Earnings call transcript Q4 2022

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Operator

Good morning and welcome to the Priority Technology Holdings Fourth Quarter and Full Year 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Chris Kettmann. Please go ahead.

Chris Kettmann

you us. thank and morning for joining Good With Executive and Officer are Tom Tim and Chief Priore, Chairman of Chief Officer. me Financial today O'Leary, Priority Technology Holdings;

a remind the remarks, undertakes detailed new Before materially result you our statements from to no The risk that which of filings. as statements. today I may all number forward-looking participants to company SEC a our statements, obligation encourage otherwise. discussion a and and review our would will filings various of we forward-looking revise include future provide forward-looking that prepared or or differ the events factors like risks information, in these give involve to cause comments we whether update We our of results to uncertainties actual

measures Additionally, liquidity to our refer EBITDA non-GAAP adjusted available EBITDA not website. measures, of and section SEC to the but measures in performance our the be and filings the of including our we may Investors Reconciliations GAAP found call. in can during press and release limited to, non-GAAP appropriate

that, would With the and CEO, to call Tom I Priore. turn our to over like Chairman

Tom Priore

full joining Thank thanks and to quarter everyone earnings XXXX for you, our fourth for and Chris year call. us

and would into our into current performance financial absorb XXXX. to going the Before few results, like projected takeaways you a QX the about I key highlight business as trends

market consistently in and in performing BXB First anticipated, Payments. way acquiring growing Enterprise share is and foremost, the strengthening and business SMB we producing results the

positioned lines benefit current we're driving rates of the conditions environment. in from to and macroeconomic turmoil, higher the are to our that and interest recent strength companies back banking on While we're response paring countercyclical business economic the other forward uncertain

continued outperforming not our the have metrics are only we in improve. our business peers to key Second, but

in accelerate proving service Our decision full and quarter and commerce API in XXXX Last, to Passport, we combining representative XXXX as first our XXXX. growth margin featured in to is trends a the somewhat year seen our rates investment unified are prescient. of expansion have payments date full banking

recent struggle businesses of the sector and prices in the sizes. Given banking of of banks confidence the among all general

more say but current fuel new and in store Passport will the on years to toward quarters pace our to partners suffice speak detail and the this send call that adoption of the of conclusion results I'll of topic ahead. collect, in money

a With let's dig the that backdrop, into numbers. as

you with out saw earnings XXXX. to momentum strong our close an As fourth we a in continued release, quarter positive our strong exceptionally

year a which $XX.X Our to fourth $XX gross quarter prior to in improvement XX% the million led million. record to a $XXX.X increase revenue in million EBITDA a increased adjusted from XX% to and XX% profit

million XXX in and purpose-built $XXX.X demonstrating gross adjusted our of margin our points for XX.X% gross XX% target operating leverage basis the Adjusted the with platform. within by in increased XX%, and adjusted $XXX XX% and gross to adjusted For revenue profit in Full million, year, grew year year organically the XXXX, from million full fourth XX.X% increased XXXX. of reaching both EBITDA EBITDA XXXX. at coming profit quarter growing $XXX.X the

I As in and fourth our anticipate business earlier our performance strong will we that quarter noted, continue. established channels trends

year to $XXX million and expecting $XXX to line the million and XXXX. consistent of As top $XXX deliver $XXX growth of projecting we bottom line EBITDA revenue to such, double-digit adjusted million for are full million

Combining company, and functionality robust that our of the new platform X Slide For commerce payments monetize serve. the collect, proprietary store and architecture you send highlights who to merchant money. banking those purpose-built unified to the to of networks is are we

software payments businesses combining funds and reinforce and accelerate and of environments as to demands be providers. belief both our payment Our features systems customers solution the will distribute multiparty on cash conditions critical market to current to and banking continue that put flow greater

We meeting for X, priority growing partners easy and simplifying working with demand X. as by experience as are committed customer to our making X, their the

or MX the suite, business FI customer adopting select via an market choose the application from small simply enterprise connecting Passport needs CPX They tools MX and partner for best that us the to fits that Partners API. middle merchant move an fit best money. is or their their automated our a payables to business, financial POS begin choosing that and operator whether a

further segment point, quarter and like performance over upcoming for to year. during guidance level who the in year, insights I'd each this provide it that full along our At Tim, to our hand inform current the trends will fourth into with

Tim O'Leary

Thank morning, you, good Tom everyone. and

quarter the review consolidated level I the contribution MD&A the results, As please details. segment or slides the to financial full refer the further fourth including year supplemental results, for and to

on Our full MD&A provide is also was results. the in with XX-K discussion and our SEC comparative year Form that our link morning of website. found included the filed a to can that this be filing A

all those I results. do the before to level year already full had across segments fourth for mentioned, metrics of I a segment time quarter periods. performance want full to the it for financial the spoke business details, the that we Tom provide to both highlights key both financial Tom As But reiterate and consolidated I into relates as strong year. few go the in won't other

bankcard size $XX dollar For roughly year, transactions and to in million growth had all We volume in in XX% X% billion. segments just $XX.XX. across under growth full count had transaction bankcard the ticket XXX average to to XX.X% we almost growth

If other are Again, ACH, and the for for include debit the business. consolidated $XXX.X billion. metrics total volumes, was payment all volume you the those year

fourth detail the the go business for of on more now each quarter. results segments into I'll

SMB XX. with on start payments Let's Slide

segment from was was in combination the almost quarter. slightly revenue X% transaction was quarter, an driven offset approximately million entirely by increase the XX% in just was and of $XX.X $XX.XX and prior that over which by billion of count which a in bankcard ticket For of average over the dollar $XX quarter organic volume in to growth This bank had $XXX a growth over fourth growth X% decline fourth of fourth roughly size to strong XXXX. included year's card

with fourth XXXX. by average new trends X,XXX month in That of monthly per quarter finished from compares per We merchant where just of growth the an month was year. quarter continued represents The merchant from X% of increase of of for about and over the also the prior driven to boards per strong which boarding an quarter. averaged X,XXX average XXX,XXX count a the merchant This growth XXX,XXX of which X% for XXXX all XXXX. an throughout average QX was quarter the was merchants count X,XXX in month

SMB down on P&L next moving but the on to with page Continuing focus the profitability.

basis decrease We performance million profit in with adjusted gross also gross increasing adjusted point saw margins. a profit $XX a strong XXX despite to XX%

more prior larger As result we've driving reseller a partners, commissions. to but of also as the on discussed residual those see continued some calls, portfolio higher partners generally our compression growth acquiring margin the of across receive

income Lastly, XX% SMB, leverage million segment. $XX of quarterly for almost result operating as by to within operating a increased business the

of revenue generated To million wind with wind for the quarterly put on down over average the of in which from decrease revenue XXXX. the half in Moving quarter that decrease October. to wind of $XXX,XXX $X.X BXB to program fourth the Services help revenue context, XX% the Services Managed result payments. fourth of We XXXX certain Managed over million was down This $X.X its compares programs the That of customer. in quarter XXXX. first of in due was discussed a in quarter final fourth as to previously large a down the the reduction had just in of of completed

forward, that be expect of legacy a Going Services generated Managed see will some nominal by smaller programs. we to amount revenue

quarter. The and grown CPX CPX business almost fueled incentives. quarter flat X% was for growth but million was timing the on revenue in of issuing of Focusing by in XX% the within for XXXX under relatively QX in impacted from just at Normalizing negatively would in to have ACH certain was growth CPX BXB, X% in QX XXXX $X.X due to it volume volume. growth the that, the

on see margin BXB's over the gross declined quarter the as adjusted result during profit Services XX% a percentage Managed XX by down to business rolled increased margin Services gross wind Managed by XX, respect how lower the With of points but adjusted the also can Slide profitability profit as you off.

of be the loss the segment operating the reduced. $X.X certain For P&L has as been costs removed but QX fully Managed had to related to million the able in an quarter, BXB program since weren't from Services

$XX.X next $XX.X page. the of on of $X.X revenue of was in QX XX% segment from million an Enterprise XXXX. or QX increase million the million to Moving

quarter clients build growth. I the entirely interest the the acquisition growth organic enrollments the quarter represents and rates September was almost XXXX, of of the all the from performance result and so XXXX. any As also Favorable benefit contributed grow-over of third in from CFTPay QX fourth a in reminder, in growth trends rising in revenue not increase of and is QX highlight the new the strong sequential number of timing. that XX% would year-over-year acquired to

the expenses segment enterprise going profit from forward. basis XXXX. the the excited experience this to growth on and in shown XX expenses by primarily by its on next of XX% from and remain XX%. growth revenue profit growth an for million the from benefited and This exemplified margins investments change are gross strong XX% the in revenue leverage to Page by We As is made increased increase for Operating inherent segment page, expanded for adjusted adjusted the business in opportunities XXX% Enterprise to totaled segment year. points and income XX.X%. XXX quarter, the earnings Operating gross resulting to million as both shown $XX.X by $XX.X technology operating personnel increased driven support by also compared the in of prior

on is a QX The in team with and compared approximately Salaries our the QX do in wage million focused XXX and from operating the to in and was in in just were end an been with employees, both $XX.X result we salaries the including under headcount added in roughly and XX% technology. of from of investments benefits increased to and only broader QX the We as development XXXX. highlight and modest made I the headcount and trends. at across increases India date which increases from of as both extracting that increase company to in a macro India. in U.S. of leverage XXXX benefits the industry remain million both consistent QX that XXX growth XXX have center increase supported $XX.X $XX.X million finished want

spend on focus QX growth. and of But drove level cost of investment in consistent in the drive we efficiencies. $X.X that nonrecurring increased levels my from the Depreciation will would increased Power continue that benefits, of million Priority XXXX. to on than QX operating $XX highlight expansion was expenses, Again, million the and I following continued in expenses with due last in from to with modestly for our XX% salaries marketing SG&A lower combined million certain $X.X comments almost the structure QX September. to million of order business that lower year. hosted we quarter the amortization Conference roll-off $X the

Interest was Moving for of down I'll quarter amortization. of and floating full levels items walk from million million QX this interest consolidated The and of net also the impact million rising are our increase year results. but to XXXX quarter interest the $XX.X QX debt. start Working an given the of QX nature back expense of discuss the rate income to the next the of added XXXX. XX% increase $X.X was million slide, expense slide. which depreciation the from $XX.X largest an existing Adjusted environment with for in EBITDA EBITDA on $XX.X the obviously is rate and

hedge On calls were to almost the the on from given that for rate floating able natural do Enterprise debt would we topic, have the I interest XX% the reiterate segment. of generate that place a we prior income in in deposits

component natural our the floating hedge cover of stock, of the rate about preferred the XX% liabilities. from floating rate deposits include you our If

for EBITDA adjustments other consists of compensation adjusted million nonrecurring $X.X at include million of noncash arrive stock and expenses. approximately to certain noncash QX adjustments further The $X or of which

of back of the adjusted of interest noncash $X.X or an million $X.X expenses. stock expense, full million For other EBITDA expense $XXX.X for million and nonrecurring add year, of million includes noncash compensation $XX.X

XX. Moving outstanding Page to slide on debt the

million debt the during You'll shares and year-over-year declined during the of and $XXX.X investments $X.X of quarter and net is we gross also net business million X.X the finished note of in that quarter fourth our million levels continued full the This PRTH reduction after of debt with repurchasing $XXX.X and million debt. year.

quarter million our of revolver. liquidity have that addition standpoint, would $XX.X credit the cash sheet we on $X at to borrowing we subsequent in the another quarter I down under facility a of balance had on QX's to unrestricted million From end, $XX.X note capacity revolving million also end. paid

On Slide of component. on on a million XX, just our December is PIK of costs stock preferred comprised million net and discounts balance is accretion at of our $X.X and discounts and unaccreted of issuance is $X.X sheet issuance million $XX.X XX with of fourth the totaled costs. preferred supplemented in The paid income of $XXX.X $XX.X That statement of the and over $XXX,XXX. million cash dividend million quarter

be and XX% can million revenue the on back adjusted the growth in over I range of EBITDA to turning and the for million $XXX guidance XX call Before growth to in the Slide strong Tom, revenue year XX% trends address further in continued are to on to which our for Based business, full $XXX year. to found the XXXX forecasting we a presentation. wanted

As XXXX. already I the should overall made during mentioned lead expansion call, in XXXX previously the are we and throughout on to focused technology which team investments on the margin leveraging

range EBITDA a million of result $XXX the will As to a XX% which year. to full XX% growth forecasting are $XXX we adjusted for million in result, of

BXB's growth but growth partners margin in show more having the of apart, larger also the growth continued Services. see in double-digit drive higher anniversary Services compression will you from by break given skewed for line segment margin business. the growth the the in we forecasting Managed modest of compared should the to we continued expect to to SMB CPX to top our that also continue revenues as profile be we're to runoff that Managed CPX result margin expect expansion from If in but some to reseller portfolio continue growth

growth growth, the Enterprise forecast the XXXX. to account to of in XXXX, XXXX. its exit from is second expect half continue for consistent margin rate have already expectations tempered in to Enterprise with the Lastly, we the strong throughout bit profile although a we Further, segment its experienced remain

turn now his Tom I'd that, closing like to comments. call over the for With to back

Tom Priore

Thank you, Tim.

significant like speak points during up, made one discussion. to Before I'd wrapping more we our to of the QX

would back as in to deliver proprietary guidance, stating believe full it, offering will we investment in called accelerate of slightly as banking of a development XXXX, the our Passport lead benefit shareholders enterprise bottom During to SMB payment to result the feature our out and initiatives years. Priority into native half suite in lower to solutions we the and accelerating decision well banking our outside line in that product our of BXB partners that, markets coming

single, a businesses or a the most self-service financial can easy-to-use embedded debit great commonly customer of the their bank. conventional and hassle platforms winners order will We a take the convenient hold suite account, likely needs conclusions open can They finance across services, fewer choose full McKinsey embed with regulatory provide payments also highlighted high-volume including deposit easy servicing operation predict By They research into platform, hand. and higher oversight, logging card may to as model compliance, trends and through embedded some products a interact a that seamless, from should platforms. Bain financing about for e-commerce upper origination experience. and firms, bigger their banking and fulfillment, out integration enablers that never of of and they touch that or a leading accounting the in referred to into finance. research meet Their up small today reflected starting

more of regulatory crisis speed flow alternative offer system deliver. businesses that Well, platforms to cannot confidence traditional that system will cash diversification of of the and banking certainly transparency, recognition, solutions support greater the drive in current risk banking

and future the Our systems are current test ready built under this for proving fire. for are

and compliance, to addition to robust handling security for checks, needs of started. e-mail and wires customers forms and account lockbox credit, an all get payments, yes, In opening process ACH, self-directed capabilities debit, Passport's only even

can FASB, set account AML less Our KYC XX and than process in minutes. an up

SVB the set failures, account signature weekend the and up during can of accounts averaged instantly. established, virtual new minutes. setup In their time customers Once own X near fact,

regulated Importantly, Passport insured FDIC syndicated to accounts. our [indiscernible] are licensed ratable by funds all fully institutions banking transmitter states, and a money in in as and the partner maintain

stronger the economic and recent the Albert Einstein of as famously opportunity. of the the pandemic even banking will COVID said emerge midst that and lies in We're well we present turmoil did every and confident great pressures the in following from that crisis prepared inflation downturn. the we for just have system height

benefit and banking our of by and into conditions opportunities igniting peers banking our solutions of the keenly the wake in uncertainty remain the even macroeconomic our emerging investment secure the confident many current need. and on system reduce that from As commerce convergence positioned to focused payments execution. of and We're fears. in more We transparent businesses today's worrisome from providing unified investments

time than my human committed the In is no We priority. products power customer results. is want to Priority the deliver today's that's day support day passion all and call for closing, to of at and our to unwavering colleagues you and greater our acknowledge out. great passionate and analysts. and ongoing to driving in Thank continue your to your to are focus you market-leading exceptional deliver you continue There appreciate experience work and the participate deliver taking and the I mission investors who fully in passion power

call open like questions. for now the we'd Operator, to

Operator

is The Alliance Instructions] from Brian Global first question Partners. of Kinstlinger [Operator

Brian Kinstlinger

the banking-as-a-service calling for that's on platform. I've platform. unified details the primers all believe been what Thanks I

going customer? what's about initial you How last about new outside assuming adoption as beta the as talked product And then is quarter. was the it this offering? imminent we of launched, So acquisition talk for process that's customer this early platform can right,

Tom Priore

more intel because very Yes, it's May beta rolling in so we're banking the broad our been and honestly, quite sector. we'll it enterprise sure, It's of been SMB all segment. The SMB, a Brian. the hitting a already having base judicious it's We've mean, segment. really into -- into about look, and out. been and on fully focused June We're acquiring being customers latter the just launched and turmoil more recent how far, on test into initially the I that SMB good be of launched on the part BXB smooth. focused gathering more

So a examples, -- stated SEB we them just folks were needed to credentials AML with move give permission for had or you account up to we and -- who minutes. they them of were of of established, setup get checks, set to all KYC, couple with kind funds get a of there, just signature. And average X lot out do get time

to So had the at know for were They operate through volume. portal API multibillion-dollar many And integrating don't players to XX it's and moving folks I up platforms level. API. of pretty -- up hours. we're instead payment that in equipped And of, let's say, all set our their our it do that are operations. were these chose how testing through setting accounts and We would physical transactions

partners integrated a prime process. or robust -- it's and already time. It a it's So process fast for got integrating in of ready the either of -- or pipeline is enterprise

Brian Kinstlinger

in so minutes. to you they in X and it challenges those backlog? had As and companies to Or set SBB with Were familiar working up quickly? signature that had that your were do move customers already banks become those were that how to and able familiar relates

Tom Priore

us, familiar but I they familiar doing existing we're that not were with mean they relationships were were what they -- to customers. we're

Brian Kinstlinger

to gears switching CPX. then And it. Got

should talk scale? you X% I think and business think But you thought is you what's faster bottleneck? year of when personally over if and years. investors could a going at this how be from Maybe about any, expect have least it this growth onboarding And in would what, had larger that about growth. expected, on there much the volume, become might how the I terms payments it growing were I clear

Tom Priore

or Look, existing growth very during in -- saw the good we growth of if last Sure. like you a years. of wallet think the couple share logos

the instance had was we've made, FIs set did their the and So volume been And to more of converting sales some seen -- is we and up, customer due some Premier portfolios. the it's certainly, that have had some implementation where great platform, have Healthcare, so break that's inertia -- our longer which GPO. level. of harvesting slower got already that relationships with. that and cycle much folks are The sales the and cycles been Those of anticipated we've been for contracted is to than at -- sales we're we've through to due technology not satisfied on not

the new we And salespeople. is thing we've then, X brought look, other done just in

KYC highly needed been of the sales mean right? and their a and system, did supplier permission of call or least and not into can AML -- checks on technological instantly, all components which information, they think felt supplier we've that place could take accounts information a I that, is I So them network expanding and We think few right? it, have upload Passport we about WX your so wallets in salespeople experience minutes, noted, put Take more effective. we in the all supplier the to I'll run our right? you your the some on banking-as-a-service supplier and component, be we as buyer

of it, different gathering vastly by that a experience I'll out to going information That's way old supplier. sell the school call supplier than

with we very have now selling that efforts platform done the optimistic expand available broadly BXB. that to being So we're about of waited this success sales. to We've complete and and those

Brian Kinstlinger

Great.

clear, date, unchanged. the quarter, or you be right? of acquiring, that heard quickly in the generally just longer are last the first to I even acquiring to years have seen in X trends I Just X on comment merchant but merchant Is to the think

Tim O’Leary

correct. That's

expect through that quarter volumes strong to seen we've balance here. first the continue the Now X and of the full through months

Brian Kinstlinger

merchants to you accelerate side? Are sustain take acquiring? to sales to become you do eventually investments much have you on merchant And you're making the the larger, more of it -- What do acquirers number might the merchants growth. as

Tom Priore

the of any we couple that to right? have. We'll embedded the about revenue We a So of all, first influence rolling this that out right? and start in segment, Well, things merchant segment let's base that just, segment, finance/banking going into are talk all out. to set roll that to on built. These money invest to that's have are to things that single need the don't within merchant call are next X Passport platform They're a Every our will weeks. month account, it go.

So be our there. revenue will account

be Now needs it just to activated, okay?

As fund offer to X. call receive the it what instantly, ability gets we'll them activated, funds in we

minutes If get authorization gateway, you're and soon instant to the authorize your elect you our as on X you funding, gateway. processing through as money in transactions have you of

If there's you're get costs. MX you a card, that spend gateway when using money debit but from your merchant day in you batch. money And suite, customer if same on no there you're Passport you you'll leave a account not close our and your

money particularly submit transparent and which environment, reporting account. FDIC modern having is given going this that's think, to are sweep in acceleration. insured be be, that to account, need. an -- in there'll And right? they And -- what look, If these businesses want in it particularly they're fee, value we you you, things want banking So current cash have add, pretty an external I sense that ratable They environment, a would high clear the a is we transparency. this to they're

just example. that's one So

ability things through from of there, again, host just that And lenders borrow building that, on approved whole to having from account. the funds we'll without to to additive become of do margin us keep other a course, lot. And

things already been growth, can to partners in share see which distribution an now ourselves and So happen. of segment. positioned lead these have you make They've profitably performance. our very opportunity more from that made. We're one in to provide is I as with place. per investments think acquiring profitability both SMB future that's should that happen the made our growth And need The to been services merchant to overall have we wallet

would I that's X. Phase say So really

my where because area boards, consistently in see above merchant of of We're a month. or have Priority. winning. health have X,XXX what retail other realizing serving, the care, And you verticals salons, lot boarding my The is, specific hey, tools. real more estate, we're that It's that's portfolio have better they're are just just can trade. worth merchant software-based the new They merchant hospitality, this a new that our tools trends I'm right? boards is are more -- at partners. Because merchants whether we at They to

we their value have for they these longer. to tailored and ability them fees for business merchant see start adding vertical now very merchants We ways stick partners. banking is worth Their inject to just And so more around software Priority; the you lines, portfolio enrich that more portfolio with drive from at reseller services. so

Brian Kinstlinger

Okay.

Tom Priore

I now, mean that is what's happening right Brian.

Brian Kinstlinger

Right. Two numbers questions.

XXXX? EBITDA benefits you change expenses guidance than salary interest kind can interest revenue assume expense I adjusted for will trend rising then and to from that, be and You help grow with the slower than highlighted revenue obviously, will expect rates, you that growth. salary and with benefits unrelated And the faster Do XX%, what us of up growth? your

Tim O’Leary

Sure. Yes.

the salary benefit on Brian, side. So and

to really different made they over already really finished to I We're pretty was to as from and of those right? right? going growth where call, investments out levels date, about increase. and year. we're going salary modest, only to QX an we've monitor than continue continue on $XXX,XXX the the keep the benefit QX, you mentioned to saw So the So manage no sequential That

to a there growth line. you'll slow we as rate think the much to than more growth bottom the see line want and I top So lower that at down more of

as but EBITDA projections part margin think that detailed Obviously, So happening is view I that's on you didn't expansion your the growth. the can accurate. provide see we guidance of between

Brian Kinstlinger

On expense? the interest

Tim O’Leary

Yes.

interest So expense, obviously, debt is floating today on rates. the our all

debt But an I and the on So we've tops SOFR Fed mentioned. itself, this or interest natural out on finishes depending got off. where the as hedge from the expense year where LIBOR

increase We've part by rising the for year. expense we're a some standpoint the then. right? each estimating from of the think rates, of is But that's and large number we've of additional at $XXX of a deposit hedge somewhere income. right? quarter the Obviously, $XXX,XXX low interest to in interest So you are that obviously, in roughly and of think a year. rates, right? point rates mid-$XX interest lot year of big with X.XX sit balance, income, today, interest the deposits saw has float, offsets last that end increase year per the So since about of expense the bump in where about benefit late or interest given the grown That I off million if gotten income of year-over-year a out we see there so meaningful of million in we the got in that offset should that

Operator

[Operator Matthew The Howlett question comes with Riley. Instructions] B. next from

Matthew Howlett

what with year. I'm margin sort can Are continue Enterprise sort you about quarter, -- why guidance, company-wise, It's the is mean, sort say 'XX I something us margin give trying accelerate. so, [ph] a of you wouldn't of Just did you But -- out just transitional XX%. to just kicks that what back in, it not fourth If mean, what I know Payment was -- get you. of the the contemplates I as some in upside guidance 'XX some of rollout. that holding where what's to

get guidance in margin the of that of Just segment. to enterprise part the more and

Tim O’Leary

joining Yes. the to, call. I Matt. No, appreciate happy you

enterprise other, So continue will couple against a work obviously, there's right? that to think I there grow. factors So each

year We from in debt government they accounts to that expanded stay go finished the consistent into the expect settlement monies with effort. as of and I of depleted to last had they to year, business a part the first year a out the lot stimulus were pretty compared really growth the had processes think where of that half second of half those that of consumers' lot margins

think growth I the in So, year. there accelerated second of half the really the

offsetting last So of that same continue of the growth but I think continue from saw we is the of you some to And half at margin first within not you'll second year. right? compression, see to rate SMB the half portfolio, then into expect that some XXXX maybe

the of they faster partners portfolio, reseller some you'll see grow So than continue compression higher balance to residuals. of as the that the there extract larger given

Services X the in offset. profit business, in then albeit is a Managed 'XX. impact but in dollar on smaller off rolling amount gross that obviously, help that should And dollar segment BXB those So a margins

Matthew Howlett

there the the other do of how -- I'll company it? at enterprise any ask you high It really long-term bit not investors What's the percent to you think margin it. one, a held that. get could appreciate sounds ramped XX-plus do of that with to -- XX%? the longer the the see of term, like adopt where it. going XX%, be side reason be SMB looking merchants I But is when is because margins XX look more product, Maybe banking-as-a-service back

Tom Priore

approach taking the will, a bottom if just have we'll you your we're see X judicious on God's flows of line. as your because kind your all and -- better ears, within those clarity to to But Look, right, to impact Yes. we from that mouth segments. the the observation, adoption

$XX $XX, a profitability because that dynamic interchange right? on the using card extra issuer, an account debit spending generates it, that we're banking going the making call their making, and to their to per they're of funds we're change merchant. where per per if month, the it collecting So Passport services as are merchant That's

we got products deliver a leverage the lot inherent in of operating there's So business. think it. to the We've on

evaluation metrics. adoption. analytically will say, I'll we'll point. answer have at have better, a And very we beyond, occurs, to that theoretical it will driven as because drive It your -- we'll question to move this a Now, have

we're why representing time. it that's trying to So at judicious what a this about bit is be

Matthew Howlett

that. appreciate I

you [indiscernible]. they explode And And I'm holding any it update it, certainly sounds just here up impressive just is if an would and signing be of little back like a then I people the that's companies maybe in -- and CFTPay? -- sort sorry update look at in the at 'XX in. Payment new and on like I'm terms Enterprise some point guidance on going? should 'XX of really bit how look on but missed when that card with Just CFTPay you're are potential at instead the where kicks there there. margins you looking confirm investors

Tom Priore

Sure.

it So it's -- relative put I'll in terms. look,

to the Tim's consumers -- debt. that, help But healthy it's money the sure. because, to -- who to outset that negotiate we electing because to benefit of I'll very that but consolidate program year not a -- do licensed resolutions just platform. know operate again upside others And space, like, consumer be it, call And them there we just since which on say, they're we distribution a ago. don't a look, certain about of consumer that we potential models. our comment, in customers doubled, trends the this It's considerate There's them we incremental very the that's are a of were it, prior help who trends The in of are a I doubles and are it the on think Probably space for sits us year? or at not to not. is pretty unlike they're being segment, candid considerate move wellness participants at have call boarding basically look COVID. for let's rate. their transmitter you platform of into within, If wellness want

think to modest who in time. have I is right see what the integrated They the our banking-as-a-service growth picking leveraging seen segment over of but that kind we technology. So, some partners be logo winners tend by are you'll but

So those we the see from partners. growth

Operator

Priore question-and-answer our back concludes This the to closing over turn remarks. session. Tom would like conference for I to

Tom Priore

not that businesses to we the you we economy about in your reinforce holds, can some we're just growing platform to and join see provider given built why want what the the of future the that also work. capitalize we very taking now next of say did we And call, a thank need that better the we aspects think support can but seeing we're solution of excited we going to to to wanted particularly in the in Well, right. everyone probably year to we're we It's to times be built and ongoing the nature a the Priority. just transitional dislocation that for time on. these to banking industry the for that it All that are opportunity to put

thank all and the you to everyone thanks listening. colleagues to So Priority

care, the get Take done. everybody. job go Let's

Operator

has Thank conference for you concluded. attending now presentation. The today's

disconnect. now may You

Priority Technology (PRTH) 23 Mar 232022 Q4 Earnings call transcript