8-K: Priority Technology Holdings Announces Secondary Offering and Preliminary Q4 2024 Results

Priority Technology Holdings has commenced a secondary offering of common stock by selling stockholders and released preliminary financial results for the quarter ended December 31, 2024.

Summary

• Priority Technology Holdings has initiated an underwritten secondary offering of 9,157,600 shares of its common stock, with selling stockholders potentially granting underwriters an option to purchase an additional 1,373,639 shares.
• The company will not receive any proceeds from this offering, as all net proceeds will go to the selling stockholders.
• Preliminary financial results for the three months ended December 31, 2024, estimate revenue between $225.2 million and $227.2 million.
• Adjusted Gross Profit is estimated to be between $82.7 million and $86.5 million.
• Adjusted EBITDA is projected to be between $49.7 million and $54.1 million.
• These preliminary results are subject to change and have not been audited by Ernst & Young LLP.
• The company's full year 2025 outlook includes revenue growth between 10% and 14% compared to fiscal year 2024 results, with an adjusted gross profit margin between 37.5% and 39.0% and an adjusted EBITDA margin between 22.5% and 24.0%.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the announcement of a secondary offering, which can be seen as a sign of growth and investor interest, coupled with the release of preliminary results that are within the expected range. However, the lack of audited results and the potential for actual results to vary introduces some uncertainty.

Positives

• The company has a unified commerce engine that combines merchant services, payables, and banking & treasury solutions.
• Priority has a highly visible revenue model with a large portion of revenue being recurring or re-occurring.
• The company has demonstrated strong top and bottom-line growth.
• Priority has a unified and efficient technology platform that drives high cash flow conversion.
• The company has a strong free cash flow conversion rate of approximately 89% year-to-date in 2024.
• Priority has a disciplined financial policy with a strong balance sheet and a proven ability to de-lever.
• The company has a founder-led management team with significant ownership and is aligned with shareholder interests.
• Priority has significant acquisition experience and a track record of growth and profitability.

Negatives

• The preliminary financial results are subject to change and have not been audited.
• The company's actual results may vary from the estimated preliminary results.
• The company's preliminary estimated results are not necessarily indicative of future results.
• The secondary offering dilutes existing shareholders ownership.

Risks

• The secondary offering is subject to market and other conditions, and there is no assurance as to whether or when the offering may be completed.
• The company's actual financial results may differ from the estimated preliminary results due to the ongoing financial closing procedures.
• The company's future results are subject to various factors, including those discussed in the Risk Factors section of their SEC filings.
• The company's forward-looking statements are subject to significant business, economic, and competitive risks and uncertainties.

Future Outlook

The company anticipates revenue growth of 10% to 14% for the full year 2025 compared to 2024, with an adjusted gross profit margin between 37.5% and 39.0% and an adjusted EBITDA margin between 22.5% and 24.0%.

Management Comments

• The company's management believes that the use of non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends of the Company.
• The company's management has provided estimated ranges, rather than specific amounts, because these results are preliminary and subject to change.

Industry Context

The announcement of a secondary offering and preliminary financial results is typical for publicly traded companies, especially those in the fintech sector, as they seek to raise capital and provide updates to investors. The company operates in the payments and banking solutions space, which is a competitive and rapidly evolving industry.

Comparison to Industry Standards

• Priority Technology Holdings is the 6th largest non-bank merchant acquirer in the U.S., according to the Nilson Report, March 2024.
• The company's focus on a unified commerce engine is similar to other fintech companies that aim to provide comprehensive solutions to businesses.
• The company's growth in adjusted EBITDA and free cash flow conversion is comparable to other high-growth fintech companies.
• The company's shift towards recurring revenue is a common strategy in the software and payments industry to improve revenue predictability and stability.
• The company's acquisition strategy is similar to other companies in the sector that seek to expand their market reach and product offerings.

Stakeholder Impact

• Shareholders may experience dilution due to the secondary offering.
• Selling stockholders will receive the net proceeds from the offering.
• Employees may be impacted by the company's performance and growth.
• Customers will continue to receive the company's services and solutions.
• Suppliers and creditors will continue to engage with the company.

Next Steps

• The company will complete its financial closing procedures for the three months ended December 31, 2024.
• The company will finalize its actual financial results for the quarter.
• The company will complete the secondary offering, subject to market conditions.
• The company will continue to execute its growth strategy and focus on achieving profitable growth and enhancing shareholder value.

Key Dates

Keywords

secondary offering, preliminary results, financial results, adjusted EBITDA, adjusted gross profit, revenue, fintech, payments, banking, commerce engine