Priority Technology (NASDAQ:PRTH) Releases Quarterly Earnings Results, Beats Expectations By $0.03 EPS

Key Points

• Priority Technology beat quarterly expectations, reporting adjusted EPS of $0.29 versus the $0.26 consensus and revenue of $262.3 million versus $257.8 million expected. Revenue rose 9.4% year over year, while adjusted EBITDA increased 6% to $59.4 million.
• Payables and Treasury Solutions led growth, with revenue up 21.6% and 14.9%, respectively, but margin pressure intensified because of lower-margin business mix, higher network costs and investments in newer products.
• Management maintained its full-year revenue guidance of $1.01 billion to $1.04 billion and expects to reach the high end, while targeting the low end of adjusted profit and EBITDA ranges. Quarterly free cash flow reached $27.4 million, and net leverage declined to 3.8 times.

Priority Technology (NASDAQ:PRTH - Get Free Report) announced its quarterly earnings results on Thursday. The company reported $0.29 earnings per share for the quarter, topping analysts' consensus estimates of $0.26 by $0.03, FiscalAI reports. The company had revenue of $262.26 million during the quarter, compared to analysts' expectations of $257.81 million. Priority Technology had a negative return on equity of 83.50% and a net margin of 5.85%.

Here are the key takeaways from Priority Technology's conference call:

• Q2 financial performance was solid, with revenue up 9.4% to $262.3 million, adjusted EBITDA up 6% to $59.4 million, and adjusted EPS up 12% year over year to $0.29. Customer accounts rose nearly 13% to 1.8 million, while annual transaction volume increased 8% to $151 billion.
• Payables and Treasury Solutions remained the primary growth engines, with revenue increasing 21.6% and 14.9%, respectively; Merchant Solutions revenue grew 7.7%, including 4.5% organic growth. Management highlighted enterprise wins and partnerships with organizations including the Pittsburgh Steelers and Texas Rangers.
• Margin pressure intensified in Payables and Treasury Solutions. Payables gross margin fell 760 basis points due to lower-margin enterprise and buyer-funded business, higher interchange costs, and gross revenue accounting, while Treasury margins declined as faster-growing Passport and Priority Tech Ventures products carry lower margins.
• The company maintained full-year revenue guidance of $1.01 billion to $1.04 billion and expects to reach the high end, but it anticipates the low end of its $405 million to $425 million adjusted gross profit range and $230 million to $245 million adjusted EBITDA range because of mix, network-cost, and investment pressures.
• Priority generated $27.4 million of quarterly free cash flow and reduced net leverage to 3.8 times from 4.0 times in Q1. Management plans to prioritize continued deleveraging through 2026 while selectively evaluating tuck-in acquisitions.

Priority Technology Price Performance

Shares of Priority Technology stock traded down $1.28 during midday trading on Thursday, hitting $5.38. 1,622,850 shares of the company were exchanged, compared to its average volume of 286,368. Priority Technology has a 52 week low of $4.44 and a 52 week high of $8.59. The firm has a 50 day simple moving average of $6.64 and a 200-day simple moving average of $5.84. The firm has a market cap of $443.10 million, a P/E ratio of 7.58 and a beta of 1.57.

Institutional Trading of Priority Technology

Hedge funds have recently modified their holdings of the company. Invesco Ltd. acquired a new stake in Priority Technology during the 4th quarter valued at $58,000. Beartown Capital Management LLC bought a new position in Priority Technology in the fourth quarter valued at about $2,180,000. Boothbay Fund Management LLC boosted its holdings in Priority Technology by 86.3% in the fourth quarter. Boothbay Fund Management LLC now owns 297,144 shares of the company's stock valued at $1,619,000 after acquiring an additional 137,605 shares during the last quarter. FourWorld Capital Management LLC acquired a new stake in Priority Technology in the fourth quarter worth about $2,007,000. Finally, Jain Global LLC bought a new stake in Priority Technology during the 4th quarter worth about $111,000. Institutional investors and hedge funds own 11.52% of the company's stock.

Analyst Upgrades and Downgrades

A number of analysts have recently weighed in on PRTH shares. Zacks Research cut shares of Priority Technology from a "strong-buy" rating to a "hold" rating in a research note on Friday, July 10th. Alliance Global Partners lowered Priority Technology from a "buy" rating to a "neutral" rating and set a $7.00 price target for the company. in a report on Thursday. Wall Street Zen cut Priority Technology from a "strong-buy" rating to a "buy" rating in a research report on Saturday, August 1st. Finally, Weiss Ratings restated a "hold (c)" rating on shares of Priority Technology in a research note on Wednesday, June 24th. Two analysts have rated the stock with a Buy rating and four have given a Hold rating to the company. According to MarketBeat.com, the company presently has a consensus rating of "Hold" and a consensus price target of $8.40.

About Priority Technology

Priority Technology Acquisition Corp is a special purpose acquisition company formed to effect a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization or similar business combination with one or more businesses in the technology sector. As a blank-check company, it does not conduct any operations of its own and holds the proceeds from its initial public offering in a trust account pending the identification and completion of a business combination.

The company’s management team is focused on evaluating target businesses that offer scalable technology products or services, including software, digital platforms and related infrastructure.

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