Priority Technology Holdings, Inc.

Previous wording

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to the terms "Company," "Priority," "we," "us" and "our" refer to Priority Technology Holdings, Inc. and its consolidated subsidiaries.

Current wording

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to the terms "Company," "Priority Commerce," "we," "us" and "our" refer to Priority Technology Holdings, Inc. and its consolidated subsidiaries.

Previous wording

This section includes certain components of our results of operations for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. 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, 2025.

Current wording

This section includes certain components of our results of operations for the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025. 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, 2025.

Previous wording

For the three months ended March 31, 2026, our consolidated revenue of $249.6 million increased by $24.9 million, or 11.1%, from $224.6 million for the three months ended March 31, 2025. This overall increase was mainly driven by increase in total card processing dollar value and total card transaction count in our Merchant Solutions segment, an increase in number of billed clients and higher interest income which is partially offset by lower new enrollments in our Treasury Solutions segment, and, increases in buyer funded card processing dollar value, supplier funded issuing dollar value, incentive income, and ACH transactions count in our Payables Segment.

Current wording

For the six months ended June 30, 2026, our consolidated revenue of $511.8 million increased by $47.4 million, or 10.2%, from $464.4 million for the six months ended June 30, 2025. This overall increase was mainly driven by increase in total card processing dollar value in our Merchant Solutions segment, increases in buyer funded card processing dollar value, supplier funded issuing dollar value, incentive income, and ACH transactions count in our Payables Segment, and, an increase in number of billed clients and higher interest income which was partially offset by lower new enrollments in our Treasury Solutions segment.

Previous wording

Merchant card fees revenue for the three months ended March 31, 2026 was $185.9 million an increase of $18.9 million or 11.3%, from $167.1 million for the three months ended March 31, 2025. The increase was primarily driven by an increase in total card dollar value, and the transaction count processed by the Company.

Current wording

Merchant card fees revenue for the three months ended June 30, 2026, was $199.1 million an increase of $18.6 million or 10.3%, from $180.5 million for the three months ended June 30, 2025. The increase was primarily driven by an increase in total card dollar value which was partially offset by lower total card transaction count processed by the Company.

Previous wording

Money transmission services for the three months ended March 31, 2026 was $41.7 million, an increase of $4.3 million, or 11.5%, from $37.4 million for the three months ended March 31, 2025. This increase was primarily driven by an increase in average billed clients which was partially offset by lower new customer enrollments.

Current wording

Money transmission services for the three months ended June 30, 2026, was $42.0 million, an increase of $2.7 million, or 6.9%, from $39.3 million for the three months ended June 30, 2025. This increase was primarily driven by an increase in average billed clients which was partially offset by lower new customer enrollments.

Previous wording

Outsourced services and other services revenue of $19.8 million for the three months ended March 31, 2026 increased by $2.8 million, or 16.6%, from $17.0 million for the three months ended March 31, 2025, primarily due to growth in interest income from higher balances of permissible investments driven by higher account balances offset by reduction in interest rates.

Current wording

Outsourced services and other services revenue of $18.9 million for the three months ended June 30, 2026, increased by $2.0 million, or 11.9%, from $16.9 million for the three months ended June 30, 2025, primarily due to growth in interest income from higher balances of permissible investments driven by higher account balances offset by reduction in interest rates.

Previous wording

Equipment revenue of $2.1 million for the three months ended March 31, 2026 decreased by $1.0 million, or 33.8% from $3.1 million for the three months ended March 31, 2025. The decrease was primarily due to lower point-of-sale equipment sales caused by a decrease in demand from merchants.

Current wording

Equipment revenue of $2.3 million for the three months ended June 30, 2026, decreased by $0.9 million, or 27.6% from $3.2 million for the three months ended June 30, 2025. The decrease was primarily due to lower point-of-sale equipment sales caused by a decrease in demand from merchants.

Previous wording

Cost of revenue (excludes depreciation and amortization) of $150.8 million for the three months ended March 31, 2026 increased by $13.4 million, or 9.8%, from $137.4 million for the three months ended March 31, 2025, primarily due to the corresponding increase in revenues.

Current wording

Cost of revenue (excludes depreciation and amortization) of $162.4 million for the three months ended June 30, 2026, increased by $15.0 million, or 10.1%, from $147.4 million for the three months ended June 30, 2025, primarily due to the corresponding increase in revenues.

Previous wording

Salary and employee benefits expense of $28.5 million for the three months ended March 31, 2026 increased by $2.7 million, or 10.7%, from $25.8 million for the three months ended March 31, 2025, primarily due to merit increases, increased headcount to support overall growth of the Company and from the acquisition of Sila, Boom and DMS, and increased stock based compensation related to long term incentive awards to executives.

Current wording

Salary and employee benefits expense of $29.2 million for the three months ended June 30, 2026, increased by $2.1 million, or 7.7%, from $27.1 million for the three months ended June 30, 2025, primarily due to merit increases, and increased headcount to support overall growth of the Company and from the acquisition related activity.

Previous wording

Depreciation and amortization expense of $17.6 million for the three months ended March 31, 2026 increased by $3.8 million, or 27.9%, from $13.8 million for the three months ended March 31, 2025, primarily due to the addition of intangible assets from the Letus, Sila, Boom and DMS acquisitions and software capitalization.

Current wording

Depreciation and amortization expense of $20.9 million for the three months ended June 30, 2026, increased by $6.8 million, or 48.3%, from $14.1 million for the three months ended June 30, 2025, primarily due to the addition of intangible assets from the acquisition related activity and software capitalization.

Previous wording

Selling, general and administrative expenses of $19.2 million for the three months ended March 31, 2026 increased by $4.1 million, or 27.4%, from $15.1 million for the three months ended March 31, 2025, primarily due to increase in professional and legal charges related to the Company's go-private project, increased marketing and software expenses to support overall growth and cloud migration, expenses related to acquired businesses and assets, which was partially offset by legal and other expenses related to the Company's secondary offering of common shares incurred during the quarter ended March 31, 2025.

Current wording

Selling, general and administrative expenses of $36.1 million for the six months ended June 30, 2026, increased by $7.0 million, or 24.3%, from $29.0 million for the six months ended June 30, 2025, primarily due to increase in professional and legal charges related to the Company's on-going special committee process, increased marketing, telecommunications and software expenses to support overall growth and cloud migration, expenses related to acquired businesses and assets, which was partially offset by decreased accounting expenses.

Previous wording

Interest expense of $21.0 million for the three months ended March 31, 2026 decreased by $2.2 million, or (9.3)%, from $23.2 million for the three months ended March 31, 2025, due to decreased SOFR rates and beneficial changes in margin from the recent refinancing which was partially offset by increased outstanding balances of the 2024 Credit Agreement and the Residual Finance credit facility established during the quarter ended September 30, 2025.

Current wording

Interest expense of $21.1 million for the three months ended June 30, 2026, decreased by $2.0 million, or 8.7%, from $23.1 million for the three months ended June 30, 2025, due to decreased SOFR rates and beneficial changes in margin from the recent refinancing which was partially offset by increased outstanding balances of the 2024 Credit Agreement and the Residual Finance Credit Facility established during the quarter ended September 30, 2025.

Previous wording

We compute our interim period income tax expense 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 2026 is 26.5% and includes the income tax provision on pre-tax income. The effective tax rate for 2026 changed primarily due to a year over year change in the discrete tax benefit associated with stock-based compensation vestings.

Current wording

We compute our interim period income tax expense 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 2026 is 27.7% and includes the income tax provision on pre-tax income. The effective tax rate for 2026 changed primarily due to a year over year change in the discrete tax benefit associated with stock-based compensation vestings.

Previous wording

Revenue from our Merchant Solutions segment was $161.8 million for the three months ended March 31, 2026, compared to $151.7 million for the three months ended March 31, 2025. The increase of $10.1 million, or 6.7%, was primarily driven by an increase in merchant card fee rate, increased total card processing dollar value and total card transaction count. The Company's merchant card fee revenue from the Merchant Solutions segment ($158.5 million for three months ended March 31, 2026 and $147.5 million for the three months ended March 31, 2025) as a percentage of total card processing dollar value during the three months ended March 31, 2026 increased to 0.87% from 0.83% as compared to the three months ended March 31, 2025.

Current wording

Revenue from our Merchant Solutions segment was $175.8 million for the three months ended June 30, 2026, compared to $163.2 million for the three months ended June 30, 2025. The increase of $12.5 million, or 7.7%, was primarily driven by acquisition related activity, an increase in merchant card fee rate, and increased total card processing dollar value which was partially offset by a decrease in total card transaction count. The Company's merchant card fee revenue from the Merchant Solutions segment ($171.9 million for three months ended June 30, 2026 and $158.8 million for the three months ended June 30, 2025) as a percentage of total card processing dollar value during the three months ended June 30, 2026 increased to 0.88% from 0.84% as compared to the three months ended June 30, 2025.

Previous wording

Adjusted EBITDA from our Merchant Solutions segment was $27.7 million for the three months ended March 31, 2026, compared to $25.7 million for the three months ended March 31, 2025. The increase of $2.0 million, or 7.9% was primarily driven by an increase in revenue, offset by mix related margin compression, certain chargeback losses, and increase in other operating expenses.

Current wording

Adjusted EBITDA from our Merchant Solutions segment was $30.9 million for the three months ended June 30, 2026, compared to $27.7 million for the three months ended June 30, 2025. The increase of $3.1 million, or 11.3% was primarily driven by an increase in revenue and the Boom Commerce acquisition, which was partially offset by mix related margin compression, and increase in other operating expenses.

Previous wording

Revenue from our Payables segment was $32.4 million for the three months ended March 31, 2026, compared to $23.9 million for the three months ended March 31, 2025. The increase of $8.5 million, or 35.6% was primarily driven by increased buyer funded card processing dollar value, certain incentive income, ACH transaction count, supplier funded issuing dollar value, and interest from higher account balances.

Current wording

Revenue from our Payables segment was $62.9 million for the six months ended June 30, 2026, compared to $49.0 million for the six months ended June 30, 2025. The increase of $13.9 million, or 28.4% was primarily driven by increased buyer funded card processing dollar value, certain incentive income, ACH transaction count, supplier funded issuing dollar value, and interest from higher account balances.

Previous wording

Adjusted EBITDA from our Payables segment of $5.5 million for the three months ended March 31, 2026, compared to $3.5 million for the three months ended March 31, 2025.The increase in Adjusted EBITDA of $1.9 million or 55.1% was contributed by $4.0 million in the supplier funded business (driven by increase in revenues) and $1.5 million in the buyer funded business (driven by increased processing volume which was partially offset by mix related margin compression).

Current wording

Adjusted EBITDA from our Payables segment was $8.6 million for the six months ended June 30, 2026, compared to $7.3 million for the six months ended June 30, 2025.The increase in Adjusted EBITDA of $1.3 million or 17.5% was contributed by $2.3 million in the supplier funded business, driven by increase in revenues and operating income, which was partially offset by a decrease of $1.0 million in the buyer funded business, driven by mix related margin compression partially offset by increased processing volume.

Previous wording

(1)This represents the average total account balance in the Treasury Solutions segment, and excludes the deposits and balances maintained in the Merchant Solutions and Payables segments. The total account and deposit balances as of March 31, 2026 and 2025, were $1.8 billion and $1.3 billion, respectively.

Current wording

(1) This represents the average total account balance in the Treasury Solutions segment, and excludes the deposits maintained in the Merchant Solutions and Payables segments. The total account and deposit balances as of June 30, 2026 and 2025, were $1.8 billion and $1.4 billion, respectively.

Previous wording

Revenue from our Treasury Solutions segment was $58.8 million for the three months ended March 31, 2026, compared to $50.1 million for the three months ended March 31, 2025. The increase of $8.8 million, or 17.5%, was primarily driven by an increase in average billed clients and average total account balances, acquisition of Sila, and growth in interest income due to higher balances of permissible investments offset by a reduction in interest rates and decreased average monthly enrollments.

Current wording

Revenue from our Treasury Solutions segment was $60.5 million for the three months ended June 30, 2026, compared to $52.7 million for the three months ended June 30, 2025. The increase of $7.9 million, or 14.9%, was primarily driven by an increase in average billed clients and average total account balances, the acquisition of Sila, and growth in interest income due to higher balances of permissible investments offset by a reduction in interest rates and decreased average monthly enrollments.

Previous wording

Adjusted EBITDA from our Treasury Solutions segment was $46.7 million for the three months ended March 31, 2026, compared to $42.4 million for the three months ended March 31, 2025. The increase of $4.2 million, or 10.0%, was primarily driven by increases in revenues.

Current wording

Adjusted EBITDA from our Treasury Solutions segment was $47.5 million for the three months ended June 30, 2026, compared to $45.6 million for the three months ended June 30, 2025. The increase of $2.0 million, or 4.3%, was primarily driven by increases in revenues.

Previous wording

Our working capital, defined as current assets less current liabilities, was $122.9 million at March 31, 2026 and $61.9 million at March 31, 2025. As of March 31, 2026, we had cash totaling $92.2 million compared to $47.6 million at March 31, 2025. These cash balances do not include restricted cash of $16.4 million and $11.5 million at March 31, 2026 and March 31, 2025, 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 $0.5 million and $1.9 million at March 31, 2026 and March 31, 2025, respectively. At March 31, 2026, we had availability of approximately $100.0 million under our revolving credit facility.

Current wording

Our working capital, defined as current assets less current liabilities, was $151.8 million at June 30, 2026 and $76.7 million at June 30, 2025. As of June 30, 2026, we had cash totaling $120.3 million compared to $50.6 million at June 30, 2025. These cash balances do not include restricted cash of $17.4 million and $14.2 million at June 30, 2026 and June 30, 2025, respectively, which reflects cash accounts holding customer settlement funds, cash reserves for potential losses and other contractual restricted cash balances. The current portion of long-term debt included in current liabilities was $3.1 million and $4.3 million at June 30, 2026 and June 30, 2025, respectively. At June 30, 2026, we had availability of approximately $100.0 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 $23.8 million for the three months ended March 31, 2026 compared to $10.0 million for the three months ended March 31, 2025. The $13.8 million increase was driven by an increase in net income and favorable non-cash adjustments and changes in the operating assets and liabilities.

Current wording

Net cash provided by operating activities was $55.3 million for the six months ended June 30, 2026 compared to $27.1 million for the six months ended June 30, 2025. The $28.2 million increase was driven by an increase in net income and favorable non-cash adjustments and changes in the operating assets and liabilities.

Previous wording

Cash Provided by/(Used in) Investing Activities

Current wording

Cash Used in Investing Activities

Previous wording

Net cash provided by investing activities was $11.4 million for the three months ended March 31, 2026, compared to $9.7 million of cash used in investing activities for the three months ended March 31, 2025. For the three months ended March 31, 2026, investing activities included the $25.0 million redemption of short-term investments of MTL funds offset by $8.1 million related to net funding of new loans to ISOs and $5.5 million additions to property, equipment and software. For the three months ended March 31, 2025, net cash used in investing activities included additions to property, equipment and software of $5.1 million, $0.1 million related to net funding of new loans to ISOs and $4.5 million related to the acquisition of a business.

Current wording

Net cash used in investing activities was $203.0 million for the six months ended June 30, 2026, compared to $21.1 million of cash used in investing activities for the six months ended June 30, 2025. For the six months ended June 30, 2026, investing activities included the $12.6 million additions to property, equipment and software, $3.0 million related to net funding of new loans to ISOs and ISVs, $185.0 million net short-term investments of MTL funds, and $2.4 million related to residual purchases and investments in unconsolidated entities. For the six months ended June 30, 2025, net cash used in investing activities included additions to property, equipment and software of $13.0 million, $1.4 million related to net funding of new loans to ISOs and ISVs, $4.5 million related to the acquisition of a business and $2.3 million investments in unconsolidated entities.

Previous wording

Net cash provided by financing activities was $70.6 million and $47.3 million for the three months ended March 31, 2026 and 2025, respectively. The net cash provided by financing activities for the three months ended March 31, 2026, included borrowings under the Residual Finance credit facility of $6.8 million and changes in the net obligations for funds held on the behalf of customers of $65.0 million, offset by $0.2 million of cash used for the repayment of the Residual Finance credit facility, $0.9 million of cash used to purchase shares withheld for taxes, and $0.1 million for a deferred consideration payment. The net cash used in financing activities for the three months ended March 31, 2025, included changes in the net obligations for funds held on the behalf of customers of $59.1 million and proceeds from the exercise of stock options of $0.1 million offset by $10.0 million of cashed used for the unscheduled repayment of the term loan principal for the 2024 Credit Agreement, $1.5 million of cash used for shares withheld for taxes and $0.4 million of payments of contingent consideration.

Current wording

Net cash provided by financing activities was $83.2 million and $178.1 million for the six months ended June 30, 2026 and 2025, respectively. The net cash provided by financing activities for the six months ended June 30, 2026, included borrowings under the Residual Finance credit facility of $7.7 million and changes in the net obligations for funds held on the behalf of customers of $77.4 million, offset by $0.2 million of cash used for the repayment of the Residual Finance credit facility, $1.5 million of cash used to purchase shares withheld for taxes, and $0.1 million for a deferred consideration payment. The net cash used in financing activities for the six months ended June 30, 2025, included changes in the net obligations for funds held on the behalf of customers of $190.9 million and proceeds from the exercise of stock options of $0.3 million offset by $10.0 million of cash used for the unscheduled repayment of the term loan principal, $2.3 million of cash used to purchase shares withheld for taxes and $0.8 million for payments of deferred consideration.

Previous wording

As of March 31, 2026, we had outstanding debt obligations, including the current portion and unamortized debt discount of $1.06 billion, compared to $1.06 billion at December 31, 2025, resulting in an increase due to net borrowings from the Residual Finance credit facility. The debt balance at March 31, 2026 consisted of $1.02 billion outstanding under the 2024 Credit Agreement's (as amended) term facility and $0.04 billion under the Residual Finance Credit Facility's term facility offset by $15.6 million of unamortized debt discounts and issuance costs.

Current wording

As of June 30, 2026, we had outstanding debt obligations, including the current portion and unamortized debt discount of $1,062.9 million, compared to $1,055.4 million at December 31, 2025, resulting in an increase due to net borrowings from the Residual Finance credit facility. The debt balance at June 30, 2026 consisted of $1,020.0 million outstanding under the 2024 Credit Agreement's (as amended) term facility and $42.9 million under the Residual Finance Credit Facility's term facility offset by $15.1 million of unamortized debt discounts and issuance costs.