Priority Technology Holdings Inc
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
PRTH$7.88+0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001653558-24-000069
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001653558-24-000106
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 90 previous paragraphs and 100 current paragraphs.
52 unchanged; 24 reworded; 20 added; 14 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 8 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
For the six months ended June 30, 2024, our consolidated revenue of $425.6 million increased by $58.3 million, or 15.9%, from $367.3 million for the six months ended June 30, 2023. This overall increase was mainly driven by increase in merchant bankcard volume in our SMB Payments segment, an increase in new enrollments and higher interest income in our Enterprise Payments segment, and acquisition of the Plastiq business during Q3 2023 in our B2B Payments Segment.
Current report
Merchant card fees revenue for the three months ended June 30, 2024 was $169.2 million, an increase of $24.7 million, or 17.1%, from $144.5 million for the three months ended June 30, 2023. This increase was primarily driven by an increase in the transaction count processed by the Company, rate increases, and the acquisition of the Plastiq business during Q3 2023.
Current report
Merchant card fees revenue for the six months ended June 30, 2024 was $327.2 million an increase of $33.0 million or 11.2%, from $294.2 million for the six months ended June 30, 2023. The increase was primarily driven by an increase in the transaction count processed by the Company, rate increases, and the acquisition of the Plastiq business during Q3 2023.
Current report
Money transmission services for the six months ended June 30, 2024 was $60.5 million, an increase of $15.4 million, or 34.0%, from $45.1 million for the six months ended June 30, 2023. This increase was primarily driven by an increase in customer enrollments.
Current report
Outsourced services and other services revenue of $31.9 million for the six months ended June 30, 2024 increased by $10.3 million, or 47.9%, from $21.6 million for the six months ended June 30, 2023, primarily due to growth in interest income due to higher interest rates and deposit balances.
Current report
Equipment revenue of $6.0 million for the six months ended June 30, 2024 decreased by $0.5 million, or 7.0% from $6.4 million for the six months ended June 30, 2023. The decrease was primarily due to decreased sales of point-of-sale equipment.
Current report
Cost of revenue (excludes depreciation and amortization)
Current report
Cost of revenue (excludes depreciation and amortization) of $267.4 million for the six months ended June 30, 2024 increased by $30.2 million, or 12.7%, from $237.2 million for the six months ended June 30, 2023, primarily due to the corresponding increase in revenues.
Current report
Depreciation and amortization expense of $30.5 million for the six months ended June 30, 2024 decreased by $5.5 million, or 15.4%, from $36.0 million for the six months ended June 30, 2023, primarily due to full amortization of certain intangible assets during 2023.
Current report
Debt extinguishment and modification costs
Current report
Debt extinguishment and modification costs of $8.6 million for the three months and six months ended June 30, 2024, relates to the refinancing of the Company's credit facilities on May 16, 2024.
Current report
The CODM's review of segment performance and allocation of resources are based on the Adjusted EBITDA (a non-GAAP financial measure). Adjusted EBITDA at each segment level includes revenues of the segment, less costs of revenue (excluding depreciation and amortization) and operating expenses that are directly related those revenues. Operating overhead and shared costs are managed centrally and included in corporate segment.
Current report
This non-GAAP financial measure helps to illustrate the underlying financial and business trends relating to results of operations of the Company and therefore used as a measure of segment profit or loss for the purposes of evaluation of segment performance and allocation of resources.
Current report
Adjusted EBITDA from our SMB Payments segment was $28.6 million for the three months ended June 30, 2024, compared to $28.4 million for the three months ended June 30, 2023. The increase of $0.2 million or 0.6% was primarily driven by increased merchant card fee revenue and $0.3 million decrease in selling, general and administrative expenses, offset by mix related margin compression and a $0.5 million increase in salaries and benefit expenses.
Current report
Adjusted EBITDA from our SMB Payments segment was $53.6 million for the six months ended June 30, 2024, compared to $56.8 million for the six months ended June 30, 2023. The decrease of $3.2 million or 5.7% was primarily driven by a decrease in certain incentive revenues and mix related margin compression. Other operating expenses of the segment remained consistent.
Current report
Revenue from our B2B Payments segment was $43.2 million for the six months ended June 30, 2024, compared to $5.8 million for the six months ended June 30, 2023. The increase of $37.5 million was primarily driven by revenue from the Plastiq business and growth in CPX business.
Current report
Adjusted EBITDA from our B2B Payments segment of $1.5 million for the three months ended June 30, 2024, compared to $0.6 million for the three months ended June 30, 2023. The increase in Adjusted EBITDA of $0.9 million was contributed by both CPX business for $0.2 million and Plastiq business for $0.7 million. The Plastiq business was acquired during Q3 2023.
Current report
Adjusted EBITDA from our B2B Payments segment of $3.3 million for the six months ended June 30, 2024, compared to $0.5 million for the six months ended June 30, 2023.The increase in Adjusted EBITDA of $2.8 million was contributed by both the CPX business for $1.6 million and the Plastiq business for $1.2 million. The Plastiq business was acquired during Q3 2023.
Current report
Revenue from our Enterprise Payments segment was $84.7 million for the six months ended June 30, 2024, compared to $58.7 million for the six months ended June 30, 2023. The increase of $25.9 million or 44.1%, was primarily driven by an increase in billed clients and customer enrollments, and growth in interest income due to higher interest rates and deposit balances.
Current report
Adjusted EBITDA from our Enterprise Payments segment was $72.0 million for the six months ended June 30, 2024, compared to $48.1 million for the six months ended June 30, 2023. The increase of $23.9 million or 49.6%, was primarily driven by increases in revenues.
Removed paragraphs (14)
Previous report
Revenue
Previous report
Merchant card fees revenue for the three months ended March 31, 2024 was $157.9 million an increase of $8.3 million or 5.5%, from $149.6 million for the three months ended March 31, 2023. The increase was primarily driven by the Plastiq business and rate increases. These increases were partially offset by a decrease in volume due to the diversification of our merchant portfolio by one of our referral partners.
Previous report
Cost of services (excludes depreciation and amortization)
Previous report
Revenue
Previous report
Operating Income
Previous report
Operating income from our SMB Payments segment was $12.4 million for the three months ended March 31, 2024, compared to $12.0 million for the three months ended March 31, 2023. The increase of $0.4 million or 3.1% was the result of a decrease in operating income of $4.0 million in merchant card fee revenue driven by the diversification of merchant portfolios by one of the Company's referral partners, the mix related margin compression and a decrease in certain incentive revenue. This decrease was offset by decreases in the allocation of salary and employee benefits expense of $1.7 million, a decrease in selling, general and administrative expenses of $0.7 million due to efficiencies and realignment at the corporate level and a decrease in depreciation and amortization expense of $2.0 million due to full amortization of certain intangible assets in 2023.
Previous report
Depreciation and amortization expense of our SMB Payments segment was $8.8 million for the three months ended March 31, 2024, compared to $10.8 million for the three months ended March 31, 2023. The decrease of $2.0 million is due to full amortization of certain intangible assets in 2023.
Previous report
Revenue
Previous report
Operating Loss
Previous report
Operating loss from our B2B Payments segment of $0.8 million for the three months ended March 31, 2024 remained consistent compared to the three months ended March 31, 2023. The increase in operating income due to increased revenue was offset by certain performance based non-recurring bonuses related to the Plastiq business and processing losses related to the CPX business.
Previous report
Depreciation and amortization from our B2B Payments segment was $1.6 million for the three months ended March 31, 2024, compared to $125.0 thousand depreciation and amortization expense for the three months ended March 31, 2023. The increase is primarily attributable to the Plastiq business.
Previous report
Revenue
Previous report
Operating Income
Previous report
Depreciation and amortization from our Enterprise Payments segment was $4.4 million for the three months ended March 31, 2024, compared to $6.7 million depreciation and amortization expense for the three months ended March 31, 2023. The decrease of $2.3 million or 34.9%, was primarily driven by full amortization of certain intangible assets in 2023.
Reworded paragraphs (24)
Previous wording
This section includes certain components of our results of operations for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. We have derived this data, except the key indicators, from our Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q and our Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
This section includes certain components of our results of operations for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023. We have derived this data, except the key indicators, from our Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q and our Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
For the three months ended March 31, 2024, our consolidated revenue of $205.7 million increased by $20.7 million, or 11.2%, from $185.0 million for the three months ended March 31, 2023. The overall increase was driven by an increase in new enrollments and higher interest income in our Enterprise Payments segment and revenue from the Plastiq business in our B2B Payments segment that was acquired in the quarter ended September 30, 2023. These increases were partially offset by a decrease in revenues in our SMB Payments segment due to decreased volumes.
Current wording
For the three months ended June 30, 2024, our consolidated revenue of $219.9 million increased by $37.6 million, or 20.6%, from $182.3 million for the three months ended June 30, 2023. This overall increase was mainly driven by increase in merchant bankcard volume in our SMB Payments segment, an increase in new enrollments and higher interest income in our Enterprise Payments segment, and acquisition of the Plastiq business during Q3 2023 in our B2B Payments Segment.
Previous wording
Money transmission services for the three months ended March 31, 2024 was $29.1 million an increase of $7.7 million, or 36.1%, from $21.4 million for the three months ended March 31, 2023. This increase was primarily driven by an increase in customer enrollments.
Current wording
Money transmission services for the three months ended June 30, 2024 was $31.3 million, an increase of $7.6 million, or 32.1%, from $23.7 million for the three months ended June 30, 2023. This increase was primarily driven by an increase in customer enrollments.
Previous wording
Outsourced services and other services revenue of $15.7 million for the three months ended March 31, 2024 increased by $4.7 million, or 42.3%, from $11.0 million for the three months ended March 31, 2023, primarily due to growth in interest income due to higher interest rates and deposit balances.
Current wording
Outsourced services and other services revenue of $16.3 million for the three months ended June 30, 2024 increased by $5.7 million, or 53.6%, from $10.6 million for the three months ended June 30, 2023, primarily due to growth in interest income due to higher interest rates and deposit balances.
Previous wording
Equipment revenue of $3.0 million for the three months ended March 31, 2024 remained consistent with $3.0 million for the three months ended March 31, 2023.
Current wording
Equipment revenue of $3.0 million for the three months ended June 30, 2024 decreased by $0.4 million, or 12.7%, from $3.5 million for the three months ended June 30, 2023. The decrease was primarily due to decreased sales of point-of-sale equipment.
Previous wording
Cost of services (excludes depreciation and amortization) of $129.3 million for the three months ended March 31, 2024, increased by $7.3 million, or 6.0%, from $122.0 million for the three months ended March 31, 2023, primarily due to the corresponding increase in revenues.
Current wording
Cost of revenue (excludes depreciation and amortization) of $138.1 million for the three months ended June 30, 2024 increased by $22.8 million, or 19.8%, from $115.3 million for the three months ended June 30, 2023, primarily due to corresponding increase in revenues.
Previous wording
Salary and employee benefits expense of $22.2 million for the three months ended March 31, 2024 increased by $3.1 million, or 16.3%, from $19.0 million for the three months ended March 31, 2023, primarily due to merit increases, certain performance based non-recurring bonuses and increased headcount from the acquisition of the Plastiq business and to support the overall growth of the Company.
Current wording
Salary and employee benefits expense of $22.1 million for the three months ended June 30, 2024 increased by $3.0 million, or 15.8%, from $19.1 million for the three months ended June 30, 2023, primarily due to merit increases, certain performance based non-recurring bonuses and increased headcount from the acquisition of the Plastiq business during Q3 2023.
Previous wording
Depreciation and amortization expense of $15.3 million for the three months ended March 31, 2024 decreased by $2.8 million, or 15.5%, from $18.0 million for the three months ended March 31, 2023, primarily due to full amortization of certain intangible assets during 2023.
Current wording
Depreciation and amortization expense of $15.2 million for the three months ended June 30, 2024 decreased by $2.7 million, or 15.2%, from $18.0 million for the three months ended June 30, 2023, primarily due to full amortization of certain intangible assets during 2023.
Previous wording
Selling, general and administrative expenses of $11.0 million for the three months ended March 31, 2024 increased by $1.9 million, or 20.6%, from $9.1 million for the three months ended March 31, 2023, primarily due to certain software and maintenance expenses and other expenses to support overall growth of the Company.
Current wording
Selling, general and administrative expenses of $11.2 million for the three months ended June 30, 2024 increased by $0.4 million, or 3.9%, from $10.8 million for the three months ended June 30, 2023, primarily due to certain software and maintenance expenses and other expenses to support overall growth of the Company.
Previous wording
Other expenses, net were as follows:
Current wording
Other expense, net were as follows:
Previous wording
Interest expense of $20.9 million for the three months ended March 31, 2024 increased by $3.2 million, or 18.0%, from $17.7 million for the three months ended March 31, 2023, due to increased interest rates and increased outstanding balance for the term loan facility used for the acquisition of the Plastiq business, offset by a decrease in the revolving credit facility.
Current wording
Interest expense of $21.7 million for the three months ended June 30, 2024 increased by $3.9 million, or 22.2%, from $17.8 million for the three months ended June 30, 2023, due to increased interest rates and increased outstanding balance for the term loan facility used for the acquisition of the Plastiq business and redemption of redeemable senior preferred stock, offset by a decrease in the revolving credit facility.
Previous wording
We compute our interim period income tax expense or benefit by using a forecasted EAETR and adjust for any discrete items arising during the interim period and any changes in our projected full-year business interest expense and taxable income. The EAETR for 2024 is 29.9% and includes the income tax provision on pre-tax income and a tax provision related to establishment of a valuation allowance for deferred income tax on the future portion of the Section 163(j) limitation created by additional 2024 interest expense. The effective tax rate for 2024 changed primarily due to an increase in certain forecasted nondeductible expenses.
Current wording
We compute our interim period income tax expense or benefit by using a forecasted EAETR and adjust for any discrete items arising during the interim period and any changes in our projected full-year business interest expense and taxable income. The EAETR for 2024 is 41.0% and includes the income tax provision on pre-tax income and a tax provision related to establishment of a valuation allowance for deferred income tax on the future portion of the Section 163(j) limitation created by additional 2024 interest expense. The effective tax rate for 2024 changed primarily due to an increase in the valuation allowance against certain business interest carryover deferred tax assets.
Previous wording
Our consolidated effective income tax rates differ from the statutory rate due to timing and permanent differences between amounts calculated under accounting principles GAAP and the U.S. tax code. The consolidated effective income tax rate for 2024 may not be indicative of our effective tax rate for future periods.
Current wording
Our consolidated effective income tax rates differ from the statutory rate due to timing and permanent differences between amounts calculated under GAAP and the U.S. tax code. The consolidated effective income tax rate for 2024 may not be indicative of our effective tax rate for future periods.
Previous wording
Revenue from our SMB Payments segment was $143.8 million for the three months ended March 31, 2024, compared to $154.9 million for the three months ended March 31, 2023. The decrease of $11.2 million, or 7.2%, was primarily driven by a decrease in certain incentives and, decreased transaction count and processed merchant bankcard volume due to diversification of merchant portfolios by one of the Company's referral partners. The Company's merchant card fee revenue from the SMB Payments segment ($139.5 million for 2024 and $148.7 million for 2023) as a percentage of merchant bankcard processing dollar value during 2024 decrease to 0.9% from 1.0% during 2023. The decrease was primarily driven by changes in merchant and card mix.
Current wording
Revenue from our SMB Payments segment was $299.1 million for the six months ended June 30, 2024, compared to $302.9 million for the six months ended June 30, 2023. The decrease of $3.8 million, or 1.2%, was primarily driven by a decrease in certain incentives, decrease in rates as the Company's merchant card fee revenue from the SMB Payments segment ($290.5 million for 2024 and $292.2 million for 2023) as a percentage of merchant bankcard processing dollar value during 2024 decrease to 0.95% from 0.96% during 2023, mainly due to changes in merchant and card mix, and decrease in equipment revenue. These decreases are partially offset by additional revenue from increases in transaction count and processed merchant bankcard dollar value.
Previous wording
Revenue from our B2B Payments segment was $21.1 million for the three months ended March 31, 2024, compared to $2.8 million for the three months ended March 31, 2023. The increase of $18.3 million was primarily driven by revenue from the Plastiq business.
Current wording
Revenue from our B2B Payments segment was $21.9 million for the three months ended June 30, 2024, compared to $3.0 million for the three months ended June 30, 2023. The increase of $18.9 million was primarily driven by revenue from the Plastiq business and growth in CPX business.
Previous wording
Revenue from our Enterprise Payments segment was $40.9 million for the three months ended March 31, 2024, compared to $27.3 million for the three months ended March 31, 2023. The increase of $13.5 million or 49.6%, was primarily driven by an increase in billed clients and customer enrollments, and growth in interest income due to higher interest rates and deposit balances.
Current wording
Revenue from our Enterprise Payments segment was $43.7 million for the three months ended June 30, 2024, compared to $31.4 million for the three months ended June 30, 2023. The increase of $12.2 million or 38.9%, was primarily driven by an increase in billed clients and customer enrollments, and growth in interest income due to higher interest rates and deposit balances.
Previous wording
Operating income from our Enterprise Payments segment was $25.5 million for the three months ended March 31, 2024, compared to $12.7 million for the three months ended March 31, 2023. The increase of $12.9 million or 101.7%, was primarily driven by increases in revenues.
Current wording
Adjusted EBITDA from our Enterprise Payments segment was $37.2 million for the three months ended June 30, 2024, compared to $25.7 million for the three months ended June 30, 2023. The increase of $11.5 million or 44.8%, was primarily driven by increases in revenues.
Previous wording
Our working capital, defined as current assets less current liabilities, was $32.4 million at March 31, 2024 and $8.9 million at March 31, 2023. As of March 31, 2024, we had cash totaling $34.3 million compared to $15.9 million at March 31, 2023. These cash balances do not include restricted cash of $12.7 million and $11.0 million at March 31, 2024 and March 31, 2023, respectively, which reflects cash accounts holding customer settlement funds and cash reserves for potential losses. The current portion of long-term debt included in current liabilities was $6.7 million and $6.2 million at March 31, 2024 and March 31, 2023, respectively. At March 31, 2024, we had availability of approximately $65.0 million under our revolving credit facility.
Current wording
Our working capital, defined as current assets less current liabilities, was $23.6 million at June 30, 2024 and $3.4 million at June 30, 2023. As of June 30, 2024, we had cash totaling $34.6 million compared to $17.6 million at June 30, 2023. These cash balances do not include restricted cash of $12.6 million and $12.4 million at June 30, 2024 and June 30, 2023, respectively, which reflects cash accounts holding customer settlement funds and cash reserves for potential losses. The current portion of long-term debt included in current liabilities was $8.4 million and $6.2 million at June 30, 2024 and June 30, 2023, respectively. At June 30, 2024, we had availability of approximately $70.0 million under our revolving credit facility.
Previous wording
The following table and discussion reflect our changes in cash flows for the comparative three month periods.
Current wording
The following table and discussion reflect our changes in cash flows for the comparative six month periods.
Previous wording
Net cash provided by operating activities was $13.3 million for the three months ended March 31, 2024 compared to $27.7 million for the three months ended March 31, 2023. The $14.4 million decrease in 2024 was primarily driven by changes in the operating assets and liabilities.
Current wording
Net cash provided by operating activities was $42.0 million for the six months ended June 30, 2024 compared to $46.9 million for the six months ended June 30, 2023. The $4.9 million decrease in 2024 was primarily driven by changes in the operating assets and liabilities.
Previous wording
Net cash used in investing activities was $7.7 million and $7.6 million for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024, investing activities included additions to property, equipment and software of $6.6 million and $1.1 million related funding of new loans to ISOs. For the three months ended March 31, 2023, net cash used in investing activities included $2.7 million of cash used to fund acquisitions of intangible assets and $5.0 million of cash used to acquire property, equipment and software offset by $0.2 million related to net payments received on loans to ISOs.
Current wording
Net cash used in investing activities was $20.6 million and $13.1 million for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024, investing activities included additions to property, equipment and software of $11.7 million, $1.4 million related to net payments received on loans to ISOs and $7.5 million related to the acquisition of intangible assets and an investment in an unconsolidated entity. For the six months ended June 30, 2023, net cash used in investing activities included $2.7 million of cash used to fund acquisitions of intangible assets, $9.9 million of cash used to acquire property, equipment and software and $0.5 million related to net payments received on loans to ISOs.
Previous wording
Net cash used in financing activities was $10.3 million for the three months ended March 31, 2024, compared to $57.5 million of cash provided by financing activities for the three months ended March 31, 2023. The net cash used in financing activities for the three months ended March 31, 2024 included changes in the net obligations for funds held on the behalf of customers of $1.9 million, offset by $1.7 million of cash used for the repayment of debt, $7.0 million of cash dividends paid to redeemable senior preferred stockholders, $0.4 million of cash used for shares withheld for taxes and $3.1 million of payments of contingent consideration. The net cash provided by financing activities for the three months ended March 31, 2023 included $7.6 million of cash used for the repayment of debt, $11.4 million of cash dividends paid to redeemable senior preferred stockholders, $0.8 million of cash used for shares withheld for taxes and share repurchases, and $2.0 million of payments of contingent consideration for business combinations, which was offset by changes in the net obligations for funds held on the behalf of customers of $79.3 million.
Current wording
Net cash used in financing activities was $18.1 million for the six months ended June 30, 2024, compared to $144.1 million of cash provided by financing activities for the six months ended June 30, 2023. The net cash used in financing activities for the six months ended June 30, 2024 included changes in the net obligations for funds held on the behalf of customers of $40.9 million and borrowings under the 2024 Credit Agreement net of issue discounts of $830.2 million, offset by $661.9 million of cash used for the repayment of the principal of the 2021 Credit Agreement and debt issuance and modification costs related to the refinancing, $167.8 million related to the redemption of senior preferred stock and accumulated unpaid dividend, $2.1 million for the redemption of redeemable NCI in subsidiary, $16.4 million of cash dividends paid to redeemable senior preferred stockholders, $0.6 million of cash used for shares withheld for taxes and $4.2 million of payments of contingent consideration. The net cash provided by financing activities for the six months ended June 30, 2023 included $15.5 million of cash used for the repayment of debt, $17.9 million of cash dividends paid to redeemable senior preferred stockholders, $1.0 million of cash used for shares withheld for taxes and share repurchases, and $2.0 million of payments of contingent consideration for business combinations, which was offset by changes in the net obligations for funds held on the behalf of customers of $175.5 million and $5.0 million in borrowings under the revolving credit facility.
Previous wording
As of March 31, 2024, we had outstanding debt obligations, including the current portion and net of unamortized debt discount of $638.1 million, compared to $638.7 million at December 31, 2023, resulting in a decrease of $0.6 million. The debt balance at March 31, 2024 consisted of $652.7 million outstanding under the term facility offset by $14.6 million of unamortized debt discounts and issuance costs. Minimum amortization of the term facility are equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal, with the balance paid upon maturity. The term facility matures in April 2027 and the revolving credit facility expires in April 2026.
Current wording
As of June 30, 2024, we had outstanding debt obligations, including the current portion and net of unamortized debt discount of $817.4 million, compared to $638.7 million at December 31, 2023, resulting in an increase of $178.7 million. The increase is due to the refinancing of the 2021 Credit Agreement on May 16, 2024. The debt balance at June 30, 2024 consisted of $835.0 million outstanding under the term facility offset by $17.6 million of unamortized debt discounts and issuance costs. Minimum amortization of the term facility are equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal, with the balance paid upon maturity. The term facility matures on May 16, 2031 and the revolving credit facility matures on May 16, 2029.
Previous wording
If the aggregate principal amount of outstanding revolving loans and letters of credit under the Credit Agreement exceeds 35% of the total revolving credit facility thereunder, the loan parties are required to comply with certain restrictions on its Total Net Leverage Ratio. If applicable, the maximum permitted Total Net Leverage Ratio is: 1) 6.50:1.00 at each fiscal quarter ended September 30, 2021 through June 30, 2022; 2) 6.00:1.00 at each fiscal quarter ended September 30, 2022 through June 30, 2023; and 3) 5.50:1.00 at each fiscal quarter ended September 30, 2023 each fiscal quarter thereafter. As of March 31, 2024, the Company was in compliance with the covenants in the Credit Agreement.
Current wording
If the aggregate principal amount of outstanding revolving loans and letters of credit under the 2024 Credit Agreement exceeds 35% of the total revolving credit facility thereunder, the loan parties are required to comply with certain restrictions on its Total Net Leverage Ratio. If applicable, the maximum permitted Total Net Leverage Ratio is: 1) 6.90:1.00 at each fiscal quarter ended September 30, 2024 through December 31, 2025; 2) 6.40:1.00 at each fiscal quarter ended March 31, 2026 and each fiscal quarter thereafter. As of June 30, 2024, the Company was in compliance with the covenants in the 2024 Credit Agreement.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Salary and employee benefits expense of $44.3 million for the six months ended June 30, 2024 increased by $6.1 million, or 16.0%, from $38.2 million for the six months ended June 30, 2023, primarily due to merit increases, certain performance based non-recurring bonuses and increased headcount from the acquisition of the Plastiq business during Q3 2023.
Current report — wording carried from elsewhere
Selling, general and administrative expenses of $22.2 million for the six months ended June 30, 2024 increased by $2.3 million, or 11.6%, from $19.9 million for the six months ended June 30, 2023, primarily due to certain software and maintenance expenses and other expenses to support overall growth of the Company.
Current report — wording carried from elsewhere
Interest expense of $42.6 million for the six months ended June 30, 2024 increased by $7.1 million, or 20.1%, from $35.5 million for the six months ended June 30, 2023, due to increased interest rates and increased outstanding balance for the term loan facility used for the acquisition of the Plastiq business and redemption of redeemable senior preferred stock, offset by a decrease in the revolving credit facility.
Current report — wording carried from elsewhere
Revenue from our SMB Payments segment was $155.1 million for the three months ended June 30, 2024, compared to $147.9 million for the three months ended June 30, 2023. The increase of $7.2 million, or 4.8%, was primarily driven by increased transaction count and processed merchant bankcard dollar value. The Company's merchant card fee revenue from the SMB Payments segment ($150.7 million for 2024 and $143.5 million for 2023) as a percentage of merchant bankcard processing dollar value during 2024 remained consistent at 0.95%.