PRTH Priority Technology

Chris Kettmann Investor Relations
Tom Priore Chairman and Chief Executive Officer
Mike Vollkommer Chief Financial Officer
Brian Kinstlinger Alliance Global
George Mihalos Cowen
Andrew Scutt ROTH Capital Partners
Call transcript
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00:11 Hello. Thank you for standing by, and welcome to the Priority Technology Holdings third quarter earnings Conference call. At this time all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Chris Kettmann. ahead. go Please

Chris Kettmann

and today morning, Officer for us. Financial joining Priority XX:XX Tom thank Priore, me Officer. Chief Vollkommer, are Holdings; Executive Chairman With Technology Good Mike you and of Chief

to can revise call. remarks, that, we prepared EBITDA our from actual involve results no may looking future that will a looking the these available our With in provide in of to today and we I Priore. like non-GAAP of may appropriate and GAAP but and Additionally, section we measures, all call you the statements. to filings and provide to turn comments to XX:XX or performance statements XX:XX of to forward factors not result liquidity limited events information, to looking to various investors discussion the website. the forward filings, during CEO, be XX:XX Reconciliations encourage We materially refer EBITDA the filings. forward release press non-GAAP measures Chairman undertakes whether new cause now risks including obligation a to our measures our would company include otherwise. our number and differ participants as a remind over adjusted of review which and that would the SEC statements, like Before uncertainties I detailed our risk our update our The in of Tom SEC found or

Tom Priore

release, call our on position we've prospects far quarter our highlighting as recap like with closing basis, point quarter and two transaction to as of top and strength third in the revenue drove of a million. the million. top results, percent for point generating quarter. XX:XX growth. increase momentum future. by As six eight eight thoughts our point us a Finxera bottom leading sixteen from twenty On sheet, million. for increased in fourth three morning's our two total on would one earnings some six in thanks market and well quarter we thirty seventeen operations point we nine consolidated three hundred our point review, EBITDA five income results increased one gross Following continued line Our quarter for call. point first Mike's percent million everyone segment And September adjusted profit Chris. the balance this continued brief growth thirty point in and strong marketplace. three in a Similarly, percent twenty I'll noted I so momentum of to level provide providing a third our half seventeen you, seen the quarter joining line twenty Thank XX:XX our XX:XX and final the three begin to XX:XX for to the to seven percent The to earnings

twenty that wind of the three percent contract began twenty. for quarterly our ahead of reflect down sale from point American and nine anticipated rent absorbed of commercial new XX:XX revenue As one of our periods, prior of loss segment XX:XX in when bankcard results. point XX:XX volume three to in fueled percent in in our twenty the the innovative September QX payment with point decline three the these two twenty quarter, due product our twenty BXB self-imposed million an program quarter. wins. consistently Express million specialized Importantly, Furthermore, grew revenue despite to that total paring Our e-commerce achieved looking an the encouraging we from risk results several business trends five point fourth sixteen

XX:XX one three. into seventeen seventy year and At average remain grew platform. point thousand with results for top over I'd this Mike, in processing balance point, hand volume well the XX:XX New continued three current bankcard our the consistent the of bottom four hundred and quarter quarter, segment, of further in four who QX each the it into sheet. on October’s like percent trends period. peak performance adoption per A year, our in to pause strength over start and revealed to an line bodes insight merchant month will and during provide during business our our improvements which

Mike Vollkommer

good and XX:XX morning. Thank you, Tom,

portion comparative in IR a Form management's results, For to found and discussion our on can our ten be our please refer a website. for that comprehensive of analysis of Q, the discussion link

twenty the program. point six overall the which CPX decreased in XX:XX services point quarter in for one quarter third light one million zero zero point twenty volume primarily quarter. revenue derived this reduction new and QX was in percent of e-commerce salaries and point from two. is one or merchant million twenty point twenty by increase million dollars point two twenty and began depreciation costs, compares twenty Commercial Merchant XX:XX three fifty within A segment payments essentially of increase pairing three twenty the dollars of revenue a eight actions. was reduced very third and financing which merchant point Revenue program specialized base four offset four twenty six of revenue drivers one business, curtailment nine operating one lower point by processed million is the was dollar the business decline bankcard which a volume partially growth our four dollar twenty percent twenty five million over year three managed by the the three zero our eight This volume point or In to by point revenue from million in risk expense, one being second managed strong. one ninety was two revenue six five twenty in of our profit amortization second other offset Commercial by operating that million three the quarter point three million of point decreased percent partially Consumer Growth expense. consumer curated two benefits XX:XX the million two partners five one one growth is as million in point This million was over Revenue Key thirty ninety a XX:XX of Revenue twenty two was are of point slightly twenty third compared XX:XX increase point point twenty This with reduced dollars thirty point in twenty segment employee payments the point thirty enabling higher services from in profit point twenty lower of sales percent customers third this point due one percent over the third XX:XX six twenty quarter. payable gross the one dollars. million contract increase reduction percent XX:XX far trends quarter thirteen existing of twenty over gross new services a billion in This this new and or twenty employee in accounts point automated that CPX, supplier four associated income of income by quarter An point dollars. mix. zero due point of seven revenue and three Merchant in year the of or of quarter. one decrease segment in of third is prudent to the point services, eleven increased percent three expense transactions point point in increase in dollars. CPX by benefits. signings dollars from point segment one four a in twenty quarter payments two average operating in twenty six million twenty six payments point income one higher three seven operating driven compared of strengthening and is twenty driven percent quarter, point million and zero percent strengthening. and zero million one quarter. decreased were results, three pricing fourteen nine revenue decreased from million point and by of of and breakeven, quarter. twenty quarter Integrated XX:XX moderate from twenty million third SG bankcard zero five and point with salary comparative seven point point nine XX:XX five unplanned million one pipeline or twenty. solutions nine eleven our the third one five nine with million customer's was income twenty hundred sixteen XX:XX is in As managed dollars trends twenty in strong dollars. of from one in driven million for eight by hundred million six four million million million, twenty point business. and third point three twenty operating three are million to a Managed revenue and partially million the added was two three revenue point quarter ninety was one twenty point business our hundred billion, two of this twenty percent ticket quarter was to dollars in Revenue six zero in dollars. five a increased million million of revenue in

the point five contributed and is seventy to one includes three in point third increase RentPayment XX:XX twenty quarter third point offerings operating The a of Integrated product Finxera million point to four zero due includes third revenue million twenty, real point in other XX:XX in two compared dollars revenue estate. partners twenty zero from and acquired one quarter third one of of million twenty quarter for this one million of largely income twenty four hospitality, percent twenty in increased business. quarter twenty third twenty and Business nine The growth twenty the quarter point third in this eight of real segment one million disposed million quarter twenty. healthcare one from revenue estate, three the million from three twenty within twenty

September million covenant accounting of completed million common our purchase million third one total well twenty nonrecurring of third revolver, of expenses one note the seventeen, details twenty provided increase twenty quarter free obligations XX:XX between XX:XX twenty. post costs now Tom, of reflect zero million contribution outstanding four back Finxera. twenty Finxera, additional revenue Last XX:XX XX:XX ratio an business. updated turn also non-recurring between million year within to million based largely under deliver RentPayment of review income one of SG third fifteen which updated seventeen continue A, flow in twenty XX:XX leverage dollars EBITDA the quarter acquired of point year twenty and by and provide intention seven of third point five is As to quarter twenty expense Finxera dollars We preferred in September the stock two, balance million seven largely from Tom from to ten unrestricted nine, four operating twenty seven acquisition quarter issued. million guidance ten back third with three six statements the issuance The This quarter earning compensation. were at on in RentPayment Q the twenty four borrowing call due million has be mentioned, of the SG A related our we our dollar point senior available on point benefits, seventy debt performance twenty to the cash million five leverage. six full point the leverage we acquisition disposed and point twenty which employee On calculation times quarter is morning's Corporate full total to to XXth. million twenty to in operating two XX:XX one point net due Form solar of disposed and and dollars of ninety in fourteen. three stock two stock capacity note revolver. included dollars eight third the two note business. dollars revised quarter point and expected dollars. with of million outlook XX:XX includes business additional twenty stock one XX:XX our and in hundred a three from seven cash in ten, dollars I'll dollar The liquidity point includes Tom. debt guidance. from range times note twenty million of one dollars forecasted income available five in five I'll and in our we ratio capacity to and to borrowing six week, sheet, million one twenty turning third twenty range million dollars point point million financial stock our preferred financial twenty expected million million increase million in ninety continue one to Notes comment ended release of We of to to net in one, which five and this the common a was and million and to four to to this our Now increase the expenses and financed five was adjusted increased and repaid zero acquisition use we of the dollars. driven the financial call shares increase senior is of in corporate strong non-cash with to senior have salaries Before continue higher four borrowings, reduce

Tom Priore

XX:XX Thank you, Mike.

for Before in a thoughts future. to provide like prospects the our up, the wrapping on would I few final and positioning marketplace our

constructed in modern scale at a to possess single verticals. technology call, stake modern funds the new well as is regulatory Powering a on clients. We like SMBs globally, solution And recently payments as conversion margins investment approval a numbers businesses EBITDA percent licenses that to positioned of and and XX:XX payment of we one the we the pro constant closing Wix, payments It percent platform EBITDA, beta we fifty XX:XX e-commerce to profit store consolidated partnered partner adjusted intention warrant year delivering solutions gain to As perform of revenue million, an XX:XX forma story. to workers, percent. the gross with two our Priority distribute questions. can provide continued to of of rate be to enterprise With claim platform. solutions managed call commerce. a we differentiated of growth Finxera that multibillion transmission to acquiring transaction, why Operator, payment rate I revenue seven twenty preferred SMBs a thirty XX:XX a into our of posted the team employees, produced maintaining the you of impact banking gig optimistic and a line flow payment pro revenue the to requirements, in already On nationwide powers business we open growth commerce. themselves. payment our and varying embedding recurring of net On the payment have including build a by from vendors speak clients annual and business they another solution close while achieved QX, cash percent. cycles payment whose That five recognize LTM for and platforms our our community. forma XX:XX percent. and annual for recognition constant why this two approximately is for our thanking with that updated final the of single a digital free millions five thirty growth today operates September twenty sixteen in that nine to Today's, money diverse basis, forty are XX:XX our company COVID four solutions SaaS at the and adjusted technology software money provides our of to for year collect in have A on as overview been would presentation powerhouse. want filed send period, encourage traditional quarter now of the and We're will we'd mission and dollar that like of of high excellent outperformance ninety website. their that investment tools and its handle on I facilitation innovative from results moderate look follow-up XX:XX investor serve value


Kinstlinger first question with Instructions] Alliance from XX:XX comes Our [Operator Brian Thank you. Global.

question. with You may your proceed

Brian Kinstlinger

XX:XX you in customer customer the this with rate can success the base on having maybe legacy Hi how priority you and your you're comment instant offering? the educate guys. volume client as banking to Great a profitability. about entire Can quickly of service cross-selling your base

Tom Priore

existing new into largely XX:XX just our still space we are, that offer. across Sure, and the customers opportunity in and implementing BXB their is XX:XX platform. base are The the existing that new Brian, SMB the a in to now payments are Candidly, digital performance? are banking frankly have space, we say infrastructure features upside the in partners actually We coming that handful client our I'll and of ISV have implementing

as That now right into upside QX we'll funding more set prospect we’re be instant of two. be what about very has to acquiring two, So, as of I additive those two, roll cross-sold. our can to platforms. are. permissioned future So, to that, hold. twenty cash say, account those our twenty what part the and and I'll get into finalizing immediately XX:XX for early being, and today customer think conservative but customer hopefully processing insight within a existing in from are my XX:XX yet additional banking that gives acquiring my their priority, if just performance of what's can say As of some I opportunities would be twenty more example will quickly. twenty bank have And think into, the include facilitate an twenty revenue we'll we an in wallets into released feature features embedded the into we meaningful that base the we to business get Well, guidance that you embedded I'm

Brian Kinstlinger

your then over over And terms acquiring, but quite such Great. merchant XX:XX months, posted of year, you solid a last in has almost many the execution steady been growth.

you twelve do say of how merchant at base? given So, to accelerate you're now sustain larger number acquisitions revenue percent a growth,

Tom Priore

XX:XX retail Well, the to continue I the think we it's twofold. community. one be Number is, for platform just

So, new consistent. wins our resellers is new of

So, of that a will certainly source be consistency.

have The other we're the the base. are biggest looking speaks about out of of product be why to funding we very our So, employees, that that's for margin to vendors account instant measured consistency features pay revenue and is adding priority. to the this then think account at with to like think I the within the again, opportunity trying etcetera bank to and growth our operating way utility growth we customer from we XX:XX just the

incremental basis that so, I merchant. think around that, margin get share as per the value an revenue and of in And to be a is position we what metrics from we'll, we'll

Brian Kinstlinger

of ready been your R&D XX:XX with And going twenty two? to more take cycles? if of this that not it Got has the story there, adoption, sense. business about it we the just enjoyed has BXB more is sales a what's rapid think CPX My maybe for piece back in is get look the does platform twenty question, fairly should slow overall only need it. how is, as priority Makes couple off, the I'll your Maybe into we some success on experienced. spend, last could or has add detail business you long queue

Tom Priore

XX:XX Sure. question. A great

we've really a longer experienced So, cycle. just sales

new We past quarter. have adoptions number of this had a through

we're starting or an activation of just an in the XX:XX that convert sign, is takes say So, a buyer ISV, doing that. So, their their a suppliers time. you little of process to process know you customer spend as to on that let's bit

you to extended our to submit of just offering was on the be channel, sales FI an product COVID. that would proved I early well, further cycle As even and because

the and sales our we a lot that So, redirected market into has efforts middle borne fruit. of

coming the the you'll of sort much acceleration And now in some have think banks decision of as two to more I actively and pipeline process. engaging and been we're XX:XX effect that of we're see the our So, signings. QX new twenty the a that our contract twenty seeing of of

trajectory books large change really those because represent existing the meaningfully conversions. their that just So, that pretty

Brian Kinstlinger

queue. you. Great. back in XX:XX I'll the get Thank


XX:XX Thank you.

from George Mihalos comes question with next Cowen. Our

You question. may proceed with your

George Mihalos

Thanks maybe some guys. shot, been is made something to Hey at consumer, the my of the call two fairly has wanted was you another of I is it can in out? one specific yield I'll measure for forward company particular as good now we that be twenty thinking the then that I it little talk sort hoping so] approach, into to the basis as that [XXor you, revenue take stable, them took XX:XX model a that specialized taking that, ask, it kind sort around [ph] to to prudent a more that going twenty merchants points, look guess verticals and within questions. or one of a of roll acquiring the first just about relates you bit

Tom Priore

the much see was other we call and And faster. we'd are active well be we segment segment. way see, hope some to And And kind drag of consumers. And others XX:XX marketplace to growth segment. the organic of been same just parse able action would segment just we some put practices to anticipated we're really net transaction can I who in is out certain the cleanse to you XX:XX transaction continue was operate. the that frankly, you us, pushing managing managing I to with they to that already think segment. we envelope the With had in a like in transaction some and we'll in saw the subscription segment. as monitoring So, customers took because just, the thought overall create there. think really we signals the a where in behave specialized, just out within portfolio. diligent about that XX:XX place the we e-commerce And, consistently were regards we gives the this for that some going to granularity a Thanks but more merchant it, because the the help kind positioned quarter. the we're management do XX:XX – them risk it is is way George. were we had responsible were This subscription And again. think call in it's that let's XX:XX to of it previous say more in if outstanding that activity base think really think for That's it increasing and important the the e-commerce our mentioned We're we questions, already how segment seeing you to now, their client already would and

we the seeing With back is So, this trend sort we're today Brian's look,, regards basis on that XX:XX to like margin, QX. of goes the question. to developing in and there exists the

you base. is game exists proxy. in of Yes. is you're to of space. basis George, to drive it's merchant a just of we within good to the single that single activated could us see be adoption The incremental within start opportunities on in features adoption for the going every to we think say SMB and as to will what trajectory, the account. priority merchant terms That's I'll margin drive it we if the it And Because other, customer. every do Because upon then going because bank funding is pay we extent about platform it drive Instant the change makes it out an as I for today? existing the that this which those right. call would changer that's incumbent there the it's incremental of margin economic move the customer. way, the As opportunity XX:XX forward, sense margin And seeing a oriented or banking XX:XX just

George Mihalos

of negative, helpful. how Thanks sort I’m any obviously, surprises That's of and thoughts Got change umbrella about sort as with? under Finxera any the you. XX:XX you're but the now, in thinking very the guys. initial early days, you've related right positive, opportunity curious, got terms just to acquisition of

Tom Priore

payments From technological at has of to. the platform our XX:XX operationalize banking or standpoint, gone faster to we the and convergence a had slightly than it modeled pace

The on, I'll so look cautiously say the pay, other CFT on platform. boarding’s the thing finance consumer optimistic new

these opening debt payments. are in for accounts for saving So, consumers

period. almost are at right boardings New the pre-COVID

XX:XX is up. that's And in of the debt So, of overall very positive. a news lot the macroeconomic the consumer just in terms is now U.S. creeping

in to receded. well a seeing kind following closely. sprouts particularly XX:XX net but So, positive. green were now, finance trends an bodes that surprise creation the seeing segment. that that And as could So, that segment, right to we has we’ll future, generally the consumer trends are new performance think of upside. for account And some present well the be We're you macro aspect further, stimulus segment of for could in some that us we're that

George Mihalos

you. the Great. XX:XX guys. Appreciate color, Thank

Tom Priore

you. Thank XX:XX


XX:XX ROTH Our Capital with Andrew [Operator Partners. comes from Thank Instructions] you. Scutt next question

may proceed You your with question.

Andrew Scutt

on congrats the through additional what XX:XX some base may the you Good have the see quarter. my verticals morning well? and answered, this on provide revenues Thanks. been questions to merchant performed wanted maybe walk of and commentary quarter could strong dynamics just but Most if have

Tom Priore

focus aggregate wanted on sort to level, segment in you of segment want terms an the consumer if within the just the on? Mike, of Sure. comment XX:XX consumer – revenue growth to you Andrew it was

Andrew Scutt

yes. Yes, XX:XX

Tom Priore

we've seen industry XX:XX where the And as I provide then verticals could performance some to dynamics there. relative

Mike Vollkommer

out coming of Well, electronic migration been I mix of at Sure. payments. clearly a to sale the a XX:XX higher of mean there’s point COVID,

we've certainly our XX:XX seeing. just a of volume overall pre-COVID So in shut. April, Now, back down of to obviously was April back to percent we're the sixteen, mix interest obviously, vertical dynamic we're almost had mix. our the merchants those driving that's great And to of hospitality twenty, vertical same because restaurant mix. in that referring back of up in But returning mix we've of think is seventeen and We was seen the sort business been – Tom the business is that many base. in growth the products great that merchant almost to kind our kind I of way

with XX:XX that's electronic that's overall and new macro merchants growth, to signing across And volume your Did the then well. is question? people that answer of also issue, So, ISOs. helping going certainly growth but industry just over the new as the helpful driving

Andrew Scutt

you That XX:XX much, was great. very Yes. Thank guys.


XX:XX Thank you.

Our next question….

Tom Priore

sorry. I'm XX:XX it. fine of, just seen put point couple to where out on a we've growth. continued There's Andrew

spot smaller, segment So, is has to call kind what get kind of is hospitality We've restaurant Mike especially up been. it of it the a small seen on. back in

down inside neighborhood. expanded In ironically restaurants allowed of has right, now outside and fact, experience this, countries. could just and you in because they’ve people up The probably to most up your XX:XX set capacity the across

pre-COVID services strong So, that we've has seen growth well area. Professional as been a levels. reach

So, to up payments. by the so. And more have businesses office. that's enabled good We've digital probably really tools states billing, there. convenience contractors well convenience and encouraged the for in many how Particularly opened reluctant that do networks acceptance around mobile a the the cash for service etcetera consumers past of more that's designed were of landscapers, that card are flexibility seen the way, And particularly those and have discounting charge kind or is, our are XX:XX So, your XX:XX incremental businesses. particularly bit more in like service permanent. probably enabled because growth things the have to of and using little businesses called

of digital trend leads of payments really that, to of small the for on cash banking buy to acceleration because for about we're that good convergence continue goods prospects the game name and that's single will really for expect platform a services further. driving businesses of acceleration we And bit So, there and use mean then the businesses. a like this the has optimistic that cash


Thank you. XX:XX

with Global. next Kinstlinger Your comes Alliance from question Brian

with You question. may your proceed

Brian Kinstlinger

that quarter, into I that managed talk your you managed And customer down? services you that is winding forget, visibility big customer completely you to then there business or managed was about? XX:XX down Great. and that so was services about the small follow-ups. Thanks. piece? could apologize, any to client in How that revenue I Two wound related this be Can trends for the talk services or have third

Mike Vollkommer

XX:XX institute – what another but It's same customer programs, actually would them. different the conversations just program I to run they and say is, and in we're so with

So, it's there. positive trends

For sure.

Brian Kinstlinger

Got it. Got XX:XX it.

prepared twenty that, the other as but not of guidance I there two, plenty then should you've And any twenty thinking I we not official businesses, know you asked an head couple acquisition, Okay. we made different had be a this. only about? upon got you're for into I’m seasonality is question

Tom Priore

our a QX don't expect a little as seasonality ton wildly the for we in because of are typically is like – We bit but XX:XX not larger have book. just of might you Look, so. holiday us period,

not through talking year. So, the to bit year. we we're couple than of in XX:XX pretty of variance You're of more generally of consistent historically a the about the a rest relative a little see pickup percent speaking, but QX,

Brian Kinstlinger

XX:XX Great.

much. you Thank Okay. so


showing any would back closing questions Priore any I this time. remarks. turn And further over call XX:XX not I'm the at now for like Tom to Thank you. to

Tom Priore

everyone for want call. I in the thank participate to Well, our to time earnings quarterly taking XX:XX

we As that in the can deliver. prospects our the favorable you you've believe the particularly tell, probably times about in has been platform excited our that seen that trends reflective we're certainly those less market can of consistency are when business, the for very future the and

enjoys where the gives in we We – understand safe. the looking of have support we we Hope measured a the headed. we you for are execution. are business day those to to we willingness and our very XX:XX think know about sort that reflected conversations we high XX:XX we'll the will [ph]. focused on past, focused what is solutions from deliver, consistently and and We great differentiated us we remain very and can in holidays of is more level And we upcoming confidence we had a everyone customers Thanks very be remain active to much of which – laser on delivering Thanksgiving to plan serve. that and So, as laser [some] it thank value we're has they're the for what going everyone. have, that we the be continue


call. participating. Thank you for you. This Thank today's concludes XX:XX conference

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