Priority Technology Holdings Stands Firm on $965M-$1B Revenue Guidance for 2025, Eyeing Growth in Enterprise and B2B Sectors

Insights from Earnings Call: Priority Technology Holdings (PRTH) First Quarter of 2025

Management View

• In Q1 of 2025, CEO Tom Priore emphasized robust financial outcomes, noting that revenues climbed to $224.6 million—a rise of 9% compared to the previous year. This period also saw an uptick in adjusted gross profits by 14%, totaling $87.3 million, alongside a surge in adjusted EBITDA by 11%, amounting to $51.3 million. By the end of this quarter, the firm had accumulated more than 1.3 million client accounts along with processing an annual transaction volume exceeding $135 billion.
• Priore restated the firm’s 2025 forecast for a 10%-14% increase in revenues, aiming for a figure between $965 million and $1 billion. The projected adjusted EBITDA was also confirmed at $220 million to $230 million. Priore highlighted the company’s integrated commerce system as a major contributor to this growth trajectory.
• Chief Financial Officer Tim O’Leary stated that during the first quarter, the business-to-business (B2B) and enterprise sectors accounted for 62% of the adjusted gross profit. This was fueled by a 12% increase in B2B revenues along with a significant 22% rise in enterprise revenues. Additionally, both segments experienced an enhancement in their adjusted gross profit margins.
• O’Leary stated that the firm decreased its net leverage to 4.2 times and prepaid a $10 million term loan over the quarter.

Outlook

• Management maintained its full-year 2025 revenue guidance of $965 million to $1 billion and adjusted EBITDA guidance of $220 million to $230 million.
• Priore emphasized that growth will be driven by sustained progress in small and medium-sized businesses acquiring, business-to-business payables, and enterprise payments sectors. Additionally, positive changes in the company’s service portfolio and robust uptake of integrated financial services by customers will contribute significantly.
• O’Leary pointed out that variations in interest rates along with broader economic conditions, such as inflation effects and tariffs, might affect performance; however, these elements are accounted for within the provided guidance.

Financial Results

• Q1 2025 revenue was $224.6 million, a 9% increase year-over-year. Adjusted gross profit grew 14% to $87.3 million, while adjusted EBITDA rose 11% to $51.3 million.
• B2B income increased by 12% compared to the previous year, reaching $23.9 million, with adjusted gross profit margins climbing by 150 basis points to hit 30.5%. Additionally, supplier-funded revenues saw an increase of 35%.
• The enterprise revenue climbed by 22% to reach $50.1 million, with the gross profit margin staying steady at 93.6%. This growth can be attributed to robust enrollment numbers and heightened client engagement within the CFTPay segment.
• The revenue for SMB grew by 5.3% compared to the previous year, reaching $151.7 million; however, gross margins saw slight variations because of ongoing reductions in legacy portfolios and risk mitigation tactics.

Q&A

• Hal Goetsch, B. Riley Securities: Asked about the recent increase in SG&A and salary expenses and the impact of cloud migration. CFO O’Leary explained that non-recurring expenses and the transition to public cloud contributed to the rise but noted expected future efficiencies.
• Brian Bergen, TD Cowen: Inquired about segment-specific growth expectations for the remainder of 2025. Management stated that enterprise and B2B segments are expected to drive growth, supported by customer demand for working capital optimization and embedded finance solutions.
• Tim Switzer from KBW questioned how tariffs and economic instability affect Tim Priore’s small-business clients. Priore highlighted his clientele‘s toughness, emphasizing robust demand for digital and automated payment systems.
• Jacob Stephan from Lake Street Capital Markets raised concerns regarding the performance of countercyclical segments. Priore emphasized CFTPay as a major growth sector owing to the increasing demand for resolving consumer debt issues.

Sentiment Analysis

• Analyst sentiment was focused on understanding growth drivers and cost management. Analysts showed interest in revenue contributions from enterprise and B2B segments and the impact of macroeconomic factors.
• The management showed faith in their recommendations, highlighting the robustness of their business approach and the prospects for expansion into embedded finance.
• In comparison to the last quarter, the management kept an unchanged optimistic stance, highlighting strategic investments and operational improvements.

Quarter-over-Quarter Comparison

• The revenue increased progressively from $227.1 million in the fourth quarter of 2024 to $224.6 million in the first quarter of 2025, showcasing consistent performance even with a reduced number of business days for operations.
• The adjusted gross profit margin saw an increase of 170 basis points compared to the previous year, primarily due to beneficial changes in the company’s portfolio toward more profitable sectors.
• The guidance stayed in line with the forecasts from the prior quarter, reinforcing faith in meeting our objectives.

Risks and Concerns

• The management recognized possible threats posed by reduced interest rates, economic fluctuations, and alterations in regulations affecting niche e-commerce sectors and various other areas.
• The effects of tariffs and inflationary pressures were noted as factors affecting customer behavior within the B2B sector; however, these elements are anticipated to boost the need for working capital optimization solutions.
• The firm is currently tackling a significant issue concerning automated controls and anticipates completing the resolution by the conclusion of fiscal year 2025.

Final Takeaway

Priority Technology Holdings demonstrated strong financial performance in Q1 2025, with significant contributions from the B2B and enterprise segments. Management reaffirmed full-year guidance, emphasizing the resilience of its unified commerce platform and growth opportunities in embedded finance solutions. Continued focus on cost efficiencies, debt reduction, and strategic investments positions the company to navigate macroeconomic challenges and deliver sustainable growth.

Review the complete earnings call transcript here.