Q2 2021 Priority Technology Holdings Inc Earnings Call
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Good day, and thank you for standing by and welcome to the priority Technology Holdings second quarter 2021earnings call at this time all participants on the listen only mode. After the speaker's presentation there'll be a question and answer session. Please be advised for today's conference.
The mill Corded to ask the question during the session you'll need the press star 1 on your telephone if you require any further assistance. Please press star zero and I would now like the hand, the confidence over the day fall town. Please go ahead.
Good morning, and thank you for joining US with me on the call today are Tom Priore, Chairman and Chief Executive Officer of priority Technology Holdings, and Mike <unk>, Our Chief Financial Officer.
Before we provide our prepared remarks, I would like to remind all participants that our comments today will include forward looking statements, which involved a number of risks and uncertainties that may cause actual results to differ materially from our forward looking statements.
The company undertakes no obligation to update or revise the forward looking statements, whether as a result of new information future events or otherwise.
We provide a detailed discussion of the various risk factors in our SEC filings and we encourage you to review these filings.
Additionally, we may refer to non-GAAP measures, including but not limited to EBITDA and adjusted EBITDA during the call reconciliations.
Reconciliations of our non-GAAP performance and liquidity measures to the appropriate GAAP measures can be found in our press release and SEC filings available on the investors section of our website with that I would like to now turn the call over to our chairman and CEO Tom Priore.
Thank you David.
And thanks to everyone for joining us for our second quarter earnings call.
I would like to begin this morning's call by providing a brief overview of our strong growth in the second quarter.
And how we are positioning priority for success for the remainder of 2021 and over the long term.
Following Mike's financial review of our quarterly results and the continued improvement in our balance sheet will.
We will offer some perspective on our positioning for the future of digital commerce.
There are a few quick highlights I'd like to share upfront.
As we outlined in our earnings release the growth trajectory, we established for the pandemic last year.
And the first quarter of 2021 has continued to accelerate the second quarter.
In the first half of 2021, we exceeded our forecast across key financial metrics, including revenue gross profit and adjusted EBITDA.
Comparing our second quarter 2021 results with the second quarter 2020, when adjusted for the exclusion of the rent payments business and we monetize in September 2020, and nonrecurring costs incurred.
And both comparative quarters revenue of $125 million increased 42, 1%.
Gross profit increased 35 per cent.
The $35.2 million and.
And adjusted EBITDA increased 54, 9% to $21 million.
Importantly.
Each of these key metrics accelerated from Q1.2021 levels of $113.3 million.
$31.4 million and $18 million respectively.
Our outstanding results were driven by of 54% increase in total bank card volume.
The $13.9 billion for the quarter.
At approximately 8.5% year over year merchant growth in the consumer segment.
The granted these growth rates are compared to second quarter.
Of 2021 to the Covid impacted second quarter of 2020 <unk>.
However, volte.
Volume has also accelerated from Q1.2021.
Compared with the first quarter of 2021, we experienced a 17% increase in total bank card volume from 11.9 billion.
She is the previously referenced $13.9 billion.
And the sequential quarter merchant growth of 2%.
During the second quarter, we outperformed our consumer segment revenue plan by 8%.
On our commercial payments segment revenue plan by 16% leading to adjusted EBITDA exceeding plan by 10%.
Given the meaningful outperformance through the first quarter of 2021, which Mike will highlight in more depth.
We will be increasing our guidance for full year 2021 revenue.
The range between 480 to 500 million of growth rate of 22% to 28% versus 2020.
And adjusted EBITDA a.
Our non-GAAP measure to range between $82 million to $86 million.
Our growth rate of 32% to 39%.
Above 2020 levels.
These comparisons exclude the rent payments business from.
2020.
We believe we should be able to exceed this guidance if our current pipeline trends hold.
Our strong financial results are magnified.
Our dramatically improved balance sheet.
We delivered through the Ares capital management perpetual preferred investment and the refinancing of our term loan debt facility, we announced in April.
The financial flexibility, we created allowed us to execute 2 tuck in acquisitions during this.
Second quarter that will further enhance our strong acquiring distribution channels.
And brings our total net leverage down from 5 point for 4 times EBITDA.
At March 31.
2021.
The 343 times EBITDA as of June 30.
2021.
With regards to our pending <unk> acquisition the.
The financing for closing is locked down as we noted in.
In our Q1 call.
We expect that the necessary regulatory approvals for the transfer of the money transmission licenses will be received and we will close the transaction in the third quarter as anticipated.
It is noteworthy.
When accounting for our combination within Sierra on a pro forma basis for the first half of 2021are.
Our business would produce revenue of $275 million.
Gross profit of $104.6 million.
Our gross profit margin of 38% and.
And adjusted EBITDA of $67.9 million.
Our present momentum.
Combined with.
Very straightforward vendor contract savings available when combining the platforms indicate that 2021 combined pro forma adjusted EBITDA in the 140 million neighborhood is well within reach.
At this point.
I'd like to pause and hand, the call over to Mike who will provide further insight into our performance during the quarter current trends and each business segment and the improvement of our balance sheet and liquidity.
Mike.
Thank you Tom and good morning.
This morning's press release provides highlights of our second quarter of 2021 results compared with second quarter of 2020 on a GAAP and non-GAAP basis GAAP.
GAAP comparisons include second quarter of 2020 results for the rent payment business sold for MRI in September of last year and also include certain non recurring expenses in both quarters as described in the press release.
In order to provide clear comparability of ongoing business performance My comments will focus on the non-GAAP amounts that exclude rent payment from the 2022nd quarter and exclude the nonrecurring expenses from both quarters.
This non-GAAP comp.
Comparison is not a substitute for the prominent comparisons under GAAP.
Another my comments are meant.
The a complement the understanding the GAAP based the comparisons.
Management's discussion and analysis in our form 10-Q will provide you with a discussion of the second quarter and first half comparative results on a GAAP basis.
As such in the second quarter of 2021 consolidated revenue of $125 million increased by $37 million, a 42, 1% increase from $88 million in the 2020 quarter rare.
Revenue growth of.
$37.9 million in consumer payments and point $7 million and integrated partners was slightly offset by a revenue decline of $1.6 million in commercial payments.
Gross profit of $35.2 million increased $9.1 million of 35 per cent increase from $26.1 million in the 2020 quarter.
Gross profit margin of 28, 1% decreased 150 basis points from 29, 6% in the 2020 quarter due to mix.
Income from operations of $9.2 million increased $5.7 million of 161, 3% increase from $3.5 million in the 2020 quarter.
Adjusted EBITDA of $21 million increased 7.4 million of 54, 9% increase from $13.6 million in the 2020 corridor.
Now, let's break this down within the segments.
Consumer payments revenue was $119.6 million of 46, 4% increase over $81.7 million in the 2020 quarter.
Growth was driven by a 3 by a $36.2 million or 47, 6% revenue growth in our base merchant business, which was supplemented by $1.7 million of 36% revenue growth from specialized e-commerce merchants.
As Tom mentioned merchant Bankcard volume processed was $13.9 billion.
This is the 54% increase over $9 billion in the 2020 quarter.
Merchant Bankcard transactions of $150.6 million increased 62, 2% of $92.8 million in the 2020 quarter in average ticket of $92.14 decreased.
5.1% from $97.06.
Consumer payments income from operations was $14.5 million.
It is the 98, 7% increase of $7.2 million of income from operations of $7.3 million in the 2020 quarter.
Key drivers for a $9 for.
$5 million increase in gross profit, partially reduced by higher depreciation of $1.6 million and higher salaries and SG&A of.
<unk> 7 million.
Now on the prior year starting in mid March 2022 April 2020, the pandemic had a significant effect on our results.
This impact was evident in the decline in merchant Bank card volume and revenue during the period of restrictive shelter in place the requirements instituted across the United States towards the end of March 2020 through April 2020.
In May 2020, as shelter in place restrictions began to be lifted and regional economy started to reopen.
<unk> volumes began to return and revenue growth was supplemented by acceleration of certain specialized product offerings and e-commerce transactions.
The strong recovery momentum continued through the second half of 2020 and first half of 2021.
The pandemic has negative effect the second quarter 2020 revenue and profit contributed to the exceptionally high second quarter 2021.
The comparative growth rates, however, the pandemics precise impact for the second quarter growth rates is not quantifiable.
Commercial payments revenue was $4 million.
This is the $1.6 million decrease from $5.6 million in the 2020 quarter.
Revenue from processing and of our Cps <unk> accounts payable automated solutions business continued its steady performance with second quarter 2021 revenue of $1.6 million, a 16, 3% growth over the 2020 quarter.
The segments overall revenue decline was driven by a $1.8 million reduction in managed services and as we've discussed before this is caused by the curtailment in April 2020 of of customers merchant financing program in response to the pandemic.
And then subsequent changes to their business model.
However.
Revenue trends in this segment have strengthened.
Managed services began a new supplier enablement program earlier this year that added $1.1 million of new revenue in the second quarter and see PX has accelerated revenue growth.
The sales pipeline for new contract signings as growing in volume trends with existing customers are strong.
Commercial payments income from operations was just above breakeven, which compares to income from operations of <unk> 5 million in the 2022nd quarter.
This comparative reduction was driven by of gross profit declined <unk> 5 million due to the year over year reduced revenue in managed services.
However, the second quarter 2021 results of <unk> $4 million improved over the first quarter 2021, driven by the strength in revenue trends in the segment.
Integrated partners revenue was $1.3 million. This is the 123, 1% increase over $6 million in the 2020 quarter.
Now as a reminder of this comparison excludes rent payment revenue of $4.4 million from the second quarter 2020.
Yeah.
Through September of 'twenty.
Second of 2020, Pratt was comprised of a rent payment business and our landlord station business.
Simultaneous with the sale of Grand payment prep entered into revenue producing agreements with MRI to provide ongoing technology support and payment processing services, which offers us an opportunity to expand this relationship and provide payment processing services to existing customers of MRI.
Revenue of 8 million for pets ongoing business increased <unk> 7 million compared with revenue of $1.1 million in the second quarter 2020.
Priority pay rate health solutions and for.
Alrighty hospitality technology comprised the remainder of this segments revenue.
With the steady performance and solid growth pipelines.
Integrated partners income from operations was <unk> $2 million is the <unk> 2 million increase over a slight loss from operations and second quarter 2020.
Again this comparison excludes rent payment from the second quarter, 2020, which generated income from operations of <unk> 9 million in that quarter.
Corporate expenses were $5.4 million in the second quarter 2021, an increase of $1.3 million from expenses of $4.1 million in the second quarter of 2020.
This comparison excludes the second quarter 2021 expenses of $1.8 million for professional fees and costs incurred in connection with the pending acquisition of <unk> and Sara The April 2021 debt refinancing and the April 2021 issuance of preferred stock.
It excludes second quarter 2020 expenses of <unk> 5 million for professional costs incurred in connection with the acquisition certain litigation activities.
Before turning the call back to Tom I'll review, our significantly improved balance sheet and liquidity and I'll also comment on our revised full year 2021 financial guidance.
We ended the second quarter 2021, with net debt of $318.9 million and total net leverage ratio was reduced to 343 times at June 30th from 544 times at March 31st.
Our unrestricted cash position was $11.1 million and we had $10 million of borrowing capacity on the revolver.
On April 27th we completed our debt refinancing and preferred equity issuance.
The new senior debt facility, which improves the interest expense by 75 basis points includes an initial term loans of $300 million, which was used to refinance existing debt and pay debt placement fees and expenses.
It also includes the committed delayed draw loan of $290 million to finance a portion of the <unk> acquisition.
And it includes a $40 million revolving credit facility for.
For which we borrowed $30 million in connection with our second quarter of acquisition activity.
The term loan matures in April 2027 on the sixth anniversary annual principal amortization is equal to 1% of the original principal balance paid quarterly with the balance of due upon maturity in 2027.
The revolving credit facility matures in April 2026 on its fifth anniversary.
The senior preferred.
<unk> stock includes an initial issuance of $150 million used to retire existing debt pay stock issuance fees and expenses and fund a portion of our second quarter acquisitions.
A committed delayed issuance of $50 million will be used to finance a portion of the transfer of acquisition and an additional $50 million issuance is available within 18 months the finance other acquisitions.
This refinancing reduces scheduled principal payments by $11.6 million in 2021 compared to the old financing in place and this assumes the third quarter delayed draw of issuance of the additional $290 million of senior debt.
It reduces.
The principal repayments in $2000.20 million to $33 million.
And in 2023 reduces principal repayments by $317.8 million, which is the year when the old facilities was scheduled to mature.
Now turning to our upward revision to 2021 financial guidance.
The Tom mentioned, we outperformed our first half plan for revenue and adjusted EBITDA as a result of stronger than expected organic growth and contributions from the second quarter 2021 tuck in acquisitions.
The strong start to 2021 and ongoing strength in the business provides us with confidence in achieving the increased full year revenue and adjusted EBITDA guidance and as Tom had noted we believe we should be able to exceed this guidance if our pipeline trends hold.
I'd like to turn the call back to Tom.
Thanks, Mike.
As Mike shared on the heels of an excellent finish to 2020 and outstanding Q1 performance.
We followed up with an even stronger second quarter.
I noted in our Q1 update.
I believe that 2020 would be regarded as priority year of transformation.
And the realization of our mission to emerge as the payments powerhouse with.
With a single platform to collect store and send money.
I would submit.
Our continued momentum through the first half of 2021 demonstrates that we're delivering differentiated products to our existing verticals.
That we possess the skills to navigate through obstacles swiftly as we did for the impact of the pandemic and the network rule changes in subscription E Commerce.
And.
That we cultivate acumen to identify and invest intelligently in high growth opportunities early in the cycle.
Well ahead of our industry competitors as we have in BTB payments and our diverse integrated partner channels of real estate global hospitality health care and now consumer finance.
As we execute on our stated strategy with precision.
We continue to demonstrate the priority is built with intention and is poised to be among the leaders powering the future of digital commerce.
With each month that goes by the numbers demonstrate that our customers.
Reselling and ISP partners and commercial marketplaces.
Are seeing us the the go to platform for businesses to collect store and send money in an easy and low friction manner.
It's our belief that the future of digital commerce will be won by operators with.
Complete control of the payment rails for payment authorization settlement.
<unk> and disbursement.
We're among the very few equipped with direct payment connections to all major network partners.
The federal reserve.
Full back end settlement capabilities.
Full service card issuing and payable solutions.
And virtual banking and payment facilitation capability on a single platform that operates at scale.
But before we open the line for Q&A.
I want to provide a brief update.
On the developing COVID-19 situation in the U S of India.
Unfortunately, the environment of India has meaningfully improved.
Our financial support enabled our <unk> colleagues in India as well as their families.
Received their first COVID-19 vaccinations.
ICU beds were also donated to bolster the health care infrastructure, along with 20 oxygen concentrator.
That were procured here in the United States.
Incent the Chandigarh for distribution of the local hospitals.
Meanwhile, in the U S. We continue.
To encourage vaccination for all of our employees.
Offering paid time off to receive the vaccination.
As well as for any vaccine side effects.
While we are eager to bring all of our employees back to the office next quarter, we will continue to monitor.
And consider local transmission rates when determining the safest time to do so.
The last I want to acknowledge the priority family and everyone's unique contribution to this quarter's results on this call.
I've been a believer that the decisions of the past.
Are the architects of the present.
I want to thank each and every 1 of our priority team members.
For your decision to believe in our collective vision.
And your decision to commit your considerable talents and efforts.
To make us the payments powerhouse.
Operator.
We'd now like to open the line for questions.
And thank you.
As a reminder of ask a question Youll need of press Star 1 on your telephone to withdraw your question press the balance sheet. Please standby, while we compile the Q&A roster and once again that is star 1 if you would like to ask a question.
And our first question comes from Andrew Scott from Roth Capital Partners. Your line is now open.
Good morning, Thank you for taking my questions and congrats on the strong quarter.
First question is you guys noted in your prepared remarks, you saw really strong volume growth on both an annual on sequential basis, you guys just talk a little bit more about the dynamics driving the growth and in particular in the consumer and CTX.
Sure Andrew.
We've seen.
Particularly kind of towards the tail end of the of the of the first quarter.
The the hospitality segment.
Dramatically improved.
You know coming out of the pandemic.
That.
That's probably the biggest area of the of.
The improved growth in the year over year period.
And in the quarter.
It's also.
As you're well aware, it's it's a lower margin.
Which was.
The reason for some of the decline in.
In the in the margin.
Which which Mike alluded to.
The other segments have been have been relatively steady.
We are a large provider of services to us.
Many professional service segments.
Like legal services as well as.
A host of other service industries that remained relatively steady.
On the so on the consumer side. It was it was really driven by by.
By the improvement in the hospitality segment.
The on the Cps side.
You know that that growth has really just been consistent across the portfolio. There's no 1 area I would say that the the.
Dominated the the.
The continued volume growth.
We've we've.
To see penetration of.
Payments and existing programs.
With more suppliers of accepting.
Yes.
The card based payments and.
The the.
The sales pipeline for new.
Buyers that are coming onto the platform has has just continued to be steady.
Again, no 1 particular segment job jumps out.
It's it's been in in health care light manufacturing.
Areas of construction.
Those that are kind of really generally been broad based which is encouraging because we think that's that's the sign that.
More and more businesses now.
Just in the U S, but but frankly globally.
Starting to realize the benefits of automated payables.
Great. Thank you that was like anything you might be of help.
No Tom I think you've covered it pretty well.
Thank you and our next question comes from Brian Ken's Linger on.
Alliance Global your line is now open.
Great results.
The global shipping challenges are impacting so many companies higher costs in some cases of inventory shortages.
Maybe you can share of what percentage of your revenue comes from CPG retail and are you seeing any impact now in the third quarter or ask or in terms of slower sales by those companies in their verticals as a result, and if so maybe which industries in.
And how much does it account for them.
Well the retail trade is about 25 per slab broad group of businesses. The fallen retail trade sic codes is about 25 per cent of on X.
And we haven't noticed any within our customer base, we haven't noticed any issues on the shipping channels that you described.
So so essentially you're not seeing volumes impacted right now on your on your payment side for that.
No not not within our customers.
No that's great.
And then it sounds like the E Commerce pie.
Right now is shrinking in the short term as consumers return to stores and of course, we're just happy to get out of their houses can you talk about the puts and takes of this for your business, where do you expect the investors will see the benefits of <unk>.
Of the.
Getting back the stores and then.
Is there any pressure on e-commerce side in terms of revenue or margin at all.
Yeah.
Mike you want to take that 1 yeah sure.
So I'd say, there's a couple couple couple of ways to Orient around our E Commerce segment.
We've seen it we.
We really haven't seen that meaningful of the drop in total mix in what I'll call of card present to card not present.
At the peak of Covid that was kind of around you know.
55.
Percent.
Card present, 45% of card not present.
Yeah, maybe that shifted 5%.
We actually 1 of the the reasons why we feel very optimistic about our ability for outperformance in the coming quarters is.
We did have.
Some decrease and this was this was actually engineered.
We are we did decrease some of our boarding trends and subscription e-commerce through the quarter.
There were a few audits that went on within that segment.
Within that.
That was driven by the networks. So we found some some segments that we thought should be operated a little cleaner we called those.
So it decreased some of our subscription e-commerce volume during the quarter of but we expect that the to pick right back up.
Here in the in the third quarter end of the fourth quarter. So.
It's actually 1 of the bright spots bright spots for optimism.
In the coming quarters.
Okay.
You you.
Briefly discussed obviously the trends in BTB payments, but I guess I'm expecting when you expect volume to really take off almost like hockey stick growth because it seems like that's the hot space.
And what does management need to of complex before adoption improved substantially and then I have 1 more question.
Sure Luke.
It's going to be.
Conversion of the pipeline.
We have these are these are long sales cycle.
Processes.
And we.
We are very confident in the pipeline we have.
Both <unk> and IFC partners looking to leverage our complete tool sets of monetize.
They're BTB payments network.
<unk>.
We just need to finish the job, but those these are.
These are massive networks that are in the tens of billions of.
All of available volume.
That.
Each day, we just.
Need to convert.
It's as simple as that.
My last question is of course, you've talked about the share acquisition.
Hasnt closed and you're expecting it well this quarter, but have you been able to go to market.
On the cross selling and revenue synergies and if you have what has been the early response that you're getting from the perspective or existing customers.
Yeah, I really appreciate the question.
So the answer is yes.
We were ready to roll with the combined offering to I'll call it collect store and send the money.
Immediately upon the announcement.
As we noted during the.
The announcement of the sincere of combination we'd already been working with the team for months I'm really almost a year and they were already in integrated payments.
Provider or I should say in the integrated payments customer excuse me.
So we accelerated that.
Net debt.
Feature combination.
We've already begun rolling that out with ISC partners.
There's been.
Very strong adoption of the combination.
And you know will be Oh, youll start to see customers here in the in the third quarter that are using the full suite.
Of priorities.
Collect store and send money capability with the.
The combination of the Terra Ledger ing.
And banking as a service technology.
Great. Thank you so much guidance.
Yeah.
Thank you.
And our next question.
Our next question comes from George <unk> from Cowen. Your line is now open.
Hey, guys. Congrats on the on the solid results here into Q.
Just wanted to ask the strong.
Volume growth the the 54% that you saw sort of year over year I'm, just curious realizing the comparisons would be easier in the earlier part of the of the quarter. Maybe you can give us some sense as to what kind of the exit rate was from a volume perspective.
I'd say from June going into July just just just wondering how that's been.
Acting.
Yeah.
Oh, you mean in 2017 volume.
So that's what you want so it's just the kind of the exit rate coming out of teaching going into into July.
It's been steady as she goes.
You know look where we're kind of.
We are consistently in terms of bank card exceeding.
You know the 5 billion on a monthly basis.
And that trend hasn't.
You know it hasn't diminished.
And part of it with Georgia, and I think this is really significant and needs to be recognized on our platform our product sales.
Of net merchant growth.
Merchants adopt our solutions because they provide more versatility in the way they interact with their for their customers on the way they manage their business.
So we consistently board more than 4000 on it.
On a very good month 5000, new merchants a month.
We certainly don't lose them at anywhere near that rate.
And when you have a net merchant growth because of the you know.
Value of your products.
It's going to lead the volume growth.
Yeah. So that was the strong and great momentum I'm sorry go ahead with the stock I'm sorry. The June was the strong month of core.
And the July is looking it looks a lot like June and I suspect the August will be there as well.
Pretty steady as Tom said.
Yeah.
Okay. That's the that's great and just 2 other ones 1 of the high level question, what could be maybe tying on to to the prior question, Tom but you know of.
Obviously a.
A lot of conversations around.
Inflation and the like on the cost of goods.
Good rising and I'm I'm I'm curious, how you think about that for them from your perspective of them. Obviously, there are certain types of spending that you guys would prefer but youre also of a spread business.
As the prices go up I would I would think of.
That's that's that's the benefit for you guys and then just the second question on.
All of the spin Sarah is the outlook still for 'twenty, 1 that that would that business will be sort of in the $80 million range I know you've done about call of $35 million or so we're looking for a little bit less of that over the first half of the year. Just curious if the 80 million of still the target.
On a on a revenue basis.
No.
We actually think it's probably more on the mid.
The mid seventies.
Okay.
Okay.
And then just curious your thoughts on on a more inflationary environment.
You know look I think what's interesting you'll note in and again I.
Thanks.
Kind of continues to reinforce.
The.
Strength of our product offering.
We actually saw for the quarter of decline in.
In average ticket.
So certainly.
And inflationary environment is going to Hell.
<unk> volume.
But.
We also.
Hey.
We we make money on on.
On the clicks.
As well.
And in many instances, we care more about the number of transactions as opposed to the.
The the <unk>.
Size of the transaction.
So so it's the balance.
And that's true of all processors.
But you know we're.
We feel very good about where we're positions.
Regardless of the of our I'll call it the inflationary environment and the the economic cycle.
We feel like we have.
Some counter cyclical assets it'll do well if we do see you know.
The downturn.
That will more than offset.
Some of the the strong fundamentals of a growing economy and and the impact of inflation.
On the on volumes.
Okay, Great I appreciate that.
Okay.
Thank you and again, ladies and gentlemen, I would there's 1 other thing I would I'm, sorry domain and we're off to I do want to come back to you because you asked the question about Sarah and.
The the stimulus.
Is.
You know the that's impactful to the.
Yeah to the number of consumers.
The.
Tenda.
Opt into it the settlement program.
Sure.
But through the summer we're now seeing.
Growth in the number of enrollments.
And net growth in the total portfolio.
So that.
That gives us a great deal of comfort moving into the second half of the year.
So to put a fine point on that.
Consumers that were into of debt settlement program, let's say 3 years ago and are now.
The improving their debt and maturing out of it.
New enrollments are exceeding those that are maturing out of that settlement.
And the team at.
The CFT pay has had a number of impressive wins on.
On the sales side.
That will be further bolstering the.
Boarding trends in the second half.
And thank you and our next question comes actually I'm, sorry, as a reminder to ask the question you will need of press star 1 on your telephone who withdraw your question press the pound key please standby, we compile the Q&A roster and once again that is star.
1 of if you'd like to ask the question and our next question comes from Tyler Roberts from T. B K Bank. Your line is now open.
Hey, good morning, Tom. Thank you for taking my question and congratulations to you and the team on an excellent quarter.
Sort of answered this on your previous statement, but regarding the since their acquisition of are you seeing any near term trends for the continuation of the moratoriums.
As well as the kind of net.
Enhanced unemployment rolling off in select states.
Hey, Tom it's good to talk to you by the way.
As I noted, we're seeing we're thinking of move improved trends coming coming out of the quarter.
So we've.
I would say that.
Coupled with.
We think of kind of a very conservative.
Subscription e-commerce quarter in Q2 that has.
Excellent fundamentals for improvement we feel.
If our pipeline converts across.
CFT pay.
Our subscription E Commerce segment and.
Or <unk>.
Commercial payments.
We could.
The improvement in our the.
The guidance.
The improved guidance that we provided this quarter.
So.
You know that that's a.
We're very optimistic about the conversion of the of that pipeline and the speed at which it can convert.
Perfect well, thank you again and congratulations again on the strong quarter.
Thank you work for.
Going to stay focused on continuing to deliver at that rate.
Yeah.
And thank you for your question.
And I am showing no further questions I would now like to turn the call back over to Tom Priore for closing remarks.
Alright, Thank you very much operator.
Just wanted to thank everyone. Once again for taking the time to.
Yeah to evaluate us as an organization and our positioning in the in this industry.
And we'll we'll continue to reinforce.
Well, we think is of is a very unique platform to collect store and send money.
And.
The the the vision that we had.
For that platform is coming together.
You know certainly it.
<unk>.
At the rate in which we expected and we look forward to sharing on our Q.
Q3 results.
Is that.
Has that mission continues to become more clear to the constituents in.
In our market. So thanks, everyone for your time I hope everyone stays safe and it's this more recent surgeon in Covid.
And.
Stay healthy and and and best of luck for all.
Thank you.
Thank you. This concludes today's conference call. Thank you for participating.
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