Greetings and welcome to the Priority Technology Holdings Q1 2025 Earnings Call. At this time, all participants are in a listen-only mode. A brief Greetings and welcome to the Priority Technology Holdings Q1 2025 Earnings Call. At this time, all participants are in a listen-only mode. A brief Greetings and welcome to the Priority Technology Holdings Q1 2025 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Meghan Amira, Managing Director, ICR. Thank you. You may begin. Good morning, and thank you for joining us. With me today are Tom Priore, Chairman and Chief Executive Officer of Priority Technology 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. With that, I would like to turn the call over to our Chairman and CEO, Tom Priore. Thank you, Meghan, and thanks to everyone for joining us for our First Quarter 2025 Earnings Call. I'll begin today's call by highlighting our aggregate performance that reinforces our consistent revenue and adjusted EBITDA guidance for 2025. Before handing it over to Tim, who will provide segment-level performance, key trends and developments within each of our business segments, and Priority overall. This morning, we reported strong growth in both revenue and profit despite the economic uncertainty over the impact of tariffs and government cuts that emerged in Q1. Summarized on slide three, Priority had a solid Q1 by every key financial metric, growing net revenue by 9%, generating adjusted gross profit and adjusted EBITDA growth of 14% and 11% respectively, and increasing adjusted EPS by $0.19 year- over- year. We ended the first quarter with over 1.3 million total customer accounts operating on our e-commerce platform, up from 1.2 million at the end of the year. Annual transaction volume increased by $5 billion to over $135 billion, and account balances under administration improved to $1.3 billion versus $1.2 billion at year-end 2024. Tim will walk through the full year 2025 guidance specifics and some of the more noteworthy trends we are seeing within our F&B acquiring, B2B payables, and enterprise payment segments later in the call. Based on strong growth trends and continued favorable shift in business mix, I'm confident that the company can achieve 10%-14% top-line revenue growth to a range of $965 million-$1 billion and generate adjusted EBITDA of $220 million-$230 million in 2025. This confidence comes from the value of our unified commerce platform, which streamlines collecting, storing, lending, and sending money that is delivering revenue and operational success to our customers despite likely headwinds related to lower interest rates and a somewhat murky macroeconomic environment. Turning our attention to our Q1 results noted on slide four, revenue of $224.6 million increased 9% from the prior year. This led to a 14% increase in adjusted gross profit to $87.3 million and an 11% improvement in adjusted EBITDA to $51.3 million. Adjusted gross profit margin of 38.9% increased 170 basis points from the prior year's quarter. For those of you who are new to Priority, slide five highlights our vision for unified commerce. The Priority commerce engine is purpose-built to streamline collecting, storing, lending, and sending money, and delivers a flexible financial toolset for merchant services, payables, and banking and treasury solutions 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 this slide to gain a more fulsome appreciation for their value and how they are being leveraged by our growing customer base. While our financial performance demonstrates that partners consistently choose Priority to help power their business, I thought it would be useful for investors to gain a deeper appreciation of why we are emerging as a go-to solution provider for embedded finance solutions using an implementation framework we typically see within our enterprise payment segment. Slide six highlights a typical partner integration to our payments and banking API. Importantly, this framework is consistently applied whether the partner is a sports management software company, a debt resolution provider leveraging CFT Pay, a payment facilitator, or a property management technology company. Customers connect and can access all routes for digital payment acceptance as well as lockbox for checks, create FDIC pass-through insured full-feature virtual bank accounts, and virtual and physical card issuing, bill payment, and automated payables options at their own pace. Our tightly coupled platform creates two important benefits for Priority's long-term prospects. First, it allows our partners to choose your adventure, as we like to say, and evolve their offering to respond to opportunities as we add features in collaboration with their goals. Both parties have a clear line of sight to quantify and access revenue growth opportunities. This creates loyalty and gives us the ability to grow with our partners' businesses. Now, second, by maintaining operational workflow consistency across implementations in diverse industry segments, we can clearly identify our operational metrics in key areas like compliance, payment operations, risk, application support, and the like to ensure that we scale cost-efficiently. We're committed to meeting our customers where they are and by refining the experience for our partners in order to make working with Priority seamless and easy. Now, this vision explains why we've been able to continually transform Priority into a high-performing payments and banking fintech with consistently strong recurring revenue prospects. Our customers and current market conditions reinforce our belief that systems facilitating payments and banking solutions to accept and distribute funds in multi-party environments will be critical as businesses put greater demands on software and payment solution providers to unlock value in existing and developing channels. At this point, I'd like to hand it over to Tim, who will provide further insight into the health of our business segments along with current trends in each that factored into our first quarter results and confidence for sustained performance in 2025. Thank you, Tom, and good morning, everyone. I'll start on slide eight. As Tom mentioned, we had strong financial performance across the business in the first quarter, and the Priority commerce engine continues to generate high growth in our higher-margin operating segments. I'll go into more detail in the segment results, but B2B revenue grew over 12% and enterprise revenue grew over 22% on a year-over-year basis for the quarter. That growth has resulted in adjusted gross profit from our B2B and enterprise segments now representing 62% of our total. The growth in those higher-margin segments also allowed for overall margin expansion as adjusted gross profit margins improved by over 170 basis points from Q1 2024. The continued shift in our business mix also contributes to the highly visible and recurring nature of our business model as nearly 62% of adjusted gross profit in Q1 came from recurring revenues that are not dependent on transaction counts or card volumes. Moving out of the segment-level results and starting with the S&B segment on slide nine, S&B generated Q1 revenue of $151.7 million, which is $7.7 million or 5.3% higher than last year. Day count for the quarter compared to last year had an approximate 2% drag on the growth rate. S&B's revenue growth was a combination of strong 10% growth in the core portfolio, partially offset by the continued attrition of historical residual portfolio purchases along with risk-paring and specialized acquiring in advance of certain network program management changes being implemented that we believe will benefit us in the future. Total card volume was $17.7 billion for the quarter, which is up 3.4% from the prior year. Again, day count also had an impact on volume growth, giving fewer processing days in Q1 of 2025. From a merchant standpoint, we averaged approximately 178,000 accounts during the quarter, up modestly from 177,000 in Q1 of 2024, while new monthly boards averaged 4,100 during the quarter compared to 4,300 in Q1 of last year and 3,700 in Q4. Adjusted gross profit in S&B for the first quarter was $33.1 million, which is 3.9% higher than last year's first quarter. Gross margins of 21.8% in the quarter are down 30 basis points from last year, but sequentially increased almost 130 basis points from Q4 as we recovered certain credit losses during the quarter that were charged off in early 2024. On a year-over-year basis, margins were impacted by the combination of reseller mix, lower specialized acquiring revenue, and the attrition of historical residual portfolio purchases. Lastly, for S&B, adjusted EBITDA was $25.7 million, which is up 2.7% from last year. Adjusted EBITDA growth lagged adjusted gross profit growth in the quarter because of increased salary and benefits along with higher software expenses related to the previously discussed migration to the public cloud, which will convert certain CapEx to OpEx, but provide longer-term benefits to the company. Moving to B2B, revenue of $23.9 million was an increase of 12.1% or $2.6 million from the prior year. Our buyer-funded revenues grew by 7.1%, while supplier-funded revenues grew by 35% on a year-over-year basis. To clarify, when we use the terms buyer-funded and supplier-funded, we're referring to who is paying the interchange or credit card-related fees. In the supplier-funded model, or what we've historically referred to as CPX, the supplier accepted card payment net of the interchange discount because they want to receive the payment faster while receiving the funds electronically with reconciliation back into their GL and without the cost of handling paper checks. In the buyer-funded model, which came via the Plastiq acquisition, the buyer pays the card fee because they want to utilize existing credit card capacity to extend their payables terms and optimize their working capital while generating cash back or rewards points for using their card. The buyer-funded business has increased focus on enterprise-level customers and large bank referral partners to its success in the quarter as companies seek to optimize their working capital and streamline their payables operations in the face of rising input costs, whether resulting from general inflation or from increased tariff rates. Adjusted gross profit in B2B increased to $7.3 million in the quarter, which is a 17.8% increase over the prior year. For the quarter, gross margins were 30.5% or 150 basis points higher compared to 29% in the first quarter of 2024. The B2B segment produced $3.5 million of adjusted EBITDA during the quarter, which was a $1.8 million or 101% increase over the comparable period in 2024. The acceleration of adjusted EBITDA growth compared to adjusted gross profit was driven by strong operating leverage in the segment, including a 14% reduction in operating expenses on a year-over-year basis. Moving to the enterprise segment, Q1 revenue of $50.1 million was an increase of $9.1 million or 22.2% from the prior year. Revenue growth was driven by continued strong enrollment trends and an increase in the number of billed clients in CFT Pay, combined with an increase in the number of integrated partners and organic same-store sales growth with those existing partners. Higher account balances in CFT Pay and Passport were able to largely offset the impact of lower interest rates in the quarter. As a result of those factors, adjusted gross profit for the enterprise segment also increased by 22.2% to $46.9 million, while adjusted gross profit margins remained at 93.6%. Adjusted EBITDA for the quarter was $42.4 million, an increase of $7.7 million or 22.2% from the prior year's first quarter. Overall profitability in enterprise was driven by continued strong performance in CFT Pay, which offset investments made in newer verticals that we believe will provide the next leg of the growth stool for the enterprise segment. Moving to consolidated operating expenses, salaries and benefits of $25.8 million increased by $3.6 million or 16.4% compared to Q1 of last year, and SG&A of $15.1 million increased by $4.1 million from Q1 of 2024. Higher SG&A expenses were driven by increased spend on software, including the continued public cloud migration, higher marketing expenses in the quarter, and certain non-recurring legal and other expenses, including those related to the secondary equity offering we closed in January. Moving to the capital structure and liquidity overview, debt levels during the quarter declined to $935.5 million following a $10 million prepayment of the term loan during the quarter. We ended the quarter with $117.6 million of available liquidity, including all $70 million of borrowing capacity available under our revolving credit facility and $47.6 million of unrestricted cash on the balance sheet. For the LTM period ended March 31st, adjusted EBITDA of $209.2 million represents $4.9 million of sequential quarterly growth from $204.3 million at the end of Q4. This growth in adjusted EBITDA combined with net debt of $887.9 million resulted in net leverage of 4.2 times at quarter end, which is down from 4.3 times at 2024's year-end. As mentioned on our last earnings call, we will continue to focus on opportunities to reduce leverage on our balance sheet while also remaining nimble in the face of inorganic growth opportunities in this market. If you were to use the midpoint of our 2025 adjusted EBITDA guidance, we would be under four times leverage by year-end based on today's net debt balance. This is the first quarter since I joined Priority where this page doesn't include mention of the preferred stock dividend. With the redemption in full of the preferred stock in 2024, I'm happy to report that all of our net income now flows to the benefit of our common shareholders, which resulted in adjusted EPS of $0.22 for the quarter. That compares to $0.18 in Q4 2024 and $0.03 in Q1 of last year. As Tom mentioned, based on our Q1 results and our forecast for the remainder of the year, we are maintaining the full year financial guidance that was provided on our Q4 2024 earnings call. This outlook is informed by the current environment where consumer spending remains stable and interest rate changes remain aligned with current market forecasts. If you compare Q1 results to the full year guidance, the simple math will show that we're not 25% of the way there yet, but our expectation is and has been that we will grow revenue and profits sequentially each quarter as we move through the year. Before I turn the call back over to Tom, I wanted to provide an update on our progress in the remediation of the material weakness related to the design and operating deficiencies in certain automated controls around ingestion and validation of third-party processors' data. As noted in our 10-K and comments on our last earnings call, the material weakness did not result in a restatement or any change to our consolidated financial results. The board of directors and management team are actively working to remediate the automated controls deficiency. As of today, the team has made substantial progress in those efforts, and we are testing the existing data translation controls in a non-production environment. Once we are certain those controls meet our internal standards and those of our external auditors, we will move them into a production environment for formal certification. To be clear, though, the material weakness will remain intact until we complete our fiscal 2025 audit process and receive a formal opinion from our external auditor. With that, I'll now turn the call back over to Tom for his closing comments. Thank you, Tim. Before concluding, I want to speak to Priority's market positioning as consumers, businesses, and investors reconcile the current economic picture. 0.3% decline in U.S. GDP during the first quarter. Consumer spending, which accounts for two-thirds of GDP, grew by only 1.8% in the quarter from a healthy 4% exiting 2024. April's 32% decline in consumer sentiment to levels not seen since the 1990s recession. It's clearly a challenging environment, but candidly, not one that has surprised us. Entering 2025, we believe the post-election optimism for economic growth required near-perfect execution, and we were more likely to experience measures of volatility and uncertainty. Therefore, our goals were basic: to gain market share in the acquiring segment as cyclical challenges we anticipated emerged while continuing to strengthen our counter-cyclical assets, including automated payables and CFT Pay, and investing efficiently in new verticals with large TAMs that are still early in the adoption of integrated payment and banking solutions. In fact, during our 2024 Year-End Earnings Call, we reflected that there was likely to be growing urgency for working capital solutions among U.S. businesses as tariffs took shape and that our CFT Pay business was well-positioned for growth by assisting the increasing population of stressed consumers find financial wellness through debt resolution. As our results demonstrate, we executed in each regard. While the card brand networks and large-scale issuing banks reported 3-5% volume growth, our core acquiring channels produced 10% organic revenue growth. Meanwhile, our counter-cyclical segments grew 12% and 22% respectively, despite investments for the future in emerging integrated verticals like payroll and benefits, real estate and construction technology, and sports and entertainment, where collecting, storing, and sending money are an important part of the value chain, but cause a modest drag on our results while they scale. Now, I offer these observations to our stakeholders with humility and recognition from our teams that success must be earned each day with relentless pursuit of execution and openness to critique and thorough evaluation to avoid complacency, particularly as economic conditions can further erode. We're hopeful that our consistent results in the first quarter of 2025 and a unified commerce vision that has delivered five-year compound annual adjusted EBITDA growth of 19.8% through the end of 2024 will convince our current and future stakeholders that Priority routinely stays ahead of the market trends, and its technology, operations, and decision-making are geared for the future of payments and banking. To put it simply, we're built different. As always, I want to thank my colleagues at Priority who continue to work incredibly hard to deliver industry-leading results. Your commitment and dedication to improving everything we do is clear, providing our partners and customers with a constant reminder that they made the right decision 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. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. One moment, please, while we pull for questions. The first question is from Hal Goetsch from B. Riley Securities. Please go ahead. There you go. Thanks, guys. Quick question on expenses. SG&A dollars and salaries and benefits rose about $5 million in spending sequentially. I know you called out the secondary offering and the cloud migration. Could you parse out some of those numbers for us? Could you let us know, if you can, the details of how much that cloud infrastructure is different than a year ago and any other kind of expense variances you can share with us? Sure. Thanks, Hal. Yeah. If you look at the SG&A in particular for Q1 of this year and compare that to last year, if you normalize for the non-recurring items, right, obviously, we had about $2.2 million this year in non-recurring items and about $0.8 million last year. If you adjust for those, SG&A was up about 26% year over year. Another million or so of that is related to the continued migration from the private hybrid cloud to the public cloud. You'd have to adjust for that as well. That was really the large part of the drivers there in SG&A. On the salary and benefits side, a lot of that is just driven by some of the headcount additions last year that obviously did not have a full year impact into the financials in Q3 or Q4 of last year, but you have the full quarter impact of that this year. I think going forward, though, obviously, we've maintained our guidance and feel comfortable with where we sit from an overall margin standpoint and some of the trends on the expense side and continue to look at the efficiencies, especially across the technology part of the team and things we can utilize automated tools for. We'll continue to evaluate those opportunities to manage expenses from here. Yeah. One follow-up. I think you mentioned the number 62%, I think twice, or maybe you said 62% of your gross profit dollars now are coming from B2B and enterprise. Is that right? I want to make sure I heard that right. It is. And actually, this quarter, both of the numbers I referenced were 62%, so it probably got a little confusing with the exact same figure. The gross profit coming from B2B and enterprise aggregates to just over 62% for the quarter. The other figure I referenced at 62% is the percentage of our adjusted gross profit that comes from recurring revenues in the quarter. Okay. That includes some recurring revenues in SMB? It does. It includes, yeah. That is on a consolidated basis. That is right. Okay. The last one before we turn it back and get back in the queue, you mentioned a pretty interesting signature win with Minnesota Wild. That is a fairly large enterprise. Could you share with us your thoughts on how you, the sales cycle for that, how you won that contract, and what were some of the reasons why you were picked over others that are active in the stadium space? Thanks. Yeah. Sure, Hal. I do want to mention one other thing that you noted on the expense side. The purpose of migrating to the public cloud also allows us to position for some engineering efficiencies. It normalizes the kind of the engineering work that gets done. There is just a broader set of folks that operate in that environment. We do expect you will start to see some of that efficiency flow through in following quarters on the OpEx side. As it relates to the press release on the Minnesota Wild, it was pretty, I think, explanatory when you looked at their Chief Revenue Officer's comments. Not only do we step in and make ticketing more efficiently executed, the other areas are really implementing the banking transparency and the acceleration of cash flow that we are able to help manage. Because we've combined payments and banking on a single platform, think about it this way: every single area of revenue that flows through at the stadium level or anything attached to the enterprise, we can, instead of all that going into a single settlement bucket, parse it out by—think of it like a clearing account. As that money flows in, reconciliation of all the batches is automated because we see the batch come through, we see the deposit go into the account, and then it can immediately and efficiently sweep out into their operating bank account. Often, and this may surprise you, but these organizations, sports in particular, have just—they've exploded over the past years in valuation, but many of them are still small market teams managed in kind of by a smaller group of personnel. Money that's sitting in those systems may not get invested in overnight funds or things like that. Bringing tools that allow them to optimize their working capital, get that money to work quickly, which we're able to do within our systems, things like that are the reasons why we want it. Just a more complete toolset to help accelerate cash flow, optimize working capital. That's how we go to market. That's what resonates. That's true whether a business is a professional sports franchise or a small business around the corner. Yeah. Very good. One last thing. Could you comment on Q1 this year versus last year? Had one last day and Easter was several weeks into April versus in March a year ago. Did that one last day bear any impact on volume and float and income and revenue in any manner, in your opinion? It did. It did. I'll let him speak to the specifics, but I would also add in you had President Carter's funeral, which we saw some weird influence there in the way it affected volume. There are a few abnormalities from the historical in this quarter. Okay. It does. Obviously, your intuition's right. One last day this year compared to Q1 of last year. If you look at just our daily revenue, which impacts SMB the most. I mean, the daily revenue there, it's about $1.6 million, $1.7 million, right? It has an impact. If you look at just Q4 to Q1, there are two days of difference between Q4 and Q1. That has an impact on us as well. All right. Terrific. Thanks, guys. The next question is from Bryan Bergin from TD Cowen. Please go ahead. Hey, guys. Good morning. Thank you for taking the question. First, I appreciate the outlook for growing overall revenue and profit sequentially as you go through 2025. Are there any important considerations as you get into the segment forecasts on growth and profit as you go through Q2 and the balance of the year? I think the biggest potential impact that would affect maybe one segment more than others is just if there is any major shift in rate curves. You think about where interest rates go and how that impacts our balances and the income we generate on permissible investments, right? At this point, we have taken the latest estimates we have from the other forward curves and applied that against our 3 plus 9 forecast and ultimately, obviously, roll that into how we feel about the full year guidance. If there is any meaningful shift in rates, which at this point, we have assumed three cuts this year consistent with what we are seeing in the Fed dot plot and some of the curves. If that changes one way or the other, then that could have an impact certainly on the high margin interest income we generate on the permissible investments. Okay. Okay. Makes sense. Within SMB, 10% growth in the core excluding the residual attrition and the risk-bearing, can you scale just the impact between those two categories? How should we be thinking about the remaining size of the business that may face incremental risk-bearing as you go forward? Sure. I would say the majority of that impact, probably a 2 to 1 plus ratio, is more of the risk-bearing than it was the runoff from the historical residual purchases. Yeah. I don't think we're going to expect to see a lot more on the risk-bearing side. We feel like we're in a pretty good position overall in that portfolio and really getting in front of some of the potential changes that Tom can talk about. Overall, I think it's all been factored into some of our guidance and the cadence of the quarterly estimates as well. Yeah. Brian, just to give you a little bit of granular context, there's some network adjustments that are occurring within the specialized e-commerce space. It's just nothing more than putting some additional reporting burden. Really, the way the networks will measure performance is going to become a little bit more stringent. In advance of that, we took some actions to reduce our footprint with a belief that a number of players who've participated in the space historically are actually going to be forced to exit because it's going to compress their economics to a point where it won't make sense. We expect that to be to our benefit over the long term. We're just kind of positioning for that in advance of those realities just getting reconciled by the market participants. That's why we try to get ahead of a few emerging opportunities. Okay. Understood. Thank you, guys. The next question is from Tim Switzer from KBW. Please go ahead. Hey. Good morning. Thank you for taking my questions. Given your exposure to consumer spending, small businesses, I bet you guys might have a pretty good sense of how those customer segments have reacted to the tariffs and economic uncertainty since Liberation Day. Have you guys seen any notable changes in behavior or anything like that? Nothing material yet, Tim. Obviously, Liberation Day came in after the quarter, so we haven't really seen a dramatic shift in anything. If we continue to look at just recent volume trends here, even after the quarter, I think relatively consistent. I think some of this goes to the mix of customers we have as well. If you think about our overall portfolio, we feel like we've got some good resilience in that portfolio. We certainly have restaurants who make up a good portion, kind of mid to high teens percentage of the portfolio, which could have an impact. If you think about the retail component of our end market, while that's high 20% range as a percentage of the portfolio, if you break that apart even further and look at the mix within that retail component, you've got package stores or liquor stores. You've got auto parts stores, right? You've got other end markets that have more resiliency. We also have, obviously, meaningful components in professional or business services, including law firms, doctor's offices, other areas that are more recession-resistant. Look, we'll see some impact, but we think we're well-positioned for what we expect to happen in the consumer spend cycle. Okay. The other thing I would note, actually, this might, as you look at some of the available research that some of the banks are publishing around, I'll call it small business owner sentiment, businesses that are above $500,000 of revenue are largely reporting kind of a limited, if any, concern. No substantive drop-off. Our average customer is doing just shy of $40,000 a bank card a month. You can do the math. They're larger, healthier customers. It is our go-to-market to utilize distribution that focuses on the upper kind of segment of small business. That also, I think, contributes to our consistency. Okay. Got it. That's helpful. Within your enterprise segment, what kind of impact do you think some of this uncertainty or the recession could have on the debt resolution business? Have you started to see a tick-up in activity there? I think there could be a lot of opportunities with some of the layoffs related to DOGE and maybe even as student loan payments are now being reported to credit bureaus and the potential for some students to be kicked off and can get a repayment plan and see rising payments there. It's going to probably frustrate a lot of consumers with debt. Yeah. I'll tell you, a couple of things we're looking at just as leading indicators. Obviously, the headlines are instructive. When you look at the amount of seriously delinquent, unsecured credit card debt, it's increasing pretty consistently. Fundamentally, we think there's going to be a great opportunity for CFT Pay to help assist stressed consumers towards resolution and work out. Certainly, the numbers are supporting that. Historically, and Tim can speak to some of the curve of that business or the revenue curve, but there's generally about a six-month lag where we start to see an increase in throughput on resolution to a backup in the economic environment. Because consumers, one, you've got that 90-day delinquent window before you sort of start to catch the attention of the card issuers. Consumers fight. The consumers engage in this process. They have jobs. They have to in order to be engaged in a resolution and work out. They were, at one time, healthy consumers that were able to get $30,000 of unsecured debt. Their ability to pay has been compromised in the near term. We think there's going to be a growing number of consumers that fit that profile. It should give us some opportunities in the months to follow. Okay. Got it. That was really helpful. If I could have one more, it seems like there's been an opportunity for you guys in the embedded finance space, largely related to some of the disruption in banking as a service relationships. We can call out the evolving Synapse situation. I believe another middleware provider, Solid, also recently filed for bankruptcy. What kind of opportunities has this created for you guys with your embedded finance and ledgering products? Yeah. It's been a target-rich environment. We've been very focused on some of the businesses that were on those platforms and feel like we'll continue to get our fair share of wins. You'll see those manifested over the coming months as they transition from environments that are just less stable. I think you can appreciate we've been very intentional about the differentiation of our platform, the stability of our bank partners, kind of building with a long-term purpose in mind, maintaining money transmission licenses so that there's kind of clarity and certainty among our bank partners of the rigor around our compliance. We're positioned to benefit from the fallout of some of the banking as a service providers who are just not viable in the current regulatory environment. Got it. Very helpful. Thank you. Look, there was a question that was asked about the potential headwinds. Tim referenced if interest rates were to decline more than have more than three cuts, right? The offset to that is deposit growth. We are seeing positive trends in deposit growth. A driver of that is the segments outside of our CFT Pay application and other segments within enterprise, some of which are these vast providers looking for a more stable home. The next question is from Jacob Stephan from Lake Street. Please go ahead. Yeah. Thanks. Just a quick question. A lot of talk about countercyclical payments here. I mean, is it possible for you guys to kind of parse out maybe some exposure to some of these end markets you referenced, like doctor's offices, lawyers, either in terms of a dollar volume or revenue or even adjusted gross profit? We can. I mean, just if you think about volume, Jacob, and you look at kind of the comments already made, I mean, restaurants as an end market is kind of mid to high teens, call it 15-16% of our volume. Retail starts to get up into the high 20% range. Within that, there's obviously subsectors that, as I referenced, have some resiliency. There's a good mix there of, I'd say, half of that volume is in end markets that have a good level of recession resistance. Legal services and doctor's offices, broader professional services, that's up north of 16-17% of the portfolio. You start getting down into other smaller subsectors. Real estate in those areas is, call it, 5%. Everything from there, really, it trails off, right? You've got things like education, sub 3%, public administration, sub 3%. The ones I've touched on already are the larger end markets and then pretty diversified from there. Okay. Very helpful. Do you guys have any exposure to kind of enabling these tariff payments by companies through the government? Yeah. I don't know that I would call it exposure. In fact, where I was going to transition your question because I think the observation is a good one. Where we see kind of a countercyclical opportunity is in B2B, right? Where you are seeing the influence of tariffs and some of what buyers in the U.S. have not prepared for. They're using our card strategies, working capital strategies in our B2B segment to help them manage through that. That's why you're seeing pretty outsized growth relative to consumer on the B2B side. Tim referenced that our plastic volume was up 7%. Our buyer-funded, our supplier-funded was up 35%. This B2B automated payables suite of tools has meaningful countercyclical aspects. Okay. That's helpful. Just last one for me. Obviously, Minnesota Wild ticketing, nice win. I was hoping that they'd get to the Western Conference semifinals for you guys, but maybe help us think about kind of the difference in contracting with a venue like the Xcel Energy Center, which is owned by the City of St. Paul. Do you kind of view this as a leading foot in the door towards a much broader opportunity with the Wild and like organizations? Yeah, it is. We are well-positioned to help professional sports franchises optimize their payment environment. And I'll say their payment and banking environment. If you think about that stadium environment you referenced, while it's owned by the city, the team is still responsible for concerts, other activities within that venue that they're selling tickets within. And they need to account for those discrete properties differently. Having a combination of flexible payments tools that can handle them all, but also do so with, I'll call it, a banking container that can ease their reconciliation and operations and how they recognize that cash, maybe even revenue shares or other payouts that need to occur within it. It is a very useful financial toolset that brings them some efficiencies that their core bank providers—and it is not just true of the Wild. This is across the board. It is just not what banks do. That is where we are bringing value to the system. We have a very healthy pipeline of like-minded franchises that we are speaking to about that very approach. As we get more wins, we will talk about them. Great. I appreciate it, guys. The next question is from Brian Kinstlinger from Alliance Global Partners. Please go ahead. Great. Thank you. I just want to make sure I understood. Just under 40% of your revenue is from restaurants and retail, just doing the simple math. I want to make sure I heard you right. In this slice of business, have the volumes or average basket sizes materially changed? It sounds like no, at least since the beginning of April. No major changes to the basket sizes, but I do want to clarify. When you say it's almost 40% of our revenue, it's about 40% of the volume in SMB, which obviously is meaningfully less from an overall revenue standpoint. I just don't want to mix messages. No, you're sorry. Yep. The answer is that's right. There hasn't been material changes in those metrics in the SMB segment. Nothing that we wouldn't expect. Obviously, there's some seasonality in certain subsectors. You think of package stores and certain food stores, right? You're going to see a little bit of a bump around the holidays. That tails off a little bit more, and it gets to normalized levels in Q1. We saw some of that activity, which we expect. Outside of that, no other real meaningful shift in the volumes by end market. Great. The only other question I had from the financial perspective, based on your adjusted EBITDA guidance, what is the anticipated range of free cash flow? Can you discuss capital deployment priorities for that cash flow? Sure. I think the overall free cash flow for the year is going to be pretty consistent with Q1, right? We had some working capital swings in Q1 just given timing of the quarter end. If I think about cash flow more as an adjusted EBITDA walk down to free cash flow, if you take out the cash interest, taxes, CapEx, take out the non-recurring expenses, we had about $20 million of free cash flow in the quarter. I think you'll see kind of consistent levels of cash flow compared to EBITDAs we've got through the year. $80 million plus of free cash flow for the year on that basis. Working capital swings may impact that a little bit, but that's mostly time-related. We don't have a lot of working capital in the business outside of just when the quarter happens to end. It usually normalizes the next quarter as things reverse if it ends midweek versus on a Friday or a Monday. If $80 million is that number, how much debt reduction and how much for other purposes? I think we'll continue to evaluate debt reductions throughout the year. Obviously, we've made a $10 million prepayment in Q1. We'll continue to look at deleveraging over time. We're also seeing some pretty unique opportunities in this market, given some of the dislocation we've seen out there. Tom's referenced a few end markets on prior calls that we have interest in. We'll remain nimble around capital deployment. I assure you the team here is very focused on the balance sheet and continuing to focus on deleveraging if there's not some other meaningful value-enhancing activity out there available to us. Okay. Thank you. his concludes the question and answer session. I would like to turn the floor back over to Tom Priore for closing comments. Thank you very much. Just want to once again thank everyone for their participation on the call. We appreciate everyone's support. After any further questions, we'll get back to work. Hope everyone has a great rest of the week, and thanks again. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.