Sign in

You're signed outSign in or to get full access.

PT

Priority Technology Holdings, Inc. (PRTH)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered diversified growth: revenue $239.8M (+9.1% YoY), adjusted gross profit $92.4M (+13.0% YoY), adjusted EBITDA $56.0M (+8.7% YoY), and diluted GAAP EPS $0.14; adjusted EPS $0.26 (+$0.15 YoY) .
  • Guidance tightened and modestly raised: revenue to $970–$990M (low end up), adjusted gross profit to $365–$380M, and adjusted EBITDA to $222.5–$227.5M; management cited momentum, pipeline timing, and moderating H1 headwinds .
  • Segment mix skewed to higher margin businesses: Enterprise revenue +21% and B2B revenue +14% YoY; Enterprise adjusted EBITDA margin ~86.5%, B2B ~15.1% .
  • Debt refinancing lowered term-loan rate by 100 bps, improving annualized FCF by >$7M and extending maturities (TL 2032, revolver 5-year), a near-term catalyst for cash generation and deleveraging .
  • Street reaction: EPS beat versus external forecast ($0.26 vs $0.17) and slight revenue beat; pre-market stock rose ~5.9% on the print (S&P Global consensus unavailable for PRTH) .

What Went Well and What Went Wrong

What Went Well

  • Management raised the low end of FY25 revenue guidance and narrowed EBITDA range, citing “strong momentum and high visibility” in Connected/Unified Commerce strategy .
  • Higher-margin mix expansion: Enterprise adj. EBITDA $45.6M (+22% YoY) at ~86.5% margin; B2B adj. EBITDA $3.8M (+146% YoY) with 365 bps gross margin expansion, demonstrating operating leverage in platform businesses .
  • Capital structure improvement: new senior credit facilities at 100 bps lower term-loan spread, extended maturities, revolver capacity increased to $100M; slides quantify net leverage at ~4.1x (LTM adj. EBITDA $213.7M) post-refi .

What Went Wrong

  • SMB growth tempered by “run-off of historical residual purchases and lower specialized acquiring revenue,” pressuring SMB margins despite 5% revenue growth; SMB adj. EBITDA fell 3% YoY .
  • Operating expenses rose: salaries/benefits +22% YoY and SG&A +24% YoY, reflecting cloud migration (CapEx→OpEx), SOX-related accounting costs, and software/marketing investments .
  • B2B issuing dollar volume declined YoY (220.2M vs 249.5M), though segment revenue/margins improved via buyer- and supplier-funded revenue growth .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$227.1 $224.6 $239.8
Operating Income ($USD Millions)$34.1 $32.6 $37.4
Adjusted Gross Profit ($USD Millions)$83.9 $87.3 $92.4
Adjusted Gross Profit Margin (%)37.0% 38.9% 38.5%
Adjusted EBITDA ($USD Millions)$51.7 $51.3 $56.0
Diluted GAAP EPS ($USD)$(0.05) $0.10 $0.14
Adjusted EPS ($USD, Diluted)$0.18 $0.22 $0.26

Segment breakdown

SegmentQ1 2025 Revenue ($M)Q1 2025 Adj. EBITDA ($M)Q2 2025 Revenue ($M)Q2 2025 Adj. EBITDA ($M)
SMB Payments$151.7 $25.7 $163.2 $27.7
B2B Payments$23.9 $3.5 $25.0 $3.8
Enterprise Payments$50.1 $42.4 $52.7 $45.6

Key KPIs (selected)

KPIQ1 2025Q2 2025
SMB Merchant bankcard processing $ volume ($000s)15,294,133 16,150,363
SMB Total card processing $ volume ($000s)17,685,491 18,667,898
B2B issuing $ volume ($000s)237,290 220,227
Enterprise Avg. CFTPay billed clients940,463 992,279
Enterprise Avg. monthly new enrollments55,946 57,818

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
Revenue ($USD Millions)FY 2025$965–$1,000 $970–$990 Raised low end; narrowed range
Adjusted Gross Profit ($USD Millions)FY 2025$360–$385 $365–$380 Raised low end; narrowed range
Adjusted EBITDA ($USD Millions)FY 2025$220–$230 $222.5–$227.5 Narrowed around midpoint

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Capital structure & deleveragingRedeemed preferred stock; raised term loan; plan to prepay $10M, target <4x net leverage by YE25 Repaid $10M TL; revolver availability; net leverage ~4.2x LTM Closed new facilities: TL SOFR+375 (-100 bps), >$7M annual interest savings, maturities extended; net leverage ~4.1x Improving leverage and cash interest burden
Cloud migration (CapEx→OpEx)Identified OpEx pressure from migration; SOX remediation in progress Ongoing migration noted in slides; OpEx impact Continued OpEx headwind in H1; salaries/SG&A up YoY; management expects normalization post-2025 Near-term margin headwind; long-term efficiency
Rates & deposit balancesModeled rate cuts; deposits growth conservative Fed cuts impact partially offset YTD Enterprise balances growth offset 100 bps cuts; guidance embeds conservative deposit assumptions Resilient Enterprise income vs rate headwinds
SMB mix & margin driversResidual portfolio run-off; inventory write-offs; stable core margins after normalization Core SMB up ~10%; margin stability Core SMB +9.5%; headwinds from residuals run-off and lower specialized acquiring Core healthy; legacy headwinds moderating
B2B buyer/supplier-funded strategiesGrowth in CPX and Plastiq; margin expansion Supplier-funded +35%; buyer-funded +7% YoY Supplier-funded +22%; buyer-funded +13% YoY; adj. EBITDA +146% Strengthening operating leverage
Enterprise partner ecosystemAdds of integrated partners; billed clients up; countercyclical attributes 99 partners; billed clients +34% YoY 102 partners; billed clients +30% YoY; enrollments up 4% Broadening partner base, sticky revenue

Management Commentary

  • “Our strong second quarter results reflect the continued success of Priority’s Connected Commerce platform… This strong momentum and high level of visibility gives us confidence to raise the low end of our full-year revenue guidance to $970 million and narrow our adjusted EBITDA guidance range to $222.5–$227.5 million.” — Tom Priore, Chairman & CEO .
  • Enterprise resilience: “Growth in balances more than offset the impact of 100 bps of rate cuts” (Enterprise segment notes) .
  • SMB headwinds context: “Revenue growth of 5% with strong 9.5% growth in core partially offset by run-off of historical residual purchases and lower specialized acquiring revenue” (SMB highlights) .
  • Capital structure: new facilities improve annualized free cash flow by over $7M with lower interest expense and extend term loan maturity to 2032 .

Q&A Highlights

  • Core SMB growth detail: management quantified core SMB growth at ~9.5% for the quarter, backing out residual purchases and specialized acquiring impacts .
  • Capital allocation: reiterated focus on deleveraging while maintaining flexibility for tuck-in acquisitions; share repurchase remains opportunistic .
  • Rates embedded in guidance: team modeled expected Fed cuts and adopted conservative deposit assumptions; noted Enterprise balances offset rate headwinds .
  • Cloud migration impact: reiterated ~$4M OpEx effect from CapEx→OpEx in 2025 (magnitude referenced across calls) .
  • Enterprise traction: continued partner additions and billed-client growth, supporting recurring high-margin revenue .

Estimates Context

  • S&P Global consensus for PRTH Q2 2025 was unavailable via our estimates tool (no values returned).*
  • External forecast comparison (Investing.com): EPS actual $0.26 vs forecast $0.17; revenue actual $239.8M vs forecast $239.63M; stock rose ~5.88% pre-market following results .
MetricActual (Q2 2025)External ForecastSurprise
EPS (Adjusted, $)$0.26 $0.17 +$0.09
Revenue ($USD Millions)$239.8 $239.63 +$0.17

*Note: S&P Global consensus unavailable for PRTH Q2 2025 at time of analysis.

Key Takeaways for Investors

  • Mix shift to Enterprise and B2B is structurally expanding margins and recurring visibility; Enterprise adj. EBITDA margin ~86% and partner growth underpin outlook .
  • SMB headwinds (residuals run-off, specialized acquiring softness) are transitory; normalized core SMB growth remains healthy (~9–10%) .
  • Lower interest burden and extended maturities from the refi add >$7M to annual FCF and support further deleveraging; liquidity strengthened with $100M revolver capacity .
  • Cloud migration and SOX remediation elevate near-term OpEx but should yield platform efficiencies; watch gross margin and SG&A trajectory through H2 .
  • Guidance raise/narrow suggests confidence in H2 acceleration tied to pipeline timing and moderating headwinds; deliverability hinges on Enterprise balances and continued partner onboarding .
  • Near-term trading: EPS beat vs external forecast and refi news are positive catalysts; monitor SMB specialized acquiring trends and B2B volume normalization. Medium term: thesis anchored on unified commerce platform, high-margin recurring revenue, and disciplined capital allocation .

Appendix: Prior Quarter Reference

  • Q1 2025: revenue $224.6M (+9%), adj. GP $87.3M (+14%), adj. EBITDA $51.3M (+11%), adj. EPS $0.22; guidance maintained at $965–$1,000M revenue, $360–$385M adj. GP, $220–$230M adj. EBITDA .
  • Q4 2024: revenue $227.1M (+13.9%), adj. GP $83.9M (+15.1%), adj. EBITDA $51.7M (+16.0%); GAAP diluted EPS $(0.05) with adjusted EPS $0.18; preferred stock fully redeemed; leverage and liquidity actions executed .