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Priority Technology Holdings, Inc. (PRTH)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered 6.3% revenue growth to $241.4M, 10.2% adjusted gross profit to $94.8M, 140 bps margin expansion to 39.2%, and adjusted EBITDA up 5.7% to $57.8M; GAAP diluted EPS was $0.34 and adjusted diluted EPS was $0.28 .
  • Mix shift toward high-value segments continued: Treasury Solutions revenue +18% and Payables +14% year-over-year, driving consolidated margin gains; Merchant Solutions was modest at +2% revenue and -3% adjusted EBITDA YoY .
  • Full-year guidance revised: revenue lowered to $950–$965M (from $970–$990M), while adjusted gross profit raised at the low end to $370–$380M and adjusted EBITDA to $223–$228M, reflecting stronger margins despite softer top line .
  • Near-term stock catalyst: a preliminary take‑private proposal from the CEO at $6.00–$6.15/share and formation of a special committee; an investor publicly opposed the bid as undervaluing PRTH, elevating strategic optionality headlines .

What Went Well and What Went Wrong

What Went Well

  • “Our ability to connect payments and treasury solutions across our diverse business segments delivered over 18% revenue growth for Treasury Solutions and 14% growth for Payables, while adjusted gross profit margins expanded by nearly 140 basis points,” said CEO Tom Priore, underscoring the Connected Commerce platform’s leverage .
  • Operational execution: launched a dedicated residual financing facility, activated card acquiring in Canada, added real‑time payments, and increased deposits under administration by $200M; also closed accretive acquisitions and reduced borrowing costs by 100 bps via a new $1.1B facility .
  • Treasury Solutions KPIs: average billed clients rose to ~1.05M and average total account balances to ~$1.25B in Q3, supporting segment revenue +18% YoY and adjusted EBITDA +14% YoY .

What Went Wrong

  • Merchant Solutions growth was muted: revenue +2% YoY to $161.9M and adjusted EBITDA down 3% YoY to $27.7M, pressured by lower specialized acquiring revenue and residual purchase runoff .
  • Supplier‑funded issuing dollar value declined YoY to $230.9M, partially offset by buyer‑funded growth; highlights mixed momentum within Payables sub‑streams .
  • Non‑recurring items and expenses: $12.5M debt modification costs, higher SG&A (+27% YoY) driven by cloud migration and acquisitions, and a large non‑recurring tax valuation allowance release affecting GAAP net income comparability .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$227.0 $224.6 $239.8 $241.4
Adjusted Gross Profit ($USD Millions)$86.0 $87.3 $92.4 $94.8
Adjusted Gross Profit Margin (%)37.9% 38.9% 38.5% 39.2%
Operating Income ($USD Millions)$38.1 $32.6 $37.4 $37.8
Net Income ($USD Millions)$10.6 $8.3 $10.9 $27.6
Diluted EPS (GAAP, $)$0.07 $0.10 $0.14 $0.34
Adjusted EPS (Diluted, $)$0.18 $0.22 $0.26 $0.28
Adjusted EBITDA ($USD Millions)$54.6 $51.3 $56.1 $57.8

Segment breakdown:

SegmentQ3 2024 Revenue ($M)Q3 2025 Revenue ($M)YoY %Q3 2024 Adj. EBITDA ($M)Q3 2025 Adj. EBITDA ($M)YoY %
Merchant Solutions$158.8 $161.9 +2% $28.6 $27.7 -3%
Payables$22.1 $25.2 +14% $1.9 $3.5 +79%
Treasury Solutions$47.1 $55.7 +18% $40.9 $46.7 +14%

Key KPIs:

KPIQ3 2024Q3 2025
Total Card Processing Dollar Value ($USD Millions)$18,076,156 $18,469,447
Total Card Transaction Count (000s)223,700 230,741
Buyer-Funded Card Processing Dollar Value ($USD Thousands)$700,510 $789,700
Supplier-Funded Issuing Dollar Value ($USD Thousands)$255,323 $230,882
ACH Transaction Count11,042 14,451
Avg CFTPay Billed Clients832,351 1,054,238
Avg CFTPay Monthly Enrollments62,875 61,185
Avg Total Account Balances ($USD Thousands)$900,690 $1,248,432

Non-GAAP adjustment context (Q3 2025):

  • Debt modification/extinguishment costs: $12.476M .
  • Bargain purchase gain: $(3.507)M .
  • Non-recurring SG&A items: $1.491M .
  • Non-recurring release of valuation allowance on deferred tax assets: $(21.170)M, materially impacting GAAP net income and EPS .

Guidance Changes

MetricPeriodPrevious Guidance (Q2’25)Current Guidance (Q3’25)Change
Revenue ($USD Millions)FY 2025$970–$990 $950–$965 Lowered
Adjusted Gross Profit ($USD Millions)FY 2025$365–$380 $370–$380 Raised low end
Adjusted EBITDA ($USD Millions)FY 2025$222.5–$227.5 $223–$228 Raised low end

Drivers: Continued strong growth in Payables and Treasury Solutions offsetting mid‑single‑digit organic growth in Merchant Solutions; disciplined cost actions and mix shift support margins .

Earnings Call Themes & Trends

TopicQ1 2025Q2 2025Q3 2025Trend
Platform/technology initiativesEmphasis on unified commerce engine; ongoing migration to public cloud to improve OpEx efficiency Cloud migration cited in operating expense drivers Cloud migration and software spend elevated SG&A; broader platform wins (card acquiring in Canada, RTP) Consistent execution; efficiency benefits expected
Tariffs/macroManagement noted tariff impacts and macro uncertainty; SMB mix resilient; B2B tools viewed as countercyclical Stable consumer volumes; mix helps resilience Noted continued diversified growth despite macro; deposit growth supports Treasury amid rate cuts Resilient backdrop with mix benefits
Payables (B2B) performanceBuyer‑funded +7%, supplier‑funded +35%; strong operating leverage Revenue +14%, adj. EBITDA +146%; margin expansion Revenue +14%, adj. EBITDA +79%; supplier‑funded down YoY, buyer‑funded up Sustained growth; sub-stream mix evolving
Treasury/CFTPay momentumEnrollments ~56K/mo; billed clients +34% YoY; balances offset rate cuts Enrollments ~58K/mo; billed clients +30% YoY Billed clients ~1.05M; balances up; 111 integrated partners (+9 QoQ) Strengthening scale and partner ecosystem
Controls/regulatoryMaterial weakness remediation progress and testing; no restatement No new disclosures No update in Q3 materials; continuing focus implied Ongoing remediation process

Management Commentary

  • CEO Tom Priore: “Our third quarter results reflect the strength and diversification of Priority’s Connected Commerce platform, with over 6% revenue growth and 10% adjusted gross profit growth… adjusted gross profit margins expanded by nearly 140 basis points” .
  • CFO Tim O’Leary (Q1 reference on expenses): SG&A up ~26% YoY normalized, with ~$1M related to public cloud migration; salary/benefits impacted by prior headcount additions; confidence in overall margin trends .
  • Strategic updates: Dedicated residual financing facility; accretive acquisitions of Boom (enterprise sales) and Dealer Merchant Services (auto dealership software + payments); new $1.1B credit facility reduced interest by 100 bps and extended maturity to 2032 .

Q&A Highlights

  • Q3 2025 transcript was not available; Q1 2025 Q&A indicates:
    • B2B (Payables) accelerating on both buyer‑funded and supplier‑funded models; operating leverage reducing expense base .
    • SMB exposure to retail/restaurants resilient; portfolio skewed to larger, healthier small businesses .
    • Free cash flow framework implied ~$80M+ FY potential and measured capital allocation between deleveraging and value‑enhancing opportunities .

Estimates Context

  • Wall Street consensus via S&P Global for Q3 2025 EPS and revenue was unavailable for PRTH at the time of query; comparisons to consensus could not be made. Values retrieved from S&P Global.*
  • Given management’s revision lowering FY revenue guidance while slightly raising margin‑focused metrics, near‑term sell‑side models may need to reduce FY revenue and adjust mix to reflect higher Treasury/Payables contribution .

Key Takeaways for Investors

  • Mix shift to high‑margin segments is driving durable margin expansion (AGP margin +140 bps YoY) and sustaining adjusted EBITDA growth despite softer Merchant Solutions; this improves earnings quality and cash generation profile .
  • Guidance pivot favors profitability: lowered FY revenue range but raised low‑end for adjusted gross profit and adjusted EBITDA—supportive for valuation anchored on EBITDA and FCF multiples .
  • Watch B2B sub‑stream dynamics: supplier‑funded down YoY while buyer‑funded up; sustained ACH growth and enterprise bank referrals suggest Payables scale with working‑capital demand .
  • Balance sheet actions de‑risk: $1.1B refinancing cut interest by 100 bps and extended maturities; $15M voluntary prepay post‑quarter; management targets ongoing deleveraging through 2026 .
  • Strategic M&A enhances vertical reach (auto dealerships) and enterprise selling (Boom), with near‑term revenue/EBITDA contributions disclosed for Q4 and 2025 accounting impacts clarified .
  • Near‑term stock driver: the CEO’s preliminary take‑private proposal and special committee review—potential for rerating with strategic alternatives; note public investor opposition asserting undervaluation .
  • Risks: elevated non‑recurring items (debt modification), SG&A inflation from cloud migration and acquisitions, and dependence on interest‑sensitive float income in Treasury against potential rate moves .