Priority Tech Holdings Q2 2026 Earnings Call: Complete Transcript

Priority Tech Holdings (NASDAQ: PRTH ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

The full earnings call is available at Summary Full Transcript OPERATOR Good morning and welcome to the Priority Tech Holdings second quarter 2026 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions.

To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Megan Mayra.

Please go ahead. Megan Mayra, Investor Relations Good morning and thank you for joining us. With me today are Thomas Priore, Chairman and Chief Executive Officer of Priority Tech 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. 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 investor 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 Tech Holdings' financial and operating results. In our case, 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, Thomas Priore.

Thomas Priore — Executive Chairman & Chief Executive Officer Thank you, Megan, and thanks to everyone for joining us this morning for our second quarter 2026 earnings call. I'll begin today's call by highlighting our aggregate second quarter performance and outlook before handing the call over to Tim, who will provide segment-level performance, key trends, and developments across our business segments and Priority Tech Holdings overall. This morning we reported solid growth in both revenue and profits for the second quarter, as summarized on slide 3. 29.

8 million total customer accounts operating on our platform, which is up almost 13% from Q2 last year. 8 billion compared to last year's second quarter. Tim will provide more context on the full-year outlook later in the call, but I can reflect that the value of our diverse partners and customer experience with our unified platform provides continued confidence that we will sustain the momentum in our Merchant Solutions, Payables, and Treasury Solutions segments.

Based on this momentum, we are maintaining our full-year financial guidance but expect to be at the higher end of our revenue range and lower end of our gross profit and adjusted EBITDA ranges, reflecting continued investment and mix-related margin pressure that Tim will detail. 3 million increased 9% from the prior year. 4 million. 5 million.

For those of you who are new to Priority Tech Holdings, slides 6 and 7 highlight our vision for connected commerce. The platform is purpose-built to streamline collecting, storing, lending, and sending money. It delivers a flexible financial tool set 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 get a deeper appreciation of why customers are consistently partnering with Priority Tech Holdings to reach their commerce goals and why we're emerging as a go-to solution provider for embedded commerce and finance solutions. Slide 7 highlights a typical partner experience with our APIs and orchestration capabilities for payments and treasury solutions. They enable partners to use a commerce surface tailored to their specific needs.

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 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.

Our focused execution explains why Priority Tech Holdings consistently performed across varying economic cycles. Our customers and current market conditions reinforce our belief in our mission to deliver single-point commerce solutions that provide businesses with one view and total command of their financial environment. At this point, I'd like to hand it 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 second quarter results and our confidence for sustained performance in 2026. Tim O'Leary, Chief Financial Officer Thank you, Tom, and good morning, everyone.

2% on a consolidated basis. 5% organic growth. Strong continued growth in payables and treasury solutions resulted in 66% of our total adjusted gross profit coming from those two segments when you compare to trailing twelve-month results on an organic basis. Moving now to the segment-level results in more detail, I'll start with Merchant Solutions on slide 9.

7%, higher than last year's second quarter. 5% organic growth complemented by the Boom and DMS acquisitions completed in the second half of 2025. As a reminder, and as we move into the back half of the year, we'll have partial third quarter impact from Boom, which closed on August 18th last year, and Q4 will then provide a clean year-over-year comparison, as the DMS acquisition closed on October 1st of last year. 6% from the prior year.

Within that aggregate volume, we saw overall strength in wholesale trade and retail, but it was a mixed bag within the broader retail category as convenience stores, gas stations, and food stores were up, while home furnishings and building materials were down. We also continued to see some softness in construction and restaurants, which improved from Q1 but were down on a year-over-year basis. 4%, from Q2 of last year. 7% are over 100 basis points higher than the comparable quarter last year due to the Boom and DMS acquisitions, partially offset by the impact of higher residual expenses in the portfolio.

3%, compared to last year. 6% higher than Q2 of last year. 1 million. 4% decrease from the prior year.

4%, which is down 760 basis points compared to last year's second quarter. The decline is the result of larger enterprise-level customers operating at lower overall initial margin profiles, increased card network and interchange expenses, and continued shift in revenue mix with buyer-funded revenues reported at lower gross margins. 5%, decrease from last year. Operating expenses before D&A were down slightly in the quarter compared to last year, with the decline in adjusted EBITDA resulting from the lower gross margin in the buyer-funded business unit.

9%, over the prior year. 1 million, combined with a 30% year-over-year increase in the number of integrated partners, along with organic 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 Q2 of last year. 5% for the quarter.

Second quarter gross margins were approximately 590 basis points lower than the prior year due to continued mix shift resulting from over 125% revenue growth in Passport and almost 400% revenue growth in Priority Tech Ventures, both of which operate at lower gross margins than the CFTPay platform, where margins have remained very stable. 3% year over year, as high single-digit growth in CFTPay was partially offset by investments we continue to make in newer vertical software assets within Priority Tech Ventures. 7%, compared to Q2 of last year and was up slightly on a sequential basis compared to Q1.

The year-over-year increase was primarily driven by an increase in acquisition-related headcount additions. 8%, compared to Q2 of last year, and was down sequentially compared to Q1. The year-over-year increase was because of higher cloud and software expenses, an increase in marketing spend, and certain non-recurring legal and transaction-related expenses. Depreciation and amortization was higher this quarter related to the accelerated depreciation of certain DMS assets.

Going forward, we expect quarterly D&A to return to more normalized levels. 3 million of cash on the balance sheet. 8 million of income taxes. 8 times at quarter end, which is down from 4 times at the end of Q1.

75x at quarter end. From a capital allocation standpoint, we will focus on continued deleveraging throughout the balance of 2026, but we'll also continue to evaluate tuck-in acquisitions in attractive verticals or new markets. The last topic I'll address before turning it back over to Tom relates to our financial guidance for the full year. 04 billion and expect to be at the higher end of that range.

As noted earlier, we are seeing some margin pressures across all three operating segments related to business mix, higher residual expenses, increased card network and interchange expenses, and continued investments in new vertical software assets in Priority Tech Ventures. Considering these factors in tandem with strong revenue expectations, we are maintaining our forecasted gross profit range of $405 to $425 million and our adjusted EBITDA range of $230 to $245 million, and we expect to be at the lower end of those respective ranges. As we move through Q3 and have enhanced visibility into our full-year results, we will provide further guidance on our Q3 earnings call.

With that, I'll now turn the call back over to Tom for his closing comments. Thomas Priore — Executive Chairman & Chief Executive Officer Thank you, Tim. Before concluding, I wanted to reflect on observations we shared during our Q4 2025 earnings call. During it, I noted our continued focus toward optimizing the Priority Commerce engine and API as a foundational moat, purpose-built to operate core payments and financial workflow applications in our key industry verticals.

Leveraging our Commerce engine for payments and treasury solutions, we can deliver one view of a business's financial environment with total command of their cash flow. Customers can see all modalities of payments reconciled in a single view and utilize sophisticated banking and treasury tools to optimize their working capital without the responsibilities of managing compliance, regulations, or risk. We continue to build out the surface layers for these key verticals and are seeing the success of this focus as just a few examples. Priority Commerce Sports continues to accelerate.

We recently announced the Pittsburgh Steelers as our first NFL franchise and the Texas Rangers in Major League Baseball, with others across all five major sports leagues waiting in the wings to go live. In a recent press release, Doug Stover, Vice President of Finance for the Pittsburgh Steelers, summarized how our Commerce platform is serving the changing expectations of finance teams in sports for more connected financial operations. He noted Priority Commerce offered the combination of payments technology and Passport, treasury orchestration, and collaborative approach we were looking for, making them the clear choice.

As another example, Priority Commerce Automotive is now the endorsed partner by 19 state automotive dealership associations, with Florida and California recently announcing their support. Additional enterprise wins we've gathered in areas like hospitality and healthcare reinforce our belief in the appeal of our connected payments and treasury capabilities to solve operational pain points and deliver new revenue opportunities to our customers. And needless to say, executing our vision for the future of commerce cannot be manifested without the focused execution of my colleagues at Priority, who continue to work incredibly hard to deliver results.

Your commitment and dedication to continuous improvement is providing our partners and customers with a consistent reminder that they made the right choice to partner with Priority. Last, we continue to appreciate the ongoing support of our investors and analysts, and for those in attendance who are new to Priority, for taking the time to participate in today's call. Operator, we'd like to now open the call for questions. OPERATOR Thank you.

We'll now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two.

At this time, we'll pause momentarily to assemble our roster. And our first question comes from Wasu Govil from KBW. Please go ahead. Wasu Govil, Analyst at KBW Hi, thank you for taking my question.