Q1 2026 Priority Technology Holdings Inc Earnings Call

May 11, 2026

Operator 1: Greetings. Welcome to Priority Technology Holdings Q1 2026 Earnings Call. At this time, all participants will be in listen-only mode. The question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded. At this time, I'll now turn the conference over to Meghna Mehra, Managing Director of ICR. Thank you, Meghna. You may now begin.

Operator: Greetings. Welcome to Priority Technology Holdings Q1 2026 Earnings Call. At this time, all participants will be in listen-only mode. The question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded. At this time, I'll now turn the conference over to Meghna Mehra, Managing Director of ICR. Thank you, Meghna. You may now begin.

Speaker #2: If anyone today should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded.

Speaker #2: At this time, I'll now turn the conference over to Megna Mehra, Managing Director of ICR. Thank you, Megna. You may now begin. Good morning, and thank you for joining us.

Meghna Mehra: Good morning, thank you for joining us. With me today are Tom Priore, Chairman and Chief Executive Officer of Priority Technology Holdings, and Tim O'Leary, Chief Financial Officer. Before giving our prepared remarks, I would like to remind all participants that our comments today will include forward-looking statements which involve 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.

Speaker #2: With me today are Tom Priore, Chairman and Chief Executive Officer of Priority Technology Holdings, and Tim OLeary, Chief Financial Officer. Before giving a prepared remarks, I would like to remind all participants that our comments today will include forward-looking statements which involve a number of risks and uncertainties that may cause actual results to differ materially from our forward-looking statements.

Speaker #2: 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.

Speaker #2: Additionally, we may refer to non-GAAP measures including but not limited to EBITDA and adjusted EBITDA during the call. Reconciliations of a non-GAAP performance and liquidity measures to the appropriate GAAP measures can be found in our press release and SEC filings available in the investor section of our website.

Meghna Mehra: 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 in the Investors section of our website. Before I turn the call over to Tom, I would like to say that on today's call, we will only be discussing Priority's financial and operational results and outlook. We will not be commenting on or answering questions related to the special committee's ongoing evaluation of the take-private proposal. Please continue to refer to the company's prior press releases for the latest on that topic. With that, I would like to turn the call over to our Chairman and CEO, Tom Priore.

Speaker #2: Before I turn the call over to Tom, I would like to say that on today's call, we will only be discussing Priority's financial and operational results and outlook.

Speaker #2: We will not be commenting on or answering questions related to the special committee's ongoing evaluation of the Take Private proposal. Please continue to refer to the company's prior press releases for the latest on that topic.

Speaker #2: With that, I would like to turn the call over to our Chairman and CEO, Tom Priore.

Speaker #3: Thank you, Megna. And thanks to everyone for joining us this morning.

Tom Priore: Thank you, Meghna, and thanks to everyone for joining us this morning. I'll cover our aggregate Q1 performance and outlook before handing the call over to Tim, who'll provide segment-level performance, key trends, and developments across our business segments and Priority overall. This morning, we reported strong growth in both revenue and profits for Q1. As summarized on slide 3, Priority had a solid Q1 by every key financial metric, growing net revenue by 11%, generating adjusted gross profit and adjusted EBITDA growth of 13% each, and increasing adjusted EPS by 27% year over year to $0.28. We ended Q1 with 1.8 million total customer accounts operating on our Priority Commerce Platform, which is up 50,000 from the end of 2025.

Speaker #4: I'll cover our aggregate first quarter performance and outlook before handing the call over to Tim, who'll provide segment-level performance, key trends, and developments across our business segments and Priority overall.

Speaker #4: This morning, we reported strong growth in both revenue and profits for the first quarter, as summarized on slide three. Priority had a solid Q1 by every key financial metric.

Speaker #4: Growing net revenue by 11%, generating adjusted gross profit and adjusted EBITDA growth of 13% each, and increasing adjusted EPS by 27% year over year to $0.28.

Speaker #4: We ended the first quarter with 1.8 million total customer accounts operating on our commerce platform, which is up 50,000 from the end of 2025.

Speaker #4: Annual transaction volume increased by 3 billion from year-end to 153 billion, and average account balances under administration improved by over 100 million from year-end to 1.8 billion.

Tom Priore: Annual transaction volume increased by 3 billion from year-end to 153 billion, and average account balances under administration improved by over 100 million from year-end to 1.8 billion. Tim will provide more context on the full-year outlook later in the call, but I can reflect that the value our diverse partners and customers see in our Priority Commerce Platform and elegant product solutions provides continued confidence that we will sustain the momentum in our Merchant Solutions, Payables, and Treasury Solutions segments. Turning our attention to aggregate Q1 results on Slide 4, revenue of $249.6 million increased 11% from the prior year. This led to a 13% increase in adjusted gross profit to $98.8 million and a 13% improvement in adjusted EBITDA to $58.1 million.

Speaker #4: Tim will provide more context on the full-year outlook later in the call. But I can reflect that the value our diverse partners and customers see in our unified commerce platform and elegant product solutions provides continued confidence that we will sustain the momentum in our Merchant Solutions, Payables, and Treasury Solution segments.

Speaker #4: Turning our attention to aggregate Q1 results on slide 249.6 million increased 11% from the prior year. This led to a 13% increase in adjusted gross profit to 98.8 million, and a 13% improvement in adjusted EBITDA to 58.1 million.

Speaker #4: Adjusted gross profit margin of 39.6% increased 70 basis points from the prior year's first quarter, reflecting the ongoing performance of our diverse high-margin payables and treasury solution segments combined with the accretive impact of acquisitions completed in the second half of 2025.

Tom Priore: Adjusted gross profit margin of 39.6% increased 70 basis points from the prior year's Q1, reflecting the ongoing performance of our diverse high-margin Payables and Treasury Solutions segments, combined with the accretive impact of acquisitions completed in H2 2025. For those of you who are new to Priority, Slides 5 and 6 highlight our vision for connected commerce. The Priority Commerce Platform is purpose-built to streamline collecting, storing, lending, and sending money. It delivers a flexible financial tool set for Merchant Solutions, Payables, and Treasury Solutions designed to accelerate cash flow and optimize working capital for businesses.

Speaker #4: For those of you who are new to Priority, slides five and six highlight our vision for connected commerce. The Priority Commerce platform is purpose-built to streamline collecting, storing, lending, and sending money.

Speaker #4: It delivers a flexible financial toolset for merchant acquiring, payables, and treasury solutions designed to accelerate cash flow and optimize working capital for businesses. I would encourage you to play the short one to two-minute videos embedded in the product links on the slide to gain a deeper appreciation of why customers are consistently partnering with Priority to reach their commerce goals and why we're emerging as a go-to solution provider for embedded commerce and finance solutions.

Tom Priore: I would encourage you to play the short 1-to-2-minute videos embedded in the product links on Slide 6 to gain a deeper appreciation of why customers are consistently partnering with Priority to reach their commerce goals and why we're emerging as a go-to solution provider for embedded commerce and finance solutions. Slide 6 highlights a typical partner experience with our commerce API's orchestration capabilities for payments and Treasury Solutions. This enables partners to use a single API tailored to their specific objectives. Customers connecting via our API can access all routes for digital payment acceptance, create traditional and virtual bank accounts, issue physical and virtual debit cards, enable lockbox for checks, configure single vendor and advanced bulk vendor payments, and many other commerce options that create new revenue opportunities and operating efficiency.

Speaker #4: Slide six highlights a typical partner experience with our commerce APIs orchestration capabilities for payments, and treasury solutions. This enables partners to use a single API tailored to their specific objectives.

Speaker #4: Customers connecting via our API can access all routes for digital payment acceptance, create traditional and virtual bank accounts, issue physical and virtual debit cards, enable lockbox for checks, configure single vendor and advanced bulk vendor payments, and many other commerce options that create new revenue opportunities and operating efficiency.

Tom Priore: Customers connecting via our API can access all routes for digital payment acceptance, create traditional and virtual bank accounts, issue physical and virtual debit cards, enable lockbox for checks, configure single vendor and advanced bulk vendor payments, and many other commerce options that create new revenue opportunities and operating efficiency. We continue to standardize payment operations and key operational workflows across diverse industry segments where money movement and treasury tools are critical to the value chain to broaden and diversify our revenue sources while maintaining our cost discipline. This vision explains why Priority has consistently performed across varying economic cycles.

Speaker #4: We continue to standardize payment operations and key operational workflows across diverse industry segments where money movement and treasury tools are critical to the value chain to broaden and diversify our revenue sources while maintaining our cost discipline.

Tom Priore: We continue to standardize payment operations and key operational workflows across diverse industry segments where money movement and treasury tools are critical to the value chain to broaden and diversify our revenue sources while maintaining our cost discipline. This vision explains why Priority has consistently performed across varying economic cycles.

Speaker #4: This vision explains why Priority has consistently performed across varying economic cycles. Our customers and current market conditions particularly accelerating narrative of AI's impact on SaaS providers reinforce our belief that systems connecting payments and treasury solutions to accept and distribute funds in multi-party environments will be critical as businesses put greater demand on software and payment solution providers to deliver a full suite of core business solutions on a single relationship.

Tom Priore: Our customers in current market conditions, particularly the accelerating narrative of AI's impact on SaaS providers, reinforce our belief that systems connecting payments and treasury solutions to accept and distribute funds in multi-party environments will be critical as businesses put greater demand on software and payment solution providers to deliver a full suite of core business solutions on a single relationship. At this point, I'd like to hand the call over to Tim, who will provide further insights into the health of our business segments, along with current trends in each that factored into our Q1 results and our confidence for sustained performance in 2026.

Speaker #4: At this point, I'd like to hand the call over to Tim, who'll provide further insights into the health of our business segments, along with current trends in each that factored into our first quarter results and our confidence for sustained performance in 2026.

Speaker #3: Thank you, Tom, and good morning, everyone. We had solid overall financial performance in the first quarter on a consolidated basis and across each of our operating segments.

Tim O'Leary: Thank you, Tom, good morning, everyone. We had solid overall financial performance in Q1 on a consolidated basis and across each of our operating segments. Q1 reported revenue growth of 11.1% included organic growth of 9.1%, fueled by strong 35.6% growth in Payables and 17.5% growth in Treasury Solutions, complemented by 6.7% reported growth in Merchant Solutions, which included 3.9% organic growth. As shown on slide 8, adjusted gross profit from our Payables and Treasury Solutions segments represented 63% of the total for the quarter and 62% on a trailing twelve-month basis. As an organic comparison to prior data points, if you exclude the impact of acquisitions, those percentages would have been 66% for the quarter and 65% for the trailing twelve-month period.

Speaker #3: Q1 reported revenue growth of 11.1% included organic growth of 9.1%, fueled by strong 35.6% growth in payables and 17.5% growth in treasury solutions complemented by 6.7% reported growth in merchant solutions which included 3.9% organic growth.

Speaker #3: As shown on slide eight, adjusted gross profit from our payables and treasury solution segments represented 63% of the total for the quarter and 62% on a trailing 12-month basis.

Speaker #3: As an organic comparison to prior data points, if you exclude the impact of acquisitions, those percentages would have been 66% for the quarter and 65% for the trailing 12-month period.

Speaker #3: Strong growth in payables and treasury solutions, combined with the impact of acquisition-related activity, also allowed for overall margin expansion, as adjusted gross profit margins improved by over 70 basis points from Q1 of '25, and gross profit from recurring revenue increased 90 basis points to over 63% in the first quarter.

Tim O'Leary: Strong growth in Payables and Treasury Solutions, combined with the impact of acquisition-related activity, also allowed for overall margin expansion as adjusted gross profit margins improved by over 70 basis points from Q1 of 2025, and gross profit from recurring revenue increased 90 basis points to over 63% in Q1. I'll move now to the segment level results and start with Merchant Solutions on Slide 9. Merchant Solutions generated Q1 revenue of $161.8 million, which is $10.1 million or 6.7% higher than last year's Q1. Revenue growth was a mix of 3.9% organic growth, complemented by the Boom and DMS acquisitions completed in H2 of 2025.

Speaker #3: I'll move now to the segment-level results and start with Merchant Solutions on slide nine. Merchant Solutions generated Q1 revenue of $161.8 million, which is $10.1 million, or 6.7%, higher than last year's first quarter.

Speaker #3: Revenue growth was a mix of 3.9% organic growth, complemented by the boom in DMS acquisitions completed in the second half of 2025. Total card volume in Merchant Solutions was 18.1 billion for the quarter, which is up 2.5% from the prior year.

Tim O'Leary: Total card volume in Merchant Solutions was $18.1 billion for the quarter, which is up 2.5% from the prior year. From a merchant standpoint, we averaged 175,000 accounts during the quarter, which is down from 178,000 last year, while new monthly boards averaged 2,800 during the quarter. Adjusted gross profit for Q1 was $36.7 million, which is up $3.6 million or 10.8% from Q1 of last year. Gross margins of 22.7% are over 80 basis points higher than the comparable quarter last year due to the Boom Commerce and DMS acquisitions, partially offset by the impact of certain higher than normal credit losses during the quarter.

Speaker #3: From a merchant standpoint, we averaged 175,000 accounts during the quarter which is down from 178,000 last year while new monthly boards averaged 2,800 during the quarter.

Speaker #3: Adjusted gross profit for the first quarter was 36.7 million which is up 3.6 million or 10.8% from Q1 of last year. Gross margins of 22.7% are over 80 basis points higher than the comparable quarter last year due to the boom commerce and DMS acquisitions partially offset by the impact of certain higher-than-normal credit losses during the quarter.

Speaker #3: Lastly, adjusted EBITDA was 27.7 million which is up 2 million or 7.9% compared to last year. Moving to the payable segment, revenue of 32.4 million was 35.6% higher than last year's Q1.

Tim O'Leary: Lastly, adjusted EBITDA was $27.7 million, which is up $2 million or 7.9% compared to last year. Moving to the Payables segment, revenue of $32.4 million was 35.6% higher than last year's Q1. Buyer-funded revenues grew 37.1% year over year to $25.4 million, while supplier-funded revenues grew 30.6% year over year to $7 million. Adjusted gross profit was $9.2 million in the quarter, which is a 26.4% increase over the prior year. For the quarter, gross margins were 28.4%, which is down 210 basis points compared to last year's Q1.

Speaker #3: Buyer-funded revenues grew 37.1% year over year to 25.4 million while supplier-funded revenues grew 30.6% year over year to 7 million. Adjusted gross profit was 9.2 million in the quarter which is a 26.4% increase over the prior year.

Speaker #3: For the quarter, gross margins were 28.4%, which is down 210 basis points compared to last year's first quarter. This decline is largely due to continued shift in revenue mix, with buyer-funded revenues reported at lower gross margins, given GAAP requirements to recognize revenue on a gross versus net basis.

Tim O'Leary: This decline is largely due to continued shift in revenue mix, with buyer-funded revenues reported at lower gross margins, giving GAAP requirements to recognize revenue on a gross versus net basis. The Payables segment contributed $ five and a half million of adjusted EBITDA during the quarter, which is a $2 million or 55.1% year-over-year increase. The acceleration of adjusted EBITDA growth compared to revenue and adjusted gross profit was driven by continued strong operating leverage in the segment, including a 3% year-over-year reduction in operating expenses before D&A. Moving to the Treasury Solutions segment, Q1 revenue of $58.8 million was an increase of $8.8 million or 17.5% over the prior year's Q1.

Speaker #3: The payable segment contributed 5.5 million of adjusted EBITDA during the quarter which is a 2 million or 55.1% year over year increase. The acceleration of adjusted EBITDA growth compared to revenue and adjusted gross profit was driven by continued strong operating leverage in the segment including a 3% year over year reduction in operating expenses before DNA.

Speaker #3: Moving to the treasury solution segment, Q1 revenue of 58.8 million was an increase of 8.8 million or 17.5% over the prior year's first quarter.

Speaker #3: Revenue growth was driven by continued strong enrollment trends and an increase in the number of billed clients enrolled in CFTPay to over 1.1 million.

Tim O'Leary: Revenue growth was driven by continued strong enrollment trends and an increase in the number of bill clients enrolled in CFTPay to over 1.1 million, combined with a 28% year-over-year increase in the number of integrated partners and organic same-store sales growth from existing Passport program managers. Higher account balances in both CFTPay and Passport were able to more than offset the impact of lower interest rates in the quarter compared to Q1 of last year. As a result of those factors, adjusted gross profit for the segment increased by 12.8% to $52.9 million, while adjusted gross profit margins were 89.8% for the quarter.

Speaker #3: Combined with a 28% year over year increase in the number of integrated partners and organic same-store sales growth from existing passport program managers. Higher account balances in both CFTPay and passport were able to more than offset the impact of lower interest rates in the quarter compared to Q1 of last year.

Speaker #3: As a result of those factors, adjusted gross profit for the segment increased by 12.8% to 52.9 million dollars while adjusted gross profit margins were 89.8% for the quarter.

Speaker #3: Gross margins were approximately 370 basis points lower than the prior year's first quarter due to mix shift resulting from over 140% revenue growth in passport and 170% revenue growth in priority tech ventures.

Tim O'Leary: Gross margins were approximately 370 basis points lower than the prior year's Q1 due to mix shift resulting from over 140% revenue growth in Passport and 170% revenue growth in Priority TechVentures, both of which operate at lower gross margins in the CFTPay platform, where margins have remained very stable. Adjusted EBITDA for the quarter was $46.7 million, an increase of $4.2 million or 10% year over year. Overall profitability in Treasury Solutions was driven by low double-digit revenue growth in CFTPay, combined with strong and profitable growth in Passport, which offset investments we continue to make in newer software vertical assets within Priority TechVentures.

Speaker #3: Both of which operate at lower gross margins than the CFTPay platform where margins have remained very stable. Adjusted EBITDA for the quarter was 46.7 million dollars and increased to 4.2 million or 10% year over year.

Speaker #3: Overall profitability in treasury solutions was driven by low double-digit revenue growth in CFTPay combined with strong and profitable growth in passport which offset investments we continue to make in newer software vertical assets within priority tech ventures.

Speaker #3: Moving to consolidated operating expenses, salaries and benefits of 28.5 million increased by 2.7 million or 10.7% compared to Q1 of last year and was down slightly on a sequential basis compared to Q4.

Tim O'Leary: Moving to consolidated operating expenses, salaries and benefits of $28.5 million increased by $2.7 million or 10.7% compared to Q1 of last year and was down slightly on a sequential basis compared to Q4. The year-over-year increase was primarily driven by an increase in stock compensation expense, combined with acquisition-related headcount additions. SG&A of $19.2 million increased by $4.1 million, or 27.4% compared to Q1 of last year because of higher cloud and software expenses, combined with an increase in non-recurring legal and transaction-related expenses.

Speaker #3: The year over year increase was primarily driven by an increase in stock acquisition-related headcount additions. SG&A of 19.2 million increased by 4.1 million or 27.4% compared to Q1 of last year because of higher cloud and software expenses combined with an increase in non-recurring legal and transaction-related expenses.

Speaker #3: With respect to our capital structure on page 13, debt at the end of the quarter was 1.02 billion and we ended the quarter with over 192 million of available liquidity including all 100 million of borrowing capacity available under our revolving credit facility and 92.2 million of cash on the balance sheet.

Tim O'Leary: With respect to our capital structure on page 13, debt at the end of the quarter was $1.02 billion, and we ended the quarter with over $192 million of available liquidity, including all $100 million of borrowing capacity available under our revolving credit facility and $92.2 million of cash on the balance sheet. With respect to free cash flow, we generated $28 million of free cash flow in the quarter based on adjusted EBITDA of $58.1 million, less $5.5 million of CapEx, $21 million of interest expense, and $3.6 million of income taxes.

Speaker #3: With respect to free cash flow, we generated 28 million of free cash flow in the quarter based on adjusted EBITDA of 58.1 million less 5.5 million of capex 21 million dollars of interest expense and 3.6 million of income taxes.

Speaker #3: For the LTM period ended March 31st, adjusted EBITDA of 232 million combined with net debt of 927.8 million resulted in net leverage of four times a quarter-end which is down from 4.2 times at the end of Q4.

Tim O'Leary: For the LTM period ending 31 March, Adjusted EBITDA of $232 million, combined with net debt of $927.8 million, resulted in net leverage of 4 times at quarter end, which is down from 4.2 times at the end of Q4. For further comparison, if you were to include the run rate EBITDA impact of acquisitions, pro forma net leverage would have been 3.8 times at quarter end. Based on strong momentum across our business segments, combined with high visibility into continued performance for the remainder of the year, we are maintaining our full year financial outlook with a revenue forecast to range between $1.01 to 1.04 billion and Adjusted EBITDA forecast to range between $230 to 245 million.

Speaker #3: For further comparison, if you were to include the run rate EBITDA impact of acquisitions pro forma net leverage would have been 3.8 times a quarter-end.

Speaker #3: Based on strong momentum across our business segments, combined with high visibility and continued performance for the remainder of the year, we are maintaining our full-year financial outlook with a revenue forecast to range between 1.01 to 1.04 billion and adjusted EBITDA forecast to range between 230 to 245 million dollars.

Speaker #3: With that, I'll now turn the call back over to Tom for his closing comments.

Tim O'Leary: With that, I'll now turn the call back over to Tom for his closing comments.

Speaker #1: Thank you, Tim. In conclusion, I want to thank all of my colleagues at Priority for continuing to work incredibly hard to deliver results. Your commitment and dedication to improving everything we do is clear, providing our partners and customers with a consistent reminder that they made the right choice to partner with Priority.

Tom Priore: Thank you, Tim. In conclusion, I want to thank all of my colleagues at Priority for continuing to work incredibly hard to deliver results. Your commitment and dedication to improving everything we do is clear, providing our partners and customers with a consistent reminder that they made the right choice to partner with Priority. Operator, we'd now like to move the call to the Q&A portion.

Speaker #2: Operator, we'd now like to move the call to the Q&A portion.

Speaker #3: Thank you. Tim asked a question. At this time, you may press star one from your telephone keypad. And a confirmation tone indicate your line is in the question queue.

Operator 2: Thank you. To ask a question at this time, you may press star one from your telephone keypad, and a confirmation tone indicate your line is in the question queue. You may press star two if you wish to remove your question from the queue. For participants that are using speakerphone, it may be necessary to pick up your handset before pressing the star keys. Thank you. Our first question is from Vasundhara Govil with KBW. Please proceed with your questions.

Operator: Thank you. To ask a question at this time, you may press star one from your telephone keypad, and a confirmation tone indicate your line is in the question queue. You may press star two if you wish to remove your question from the queue. For participants that are using speakerphone, it may be necessary to pick up your handset before pressing the star keys. Thank you. Our first question is from Vasundhara Govil with KBW. Please proceed with your questions.

Speaker #3: You may press star two if you wish to remove your question from the queue. For participants that are using speakerphone, it may be necessary to pick up your handset before pressing the star keys.

Speaker #3: Thank you. And our first question is from Vasu Govil with KBW. Please proceed with your question.

Speaker #4: Hi. Thank you for taking my question. I want to maybe start with the payable segment. It was really strong growth there, nice acceleration from last quarter even.

Vasundhara Govil: Hi. Thank you for taking my question. I want to maybe start with the Payables segment. It was really strong growth there. Nice acceleration from last quarter even. Can you maybe just drill down on what drove the strength there and if any one-timers that we should be mindful of as we think about modeling it for the rest of the year? Thank you.

Vasu Govil: Hi. Thank you for taking my question. I want to maybe start with the Payables segment. It was really strong growth there. Nice acceleration from last quarter even. Can you maybe just drill down on what drove the strength there and if any one-timers that we should be mindful of as we think about modeling it for the rest of the year? Thank you.

Speaker #4: can you maybe just drill down on what drove the strength there and if any one-timers that we should be mindful of as we think about modeling it for the rest of the year?

Speaker #4: Thank you.

Speaker #5: Sure. You know, we have had the view when we acquired the business that this was really well situated to move up market towards, you know, really market it more as a working capital solution for larger organizations.

Tom Priore: Sure. You know, We've had the view when we acquired the business that this was really well situated to move, you know, upmarket towards, you know, really marketed more as a working capital solution for larger organizations. You know, that's just starting. With the numbers you're seeing is that manifesting. Larger customers, larger volumes, you know, utilizing it for both domestic and cross-border opportunities, as a, you know, as a very viable working capital solution that is better priced than Revolver. We think there'll be, you know, there'll be more to come.

Speaker #5: And, you know, that's just starting. With the numbers you're seeing, is that manifesting? So, larger customers, larger volumes, you know, utilizing it for both domestic and cross-border opportunities.

Speaker #5: as a you know, as a very viable working capital solution, that is, is better priced than Revolver. We think there'll be, you know, there'll be more to come.

Speaker #4: Thank you. and if I could just ask a quick follow-up, I know some of your peers have been calling out some margin pressure due to higher memory chip costs for hardware.

Vasundhara Govil: Thank you. If I could just ask a quick follow-up. I know some of your peers have been calling out some margin pressure due to higher memory chip costs for hardware. Just wondering if that's an issue, if that's a concern for you, and if so, is that baked into the outlook? Thank you.

Vasu Govil: Thank you. If I could just ask a quick follow-up. I know some of your peers have been calling out some margin pressure due to higher memory chip costs for hardware. Just wondering if that's an issue, if that's a concern for you, and if so, is that baked into the outlook? Thank you.

Speaker #4: Just wondering if that's an issue that's a concern for you and if, though, is that baked into the outlook. Thank you.

Speaker #5: I, I wouldn't, first of all, y-yes. I mean, that's always a, a focus. I'll just say. But not, due to hardware. you know, these, I'll just say payments generally, of course, you know, as it as it continues to, you know, commoditize in certain respects, you know, it's why the, you know, kind of the breadth of our platform to add payables and other, treasury-oriented tools, you know, is becoming the differentiator, you know, on, on platform.

Tom Priore: I wouldn't. First of all, yes. I mean, that's always a focus, I'll just say, not due to hardware. You know, these, I'll just say payments generally, of course, you know, as it continues to, you know, commoditize in certain respects, you know, it's why the kind of the breadth of our platform to add Payables and other treasury-oriented tools, you know, is becoming the differentiator, you know, on platform. It's definitely not hardware related. You know, it's a condition that we feel really comfortable about mitigating. You know, the devil will be in the details and the work that gets done.

Speaker #5: So, it's definitely not hardware-related, but, you know, it's a you know, it's a it's a condition that, we feel really comfortable about, mitigating. and, but, you know, the devil being the details and, and the work that gets done, Tom Tim, anything you, you feel you want to add, you know, just from a, a, a statistical standpoint, what you're saying?

Tom Priore: Tom, Tim, anything you feel you wanna add, you know, just from a statistical standpoint what you're seeing?

Speaker #6: Yeah. The only thing I'd say is some of the some of the POS equipment we did see price increases and some of the tariffs, that, that impacted, you know, that segment.

Tim O'Leary: Yeah. The only thing I'd say is some of the POS equipment, we did see price increases and some of the tariffs that impacted, you know, that segment. You know, that's a relatively small revenue stream for us. We got ahead of some of that with some equipment purchases before the tariffs kicked in with the last price increase. Overall, it's really not a big impact on the P&L. Most of the margin compression we've seen has been just from a continued mix shift within the business.

Speaker #6: You know, that's a relatively small revenue stream for us. We got ahead of some of that with some equipment purchases before the tariffs kicked in with the last price increase, but overall, it's really not a big impact on the P&L.

Speaker #6: Most of the margin compression we've seen has been just from continued makeshift within the business.

Speaker #4: Got it. Thank you for the color.

Vasundhara Govil: Got it. Thank you for the color.

Vasu Govil: Got it. Thank you for the color.

Speaker #3: Our next questions are from the line of Jacob Stepman with Lake Street. Please proceed with your questions.

Operator 2: Our next questions are from the line of Jacob Stephan with Lake Street. Please proceed with your questions.

Operator: Our next questions are from the line of Jacob Stephan with Lake Street. Please proceed with your questions.

Speaker #7: Yeah. Hey, guys. Appreciate you taking the questions. maybe just first, you know, looking at the EBITDA, number this quarter, you know, it's typically trended above, you know, where historically Q1 is as a percentage for the balance of the year.

Jacob Stephan: Yeah. Hey, guys. Appreciate you taking the questions. Maybe just first, you know, looking at the EBITDA number this quarter. You know, it's typically trended above, you know, where historically Q1 is as a percentage for the balance of the year. Just wondering if you could kinda touch on, you know, how you see the quarterly cadence kinda break down over the remainder of the year.

Speaker #7: Just wondering if you could kind of touch on, you know, how you see the quarterly cadence kind of breakdown over the remainder of the year.

Speaker #5: Sure. Hi, Jacob. yeah. I think our pattern's going to be consistent, right? I think we're obviously continuing to see growth in the business. on the top line, seeing the benefit of, you know, some of the acquisitions from last year along with just, you know, strong organic performance.

Tim O'Leary: Sure. Hi, Jacob. Yeah, I think our pattern's gonna be consistent, right? I think we're obviously continuing to see growth in the business, on the top line, seeing the benefit of, you know, some of the acquisitions from last year, along with just, you know, strong organic performance. You know, we'll expect continued progression through the year. Obviously we've maintained our guidance and, you know, if you take the midpoint of that guidance and, you know, do your own extrapolation, you would expect to see some growth in EBITDA as you move through the year to get to those numbers.

Speaker #5: So, you know, we'll expect continued progression through the year. obviously, we've maintained our guidance and, you know, if you take the midpoint of that guidance and, you know, do your own extrapolation, you would expect to see some growth in EBITDA as you move through the year to get to those numbers.

Speaker #7: Yeah, that, and maybe just on the recurring piece of the business—you know, payables plus treasury—I think at this point it was 65%, excluding acquisitions.

Jacob Stephan: Got it. Maybe just on the recurring piece of the business, you know, Payables plus Treasury, I think at this point it was 65% excluding acquisitions. Do you feel like there's a natural kinda ceiling as to how high, you know, the consolidated number could be? Do you see a path to, you know, even further kinda expanding on that?

Speaker #7: d-do you feel like there's a natural kind of ceiling, as to how high, you know, the, the consolidated number could be? Or, do you see a path to, you know, even further kind of e-expanding on that?

Speaker #5: I think you'll continue to see that number expand. Obviously, the growth we saw this quarter in payables, helped add to that, that figure, right, with 35.6% growth in payables.

Tim O'Leary: I think you'll continue to see that number expand. Obviously, the growth we saw this quarter in Payables helped add to that figure, right? With 35.6% growth in Payables. You'll continue to see that percentage coming from Payables and Treasury Solutions grow over time, right? Obviously, Merchant Solutions continues to grow as well and, you know, we had nice organic and overall growth in that segment. Just that higher growth coming from Payables and Treasury is gonna continue to have that mix shift towards, you know, those higher value segments.

Speaker #5: You'll continue to see that percentage coming from payables and treasury solutions grow over time, right? Obviously, merchant solutions continues to grow as well. And, you know, we had nice organic, and overall growth in that segment.

Speaker #5: But just that higher growth coming from payables and treasury is going to continue to have that makeshift towards, you know, those higher value segments.

Speaker #7: Yeah. That appreciate the color.

Jacob Stephan: Got it. Appreciate the color.

Tom Priore: One other thing I would just point to, Jacob, is if you look at the continued growth in our deposit base, right? That's very intentional that we are focused on segments where, as I said, we're a collect, store, and send platform. That storage piece is a differentiator, so, you know, the more and more we're attaching to segments where storing money is an important part of the value chain, and that money remains in the network and, you know, creates earning streams for ourselves and all our partners, that'll be a substantial catalyst to, you know, the continued recurring contribution growth of those two segments.

Speaker #5: One other thing I would just point to, Jacob, is if you look at the continued growth in our deposit base, right, that-that's very intentional that we are focused on segments where, as I said, we're a we're a collect-store and send platform.

Speaker #5: that storage piece is, is a differentiator. So, you know, the more and more we're attaching to, segments where storing money is an important part of the value chain, and that, that money remains in the network and, you know, creates earning streams for ourselves and all our partners, that'll be a substantial catalyst to, you know, the continued recurring, contribution growth of those two segments.

Speaker #7: Got it. Thank you.

Jacob Stephan: Got it. Thank you.

Speaker #3: Thank you. As a reminder, to ask questions today you may press star one. The next questions are from the line of Brian Bergen with TD Cowen.

Operator 2: Thank you. As a reminder to ask a question today, you may press star one. The next questions are from the line of Brian Bergen with TD Cowen. Please just use your question.

Operator: Thank you. As a reminder to ask a question today, you may press star one. The next questions are from the line of Brian Bergen with TD Cowen. Please just use your question.

Speaker #3: Please proceed with your question.

Speaker #8: Hey, guys. Good morning. So I'll go on the merchant side and see your macro perspective here. So just give us a perspective on what you're seeing across the various industry sectors.

Brian Bergen: Hey, guys. Good morning. I'll go on the merchant side and see your macro perspective here. Just give us a perspective on what you're seeing across the various industry sectors. Any signs of change or inflection in any of those SMB markets that you flagged the last quarter or two that were slower? As you think about in that business too, just the total card volume growth, what's a reasonable run rate expectation on card volume growth relative to the trajectories discussed by the networks?

Speaker #8: Any signs of, of change or inflection in, in any of those SMB markets that you've flagged the last quarter or two that were slower?

Speaker #8: And as you think about, in that business too, just the total card volume growth, what's a reasonable run rate expectation on card volume growth relative to the trajectories discussed by the networks?

Speaker #5: Sure. Thanks, Brian. Yeah, I think some of the trends have been consistent with what we had the last couple of quarters, right? We continue to see a little bit of softness in restaurants, not as much as we had over the last two quarters on a year-over-year basis.

Tim O'Leary: Sure. Thanks, Brian. I think some of the trends have been consistent from what we had the last couple quarters, right? We continue to see a little bit of softness in restaurants. Not as much as we had over the last 2 quarters on a year-over-year basis, if you think about the change year-over-year, but certainly down a little bit from last year, and then down a little bit from Q4 as well, just given some of the seasonality you get with restaurants in Q4. Construction was also still a little bit soft, and then legal services was down as well. Where we saw strength was real estate, as we continue to expand some of our property management solutions and real estate tech.

Speaker #5: If you think about the change, year over year, but certainly down a little bit from last year, and then down a little bit from Q4 as well, just given some of the seasonality.

Speaker #5: You get with restaurants in Q4, construction was also still a little bit soft, and then legal services was down as well. where we saw strength was real estate, as we continue to expand some of our, our property management solutions and real estate tech continue to see growth there, which I would argue is more, us taking share than it is, you know, the market necessarily continuing to grow in real estate.

Tim O'Leary: Continue to see growth there, which I would argue is more us taking share than it is, you know, the market necessarily continuing to grow in real estate. I think that's a positive for us. We also saw, you know, very strong growth and, you know, nice improvement in retail trade, specifically with areas like auto and gas, with gas prices being up, as well as into food stores and grocery, with inflation having a benefit there as well.

Speaker #5: So I think that's a positive for us. And then we also saw, you know, very strong growth in, you know, nice improvement in retail trade, specifically with areas like auto and gas, with gas prices being up, as well as into food stores and grocery, with inflation having a benefit there as well.

Speaker #8: Okay. And as far as that card volume growth level, the two and a half relative to kind of what the use of MasterCard talked about, what's a what's a reasonable i-is we kind of build models and think about run rate expectations.

Brian Bergen: Okay. As far as that card volume growth level, the 2.5, relative to kinda what Visa and Mastercard talk about, what's a reasonable, as we kinda build models and think about run rate expectations, where do you feel like that can go?

Speaker #8: Where do you feel like that can go?

Speaker #5: I think that's a, a normalized level of, of organic growth from a, a card volume standpoint, right? I think we've seen the last several quarters, probably a little bit of a delta between what even some of the banks are reporting from issuing volume and what the networks are reporting from a volume growth compared to where some of the, the other acquirers are showing volume growth.

Tim O'Leary: I think that's a normalized level of organic growth from a card volume standpoint, right? I think we've seen the last several quarters probably a little bit of a delta between what even some of the banks are reporting from issuing volume and what the networks are reporting from a volume growth, compared to where some of the other acquirers are showing volume growth. I think our numbers are relatively normalized, right? Organically, you know, we're a little north of 2%, right? The delta there is, you know, the acquisitions, you know, late last year. I think we're modeling, you know, something in that same, you know, kinda low, low single-digit, you know, organic volume growth range as we got to our guidance for the year.

Speaker #5: So, I think our numbers are relatively normalized, right? Organically, you know, we're a little north of 2%, right? The delta there is, you know, the acquisitions.

Speaker #5: You know, late last year, but I think we're modeling, you know, something in that same, you know, kind of low, low single-digit, you know, organic volume growth range as we got to our guidance for the year.

Speaker #8: Okay. Okay. That's clear. and then on payables, so really strong growth there. I'm curious if the underlying activity you're seeing is, is signaling anything to you in, in the customer base or, or if it's really just the, that movement up market that's really driving that strength.

Brian Bergen: Okay. Okay, that's clear. Then on Payables. Really strong growth there. Curious if the underlying activity you're seeing is signaling anything to you in the customer base or if it's really just that movement up market that's really driving that strength. You start the year strong, you affirmed the guide. I think you were thinking that segment would be like an 8% to 10% grower. Any caveats there as you move through the balance of the year for Payables?

Speaker #8: And you, you start the year strong. You affirm the guide. I think you were thinking that segment would be like an 8% to 10% grower.

Speaker #8: Any caveats there as you move to the balance of the year for payables?

Speaker #5: I think the growth there is—it's twofold. It's continued solid growth in our historical core, in that business, combined with Tom's point earlier, the upside we're starting to see from some of these large, enterprise-sized customers that we've onboarded here more recently.

Tim O'Leary: I think the growth there is twofold. It's continued solid growth in our historical core in that business, combined with Tom's point earlier, the upside we're starting to see from some of these large enterprise-sized customers that we've onboarded here more recently. It took some time to get those relationships integrated and up and running, but now that we're seeing the benefit of that, you know, the growth rate here, you know, has definitely improved. You know, I don't think there's nothing really in those numbers that is one time in nature. We did have a solid quarter relative to some of our supplier enablement business, but that's gonna continue to have a solid trend line as well.

Speaker #5: It took some time to get those relationships integrated and up and running, but now that we're seeing the benefit of that, you know, the growth rate here is definitely improved.

Speaker #5: Yeah, I don't think there's anything really in those numbers that is one-time in nature. We did have a solid quarter relative to some of our supplier enablement business, but that's going to continue to have a solid trend line as well.

Speaker #3: Thank you. At this time, I'll turn the floor back to Tom for closing remarks.

Operator 2: Thank you. At this time, I'll turn the floor back to Tom for closing remarks.

Operator: Thank you. At this time, I'll turn the floor back to Tom for closing remarks.

Speaker #8: operator, I think that's.

Tom Priore: Operator.

Speaker #3: that was the last question. Yes. Yes. Please go ahead, Tom, with your closing comments.

Operator 2: That was the last question. Yes. Yes, please go ahead, Tom, with your closing comments.

Operator: That was the last question. Yes. Yes, please go ahead, Tom, with your closing comments.

Speaker #8: Yeah. We, we can end the call there, operator.

Tom Priore: No, we can end the call there, Operator. Thank you.

Speaker #3: Okay. Thank you. Thank you, everyone, for joining us today. This, this will conclude today's conference. You may disconnect your line at this time. Thank you for your participation.

Operator 2: Thank you. Thank you everyone for joining us today. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Operator: Thank you. Thank you everyone for joining us today. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.