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 Second Quarter 2023 Financial Results By: Priority Technology Holdings, Inc. via Business Wire August 10, 2023 at 07:30 AM EDT Strong Second Quarter Growth Driven by Performance Across Diverse Business Segments Priority Technology Holdings, Inc. (NASDAQ: PRTH) ("Priority" or the "Company"), the platform for unified commerce that delivers integrated payments and banking services at scale, today announced its second quarter 2023 financial results including strong quarter-over-quarter diversified revenue growth. Highlights of Consolidated Results Second Quarter 2023 Compared with Second Quarter 2022 Financial highlights of the second quarter of 2023 compared with the second quarter of 2022, are as follows: Revenue of $182.3 million increased 9.6% from $166.4 million Adjusted gross profit (a non-GAAP measure1) of $67.0 million increased 20.3% from $55.7 million Adjusted gross profit margin (a non-GAAP measure1) of 36.8% increased 330 basis points from 33.5% Operating income of $19.1 million increased 45.8% from $13.1 million Adjusted EBITDA (a non-GAAP measure1) of $41.1 million increased 21.2% from $33.9 million "Consistent with the first few months of the year, we continued to deliver strong results as we executed our unified commerce vision combining payments and banking on a single platform, enhanced by the strength of our counter cyclical business lines that were positioned to benefit from higher interest rates and weakening macroeconomic trends," said Tom Priore, Chairman & CEO of Priority. "We continue to invest thoughtfully, as our recent acquisition of Plastiq demonstrates, to deliver differentiated solutions to our business and integrated software clients that accelerate cash flow and optimize working capital, which will drive consistent long-term performance for our shareholders." (1) See "Non-GAAP Financial Measures" and the reconciliations of Adjusted Gross Profit (non-GAAP), Adjusted Gross Profit Margin (non-GAAP), and Adjusted EBITDA, to their most comparable GAAP measures provided below for additional information. Updated Full Year 2023 Financial Guidance The Company has updated its outlook for the full year 2023 to include the forecasted post-acquisition contribution from the Plastiq business as follows: Revenue forecast revised to range between $765 million to $780 million, a growth rate of 15% to 17%, from $740 million to $755 million Adjusted EBITDA (a non-GAAP measure) forecast remains in range between $160 million to $165 million, a growth rate of 14% to 18% Conference Call Priority's leadership will host a conference call on Thursday, August 10, 2023 at 11:00 a.m. EDT to discuss its second quarter 2023 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/yohu2k4c 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 August 17, 2023 at 2:00 p.m. EDT. To listen to the audio replay, dial (877) 344-7529 or (412) 317-0088 and enter conference ID number 2194982. 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. Adjusted Gross Profit and Adjusted Gross Profit Margin The Company's adjusted gross profit metric represents revenues less cost of revenue (excluding depreciation and amortization). Adjusted gross profit margin is adjusted gross profit divided by revenues. We review these non-GAAP measures to evaluate our underlying profit trends. The reconciliation of adjusted gross profit to its most comparable GAAP measure is provided below: (in thousands) Three Months Ended June 30, 2023 2022 Revenues $ 182,290 $ 166,430 Cost of revenue (excluding depreciation and amortization) (115,281 ) (110,749 ) Adjusted gross profit $ 67,009 $ 55,681 Adjusted gross profit margin 36.8 % 33.5 % Depreciation and amortization of revenue generating assets (3,030 ) (2,538 ) Gross profit $ 63,979 $ 53,143 Gross profit margin 35.1 % 31.9 % 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 June 30, 2023 2022 Net loss (income) $ (612 ) $ 287 Interest expense 17,765 12,335 Income tax expense 2,355 467 Depreciation and amortization 17,980 17,505 EBITDA 37,488 30,594 Selling, general and administrative (non-recurring) 1,859 1,743 Non-cash stock-based compensation 1,746 1,542 Adjusted EBITDA $ 41,093 $ 33,879 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 June 30, 2023 2022 Selling, general and administrative expenses (non-recurring): Certain legal fees $ 1,221 $ 213 Professional, accounting and consulting fees 509 373 IRS penalty for 2014 and 2015 — 703 General ledger transition expenses — 96 Other expenses 129 358 $ 1,859 $ 1,743 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 technology company that leverages a purpose-built platform to enable clients to collect, store and send money, operating at scale. Priority helps its customers take and make payments while managing business and consumer operating accounts to monetize payment networks. Priority's tailored, agile technology powers high-value payments products bolstered by industry-leading personalized support, and delivers value to its partners by leveraging its payments and embedded finance technology to deliver solutions that power modern commerce. The Company's approach is simple – Priority handles the complexities of payments and embedded finance to free its partners to focus on their core business objectives. Priority's solutions are offered via API or proprietary applications with nationwide money transmission licenses, providing end-to-end operational support including automated risk management and underwriting, full compliance and industry leading customer service. 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 2023 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 23, 2023. 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenues $ 182,290 $ 166,430 $ 367,318 $ 319,669 Operating expenses Cost of revenue (excludes depreciation and amortization) 115,281 110,749 237,247 212,229 Salary and employee benefits 19,109 15,770 38,157 31,847 Depreciation and amortization 17,980 17,505 36,028 34,858 Selling, general and administrative 10,787 9,346 19,905 16,849 Total operating expenses 163,157 153,370 331,337 295,783 Operating income 19,133 13,060 35,981 23,886 Other (expense) income Interest expense (17,765 ) (12,335 ) (35,464 ) (23,870 ) Other income, net 375 29 587 80 Total other expense, net (17,390 ) (12,306 ) (34,877 ) (23,790 ) Income before income taxes 1,743 754 1,104 96 Income tax expense 2,355 467 2,222 142 Net (loss) income (612 ) 287 (1,118 ) (46 ) Less: Dividends and accretion attributable to redeemable senior preferred stockholders (11,765 ) (8,549 ) (23,060 ) (16,949 ) Loss attributable to common stockholders (12,377 ) (8,262 ) $ (24,178 ) $ (16,995 ) Other comprehensive income (loss) Foreign currency translation adjustments 7 — 31 — Comprehensive loss $ (12,370 ) $ (8,262 ) $ (24,147 ) $ (16,995 ) Loss per common share: Basic and diluted $ (0.16 ) $ (0.11 ) $ (0.31 ) $ (0.22 ) Weighted-average common shares outstanding: Basic and diluted 78,292 78,603 78,213 78,600 Priority Technology Holdings, Inc. Unaudited Consolidated Balance Sheets (in thousands) June 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 17,567 $ 18,454 Restricted cash 12,357 10,582 Accounts receivable, net of allowances 60,130 78,113 Prepaid expenses and other current assets 14,608 11,832 Current portion of notes receivable 2,530 1,471 Settlement assets and customer/subscriber account balances 710,705 532,018 Total current assets 817,897 652,470 Notes receivable, less current portion 3,018 3,191 Property, equipment and software, net 38,984 34,687 Goodwill 368,740 369,337 Intangible assets, net 269,428 288,794 Deferred income taxes, net 26,066 16,447 Other noncurrent assets 8,147 8,437 Total assets $ 1,532,280 1,373,363 Liabilities, Redeemable Senior Preferred Stock and Stockholders' Deficit Current liabilities: Accounts payable and accrued expenses $ 59,839 $ 51,864 Accrued residual commissions 34,614 35,979 Customer deposits and advance payments 3,253 2,618 Current portion of long-term debt 6,200 6,200 Settlement and customer/subscriber account obligations 710,551 533,340 Total current liabilities 814,457 630,001 Long-term debt, net of current portion, discounts and debt issuance costs 589,932 598,926 Other noncurrent liabilities 11,752 11,643 Total noncurrent liabilities 601,684 610,569 Total liabilities 1,416,141 1,240,570 Redeemable senior preferred stock 240,731 235,579 Stockholders' deficit: Preferred stock — — Common stock 76 76 Treasury stock, at cost (12,577 ) (11,559 ) Additional paid-in capital — 9,650 Accumulated other comprehensive income 31 — Accumulated deficit (112,974 ) (102,208 ) Total stockholders' deficit attributable to stockholders of PRTH (125,444 ) (104,041 ) Non-controlling interest 852 1,255 Total stockholders' deficit (124,592 ) (102,786 ) Total liabilities, redeemable senior preferred stock and stockholders' deficit $ 1,532,280 $ 1,373,363 Priority Technology Holdings, Inc. Unaudited Consolidated Statements of Cash Flows (in thousands) Six Months Ended June 30, 2023 2022 Cash flows from operating activities: Net loss $ (1,118 ) $ (46 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization of assets 36,028 34,858 Stock-based compensation 3,682 3,100 Amortization of debt issuance costs and discounts 1,826 1,719 Deferred income tax (9,619 ) (3,053 ) Change in contingent consideration 346 — Other non-cash items, net (461 ) — Change in operating assets and liabilities: Accounts receivable 18,066 (12,015 ) Prepaid expenses and other current assets (3,560 ) (4,445 ) Income taxes (receivable) payable 498 (304 ) Notes receivable (389 ) 297 Accounts payable and other accrued liabilities 1,306 14,792 Customer deposits and advance payments 635 (3,957 ) Other assets and liabilities, net (383 ) (612 ) Net cash provided by operating activities 46,857 30,334 Cash flows from investing activities: Additions to property, equipment and software (9,869 ) (6,011 ) Notes receivable, net (498 ) (2,750 ) Acquisitions of assets and other investing activities (2,715 ) (3,974 ) Net cash used in investing activities (13,082 ) (12,735 ) Cash flows from financing activities: Repayments of long-term debt (3,525 ) (3,100 ) Borrowings under revolving credit facility 5,000 12,000 Repayments of borrowings under revolving credit facility (12,000 ) (12,500 ) Repurchases of common stock and shares withheld for taxes (1,018 ) (2,079 ) Dividends paid to redeemable senior preferred stockholders (17,908 ) (7,076 ) Settlement and customer/subscriber accounts obligations, net 175,548 15,180 Payment of contingent consideration related to business combination (1,959 ) (1,863 ) Net cash provided by financing activities 144,138 562 Net change in cash and cash equivalents, and restricted cash: Net increase in cash and cash equivalents, and restricted cash 177,913 18,161 Cash and cash equivalents, and restricted cash at beginning of period 560,610 518,093 Cash and cash equivalents, and restricted cash equivalents at end of period $ 738,523 $ 536,254 Reconciliation of cash and cash equivalents, and restricted cash: Cash and cash equivalents $ 17,567 $ 22,162 Restricted cash 12,357 11,717 Cash and cash equivalents included in settlement assets and customer/subscriber account balances 708,599 502,375 Total cash and cash equivalents, and restricted cash $ 738,523 $ 536,254 Priority Technology Holdings, Inc. Unaudited Reportable Segments' Results (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 SMB Payments: Revenue $ 147,895 $ 142,506 $ 302,828 $ 272,465 Operating expenses 136,353 128,511 279,275 245,984 Operating income $ 11,542 $ 13,995 $ 23,553 $ 26,481 Operating margin 7.8 % 9.8 % 7.8 % 9.7 % Depreciation and amortization $ 10,769 $ 10,980 $ 21,615 $ 21,804 Key indicators: Merchant bankcard processing dollar value $ 15,111,781 $ 15,402,560 $ 30,332,495 $ 29,479,407 Merchant bankcard transaction count 180,343 164,341 343,749 310,289 B2B Payments: Revenue $ 2,971 $ 5,295 $ 5,757 $ 11,220 Operating expenses 2,990 4,632 6,625 10,148 Operating (loss) income $ (19 ) $ 663 $ (868 ) $ 1,072 Operating margin (0.6 )% 12.5 % (15.1 )% 9.6 % Depreciation and amortization $ 127 $ 73 $ 252 $ 146 Key indicators: B2B issuing dollar volume $ 216,358 $ 214,085 $ 414,904 $ 383,580 B2B issuing transaction count 282 247 562 435 Enterprise Payments: Revenue $ 31,424 $ 18,629 $ 58,733 $ 35,984 Operating expenses 15,345 12,931 29,991 25,792 Operating income $ 16,079 $ 5,698 $ 28,742 $ 10,192 Operating margin 51.2 % 30.6 % 48.9 % 28.3 % Depreciation and amortization $ 6,713 $ 6,199 $ 13,403 $ 12,396 Key indicators: Average billed clients 520,028 362,552 492,622 354,473 Average new enrollments 53,374 28,251 49,661 25,846 Operating income of reportable segments $ 27,602 $ 20,356 $ 51,427 $ 37,745 Less: Corporate expense (8,469 ) (7,296 ) (15,446 ) (13,859 ) Consolidated operating income $ 19,133 $ 13,060 $ 35,981 $ 23,886 Corporate depreciation and amortization $ 371 $ 253 $ 758 $ 512 View source version on businesswire.com: https://www.businesswire.com/news/home/20230810932302/en/Contacts Priority Investor Inquiries: Chris Kettmann chris.kettmann@dentonsglobaladvisors.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 Second Quarter 2023 Financial Results By: Priority Technology Holdings, Inc. via Business Wire August 10, 2023 at 07:30 AM EDT Strong Second Quarter Growth Driven by Performance Across Diverse Business Segments Priority Technology Holdings, Inc. (NASDAQ: PRTH) ("Priority" or the "Company"), the platform for unified commerce that delivers integrated payments and banking services at scale, today announced its second quarter 2023 financial results including strong quarter-over-quarter diversified revenue growth. Highlights of Consolidated Results Second Quarter 2023 Compared with Second Quarter 2022 Financial highlights of the second quarter of 2023 compared with the second quarter of 2022, are as follows: Revenue of $182.3 million increased 9.6% from $166.4 million Adjusted gross profit (a non-GAAP measure1) of $67.0 million increased 20.3% from $55.7 million Adjusted gross profit margin (a non-GAAP measure1) of 36.8% increased 330 basis points from 33.5% Operating income of $19.1 million increased 45.8% from $13.1 million Adjusted EBITDA (a non-GAAP measure1) of $41.1 million increased 21.2% from $33.9 million "Consistent with the first few months of the year, we continued to deliver strong results as we executed our unified commerce vision combining payments and banking on a single platform, enhanced by the strength of our counter cyclical business lines that were positioned to benefit from higher interest rates and weakening macroeconomic trends," said Tom Priore, Chairman & CEO of Priority. "We continue to invest thoughtfully, as our recent acquisition of Plastiq demonstrates, to deliver differentiated solutions to our business and integrated software clients that accelerate cash flow and optimize working capital, which will drive consistent long-term performance for our shareholders." (1) See "Non-GAAP Financial Measures" and the reconciliations of Adjusted Gross Profit (non-GAAP), Adjusted Gross Profit Margin (non-GAAP), and Adjusted EBITDA, to their most comparable GAAP measures provided below for additional information. Updated Full Year 2023 Financial Guidance The Company has updated its outlook for the full year 2023 to include the forecasted post-acquisition contribution from the Plastiq business as follows: Revenue forecast revised to range between $765 million to $780 million, a growth rate of 15% to 17%, from $740 million to $755 million Adjusted EBITDA (a non-GAAP measure) forecast remains in range between $160 million to $165 million, a growth rate of 14% to 18% Conference Call Priority's leadership will host a conference call on Thursday, August 10, 2023 at 11:00 a.m. EDT to discuss its second quarter 2023 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/yohu2k4c 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 August 17, 2023 at 2:00 p.m. EDT. To listen to the audio replay, dial (877) 344-7529 or (412) 317-0088 and enter conference ID number 2194982. 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. Adjusted Gross Profit and Adjusted Gross Profit Margin The Company's adjusted gross profit metric represents revenues less cost of revenue (excluding depreciation and amortization). Adjusted gross profit margin is adjusted gross profit divided by revenues. We review these non-GAAP measures to evaluate our underlying profit trends. The reconciliation of adjusted gross profit to its most comparable GAAP measure is provided below: (in thousands) Three Months Ended June 30, 2023 2022 Revenues $ 182,290 $ 166,430 Cost of revenue (excluding depreciation and amortization) (115,281 ) (110,749 ) Adjusted gross profit $ 67,009 $ 55,681 Adjusted gross profit margin 36.8 % 33.5 % Depreciation and amortization of revenue generating assets (3,030 ) (2,538 ) Gross profit $ 63,979 $ 53,143 Gross profit margin 35.1 % 31.9 % 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 June 30, 2023 2022 Net loss (income) $ (612 ) $ 287 Interest expense 17,765 12,335 Income tax expense 2,355 467 Depreciation and amortization 17,980 17,505 EBITDA 37,488 30,594 Selling, general and administrative (non-recurring) 1,859 1,743 Non-cash stock-based compensation 1,746 1,542 Adjusted EBITDA $ 41,093 $ 33,879 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 June 30, 2023 2022 Selling, general and administrative expenses (non-recurring): Certain legal fees $ 1,221 $ 213 Professional, accounting and consulting fees 509 373 IRS penalty for 2014 and 2015 — 703 General ledger transition expenses — 96 Other expenses 129 358 $ 1,859 $ 1,743 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 technology company that leverages a purpose-built platform to enable clients to collect, store and send money, operating at scale. Priority helps its customers take and make payments while managing business and consumer operating accounts to monetize payment networks. Priority's tailored, agile technology powers high-value payments products bolstered by industry-leading personalized support, and delivers value to its partners by leveraging its payments and embedded finance technology to deliver solutions that power modern commerce. The Company's approach is simple – Priority handles the complexities of payments and embedded finance to free its partners to focus on their core business objectives. Priority's solutions are offered via API or proprietary applications with nationwide money transmission licenses, providing end-to-end operational support including automated risk management and underwriting, full compliance and industry leading customer service. 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 2023 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 23, 2023. 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenues $ 182,290 $ 166,430 $ 367,318 $ 319,669 Operating expenses Cost of revenue (excludes depreciation and amortization) 115,281 110,749 237,247 212,229 Salary and employee benefits 19,109 15,770 38,157 31,847 Depreciation and amortization 17,980 17,505 36,028 34,858 Selling, general and administrative 10,787 9,346 19,905 16,849 Total operating expenses 163,157 153,370 331,337 295,783 Operating income 19,133 13,060 35,981 23,886 Other (expense) income Interest expense (17,765 ) (12,335 ) (35,464 ) (23,870 ) Other income, net 375 29 587 80 Total other expense, net (17,390 ) (12,306 ) (34,877 ) (23,790 ) Income before income taxes 1,743 754 1,104 96 Income tax expense 2,355 467 2,222 142 Net (loss) income (612 ) 287 (1,118 ) (46 ) Less: Dividends and accretion attributable to redeemable senior preferred stockholders (11,765 ) (8,549 ) (23,060 ) (16,949 ) Loss attributable to common stockholders (12,377 ) (8,262 ) $ (24,178 ) $ (16,995 ) Other comprehensive income (loss) Foreign currency translation adjustments 7 — 31 — Comprehensive loss $ (12,370 ) $ (8,262 ) $ (24,147 ) $ (16,995 ) Loss per common share: Basic and diluted $ (0.16 ) $ (0.11 ) $ (0.31 ) $ (0.22 ) Weighted-average common shares outstanding: Basic and diluted 78,292 78,603 78,213 78,600 Priority Technology Holdings, Inc. Unaudited Consolidated Balance Sheets (in thousands) June 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 17,567 $ 18,454 Restricted cash 12,357 10,582 Accounts receivable, net of allowances 60,130 78,113 Prepaid expenses and other current assets 14,608 11,832 Current portion of notes receivable 2,530 1,471 Settlement assets and customer/subscriber account balances 710,705 532,018 Total current assets 817,897 652,470 Notes receivable, less current portion 3,018 3,191 Property, equipment and software, net 38,984 34,687 Goodwill 368,740 369,337 Intangible assets, net 269,428 288,794 Deferred income taxes, net 26,066 16,447 Other noncurrent assets 8,147 8,437 Total assets $ 1,532,280 1,373,363 Liabilities, Redeemable Senior Preferred Stock and Stockholders' Deficit Current liabilities: Accounts payable and accrued expenses $ 59,839 $ 51,864 Accrued residual commissions 34,614 35,979 Customer deposits and advance payments 3,253 2,618 Current portion of long-term debt 6,200 6,200 Settlement and customer/subscriber account obligations 710,551 533,340 Total current liabilities 814,457 630,001 Long-term debt, net of current portion, discounts and debt issuance costs 589,932 598,926 Other noncurrent liabilities 11,752 11,643 Total noncurrent liabilities 601,684 610,569 Total liabilities 1,416,141 1,240,570 Redeemable senior preferred stock 240,731 235,579 Stockholders' deficit: Preferred stock — — Common stock 76 76 Treasury stock, at cost (12,577 ) (11,559 ) Additional paid-in capital — 9,650 Accumulated other comprehensive income 31 — Accumulated deficit (112,974 ) (102,208 ) Total stockholders' deficit attributable to stockholders of PRTH (125,444 ) (104,041 ) Non-controlling interest 852 1,255 Total stockholders' deficit (124,592 ) (102,786 ) Total liabilities, redeemable senior preferred stock and stockholders' deficit $ 1,532,280 $ 1,373,363 Priority Technology Holdings, Inc. Unaudited Consolidated Statements of Cash Flows (in thousands) Six Months Ended June 30, 2023 2022 Cash flows from operating activities: Net loss $ (1,118 ) $ (46 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization of assets 36,028 34,858 Stock-based compensation 3,682 3,100 Amortization of debt issuance costs and discounts 1,826 1,719 Deferred income tax (9,619 ) (3,053 ) Change in contingent consideration 346 — Other non-cash items, net (461 ) — Change in operating assets and liabilities: Accounts receivable 18,066 (12,015 ) Prepaid expenses and other current assets (3,560 ) (4,445 ) Income taxes (receivable) payable 498 (304 ) Notes receivable (389 ) 297 Accounts payable and other accrued liabilities 1,306 14,792 Customer deposits and advance payments 635 (3,957 ) Other assets and liabilities, net (383 ) (612 ) Net cash provided by operating activities 46,857 30,334 Cash flows from investing activities: Additions to property, equipment and software (9,869 ) (6,011 ) Notes receivable, net (498 ) (2,750 ) Acquisitions of assets and other investing activities (2,715 ) (3,974 ) Net cash used in investing activities (13,082 ) (12,735 ) Cash flows from financing activities: Repayments of long-term debt (3,525 ) (3,100 ) Borrowings under revolving credit facility 5,000 12,000 Repayments of borrowings under revolving credit facility (12,000 ) (12,500 ) Repurchases of common stock and shares withheld for taxes (1,018 ) (2,079 ) Dividends paid to redeemable senior preferred stockholders (17,908 ) (7,076 ) Settlement and customer/subscriber accounts obligations, net 175,548 15,180 Payment of contingent consideration related to business combination (1,959 ) (1,863 ) Net cash provided by financing activities 144,138 562 Net change in cash and cash equivalents, and restricted cash: Net increase in cash and cash equivalents, and restricted cash 177,913 18,161 Cash and cash equivalents, and restricted cash at beginning of period 560,610 518,093 Cash and cash equivalents, and restricted cash equivalents at end of period $ 738,523 $ 536,254 Reconciliation of cash and cash equivalents, and restricted cash: Cash and cash equivalents $ 17,567 $ 22,162 Restricted cash 12,357 11,717 Cash and cash equivalents included in settlement assets and customer/subscriber account balances 708,599 502,375 Total cash and cash equivalents, and restricted cash $ 738,523 $ 536,254 Priority Technology Holdings, Inc. Unaudited Reportable Segments' Results (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 SMB Payments: Revenue $ 147,895 $ 142,506 $ 302,828 $ 272,465 Operating expenses 136,353 128,511 279,275 245,984 Operating income $ 11,542 $ 13,995 $ 23,553 $ 26,481 Operating margin 7.8 % 9.8 % 7.8 % 9.7 % Depreciation and amortization $ 10,769 $ 10,980 $ 21,615 $ 21,804 Key indicators: Merchant bankcard processing dollar value $ 15,111,781 $ 15,402,560 $ 30,332,495 $ 29,479,407 Merchant bankcard transaction count 180,343 164,341 343,749 310,289 B2B Payments: Revenue $ 2,971 $ 5,295 $ 5,757 $ 11,220 Operating expenses 2,990 4,632 6,625 10,148 Operating (loss) income $ (19 ) $ 663 $ (868 ) $ 1,072 Operating margin (0.6 )% 12.5 % (15.1 )% 9.6 % Depreciation and amortization $ 127 $ 73 $ 252 $ 146 Key indicators: B2B issuing dollar volume $ 216,358 $ 214,085 $ 414,904 $ 383,580 B2B issuing transaction count 282 247 562 435 Enterprise Payments: Revenue $ 31,424 $ 18,629 $ 58,733 $ 35,984 Operating expenses 15,345 12,931 29,991 25,792 Operating income $ 16,079 $ 5,698 $ 28,742 $ 10,192 Operating margin 51.2 % 30.6 % 48.9 % 28.3 % Depreciation and amortization $ 6,713 $ 6,199 $ 13,403 $ 12,396 Key indicators: Average billed clients 520,028 362,552 492,622 354,473 Average new enrollments 53,374 28,251 49,661 25,846 Operating income of reportable segments $ 27,602 $ 20,356 $ 51,427 $ 37,745 Less: Corporate expense (8,469 ) (7,296 ) (15,446 ) (13,859 ) Consolidated operating income $ 19,133 $ 13,060 $ 35,981 $ 23,886 Corporate depreciation and amortization $ 371 $ 253 $ 758 $ 512 View source version on businesswire.com: https://www.businesswire.com/news/home/20230810932302/en/Contacts Priority Investor Inquiries: Chris Kettmann chris.kettmann@dentonsglobaladvisors.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 services at scale, today announced its second quarter 2023 financial results including strong quarter-over-quarter diversified revenue growth. Highlights of Consolidated Results Second Quarter 2023 Compared with Second Quarter 2022 Financial highlights of the second quarter of 2023 compared with the second quarter of 2022, are as follows: Revenue of $182.3 million increased 9.6% from $166.4 million Adjusted gross profit (a non-GAAP measure1) of $67.0 million increased 20.3% from $55.7 million Adjusted gross profit margin (a non-GAAP measure1) of 36.8% increased 330 basis points from 33.5% Operating income of $19.1 million increased 45.8% from $13.1 million Adjusted EBITDA (a non-GAAP measure1) of $41.1 million increased 21.2% from $33.9 million "Consistent with the first few months of the year, we continued to deliver strong results as we executed our unified commerce vision combining payments and banking on a single platform, enhanced by the strength of our counter cyclical business lines that were positioned to benefit from higher interest rates and weakening macroeconomic trends," said Tom Priore, Chairman & CEO of Priority. "We continue to invest thoughtfully, as our recent acquisition of Plastiq demonstrates, to deliver differentiated solutions to our business and integrated software clients that accelerate cash flow and optimize working capital, which will drive consistent long-term performance for our shareholders." (1) See "Non-GAAP Financial Measures" and the reconciliations of Adjusted Gross Profit (non-GAAP), Adjusted Gross Profit Margin (non-GAAP), and Adjusted EBITDA, to their most comparable GAAP measures provided below for additional information. Updated Full Year 2023 Financial Guidance The Company has updated its outlook for the full year 2023 to include the forecasted post-acquisition contribution from the Plastiq business as follows: Revenue forecast revised to range between $765 million to $780 million, a growth rate of 15% to 17%, from $740 million to $755 million Adjusted EBITDA (a non-GAAP measure) forecast remains in range between $160 million to $165 million, a growth rate of 14% to 18% Conference Call Priority's leadership will host a conference call on Thursday, August 10, 2023 at 11:00 a.m. EDT to discuss its second quarter 2023 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/yohu2k4c 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 August 17, 2023 at 2:00 p.m. EDT. To listen to the audio replay, dial (877) 344-7529 or (412) 317-0088 and enter conference ID number 2194982. 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. Adjusted Gross Profit and Adjusted Gross Profit Margin The Company's adjusted gross profit metric represents revenues less cost of revenue (excluding depreciation and amortization). Adjusted gross profit margin is adjusted gross profit divided by revenues. We review these non-GAAP measures to evaluate our underlying profit trends. The reconciliation of adjusted gross profit to its most comparable GAAP measure is provided below: (in thousands) Three Months Ended June 30, 2023 2022 Revenues $ 182,290 $ 166,430 Cost of revenue (excluding depreciation and amortization) (115,281 ) (110,749 ) Adjusted gross profit $ 67,009 $ 55,681 Adjusted gross profit margin 36.8 % 33.5 % Depreciation and amortization of revenue generating assets (3,030 ) (2,538 ) Gross profit $ 63,979 $ 53,143 Gross profit margin 35.1 % 31.9 % 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 June 30, 2023 2022 Net loss (income) $ (612 ) $ 287 Interest expense 17,765 12,335 Income tax expense 2,355 467 Depreciation and amortization 17,980 17,505 EBITDA 37,488 30,594 Selling, general and administrative (non-recurring) 1,859 1,743 Non-cash stock-based compensation 1,746 1,542 Adjusted EBITDA $ 41,093 $ 33,879 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 June 30, 2023 2022 Selling, general and administrative expenses (non-recurring): Certain legal fees $ 1,221 $ 213 Professional, accounting and consulting fees 509 373 IRS penalty for 2014 and 2015 — 703 General ledger transition expenses — 96 Other expenses 129 358 $ 1,859 $ 1,743 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 technology company that leverages a purpose-built platform to enable clients to collect, store and send money, operating at scale. Priority helps its customers take and make payments while managing business and consumer operating accounts to monetize payment networks. Priority's tailored, agile technology powers high-value payments products bolstered by industry-leading personalized support, and delivers value to its partners by leveraging its payments and embedded finance technology to deliver solutions that power modern commerce. The Company's approach is simple – Priority handles the complexities of payments and embedded finance to free its partners to focus on their core business objectives. Priority's solutions are offered via API or proprietary applications with nationwide money transmission licenses, providing end-to-end operational support including automated risk management and underwriting, full compliance and industry leading customer service. 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 2023 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 23, 2023. 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenues $ 182,290 $ 166,430 $ 367,318 $ 319,669 Operating expenses Cost of revenue (excludes depreciation and amortization) 115,281 110,749 237,247 212,229 Salary and employee benefits 19,109 15,770 38,157 31,847 Depreciation and amortization 17,980 17,505 36,028 34,858 Selling, general and administrative 10,787 9,346 19,905 16,849 Total operating expenses 163,157 153,370 331,337 295,783 Operating income 19,133 13,060 35,981 23,886 Other (expense) income Interest expense (17,765 ) (12,335 ) (35,464 ) (23,870 ) Other income, net 375 29 587 80 Total other expense, net (17,390 ) (12,306 ) (34,877 ) (23,790 ) Income before income taxes 1,743 754 1,104 96 Income tax expense 2,355 467 2,222 142 Net (loss) income (612 ) 287 (1,118 ) (46 ) Less: Dividends and accretion attributable to redeemable senior preferred stockholders (11,765 ) (8,549 ) (23,060 ) (16,949 ) Loss attributable to common stockholders (12,377 ) (8,262 ) $ (24,178 ) $ (16,995 ) Other comprehensive income (loss) Foreign currency translation adjustments 7 — 31 — Comprehensive loss $ (12,370 ) $ (8,262 ) $ (24,147 ) $ (16,995 ) Loss per common share: Basic and diluted $ (0.16 ) $ (0.11 ) $ (0.31 ) $ (0.22 ) Weighted-average common shares outstanding: Basic and diluted 78,292 78,603 78,213 78,600 Priority Technology Holdings, Inc. Unaudited Consolidated Balance Sheets (in thousands) June 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 17,567 $ 18,454 Restricted cash 12,357 10,582 Accounts receivable, net of allowances 60,130 78,113 Prepaid expenses and other current assets 14,608 11,832 Current portion of notes receivable 2,530 1,471 Settlement assets and customer/subscriber account balances 710,705 532,018 Total current assets 817,897 652,470 Notes receivable, less current portion 3,018 3,191 Property, equipment and software, net 38,984 34,687 Goodwill 368,740 369,337 Intangible assets, net 269,428 288,794 Deferred income taxes, net 26,066 16,447 Other noncurrent assets 8,147 8,437 Total assets $ 1,532,280 1,373,363 Liabilities, Redeemable Senior Preferred Stock and Stockholders' Deficit Current liabilities: Accounts payable and accrued expenses $ 59,839 $ 51,864 Accrued residual commissions 34,614 35,979 Customer deposits and advance payments 3,253 2,618 Current portion of long-term debt 6,200 6,200 Settlement and customer/subscriber account obligations 710,551 533,340 Total current liabilities 814,457 630,001 Long-term debt, net of current portion, discounts and debt issuance costs 589,932 598,926 Other noncurrent liabilities 11,752 11,643 Total noncurrent liabilities 601,684 610,569 Total liabilities 1,416,141 1,240,570 Redeemable senior preferred stock 240,731 235,579 Stockholders' deficit: Preferred stock — — Common stock 76 76 Treasury stock, at cost (12,577 ) (11,559 ) Additional paid-in capital — 9,650 Accumulated other comprehensive income 31 — Accumulated deficit (112,974 ) (102,208 ) Total stockholders' deficit attributable to stockholders of PRTH (125,444 ) (104,041 ) Non-controlling interest 852 1,255 Total stockholders' deficit (124,592 ) (102,786 ) Total liabilities, redeemable senior preferred stock and stockholders' deficit $ 1,532,280 $ 1,373,363 Priority Technology Holdings, Inc. Unaudited Consolidated Statements of Cash Flows (in thousands) Six Months Ended June 30, 2023 2022 Cash flows from operating activities: Net loss $ (1,118 ) $ (46 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization of assets 36,028 34,858 Stock-based compensation 3,682 3,100 Amortization of debt issuance costs and discounts 1,826 1,719 Deferred income tax (9,619 ) (3,053 ) Change in contingent consideration 346 — Other non-cash items, net (461 ) — Change in operating assets and liabilities: Accounts receivable 18,066 (12,015 ) Prepaid expenses and other current assets (3,560 ) (4,445 ) Income taxes (receivable) payable 498 (304 ) Notes receivable (389 ) 297 Accounts payable and other accrued liabilities 1,306 14,792 Customer deposits and advance payments 635 (3,957 ) Other assets and liabilities, net (383 ) (612 ) Net cash provided by operating activities 46,857 30,334 Cash flows from investing activities: Additions to property, equipment and software (9,869 ) (6,011 ) Notes receivable, net (498 ) (2,750 ) Acquisitions of assets and other investing activities (2,715 ) (3,974 ) Net cash used in investing activities (13,082 ) (12,735 ) Cash flows from financing activities: Repayments of long-term debt (3,525 ) (3,100 ) Borrowings under revolving credit facility 5,000 12,000 Repayments of borrowings under revolving credit facility (12,000 ) (12,500 ) Repurchases of common stock and shares withheld for taxes (1,018 ) (2,079 ) Dividends paid to redeemable senior preferred stockholders (17,908 ) (7,076 ) Settlement and customer/subscriber accounts obligations, net 175,548 15,180 Payment of contingent consideration related to business combination (1,959 ) (1,863 ) Net cash provided by financing activities 144,138 562 Net change in cash and cash equivalents, and restricted cash: Net increase in cash and cash equivalents, and restricted cash 177,913 18,161 Cash and cash equivalents, and restricted cash at beginning of period 560,610 518,093 Cash and cash equivalents, and restricted cash equivalents at end of period $ 738,523 $ 536,254 Reconciliation of cash and cash equivalents, and restricted cash: Cash and cash equivalents $ 17,567 $ 22,162 Restricted cash 12,357 11,717 Cash and cash equivalents included in settlement assets and customer/subscriber account balances 708,599 502,375 Total cash and cash equivalents, and restricted cash $ 738,523 $ 536,254 Priority Technology Holdings, Inc. Unaudited Reportable Segments' Results (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 SMB Payments: Revenue $ 147,895 $ 142,506 $ 302,828 $ 272,465 Operating expenses 136,353 128,511 279,275 245,984 Operating income $ 11,542 $ 13,995 $ 23,553 $ 26,481 Operating margin 7.8 % 9.8 % 7.8 % 9.7 % Depreciation and amortization $ 10,769 $ 10,980 $ 21,615 $ 21,804 Key indicators: Merchant bankcard processing dollar value $ 15,111,781 $ 15,402,560 $ 30,332,495 $ 29,479,407 Merchant bankcard transaction count 180,343 164,341 343,749 310,289 B2B Payments: Revenue $ 2,971 $ 5,295 $ 5,757 $ 11,220 Operating expenses 2,990 4,632 6,625 10,148 Operating (loss) income $ (19 ) $ 663 $ (868 ) $ 1,072 Operating margin (0.6 )% 12.5 % (15.1 )% 9.6 % Depreciation and amortization $ 127 $ 73 $ 252 $ 146 Key indicators: B2B issuing dollar volume $ 216,358 $ 214,085 $ 414,904 $ 383,580 B2B issuing transaction count 282 247 562 435 Enterprise Payments: Revenue $ 31,424 $ 18,629 $ 58,733 $ 35,984 Operating expenses 15,345 12,931 29,991 25,792 Operating income $ 16,079 $ 5,698 $ 28,742 $ 10,192 Operating margin 51.2 % 30.6 % 48.9 % 28.3 % Depreciation and amortization $ 6,713 $ 6,199 $ 13,403 $ 12,396 Key indicators: Average billed clients 520,028 362,552 492,622 354,473 Average new enrollments 53,374 28,251 49,661 25,846 Operating income of reportable segments $ 27,602 $ 20,356 $ 51,427 $ 37,745 Less: Corporate expense (8,469 ) (7,296 ) (15,446 ) (13,859 ) Consolidated operating income $ 19,133 $ 13,060 $ 35,981 $ 23,886 Corporate depreciation and amortization $ 371 $ 253 $ 758 $ 512 View source version on businesswire.com: https://www.businesswire.com/news/home/20230810932302/en/