth of 13 and 9%, respectively, and increased adjusted EPS by 15 cents year over year to 26 cents. We ended the second quarter with over 1.6 million total customer accounts operating on our commerce platform, up from 1.3 at the end of last quarter. Annual transaction volume in the LTM period increased by nearly 5 billion from Q1 to 140 billion, and average account balances under administration improved to 1.4 billion versus 1.3 billion in the first quarter of 2025. So, we're not going to go into that. I'll walk you through the full year 2025 guidance specifics and some of the more noteworthy trends we're seeing within SMB acquiring, B2B payables, and the enterprise payment segments later in the call. Based on strong growth trends and a continued favorable shift in our business mix, I'm confident that priority can achieve 10% to .5% top line revenue growth, which is why we're increasing the low end of our revenue expectations to 970 million and narrowing the overall range to 990 million at the high end while refining adjusted EBITDA around the midpoint of our original full year guidance, increasing the low end to 222.5 million and narrowing the overall range to 227.5 million at the high end. Our confidence comes from the adoption we continue to experience for our connected commerce platform, combining payments and banking capabilities to streamline collecting, storing, lending and sending money to create revenue and operational success for our customers. But turning our attention to our Q2 results noted on slide four, revenue of 239.8 million increased 9% from the prior year. This led to a 13% increase in adjusted gross profit in 92.4 million and a 9% improvement in adjusted EBITDA, 56 million. Adjusted gross profit margin of .5% increased 135 basis points from the prior year's second quarter. Highlighted on slide five, our steady Q2 performance contributed the -to-date revenue growth of 9% to 464.4 million, fueling a 14% increase in adjusted gross profit to 179.7 million and a 10% improvement in adjusted EBITDA to 107.3 million while expanding adjusted gross profit margin by 150 basis points