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Priority Technology Holdings Inc (PRTH)
NASDAQ:PRTH
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Priority Technology Holdings
(NASDAQ:PRTH)46Neutral
Positive Factors
Financial Performance
All segments registered double-digit organic revenue growth and EBITDA profitability in Q4.
Valuation
Priority's shares are seen as undervalued compared to competitors, with a strong potential for price appreciation.
Negative Factors
Revenue Expectations
Revenue for Q4 is expected slightly below consensus.
Priority Technology Holdings (PRTH) vs. S&P 500 (SPY)
Market Cap
$568.96M
Dividend YieldN/A
Average Volume (3M)656.89K
Price to Earnings (P/E)―
Beta (1Y)1.70
Revenue Growth16.08%
EPS Growth31.91%
CountryUS
Employees983
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)-0.31
Shares Outstanding79,519,230
10 Day Avg. Volume742,509
30 Day Avg. Volume656,892
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.69
Price to Cash Flow (P/CF)6.40
P/FCF Ratio7.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$13.33Price Target Upside86.17% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
Priority Technology Holdings Business Overview & Revenue Model
Company DescriptionPriority Technology Holdings, Inc. (PRTH) is a provider of merchant acquiring and commercial payment solutions, operating primarily in the financial technology sector. The company offers payment processing services, enterprise software solutions, and various other technology-driven services aimed at enhancing business efficiency and customer engagement. Priority Technology Holdings serves a diverse clientele, including small and medium-sized businesses, financial institutions, and enterprise-level organizations.
How the Company Makes MoneyPriority Technology Holdings generates revenue through various streams, primarily from payment processing fees, software as a service (SaaS) subscriptions, and value-added services. The company earns transaction fees each time a payment is processed through its systems, making it a critical partner for businesses needing efficient and secure payment solutions. Furthermore, Priority offers subscription-based software solutions that provide businesses with tools for financial management, accounting, and customer relationship management. Additionally, the company forms strategic partnerships with financial institutions and other technology providers to expand its service offerings and market reach, thereby contributing to its revenue growth.
Priority Technology Holdings Financial Statement Overview
Summary
Priority Technology Holdings shows strong revenue growth but faces challenges with profitability, negative equity, and significant liabilities. Cash flow is positive, yet reliance on external financing poses liquidity risks.Income Statement
Priority Technology Holdings shows strong revenue growth with an increase from $663.6M in 2022 to $879.7M in 2024. However, the company experiences volatility in profitability; net income remains negative despite an increase in EBIT. EBITDA margin decline from 2023 to 2024 is notable, indicating rising operational challenges.45
Neutral
Balance Sheet
The balance sheet reflects a concerning financial position with negative stockholders' equity in 2024, driven by significant liabilities. The debt-to-equity ratio is not meaningful due to negative equity, and the equity ratio is similarly concerning. The high level of liabilities poses a risk to financial stability.30
Negative
Cash Flow
Cash flow analysis reveals positive operating cash flow and free cash flow in recent years, with a stable operating cash flow to net income ratio. However, the free cash flow growth rate is modest, and substantial financing cash flows indicate reliance on external funding.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 879.70M | 755.61M | 663.64M | 514.90M | 404.34M | Gross Profit |
| 879.70M | 275.31M | 226.89M | 155.02M | 126.97M | EBIT |
| 133.42M | 81.52M | 56.16M | 33.09M | 20.86M | EBITDA |
| 184.27M | 151.66M | 126.57M | 82.31M | 167.57M | Net Income Common Stockholders |
| 24.02M | -1.31M | -2.15M | 1.39M | 71.06M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 58.60M | 39.60M | 18.45M | 20.30M | 9.24M | Total Assets |
| 1.83B | 1.62B | 1.37B | 1.35B | 417.83M | Total Debt |
| 9.50M | 638.68M | 605.13M | 610.30M | 377.31M | Net Debt |
| -49.10M | 599.07M | 586.67M | 590.00M | 368.07M | Total Liabilities |
| 1.99B | 1.50B | 1.24B | 1.21B | 516.39M | Stockholders Equity |
| -166.84M | 110.89M | 131.54M | 145.92M | -98.56M |
| Cash Flow | Free Cash Flow | |||
| 63.92M | 60.00M | 51.64M | -49.80M | 34.05M | Operating Cash Flow |
| 85.61M | 81.26M | 70.52M | 9.38M | 47.07M | Investing Cash Flow |
| -35.55M | -55.75M | -36.50M | -451.03M | 166.40M | Financing Cash Flow |
| 147.58M | 210.10M | 8.50M | 871.63M | -175.81M |
Priority Technology Holdings Technical Analysis
Negative
7.16
Price Trends
10.22
Negative
9.00
Negative
7.17
Negative
Market Momentum
-0.64
Positive
27.84
Positive
9.57
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PRTH, the sentiment is Negative. The current price of 7.16 is below the 20-day moving average (MA) of 10.25, below the 50-day MA of 10.22, and below the 200-day MA of 7.17, indicating a bearish trend. The MACD of -0.64 indicates Positive momentum. The RSI at 27.84 is Positive, neither overbought nor oversold. The STOCH value of 9.57 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PRTH.
Priority Technology Holdings Risk Analysis
Priority Technology Holdings disclosed 27 risk factors in its most recent earnings report. Priority Technology Holdings reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Priority Technology Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $12.43B | 23.89 | 34.88% | 0.70% | 11.19% | 51.03% | |
77 Outperform | $123.28B | 31.97 | 83.72% | 1.87% | 7.09% | 11.51% | |
74 Outperform | $33.91B | 12.03 | 14.50% | ― | 10.06% | 38060.98% | |
73 Outperform | $24.04B | 16.35 | 6.94% | 0.99% | 4.68% | 63.39% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
51 Neutral | $37.75B | 50.26 | 4.65% | 2.02% | -17.38% | ― | |
46 Neutral | $568.96M | ― | 57.39% | ― | 16.08% | 31.91% |
* Technology Sector Average
Performance Comparison
PRTH
Priority Technology Holdings
7.16
4.03
128.75%
ADP
Automatic Data Processing
302.99
62.19
25.83%
FIS
Fidelity National Info
71.27
2.64
3.85%
GPN
Global Payments
93.25
-38.67
-29.31%
PAYC
Paycom
217.02
31.64
17.07%
XYZ
Block
54.74
-26.97
-33.01%
Priority Technology Holdings Earnings Call Summary
Earnings Call Date: Mar 6, 2025 | % Change Since: -21.15% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive sentiment with record-breaking revenue growth, significant improvements in adjusted EBITDA, and strong performances across key business segments. However, challenges such as a substantial inventory write-off in the SMB segment, increased interest expenses, and disclosure of a material weakness in internal controls slightly offset these achievements.Highlights
Record Revenue Growth
Priority Technology achieved the strongest revenue performance in its history for both Q4 and the full year 2024, with net revenue growing by 16%.
Significant EBITDA Improvement
Adjusted EBITDA grew by 21% for the full year 2024, indicating strong operational performance.
Strong Performance in Enterprise Segment
Q4 revenue in the Enterprise segment increased by 27%, driven by strong enrollment trends and an increase in integrated partners.
Positive B2B Segment Growth
B2B segment revenue increased by 10.9% in Q4, with Plastiq revenue up almost 8% and CPX growing by 26%.
Debt Reduction and Financial Flexibility
The company redeemed its preferred stock and made a $10 million prepayment on the term loan balance, improving the capital structure.
Lowlights
Inventory Write-Off in SMB Segment
The SMB segment was negatively impacted by a $3.5 million write-off of obsolete inventory, affecting gross margins.
Material Weakness in Internal Controls
Priority Technology disclosed a material weakness in internal controls over financial reporting, which management is actively working to remediate.
Increased Interest Expense
Interest expense increased by $2.5 million in Q4 due to higher debt levels.
CapEx to OpEx Shift Impacting Expenses
The migration of certain platforms to the cloud is expected to increase operating expenses by approximately $4 million in 2025.
Company Guidance
During Priority Technology's fourth quarter 2024 earnings call, the company provided guidance for 2025, projecting a top-line revenue growth of 10% to 14%, bringing expected revenues to a range of $965 million to $1 billion. Adjusted EBITDA is anticipated to grow between 8% and 13%, reaching $220 million to $230 million. Despite potential headwinds such as lower interest rates and a challenging macroeconomic environment, the company remains confident in sustaining momentum across its segments due to the value delivered by its unified commerce platform. In 2024, Priority reported a 16% increase in net revenue and a 19% growth in adjusted gross profit, with adjusted EBITDA rising by 21%. The company ended the year with approximately 1.2 million total customer accounts and processed over $130 billion in annual transaction volume, reflecting a strong performance driven by its diverse product offerings in acquiring, payables, and enterprise segments.Priority Technology Holdings Corporate Events
Executive/Board Changes
Priority Technology Holdings Announces Board Changes
Neutral
Feb 27, 2025
On February 26, 2025, John V. Priore announced his resignation from the Board of Priority Technology Holdings, effective April 1, 2025. His departure was not due to any disagreements with the company. Clayton Main, an experienced executive with over 20 years in leveraged financing and structured equity investments, will replace Priore on the board. Main’s appointment is expected to bring valuable expertise to Priority as it seeks to optimize its capital structure and explore growth in new enterprise payment verticals.
Private Placements and Financing
Priority Technology Holdings Announces Public Stock Offering
Neutral
Jan 17, 2025
On January 15, 2025, Priority Technology Holdings entered into an underwriting agreement for a public offering of 9,070,643 shares of its common stock, priced at $7.75 per share, with a 30-day option for underwriters to purchase an additional 1,360,596 shares. The offering, closed on January 17, 2025, resulted in net proceeds of approximately $67.49 million for the Selling Stockholders, though the company itself did not receive any proceeds. The agreement included a 90-day lock-up period for the company’s directors, executive officers, and selling stockholders, aligning with typical obligations under the Securities Act.
Private Placements and FinancingFinancial Disclosures
Priority Technology Holdings Announces Stock Offering and Q4 Estimates
Neutral
Jan 15, 2025
On January 15, 2025, Priority Technology Holdings announced the commencement of an underwritten secondary offering of its common stock by certain selling stockholders, who will receive all net proceeds. The company also provided estimated preliminary financial results for the fourth quarter of 2024, with revenues ranging between $225.2 million and $227.2 million, adjusted gross profit between $82.7 million and $86.5 million, and adjusted EBITDA between $49.7 million and $54.1 million. These figures are subject to change upon the completion of financial closing procedures, and investors are advised not to place undue reliance on these estimates.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.