[10-Q] Priority Technology Holdings, Inc. Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
Priority Technology Holdings (PRTH) reported Q3 2025 results. Revenue was $241.4 million, up from $227.0 million a year ago, as Merchant Solutions and Treasury Solutions grew. Operating income was $37.8 million versus $38.1 million. Net income attributable to common stockholders rose to $27.6 million, or $0.34 per diluted share, compared with $5.5 million, or $0.07 per diluted share, helped by a tax benefit.
For the first nine months, revenue reached $705.9 million versus $652.6 million, and net income to common stockholders was $46.7 million versus a loss of $20.2 million. The company completed acquisitions of Payslate (Letus) and Sila, recognizing a $3.5 million bargain purchase gain related to Sila, and purchased Boom Commerce residual portfolio rights ($73.5 million cash plus $13.5 million in shares and potential earn-outs). PRTH amended its 2024 Credit Agreement, increasing the term facility to $1.0 billion and extending maturities, and added a Residual Finance Credit Facility with $50.0 million commitment ($23.9 million drawn). Shares outstanding were 81,871,568 as of October 31, 2025.
Positive
- None.
Negative
- None.
Insights
Solid top-line growth with acquisitive expansion and refinancing.
PRTH delivered Q3 revenue of
The company closed two tuck-ins—Payslate (Letus) for total consideration of
On funding, PRTH upsized its term facility to
Tax benefit drove EPS; policy change impacted valuation allowance.
Effective tax rates were negative in Q3, reflecting the release of valuation allowance on interest limitation deferred tax assets following enactment of the OBBBA. This contributed to higher net income versus last year.
Sustainability of the tax benefit depends on future taxable income and continued applicability of the provisions. The company indicates ongoing evaluation of valuation allowances each quarter.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended September 30, 2025
OR
For the transition period from to
Commission file number: 001-37872
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
Registrant's telephone number, including area code: ( | ||||||||
| Not applicable | ||||||||
| (Former name, former address and former fiscal year, if changed since last report) | ||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of October 31, 2025, the number of the registrant's Common Stock outstanding was 81,871,568 .
Table of Contents
| Page | |||||
Commonly Used or Defined Terms | ii | ||||
PART I. FINANCIAL INFORMATION | 1 | ||||
Item 1. Financial Statements | 1 | ||||
Unaudited Consolidated Balance Sheets | 1 | ||||
Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) | 2 | ||||
Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest | 3 | ||||
Unaudited Consolidated Statements of Cash Flows | 6 | ||||
Notes to Unaudited Consolidated Financial Statements: | 8 | ||||
1. Basis of Presentation and Significant Accounting Policies | 8 | ||||
2. Acquisitions | 10 | ||||
3. Revenues | 13 | ||||
4. Settlement Assets and Obligations | 15 | ||||
5. Notes Receivable | 17 | ||||
6. Property, Equipment and Software | 18 | ||||
7. Goodwill and Other Intangible Assets | 19 | ||||
8. Debt Obligations | 20 | ||||
9. Income Taxes | 22 | ||||
10. Stockholders' Deficit | 23 | ||||
11. Stock-based Compensation | 23 | ||||
12. Related Party Transactions | 24 | ||||
13. Commitments and Contingencies | 24 | ||||
14. Fair Value | 26 | ||||
15. Segment Information | 27 | ||||
16. Earnings (Loss) per Common Share | 32 | ||||
17. Subsequent Events | 32 | ||||
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 33 | ||||
Item 3. Qualitative and Quantitative Disclosures about Market Risk | 46 | ||||
Item 4. Controls and Procedures | 46 | ||||
PART II. OTHER INFORMATION | 47 | ||||
Item 1. Legal Proceedings | 47 | ||||
Item 1A. Risk Factors | 47 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 47 | ||||
Item 3. Defaults Upon Senior Securities | 47 | ||||
Item 4. Mine Safety Disclosures | 47 | ||||
Item 5. Other Information | 47 | ||||
Item 6. Exhibits | 48 | ||||
Signatures | 50 | ||||
i
Table of Contents
Commonly Used or Defined Terms
| Term | Definition | |||||||
| 2018 Plan | 2018 Equity Incentive Plan | |||||||
| 2021 Stock Purchase Plan | Priority Technology Holdings, Inc. 2021 Employee Stock Purchase Plan | |||||||
| 2021 Share Repurchase Program | Priority Technology Holdings, Inc. 2021 Share Repurchase Program | |||||||
| AOCI | Accumulated other comprehensive income/loss | |||||||
| AP | Accounts payable | |||||||
| ASC | Accounting Standards Codification | |||||||
| APIC | Additional paid-in capital | |||||||
| ASU | Accounting Standards Update | |||||||
| B2B | Business-to-business | |||||||
| B2C | Business-to-consumer | |||||||
| CEO | Chief Executive Officer | |||||||
| CFO | Chief Financial Officer | |||||||
| Common Stock | The Company's Common Stock, par value $0.001 | |||||||
| 2024 Credit Agreement | Credit and Guaranty Agreement with Truist Bank dated as of May 16, 2024 | |||||||
| EAETR | Estimated annual effective tax rate | |||||||
| ESPP | Employee Stock Purchase Plan | |||||||
| Exchange Act | Securities Exchange Act of 1934 | |||||||
| FASB | Financial Accounting Standards Board | |||||||
| FDIC | Federal Deposit Insurance Corporation | |||||||
| FBO | For the benefit of | |||||||
| FI | Financial institution | |||||||
| Finxera | Finxera Holdings, Inc. | |||||||
| GAAP | U.S. Generally Accepted Accounting Principles | |||||||
| ISO | Independent sales organization | |||||||
| ISV | Independent software vendor | |||||||
| LIBOR | London Interbank Offered Rate | |||||||
| MTL | Money Transmission Licenses | |||||||
| NCI | Non-controlling interests in consolidated subsidiaries | |||||||
| PHOT | Priority Hospitality Technology, LLC | |||||||
| Plastiq | Acquisition of assets of Plastiq, Inc. and certain of its affiliates | |||||||
| Residual Finance credit facility | Credit Agreement with VP Capital, L.P. | |||||||
| 2024 Revolving credit facility | $100.0 million line issued under the 2024 Credit Agreement | |||||||
| SEC | Securities and Exchange Commission | |||||||
| SOFR | Secured Overnight Financing Rate | |||||||
| SOX | Sarbanes–Oxley Act of 2002 | |||||||
| SMB | Small to medium-sized businesses | |||||||
| Term facility | Term loan facility issued under the 2024 Credit Agreement | |||||||
| Wholesale Payments | Wholesale Payments, Inc. | |||||||
ii
Table of Contents
Priority Technology Holdings, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share data)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
| September 30, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
Accounts receivable, net of allowances of $ | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
Current portion of notes receivable, net of allowance of $ | |||||||||||
| Settlement assets | |||||||||||
| Total current assets | |||||||||||
| Notes receivable, less current portion | |||||||||||
| Property, equipment and software, net | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Deferred income taxes, net | |||||||||||
| Other noncurrent assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities, Stockholders' Deficit and NCI | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued expenses | $ | $ | |||||||||
| Accrued residual commissions | |||||||||||
| Customer deposits and advance payments | |||||||||||
| Current portion of long-term debt | |||||||||||
| Settlement obligations | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt, net of current portion, discounts and debt issuance costs | |||||||||||
| Other noncurrent liabilities | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (Note 13) | |||||||||||
| Stockholders' deficit: | |||||||||||
Preferred stock, $ | |||||||||||
Common Stock, $ | |||||||||||
Treasury stock at cost, | ( | ( | |||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders' deficit attributable to stockholders of Priority | ( | ( | |||||||||
| Non-controlling interests in consolidated subsidiaries | |||||||||||
| Total stockholders' deficit | ( | ( | |||||||||
| Total liabilities, stockholders' deficit and NCI | $ | $ | |||||||||
1
Table of Contents
Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss)
(in thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues | $ | $ | $ | $ | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Cost of revenue (excludes depreciation and amortization) | |||||||||||||||||||||||
| Salary and employee benefits | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Other (expense) income | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Debt extinguishment and modification costs | ( | ( | ( | ( | |||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Total other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax (benefit) expense | ( | ( | |||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Less: Dividends and accretion attributable to redeemable senior preferred stockholders | ( | ( | |||||||||||||||||||||
| Less: Return on redeemable NCI | ( | ||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | ( | ||||||||||||||||||||||
| Other comprehensive income (loss) | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | ( | ( | |||||||||||||||||||
| Comprehensive income (loss) | $ | $ | $ | $ | ( | ||||||||||||||||||
| Earnings (loss) per common share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | ( | ||||||||||||||||||
| Diluted | $ | $ | $ | $ | ( | ||||||||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See Notes to Unaudited Consolidated Financial Statement
2
Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest
(in thousands)
Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest
(in thousands)
| Common Stock | Treasury Stock | APIC | AOCI | Accumulated Deficit | Deficit Attributable to Stockholders | NCIs | Total | |||||||||||||||||||||||||
| Shares | $ | Shares | $ | |||||||||||||||||||||||||||||
| December 31, 2024 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
| Equity-classified stock-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Vesting of stock awards and ESPP purchases | — | — | — | — | — | |||||||||||||||||||||||||||
| Shares withheld for taxes | ( | — | ( | — | — | — | ( | — | ( | |||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Exercise of warrants | — | — | ( | — | — | — | ||||||||||||||||||||||||||
| Issuance of profit interests in subsidiaries | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| March 31, 2025 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
| Equity-classified stock-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Vesting of stock awards and ESPP purchases | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Shares withheld for taxes | ( | — | ( | — | — | — | ( | — | ( | |||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Issuance of profit interests in subsidiaries | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| June 30, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
| Equity-classified stock-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Vesting of stock awards and ESPP purchases | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Shares withheld for taxes | ( | — | ( | — | — | — | ( | — | ( | |||||||||||||||||||||||
| Shares issued as part of Boom asset purchase | — | — | — | — | — | |||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Plastiq NCI repurchase | — | — | — | — | ( | — | — | ( | ( | ( | ||||||||||||||||||||||
| Issuance of profit interests in subsidiaries | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| September 30, 2025 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
3
Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest
(in thousands)
Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest
(in thousands)
| Common Stock | Treasury Stock | APIC | AOCI | Accumulated Deficit | Deficit Attributable to Stockholders | NCIs | Total | |||||||||||||||||||||||||
| Shares | $ | Shares | $ | |||||||||||||||||||||||||||||
| December 31, 2023 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
| Equity-classified stock-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Vesting of stock awards and ESPP purchases | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Shares withheld for taxes | ( | — | ( | — | — | — | ( | — | ( | |||||||||||||||||||||||
| Exchange for PHOT redeemable NCI | ( | ( | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||
| Dividends on redeemable senior preferred stock | — | — | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||
| Accretion of redeemable senior preferred stock | — | — | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||
| Issuance of profit interests/common equity in subsidiaries | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||
| Reclassification of negative additional paid in capital | — | — | — | — | — | ( | — | |||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| March 31, 2024 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
| Equity-classified stock-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Vesting of stock awards and ESPP purchases | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Shares withheld for taxes | ( | — | ( | — | — | — | ( | — | ( | |||||||||||||||||||||||
| Redemption of PHOT redeemable NCI | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Return on PHOT redeemable NCI | — | — | — | — | ( | — | — | ( | ( | |||||||||||||||||||||||
| Dividends on redeemable senior preferred stock | — | — | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||
| Accretion of redeemable senior preferred stock | — | — | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||
| Issuance of profit interests/ common equity in subsidiaries | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Reclassification of negative additional paid-in capital | — | — | — | — | — | ( | — | |||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| June 30, 2024 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
4
Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest
(in thousands)
Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest
(in thousands)
| Common Stock | Treasury Stock | APIC | AOCI | Accumulated Deficit | Deficit Attributable to Stockholders | NCIs | Total | |||||||||||||||||||||||||
| Shares | $ | Shares | $ | |||||||||||||||||||||||||||||
| June 30, 2024 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
| Equity-classified stock-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Vesting of stock awards and ESPP purchases | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Shares withheld for taxes | ( | — | ( | — | — | — | ( | — | ( | |||||||||||||||||||||||
| PHOT share issuance | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Dividends on redeemable senior preferred stock | — | — | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||
| Accretion of redeemable senior preferred stock | — | — | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||
| Issuance of profit interests/common equity in subsidiaries | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||
| Reclassification of negative additional paid-in capital | — | — | — | — | — | ( | — | |||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| September 30, 2024 | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
5
Table of Contents
Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization of assets | |||||||||||
| Stock-based compensation | |||||||||||
| Amortization of debt issuance costs and discounts | |||||||||||
| Debt extinguishment and modification costs | |||||||||||
| Deferred income tax | ( | ( | |||||||||
| Change in deferred consideration | |||||||||||
| Bargain purchase gain | ( | ||||||||||
| Other non-cash items, net | ( | ( | |||||||||
| Change in operating assets and liabilities: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Prepaid expenses and other current assets | ( | ( | |||||||||
| Income taxes (receivable) payable | ( | ( | |||||||||
| Notes receivable | ( | ||||||||||
| Accounts payable and accrued expenses | |||||||||||
| Accrued residuals commissions | |||||||||||
| Customer deposits and advance payments | ( | ||||||||||
| Other noncurrent assets and liabilities, net | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Acquisition of businesses, net of cash acquired | ( | ||||||||||
| Additions to property, equipment and software | ( | ( | |||||||||
| Notes receivable, net | ( | ( | |||||||||
| Acquisitions of assets and other investing activities | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from issuance of long-term debt, net of issue discount | |||||||||||
| Debt issuance and modification costs paid | ( | ( | |||||||||
| Repayments of long-term debt | ( | ( | |||||||||
| Redemption of PHOT redeemable NCI | ( | ||||||||||
| Repurchases of shares withheld for taxes | ( | ( | |||||||||
| Redemption of senior preferred stock | ( | ||||||||||
| Redemption of accumulated unpaid dividend on redeemable senior preferred stock | ( | ||||||||||
| Dividends paid to redeemable senior preferred stockholders | ( | ||||||||||
| Proceeds from exercise of stock options | |||||||||||
| Settlement obligations, net | |||||||||||
| Payment of deferred/contingent consideration related to business combination | ( | ( | |||||||||
| NCI repurchase | ( | ||||||||||
| Net cash provided by financing activities | |||||||||||
| Net change in cash and cash equivalents and restricted cash: | |||||||||||
6
Table of Contents
Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net increase in cash and cash equivalents, and restricted cash | |||||||||||
| Cash and cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash and cash equivalents and restricted cash at end of period | $ | $ | |||||||||
| Reconciliation of cash and cash equivalents, and restricted cash: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
Cash and cash equivalents included in settlement assets (restricted in nature) (see Note 4) | |||||||||||
| Total cash and cash equivalents, and restricted cash | $ | $ | |||||||||
| Supplemental cash flow information: | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
| Non-cash investing and financing activities: | |||||||||||
| Acquisition of intangible asset | $ | $ | ( | ||||||||
| Measurement period adjustment to purchase price | $ | $ | |||||||||
Cash portion of dividend payable for redeemable senior preferred stock(1) | $ | $ | |||||||||
| Common stock issued for Boom Commerce asset purchase | $ | $ | |||||||||
| Foreign currency adjustment to goodwill and intangibles | $ | ( | $ | ||||||||
| Deferred/contingent consideration | $ | $ | |||||||||
See Notes to Unaudited Consolidated Statements
7
Table of Contents
Priority Technology Holdings, Inc.
Notes to Unaudited Consolidated Financial Statements
1. Basis of Presentation and Significant Accounting Policies
Business, Consolidation and Presentation
Priority Technology Holdings, Inc. is a holding company with no material operations of its own. Priority Technology Holdings, Inc. and its consolidated subsidiaries are referred to herein collectively as "Priority," the "Company," "we," "our" or "us," unless the context requires otherwise. Priority is the payments and banking solution that enables businesses to collect, store, lend and send funds through a unified commerce engine. Our platform combines payables, merchant solutions, and treasury solutions so leaders can streamline financial operations efficiently — and our innovative industry experts help businesses navigate and build momentum on the path to growth. With the Priority Commerce Engine, leaders can accelerate cash flow, optimize working capital, reduce unnecessary costs, and unlock new revenue opportunities.
The Company operates on a calendar year ending each December 31 and reports quarterly results on four calendar quarters ending on March 31, June 30, September 30 and December 31 of each year. Results of operations reported for interim periods are not necessarily indicative of results for the entire year.
NCI represents the equity interest in certain consolidated entities in which the Company owns less than 100% of the profit interests. Changes in the Company's ownership interest while the Company retains its controlling interest are accounted for as equity transactions. As of September 30, 2025, there was no income attributable to NCI in accordance with the applicable operating agreements.
In the opinion of the Company's management, all known adjustments necessary for a fair presentation of the Unaudited Consolidated Financial Statements for interim periods have been made. These adjustments consist of normal recurring accruals and estimates that affect the carrying amounts of assets and liabilities. These Unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Certain amounts from prior periods have been reclassified to conform to the current period’s presentation. The effect of these reclassifications on the Company’s previously reported consolidated financial statements was not material.
Segment Renaming
Use of Estimates
Foreign Currency
The Company's reporting currency is the U.S. dollar. The functional currency of the Indian subsidiary of the Company is the Indian Rupee (i.e. local currency of Republic of India). The functional currency of the Canadian subsidiaries of the Company is
8
the Canadian Dollar. Accordingly, assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the current exchange rate on the last day of the reporting period. Revenues and expenses are translated using the average exchange rate in effect during the reporting period. Translation adjustments are reported as a component of accumulated other comprehensive income (loss).
Deferred Consideration
Allowance for Expected Losses
A reconciliation of the beginning and ending amount of allowance for expected losses is as follows:
| (in thousands) | Accounts Receivables | Settlement assets | |||||||||
| Balance at January 1, 2025 | $ | ( | $ | ( | |||||||
| Charge-offs (recoveries), net | |||||||||||
| Provision | ( | ( | |||||||||
| Reclassification | ( | ||||||||||
| Balance at September 30, 2025 | $ | ( | $ | ( | |||||||
Recently Issued Accounting Standards
Profit Interest ASU 2024-01
In March 2024, the FASB issued ASU 2024-01, Profit Interest and Similar Awards ("ASU 2024-01"), to improve GAAP by adding an illustrative example to demonstrate how an entity should apply the scope in paragraph 718-10-15-3 to determine whether profit interest and similar awards should be accounted for in accordance with Topic 718, Compensation- Stock Compensation. This guidance is effective for annual and interim periods beginning after December 15, 2024. Adoption of this standard did not have any significant impact on results of operations, financial position or cash flows.
Income Taxes ASU 2023-09
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures. The guidance includes improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid. This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. This guidance is expected to only impact the disclosures with no impact on the results of operations, financial position or cash flows.
Disaggregation of Income Statement Expenses ASU 2024-03
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03") requiring additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the face of the income statement. The ASU is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early
9
adoption is permitted. The Company will adopt this guidance for the year ended December 31, 2026. This guidance is expected to only impact the disclosures with no impact on the results of operations, financial position or cash flows.
Accounting for Internal-Use Software ASU 2025-06
In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) ("ASU 2025-06") for targeted improvements to the accounting for internal-use software. The amendments updates guidance to consider different methods of software development, updating the requirements for capitalization of software costs. This ASU is effective for annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements.
2. Acquisitions
Payslate
On January 21, 2025, Priority’s wholly owned subsidiary, Priority Canada Acquisition Company, Inc. (the "acquiring entity"), acquired 100 % of the equity interest in Payslate Inc. (Canada), and its subsidiary Rentmoola Payment Solutions Ltd (United Kingdom) (jointly referred as "Letus business"). The Letus business is engaged in processing of rent payments for property management companies in the United States and Canada. The acquisition will provide synergy opportunities to the Company's Treasury Solutions rent payment business and expand Priority's services in Canada. The acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. The total purchase consideration was $9.0 million, consisting of $4.6 million in cash consideration funded by the Company’s cash flows, deferred consideration of $4.3 million and contingent consideration of $0.1 million.
The deferred consideration of $4.3 million was recorded at the fair value on the acquisition date. The deferred consideration will be paid monthly equal to 40 % of gross profit under the agreement and total payments will not exceed $6.5 million. Any amount remaining but unpaid will be paid in full by January 21, 2030. The Company will accrete interest expense on the deferred consideration throughout the period, which was $0.1 million and $0.3 million for the three and nine months ended September 30, 2025, respectively. As of September 30, 2025, total deferred consideration was $4.5 million, $0.7 million included in accounts payable and accrued expenses and $3.8 million included in noncurrent liabilities on the Unaudited Consolidated Balance Sheets.
Results for the Letus business since the acquisition are included within the Treasury Solutions segment, which includes $0.2 million and $0.6 million in revenue and a net loss of $0.2 million and $0.4 million for the three and nine months ended September 30, 2025, respectively.
10
The preliminary purchase price allocation is set forth in the table below:
| (in thousands) | |||||
| Consideration: | |||||
Cash(1) | $ | ||||
Deferred consideration (2) | |||||
Contingent consideration(3) | |||||
| Less: cash acquired | ( | ||||
| Total purchase consideration, net of cash acquired | $ | ||||
Recognized amounts of assets acquired and liabilities assumed(4): | |||||
| Accounts receivable | $ | ||||
| Prepaid expenses | |||||
| Property, equipment and software | |||||
| Goodwill | |||||
| Intangible assets: | |||||
| Customer relationships | |||||
| Trademarks | |||||
| Technology | |||||
| Accounts payable and accrued expenses | ( | ||||
| Total purchase consideration | $ | ||||
(1)Cash at closing net of adjustments from estimated net working capital to actual working capital.
(2)The fair value of the deferred consideration was determined utilizing a Monte Carlo simulation. The payments were calculated based on the path for the simulated metrics and the contractual terms of the deferred consideration payments and were discounted to present value at a rate reflecting a risk associated with the payoffs. The fair value was estimated to be the average present value of the deferred consideration payments over all iterations of the simulation.
(3)The contingent consideration represents the fair value of the share of net operating loss carryforwards owed to the seller in the future.
(4)Includes deferred tax asset of $3.8 million which has a full valuation allowance.
The Company incurred $0.5
Sila
On August 26, 2025, Priority's wholly owned subsidiary, Priority Tech Ventures, LLC (the "acquiring entity"), through it's merger subsidiary, acquired total outstanding shares including all voting interests in Sila Inc. ("the "Sila business" or "Sila"). Sila is a payment platform that enables ACH transfers, instant settlement, digital wallets and built-in compliance through a simple application programming interface. Technology acquired in this transaction will supplement Priority's current treasury solutions. The acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805 Business Combinations. The total purchase price was $7.9 million, consisting of $3.6 million in cash consideration funded by the Company's cash flows, and contingent consideration of $4.3 million for contractual earn-outs and additional contingent consideration of $0.1 million. Earn-outs will be paid as a percentage of gross profit when certain thresholds are met and additional contingent considerations will be paid based on utilization of the seller's carryforward tax losses.
The contingent consideration for the contractual earn-outs was recorded at the fair value of $4.3 million on the acquisition date. The contingent consideration will be paid quarterly subject to terms and conditions noted within the agreement over a period of seven years and total payments will not exceed $17.0 million. As of September 30, 2025, total contingent consideration of
11
$4.4 million is recorded in noncurrent liabilities on the Unaudited Consolidated Balance Sheets.
Results for the Sila business since the acquisition are included within the Treasury Solutions segment, which includes $0.1 0.3
The preliminary purchase price allocation is set forth in the table below:
| (in thousands) | |||||
| Consideration: | |||||
Cash(1) | $ | ||||
Contingent consideration (2) | |||||
| Less: cash acquired | ( | ||||
| Total purchase consideration, net of cash acquired | $ | ||||
| Recognized amounts of assets acquired and liabilities assumed: | |||||
| Accounts receivable | $ | ||||
| Prepaid expenses | |||||
| Other noncurrent assets | |||||
| Intangible assets: | |||||
| Trademarks | |||||
| Technology | |||||
| Accounts payable and accrued expenses | ( | ||||
| Customer deposits | ( | ||||
| Fair value of net assets acquired | $ | ||||
| Estimated bargain purchase gain | $ | ||||
(1)Cash at closing net of adjustments from estimated net working capital and closing cash.
The fair value of acquired assets and assumed liabilities exceeded the consideration paid, resulting in a bargain purchase gain. The Company reviewed its acquisition accounting methods, confirmed all assets and liabilities were properly identified, and ensured measurements reflected all consideration as of the closing date. The gain was primarily due to recognizing a deferred tax asset recorded in accordance with ASC 740 related to Sila's historical net operating losses. The bargain purchase gain is recorded in other income, net, in the Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2025.
The Company incurred $0.2
12
Based on the purchase consideration and pre-acquisition operating results, this business combination did not meet the materiality requirements for pro forma disclosures.
Other Acquisitions
Boom Commerce
3. Revenues
Disaggregation of Revenues
The following table presents a disaggregation of our consolidated revenues by type:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Revenue Type: | |||||||||||||||||||||||
| Merchant card fees | $ | $ | $ | $ | |||||||||||||||||||
| Money transmission services | |||||||||||||||||||||||
Outsourced services and other services(2) | |||||||||||||||||||||||
| Equipment | |||||||||||||||||||||||
Total revenues(1) | $ | $ | $ | $ | |||||||||||||||||||
(1)Includes contracts with an original duration of one year or less and variable consideration under a stand-ready series of distinct days of service. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material.
(2)Approximately $15.8 million and $42.5 million of interest income on customer funds for the three and nine months ended September 30, 2025, respectively, and $13.8 million and $38.8 million for the three and nine months ended September 30, 2024, respectively, is included in outsourced services and other services revenue in the table above. Approximately $1.1 million and $3.2 million of interest income on corporate funds for the three and nine months ended September 30, 2025 and $0.6 million and $1.8 million for the three and nine months ended September 30, 2024, respectively, is included in other income, net on the Company's Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) and not reflected in the table above.
The following table presents a disaggregation of our consolidated revenues by segment:
13
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||
| (in thousands) | Merchant Card Fees | Money Transmission Services | Outsourced and Other Services | Equipment | Total | ||||||||||||||||||||||||
| Segment | |||||||||||||||||||||||||||||
| Merchant Solutions | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Payables | |||||||||||||||||||||||||||||
| Treasury Solutions | |||||||||||||||||||||||||||||
| Eliminations | ( | ( | ( | ||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||
| (in thousands) | Merchant Card Fees | Money Transmission Services | Outsourced and Other Services | Equipment | Total | ||||||||||||||||||||||||
| Segment | |||||||||||||||||||||||||||||
| Merchant Solutions | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Payables | |||||||||||||||||||||||||||||
| Treasury Solutions | |||||||||||||||||||||||||||||
| Eliminations | ( | ( | ( | ||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Three Months Ended September 30, 2024 | |||||||||||||||||||||||||||||
| (in thousands) | Merchant Card Fees | Money Transmission Services | Outsourced and Other Services | Equipment | Total | ||||||||||||||||||||||||
| Segment | |||||||||||||||||||||||||||||
| Merchant Solutions | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Payables | |||||||||||||||||||||||||||||
| Treasury Solutions | |||||||||||||||||||||||||||||
| Eliminations | ( | ( | ( | ||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
14
| Nine Months Ended September 30, 2024 | |||||||||||||||||||||||||||||
| (in thousands) | Merchant Card Fees | Money Transmission Services | Outsourced and Other Services | Equipment | Total | ||||||||||||||||||||||||
| Segment | |||||||||||||||||||||||||||||
| Merchant Solutions | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Payables | |||||||||||||||||||||||||||||
| Treasury Solutions | |||||||||||||||||||||||||||||
| Eliminations | ( | ( | ( | ||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Deferred revenues were not material for the three and nine months ended September 30, 2025 and 2024.
Contract Assets and Contract Liabilities
Material contract assets and liabilities are presented net at the individual contract level in the Unaudited Consolidated Balance Sheets and are classified as current or noncurrent based on the nature of the underlying contractual rights and obligations.
Contract liabilities were $0.3 million and $0.2 million as of September 30, 2025 and December 31, 2024, respectively. Substantially all of these balances are recognized as revenue within 12 months.
Net contract assets were $0.3 million for the period ended September 30, 2025 and were not material for the period ended December 31, 2024.
4. Settlement Assets and Obligations
Settlement assets and obligations include, 1) funds due from merchants arising from settlement of funds for sales and credits between card issuers, merchants, 2) card settlement funds due from networks due to timing and its related obligations, and 3) Customer/Subscriber account balances and related obligations resulting from licensed money transmitter services.
Card settlements due from merchants, net
The merchant solution services of the Company include settlement of funds for sales and credits between card issuers, card networks and merchants. The standards of the card networks require possession of funds during the settlement process by a member bank which controls the clearing transactions. Since settlement funds are required to be in the possession of a member bank until merchants are funded, these funds are not assets of the Company, and the associated obligations are not liabilities of the Company. Therefore, neither is recognized in the Company's Unaudited Consolidated Balance Sheets.
Exception items that the Company is still attempting to collect from the merchants through the funds settlement process or merchant reserves are recognized as settlement assets in the Company's Unaudited Consolidated Balance Sheets, with an offsetting reserve for those amounts the Company estimates it will not be able to recover. Exception items that the Company has deemed uncollectible are recorded as merchant losses, a component of cost of revenue in the Company's Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss). Expenses for merchant losses net of recoveries for the three and nine months ended September 30, 2025 were $0.9 million and $2.8 million, respectively. Expenses for merchant losses, net of recoveries for the three and nine months ended September 30, 2024, were $0.7 million and $1.6 million respectively.
Card settlements due from networks and Dues to Customers’ Payees
As part of the Payables service offering:
15
•Priority accepts card payments for its customers and processes disbursements to their vendors (customers’ payees). The time lag between authorization and settlement of card transactions creates certain receivables (from card networks) and payables (to the vendors of customers). These receivables and payables arise from the settlement activities that the Company performs on behalf of its customers and therefore, are presented as settlement assets and related obligations.
•Priority processes payments to the customers’ payees wherein customers funds are received either in company-owned bank accounts controlled by the Company or bank-owned FBO accounts controlled by the banks, until such time that the transactions are settled with the customers’ payees. Balances in the bank-owned FBO accounts and related obligations are not considered assets and obligations of the Company. Therefore, neither is recognized in the Company's Unaudited Consolidated Balance Sheets. Amounts due to customers’ payees that are held in company-owned bank accounts are included in restricted cash in the Company's Unaudited Consolidated Balance Sheets and related obligations are presented as due to customers’ payees.
MTL Customer cash and cash equivalents (restricted in nature), short-term investments and MTL Customer account obligations
The Company provides treasury solutions to its customers through its money transmission licenses in 46 states and 3 territories of the United States and through agency relationships with banks in the remaining states. These services include the acceptance and disbursement of funds. While waiting for disbursement, these funds are held in bank accounts maintained by the Company on behalf of its customers. Per the money transmission regulations, the Company is allowed to invest available balances in these accounts in certain permitted investments, and returns on such investments contribute to the Company's net cash inflows. As such, the Company recognized these balances and related obligations on its balance sheet. Considering these balances are payable on demand and are related to settlement activities, they are presented as settlement assets (as part of the current assets) and the related obligations as settlement obligations (as part of the current liabilities) in the Company's Unaudited Consolidated Balance Sheets. The nature of these MTL Customer cash and cash equivalent are restricted in nature and therefore these balances are presented as restricted cash on the Company's Unaudited Consolidated Statement of Cash Flows. The MTL Short-term investments are included within acquisitions of assets and other investing activities on the Company's Unaudited Consolidated Statement of Cash Flows.
16
The Company's consolidated settlement assets and obligations were as follows:
| (in thousands) | September 30, 2025 | December 31, 2024 | |||||||||
Settlement Assets, net of estimated losses(1): | |||||||||||
Card settlements due from merchants, net(1)(2) | $ | $ | |||||||||
| Card settlements due from networks | |||||||||||
| Other settlement assets | |||||||||||
| Subtotal | |||||||||||
MTL Customer cash and cash equivalents (restricted in nature)(3) | |||||||||||
| MTL Short-term investments | |||||||||||
| Total settlement assets | $ | $ | |||||||||
| Settlement Obligations: | |||||||||||
| MTL Customer account obligations | $ | $ | |||||||||
| Subscriber account obligations | |||||||||||
| Total customer/subscriber account obligations | |||||||||||
Due to customers' payees(4)(5) | |||||||||||
| Total settlement obligations | $ | $ | |||||||||
(1)Allowance for estimated losses were $9.4 million and $7.9 million as of September 30, 2025 and December 31, 2024, respectively.
(2)Excludes merchant funds held at member banks of $109.7 million and $106.2 million on September 30, 2025 and December 31, 2024, respectively.
(3)Excludes funds held under agency arrangement with member banks (in states where the Company does not have a money transmitter license), balances remain under the control of the member banks (therefore not the assets or obligation of the Company). Agency owned accounts held $57.0 million and $22.6 million at September 30, 2025 and December 31, 2024, respectively.
(4)Includes $15.3 million and $12.3 million as of September 30, 2025 and December 31, 2024, respectively, of card settlements due from networks and the remainder is included in restricted cash on our Unaudited Consolidated Balance Sheets.
(5)Excludes amounts due to customer payees that are held in bank-owned FBO accounts which are not assets of the Company, and the associated obligations are not liabilities of the Company. Therefore, neither is recognized in the Company's Unaudited Consolidated Balance Sheets. Bank-owned FBO accounts held funds of $198.2 million and $64.8 million at September 30, 2025 and December 31, 2024, respectively.
5. Notes Receivable
The Company had notes receivable of $13.6 million and $8.6 million as of September 30, 2025 and December 31, 2024, respectively, which are reported as current portion of notes receivable and notes receivable less current portion on the Company's Unaudited Consolidated Balance Sheets. The notes receivable carried weighted-average interest rates of 13.8 % and 16.9 % as of September 30, 2025 and December 31, 2024, respectively. The notes are receivables from ISOs, which are made with a term of 1 -5 years. Under the terms of the agreements, the Company will hold back residual payments due to the ISOs and apply such residuals against future payment due to the Company. As of September 30, 2025 and December 31, 2024, there were no
The following table provides a reconciliation for activity within the notes receivable as of September 30, 2025:
17
| (in thousands) | |||||
| Balance at January 1, 2025 | $ | ||||
| Principal payments | ( | ||||
| Advances during the period | |||||
| Balance at March 31, 2025 | $ | ||||
| Principal payments | ( | ||||
| Advances during the period | |||||
| Balance at June 30, 2025 | $ | ||||
| Principal payments | ( | ||||
| Advances during the period | |||||
| Balance at September 30, 2025 | $ | ||||
As of September 30, 2025, the principal payments for the Company's notes receivable are due as follows:
| (in thousands) | |||||
| Twelve months ending September 30, | |||||
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| After 2029 | |||||
| Total | $ | ||||
6. Property, Equipment and Software
A summary of property, equipment and software, net was as follows:
| (in thousands) | September 30, 2025 | December 31, 2024 | |||||||||
| Computer software | $ | $ | |||||||||
| Equipment | |||||||||||
| Leasehold improvements | |||||||||||
| Furniture and fixtures | |||||||||||
| Property, equipment and software | |||||||||||
| Less: Accumulated depreciation | ( | ( | |||||||||
| Capital work in-progress | |||||||||||
| Property, equipment and software, net | $ | $ | |||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Depreciation expense | $ | $ | $ | $ | |||||||||||||||||||
Computer software represents purchased software and internally developed software that is used to provide the Company's services to its customers.
18
Fully depreciated assets are retained in property, equipment and software, net, until removed from service. Certain fully depreciated assets were removed from service during the three and nine months ended September 30, 2025 and 2024.
7. Goodwill and Other Intangible Assets
Goodwill
The Company's goodwill relates to the following segments:
| (in thousands) | September 30, 2025 | December 31, 2024 | |||||||||
| Merchant Solutions | $ | $ | |||||||||
| Treasury Solutions | |||||||||||
| Payables | |||||||||||
| Total | $ | $ | |||||||||
The following table summarizes the changes in the carrying value of goodwill:
| (in thousands) | Amount | ||||
| Balance at December 31, 2024 | $ | ||||
| Letus business combination | |||||
| Foreign currency translation adjustment | |||||
Balance at September 30, 2025 | $ | ||||
As of September 30, 2025, the Company is not aware of any triggering events for impairment that have occurred since the last annual impairment test.
Other Intangible Assets
Other intangible assets consisted of the following:
| September 30, 2025 | Weighted-average Useful Life | ||||||||||||||||||||||
| (in thousands, except weighted-average data) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||
| Other intangible assets: | |||||||||||||||||||||||
| ISO and referral partner relationships | $ | $ | ( | $ | |||||||||||||||||||
| Residual buyouts | ( | ||||||||||||||||||||||
| Customer relationships | ( | ||||||||||||||||||||||
| Merchant portfolios | ( | ||||||||||||||||||||||
| Technology | ( | ||||||||||||||||||||||
| Trade names | ( | ||||||||||||||||||||||
| Non-compete agreements | ( | ||||||||||||||||||||||
Money transmission licenses(1) | — | ||||||||||||||||||||||
| Total | $ | $ | ( | $ | |||||||||||||||||||
(1)These assets have an indefinite useful life.
19
| December 31, 2024 | Weighted-average Useful Life | ||||||||||||||||||||||
| (in thousands, except weighted-average data) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||
| Other intangible assets: | |||||||||||||||||||||||
| ISO and referral partner relationships | $ | $ | ( | $ | |||||||||||||||||||
| Residual buyouts | ( | ||||||||||||||||||||||
| Customer relationships | ( | ||||||||||||||||||||||
| Merchant portfolios | ( | ||||||||||||||||||||||
| Technology | ( | ||||||||||||||||||||||
| Trade names | ( | ||||||||||||||||||||||
| Non-compete agreements | ( | ||||||||||||||||||||||
Money transmission licenses(1) | — | ||||||||||||||||||||||
| Total | $ | $ | ( | $ | |||||||||||||||||||
(1)These assets have an indefinite useful life.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
Amortization expense(1) | $ | $ | $ | $ | |||||||||||||||||||
8. Debt Obligations
Outstanding debt obligations consisted of the following:
| September 30, 2025 | December 31, 2024 | ||||||||||
| 2024 Credit Agreement | |||||||||||
Term facility - matures July 31, 2032, interest rate of | $ | $ | |||||||||
Revolving credit facility - $ | |||||||||||
| Residual Finance Credit Facility | |||||||||||
Term facility - matures August 18, 2031, interest rate of | |||||||||||
| Total debt obligations | |||||||||||
| Less: current portion of long-term debt | ( | ( | |||||||||
| Less: unamortized debt discounts and deferred financing costs | ( | ( | |||||||||
| Long-term debt, net | $ | $ | |||||||||
20
Second Amendment to the 2024 Credit Agreement
On July 31, 2025, the Company amended the 2024 Credit Agreement to incorporate the following:
•Term facility: The amendment increased the principal balance from $935.5 million to $1.0 billion, increased quarterly principal payments from $2.4 million to $2.5 million, extended the maturity date from May 2031 to July 2032 and decreased the margin rate from 4.75 % to 3.75 %.
•Revolving credit facility: The amendment increased the credit commitment from $70.0 million to $100.0 million, extended the maturity date from May 2029 to July 2030 and decreased the margin rate from 4.25 % to 3.50 %.
Proceeds from the increase in the term facility was primarily used for the acquisitions in Note 2. Acquisitions. In accordance with ASC 470, the Company determined on a creditor-by-creditor basis that the amendment was both a debt extinguishment and modification. The Company expensed $2.3 million of previously unamortized fees and $4.1 million of debt issuance costs related to the refinancing which is reported in debt extinguishment and modification on the Company's Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss). Also reported in debt extinguishment and modification on the Company's Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) is the acceleration and payout of $6.9 million of deferred consideration for Plastiq (see Note 13. Commitments and Contingencies) and the $0.8 million gain on the extinguishment of a loan.
Residual Finance Credit Facility
On August 18, 2025, a wholly owned subsidiary of the Company not restricted by the 2024 Credit Agreement entered into an agreement ("Residual Finance Credit Facility") which provides a delayed draw term loan facility with a total commitment of $50.0 million of which the Company has drawn $23.9 million. The agreement also provides an accordion feature to increase the commitment by an aggregate amount not to exceed $75.0 million such that the total commitment may equal, but not exceed, $125.0 million. The purpose of this credit facility is to fund certain residual purchases and loans to ISOs and ISVs.
Outstanding borrowings under the Residual Finance Credit Facility accrue interest using a SOFR rate plus an applicable margin per year, equal to 6.25 %, subject to a SOFR rate floor of 2.0 % per year. Unused commitments are subject to a unused commitment fee on any undrawn amount equal to 1.0 % per year of the unused portion.
Interest Expense and Amortization of Deferred Loan Costs and Discounts
Deferred financing costs and debt discounts are amortized using the effective interest method over the remaining term of the respective debt and are recorded as a component of interest expense. Unamortized deferred financing costs and debt discounts are included in long-term debt on the Company's Unaudited Consolidated Balance Sheets.
Interest expense for outstanding debt, including fees for undrawn amounts and amortization of deferred financing costs and debt discounts was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
Interest expense(1),(2) | $ | $ | $ | $ | |||||||||||||||||||
(1)Included in interest expense is $0.4 million and $2.5 million related to the accretion of deferred consideration from acquisitions for the three and nine months ended September 30, 2025, respectively, and $1.1 million and $3.3 million for the three and nine months ended September 30, 2024, respectively.
21
Debt Covenants
The 2024 Credit Agreement contains representations and warranties, financial and collateral requirements, mandatory payment events, events of default and affirmative and negative covenants, including without limitation, covenants that restrict among other things, the ability to create liens, pay dividends or distribute assets from the loan parties to the Company, merge or consolidate, dispose of assets, incur additional indebtedness, make certain investments or acquisitions, enter into certain transactions (including with affiliates) and to enter into certain leases.
If the aggregate principal amount of outstanding revolving loans and letters of credit under the 2024 Credit Agreement exceeds 35 % of the total revolving credit facility thereunder, the Company is required to comply with certain restrictions on its Total Net Leverage Ratio. If applicable, the maximum permitted Total Net Leverage Ratio is: 1) 6.90 :1.00 at each fiscal quarter ended September 30, 2025 through March 31, 2026; 2) 6.40 :1.00 at each fiscal quarter ended June 30, 2026 and each fiscal quarter thereafter. As of September 30, 2025, the Company was in compliance with the covenants in the 2024 Credit Agreement.
The Residual Finance Credit Facility contains customary representations and warranties, financial and collateral requirements, mandatory payment events, events of default and affirmative and negative covenants, including without limitation, covenants that restrict among other things, the ability to create liens, pay dividends or distribute assets from the Loan Parties to the Company, merge or consolidate, dispose of assets, incur additional indebtedness, make certain investments or acquisitions, and enter into certain transactions (including with affiliates).
The Residual Finance Credit Facility requires the Company to comply with certain restrictions including minimum liquidity of $2.0 million, minimum tangible net worth of $5.0 million, maximum default ratio of 2.5 %, maximum delinquency ratio of 5.0 %, and a minimum excess spread ratio of 1.00 to 1.00. As of September 30, 2025, the Company was in compliance with the restrictions in the agreement.
9. Income Taxes
The Company's consolidated effective income tax rate for the three and nine months ended September 30, 2025 was (273.5 )% and (40.7 )%, respectively, compared to a consolidated effective income tax rate of 31.6 % and 37.3 % for the three and nine months ended September 30, 2024, respectively. The effective rates differed from the statutory rate of 21.0% primarily due to a decrease in the valuation allowance against certain business interest carry over deferred tax assets.
Valuation Allowance for Deferred Income Tax Assets
The Company considers all available positive and negative evidence to determine whether sufficient taxable income will be generated in the future to permit realization of the existing deferred tax assets. In accordance with the provisions of ASC 740, Income Taxes, the Company is required to provide a valuation allowance against deferred income tax assets when it is "more likely than not" that some portion or all of the deferred tax assets will not be realized.
Based on management's assessment, as of September 30, 2025, the Company continues to record a full valuation allowance against certain transaction costs, and net deferred tax assets acquired as part of the Payslate acquisition. The Company will continue to evaluate the realizability of the net deferred tax asset on a quarterly basis and, as a result, the valuation allowance may change in future periods.
22
10. Stockholders' Deficit
The Company is authorized to issue 100,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors. As of September 30, 2025 and December 31, 2024, the Company has not
Share Repurchase Program
In 2022, Priority's Board of Directors authorized a general share repurchase program under which the Company may purchase up to 2,000,000 shares of its outstanding Common Stock for a total of up to $10.0 million. Under the terms of this plan, the Company may purchase shares through open market purchases, unsolicited or solicited privately negotiated transactions, or in another manner so long as it complies with applicable rules and regulations. The Company has purchased 1,309,374 shares for $5.8 million under this plan. On May 5, 2025, the Company's Board of Directors amended the program to increase the authorization to 5,000,000 shares of it's outstanding common stock for a total of $40.0 million. As of September 30, 2025, there have been no shares repurchased under this amended plan.
11. Stock-based Compensation
Stock-based compensation expense, which is included in salary and employee benefits within the Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss), was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Stock-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
| Incentive units compensation expense | |||||||||||||||||||||||
| Liability-classified compensation expense | |||||||||||||||||||||||
| ESPP compensation expense | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
Income tax benefit for stock-based compensation was $0.2 million and $1.0 million respectively, for the three and nine months ended September 30, 2025 and was immaterial No
2018 Plan
The Company's 2018 Plan initially provided for the issuance of up to 6,685,696 shares of the Company's Common Stock. On March 17, 2022, the Company's Board of Directors unanimously approved an amendment to the 2018 Plan, which was subsequently approved by our shareholders, to increase the number of shares authorized for issuance under the plan by 2,500,000 shares, resulting in 9,185,696 shares of the Company's Common Stock authorized for issuance under the plan.
As of September 30, 2025, the Company had 3,123,543 shares available for issuance under the 2018 Plan.
2021 Employee Stock Purchase Plan
The 2021 Employee Stock Purchase Plan ("ESPP") provides for up to 200,000 shares to be purchased under the plan. Shares issued under the plan may be authorized but unissued or reacquired shares of Common Stock. All employees of the Company who work more than 20 hours per week and have been employed by the Company for at least 30 days may participate in the ESPP.
Under the ESPP, participants are offered, on the first day of the offering period, the option to purchase shares of Common Stock at a discount on the last day of the offering period. The offering period shall be for a period of three months and the first offering period began on January 10, 2022. The ESPP provides eligible employees the opportunity to purchase shares of the
23
Company's Common stock at 95 % of the lesser of the fair value on the first and last trading day of each offering period. The ESPP was amended by shareholder approval on June 13, 2025, to increase the number of shares available by 200,000 .
As of September 30, 2025, the Company had 203,702 shares available for issuance under the 2021 Stock Purchase Plan.
Non-voting Incentive Units
The Company issued non-voting incentive units to certain employees and partners in seven subsidiaries. These non-voting incentive units were determined to be equity and are accounted for under ASC 718 Stock Compensation. The non-voting incentive units are either fully vested when granted, or vest according to the service period and/or performance measure noted in the grant agreement. As the non-voting incentive units are vested, they are recognized as NCI to the Company, who is the majority owner of the subsidiaries.
12. Related Party Transactions
In February 2019, the Company's CEO contributed assets of certain businesses to PHOT (a subsidiary of the Company). In consideration, PHOT issued redeemable preferred equity interest (preferred units) to the CEO and COO of the Company. These preferred units were eligible to receive up to $4.5 million in profits earned by PHOT plus an annual preferred yield of 6 % on undistributed amounts.
13. Commitments and Contingencies
Minimum Annual Commitments with Third-party Processors
The Company has multi-year agreements with third parties to provide certain payment processing services to the Company. The Company pays processing fees under these agreements. Based on existing contracts in place, the Company is committed to pay minimum processing fees under these agreements of approximately $15.4 million in 2025 and $23.0 million in 2026.
Other Commitments
As of September 30, 2025 and December 31, 2024, the Company had a capital contribution commitment of $4.4 million and $12.6 million respectively, to fund operations of certain subsidiaries. The Company is obligated to make the contributions within 10 business days of receiving notice for such contribution from the subsidiary.
24
Deferred/Contingent Consideration
The following table provides a reconciliation of the beginning and ending balance of the Company's deferred and contingent consideration liabilities related to completed acquisitions:
| (in thousands) | Deferred/Contingent Consideration Liabilities | |||||||
| December 31, 2024 | $ | |||||||
Addition of deferred consideration (Related to acquisition, see Note 2) | ||||||||
Addition of contingent consideration (Related to acquisition, see Note 2) | ||||||||
| Accretion of deferred consideration | ||||||||
| Additions due to acceleration of timing of deferred consideration payments | ||||||||
| Payment of deferred consideration | ( | |||||||
| September 30, 2025 | $ | |||||||
On July 31, 2025, the Company accelerated remaining payments of $18.9 million of the deferred considerations related to the Plastiq acquisition. The acceleration of these payments resulted in $6.9 million of debt extinguishment and modification costs, net, in the Company's Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss).
Legal Proceedings
The Company is involved in certain legal proceedings and claims which arise in the ordinary course of business. In the opinion of the Company and based on consultations with internal and external counsel, the results of any of these matters, individually and in the aggregate, are not expected to have a material effect on the Company's results of operations, financial condition or cash flows. As more information becomes available, and the Company determines that an unfavorable outcome is probable on a claim and that the amount of probable loss that the Company will incur on that claim is reasonably estimable, the Company will record an accrued expense for the claim in question. If and when the Company records such an accrual, it could be material and could adversely impact the Company's results of operations, financial condition and cash flows.
The Company is a party in a case filed on October 11, 2023 in the United States District Court of Northern District of California (the “Complaint”). The Complaint is a putative class action against The Credit Wholesale Company, Inc. (“Wholesale”), Priority Technology Holdings, Inc., Priority Payment Systems (“PPS”), LLC and Wells Fargo Bank, N.A. (“Wells Fargo”). The Complaint alleges that Wholesale as an agent of Priority, PPS and Wells Fargo made non-consensual recordation of telephonic communications with California businesses in violation of California Invasion of Privacy Act (the “Act”). The Complaint seeks to certify a class of affected businesses and an award of $5,000 per violation of the Act. During the quarter ended June 30, 2025, the court granted final approval of the settlement agreement wherein the defendants agree to pay $19.5 million to settle this litigation on a class basis. There was no contribution from the Company towards this settlement agreement.
Concentration of Risks
While providing payment processing services, Priority manages funds that are held on behalf of its customers. Because Priority is not a member bank, these customer funds are held in bank accounts maintained with member banks pursuant to sponsorship agreements which require, among other things, that the Company abide by the laws and regulations of the card associations and MTL regulators.
As of September 30, 2025, the Company's customer account balances of $1.2 billion are maintained in accounts with certain FIs which are eligible to pass-through insurance subject to FDIC rules and regulations (refer to Note 4. Settlement Assets and Obligations). A majority of the Company's cash, restricted cash and off-balance sheet settlement funds are held in certain FIs,
25
substantially all of which is in excess of FDIC limits. The Company does not believe it is exposed to any significant credit risk from these transactions.
14. Fair Value
Fair Value Disclosures
The Company's contingent considerations were derived from business combinations occurring during nine months ended September 30, 2025 (refer to Note 2. Acquisitions). The contingent considerations are classified within Level 3 of the fair value hierarchy due to the uncertainty of the fair value measurement created by the absence of quoted market prices, the inherent lack of liquidity and unobservable inputs used to measure fair value which require judgment. The Company uses valuation techniques including Monte Carlo simulations to estimate fair value based on projection period and assumed growth rates. A change in inputs in the valuation techniques used might result in a significantly higher or lower fair value measurement than what is reported. Contingent consideration liabilities are uncertain due to the utilization of unobservable inputs and management's judgment in determining the likelihood of achieving criteria required by the respective agreements. The contingent considerations fair value of $4.5 million at September 30, 2025, are included in other noncurrent liabilities on the Company's Unaudited Consolidated Balance Sheets. There were no contingent consideration on the Company's balance sheet at December 31, 2024.
Notes Receivable
Notes receivable are carried at amortized cost. Substantially all of the Company's notes receivable are secured, and the Company provides for allowances when it believes that certain notes receivable may not be collectible. The carrying value of the Company's notes receivable, net approximates fair value and was approximately $13.6 million and $8.6 million at September 30, 2025 and December 31, 2024, respectively and is within Level 3 of the fair value hierarchy.
Short-term investments
Short-term investments are certificate of deposits which have a maturity that extends beyond three months but within one year of the initial purchase date and are carried at amortized cost. The carrying value approximates fair value of $46.7 million and is within Level 2 of the fair value hierarchy.
Debt Obligations
Outstanding debt obligations (see Note 8. Debt Obligations) are reflected in the Company's Unaudited Consolidated Balance Sheets at carrying value since the Company did not elect to remeasure debt obligations to fair value at the end of each reporting period.
The fair value of the term facility was estimated to be $1.0 billion and $944.4 million at September 30, 2025 and December 31, 2024, respectively. The fair value of the Residual Finance Credit Facility was estimated to be $23.9 million as of September 30, 2025. Both were estimated using binding and non-binding quoted prices in an active secondary market, which considers the credit risk and market related conditions, and is within Level 2 of the fair value hierarchy.
During the three and nine months ended September 30, 2025, there were no transfers into, out of, or between levels of the fair value hierarchy.
26
15. Segment Information
The Company's three reportable segments included Merchant Solutions, Payables and Treasury Solutions:
•Merchant Solutions: Provides full-service acquiring and payment-enabled solutions for B2C transactions, leveraging Priority's proprietary software platform, distributed through ISO, direct sales and vertically focused ISV channels.
•Payables: Provides market-leading AP automation solutions to corporations, software partners and industry leading FIs in addition to improving cash flows by providing instant access to working capital.
•Treasury Solutions: Provides embedded finance and treasury solutions to customers to modernize legacy platforms and accelerate software partners' strategies to monetize payments.
Corporate includes costs of corporate functions and shared services not allocated to our reportable segments.
The Company's chief operating decision makers ("CODM") are our CEO and CFO. The CODM uses adjusted earnings before interest expense, income tax and depreciation and amortization expenses ("Adjusted EBITDA") as the measure of segment profit or loss to allocate resources. Adjusted EBITDA represents EBITDA (i.e. earnings before interest, income tax, and depreciation and amortization expenses) adjusted for 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.
Segment level assets information is not provided or subject to review by the CODM and therefore not provided.
Information on reportable segments and reconciliations to income before income taxes are as follows:
27
| Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||
| (in thousands) | Merchant Solutions | Payables | Treasury Solutions | Total | ||||||||||||||||||||||
| Revenue from external customers | $ | $ | $ | $ | ||||||||||||||||||||||
| Intersegment revenues | ||||||||||||||||||||||||||
| Elimination of intersegment revenues | ( | |||||||||||||||||||||||||
| Total consolidated revenues | ||||||||||||||||||||||||||
Less: Cost of services (excludes depreciation and amortization)1 | ( | ( | ( | |||||||||||||||||||||||
Less: Other operating expenses 1,2 | ( | ( | ( | |||||||||||||||||||||||
Add: Other segment items3 | ||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | $ | $ | $ | ||||||||||||||||||||||
| Reconciliation of Segment Adjusted EBITDA to income (loss) before income taxes | ||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | |||||||||||||||||||||||||
Adjustment for corporate items4 | ( | |||||||||||||||||||||||||
| Intersegment revenue elimination | ( | |||||||||||||||||||||||||
| Depreciation and amortization | ( | |||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||
| Debt modification and extinguishment expenses | ( | |||||||||||||||||||||||||
| Selling, general and administrative (non-recurring) | ( | |||||||||||||||||||||||||
| Non-cash stock based compensation | ( | |||||||||||||||||||||||||
| Income before income taxes | $ | |||||||||||||||||||||||||
(1)The significant expense categories and amounts align with the segment level information regularly provided to the CODM.
(2)Other operating expenses including salary and employee benefits, and selling, general and administrative expenses.
(3)Other segment items for each reportable segment include other income, net, and stock based compensation expense.
(4)Adjustment for corporate items include:
| (in thousands) | Three Months Ended September 30, 2025 | ||||||||||||||||||||||
| Elimination of cost of services (excludes depreciation and amortization) | $ | ||||||||||||||||||||||
Other operating expenses2 | ( | ||||||||||||||||||||||
Other items5 | |||||||||||||||||||||||
| $ | ( | ||||||||||||||||||||||
(5)Other items include other income net, stock based compensation expense, and selling general and administrative (non-recurring expense).
| (in thousands) | Other specified segment disclosure | ||||||||||||||||||||||
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||
| Merchant Solutions | Payables | Treasury Solutions | Total | ||||||||||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | |||||||||||||||||||
28
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||
| (in thousands) | Merchant Solutions | Payables | Treasury Solutions | Total | ||||||||||||||||||||||
| Revenue from external customers | $ | $ | $ | $ | ||||||||||||||||||||||
| Intersegment revenue | ||||||||||||||||||||||||||
| Elimination of intersegment revenues | ( | |||||||||||||||||||||||||
| Total consolidated revenues | ||||||||||||||||||||||||||
Less: Cost of services (excludes depreciation and amortization)1 | ( | ( | ( | |||||||||||||||||||||||
Less: Other operating expenses1,2 | ( | ( | ( | |||||||||||||||||||||||
Add: Other segment items3 | ||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | $ | $ | $ | ||||||||||||||||||||||
| Reconciliation of Segment Adjusted EBITDA to income (loss) before income taxes | ||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | |||||||||||||||||||||||||
Adjustment for corporate items4 | ( | |||||||||||||||||||||||||
| Intersegment revenue elimination | ( | |||||||||||||||||||||||||
| Depreciation and amortization | ( | |||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||
| Debt modification and extinguishment expenses | ( | |||||||||||||||||||||||||
| Selling, general and administrative (non-recurring) | ( | |||||||||||||||||||||||||
| Non-cash stock based compensation | ( | |||||||||||||||||||||||||
| Income before income taxes | $ | |||||||||||||||||||||||||
(1)The significant expense categories and amounts align with the segment level information regularly provided to the CODM.
(2)Other operating expenses including salary and employee benefits, and selling, general and administrative expenses.
(3)Other segment items for each reportable segment include other income, net, and stock based compensation expense.
(4)Adjustment for corporate items include:
| (in thousands) | Nine Months Ended September 30, 2025 | ||||
| Elimination of cost of services (excludes depreciation and amortization) | $ | ||||
Other operating expenses2 | ( | ||||
Other items5 | |||||
| $ | ( | ||||
(5)Other items include other income net, stock based compensation expense, and selling general and administrative (non-recurring expense).
| (in thousands) | Other specified segment disclosure | ||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||
| Merchant Solutions | Payables | Treasury Solutions | Total | ||||||||||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | |||||||||||||||||||
29
| Three Months Ended September 30, 2024 | ||||||||||||||||||||||||||
| (in thousands) | Merchant Solutions | Payables | Treasury Solutions | Total | ||||||||||||||||||||||
| Revenue from external customers | $ | $ | $ | $ | ||||||||||||||||||||||
| Intersegment revenues | ||||||||||||||||||||||||||
| Elimination of intersegment revenues | ( | |||||||||||||||||||||||||
| Total consolidated revenues | ||||||||||||||||||||||||||
Less: Cost of services (excludes depreciation and amortization)1 | ( | ( | ( | |||||||||||||||||||||||
Less: Other operating expenses 1,2 | ( | ( | ( | |||||||||||||||||||||||
Add: Other segment items3 | ||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | $ | $ | $ | ||||||||||||||||||||||
| Reconciliation of Segment Adjusted EBITDA to income (loss) before income taxes | ||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | |||||||||||||||||||||||||
Adjustment for corporate items4 | ( | |||||||||||||||||||||||||
| Intersegment revenue elimination | ( | |||||||||||||||||||||||||
| Depreciation and amortization | ( | |||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||
| Debt modification and extinguishment expenses | ( | |||||||||||||||||||||||||
| Selling, general and administrative (non-recurring) | ( | |||||||||||||||||||||||||
| Non-cash stock based compensation | ( | |||||||||||||||||||||||||
| Income before income taxes | $ | |||||||||||||||||||||||||
(1)The significant expense categories and amounts align with the segment level information regularly provided to the CODM.
(2)Other operating expenses including salary and employee benefits, and selling, general and administrative expenses.
(3)Other segment items for each reportable segment include other income, net, and stock based compensation expense.
(4)Adjustment for corporate items include:
| (in thousands) | Three Months Ended September 30, 2024 | ||||||||||||||||||||||
| Elimination of cost of services (excludes depreciation and amortization) | $ | ||||||||||||||||||||||
Other operating expenses2 | ( | ||||||||||||||||||||||
Other items5 | |||||||||||||||||||||||
| $ | ( | ||||||||||||||||||||||
(5)Other items include other income net, stock based compensation expense, and selling general and administrative (non-recurring expense).
| (in thousands) | Other specified segment disclosure | ||||||||||||||||||||||
| Three Months Ended September 30, 2024 | |||||||||||||||||||||||
| Merchant Solutions | Payables | Treasury Solutions | Total | ||||||||||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | |||||||||||||||||||
30
| Nine Months Ended September 30, 2024 | ||||||||||||||||||||||||||
| (in thousands) | Merchant Solutions | Payables | Treasury Solutions | Total | ||||||||||||||||||||||
| Revenue from external customers | $ | $ | $ | $ | ||||||||||||||||||||||
| Intersegment revenue | ||||||||||||||||||||||||||
| Elimination of intersegment revenues | ( | |||||||||||||||||||||||||
| Total consolidated revenues | ||||||||||||||||||||||||||
Less: Cost of services (excludes depreciation and amortization)1 | ( | ( | ( | |||||||||||||||||||||||
Less: Other operating expenses1,2 | ( | ( | ( | |||||||||||||||||||||||
Add: Other segment items3 | ||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | $ | $ | $ | ||||||||||||||||||||||
| Reconciliation of Segment Adjusted EBITDA to income (loss) before income taxes | ||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | |||||||||||||||||||||||||
Adjustment for corporate items4 | ( | |||||||||||||||||||||||||
| Intersegment revenue elimination | ( | |||||||||||||||||||||||||
| Depreciation and amortization | ( | |||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||
| Debt modification and extinguishment expenses | ( | |||||||||||||||||||||||||
| Selling, general and administrative (non-recurring) | ( | |||||||||||||||||||||||||
| Non-cash stock based compensation | ( | |||||||||||||||||||||||||
| Income before income taxes | $ | |||||||||||||||||||||||||
(1)The significant expense categories and amounts align with the segment level information regularly provided to the CODM.
(2)Other operating expenses including salary and employee benefits, and selling, general and administrative expenses.
(3)Other segment items for each reportable segment include other income, net, and stock based compensation expense.
(4)Adjustment for corporate items include:
| (in thousands) | Nine Months Ended September 30, 2024 | ||||||||||||||||||||||
| Elimination of cost of services (excludes depreciation and amortization) | $ | ||||||||||||||||||||||
Other operating expenses2 | ( | ||||||||||||||||||||||
Other items5 | |||||||||||||||||||||||
| $ | ( | ||||||||||||||||||||||
(5)Other items include other income net, stock based compensation expense, and selling general and administrative (non-recurring expense).
| (in thousands) | Other specified segment disclosure | ||||||||||||||||||||||
| Nine Months Ended September 30, 2024 | |||||||||||||||||||||||
| Merchant Solutions | Payables | Treasury Solutions | Total | ||||||||||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | |||||||||||||||||||
31
16. Earnings (Loss) per Common Share
The following tables set forth the computation of the Company's basic and diluted earnings (loss) per common share:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands except per share amounts) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Less: Dividends and accretion attributable to redeemable senior preferred stockholders | ( | ( | |||||||||||||||||||||
| Less: Return on redeemable NCI | ( | ||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | $ | $ | $ | ( | ||||||||||||||||||
Weighted average shares outstanding(1) | |||||||||||||||||||||||
| Effect of dilutive potential common shares | |||||||||||||||||||||||
| Adjusted Weighted average shares outstanding | |||||||||||||||||||||||
| Basic Earnings (loss) per common share | $ | $ | $ | $ | ( | ||||||||||||||||||
| Diluted Earnings (loss) per share | $ | $ | $ | $ | ( | ||||||||||||||||||
(1)For the three and nine months ended September 30, 2024, the weighted-average common shares outstanding includes 1,803,841 warrants. These shares of common stock had an exercise price of $0.001 and were exercised on January 14, 2025. The warrants are considered to be equity contracts indexed in the Company's own shares and therefore were recorded at their inception date relative fair value and are included in additional paid-in capital on the Company's Unaudited Consolidated Balance Sheets.
For the three and nine months ended September 30, 2025, the Company had 0.8 million and 1.0 million, respectively, dilutive securities that were included in the Company's diluted earnings per share. For the three and nine months ended September 30, 2024, the Company had 2.1 million and 0.0 million , respectively, dilutive securities that were included in the Company's diluted earnings per share. Anti-dilutive securities that were excluded from the Company's earnings (loss) per common share are as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (number of shares, in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
Restricted stock awards(1) | |||||||||||||||||||||||
| Liability-classified restricted stock units | |||||||||||||||||||||||
Outstanding stock option awards(1) | |||||||||||||||||||||||
| Total | |||||||||||||||||||||||
(1)Granted under the 2018 Plan.
17. Subsequent Events
On October 1, 2025, Priority’s indirect subsidiary, Priority DMS LLC, (the "acquiring entity"), acquired certain assets of DMSJV LLC (the "DMS business"), for cash consideration of $35.0 million, earn outs not to exceed $22.5 million and equity in the acquiring entity. Post transaction, Priority owns 76.7 % of the equity interest in the acquiring entity with the remaining interest owned by the sellers of the DMS business. Considering the timing of the acquisition, the Company has not yet completed its preliminary acquisition accounting. The DMS business is a leading vertically focused reseller in the auto and
32
truck dealership sector and will complement the Company's Merchant Solutions segment. Priority will benefit from the addition of the DMS team, vertically focused integrated software and distribution in the automotive dealership arena. The preliminary acquisition accounting is expected to be completed in the fourth quarter of 2025.
On October 1, 2025, the Company entered into the third amendment to its 2024 Credit Agreement to increase its term loan facility by $35.0 million. All other significant terms remained unchanged. The proceeds of the increase were used to fund the acquisition of the DMS business. The accounting evaluation of the amendment is in process.
33
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Audited Consolidated Financial Statements and related Notes and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Certain amounts in this section may not add mathematically due to rounding.
Cautionary Note Regarding Forward-looking Statements
Some of the statements made in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements include, but are not limited to, statements regarding our management's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, such as statements about our future financial performance, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "future," "goal," "intend," "likely," "may," "might," "plan," "possible," "potential," "predict," "project," "seek," "should," "would," "will," "approximately," "shall" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•negative economic and political conditions that adversely affect the general economy, consumer confidence and consumer and commercial spending habits, which may, among other things, negatively impact our business, financial condition and results of operations;
•competition in the payment processing industry;
•the use of distribution partners;
•any unauthorized disclosures of merchant or cardholder data, whether through breach of our computer systems, computer viruses or otherwise;
•any breakdowns in our processing systems;
•government regulation, including regulation of consumer information;
•the use of third-party vendors;
•any changes in card association and debit network fees or products;
•any failure to comply with the rules established by payment networks or standards established by third-party processors;
•any proposed acquisitions or dispositions or any risks associated with completed acquisitions or dispositions; and
•other risks and uncertainties set forth in the "Item 1A - Risk Factors" section of this Quarterly Report on Form 10-Q or our Annual Report on Form 10-K.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. You should not place undue reliance on these forward-looking statements in deciding whether to invest in our securities. We cannot assure you that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions, including the risk factors set forth in the "Item 1A - Risk Factors" section of this Quarterly Report on Form 10-Q or our Annual Report on Form 10-K, that may cause our actual results or performance to
34
be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Forward-looking statements speak only as of the date they were made. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Terms Used in this Quarterly Report on Form 10-Q
As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to the terms "Company," "Priority," "we," "us" and "our" refer to Priority Technology Holdings, Inc. and its consolidated subsidiaries.
Results of Operations
This section includes certain components of our results of operations for the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024. We have derived this data, except the key indicators, from our Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q and our Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.
Revenues
For the three months ended September 30, 2025, our consolidated revenue of $241.4 million increased by $14.4 million, or 6.3%, from $227.0 million for the three months ended September 30, 2024. This overall increase was mainly driven by increase in total card dollar value processed in our Merchant Solutions segment, an increase in new enrollments, number of billed clients and higher interest income in our Treasury Solutions segment, and, increases in processing volume and ACH transactions count in our Payables Segment, which was partially offset by a decrease in issuing volume.
For the nine months ended September 30, 2025, our consolidated revenue of $705.9 million increased by $53.2 million, or 8.2%, from $652.6 million for the nine months ended September 30, 2024. This overall increase was mainly driven by increase in total card dollar value processed in our Merchant Solutions segment, an increase in new enrollments, number of billed clients and higher interest income in our Treasury Solutions segment, and, increases in processing volume, incentive income and ACH transactions count in our Payables Segment, which was partially offset by a decrease in issuing volume.
35
The following table presents our revenues by type:
| (in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | 2025 | 2024 | $ Change | ||||||||||||||||||||||||||||||
| Revenue Type: | |||||||||||||||||||||||||||||||||||
| Merchant card fees | $ | 178,518 | $ | 171,814 | $ | 6,704 | $ | 526,080 | $ | 499,007 | $ | 27,073 | |||||||||||||||||||||||
| Money transmission services | 40,991 | 33,868 | 7,123 | 117,713 | 94,352 | 23,361 | |||||||||||||||||||||||||||||
| Outsourced services and other services | 18,288 | 18,063 | 225 | 52,143 | 49,984 | 2,159 | |||||||||||||||||||||||||||||
| Equipment | 3,642 | 3,304 | 338 | 9,945 | 9,292 | 653 | |||||||||||||||||||||||||||||
| Total revenues | $ | 241,439 | $ | 227,049 | $ | 14,390 | $ | 705,881 | $ | 652,635 | $ | 53,246 | |||||||||||||||||||||||
Merchant card fees
Merchant card fees revenue for the three months ended September 30, 2025 was $178.5 million an increase of $6.7 million or 3.9%, from $171.8 million for the three months ended September 30, 2024. The increase was primarily driven by an increase in total card value, and the transaction count processed by the Company.
Merchant card fees revenue for the nine months ended September 30, 2025 was $526.1 million an increase of $27.1 million or 5.4%, from $499.0 million for the nine months ended September 30, 2024. The increase was primarily driven by an increase in total card value, and the transaction count processed by the Company.
Money transmission services
Money transmission services for the three months ended September 30, 2025 was $41.0 million, an increase of $7.1 million, or 21.0%, from $33.9 million for the three months ended September 30, 2024. This increase was primarily driven by an increase in new customer enrollments and average billed clients.
Money transmission services for the nine months ended September 30, 2025 was $117.7 million, an increase of $23.4 million, or 24.8%, from $94.4 million for the nine months ended September 30, 2024. This increase was primarily driven by an increase in new customer enrollments and average billed clients.
Outsourced services and other services revenue
Outsourced services and other services revenue of $18.3 million for the three months ended September 30, 2025 increased by $0.2 million, or 1.2%, from $18.1 million for the three months ended September 30, 2024, primarily due to growth in interest income from higher balances of permissible investments driven by higher account balances offset by reduction in interest rates.
Outsourced services and other services revenue of $52.1 million for the nine months ended September 30, 2025 increased by $2.2 million, or 4.3%, from $50.0 million for the nine months ended September 30, 2024, primarily due to growth in interest income from higher balances of permissible investments driven by higher account balances offset by reduction in interest rates.
Equipment
Equipment revenue of $3.6 million for the three months ended September 30, 2025 increased by $0.3 million, or 10.2% from $3.3 million for the three months ended September 30, 2024. The increase was primarily due to increased sales of point-of-sale equipment.
Equipment revenue of $9.9 million for the nine months ended September 30, 2025 increased by $0.7 million, or 7.0% from $9.3 million for the nine months ended September 30, 2024. The increase was primarily due to increased sales of point-of-sale equipment.
36
Operating expenses were as follows:
| (in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | 2025 | 2024 | $ Change | ||||||||||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||||||||
| Cost of revenue (excludes depreciation and amortization) | $ | 146,681 | $ | 141,070 | $ | 5,611 | $ | 431,433 | $ | 408,486 | $ | 22,947 | |||||||||||||||||||||||
| Salary and employee benefits | 26,140 | 21,748 | 4,392 | 78,975 | 66,017 | 12,958 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 15,122 | 13,733 | 1,389 | 42,992 | 44,230 | (1,238) | |||||||||||||||||||||||||||||
| Selling, general and administrative | 15,724 | 12,413 | 3,311 | 44,734 | 34,620 | 10,114 | |||||||||||||||||||||||||||||
| Total operating expenses | $ | 203,667 | $ | 188,964 | $ | 14,703 | $ | 598,134 | $ | 553,353 | $ | 44,781 | |||||||||||||||||||||||
Cost of revenue (excludes depreciation and amortization)
Cost of revenue (excludes depreciation and amortization) of $146.7 million for the three months ended September 30, 2025 increased by $5.6 million, or 4.0%, from $141.1 million for the three months ended September 30, 2024, primarily due to the corresponding increase in revenues.
Cost of revenue (excludes depreciation and amortization) of $431.4 million for the nine months ended September 30, 2025 increased by $22.9 million, or 5.6%, from $408.5 million for the nine months ended September 30, 2024, primarily due to the corresponding increase in revenues offset by recovery of certain bad debts.
Salary and employee benefits
Salary and employee benefits expense of $26.1 million for the three months ended September 30, 2025 increased by $4.4 million, or 20.2%, from $21.7 million for the three months ended September 30, 2024, primarily due to merit increases, lower capitalization rates, increased headcount to support overall growth of the Company and from the acquisition of Letus, Sila and Boom, and increased stock based compensation related to long term incentive awards to executives.
Salary and employee benefits expense of $79.0 million for the nine months ended September 30, 2025 increased by $13.0 million, or 19.6%, from $66.0 million for the nine months ended September 30, 2024, primarily due to merit increases, lower capitalization rates, increased headcount to support overall growth of the Company and from the acquisition of Letus, Sila and Boom, and increased stock based compensation related to long term incentive awards to executives.
Depreciation and amortization expense
Depreciation and amortization expense of $15.1 million for the three months ended September 30, 2025 increased by $1.4 million, or 10.1%, from $13.7 million for the three months ended September 30, 2024, primarily due to additional intangible assets from the Letus, Sila and Boom acquisitions and software capitalization, offset by full amortization of certain intangible assets.
Depreciation and amortization expense of $43.0 million for the nine months ended September 30, 2025 decreased by $1.2 million, or 2.8%, from $44.2 million for the nine months ended September 30, 2024, primarily due to full amortization of certain intangible assets offset by the addition of intangible assets from the Letus, Sila and Boom acquisitions and software capitalization.
Selling, general and administrative
Selling, general and administrative expenses of $15.7 million for the three months ended September 30, 2025 increased by $3.3 million, or 26.7%, from $12.4 million for the three months ended September 30, 2024, primarily due to increase in professional
37
charges related to SOX compliance, increased marketing and software expenses to support overall growth and cloud migration, expenses related to acquired businesses and assets, and certain nonrecurring expenses.
Selling, general and administrative expenses of $44.7 million for the nine months ended September 30, 2025 increased by $10.1 million, or 29.2%, from $34.6 million for the nine months ended September 30, 2024, primarily due to increase in professional charges related to SOX compliance, increased marketing and software expenses to support overall growth and cloud migration, expenses related to acquired businesses and assets, legal expenses related to the Company's secondary offering of common shares, and certain nonrecurring expenses.
Other Expense, net
Other expense, net were as follows:
| (in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | 2025 | 2024 | $ Change | ||||||||||||||||||||||||||||||
| Other (expense) income | |||||||||||||||||||||||||||||||||||
| Interest expense | $ | (22,463) | $ | (23,246) | $ | 783 | $ | (68,693) | $ | (65,836) | $ | (2,857) | |||||||||||||||||||||||
| Debt extinguishment and modification costs | (12,476) | (43) | (12,433) | (12,514) | (8,666) | (3,848) | |||||||||||||||||||||||||||||
| Other income, net | 4,554 | 711 | 3,843 | 6,667 | 2,011 | 4,656 | |||||||||||||||||||||||||||||
| Total other expense, net | $ | (30,385) | $ | (22,578) | $ | (7,807) | $ | (74,540) | $ | (72,491) | $ | (2,049) | |||||||||||||||||||||||
Interest expense
Interest expense of $22.5 million for the three months ended September 30, 2025 decreased by $0.8 million, or 3.4%, from $23.2 million for the three months ended September 30, 2024, due to increased outstanding balance of the term loan facility and residual finance credit facility, offset by decreases in interest rates due to lower SOFR rates and beneficial changes in margin from the recent refinancing.
Interest expense of $68.7 million for the nine months ended September 30, 2025 increased by $2.9 million, or 4.3%, from $65.8 million for the nine months ended September 30, 2024, due to increased outstanding balance of the term loan facility and residual finance credit facility, offset by decreases in interest rates due to lower SOFR rates and beneficial changes in margin from the recent refinancing.
Debt Extinguishment and Modification Costs
Debt extinguishment and modification costs for the three and nine months ended September 30, 2025 were $12.5 million, driven by the recent financing of the term loan facility, acceleration of deferred consideration payment related to a prior acquisition, and offset by gain from early repayment of a loan granted by the Company.
Debt extinguishment and modification costs for the nine months ended September 30, 2025 were $12.5 million, an decrease of $3.8 million, or 44.4%, from $8.7 million for the nine months ended September 30, 2024, driven by the recent financing of the term loan facility, acceleration of deferred consideration payment related to a prior acquisition, and offset by gain from early repayment of a loan granted by the Company.
Other income, net
Other income, net, for three months ended September 30, 2025 and September 30, 2024 was $4.6 million and $0.7 million respectively, an increase of $3.8 million or 540.5%, primarily driven by the bargain purchase gain recognized due to the deferred tax assets (resulting from historical losses) related to the Sila acquisition.
Other income, net, for the nine months ended September 30, 2025 and September 30, 2024 was $6.7 million and $2.0 million respectively, an increase of $4.7 million or 231.5%, primarily driven by the bargain purchase gain recognized due to the deferred tax assets (resulting from historical losses) related to the Sila acquisition.
38
Income tax (benefit) expense
Income tax expense was as follows:
| (in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | 2025 | 2024 | $ Change | ||||||||||||||||||||||||||||||
| Income before income taxes | $ | 7,387 | $ | 15,507 | $ | (8,120) | $ | 33,208 | $ | 26,791 | $ | 6,417 | |||||||||||||||||||||||
| Income tax (benefit) expense | $ | (20,201) | $ | 4,899 | $ | (25,100) | $ | (13,528) | $ | 9,996 | $ | (23,524) | |||||||||||||||||||||||
| Effective tax rate | (273.5) | % | 31.6 | % | (40.7) | % | 37.3 | % | |||||||||||||||||||||||||||
We compute our interim period income tax expense or benefit by using a forecasted EAETR and adjust for any discrete items arising during the interim period and any changes in our projected full-year business interest expense and taxable income. The EAETR for 2025 is 20.7% and includes the income tax provision on pre-tax income and a tax benefit related to the release of a valuation allowance against deferred income taxes related to section 163(j) interest limitation carry over utilized in the current year. The effective tax rate for 2025 changed primarily due to a decrease in the valuation allowance against certain business interest carry over deferred tax assets.
Our consolidated effective income tax rates differ from the statutory rate due to timing and permanent differences between amounts calculated under GAAP and the U.S. tax code. The consolidated effective income tax rate for 2025 may not be indicative of our effective tax rate for future periods.
On July 4, 2025, the U.S. government enacted legislation know as the One Big Beautiful Bill Act into law. The OBBBA, among other provisions, extends or reinstates certain provisions of the 2017 Tax Cuts and Jobs Act (TCJA), including but not limited to, 100% bonus depreciation on eligible property, immediate expensing of domestic research and development costs, and the restoration of an EBITDA based interest expense limitation calculation. As a result of the OBBBA interest expense limitation provision changes, the Company has released its valuation allowance against its interest limitation deferred tax assets.
Segment Results
The CODM's review of segment performance and allocation of resources are based on Adjusted EBITDA (a non-GAAP financial measure). Adjusted EBITDA at each segment level includes revenues of the segment, less costs of revenue (excluding depreciation and amortization) and operating expenses that are directly related those revenues. Operating overhead and shared costs are managed centrally and included in corporate segment.
This non-GAAP financial measure helps to illustrate the underlying financial and business trends relating to results of operations of the Company and therefore used as a measure of segment profit or loss for the purposes of evaluation of segment performance and allocation of resources.
Merchant Solutions
| (in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | 2025 | 2024 | Change | ||||||||||||||||||||||||||||||
| Revenues | $ | 161,874 | $ | 158,770 | $ | 3,104 | $ | 476,794 | $ | 457,875 | $ | 18,919 | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 27,727 | $ | 28,644 | $ | (917) | $ | 81,181 | $ | 82,265 | $ | (1,084) | |||||||||||||||||||||||
| Key Indicators: | |||||||||||||||||||||||||||||||||||
| Total card processing dollar value | $ | 18,469,447 | $ | 18,076,156 | $ | 393,291 | $ | 54,822,837 | $ | 53,428,816 | $ | 1,394,021 | |||||||||||||||||||||||
| Total card transaction count | 230,741 | 223,700 | 7,041 | 671,233 | 642,827 | 28,406 | |||||||||||||||||||||||||||||
Revenues
39
Revenue from our Merchant Solutions segment was $161.9 million for the three months ended September 30, 2025, compared to $158.8 million for the three months ended September 30, 2024. The increase of $3.1 million, or 2.0%, was primarily driven by an increased total card processing value and total card transaction count. The Company's merchant card fee revenue from the Merchant Solutions segment ($157.2 million for the three months ended September 30, 2025 and $153.1 million for the three months ended September 30, 2024) as a percentage of total card processing dollar value during the three months ended September 30, 2025 remained consistent at 0.85% as compared to the three months ended September 30, 2024.
Revenue from our Merchant Solutions segment was $476.8 million for the nine months ended September 30, 2025, compared to $457.9 million for the nine months ended September 30, 2024. The increase of $18.9 million, or 4.1%, was primarily driven by an increase in merchant card fee rate, increased total card processing value and total card transaction count. The Company's merchant card fee revenue from the Merchant Solutions segment ($463.5 million for nine months ended September 30, 2025 and $443.6 million for the nine months ended September 30, 2024) as a percentage of total card processing value during the nine months ended September 30, 2025 increased to 0.85% from 0.83% as compared to the nine months ended September 30, 2024.
Adjusted EBITDA
Adjusted EBITDA from our Merchant Solutions segment was $27.7 million for the three months ended September 30, 2025, compared to $28.6 million for the three months ended September 30, 2024. The decrease of $0.9 million, or 3.2% was primarily driven by an increase in revenue, offset by mix related margin compression and increase in other operating expenses.
Adjusted EBITDA from our Merchant Solutions segment was $81.2 million for the nine months ended September 30, 2025, compared to $82.3 million for the nine months ended September 30, 2024. The decrease of $1.1 million, or 1.3% was primarily driven by an increase in revenue, and recovery of certain chargeback losses, offset by mix related margin compression and increase in other operating expenses.
Payables
| (in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | 2025 | 2024 | Change | ||||||||||||||||||||||||||||||
| Revenues | $ | 25,162 | $ | 22,143 | $ | 3,019 | $ | 74,113 | $ | 65,368 | $ | 8,745 | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 3,455 | $ | 1,933 | $ | 1,522 | $ | 10,741 | $ | 5,209 | $ | 5,532 | |||||||||||||||||||||||
| Key Indicators: | |||||||||||||||||||||||||||||||||||
| Buyer funded card processing dollar value | $ | 789,700 | $ | 700,510 | $ | 89,190 | $ | 2,295,100 | $ | 2,082,590 | $ | 212,510 | |||||||||||||||||||||||
| Supplier funded issuing dollar value | $ | 230,882 | $ | 255,323 | $ | (24,441) | $ | 688,399 | $ | 732,589 | $ | (44,190) | |||||||||||||||||||||||
| ACH transaction count | 14,451 | 11,042 | 3,409 | 41,085 | 29,621 | 11,464 | |||||||||||||||||||||||||||||
Revenues
Revenue from our Payables segment was $25.2 million for the three months ended September 30, 2025, compared to $22.1 million for the three months ended September 30, 2024. The increase of $3.0 million, or 13.6% was primarily driven by increased buyer funded card processing dollar value, ACH transaction count and interest from higher account balances offset by the decrease in supplier funded issuing dollar value.
Revenue from our Payables segment was $74.1 million for the nine months ended September 30, 2025, compared to $65.4 million for the nine months ended September 30, 2024. The increase of $8.7 million, or 13.4% was primarily driven by
40
increases buyer funded card processing dollar value, certain incentive income, ACH transaction and interest from higher account balances offset by the decrease in supplier funded issuing dollar value.
Adjusted EBITDA
Adjusted EBITDA from our Payables segment of $3.5 million for the three months ended September 30, 2025, compared to $1.9 million for the three months ended September 30, 2024.The increase in Adjusted EBITDA of $1.5 million or 78.7% was contributed by $1.1 million in the supplier funded business (driven by increase in revenues) and $0.4 million in the buyer funded business (driven by increased processing volume).
Adjusted EBITDA from our Payables segment of $10.7 million for the nine months ended September 30, 2025, compared to $5.2 million for the nine months ended September 30, 2024.The increase in Adjusted EBITDA of $5.5 million or 106.2% was contributed by $2.4 million in the supplier funded business (driven by increase in revenues) and $3.1 million in the buyer funded business (driven by increased processing volume).
Treasury Solutions
| (in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | 2025 | 2024 | Change | ||||||||||||||||||||||||||||||
| Revenues | $ | 55,684 | $ | 47,099 | $ | 8,585 | $ | 158,430 | $ | 131,758 | $ | 26,672 | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 46,676 | $ | 40,940 | $ | 5,736 | $ | 134,677 | $ | 112,911 | $ | 21,766 | |||||||||||||||||||||||
| Key Indicators: | |||||||||||||||||||||||||||||||||||
| Average CFTPay billed clients | 1,054,238 | 832,351 | 221,887 | 995,660 | 766,370 | 229,290 | |||||||||||||||||||||||||||||
| Average CFTPay monthly enrollments | 61,185 | 62,875 | (1,690) | 58,316 | 57,281 | 1,035 | |||||||||||||||||||||||||||||
Average total account balances(1) | $ | 1,248,432 | $ | 900,690 | $ | 347,742 | $ | 1,145,164 | $ | 847,486 | $ | 297,678 | |||||||||||||||||||||||
(1)This represents the average total account balance during the three and nine months ended on September 30, 2025, in the Treasury solutions segment, and excludes the deposits and balances maintained in the Merchant Solution and Payables segment. The total account and deposit balances as of September 30, 2025, were $1.6 billion.
Revenue from our Treasury Solutions segment was $55.7 million for the three months ended September 30, 2025, compared to $47.1 million for the three months ended September 30, 2024. The increase of $8.6 million, or 18.2%, was primarily driven by an increase in average billed clients and average total account balances, acquisition of the Letus business, and growth in interest income due to higher balances of permissible investments offset by reduction in interest rates and lower average monthly enrollments.
Revenue from our Treasury Solutions segment was $158.4 million for the nine months ended September 30, 2025, compared to $131.8 million for the nine months ended September 30, 2024. The increase of $26.7 million, or 20.2%, was primarily driven by an increase in average billed clients, average monthly enrollments and average total account balances, acquisition of the Letus business, and growth in interest income due to higher balances of permissible investments offset by reduction in interest rates.
41
Adjusted EBITDA
Adjusted EBITDA from our Treasury Solutions segment was $46.7 million for the three months ended September 30, 2025, compared to $40.9 million for the three months ended September 30, 2024. The increase of $5.7 million, or 14.0%, was primarily driven by increases in revenues.
Adjusted EBITDA from our Treasury Solutions segment was $134.7 million for the nine months ended September 30, 2025, compared to $112.9 million for the nine months ended September 30, 2024. The increase of $21.8 million, or 19.3%, was primarily driven by increases in revenues.
| Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||
| Merchant Solutions | Payables Solutions | Treasury Solutions | Corporate | Total Consolidated | ||||||||||||||||||||||||||||
| Reconciliation of Adjusted EBITDA to GAAP Measure: | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 27,727 | $ | 3,455 | $ | 46,676 | $ | (20,099) | $ | 57,759 | ||||||||||||||||||||||
| Interest expense | (357) | (361) | (143) | (21,602) | (22,463) | |||||||||||||||||||||||||||
| Depreciation and amortization | (7,607) | (1,275) | (4,924) | (1,316) | (15,122) | |||||||||||||||||||||||||||
| Debt modification and extinguishment expenses | — | — | — | (12,476) | (12,476) | |||||||||||||||||||||||||||
| Selling, general and administrative (non-recurring) | — | — | — | (1,491) | (1,491) | |||||||||||||||||||||||||||
| Non-cash stock based compensation | — | (133) | (33) | (2,161) | (2,327) | |||||||||||||||||||||||||||
| Bargain purchase gain (non-recurring) | — | — | — | 3,507 | 3,507 | |||||||||||||||||||||||||||
| Income (loss) before taxes | $ | 19,763 | $ | 1,686 | $ | 41,576 | $ | (55,638) | $ | 7,387 | ||||||||||||||||||||||
| Income tax benefit | 20,201 | |||||||||||||||||||||||||||||||
| Net income | $ | 27,588 | ||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2024 | ||||||||||||||||||||||||||||||||
| Merchant Solutions | Payables Solutions | Treasury Solutions | Corporate | Total Consolidated | ||||||||||||||||||||||||||||
| Reconciliation of Adjusted EBITDA to GAAP Measure: | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 28,644 | $ | 1,933 | $ | 40,940 | $ | (16,876) | $ | 54,641 | ||||||||||||||||||||||
| Interest expense | — | (1,066) | — | (22,180) | (23,246) | |||||||||||||||||||||||||||
| Depreciation and amortization | (6,939) | (1,261) | (4,304) | (1,229) | (13,733) | |||||||||||||||||||||||||||
| Debt modification and extinguishment expenses | — | — | — | (43) | (43) | |||||||||||||||||||||||||||
| Selling, general and administrative (non-recurring) | — | — | — | (696) | (696) | |||||||||||||||||||||||||||
| Non-cash stock based compensation | (4) | (73) | (33) | (1,306) | (1,416) | |||||||||||||||||||||||||||
| Income (loss) before taxes | $ | 21,701 | $ | (467) | $ | 36,603 | $ | (42,330) | $ | 15,507 | ||||||||||||||||||||||
| Income tax expense | (4,899) | |||||||||||||||||||||||||||||||
| Net income | $ | 10,608 | ||||||||||||||||||||||||||||||
42
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||
| Merchant Solutions | Payables Solutions | Treasury Solutions | Corporate | Total Consolidated | ||||||||||||||||||||||||||||
| Reconciliation of Adjusted EBITDA to GAAP Measure: | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 81,181 | $ | 10,741 | $ | 134,677 | $ | (61,496) | $ | 165,103 | ||||||||||||||||||||||
| Interest expense | (357) | (2,158) | (385) | (65,793) | (68,693) | |||||||||||||||||||||||||||
| Depreciation and amortization | (20,865) | (3,798) | (14,507) | (3,822) | (42,992) | |||||||||||||||||||||||||||
| Debt modification and extinguishment expenses | — | — | — | (12,514) | (12,514) | |||||||||||||||||||||||||||
| Selling, general and administrative (non-recurring) | — | — | — | (4,085) | (4,085) | |||||||||||||||||||||||||||
| Non-cash stock based compensation | 1 | (301) | (98) | (6,721) | (7,119) | |||||||||||||||||||||||||||
| Bargain purchase gain (non-recurring) | — | — | — | 3,507 | 3,507 | |||||||||||||||||||||||||||
| Income (loss) before taxes | $ | 59,960 | $ | 4,484 | $ | 119,687 | $ | (150,924) | $ | 33,207 | ||||||||||||||||||||||
| Income tax benefit | 13,528 | |||||||||||||||||||||||||||||||
| Net income | $ | 46,735 | ||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2024 | ||||||||||||||||||||||||||||||||
| Merchant Solutions | Payables Solutions | Treasury Solutions | Corporate | Total Consolidated | ||||||||||||||||||||||||||||
| Reconciliation of Adjusted EBITDA to GAAP Measure: | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 82,265 | $ | 5,209 | $ | 112,911 | $ | (47,853) | $ | 152,532 | ||||||||||||||||||||||
| Interest expense | (1) | (3,280) | — | (62,555) | (65,836) | |||||||||||||||||||||||||||
| Depreciation and amortization | (24,065) | (3,992) | (12,431) | (3,742) | (44,230) | |||||||||||||||||||||||||||
| Debt modification and extinguishment expenses | — | — | — | (8,666) | (8,666) | |||||||||||||||||||||||||||
| Selling, general and administrative (non-recurring) | — | — | — | (2,131) | (2,131) | |||||||||||||||||||||||||||
| Non-cash stock based compensation | (12) | (299) | (98) | (4,469) | (4,878) | |||||||||||||||||||||||||||
| Income (loss) before taxes | $ | 58,187 | $ | (2,362) | $ | 100,382 | $ | (129,416) | $ | 26,791 | ||||||||||||||||||||||
| Income tax expense | (9,996) | |||||||||||||||||||||||||||||||
| Net income | $ | 16,795 | ||||||||||||||||||||||||||||||
Critical Accounting Policies and Estimates
Our Unaudited Consolidated Financial Statements have been prepared in accordance with GAAP for interim periods, which often require the judgment of management in the selection and application of certain accounting principles and methods. Our critical accounting policies and estimates are discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to these critical accounting policies and estimates as of September 30, 2025.
Liquidity and Capital Resources
Liquidity and capital resource management is a process focused on providing the funding we need to meet our short-term and long-term cash and working capital needs. We have used our funding sources to build our merchant portfolio, for technology solutions and to make acquisitions with the expectation that such investments will generate cash flows sufficient to cover our working capital and other anticipated needs, including our acquisition strategy. We anticipate that cash on hand, funds generated from operations and available borrowings under our revolving credit facility are sufficient to meet our working capital requirements for at least the next 12 months.
Our principal uses of cash are to fund business operations and administrative costs, and to service our debt.
43
Our working capital, defined as current assets less current liabilities, was $82.0 million at September 30, 2025 and $37.7 million at September 30, 2024. As of September 30, 2025, we had cash totaling $57.0 million compared to $41.1 million at September 30, 2024. These cash balances do not include restricted cash of $13.0 million and $13.4 million at September 30, 2025 and September 30, 2024, respectively, which reflects cash accounts holding customer settlement funds and cash reserves for potential losses. The current portion of long-term debt included in current liabilities was $10.0 million and $8.4 million at September 30, 2025 and September 30, 2024, respectively. At September 30, 2025, we had availability of approximately $100.0 million under our revolving credit facility.
The following table and discussion reflect our changes in cash flows for the comparative nine month periods.
| Nine Months Ended September 30, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Net cash provided by (used in): | |||||||||||
| Operating activities | $ | 63,161 | $ | 61,852 | |||||||
| Investing activities | (151,898) | (24,734) | |||||||||
| Financing activities | 288,634 | 84,716 | |||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | $ | 199,897 | $ | 121,834 | |||||||
Cash Provided by Operating Activities
Net cash provided by operating activities was $63.2 million for the nine months ended September 30, 2025 compared to $61.9 million for the nine months ended September 30, 2024. The $1.3 million increase was driven by an increase in net income offset by non-cash adjustments and changes in the operating assets and liabilities.
Cash Used in Investing Activities
Net cash used in investing activities was $151.9 million and $24.7 million for the nine months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025, investing activities included acquisitions of businesses, net of cash acquired of $77.4 million, additions to property, equipment and software of $19.0 million, $5.1 million related to net funding of new loans to ISOs, and $50.5 million in short-term investments of MTL funds and investments in unconsolidated entities. For the nine months ended September 30, 2024, net cash used in investing activities included additions to property, equipment and software of $17.0 million, $0.2 million related funding of new loans to ISOs and $7.5 million related to the acquisition of intangible assets and an investment in an unconsolidated entity.
Cash Provided by Financing Activities
Net cash provided by financing activities was $288.6 million for the nine months ended September 30, 2025, compared to $84.7 million of cash used in financing activities for the nine months ended September 30, 2024. The net cash provided by financing activities for the nine months ended September 30, 2025 included borrowings under the Second Amendment to the 2024 Credit Agreement and the Residual Finance Credit Facility of $1.0 billion, proceeds from the exercise of stock options of $0.4 million and changes in the net obligations for funds held on the behalf of customers of $247.5 million, offset by $945.5 million of cash used for the repayment of the term loan facility due to refinancing, $4.7 million in debt issuance and modification costs paid for the Second Amendment to the 2024 Credit Agreement, $3.0 million of cash used to purchase shares withheld for taxes, $19.8 million for the accelerated deferred consideration payments, and $6.0 million used to repurchase NCI in one of the subsidiaries. The net cash provided by financing activities for the nine months ended September 30, 2024 included changes in the net obligations for funds held on the behalf of customers of $116.1 million and borrowings under the 2024 Credit Agreement net of issue discounts of $830.2 million, offset by $661.9 million of cash used for the repayment of the principal of the 2021 Credit Agreement and debt issuance and modification costs related to the refinancing, $167.8 million related to the redemption of senior preferred stock and accumulated unpaid dividend, $2.1 million for the redemption of redeemable NCI in subsidiary, $22.1 million of cash dividends paid to redeemable senior preferred stockholders, $1.2 million of cash used for shares withheld for taxes and $5.0 million of payments of contingent consideration.
44
Long-term Debt
As of September 30, 2025, we had outstanding debt obligations, including the current portion and unamortized debt discount of $1,023.9 billion, compared to $945.5 million at December 31, 2024, resulting in an increase of $78.4 million. The increase is due to the Second Amendment to the 2024 Credit Agreement and the addition of the Residual Finance Credit Facility offset by an unscheduled principal payment. The debt balance at September 30, 2025 consisted of $1.0 billion outstanding under the 2024 Credit Agreement's (as amended) term facility and $23.9 million under the Residual Finance Credit Facility's term facility offset by $16.4 million of unamortized debt discounts and issuance costs.
Minimum amortization of the 2024 Credit Agreement's term facility are equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal, with the balance paid upon maturity. The term facility matures on July 31, 2032 and the revolving credit facility matures on July 31, 2030.
The 2024 Credit Agreement contains representations and warranties, financial and collateral requirements, mandatory payment events, events of default and affirmative and negative covenants, including without limitation, covenants that restrict among other things, the ability to create liens, pay dividends or distribute assets from the loan parties to the Company, merge or consolidate, dispose of assets, incur additional indebtedness, make certain investments or acquisitions, enter into certain transactions (including with affiliates) and to enter into certain leases.
If the aggregate principal amount of outstanding revolving loans and letters of credit under the 2024 Credit Agreement exceeds 35% of the total revolving facility thereunder, the loan parties are required to comply with certain restrictions on its Total Net Leverage Ratio, which is defined in the Credit Agreement as the ratio of consolidated total debt less unrestricted cash to consolidated adjusted EBITDA (as defined in the Credit Agreement). If the aggregate principal amount of outstanding revolving loans and letters of credit under the 2024 Credit Agreement exceeds 35% of the total revolving credit facility thereunder, the Company is required to comply with certain restrictions on its Total Net Leverage Ratio. If applicable, the maximum permitted Total Net Leverage Ratio is: 1) 6.90:1.00 at each fiscal quarter ended September 30, 2025 through March 31, 2026; 2) 6.40:1.00 at each fiscal quarter ended June 30, 2026 and each fiscal quarter thereafter. As of September 30, 2025, the Company was in compliance with the covenants in the 2024 Credit Agreement.
The Residual Finance Credit Facility contains customary representations and warranties, financial and collateral requirements, mandatory payment events, events of default and affirmative and negative covenants, including without limitation, covenants that restrict among other things, the ability to create liens, pay dividends or distribute assets from the Loan Parties to the Company, merge or consolidate, dispose of assets, incur additional indebtedness, make certain investments or acquisitions, and enter into certain transactions (including with affiliates).
The Residual Finance Credit Facility requires the Company to comply with certain restrictions including minimum liquidity of $2.0 million, minimum tangible net worth of $5.0 million, maximum default ratio of 2.5%, maximum delinquency ratio of 5.0%, and a minimum excess spread ratio of 1.00 to 1.00. As of September 30, 2025, the Company was in compliance with the restrictions in the agreement.
Effect of New Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted
From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that may affect our current and/or future financial statements. See Note 1, Basis of Presentation and Significant Accounting Policies, to our Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, for a discussion of recently issued accounting pronouncements not yet adopted.
45
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For quantitative and qualitative disclosures about market risk, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," of our Annual Report on Form 10-K for the year ended December 31, 2024. Our exposures to market risk have not changed materially since December 31, 2024.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, designed to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized or reported within the time periods specified in SEC rules and regulations and that such information is accumulated and communicated to our management, including our principal executive officer (CEO), our principal financial officer (CFO) and, as appropriate, to allow timely decisions regarding required disclosures.
Management, with the participation of the CEO and CFO, has evaluated the effectiveness of the Company's disclosure controls and procedures as of September 30, 2025. Based on that evaluation, the Company's CEO and CFO concluded that the Company's disclosure controls and procedures were not effective as of September 30, 2025 because of a material weakness within our internal controls over financial reporting, as described below.
Notwithstanding that conclusion, based on review, analysis and inquiries conducted subsequent to September 30, 2025, management believes that the consolidated financial statements and related financial information included in this Form 10-Q fairly present in all material respects the Company’s financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with GAAP.
Notwithstanding that conclusion, based on review, analysis and inquiries conducted subsequent to September 30, 2025, management believes that the consolidated financial statements and related financial information included in this Form 10-Q fairly present in all material respects the Company’s financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with GAAP.
Previously Disclosed Material Weakness
In our Annual Report on Form 10-K for the year ended December 31, 2024, we identified a material weakness related to the design and operation of certain automated controls (including related information technology general controls) for certain tools or applications involved in the transformation and ingestion of third-party processors’ data in the Company’s control environment. The Company began implementing a remediation plan to address this material weakness.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of annual or interim financial statements would not be prevented or detected on a timely basis.
Changes in Internal Control over Financial Reporting
Other than described above, there were no changes in the Company's internal control over financial reporting during the three and nine months ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
46
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are involved in certain legal proceedings and claims, which arise in the ordinary course of business. In the opinion of the Company, based on consultations with internal and external counsel, the results of any of these ordinary course matters, individually and in the aggregate, are not expected to have a material effect on our results of operations, financial condition, or cash flows. As more information becomes available and we determine that an unfavorable outcome is probable on a claim and that the amount of probable loss that we will incur on that claim is reasonably estimable, we will record an accrued expense for the claim in question. If and when we record such an accrual, it could be material and could adversely impact our results of operations, financial condition and cash flows.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in our Annual Report under Part I, Item 1A "Risk Factors" because these risk factors may affect our operations and financial results. The risks described in the Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition and operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities and Use of Proceeds
None.
Issuer Purchases of Equity Securities
The Company's purchases of its Common Stock during the three months ended September 30, 2025 were as follows:
| Period | Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
| July 1-31, 2025 | 8,581 | $ | 7.53 | — | 5,690,296 | |||||||||||||||||||||
| August 1-31, 2025 | 11,661 | $ | 6.85 | — | 5,690,626 | |||||||||||||||||||||
| September 1-30, 2025 | 63,681 | $ | 7.48 | — | 5,690,626 | |||||||||||||||||||||
| Total | 83,923 | $ | 7.40 | — | ||||||||||||||||||||||
(1)Represents shares (in whole units) withheld to satisfy employees' tax withholding obligations related to the vesting of restricted stock awards, which was determined based on the fair market value on the day prior to the vesting date.
Item 3. Defaults Upon Senior Securities
N/A
Item 4. Mine Safety Disclosures
N/A
Item 5. Other Information
47
On March 11, 2025, Sean Kiewiet, an officer of the Company as defined in Section 16 of the Exchange Act, adopted a Rule 10b5-1 trading arrangement as defined in Item 408(a) of the SEC's Regulation S-K.
| Officer or Director Name and Title | Action | Plan Type | Date | Number of Shares to be sold | Expiration | |||||||||||||||||||||||||||
Sean Kiewiet, Chief Strategy Officer | Adopted | Rule 10b5-1 | March 11, 2025 | 600,000 | August 31, 2026 | |||||||||||||||||||||||||||
Item 6. Exhibits
| Exhibit | Description | |||||||
2.1 | Second Amended and Restated Contribution Agreement, dated as of April 17, 2018, by and among Priority Investment Holdings, Priority Incentive Equity Holdings, LLC and M I Acquisitions, Inc. (incorporated by reference to Annex A to the Company's Proxy Statement on Schedule 14(a), filed July 5, 2018). | |||||||
2.2 | Agreement and Plan of Merger, dated as of March 5, 2021, by and among the Company, Finxera, Merger Sub, and the Equityholder Representative. | |||||||
2.3 | Certificate of Amendment to the Certificate of Incorporation of Priority Technology Holdings dated April 16, 2021, filed April 29, 2021 | |||||||
2.4 | Agreement and Plan of Merger by and among the Company, Finxera Holdings, Inc., Prime Warrior Acquisition Corp., and Stone Point Capital LLC. | |||||||
3.1 | Second Amended and Restated Certificate of Incorporation of Priority Technology Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed July 31, 2018). | |||||||
3.2 | Amended and Restated Bylaws of Priority Technology Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K, filed July 31, 2018). | |||||||
10.1 | Registration Rights Agreement dated as of July 25, 2018 by and among M I Acquisitions, Inc. and the other parties thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed July 31, 2018). | |||||||
10.2 | Priority Technology Holdings, Inc. 2018 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed July 31, 2018). | |||||||
10.3 | Priority Technology Holdings, Inc. 2021 Employee Stock Purchase Plan | |||||||
10.3.1 | Amendment No. 1 to Priority Technology Holdings, Inc. 2021 Employee Stock Purchase Plan | |||||||
10.3.2 | Amendment No. 2 to Priority Technology Holdings, Inc. 2021 Employee Stock Purchase Plan | |||||||
10.4 † | Director Agreement by and among Priority Holdings LLC, Pipeline Cynergy Holdings, LLC, Priority Payment Systems Holdings, LLC and Thomas C. Priore, dated May 21, 2014 (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement on Form S-4/A, filed December 26, 2018). | |||||||
10.5 † | Amendment No. 1 to Director Agreement by and among Priority Holdings LLC, Pipeline Cynergy Holdings, LLC, Priority Payment Systems Holdings, LLC and Thomas C. Priore, dated April 19, 2018 (incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-4/A, filed December 26, 2018). | |||||||
10.6 | Form of Independent Director Agreement (incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K, filed March 29, 2019). | |||||||
10.7 | Asset Purchase Agreement by and between MRI Payments LLC, MRI Software LLC, and Priority Real Estate Technology LLC, dated August 31, 2020 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed September 1, 2020). | |||||||
10.17 | Form Restricted Stock Unit Award Agreement. | |||||||
10.18 † | Executive Employment Agreement between Priority Technology Holdings, Inc. and Tim O'Leary, dated September 19, 2022. | |||||||
10.19 | Priority Technology Holdings, Inc. Recoupment Policy adopted March 1, 2023 | |||||||
10.20 | Amendment No. 1 to Equity and Asset Purchase Agreement, dated July 31, 2023, by and among Plastiq, Powered by Priority, LLC, Plastiq Inc., PLV Inc. and Nearside Business Corp. | |||||||
10.24 | Rule 10b5-1 Sales Plan, dated March 11, 2025, by and between Sean Kiewiet and J.P. Morgan Securities LLC. | |||||||
10.25 | Credit and Guaranty Agreement, dated as of May 16, 2024, by and among Priority Holdings, LLC, as the Initial Borrower, the Credit Parties party thereto, the Lenders party thereto and Truist Bank, as Administrative Agent and Collateral Agent. | |||||||
48
10.26 | Amendment No. 1 to the Credit and Guaranty Agreement, dated as of November 21, 2024, by and among Priority Holdings, LLC, as the Initial Borrower, the Credit Parties party thereto, the 2024-1 Incremental Term Lenders and Truist Bank, as Administrative Agent and Collateral Agent. | |||||||
10.27 | Share Purchase Agreement by and between Ayrshire Developments Corp., Priority Canada Acquisition Company, Inc., and Priority Technology Holdings, Inc., dated January 21, 2025. | |||||||
10.28 | Amendment No. 2 to the Credit and Guaranty Agreement, dated as of July 31, 2025, by and among Priority Holdings, LLC, as the Borrower Representative, the Credit Parties party thereto, each of the Lenders party thereto, each 2025-1 Converting Lender party thereto, each 2025-1 Incremental Revolving Credit Lender party thereto, each New 2025-1 Refinancing Term Lender party thereto and Truist Bank, as administrative agent and collateral agent, as the Designated 2025 Fronting Lender and as the 2025-1 Incremental Term Lender. | |||||||
10.29 | Credit Agreement, dated as of August 18, 2025, by and among Priority Finance SPV, LLC, as Borrower, Priority Residual Finance, LLC, as Holdings, Priority Holdings, LLC, as Servicer, the Lenders party thereto and VP Capital, L.P., as Administrative Agent and Collateral Agent. | |||||||
10.30 | Sale Agreement, dated as of August 18, 2025, by and among Priority Holdings, LLC, as Priority Originator and Servicer, Priority Payment Systems LLC, as PPS Originator and Priority Finance SPV, LLC. | |||||||
10.31 | Servicing Agreement, dated as of August 18, 2025, by and between Priority Finance SPV, LLC, as Borrower and Priority Holdings, LLC, as Servicer. | |||||||
10.32 | Asset Purchase Agreement, dated as of August 18, 2025, by and between Priority Boom, LLC as buyer and Eventus Holdings, LLC, Riverside Management, LLC, and National Payment Systems, LLC, as sellers. | |||||||
10.33 | Asset Purchase Agreement, dated October 1, 2025, by and between Priority DMS, LLC as buyer and DMSJV, LLC as seller. | |||||||
10.34 | Amendment No. 3 to the Credit and Guaranty Agreement, dated as of October 1, 2025, by and among Priority Holdings, LLC, as the sole Borrower Representative under the Credit Agreement, the other Credit Parties thereto, the 2025-2 Incremental Term Lender and Truist Bank, as Administrative Agent and Collateral Agent. | |||||||
21.1 * | Subsidiaries | |||||||
31.1 * | Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended. | |||||||
31.2 * | Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended. | |||||||
32 ** | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 101.INS * | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH * | XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL * | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.LAB * | XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE * | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 101.DEF * | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
* Filed herewith.
** Furnished herewith.
† Indicates exhibits that constitute management contracts or compensation plans or arrangements.
49
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PRIORITY TECHNOLOGY HOLDINGS, INC.
| November 6, 2025 | /s/ Thomas C. Priore Thomas C. Priore President, Chief Executive Officer and Chairman (Principal Executive Officer) | ||||
| November 6, 2025 | /s/ Timothy M. O'Leary Timothy M. O'Leary Chief Financial Officer (Principal Financial Officer) | ||||
50
FAQ
How did PRTH’s Q3 2025 revenue and earnings compare to last year?
Revenue was $241.4 million vs. $227.0 million. Net income to common was $27.6 million (diluted EPS $0.34) vs. $5.5 million (diluted EPS $0.07).
What were PRTH’s year-to-date results for 2025?
Nine-month revenue was $705.9 million vs. $652.6 million, and net income to common stockholders was $46.7 million vs. a loss of $20.2 million last year.
What acquisitions did PRTH complete in 2025?
PRTH acquired Payslate (Letus) for total consideration of $9.0 million and Sila for $7.9 million, and purchased Boom Commerce residual rights for $73.5 million cash plus $13.5 million in shares and potential earn-outs.
Did PRTH change its debt facilities in Q3 2025?
Yes. It increased the term facility to $1.0 billion, extended maturities, reduced margins, and added a $50.0 million Residual Finance Credit Facility with $23.9 million drawn.
What segments drove PRTH’s revenue in Q3 2025?
Merchant Solutions and Treasury Solutions contributed most, with Treasury Solutions including $41.0 million in money transmission services.
How many PRTH shares were outstanding recently?
As of October 31, 2025, common shares outstanding were 81,871,568.
Were there notable tax impacts in Q3 2025?
Yes. The effective tax rate was negative, reflecting a valuation allowance release tied to the OBBBA provisions.
Priority Technology Hldgs Inc
NASDAQ:PRTH
PRTH Rankings
PRTH Latest News
PRTH Latest SEC Filings
PRTH Stock Data
387.60M
29.12M
66.01%
22.06%
1.68%
Software - Infrastructure
Services-business Services, Nec
United States
ALPHARETTA