Priority Technology Holdings Inc.
11/06/2025 | Press release | Distributed by Public on 11/06/2025 07:42
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
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
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.
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.
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
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.
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
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
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.
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 | ||||||||||||||||||||||||||||||
| 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.
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.
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.
Priority Technology Holdings Inc. published this content on November 06, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 06, 2025 at 13:42 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]