Hi, everyone. I'm Rayna Kumar, and I lead this Fintech Equity Research Effort here at Oppenheimer. Today I am happy to have Priority Technology Holdings CEO, Tom Priore. Tom, thanks for joining. Yeah, Rayna, thanks for having me. Great. I'm going to go through some of my questions, but Tom and I do want to make this as interactive as possible. If you do have any questions, feel free to type it in the dashboard, and I'm happy to read out questions throughout this presentation. Tom, could you just start out for people who are new to the story, if you can give a background of yourself on Priority, and maybe talk a little bit about the services you provide, who your typical customers are, and what you're trying to solve for them? Yeah, sure. We're a 20-year-old company. In fact, this month is our 20-year anniversary. We've evolved over that time. I think we squarely fit into the definition of a payments and banking fintech at this point. We've scaled across three business segments dedicated to solving money movement. We've built a single, what we call, commerce engine to collect, store, lend, and send money across traditional merchant acquiring, B2B payables, as well as what we call enterprise payments, which a lot of folks would sort of maybe put into the kind of large-scale ISV. The reason why we distinguish that or kind of in that way is we're not just payments. Our platform not only moves money in all routes, so credit, debit, ACH direct to Fed, but we also handle checks, wires, everything in terms of moving the money in. We have that same engine as virtual card and physical card issuer. We can administer payments with metadata that is important for construction or healthcare or other areas like that, for payables. Our ISV partners use all those utilities to power their commerce networks that include not just money in motion, which is kind of the standard for a lot of payments companies, but also money, what I'll call money at rest, so storing that money for a moment before it gets dispersed. It's really that capability that's allowed us to operate across segments. I would consider us more of a multi-line business. As a result, within the segments I mentioned, acquiring, B2B, and enterprise payments, we have different competitors that we'll run into. The very traditional acquirers on one segment, like your Fiservs, your Globals, Global TSYS, even some of the downstreams, your Paysafe of the world, and payables, more like the Avids, Corpays, Bottoml ines. On the enterprise side, we'll run into your Adyens and Stripes. That diversification, we think, has really given us a growth advantage, particularly in the current environment. In terms of scale, we do about $150 billion, $140 billion as of our most recent quarterly release last week in terms of annual payments volume, about 1.4 million customer accounts. I called out that money at rest at any given day. As of last quarter, we had about 1.6 billion in customer accounts and $1.4 billion in money under administration, so average daily deposit balance. Understood. That's very helpful. Can you talk a little bit about your revenue model? What are the largest drivers there, and how do you get paid? Sure. Look, we're a transaction-based company. We're providing that platform I just described as a service across these verticals. Our money comes from transaction processing, as well as software and platform fees. I think one of the things that people should understand about Priority, which is a little different, about 60%, now over 60%, 62% of our adjusted gross profit comes from recurring revenue or recurring gross profit. This is non-transaction fees, which we can count on every month. When you look at our recurring, so all those transaction fees, 98% of our revenue, we have high visibility into when January 1 comes around. Understood. If you can talk a little bit about your current market penetration, customer growth, retention rate, and if you can quantify the TAM for us. We operate across the segments I described of, let's just say broadly, consumer payments, right? Consumers to business, C to B, and then B2B. Our platform not only enables our software, which is being used by our customers to power these things, as well as other third-party software providers plugging into our system. If you look at the TAM of that, just in the U.S., domestic, B2C is a $6 trillion market. Large TAM, the other advantage to that is it's largely digital. We're not competing, I'll just say, with non-digital forms of payment there for the most part. We're just looking to grab market share. You can look at our stats and our growth last quarter and last year has been consistently in high single, low double digits on that side of our business, which is outpacing our peers. That tells us we're gaining market share. We've got a tool set that's winning. On the B2B side, that's a massive TAM. Just domestically, that's 3x the size of the B2C market. It's just shy of $20 trillion. That is largely underpenetrated, certainly relative to consumer for digital acceptance. Probably about 50%. The overwhelming majority of that is probably traveling ACH. It's not traveling the card rail. There's a lot of penetration, adoption that is available in that marketplace. I think you've seen, if you look at some of the transactions lately that have been B2B related, Avid, Bottoml ine, all these take privates. That's an area of the market that's really accelerating. If you look at our most recent quarterly performance, that sector of our business, gross profit grew on an annualized basis of 30% year- over- year. Gross profit, EBITDA grew over 100%. It's really a segment that's got a lot of momentum behind it. We're seeing that large TAM that I just described really start to convert. Do you have any market share data you could, that you're able to share with us? When you say market share data, I mean kind of ours relative to our peers? Correct, yeah. I'll be honest with you, I really couldn't, in the B2B space, in the acquiring space, it's actually published, right? The Nielsen report comes out. Priority would fall in the fifth largest non-bank merchant acquiring business. Those above us would be your TSYS, your Fiserv, and then you sort of get into your Shift4, Paysafe, and that's sort of where we would fall. Obviously at scale, fifth largest non-bank U.S. acquirer. We're beginning right now. We're actually in the early stages of moving globally in the acquiring business. We're just going live in Canada, and we'll be a fast follow into other non-U.S. jurisdictions. We'd like that to be a growth catalyst as well. Understood. If you could talk a little bit about your market strategy and your go-to-market strategy, do your customers self-onboard, or do you have a dedicated sales force, and how large is that sales force? Yeah, it really depends on what segment. We use both what I'll describe as a variable cost sales force, so resellers in the acquiring space. We found that that's probably the most efficient, although we also have direct sales in that arena. It's probably 2/3 what I would describe as resellers, and that's a combination of your traditional ISOs, independent sales organizations, and integrated software partners that are using us purely for payments. A third is direct into both our direct sales force, as well as what I would describe as more referral partners where we're the sales engine helping power their relationship. Those are your community banks, your associations, that sort of thing. On the enterprise and B2B side, we are direct. That's a much more curated experience. Our go-to-market across both of those is we're leading with a software solution to accelerate cash flow and optimize working capital. The days of traditional sort of payments is diminishing. The solution set customers are looking for is they want a counterparty that's going to provide multiple solutions on a single platform. In the acquiring space, we deliver a product called MX Merchant or our MX Merchant Suite, and that includes not just merchant acquiring, but also embedded banking that they can leverage that will help them settle their transactions faster and give visibility to cash flow. Within that, they can pay bills and do a host of traditional banking functions and also borrow money. That suite of products is what we deliver out to resellers, really to make them consultants, and then we deliver direct to merchant. On the payable side, we're delivering a product called Priority Payables, which is just all about automating the spend file, the vendor files from whatever ERP middle market, large customers are using to get vendors paid in a much more efficient way to extend their working capital and optimize their working capital. That's the narrative that we found is starting to, frankly, it's starting to change the way businesses large and small think about providers in this space. It's not just about the features of moving money. It's, hey, what's the utility? What value are you bringing me? That's where we really center on, we're going to help you accelerate your cash flow and optimize your working capital. Here are the tools to do it. Choose your adventure, and we'll make it happen. In that enterprise segment, they're tying in and integrating, and they're using our feature set to optimize their software offering. Understood. That's very, very helpful details. Can you just report a second quarter earnings, for people who are new to the story? You know, can you just give us some highlights of your second quarter earnings report and talk to us a little bit about how your second half growth could look? Yeah, you know, we've, so second quarter, our net revenue was up 9%, and, you know, we had a, we had a few, I'll say that, that includes some drag from, a, from some portfolios that are just in natural runoff we had bought years ago. Our, I'll say our organic was, was a bit higher than that. Given that adjustment, adjusted gross profit was up 13%. Adjusted EBITDA was up 9%, and, you know, our, our EPS was $0.26 a share, up about $0.15 year- over- year. That was very consistent with the first quarter. Based on our visibility of, you know, our pipeline converting, we affirmed our guidance. In fact, we raised the low end of our revenue guidance up to $970 million -$990 million for the year on revenue, which is about 10%-1 2.5% growth. Adjusted gross profit of $365 million - $380 million, and, you know, adjusted EBITDA, was, you know, we, we feel very confident in that $222.5 million - $227.5 million range. We're, you know, we're right on track. We're right on track. What do you think are the biggest catalysts that investors should look out for, for growth of Priority Technology in the next six to 12 months? What are you most excited about here? I would say what we've described about the business is we're a winner in acquiring. We have a very developed distribution channel, longstanding market product that continues to add features as market demand is there, and that's continuing to gain market share. We just got to keep putting men on base. As simple as that. It's very consistent, bringing in net growth of over 2,500 customers- 3,000 customers a month, and it is a very steady business. The segments of our growth that we think, number one, we're just seeing market conversion come our way is in, I mentioned B2B, given that growth trajectory and the large TAM that is there starting to convert at a higher pace. Then adoption of our enterprise suite. Demand's being put on businesses within our segment. I'll give you a few examples of how folks are thinking about it, particularly among, I'll call it the software crowd. They want to come to a single provider to not just process payments, but to process, I'll say, to collect, store money, and then redistribute it, and that's a result of new segments like property management becoming highly automated. It's very complex. A lot of renters. I got a lot of different property owners. It's a different environment. It's a, I'll call it a multiparty environment. Construction, same thing. Healthcare, same thing. All these areas are looking to digitize. That can't just happen on traditional payment rails and be a complete connected experience. We've built for that future state, and we're seeing it resonate and win in those segments. That's probably the area we're most excited about, because we think we have a competitive advantage, and we're seeing that in the pipeline growth and pipeline execution. I don't, we don't see that changing in terms of the orientation. We've got to make sure our product just continues to be on the cutting edge, continues to get delivered with precision and scale, and that'll be momentum for years. I think the biggest advantage, frankly, of our platform is we have these very sticky businesses that combine with this embedded finance experience. I said I'd mention transactions. Look at things like the Acrisure advantage acquisition of Heartland Payroll for $1.1 billion. Payroll and benefits, a benefits provider, they want to embed more payroll, right? That's a connected single location. I want to provide all these experiences. That's all money movement. There are an Avid's take private. Same philosophy in what TPG did there. Look at Xero's acquisition of Melio, right? They want to bring payables into that accounting arena. These connected experiences where the customer's getting maybe not everything, but a lot more in one spot, that's what businesses are calling for. We feel really well positioned to deliver that. Understood. I guess, on the other hand, you explained what are you most excited about. I guess, on the other hand, what do you think are the biggest risks to your business or what keeps you up at night? I don't know if I would say it, you know, it's something that keeps us upside from a risk standpoint, right? It's all about execution, and it's all about delivery. I'll say what motivates us is, hey, we think the numbers already show, and they're not disputable. We've had the last five years, 20% compound annual growth rate on the bottom line, right? We've delivered, but it's, hey, we have to keep delivering. I'll say those are the things that motivate us as a business. We've got a really strong utility we've developed, but just can't get complacent. Have to continue to deliver with precision, make sure we're built for scale, make sure we're delivering security, consistency across the board. Those are the things that occupy our mind to ensure we've protected our flank, protected our downside. Understood. That's really helpful. Talk to us a little bit about your capital allocation priorities, and maybe discuss your M&A strategy as well. Yeah, sure. On that topic, we just closed a refinance and an increase in our debt facility. The rating agencies, S&P in particular, have us on watch for an upgrade. We were just able to refi and reduce their cost of capital by 100 basis points. Also, given the size and scale of our facility, about $1 billion, we have a broad base of investors. We're well positioned to access liquidity in that segment. We're a little over 4x levered. Our continued focus is to bring that down, sort of in the mid to high threes over the course of the next handful of months, moving into the remainder of the year by both debt reduction and principal pay downs and just our growth in the trajectory we're on. We're using that capital and we've kind of done a couple of things. One, we see opportunities now while some of our peers, their gross numbers are languishing a bit. We want to, as I said, we have goals to grab market share in acquiring. We're finding distribution channels that we can acquire that we think we can really turbocharge. That's one area of M&A. The other, and we've historically done this, I haven't touched on it yet, but we've been very intentional about buying what I would describe as either countercyclical segments within this payments and banking fintech arena, or early in the cycle of conversion. One such area, for instance, performed exceedingly well for us is the consumer finance, consumer wellness segment. We have a large presence there, and that business has grown consistently, high 20%, 30%, bottom line over the last handful of years. It's in the consumer wellness segment where when the market turns down, we'll see consumers looking for assistance with resolution of their debt. We power many debt solution providers or debt resolution providers. We power their backend for payments and banking, and that's a segment that has done exceedingly well. Given the current economic backdrop and some other, we think, systemic changes in that space, that's not going to change anytime soon, but it's a very countercyclical benefit to traditional payments. The other countercyclical area is B2B, right? We've seen that area take off because of uncertainty of businesses over working capital challenges that could be associated to economic growth, which diminished a bit in the first quarter, as well as the tariffs volatility. These businesses provide countercyclical balance. We've been investing in areas like payroll and benefits, in construction technology and property technology that are early in this conversion to digital. This will shock you, but rent payments is like a perfect example. It's diminished some, but over 70% of rent payments are still paid on a check. That just doesn't, in today's world, that doesn't make a lot of sense. There's a lot of conversion of providing great technology to property managers. Renting is probably becoming a bigger part of the real estate market as opposed to ownership. We think there's some tailwinds to things like that. Construction is really an archaic space of money movement. These are all areas where we don't have to be perfect. We have to be solution-oriented, work with our customers, and develop these solutions and really have, I'll say, some time to get all that perfected. Those are areas where we're investing judiciously, and we see large upside. Do you anticipate any impact to your business from Trump tariffs policies? I'll tell you what we've seen. The answer is yes, but we were kind of positioned for a benefit from tariffs. One I already called out is the B2B payable space. We have seen a lift because of businesses trying to make sure they're preserving working capital given the tariff uncertainty, and they're using our tools to help do that. We allow customers to use their credit card for vendors that do not accept card in something we call buyer-funded or bill payment service provider. That allows for some flexibility of their working capital, and we've seen adoption from that. We expect that to continue, because it's a cheaper source of capital for businesses than using their credit lines. The other area, which there's been a lot of concern over, is what are small businesses going to do in this environment? We've not yet seen a drop-off that I would say we would absolutely tie to tariffs. Same-store sales growth has been actually a drag on volumes that we've seen, but it's unclear whether that's more of the economic cycle-driven versus tariff-driven. Our instinct is it's just more economic cycle, from a pretty robust 2024. Understood. Very helpful detail. I know we're close to the end of our session, so just one final question for you, Tom. What do you think is most underappreciated about your stock, and what do you think maybe investors or the buy side don't fully understand about your story? Oh, gosh. Look, I think it's just there's some straight-up math that folks should take a look at. It doesn't get more complicated than, look, if you took apart our businesses, their revenue, just look at sum-of-the-parts. We had an analyst who did this. Based on our multiple of our total EBITDA, we have business lines that are valued at zero. They make no sense. On a sum-of-the-parts analysis, this is clearly a double-digit, probably mid-teens valuation versus the peer set in our business and our different business lines. All of those were outgrowing. I think that's really the takeaway. Look at the diversification, the multi-line nature of our business. It's been built intentionally, and it performs in varying economic cycles. I'll submit this on a personal level. I'm the largest shareholder, with over 60% of the available shares. Across management, it's close to 80%. You have people's attention as an investor in our business, and we're laser-focused on performing. Tom, that's wonderful that you own 60% of the stock. That says a lot about how you think the growth potential of your business looks in the coming months and years. I know I said that was my final question, but I do have one more based off of that answer. You said looking at your business on a sum-of-the-parts is a good way to value the company. Given you said that, do you think, you would potentially look at strategic options for different parts of your business, or do you think all of these business lines belong under the Priority Technology umbrella, or are there options to potentially sell and see more value to the stock that way? Yeah, look, we're all about creating shareholder equity value. There are things that absolutely should be evaluated, and we're doing that on a regular basis. The advantageous position we're in is we're growing top line, we're driving more to the bottom line, and we have a very efficient business. When you look at our pull-through from gross profit to EBITDA, it is a software margin performance because we're selling software. We're just embedding that payment experience within that value story to our customers. To the extent there's better ways to reflect that from a shareholder perspective, we're absolutely evaluating those on a regular basis. We see a lot of opportunity to grow organically and to find those segments I already noted that are, I'll say, others have maybe initiated an effort and haven't scaled, where we can pick up great value by bringing them onto the platform and synergizing. We want to be very intentional about our use of capital in that way, and we're evaluating it all. Wonderful. Tom, really great chatting with you today. Thank you for the opportunity. For everyone else who's been watching, thanks for joining. If you have any questions, feel free to reach out to me. Thanks very much, Rayna. Thanks, everyone, for the time. Thanks.