Priority Technology NASDAQ: PRTH reported higher first-quarter revenue and profit as growth in its Payables and Treasury Solutions businesses continued to outpace its Merchant Solutions segment, management said on the company’s earnings call.
Chairman and Chief Executive Officer Tom Priore said the company delivered “strong growth in both revenue and profits” during the first quarter. Net revenue rose 11% year over year to $249.6 million, while adjusted gross profit increased 13% to $98.8 million. Adjusted EBITDA also rose 13% to $58.1 million, and adjusted earnings per share increased 27% to $0.28.
Priority ended the quarter with 1.8 million total customer accounts on its commerce platform, up 50,000 from the end of 2025. Annual transaction volume increased by $3 billion from year-end to $153 billion, and average account balances under administration rose by more than $100 million to $1.8 billion.
Payables and Treasury Solutions Drive Growth
Chief Financial Officer Tim O’Leary said consolidated revenue growth of 11.1% included organic growth of 9.1%. He attributed the performance to 35.6% growth in Payables, 17.5% growth in Treasury Solutions and 6.7% reported growth in Merchant Solutions, which included 3.9% organic growth.
O’Leary said adjusted gross profit from the Payables and Treasury Solutions segments represented 63% of Priority’s total adjusted gross profit for the quarter and 62% on a trailing 12-month basis. Excluding acquisitions, those figures would have been 66% for the quarter and 65% for the trailing 12-month period.
Adjusted gross profit margin expanded by more than 70 basis points from the prior-year quarter to 39.6%. O’Leary said the improvement reflected growth in higher-margin Payables and Treasury Solutions, along with the impact of acquisitions completed in the second half of 2025.
Merchant Solutions Posts Modest Organic Growth
Priority’s Merchant Solutions segment generated first-quarter revenue of $161.8 million, up $10.1 million, or 6.7%, from a year earlier. O’Leary said the increase reflected 3.9% organic growth, supplemented by the Boom Commerce and DMS acquisitions completed in the second half of 2025.
Total card volume in Merchant Solutions was $18.1 billion, up 2.5% year over year. The segment averaged 175,000 merchant accounts during the quarter, down from 178,000 a year earlier, while new monthly boards averaged 2,800.
Adjusted gross profit in Merchant Solutions rose 10.8% to $36.7 million, and gross margin increased more than 80 basis points to 22.7%. O’Leary said the margin improvement was tied to the Boom Commerce and DMS acquisitions, partially offset by higher-than-normal credit losses during the quarter. Adjusted EBITDA for the segment increased 7.9% to $27.7 million.
During the question-and-answer portion of the call, O’Leary said Priority continued to see some softness in restaurants, construction and legal services. He said the company saw strength in real estate, which he attributed partly to expansion in property management solutions and real estate technology, as well as stronger trends in retail trade, including auto, gas, food stores and grocery.
Payables Growth Accelerates
The Payables segment reported revenue of $32.4 million, up 35.6% from the prior-year quarter. Buyer-funded revenue rose 37.1% to $25.4 million, while supplier-funded revenue increased 30.6% to $7 million.
Adjusted gross profit in Payables increased 26.4% to $9.2 million. Gross margin was 28.4%, down 210 basis points from the prior year. O’Leary said the decline was largely due to a continued revenue mix shift toward buyer-funded revenue, which is reported at lower gross margins because of GAAP requirements to recognize revenue on a gross rather than net basis.
Adjusted EBITDA in Payables increased 55.1% to $5.5 million. O’Leary said the faster EBITDA growth reflected operating leverage, including a 3% year-over-year reduction in operating expenses before depreciation and amortization.
Asked about the Payables segment’s strength, Priore said the business has moved upmarket as a working capital solution for larger organizations. He cited larger customers and larger volumes, including domestic and cross-border uses, and said the solution is “better priced than Revolver.” O’Leary added that the growth reflected both the historical core business and recently onboarded larger enterprise customers, and said there was nothing in the quarter’s Payables numbers that was one-time in nature.
Treasury Solutions Benefits From Enrollment and Balances
Treasury Solutions revenue increased 17.5% year over year to $58.8 million. O’Leary said growth was driven by enrollment trends, more than 1.1 million billed clients enrolled in CFTPay, a 28% increase in integrated partners and same-store sales growth from existing Passport program managers.
O’Leary said higher account balances in CFTPay and Passport more than offset the impact of lower interest rates compared with the prior-year quarter. Adjusted gross profit in the segment increased 12.8% to $52.9 million, while adjusted gross profit margin was 89.8%.
The segment’s gross margin declined about 370 basis points from the prior year because of mix shift, including more than 140% revenue growth in Passport and 170% revenue growth in Priority Tech Ventures, both of which operate at lower gross margins than CFTPay. Treasury Solutions adjusted EBITDA rose 10% to $46.7 million.
Guidance Maintained as Liquidity Improves
Priority maintained its full-year financial outlook. The company continues to expect revenue of $1.01 billion to $1.04 billion and adjusted EBITDA of $230 million to $245 million.
At quarter-end, Priority had $1.02 billion of debt and more than $192 million of available liquidity, including $100 million of borrowing capacity under its revolving credit facility and $92.2 million of cash. The company generated $28 million of free cash flow in the quarter, based on adjusted EBITDA of $58.1 million, less $5.5 million of capital expenditures, $21 million of interest expense and $3.6 million of income taxes.
For the trailing 12 months ended March 31, adjusted EBITDA was $232 million, and net debt was $927.8 million. O’Leary said net leverage was 4 times at quarter-end, down from 4.2 times at the end of the fourth quarter. Including the run-rate EBITDA impact of acquisitions, pro forma net leverage would have been 3.8 times.
Management also addressed potential margin pressures tied to equipment costs and tariffs. Priore said margin pressure was “definitely not hardware related,” while O’Leary said some point-of-sale equipment price increases and tariffs had affected that segment, but that it represented a relatively small revenue stream and was “not a big impact on the P&L.”
About Priority Technology NASDAQ: PRTH
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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