Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Priority Technology Holdings, Inc. Announces Third Quarter 2022 Financial Results By: Priority Technology Holdings, Inc. via Business Wire November 10, 2022 at 07:30 AM EST Strong Third Quarter Revenue and Gross Profit (Non-GAAP) Growth Across all Business Segments Priority Technology Holdings, Inc. (NASDAQ: PRTH) ("Priority" or the "Company"), the platform for unified commerce that delivers integrated payments and banking at scale, today announced its third quarter 2022 financial results including strong quarter-over-quarter diversified revenue growth. Highlights of Consolidated Results Third Quarter 2022, Compared with Third Quarter 2021 Financial highlights of the third quarter of 2022 compared with the third quarter of 2021, are as follows: Revenue of $166.4 million increased 25.6% from $132.5 million. Gross profit (a non-GAAP measure1) of $58.5 million increased 47.4% million from $39.7 million. Gross profit margin (a non-GAAP measure1) of 35.1% increased 510 basis points from 30.0%. Operating income of $14.1 million increased 69.9% from $8.3 million. Adjusted EBITDA (a non-GAAP measure1) of $35.1 million increased 48.7% from $23.6 million. See "Non-GAAP Financial Measures" and the reconciliations of Gross Profit (non-GAAP),Gross Profit Margin (non-GAAP), and Adjusted EBITDA, to their most comparable GAAP measures provided below for additional information. "We are pleased that our excellent third quarter results, by all financial metrics, continue to reinforce the strength of the solutions we offer our SMB, B2B and Enterprise payments partners," said Tom Priore, Chairman & CEO of Priority. "Our consistently strong performance through COVID and the current economic turmoil demonstrates the differentiation of our unified commerce platform that performs in varying business cycles and is poised to capitalize on emerging opportunities." Full Year 2022 Financial Guidance Priority's outlook remains strong and we are reaffirming our full-year 2022 revenue guidance while revising our adjusted EBITDA guidance for the year. Revenue remains forecasted to range between $650 million to $665 million, a growth rate of 26% to 29%. Adjusted EBITDA (a non-GAAP measure) is forecasted to range between $140 million to $145 million, a growth rate of 46% to 50%, compared to the prior forecasted range of $145 million to $150 million. Conference Call Priority Technology Holdings, Inc.'s leadership will host a conference call on Thursday, November 10, 2022 at 11:00 a.m. EST to discuss its third quarter 2022 financial results. Participants can access the call by phone in the U.S. or Canada at (833) 636-1319 or internationally at (412) 902-4286. The Internet webcast link and accompanying slide presentation can be accessed at https://edge.media-server.com/mmc/p/ofqk9ouz and will also be posted in the "Investor Relations" section of the Company's website at www.prioritycommerce.com. An audio replay of the call will be available shortly after the conference call until November 17, 2022 at 2:00 p.m. EST. To listen to the audio replay, dial (877) 344-7529 or (412) 317-0088 and enter conference ID number 1085687. Alternatively, you may access the webcast replay in the "Investor Relations" section of the Company's website at www.prioritycommerce.com. Non-GAAP Financial Measures This communication includes certain non-GAAP financial measures that we regularly review to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions. We believe these non-GAAP measures help to illustrate the underlying financial and business trends relating to our results of operations and comparability between current and prior periods. We also use these non-GAAP measures to establish and monitor operational goals. However, these non-GAAP measures are not superior to or a substitute for prominent measurements calculated in accordance with GAAP. Rather, the non-GAAP measures are meant to be a complement to understanding measures prepared in accordance with GAAP. Gross Profit (non-GAAP) and Gross Profit Margin (non-GAAP) The Company's gross profit (non-GAAP) metric represents revenues less cost of revenue (excluding depreciation and amortization). Gross profit margin (non-GAAP) is gross profit (non-GAAP) divided by revenues. We review these non-GAAP measures to evaluate our underlying profit trends. The reconciliation of gross profit (non-GAAP) to its most comparable GAAP measure is provided below: (in thousands) Three Months Ended September 30, 2022 2021 Revenues $ 166,417 $ 132,542 Cost of revenue (excluding depreciation and amortization) (107,958 ) (92,833 ) Gross profit (non-GAAP) 58,459 39,709 Gross profit margin (non-GAAP) 35.1 % 30.0 % Depreciation and amortization of revenue generating assets (2,629 ) (1,495 ) Gross profit 55,830 38,214 Gross profit margin 33.5 % 28.8 % EBITDA and Adjusted EBITDA EBITDA and adjusted EBITDA are performance measures. EBITDA is earnings before interest, income tax, and depreciation and amortization expenses ("EBITDA"). Adjusted EBITDA begins with EBITDA but further excludes certain non-cash costs, such as stock-based compensation and the write-off of the carrying value of investments or other assets, as well as debt extinguishment and modification expenses and other expenses and income items considered non-recurring, such as acquisition integration expenses, certain professional fees, and litigation settlements. We review the non-GAAP adjusted EBITDA measure to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions. The reconciliation of adjusted EBITDA to its most comparable GAAP measure is provided below: (in thousands) Three Months Ended September 30, 2022 2021 Net income (loss) $ (792 ) $ (549 ) Interest expense 13,412 8,155 Income tax expense 1,691 790 Depreciation and amortization 17,817 12,330 EBITDA 32,128 20,726 Selling, general and administrative (non-recurring) 760 1,901 Non-cash stock-based compensation 1,104 935 Change in the fair value of contingent consideration 1,072 — Adjusted EBITDA $ 35,064 $ 23,562 Further detail of certain of these adjustments, and where these items are recorded in our consolidated statements of operations, is provided below: (in thousands) Three Months Ended September 30, 2022 2021 Selling, general and administrative expenses (non-recurring): Certain legal fees $ 199 $ 932 Professional, accounting and consulting fees 95 383 Other expenses 466 586 $ 760 $ 1,901 Priority does not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because it could not do so without unreasonable effort due to the unavailability of the information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, the Company does so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for various cash and non-cash reconciling items that would be difficult to predict with reasonable accuracy. For example, stock-based compensation expense would be difficult to estimate because it depends on the Company's future hiring and retention needs, as well as the future fair market value of the Company's common stock, all of which are difficult to predict and subject to constant change. As a result, the Company does not believe that a GAAP reconciliation would provide meaningful supplemental information about the Company's outlook. About Priority Technology Holdings, Inc. Priority is a payments powerhouse driving the convergence of payments and banking. The company has built a single platform to collect, store, and send money that operates at scale. We help our customers take and make payments while managing business and consumer operating accounts to monetize payment networks. Our tailored, agile technology powers high-value, payments products bolstered by our industry-leading personalized support. Additional information can be found at www.prioritycommerce.com. Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services, and other statements identified by words such as "may," "will," "should," "anticipates," "believes," "expects," "plans," "future," "intends," "could," "estimate," "predict," "projects," "targeting," "potential" or "contingent," "guidance," "outlook" or words of similar meaning. These forward-looking statements include, but are not limited to, our 2022 outlook and statements regarding our market and growth opportunities. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive risks, trends and uncertainties that could cause actual results to differ materially from those projected, expressed, or implied by such forward-looking statements. Our actual results could differ materially, and potentially adversely, from those discussed or implied herein. We caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties disclosed in our SEC filings, including our most recent Annual Report on Form 10-K filed with the SEC on March 17, 2022 and our Quarterly Report on Form 10-Q filed with the SEC on August 9, 2022. These filings are available online at www.sec.gov or www.prioritycommerce.com. We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the way we expect. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. Priority Technology Holdings, Inc. Unaudited Consolidated Statements of Operations (in thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenues $ 166,417 $ 132,542 $ 486,086 $ 370,853 Operating expenses Cost of revenue (excludes depreciation and amortization) 107,958 92,833 320,187 264,527 Salary and employee benefits 16,384 11,909 48,231 31,808 Depreciation and amortization 17,817 12,330 52,675 32,123 Selling, general and administrative 10,178 7,220 27,027 22,213 Total operating expenses 152,337 124,292 448,120 350,671 Operating income 14,080 8,250 37,966 20,182 Other (expense) income Interest expense (13,412 ) (8,155 ) (37,282 ) (24,608 ) Debt extinguishment and modification costs — — — (8,322 ) Other income, net 231 146 311 92 Total other expense, net (13,181 ) (8,009 ) (36,971 ) (32,838 ) Income (loss) before income taxes 899 241 995 (12,656 ) Income tax expense 1,691 790 1,833 49 Net loss (792 ) (549 ) (838 ) (12,705 ) Less: Dividends and accretion attributable to redeemable senior preferred stockholders (9,466 ) (5,813 ) (26,415 ) (9,724 ) Less: NCI preferred unit redemptions — — — (10,777 ) Net loss attributable to common stockholders $ (10,258 ) $ (6,362 ) $ (27,253 ) $ (33,206 ) Loss per common share: Basic and diluted $ (0.13 ) $ (0.09 ) $ (0.35 ) $ (0.48 ) Weighted-average common shares outstanding: Basic and diluted 77,984 71,979 78,392 69,689 Priority Technology Holdings, Inc. Unaudited Consolidated Balance Sheets (in thousands) September 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 12,707 $ 20,300 Restricted cash 11,624 28,859 Accounts receivable, net of allowances 69,688 58,423 Prepaid expenses and other current assets 16,725 15,807 Current portion of notes receivable 986 272 Settlement assets and customer account balances 516,687 479,471 Total current assets 628,417 603,132 Notes receivable, less current portion 2,072 105 Property, equipment and software, net 29,773 25,233 Goodwill 365,347 365,740 Intangible assets, net 301,729 340,211 Deferred income taxes, net 12,058 8,265 Other noncurrent assets 10,353 9,256 Total assets $ 1,349,749 $ 1,351,942 Liabilities, Redeemable Senior Preferred Stock and Stockholders' Deficit Current liabilities: Accounts payable and accrued expenses $ 50,955 $ 42,523 Accrued residual commissions 32,593 29,532 Customer deposits and advance payments 3,111 5,021 Current portion of long-term debt 6,200 6,200 Settlement and customer account obligations 517,008 500,291 Total current liabilities 609,867 583,567 Long-term debt, net of current portion, discounts and debt issuance costs 593,068 604,105 Other noncurrent liabilities 13,583 18,349 Total noncurrent liabilities 606,651 622,454 Total liabilities 1,216,518 1,206,021 Redeemable senior preferred stock 225,095 210,158 Stockholders' deficit: Preferred stock — — Common stock 78 77 Additional paid-in capital 17,719 39,835 Treasury stock, at cost (8,765 ) (4,091 ) Accumulated deficit (100,896 ) (100,058 ) Total stockholders' deficit (91,864 ) (64,237 ) Total liabilities, redeemable senior preferred stock and stockholders' deficit $ 1,349,749 $ 1,351,942 Priority Technology Holdings, Inc. Unaudited Consolidated Statements of Cash Flows (in thousands) Nine Months Ended September 30, 2022 2021 Cash flows from operating activities: Net loss $ (838 ) $ (12,705 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization of assets 52,675 32,123 Stock-based compensation 4,204 2,349 Amortization of debt issuance costs and discounts 2,613 1,607 Write-off of deferred loan costs and discount — 2,580 Deferred income tax benefit (3,567 ) (160 ) PIK interest paid — (23,715 ) Other non-cash items, net (154 ) (39 ) Change in operating assets and liabilities: Accounts receivable (11,265 ) (10,847 ) Prepaid expenses and other current assets (2,575 ) (1,947 ) Income taxes (receivable) payable 1,003 (1,541 ) Notes receivable 569 (190 ) Accounts payable and other accrued liabilities 13,711 9,192 Customer deposits and advance payments (1,910 ) 713 Other assets and liabilities, net (3,908 ) 13 Net cash provided by (used in) operating activities 50,558 (2,567 ) Cash flows from investing activities: Acquisitions of businesses, net of cash acquired — (407,129 ) Additions to property, equipment and software (11,380 ) (7,530 ) Notes receivable loan funding (3,250 ) — Acquisitions of intangible assets (6,715 ) (48,219 ) Other investing activities 250 — Net cash used in investing activities (21,095 ) (462,878 ) Cash flows from financing activities: Proceeds from issuance of long-term debt, net of issue discount — 607,318 Debt issuance and modification costs paid — (9,073 ) Repayments of long-term debt (4,650 ) (359,875 ) Borrowings under revolving credit facility 23,000 30,000 Repayments of borrowings under revolving credit facility (32,000 ) — Proceeds from the issuance of redeemable senior preferred stock, net of discount — 219,062 Redeemable senior preferred stock issuance fees and costs — (8,098 ) Repurchases of Common Stock and shares withheld for taxes (4,674 ) (1,023 ) Dividends paid to redeemable senior preferred stockholders (11,478 ) (4,015 ) Proceeds from exercise of stock options — 1,190 Settlement and customer accounts obligations, net 25,695 396,338 Contingent consideration for business combinations and asset acquisitions (3,992 ) — Other financing activities — (814 ) Net cash (used in) provided by financing activities (8,099 ) 871,010 Net change in cash and cash equivalents, and restricted cash: Net increase in cash and cash equivalents, and restricted cash 21,364 405,565 Cash and cash equivalents, and restricted cash at beginning of period 518,093 88,120 Cash and cash equivalents, and restricted cash equivalents at end of period $ 539,457 $ 493,685 Reconciliation of cash and cash equivalents, and restricted cash: Cash and cash equivalents $ 12,707 $ 16,974 Restricted cash 11,624 17,258 Cash and cash equivalents included in settlement assets and customer account balances 515,126 459,453 Total cash and cash equivalents, and restricted cash $ 539,457 $ 493,685 Priority Technology Holdings, Inc. Reportable Segments' Results (in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 SMB Payments: Revenue $ 139,892 $ 124,737 $ 412,357 $ 354,149 Operating expenses 126,445 110,090 372,429 311,769 Operating income $ 13,447 $ 14,647 $ 39,928 $ 42,380 Operating margin 9.6 % 11.7 % 9.7 % 12.0 % Depreciation and amortization $ 11,040 $ 11,049 $ 32,844 $ 30,130 Key indicators: Merchant bankcard processing dollar value $ 15,098,450 $ 13,830,550 $ 44,577,857 $ 39,602,577 Merchant bankcard transaction volume 165,796 153,053 476,084 431,369 B2B Payments: Revenue $ 4,868 $ 4,181 $ 16,088 $ 11,722 Operating expenses 4,651 4,210 14,799 12,139 Operating income (loss) $ 217 $ (29 ) $ 1,289 $ (417 ) Operating margin 4.5 % (0.7 ) % 8.0 % (3.6 )% Depreciation and amortization $ 295 $ 73 $ 441 $ 220 Key indicators: Merchant bankcard processing dollar value $ 116,348 $ 87,116 $ 380,217 $ 226,056 Merchant bankcard transaction volume 63 55 239 143 Enterprise Payments: Revenue $ 21,657 $ 3,624 $ 57,641 $ 4,982 Operating expenses 12,345 2,395 38,137 3,418 Operating income $ 9,312 $ 1,229 $ 19,504 $ 1,564 Operating margin 43.0 % 33.9 % 33.8 % 31.4 % Depreciation and amortization $ 6,203 $ 939 $ 18,599 $ 939 Key indicators: Merchant bankcard processing dollar value $ 585,382 $ 23 $ 1,189,034 $ 23 Merchant bankcard transaction volume 808 — 2,023 — Average billed clients 387,384 342,789 363,993 342,789 Operating income of reportable segments $ 22,976 $ 15,847 $ 60,721 $ 43,527 Less: Corporate expense (8,896 ) (7,597 ) (22,755 ) (23,345 ) Consolidated operating income $ 14,080 $ 8,250 $ 37,966 $ 20,182 Corporate depreciation and amortization $ 279 $ 269 $ 791 $ 834 Key indicators: Merchant bankcard processing dollar value $ 15,800,180 $ 13,917,689 $ 46,147,108 $ 39,828,656 Merchant bankcard transaction volume 166,667 153,108 478,346 431,512 Average billed clients 387,384 342,789 363,993 342,789 View source version on businesswire.com: https://www.businesswire.com/news/home/20221110005327/en/Contacts Priority Investor Inquiries: Chris Kettmann ckettmann@lincolnchurchilladvisors.com (773) 497-7575 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Priority Technology Holdings, Inc. Announces Third Quarter 2022 Financial Results By: Priority Technology Holdings, Inc. via Business Wire November 10, 2022 at 07:30 AM EST Strong Third Quarter Revenue and Gross Profit (Non-GAAP) Growth Across all Business Segments Priority Technology Holdings, Inc. (NASDAQ: PRTH) ("Priority" or the "Company"), the platform for unified commerce that delivers integrated payments and banking at scale, today announced its third quarter 2022 financial results including strong quarter-over-quarter diversified revenue growth. Highlights of Consolidated Results Third Quarter 2022, Compared with Third Quarter 2021 Financial highlights of the third quarter of 2022 compared with the third quarter of 2021, are as follows: Revenue of $166.4 million increased 25.6% from $132.5 million. Gross profit (a non-GAAP measure1) of $58.5 million increased 47.4% million from $39.7 million. Gross profit margin (a non-GAAP measure1) of 35.1% increased 510 basis points from 30.0%. Operating income of $14.1 million increased 69.9% from $8.3 million. Adjusted EBITDA (a non-GAAP measure1) of $35.1 million increased 48.7% from $23.6 million. See "Non-GAAP Financial Measures" and the reconciliations of Gross Profit (non-GAAP),Gross Profit Margin (non-GAAP), and Adjusted EBITDA, to their most comparable GAAP measures provided below for additional information. "We are pleased that our excellent third quarter results, by all financial metrics, continue to reinforce the strength of the solutions we offer our SMB, B2B and Enterprise payments partners," said Tom Priore, Chairman & CEO of Priority. "Our consistently strong performance through COVID and the current economic turmoil demonstrates the differentiation of our unified commerce platform that performs in varying business cycles and is poised to capitalize on emerging opportunities." Full Year 2022 Financial Guidance Priority's outlook remains strong and we are reaffirming our full-year 2022 revenue guidance while revising our adjusted EBITDA guidance for the year. Revenue remains forecasted to range between $650 million to $665 million, a growth rate of 26% to 29%. Adjusted EBITDA (a non-GAAP measure) is forecasted to range between $140 million to $145 million, a growth rate of 46% to 50%, compared to the prior forecasted range of $145 million to $150 million. Conference Call Priority Technology Holdings, Inc.'s leadership will host a conference call on Thursday, November 10, 2022 at 11:00 a.m. EST to discuss its third quarter 2022 financial results. Participants can access the call by phone in the U.S. or Canada at (833) 636-1319 or internationally at (412) 902-4286. The Internet webcast link and accompanying slide presentation can be accessed at https://edge.media-server.com/mmc/p/ofqk9ouz and will also be posted in the "Investor Relations" section of the Company's website at www.prioritycommerce.com. An audio replay of the call will be available shortly after the conference call until November 17, 2022 at 2:00 p.m. EST. To listen to the audio replay, dial (877) 344-7529 or (412) 317-0088 and enter conference ID number 1085687. Alternatively, you may access the webcast replay in the "Investor Relations" section of the Company's website at www.prioritycommerce.com. Non-GAAP Financial Measures This communication includes certain non-GAAP financial measures that we regularly review to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions. We believe these non-GAAP measures help to illustrate the underlying financial and business trends relating to our results of operations and comparability between current and prior periods. We also use these non-GAAP measures to establish and monitor operational goals. However, these non-GAAP measures are not superior to or a substitute for prominent measurements calculated in accordance with GAAP. Rather, the non-GAAP measures are meant to be a complement to understanding measures prepared in accordance with GAAP. Gross Profit (non-GAAP) and Gross Profit Margin (non-GAAP) The Company's gross profit (non-GAAP) metric represents revenues less cost of revenue (excluding depreciation and amortization). Gross profit margin (non-GAAP) is gross profit (non-GAAP) divided by revenues. We review these non-GAAP measures to evaluate our underlying profit trends. The reconciliation of gross profit (non-GAAP) to its most comparable GAAP measure is provided below: (in thousands) Three Months Ended September 30, 2022 2021 Revenues $ 166,417 $ 132,542 Cost of revenue (excluding depreciation and amortization) (107,958 ) (92,833 ) Gross profit (non-GAAP) 58,459 39,709 Gross profit margin (non-GAAP) 35.1 % 30.0 % Depreciation and amortization of revenue generating assets (2,629 ) (1,495 ) Gross profit 55,830 38,214 Gross profit margin 33.5 % 28.8 % EBITDA and Adjusted EBITDA EBITDA and adjusted EBITDA are performance measures. EBITDA is earnings before interest, income tax, and depreciation and amortization expenses ("EBITDA"). Adjusted EBITDA begins with EBITDA but further excludes certain non-cash costs, such as stock-based compensation and the write-off of the carrying value of investments or other assets, as well as debt extinguishment and modification expenses and other expenses and income items considered non-recurring, such as acquisition integration expenses, certain professional fees, and litigation settlements. We review the non-GAAP adjusted EBITDA measure to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions. The reconciliation of adjusted EBITDA to its most comparable GAAP measure is provided below: (in thousands) Three Months Ended September 30, 2022 2021 Net income (loss) $ (792 ) $ (549 ) Interest expense 13,412 8,155 Income tax expense 1,691 790 Depreciation and amortization 17,817 12,330 EBITDA 32,128 20,726 Selling, general and administrative (non-recurring) 760 1,901 Non-cash stock-based compensation 1,104 935 Change in the fair value of contingent consideration 1,072 — Adjusted EBITDA $ 35,064 $ 23,562 Further detail of certain of these adjustments, and where these items are recorded in our consolidated statements of operations, is provided below: (in thousands) Three Months Ended September 30, 2022 2021 Selling, general and administrative expenses (non-recurring): Certain legal fees $ 199 $ 932 Professional, accounting and consulting fees 95 383 Other expenses 466 586 $ 760 $ 1,901 Priority does not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because it could not do so without unreasonable effort due to the unavailability of the information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, the Company does so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for various cash and non-cash reconciling items that would be difficult to predict with reasonable accuracy. For example, stock-based compensation expense would be difficult to estimate because it depends on the Company's future hiring and retention needs, as well as the future fair market value of the Company's common stock, all of which are difficult to predict and subject to constant change. As a result, the Company does not believe that a GAAP reconciliation would provide meaningful supplemental information about the Company's outlook. About Priority Technology Holdings, Inc. Priority is a payments powerhouse driving the convergence of payments and banking. The company has built a single platform to collect, store, and send money that operates at scale. We help our customers take and make payments while managing business and consumer operating accounts to monetize payment networks. Our tailored, agile technology powers high-value, payments products bolstered by our industry-leading personalized support. Additional information can be found at www.prioritycommerce.com. Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services, and other statements identified by words such as "may," "will," "should," "anticipates," "believes," "expects," "plans," "future," "intends," "could," "estimate," "predict," "projects," "targeting," "potential" or "contingent," "guidance," "outlook" or words of similar meaning. These forward-looking statements include, but are not limited to, our 2022 outlook and statements regarding our market and growth opportunities. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive risks, trends and uncertainties that could cause actual results to differ materially from those projected, expressed, or implied by such forward-looking statements. Our actual results could differ materially, and potentially adversely, from those discussed or implied herein. We caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties disclosed in our SEC filings, including our most recent Annual Report on Form 10-K filed with the SEC on March 17, 2022 and our Quarterly Report on Form 10-Q filed with the SEC on August 9, 2022. These filings are available online at www.sec.gov or www.prioritycommerce.com. We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the way we expect. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. Priority Technology Holdings, Inc. Unaudited Consolidated Statements of Operations (in thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenues $ 166,417 $ 132,542 $ 486,086 $ 370,853 Operating expenses Cost of revenue (excludes depreciation and amortization) 107,958 92,833 320,187 264,527 Salary and employee benefits 16,384 11,909 48,231 31,808 Depreciation and amortization 17,817 12,330 52,675 32,123 Selling, general and administrative 10,178 7,220 27,027 22,213 Total operating expenses 152,337 124,292 448,120 350,671 Operating income 14,080 8,250 37,966 20,182 Other (expense) income Interest expense (13,412 ) (8,155 ) (37,282 ) (24,608 ) Debt extinguishment and modification costs — — — (8,322 ) Other income, net 231 146 311 92 Total other expense, net (13,181 ) (8,009 ) (36,971 ) (32,838 ) Income (loss) before income taxes 899 241 995 (12,656 ) Income tax expense 1,691 790 1,833 49 Net loss (792 ) (549 ) (838 ) (12,705 ) Less: Dividends and accretion attributable to redeemable senior preferred stockholders (9,466 ) (5,813 ) (26,415 ) (9,724 ) Less: NCI preferred unit redemptions — — — (10,777 ) Net loss attributable to common stockholders $ (10,258 ) $ (6,362 ) $ (27,253 ) $ (33,206 ) Loss per common share: Basic and diluted $ (0.13 ) $ (0.09 ) $ (0.35 ) $ (0.48 ) Weighted-average common shares outstanding: Basic and diluted 77,984 71,979 78,392 69,689 Priority Technology Holdings, Inc. Unaudited Consolidated Balance Sheets (in thousands) September 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 12,707 $ 20,300 Restricted cash 11,624 28,859 Accounts receivable, net of allowances 69,688 58,423 Prepaid expenses and other current assets 16,725 15,807 Current portion of notes receivable 986 272 Settlement assets and customer account balances 516,687 479,471 Total current assets 628,417 603,132 Notes receivable, less current portion 2,072 105 Property, equipment and software, net 29,773 25,233 Goodwill 365,347 365,740 Intangible assets, net 301,729 340,211 Deferred income taxes, net 12,058 8,265 Other noncurrent assets 10,353 9,256 Total assets $ 1,349,749 $ 1,351,942 Liabilities, Redeemable Senior Preferred Stock and Stockholders' Deficit Current liabilities: Accounts payable and accrued expenses $ 50,955 $ 42,523 Accrued residual commissions 32,593 29,532 Customer deposits and advance payments 3,111 5,021 Current portion of long-term debt 6,200 6,200 Settlement and customer account obligations 517,008 500,291 Total current liabilities 609,867 583,567 Long-term debt, net of current portion, discounts and debt issuance costs 593,068 604,105 Other noncurrent liabilities 13,583 18,349 Total noncurrent liabilities 606,651 622,454 Total liabilities 1,216,518 1,206,021 Redeemable senior preferred stock 225,095 210,158 Stockholders' deficit: Preferred stock — — Common stock 78 77 Additional paid-in capital 17,719 39,835 Treasury stock, at cost (8,765 ) (4,091 ) Accumulated deficit (100,896 ) (100,058 ) Total stockholders' deficit (91,864 ) (64,237 ) Total liabilities, redeemable senior preferred stock and stockholders' deficit $ 1,349,749 $ 1,351,942 Priority Technology Holdings, Inc. Unaudited Consolidated Statements of Cash Flows (in thousands) Nine Months Ended September 30, 2022 2021 Cash flows from operating activities: Net loss $ (838 ) $ (12,705 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization of assets 52,675 32,123 Stock-based compensation 4,204 2,349 Amortization of debt issuance costs and discounts 2,613 1,607 Write-off of deferred loan costs and discount — 2,580 Deferred income tax benefit (3,567 ) (160 ) PIK interest paid — (23,715 ) Other non-cash items, net (154 ) (39 ) Change in operating assets and liabilities: Accounts receivable (11,265 ) (10,847 ) Prepaid expenses and other current assets (2,575 ) (1,947 ) Income taxes (receivable) payable 1,003 (1,541 ) Notes receivable 569 (190 ) Accounts payable and other accrued liabilities 13,711 9,192 Customer deposits and advance payments (1,910 ) 713 Other assets and liabilities, net (3,908 ) 13 Net cash provided by (used in) operating activities 50,558 (2,567 ) Cash flows from investing activities: Acquisitions of businesses, net of cash acquired — (407,129 ) Additions to property, equipment and software (11,380 ) (7,530 ) Notes receivable loan funding (3,250 ) — Acquisitions of intangible assets (6,715 ) (48,219 ) Other investing activities 250 — Net cash used in investing activities (21,095 ) (462,878 ) Cash flows from financing activities: Proceeds from issuance of long-term debt, net of issue discount — 607,318 Debt issuance and modification costs paid — (9,073 ) Repayments of long-term debt (4,650 ) (359,875 ) Borrowings under revolving credit facility 23,000 30,000 Repayments of borrowings under revolving credit facility (32,000 ) — Proceeds from the issuance of redeemable senior preferred stock, net of discount — 219,062 Redeemable senior preferred stock issuance fees and costs — (8,098 ) Repurchases of Common Stock and shares withheld for taxes (4,674 ) (1,023 ) Dividends paid to redeemable senior preferred stockholders (11,478 ) (4,015 ) Proceeds from exercise of stock options — 1,190 Settlement and customer accounts obligations, net 25,695 396,338 Contingent consideration for business combinations and asset acquisitions (3,992 ) — Other financing activities — (814 ) Net cash (used in) provided by financing activities (8,099 ) 871,010 Net change in cash and cash equivalents, and restricted cash: Net increase in cash and cash equivalents, and restricted cash 21,364 405,565 Cash and cash equivalents, and restricted cash at beginning of period 518,093 88,120 Cash and cash equivalents, and restricted cash equivalents at end of period $ 539,457 $ 493,685 Reconciliation of cash and cash equivalents, and restricted cash: Cash and cash equivalents $ 12,707 $ 16,974 Restricted cash 11,624 17,258 Cash and cash equivalents included in settlement assets and customer account balances 515,126 459,453 Total cash and cash equivalents, and restricted cash $ 539,457 $ 493,685 Priority Technology Holdings, Inc. Reportable Segments' Results (in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 SMB Payments: Revenue $ 139,892 $ 124,737 $ 412,357 $ 354,149 Operating expenses 126,445 110,090 372,429 311,769 Operating income $ 13,447 $ 14,647 $ 39,928 $ 42,380 Operating margin 9.6 % 11.7 % 9.7 % 12.0 % Depreciation and amortization $ 11,040 $ 11,049 $ 32,844 $ 30,130 Key indicators: Merchant bankcard processing dollar value $ 15,098,450 $ 13,830,550 $ 44,577,857 $ 39,602,577 Merchant bankcard transaction volume 165,796 153,053 476,084 431,369 B2B Payments: Revenue $ 4,868 $ 4,181 $ 16,088 $ 11,722 Operating expenses 4,651 4,210 14,799 12,139 Operating income (loss) $ 217 $ (29 ) $ 1,289 $ (417 ) Operating margin 4.5 % (0.7 ) % 8.0 % (3.6 )% Depreciation and amortization $ 295 $ 73 $ 441 $ 220 Key indicators: Merchant bankcard processing dollar value $ 116,348 $ 87,116 $ 380,217 $ 226,056 Merchant bankcard transaction volume 63 55 239 143 Enterprise Payments: Revenue $ 21,657 $ 3,624 $ 57,641 $ 4,982 Operating expenses 12,345 2,395 38,137 3,418 Operating income $ 9,312 $ 1,229 $ 19,504 $ 1,564 Operating margin 43.0 % 33.9 % 33.8 % 31.4 % Depreciation and amortization $ 6,203 $ 939 $ 18,599 $ 939 Key indicators: Merchant bankcard processing dollar value $ 585,382 $ 23 $ 1,189,034 $ 23 Merchant bankcard transaction volume 808 — 2,023 — Average billed clients 387,384 342,789 363,993 342,789 Operating income of reportable segments $ 22,976 $ 15,847 $ 60,721 $ 43,527 Less: Corporate expense (8,896 ) (7,597 ) (22,755 ) (23,345 ) Consolidated operating income $ 14,080 $ 8,250 $ 37,966 $ 20,182 Corporate depreciation and amortization $ 279 $ 269 $ 791 $ 834 Key indicators: Merchant bankcard processing dollar value $ 15,800,180 $ 13,917,689 $ 46,147,108 $ 39,828,656 Merchant bankcard transaction volume 166,667 153,108 478,346 431,512 Average billed clients 387,384 342,789 363,993 342,789 View source version on businesswire.com: https://www.businesswire.com/news/home/20221110005327/en/Contacts Priority Investor Inquiries: Chris Kettmann ckettmann@lincolnchurchilladvisors.com (773) 497-7575
Priority Technology Holdings, Inc. (NASDAQ: PRTH) ("Priority" or the "Company"), the platform for unified commerce that delivers integrated payments and banking at scale, today announced its third quarter 2022 financial results including strong quarter-over-quarter diversified revenue growth. Highlights of Consolidated Results Third Quarter 2022, Compared with Third Quarter 2021 Financial highlights of the third quarter of 2022 compared with the third quarter of 2021, are as follows: Revenue of $166.4 million increased 25.6% from $132.5 million. Gross profit (a non-GAAP measure1) of $58.5 million increased 47.4% million from $39.7 million. Gross profit margin (a non-GAAP measure1) of 35.1% increased 510 basis points from 30.0%. Operating income of $14.1 million increased 69.9% from $8.3 million. Adjusted EBITDA (a non-GAAP measure1) of $35.1 million increased 48.7% from $23.6 million. See "Non-GAAP Financial Measures" and the reconciliations of Gross Profit (non-GAAP),Gross Profit Margin (non-GAAP), and Adjusted EBITDA, to their most comparable GAAP measures provided below for additional information. "We are pleased that our excellent third quarter results, by all financial metrics, continue to reinforce the strength of the solutions we offer our SMB, B2B and Enterprise payments partners," said Tom Priore, Chairman & CEO of Priority. "Our consistently strong performance through COVID and the current economic turmoil demonstrates the differentiation of our unified commerce platform that performs in varying business cycles and is poised to capitalize on emerging opportunities." Full Year 2022 Financial Guidance Priority's outlook remains strong and we are reaffirming our full-year 2022 revenue guidance while revising our adjusted EBITDA guidance for the year. Revenue remains forecasted to range between $650 million to $665 million, a growth rate of 26% to 29%. Adjusted EBITDA (a non-GAAP measure) is forecasted to range between $140 million to $145 million, a growth rate of 46% to 50%, compared to the prior forecasted range of $145 million to $150 million. Conference Call Priority Technology Holdings, Inc.'s leadership will host a conference call on Thursday, November 10, 2022 at 11:00 a.m. EST to discuss its third quarter 2022 financial results. Participants can access the call by phone in the U.S. or Canada at (833) 636-1319 or internationally at (412) 902-4286. The Internet webcast link and accompanying slide presentation can be accessed at https://edge.media-server.com/mmc/p/ofqk9ouz and will also be posted in the "Investor Relations" section of the Company's website at www.prioritycommerce.com. An audio replay of the call will be available shortly after the conference call until November 17, 2022 at 2:00 p.m. EST. To listen to the audio replay, dial (877) 344-7529 or (412) 317-0088 and enter conference ID number 1085687. Alternatively, you may access the webcast replay in the "Investor Relations" section of the Company's website at www.prioritycommerce.com. Non-GAAP Financial Measures This communication includes certain non-GAAP financial measures that we regularly review to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions. We believe these non-GAAP measures help to illustrate the underlying financial and business trends relating to our results of operations and comparability between current and prior periods. We also use these non-GAAP measures to establish and monitor operational goals. However, these non-GAAP measures are not superior to or a substitute for prominent measurements calculated in accordance with GAAP. Rather, the non-GAAP measures are meant to be a complement to understanding measures prepared in accordance with GAAP. Gross Profit (non-GAAP) and Gross Profit Margin (non-GAAP) The Company's gross profit (non-GAAP) metric represents revenues less cost of revenue (excluding depreciation and amortization). Gross profit margin (non-GAAP) is gross profit (non-GAAP) divided by revenues. We review these non-GAAP measures to evaluate our underlying profit trends. The reconciliation of gross profit (non-GAAP) to its most comparable GAAP measure is provided below: (in thousands) Three Months Ended September 30, 2022 2021 Revenues $ 166,417 $ 132,542 Cost of revenue (excluding depreciation and amortization) (107,958 ) (92,833 ) Gross profit (non-GAAP) 58,459 39,709 Gross profit margin (non-GAAP) 35.1 % 30.0 % Depreciation and amortization of revenue generating assets (2,629 ) (1,495 ) Gross profit 55,830 38,214 Gross profit margin 33.5 % 28.8 % EBITDA and Adjusted EBITDA EBITDA and adjusted EBITDA are performance measures. EBITDA is earnings before interest, income tax, and depreciation and amortization expenses ("EBITDA"). Adjusted EBITDA begins with EBITDA but further excludes certain non-cash costs, such as stock-based compensation and the write-off of the carrying value of investments or other assets, as well as debt extinguishment and modification expenses and other expenses and income items considered non-recurring, such as acquisition integration expenses, certain professional fees, and litigation settlements. We review the non-GAAP adjusted EBITDA measure to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions. The reconciliation of adjusted EBITDA to its most comparable GAAP measure is provided below: (in thousands) Three Months Ended September 30, 2022 2021 Net income (loss) $ (792 ) $ (549 ) Interest expense 13,412 8,155 Income tax expense 1,691 790 Depreciation and amortization 17,817 12,330 EBITDA 32,128 20,726 Selling, general and administrative (non-recurring) 760 1,901 Non-cash stock-based compensation 1,104 935 Change in the fair value of contingent consideration 1,072 — Adjusted EBITDA $ 35,064 $ 23,562 Further detail of certain of these adjustments, and where these items are recorded in our consolidated statements of operations, is provided below: (in thousands) Three Months Ended September 30, 2022 2021 Selling, general and administrative expenses (non-recurring): Certain legal fees $ 199 $ 932 Professional, accounting and consulting fees 95 383 Other expenses 466 586 $ 760 $ 1,901 Priority does not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because it could not do so without unreasonable effort due to the unavailability of the information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, the Company does so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for various cash and non-cash reconciling items that would be difficult to predict with reasonable accuracy. For example, stock-based compensation expense would be difficult to estimate because it depends on the Company's future hiring and retention needs, as well as the future fair market value of the Company's common stock, all of which are difficult to predict and subject to constant change. As a result, the Company does not believe that a GAAP reconciliation would provide meaningful supplemental information about the Company's outlook. About Priority Technology Holdings, Inc. Priority is a payments powerhouse driving the convergence of payments and banking. The company has built a single platform to collect, store, and send money that operates at scale. We help our customers take and make payments while managing business and consumer operating accounts to monetize payment networks. Our tailored, agile technology powers high-value, payments products bolstered by our industry-leading personalized support. Additional information can be found at www.prioritycommerce.com. Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services, and other statements identified by words such as "may," "will," "should," "anticipates," "believes," "expects," "plans," "future," "intends," "could," "estimate," "predict," "projects," "targeting," "potential" or "contingent," "guidance," "outlook" or words of similar meaning. These forward-looking statements include, but are not limited to, our 2022 outlook and statements regarding our market and growth opportunities. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive risks, trends and uncertainties that could cause actual results to differ materially from those projected, expressed, or implied by such forward-looking statements. Our actual results could differ materially, and potentially adversely, from those discussed or implied herein. We caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties disclosed in our SEC filings, including our most recent Annual Report on Form 10-K filed with the SEC on March 17, 2022 and our Quarterly Report on Form 10-Q filed with the SEC on August 9, 2022. These filings are available online at www.sec.gov or www.prioritycommerce.com. We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the way we expect. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. Priority Technology Holdings, Inc. Unaudited Consolidated Statements of Operations (in thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenues $ 166,417 $ 132,542 $ 486,086 $ 370,853 Operating expenses Cost of revenue (excludes depreciation and amortization) 107,958 92,833 320,187 264,527 Salary and employee benefits 16,384 11,909 48,231 31,808 Depreciation and amortization 17,817 12,330 52,675 32,123 Selling, general and administrative 10,178 7,220 27,027 22,213 Total operating expenses 152,337 124,292 448,120 350,671 Operating income 14,080 8,250 37,966 20,182 Other (expense) income Interest expense (13,412 ) (8,155 ) (37,282 ) (24,608 ) Debt extinguishment and modification costs — — — (8,322 ) Other income, net 231 146 311 92 Total other expense, net (13,181 ) (8,009 ) (36,971 ) (32,838 ) Income (loss) before income taxes 899 241 995 (12,656 ) Income tax expense 1,691 790 1,833 49 Net loss (792 ) (549 ) (838 ) (12,705 ) Less: Dividends and accretion attributable to redeemable senior preferred stockholders (9,466 ) (5,813 ) (26,415 ) (9,724 ) Less: NCI preferred unit redemptions — — — (10,777 ) Net loss attributable to common stockholders $ (10,258 ) $ (6,362 ) $ (27,253 ) $ (33,206 ) Loss per common share: Basic and diluted $ (0.13 ) $ (0.09 ) $ (0.35 ) $ (0.48 ) Weighted-average common shares outstanding: Basic and diluted 77,984 71,979 78,392 69,689 Priority Technology Holdings, Inc. Unaudited Consolidated Balance Sheets (in thousands) September 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 12,707 $ 20,300 Restricted cash 11,624 28,859 Accounts receivable, net of allowances 69,688 58,423 Prepaid expenses and other current assets 16,725 15,807 Current portion of notes receivable 986 272 Settlement assets and customer account balances 516,687 479,471 Total current assets 628,417 603,132 Notes receivable, less current portion 2,072 105 Property, equipment and software, net 29,773 25,233 Goodwill 365,347 365,740 Intangible assets, net 301,729 340,211 Deferred income taxes, net 12,058 8,265 Other noncurrent assets 10,353 9,256 Total assets $ 1,349,749 $ 1,351,942 Liabilities, Redeemable Senior Preferred Stock and Stockholders' Deficit Current liabilities: Accounts payable and accrued expenses $ 50,955 $ 42,523 Accrued residual commissions 32,593 29,532 Customer deposits and advance payments 3,111 5,021 Current portion of long-term debt 6,200 6,200 Settlement and customer account obligations 517,008 500,291 Total current liabilities 609,867 583,567 Long-term debt, net of current portion, discounts and debt issuance costs 593,068 604,105 Other noncurrent liabilities 13,583 18,349 Total noncurrent liabilities 606,651 622,454 Total liabilities 1,216,518 1,206,021 Redeemable senior preferred stock 225,095 210,158 Stockholders' deficit: Preferred stock — — Common stock 78 77 Additional paid-in capital 17,719 39,835 Treasury stock, at cost (8,765 ) (4,091 ) Accumulated deficit (100,896 ) (100,058 ) Total stockholders' deficit (91,864 ) (64,237 ) Total liabilities, redeemable senior preferred stock and stockholders' deficit $ 1,349,749 $ 1,351,942 Priority Technology Holdings, Inc. Unaudited Consolidated Statements of Cash Flows (in thousands) Nine Months Ended September 30, 2022 2021 Cash flows from operating activities: Net loss $ (838 ) $ (12,705 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization of assets 52,675 32,123 Stock-based compensation 4,204 2,349 Amortization of debt issuance costs and discounts 2,613 1,607 Write-off of deferred loan costs and discount — 2,580 Deferred income tax benefit (3,567 ) (160 ) PIK interest paid — (23,715 ) Other non-cash items, net (154 ) (39 ) Change in operating assets and liabilities: Accounts receivable (11,265 ) (10,847 ) Prepaid expenses and other current assets (2,575 ) (1,947 ) Income taxes (receivable) payable 1,003 (1,541 ) Notes receivable 569 (190 ) Accounts payable and other accrued liabilities 13,711 9,192 Customer deposits and advance payments (1,910 ) 713 Other assets and liabilities, net (3,908 ) 13 Net cash provided by (used in) operating activities 50,558 (2,567 ) Cash flows from investing activities: Acquisitions of businesses, net of cash acquired — (407,129 ) Additions to property, equipment and software (11,380 ) (7,530 ) Notes receivable loan funding (3,250 ) — Acquisitions of intangible assets (6,715 ) (48,219 ) Other investing activities 250 — Net cash used in investing activities (21,095 ) (462,878 ) Cash flows from financing activities: Proceeds from issuance of long-term debt, net of issue discount — 607,318 Debt issuance and modification costs paid — (9,073 ) Repayments of long-term debt (4,650 ) (359,875 ) Borrowings under revolving credit facility 23,000 30,000 Repayments of borrowings under revolving credit facility (32,000 ) — Proceeds from the issuance of redeemable senior preferred stock, net of discount — 219,062 Redeemable senior preferred stock issuance fees and costs — (8,098 ) Repurchases of Common Stock and shares withheld for taxes (4,674 ) (1,023 ) Dividends paid to redeemable senior preferred stockholders (11,478 ) (4,015 ) Proceeds from exercise of stock options — 1,190 Settlement and customer accounts obligations, net 25,695 396,338 Contingent consideration for business combinations and asset acquisitions (3,992 ) — Other financing activities — (814 ) Net cash (used in) provided by financing activities (8,099 ) 871,010 Net change in cash and cash equivalents, and restricted cash: Net increase in cash and cash equivalents, and restricted cash 21,364 405,565 Cash and cash equivalents, and restricted cash at beginning of period 518,093 88,120 Cash and cash equivalents, and restricted cash equivalents at end of period $ 539,457 $ 493,685 Reconciliation of cash and cash equivalents, and restricted cash: Cash and cash equivalents $ 12,707 $ 16,974 Restricted cash 11,624 17,258 Cash and cash equivalents included in settlement assets and customer account balances 515,126 459,453 Total cash and cash equivalents, and restricted cash $ 539,457 $ 493,685 Priority Technology Holdings, Inc. Reportable Segments' Results (in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 SMB Payments: Revenue $ 139,892 $ 124,737 $ 412,357 $ 354,149 Operating expenses 126,445 110,090 372,429 311,769 Operating income $ 13,447 $ 14,647 $ 39,928 $ 42,380 Operating margin 9.6 % 11.7 % 9.7 % 12.0 % Depreciation and amortization $ 11,040 $ 11,049 $ 32,844 $ 30,130 Key indicators: Merchant bankcard processing dollar value $ 15,098,450 $ 13,830,550 $ 44,577,857 $ 39,602,577 Merchant bankcard transaction volume 165,796 153,053 476,084 431,369 B2B Payments: Revenue $ 4,868 $ 4,181 $ 16,088 $ 11,722 Operating expenses 4,651 4,210 14,799 12,139 Operating income (loss) $ 217 $ (29 ) $ 1,289 $ (417 ) Operating margin 4.5 % (0.7 ) % 8.0 % (3.6 )% Depreciation and amortization $ 295 $ 73 $ 441 $ 220 Key indicators: Merchant bankcard processing dollar value $ 116,348 $ 87,116 $ 380,217 $ 226,056 Merchant bankcard transaction volume 63 55 239 143 Enterprise Payments: Revenue $ 21,657 $ 3,624 $ 57,641 $ 4,982 Operating expenses 12,345 2,395 38,137 3,418 Operating income $ 9,312 $ 1,229 $ 19,504 $ 1,564 Operating margin 43.0 % 33.9 % 33.8 % 31.4 % Depreciation and amortization $ 6,203 $ 939 $ 18,599 $ 939 Key indicators: Merchant bankcard processing dollar value $ 585,382 $ 23 $ 1,189,034 $ 23 Merchant bankcard transaction volume 808 — 2,023 — Average billed clients 387,384 342,789 363,993 342,789 Operating income of reportable segments $ 22,976 $ 15,847 $ 60,721 $ 43,527 Less: Corporate expense (8,896 ) (7,597 ) (22,755 ) (23,345 ) Consolidated operating income $ 14,080 $ 8,250 $ 37,966 $ 20,182 Corporate depreciation and amortization $ 279 $ 269 $ 791 $ 834 Key indicators: Merchant bankcard processing dollar value $ 15,800,180 $ 13,917,689 $ 46,147,108 $ 39,828,656 Merchant bankcard transaction volume 166,667 153,108 478,346 431,512 Average billed clients 387,384 342,789 363,993 342,789 View source version on businesswire.com: https://www.businesswire.com/news/home/20221110005327/en/