Priority Technology Holdings Reports Record Revenue and Strong Growth

Priority Technology Holdings ((PRTH)) has held its Q4 earnings call. Read on for the main highlights of the call.

Priority Technology Holdings recently held its fourth quarter 2024 earnings call, which was characterized by a generally positive sentiment. The company reported record-breaking revenue growth and significant improvements in adjusted EBITDA, alongside strong performances in key business segments. However, these achievements were slightly offset by challenges such as a substantial inventory write-off in the SMB segment, increased interest expenses, and a disclosed material weakness in internal controls.

Record Revenue Growth

Priority Technology achieved its strongest revenue performance in history for both Q4 and the full year 2024, with net revenue growing by 16%. This impressive growth underscores the company’s ability to expand its market presence and capitalize on its strategic initiatives.

Significant EBITDA Improvement

The company reported a 21% growth in adjusted EBITDA for the full year 2024, highlighting strong operational performance. This improvement reflects effective cost management and enhanced profitability across the business.

Strong Performance in Enterprise Segment

In Q4, the Enterprise segment saw a remarkable 27% increase in revenue, driven by robust enrollment trends and a rise in integrated partners. This segment’s success is a testament to Priority Technology’s strategic focus on expanding its enterprise solutions.

Positive B2B Segment Growth

The B2B segment also experienced growth, with a 10.9% increase in Q4 revenue. Notably, Plastiq revenue rose by almost 8%, and CPX grew by 26%, indicating strong demand for the company’s B2B payment solutions.

Debt Reduction and Financial Flexibility

Priority Technology made strides in improving its capital structure by redeeming its preferred stock and making a $10 million prepayment on its term loan balance. These actions enhance the company’s financial flexibility and position it well for future growth.

Inventory Write-Off in SMB Segment

The SMB segment faced challenges with a $3.5 million write-off of obsolete inventory, which negatively impacted gross margins. This issue highlights the need for improved inventory management practices.

Material Weakness in Internal Controls

The company disclosed a material weakness in internal controls over financial reporting. Management is actively working to address and remediate this issue to ensure robust financial governance.

Increased Interest Expense

Interest expenses rose by $2.5 million in Q4 due to higher debt levels. This increase reflects the company’s ongoing efforts to manage its capital structure amid rising interest rates.

CapEx to OpEx Shift Impacting Expenses

Priority Technology is transitioning certain platforms to the cloud, which is expected to increase operating expenses by approximately $4 million in 2025. This strategic shift aims to enhance operational efficiency and scalability.

Forward-Looking Guidance

Looking ahead, Priority Technology provided guidance for 2025, projecting top-line revenue growth of 10% to 14%, with expected revenues ranging from $965 million to $1 billion. Adjusted EBITDA is anticipated to grow between 8% and 13%, reaching $220 million to $230 million. Despite potential macroeconomic challenges, the company remains optimistic about sustaining momentum across its segments, driven by its unified commerce platform.

In conclusion, Priority Technology Holdings’ earnings call highlighted a positive outlook with record revenue growth and strong segment performances. While challenges such as inventory write-offs and increased interest expenses were noted, the company’s strategic initiatives and forward-looking guidance suggest continued growth and resilience in the coming year.