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What changed in Priority Technology Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Priority Technology Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+234 added−214 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-12)

Top changes in Priority Technology Holdings, Inc.'s 2024 10-K

234 paragraphs added · 214 removed · 175 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

60 edited+13 added−16 removed65 unchanged
Biggest changeWe are subject to a variety of federal, state and local laws and regulations and the rules and standards of the payment networks that are utilized to provide our electronic payment services, as more fully described below. 12 Table of Contents Wall Street Reform and Consumer Protection Act The Dodd-Frank Act resulted in significant structural and other changes to the regulation of the financial services industry.
Biggest changeGovernment Regulation and Payment Network Rules We operate in an increasingly complex legal and regulatory environment. We are subject to a variety of federal, state and local laws and regulations and the rules and standards of the payment networks that are utilized to provide our Electronic Payment services, as more fully described below.
Risk Audit – Transactions flagged by our risk monitoring systems or that demonstrate suspicious activity traits that have been flagged for review can result in funds being held in addition to other risk mitigation actions. The risk mitigation actions can include: 1) non-authorization of the transaction; 2) debit of reserves; or 3) termination of the processing agreement.
Risk Audit – Transactions flagged by our risk monitoring systems or that demonstrate suspicious activity traits that have been flagged for review can result in funds being held in addition to other risk mitigation actions. The risk mitigation actions can include: 1) non-authorization of the transaction; 2) debit of reserves; or 3) termination of the processing or services agreement.
Deploy Industry Specific Payment Technology We intend to continue to enhance and deploy our technology-enabled payment solutions and our capabilities to collect, store and send money into industry-specific verticals. We continue to identify and evaluate new, attractive industries where we can deliver differentiated technology-enabled payment solutions that meet merchants' industry-specific needs.
Deploy Industry Specific Payment Technology We intend to continue to enhance and deploy our technology-enabled payment solutions and our capabilities to collect, store, lend and send money into industry-specific verticals. We continue to identify and evaluate new, attractive industries where we can deliver differentiated technology-enabled payment solutions that meet merchants' industry-specific needs.
These laws and regulations include: 1) the federal Gramm-Leach-Bliley Act of 1999, which applies to a broad range of FIs and to companies 13 Table of Contents that provide services to FIs in the U.S.; 2) certain health care technology laws, including HIPAA and the Health Information Technology for Economic and Clinical Act; and 3) the CCPA, which establishes a new privacy framework for covered businesses by: i) creating an expanded definition of personal information; ii) establishing new data privacy rights for consumers in the State of California; iii) imposing special rules on the collection of consumer data from minors; and iv) creating a new and potentially severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.
These laws and regulations include: 1) the federal Gramm-Leach-Bliley Act of 1999, which applies to a broad range of FIs and to companies that provide services to FIs in the U.S.; 2) certain health care technology laws, including HIPAA and the Health Information Technology for Economic and Clinical Act; and 3) the CCPA, which establishes a new privacy framework for covered businesses by: i) creating an expanded definition of personal information; ii) establishing new data privacy rights for consumers in the State of California; iii) imposing special rules on the collection of consumer data from minors; and iv) creating a new and potentially severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.
Our B2B segment obtains its partner clients through: 1) direct sales initiatives; 2) ISVs and business partnerships; 3) the card networks (Mastercard and Visa); 4) large U.S. banking institutions and 5) other card issuer referral partners. We support a direct vendor sales model that provides turn-key merchant development, product sales and supplier enablement programs.
Our B2B segment obtains its partner clients through: 1) direct sales initiatives; 2) ISVs and business partnerships; 3) the card networks (Mastercard, Visa and American Express); 4) large U.S. banking institutions and 5) other card issuer referral partners. We support a direct vendor sales model that provides turn-key merchant development, product sales and supplier enablement programs.
This segment is quickly growing as marketplaces, gig economy platforms, software partners, and legacy business platforms are incorporating features of payment processing and embedded finance services into their customer experience and enhance their offering. Expand our Network of Distribution Partners We have established and maintained a strong position within the reseller community with approximately 1,200 partners.
This segment is quickly growing as marketplaces, gig economy platforms, software partners, and legacy business platforms are incorporating features of payment processing and embedded finance services into their customer experience and enhance their offering. Expand our Network of Distribution Partners We have established and maintained a strong position within the reseller community with approximately 1,100 partners.
These include: 1) charge-back dispute resolution; 2) merchant and reseller funds (reserves or processed batches) withheld; 3) inclusion on Network Match List to notify the industry of a "bad actor"; and/or 4) legal action. Investments - We use our primary portfolio to provide for the investment of excess funds at acceptable risk levels.
These include: 1) charge-back dispute resolution; 2) merchant and reseller funds (reserves or processed batches) withheld; 3) inclusion on Network Match List to notify the industry of a "bad actor"; and/or 4) legal action. Investments - We use our primary portfolio to provide for the investment of excess funds at acceptable risk levels as permitted.
This transaction-level risk module, housed within MX Connect, forms the foundational risk management framework that enables the Company to optimize transaction activity and processing scale while preserving a modest aggregate risk profile that has resulted in historically low losses. Real-Time Risk Monitoring – Merchant transactions are monitored on a transactional basis to proactively enforce risk controls.
This transaction-level risk module, housed within MX Connect, forms the foundational risk management framework that enables the Company to optimize transaction activity and processing scale while preserving a modest aggregate risk profile that has resulted in historically low losses. Real-Time Risk Monitoring – Customer transactions are monitored on a transactional basis to proactively enforce risk controls.
Passport's offering provides those partners with a fully automated, scalable and integrated financial tool to collect, store, lend and send money for their customers. Our market strategy has resulted in a merchant base that we believe is diversified across both industries and geographies resulting in, what we believe, is more stable average profitability per merchant.
Priority's offering provides those partners with a fully automated, scalable and integrated financial tool to collect, store, lend and send money for their customers. Our market strategy has resulted in a merchant base that we believe is diversified across both industries and geographies resulting in, what we believe, is more stable average profitability per merchant.
Initial Underwriting – Central to our risk management process are our front-line underwriting policies that vet all resellers and merchants prior to their contractual arrangements with us. Our automated risk systems access: 1) guarantor information; 2) corporate ownership details; 3) anti-money laundering information; and, 4) OFAC and FinCEN information from a variety of integrated databases.
Initial Underwriting – Central to our risk management process are our front-line underwriting policies that vet all resellers and customers prior to their contractual arrangements with us. Our automated risk systems access: 1) guarantor information; 2) corporate ownership details; 3) anti-money laundering information; and, 4) OFAC and FinCEN information from a variety of integrated databases.
Our risk systems provide automated evaluation of merchant transaction activity against initial underwriting settings. Transactions that are outside underwriting parameters are queued for further investigation. Also, resellers whose merchant portfolio represents a concentration of investigated merchants are evaluated for risk action (i.e., increased reserves or contract termination).
Our risk systems provide automated evaluation of customer transaction activity against initial underwriting settings. Transactions that are outside underwriting parameters are queued for further investigation. Also, resellers whose customer portfolio represents a concentration of investigated merchants are evaluated for risk action (i.e., increased reserves or contract termination).
Alongside CPX as part of the AP suite, Priority acquired the assets of Plastiq Inc. through its subsidiary Plastiq, Powered by Priority, LLC, a leading B2B payments company, in the third fiscal quarter of 2023, and has helped tens of thousands of businesses improve cash flow with instant access to working capital, while automating and enabling control over all aspects of accounts payable and receivable.
Alongside CPX as part of the AP suite, Priority acquired the assets of Plastiq Inc. through its subsidiary Plastiq, Powered by Priority, LLC, a leading B2B payments company, in the third fiscal quarter of 2023, and has helped tens of thousands of 7 Table of Contents businesses improve cash flow with instant access to working capital, while automating and enabling control over all aspects of accounts payable and receivable.
The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 15 Table of Contents
The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 16 Table of Contents
The results of our initial merchant underwriting process inform the transaction-level risk limits for volume, average ticket, transaction types and authorization codes that are captured by our CYRIS risk module - a proprietary risk system that monitors and reports transaction risk activity to our risk team.
The results of our initial customer underwriting process inform the transaction-level risk limits for volume, average ticket, transaction types and authorization codes that are captured by our CYRIS risk module - a proprietary risk system that monitors and reports transaction risk activity to our risk team.
By creating a cost-efficient environment that facilitates the combination of ongoing product innovation to drive organic growth and stable cash flow to fund acquisitions, we anticipate ongoing economies of scale and increased margins over time. • Experienced Management Team Led by Industry Veterans – Our executive management team has a record of execution in the merchant acquiring and technology-enabled payments industry.
By creating a cost-efficient environment that facilitates the combination of ongoing product innovation to drive organic growth and stable cash flow to fund acquisitions, we anticipate ongoing economies of scale and increased margins over time. 9 Table of Contents • Experienced Management Team Led by Industry Veterans – Our executive management team has a record of execution in the merchant acquiring and technology-enabled payments industry.
Through Passport, Priority delivers a fully embedded finance solution to customers that manages the inflows and outflows, and reconciliation, of all forms of payments (ACH, wire, check, credit and debit) for any number of clients from a single account.
Priority delivers a fully embedded finance solution to customers that manages the inflows and outflows, and reconciliation, of all forms of payments (ACH, wire, check, credit and debit) for any number of clients from a single account.
We deliver innovative business management products and add-on features that meet the needs of SMBs across different vertical markets. Additionally, with our embedded finance offerings and money transmissions licenses in 46 U.S. states, the District of Columbia and two U.S. territories, we are uniquely positioned to collect, store, lend and send money on behalf of our customers.
We deliver innovative business management products and add-on features that meet the needs of SMBs across different vertical markets. Additionally, with our embedded finance offerings and money transmissions licenses in forty six U.S. states, the District of Columbia and two U.S. territories, we are uniquely positioned to collect, store, lend and send money on behalf of our customers.
Given that a number of our clients are FIs that are directly subject to U.S. federal anti-money laundering laws and regulations, we have developed an anti-money laundering compliance program to best assist our clients in meeting such legal and regulatory requirements. We are subject to certain economic and trade sanctions programs that are administered by OFAC of the U.S.
Given that a number of our clients are FIs that are directly subject to U.S. federal anti-money laundering laws and regulations, we have developed an anti-money laundering compliance program to best assist our clients in meeting such legal and regulatory requirements. 14 Table of Contents We are subject to certain economic and trade sanctions programs that are administered by OFAC of the U.S.
Since inception, we have built a native tec hnology platform that provides all forms of payments (card acquiring and issuing, ACH, check and wire) and embedded finance services that serve customers of any size.
Since inception, we have built a native tec hnology platform that provides all forms of payments (card acquiring and issuing, ACH, check and wire) and embedded finance solutions that serve customers of any size.
Other Regulation The Tax Act of 2008 requires certain merchant acquiring entities and third-party settlement organizations to provide information returns for each calendar year with respect to payments made in settlement of electronic payment transactions and 14 Table of Contents third-party payment network transactions occurring in that calendar year. Reportable transactions are also subject to backup withholding requirements.
Other Regulation The Tax Act of 2008 requires certain merchant acquiring entities and third-party settlement organizations to provide information returns for each calendar year with respect to payments made in settlement of Electronic Payment transactions and third-party payment network transactions occurring in that calendar year. Reportable transactions are also subject to backup withholding requirements.
As a TSP, we are subject to audits by an interagency group consisting of the Federal Reserve System, the FDIC, and the Office of the Comptroller of the Currency. Through our subsidiary, Finxera, Inc., we also hold money transmission licenses in 46 U.S. states, the District of Columbia and two U.S. territories.
As a TSP, we are subject to audits by an interagency group consisting of the Federal Reserve System, the FDIC, and the Office of the Comptroller of the Currency. Through our subsidiary, Finxera, Inc., we also hold money transmission licenses in forty six U.S. states, the District of Columbia and two U.S. territories.
Industry Overview The payment processing industry provides merchants with credit, debit, gift, loyalty card and other payment processing services, along with related value-added solutions and information services. The industry continues to grow, driven by wider merchant acceptance, increased use of Electronic Payments, advances in payment technology and the disruption in banking by fintech providers.
Industry Overview The payment processing industry provides businesses with credit, debit, gift, loyalty card and other payment processing services, along with related value-added solutions and information services. The industry continues to grow, driven by wider acceptance, increased use of Electronic Payments, advances in payment technology and the disruption in banking by fintech providers.
The appetite of both merchants and consumers for new alternatives to traditional payment options remains top of mind and big tech companies, fintechs, challenger banks and other non-bank entrants are driving market disruption by offering customers better user experiences at lower prices.
The appetite of both merchants and consumers for new alternatives to traditional payment options remains top of mind and big tech companies, fintechs, challenger banks and other non-bank entrants are driving market disruption by offering 8 Table of Contents customers better user experiences at lower prices.
We believe this shift represents a significant opportunity given the high growth rates of mobile 7 Table of Contents payments volume, higher fees for card-not-present and cross-border processing and potential for the in-app economy to stimulate and/or alter consumer spending behavior.
We believe this shift represents a significant opportunity given the high growth rates of mobile payments volume, higher fees for card-not-present and cross-border processing and potential for the in-app economy to stimulate and/or alter consumer spending behavior.
Key Industry Trends The following are key trends we believe are impacting the merchant acquiring/payment processing industry: • Trend Toward Electronic Transactions – We believe the continued shift from cash/paper payments toward electronic/card payments will drive growth for merchant acquirers and processors as volume continues to grow correspondingly.
Key Industry Trends The following are key trends we believe are impacting the fintech and payments processing industry: • Trend Toward Electronic Transactions – We believe the continued shift from cash/paper payments toward electronic/card payments will drive growth for merchant acquirers and processors as volume continues to grow correspondingly.
We actively seek potential acquisition candidates that exhibit certain attractive attributes including predictable and recurring revenue, a scalable operating model, low capital intensity, complementary 9 Table of Contents technology offerings and a strong cultural fit. Our operating infrastructure is purpose-built to rapidly and seamlessly consolidate complementary businesses into our ecosystem all while optimizing revenue and cost synergies.
We actively seek potential acquisition candidates that exhibit certain attractive attributes including predictable and recurring revenue, a scalable operating model, low capital intensity, complementary technology offerings and a strong cultural fit. Our operating infrastructure is purpose-built to rapidly and seamlessly consolidate complementary businesses into our ecosystem all while optimizing revenue and cost synergies.
Priority delivers value to its partners by leveraging its payments and embedded finance technology to deliver solutions that power modern commerce for SMBs and enterprise software and business partners. We handle the complexities of payments and embedded finance to free our partners to focus on their core business objectives.
Priority delivers value to its partners by leveraging its payments and embedded finance technology to deliver solutions that power modern commerce for SMBs and enterprise software and business partners. We handle the complexities of payments and embedded finance to allow partners to focus on their core business objectives.
Our growth has been underpinned by three key strengths: 1) market leading proprietary product platforms in SMB, B2B and Enterprise Payments verticals; 2) focused distribution engines dedicated to helping our partners monetize their merchant payment networks; and 3) a cost-efficient, agile payment and business processing infrastructure, purpose-built to support our partners in operating in these distinct market verticals.
Our growth has been underpinned by three key strengths: 1) market leading proprietary product platforms in SMB, B2B and Enterprise Payments verticals; 2) focused distribution engines dedicated to helping partners monetize their merchant payment networks; and 3) a cost-efficient, agile payment and business processing infrastructure, purpose-built to support our partners’ operations.
Risk Management Our thoughtful merchant and reseller underwriting policies combined with our forward-looking transaction monitoring capabilities have enabled us to maintain low credit loss performance. Our risk management strategies are informed by a team with experience managing merchant acquiring risk operations that are augmented by our rules-based modern systems designed to manage risk at the transaction level.
Risk Management Our thoughtful customer and reseller underwriting policies combined with our forward-looking transaction monitoring capabilities have enabled us to maintain low credit loss performance. Our risk management strategies are informed by a team with experience managing payments and banking risk operations that are augmented by our rules-based modern systems designed to manage risk at the transaction level.
Plastiq Accept offers an alternative to expensive merchant services, enabling businesses to accept credit cards with no merchant 6 Table of Contents fees and get paid across any customer touch point, including a website, invoice, checkout process, and in person via QR code.
Plastiq Accept offers an alternative to expensive merchant services, enabling businesses to accept credit cards with no merchant fees and get paid across any customer touch point, including a website, invoice, checkout process, and in person via QR code.
Merchants are periodically reviewed to assess any risk adjustments based upon their overall financial health and compliance with network standards. Merchant transaction activity is investigated for instances of business activity changes or credit impairment (and improvement).
Customers are periodically reviewed to assess any risk adjustments based upon their overall financial health and compliance with network standards. Customer transaction activity is investigated for instances of business activity changes or credit impairment (and improvement).
Deploy our Embedded Finance Solution to Enterprise Customers Our Enterprise Payments segment, and its flagship product Passport enables software partners and business platform customers to embed our payments and treasury solutions into their core operating and business systems that deliver a fully automated and digital experience to collect, store, lend and send money for their customers.
Deploy our Embedded Finance Solution to Enterprise Customers Our Enterprise Payments segment, enables software partners and business platform customers to embed our banking and treasury solutions into their core operating and business systems that deliver a fully automated and digital experience to collect, store, lend and send money for their customers.
Priority maintains a global business platform with 983 employees operating from its headquarters in Alpharetta, GA and regional offices in other locations, including New York, NY; Hicksville, NY; Chattanooga, TN; Raleigh, NC; Dallas, TX; San Francisco, CA; and Chandigarh, India.
Priority maintains a global business platform with 1,019 employees operating from its headquarters in Alpharetta, GA and regional offices in other locations, including New York, NY; Hicksville, NY; Nashville,TN; Chattanooga, TN; Raleigh, NC; Houston, TX; Dallas, TX; San Francisco, CA; and Chandigarh, India.
We believe this will drive strong growth and profitability. Accretive Acquisitions With a consistent, long-term goal of maximizing stockholder value, we intend to selectively pursue strategic and tactical acquisitions that meet our established criteria.
We believe this will drive strong growth and profitability. 10 Table of Contents Accretive Acquisitions With a consistent, long-term goal of maximizing shareholder value, we intend to selectively pursue strategic and tactical acquisitions that meet our established criteria.
Priority's solutions are delivered via internally developed payment applications and services to customers in the following business segments: • SMB Acquiring Solutions : Provides full-service acquiring and payment-enabled solutions for B2C transactions, leveraging Priority's proprietary software platform, distributed through ISO, direct sales and vertically focused ISV channels. • B2B Payables : Provides market-leading AP automation solutions to corporations, software partners and industry leading FIs (including Citibank and Mastercard). • Enterprise Payments and BaaS : Provides embedded finance and BaaS solutions to customers to modernize legacy platforms and accelerate software partners' strategies to monetize payments. 5 Table of Contents The MX product suite provides technology-enabled payment acceptance and business management capabilities to merchants, enterprises and our distribution partners.
Priority's solutions are delivered via internally developed payment applications and services to customers in the following business segments: • SMB Payments : Provides full-service acquiring and payment-enabled solutions for B2C transactions, leveraging Priority's proprietary software platform, distributed through ISO, direct sales and vertically focused ISV channels. • B2B Payments : Provides market-leading AP automation solutions to corporations, software partners and industry leading FIs (including Citibank, Visa and Mastercard) in addition to improving cash flows by providing instant access to working capital. • Enterprise Payments : Provides embedded finance and BaaS solutions to customers to modernize legacy platforms and accelerate software partners' strategies to monetize payments. 6 Table of Contents The MX product suite provides technology-enabled payment acceptance and business management capabilities to merchants, enterprises and our distribution partners.
These processors in turn have agreements with card networks such as Visa and Mastercard, through which the transaction information is routed in exchange for network fees. To provide processing services, merchant acquirers like Priority must be registered with the card networks (e.g., Visa and Mastercard).
These third parties are compensated for their services. These processors in turn have agreements with card networks such as Visa and Mastercard, through which the transaction information is routed in exchange for network fees. To provide processing services, merchant acquirers like Priority must be registered with the card networks (e.g., Visa, Mastercard, American Express, Discover, etc.).
The platform today manages over 700,000 active accounts and, through its money transmission licenses in 46 U.S. states, the District of Columbia and two U.S. territories, handles over $795 million in deposits across a growing number of banking partners.
The platform today manages over 930,000 active accounts and, through its money transmission licenses in forty six U.S. states, the District of Columbia and two U.S. territories, handles over $945.0 million in deposits across a growing number of banking partners.
To register with a card network in the U.S., acquirers must maintain relationships with banks willing to sponsor the merchant acquirer's adherence to the rules and standards of the card networks, or a sponsor bank. We maintain sponsor bank relationships with Wells Fargo, Synovus Bank, Pueblo Bank and Axiom Bank. We maintain a card issuing relationship with Sutton Bank.
To register with a card network in the U.S., acquirers must maintain relationships with banks willing to sponsor the merchant acquirer's adherence to the rules and standards of the card networks, or a sponsor bank. We maintain sponsor bank relationships with Wells Fargo, Synovus Bank, Pueblo Bank and Georgia Banking Company ("GBC").
We face competition from other BaaS providers and banks directly. We differentiate ourselves to merchants and enterprise customers through our ability to innovate and develop new products and services that offer new payment experiences for customers on our platform. Our agility, risk management and suite of products within a single platform differentiates us from competitors.
We differentiate ourselves to merchants and enterprise customers through our ability to innovate and develop new products and services that offer new payment experiences for customers on our platform. Our agility, regulatory compliance, risk management and suite of products within a single platform differentiates us from competitors.
Competitive Strengths We possess certain attributes that we believe differentiate us as a leading provider of merchant acquiring, commercial payment and embedded finance solutions in the U.S. Our key competitive strengths include: • Diverse Reseller Community – We maintain strong reseller relationships with approximately 1,200 partners, including ISOs, FIs, ISVs, VARs and other referral partners.
Competitive Strengths We possess certain attributes that we believe differentiate us as a leading provider of merchant services, payables and banking & treasury solutions in the U.S. Our key competitive strengths include: • Diverse Reseller Community – We maintain strong reseller relationships with approximately 1,100 partners, including ISOs, FIs, ISVs, VARs and other referral partners.
In addition to these contractual measures, we also rely on a combination of trademarks, copyrights, registered domain names, and patent rights to help protect the Priority brand and our other intellectual property. Human Capital Management As of December 31, 2023, we employed 983 employees, of which 974 were employed full-time. We have employees residing throughout the U.S., Canada and India.
In addition to these contractual measures, we also rely on a combination of trademarks, copyrights, registered domain names, and patent rights to help protect the Priority brand and our other intellectual property. Human Capital Management As of December 31, 2024, we employed 1,019 employees of which 1005 were employed full time.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. Growth and Development Our strategy to develop and retain the best talent includes an emphasis on employee training and development.
We have employees residing throughout the U.S., Canada and India. None of our employees are represented by a labor union or covered by a collective bargaining agreement. 15 Table of Contents Growth and Development Our strategy to develop and retain the best talent includes an emphasis on employee training and development.
We generate revenue primarily from payment processing transactions, and to a lesser extent, from monthly subscription services and other solutions provided to customers and interest income from the permissible investments of the deposits we hold. Payment processing fees are generated from the ongoing sales of our merchants and are governed by multi-year merchant contracts.
We generate revenue primarily from payment processing transactions, and from monthly services and other solutions provided to customers and interest income from the permissible investments of the account balances we hold. Payment processing fees are generated from the ongoing sales to our customers and are governed by multi-year contracts. As a result, payment processing fees are highly recurring in nature.
For the year ended December 31, 2023, we generated revenue of $755.6 million, net loss attributable to common stockholders of $49.1 million and operating income of $81.5 million, compared to revenue of $663.6 million, net loss attributable to common stockholders of $39.0 million and operating income of $56.2 million for the year ended December 31, 2022.
For the year ended December 31, 2024, we generated revenue of $879.7 million, net loss attributable to common shareholders of $24.0 million and operating income of $133.4 million, compared to revenue of $755.6 million, net loss attributable to common shareholders of $49.1 million and operating income of $81.5 million for the year ended December 31, 2023.
We invest to attract and retain executive leadership that align with the opportunities in the market and our strategic focus. 8 Table of Contents Growth Strategies We intend to continue to execute a multi-pronged growth strategy, with diverse organic initiatives supplemented by acquisitions.
Our team has continued to develop and enhance our proprietary and innovative technology platforms that differentiate us in the payments industry. We invest to attract and retain executive leadership that align with the opportunities in the market and our strategic focus. Growth Strategies We intend to continue to execute a multi-pronged growth strategy, with diverse organic initiatives supplemented by acquisitions.
In these partnerships, we serve as a merchant acquirer and enter into processing agreements with payment processors, such as Fiserv or Global Payments, to assist us in providing front-end and back-end transaction processing services 10 Table of Contents for our merchants. These third parties are compensated for their services.
Processing is a scale-driven business in which many acquirers outsource the processing function to a small number of large processors. In these partnerships, we serve as a merchant acquirer and enter into processing agreements with payment processors, such as Fiserv or Global Payments, to assist us in providing front-end and back-end transaction processing services for our merchants.
Priority was established in 2005 and has grown from a founder-financed technology startup to becom e the 5 th largest non-bank merchant acquirer in the U.S. by volume, according to the Nilson Report issued in March 2023.
Priority was established in 2005 and has grown from a founder-financed technology startup with a mission to build an institutional caliber enterprise to advance the convergenc e of software and payments to become the 6th largest non-bank merchant acquirer in the U.S. by volume, according to the Nilson Report issued in March 2024.
The Dodd-Frank Act directed the Federal Reserve Board to regulate the debit interchange transaction fees that a card issuer or payment card network receives or charges for an electronic debit transaction.
Wall Street Reform and Consumer Protection Act The Dodd-Frank Act resulted in significant structural and other changes to the regulation of the financial services industry. The Dodd-Frank Act directed the Federal Reserve Board to regulate the debit interchange transaction fees that a card issuer or payment card network receives or charges for an electronic debit transaction.
Providers with more advanced tech-enabled services (primarily online and integrated offerings), have an advantage over providers who are operating legacy technology and offering undifferentiated services that have come under pricing pressure from higher levels of competition. High quality customer service further differentiates providers as this helps to reduce attrition.
Pricing has historically been the key factor influencing the selection of a merchant acquirer. Providers with more advanced tech-enabled services (primarily online and integrated offerings), have an advantage over providers who are operating legacy technology and offering undifferentiated services that have come under pricing pressure from higher levels of competition.
By subsisting within SMB's critical business software, processors are able to improve economic results through better merchant retention and higher processing margins. Through our MX Merchant platform, we are well-positioned to capitalize on the trend towards integrated solutions, new technology adoption and value added-service utilization in the SMB market. Providing BaaS products is highly competitive.
Through our MX Merchant platform, we are well-positioned to capitalize on the trend towards integrated solutions, new technology adoption and value added-service utilization in the SMB market. Providing BaaS products is highly competitive. We face competition from other BaaS providers and banks directly.
The Dodd-Frank Act created the CFPB, which has assumed responsibility for enforcing federal consumer protection laws, and the FSOC, which was established to, among other things, identify risks to the stability of the U.S. financial system.
The prohibition on network exclusivity has not significantly affected our ability to pass on network fees and other costs to our customers, nor do we expect it to in the future. 13 Table of Contents The Dodd-Frank Act created the CFPB, which has assumed responsibility for enforcing federal consumer protection laws, and the FSOC, which was established to, among other things, identify risks to the stability of the U.S. financial system.
The largest opportunity for acquirers to expand is within the SMB merchant market. As small businesses increasingly demand integrated solutions tailored to specific business functions or industries, merchant processors are adopting payment-enabled software offerings that combine embedded finance products with core business operating software.
As small businesses increasingly demand integrated solutions tailored to specific business functions or industries, merchant processors are adopting payment-enabled software offerings that combine embedded finance products with core business operating software. By subsisting within SMB's critical business software, processors are able to improve economic results through better merchant retention and higher processing margins.
We believe this migration and overall market growth will continue to provide tailwinds to the Electronic Payments industry. • Convergence of Payments and Embedded Finance Solutions – As consumer behavior shifted during the COVID-19 pandemic, the scale of disruption grew dramatically and we believe the speed of change will continue to rise.
As businesses have increasingly looked to improve efficiency and reduce costs, the electronification of B2B payments has gained momentum. • Convergence of Payments and Embedded Finance Solutions – As consumer behavior shifted during the COVID-19 pandemic, the scale of disruption grew dramatically and we believe the speed of change will continue to rise.
The collected information is delivered to a team of underwriters who conduct necessary industry checks, financial performance analysis or owner background checks, as applicable and consistent with our policies.
The collected information is delivered to a team of underwriters who conduct necessary industry checks, financial performance analysis or owner background checks, as applicable and consistent with our policies. Based upon these results, the underwriting department rejects or approves the customer or reseller and sets appropriate reserve requirements which are held by our bank sponsors on our behalf.
For ACH payments, the Company's ACH network (ACH.com) is sponsored by South State Bank. Sponsor bank relationships enable us to route transactions under the sponsor bank's control and identification number (referred to as a BIN for Visa and ICA for Mastercard) across the card networks (or ACH network) to authorize and clear transactions.
Sponsor bank relationships enable us to route transactions under the sponsor bank's control and identification number (referred to as a BIN for Visa and ICA for Mastercard) across the card networks (or ACH network) to authorize and clear transactions. 11 Table of Contents We offer banking and money transmission services to our customers through our partner banks including Wells Fargo and Axos Bank.
We believe that the large merchant acquirers whose innovation has been hindered by these redundant legacy systems risk losing market share to acquirers with more agile and dynamic IT systems. Pricing has historically been the key factor influencing the selection of a merchant acquirer.
We believe that consolidation has also resulted in many large processors maintaining multiple, inflexible legacy IT systems that are not well-equipped to adjust to changing market requirements. We believe that the large merchant acquirers whose innovation has been hindered by these redundant legacy systems risk losing market share to acquirers with more agile and dynamic IT systems.
Only one reseller relationship contributes more than 10% of total bankcard processing volume, and such relationship represents approximately 14% of our total bankcard processing volume for the fiscal year ending December 31, 2023. Security, Disaster Recovery and Back-up Systems As a result of routine business operations, we store information relating to our merchants and their transactions.
Only one reseller relationship contributes more than 10% of total bankcard processing volume, and such relationship represents approximately 10.6% of our total bankcard processing volume for the fiscal year ending December 31, 2024.
When excluding banks, we ranked 5 th among U.S. non-bank merchant acquirers, according to the March 2023 Nilson Report. The concentration at the top of the industry is partly a result of consolidation. We believe that consolidation has also resulted in many large processors maintaining multiple, inflexible legacy IT systems that are not well-equipped to adjust to changing market requirements.
When excluding banks, we ranked 6 th among U.S. non-bank merchant acquirers, according to the March 2024 Nilson Report. 12 Table of Contents The concentration at the top of the industry is partly a result of consolidation.
Based upon these results, the underwriting department rejects or approves the merchant or reseller and sets appropriate merchant and reseller reserve requirements which are held by our bank sponsors on our behalf. Resellers may be subject to quarterly and/or annual assessments for financial strength in compliance with our policies and adjustments to reserve levels.
Resellers may be subject to quarterly and/or annual assessments for financial strength in compliance with our policies and adjustments to reserve levels.
Other competitive factors that set acquirers apart include: 1) price; 2) breadth of product offerings; 3) partnerships with FIs; 4) servicing capability; 5) data security; and 6) functionality. Leading acquirers are expected to continue to add additional services to expand cross-selling opportunities, primarily in omni-channel payment solutions, POS software, payments security, customer loyalty and other payments-related offerings.
High quality customer service further differentiates providers as this helps to reduce attrition. Other competitive factors that set acquirers apart include: 1) price; 2) breadth of product offerings; 3) partnerships with FIs; 4) servicing capability; 5) data security; and 6) functionality.
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Item 1. Business Overview of the Company Priority is a solutions provider in Payments and BaaS industry, o perating at scale with 860,000 active customers across its SMB, B2B and Enterprise customers channels. Priority proc esses $120 billion in annual transaction volume and provides administration for $900 million in deposits.
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Item 1. Business Overview of the Company Priority is a payments and banking fintech that streamlines collecting, storing, lending and sending money through its innovative commerce engine (the “Priority Commerce Engine” or “PCE”) to unlock revenue opportunities and generate operational success for businesses.
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P riority’s purpose-built technology enables clients to collect, store, lend and send money while providing AP payment applications and Passport financial tools that best optimize their cash flow and maximize working capital bolstered by our industry leading personalized support.
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Our mission is to provide a personalized financial toolset to accelerate cashflow and optimize working capital for our customers by providing merchant services, payables and banking & treasury solutions.
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As a result, payment processing fees are highly recurring in nature.
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Priority operates at scale across three primary business segments: SMB Acquiring, B2B Payables and Enterprise Payments and is presently serving approximat ely 1.2 million customer accounts processing over $130.0 billion in annual transaction activity while administering approximately $1.2 billion dollars in account balances.
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Our team has continued to develop and enhance our proprietary and innovative technology platforms that differentiate us in the payments industry.
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The Priority Commerce Engine serves enterprise grade independent software vendors (ISV's), as well as discrete institutional and SMB customers across all major sectors of the U.S. economy including Retail, Hospitality, Healthcare, Real Estate, Government, Utility, Ed ucation, Non-Profit, Business-to-Business, Professional Services and Financial Institutions. Priority builds with intention, utilizing market research and stakeholder feedback to drive growth activity.
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Because this information is considered sensitive in nature, we maintain a high level of security to protect it. Our computational systems are continually updated and audited to the latest security standards as defined by 1) payment card industry and data security standards; and 2) the Payment Card Industry Security Standards Council.
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The result is an end-to-end solution that customers leverage across their financial lifecycle, engineered to accelerate cash flow and optimize working capital.
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As such, we have a dedicated team responsible for responding to security incidents. This team develops, maintains, tests and verifies our incident response plan. The primary function of this team is to react and respond to intrusions, denial of service, data leakage, malware, vandalism and other events that could potentially jeopardize data availability, integrity and confidentiality.
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Trust is paramount in partnerships with customers, which is why Priority works with multiple, proven partners, to ensure our customers experience the security and peace of mind that comes with diversification, while enjoying the cost and time-saving benefits of consolidation.
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In addition to handling security incidents, the incident response team continually educates themselves and us on information security matters. High-availability and disaster recovery are provided through a combination of redundant hardware and software running at two geographically distinct data centers.
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Priority centralizes all money movement activity within a single, integrated platform, empowering users to seamlessly collect, store, lend, and send money. Highly configurable and easy to use, the Priority Commerce Engine enables financial agility and operational stability for today’s fastest-growing enterprises.
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Each data center deployment is an exact mirror of the other and each can handle all technical, payment and business operations for all product lines independently. If one data center becomes impaired, the traffic is automatically redirected to the other. Business continuity planning drills are run each quarter to test fail-over and recovery as well as staff operations and readiness.
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We believe this migration and overall market growth will continue to provide tailwinds to the Electronic Payments industry. B2B payments is the largest payment market in the U.S. by volume and presents a significant opportunity for payment providers to capitalize on the conversion of check and paper-based payments to Electronic Payments, including card-based acceptance.
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Processing is a scale-driven business in which many acquirers outsource the processing function to a small number of large processors.
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Enterprise Payments and BaaS is the integration of financial services, like payments, lending, or banking services, into non-financial offerings. This embedded finance capability allows customers to access financial services seamlessly through applications they already utilize. The market is large and growing rapidly as customers demand a digital, frictionless and integrated approach to meeting the needs of their end consumer.
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Our portfolio consists primarily of money market accounts at FDIC insured institutions.
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We maintain a card issuing relationship with Sutton Bank. For ACH payments, the Company's ACH network (ACH.com) is sponsored by South State Bank.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeLegal, Regulatory Compliance and Tax Risks Legal proceedings could have a material adverse effect on our business, financial condition or results of operations.
Biggest changeMeeting these various requirements may require a significant investment of time and money. Any of these developments could have a material adverse impact on our business, results of operations and financial condition. Legal, Regulatory Compliance and Tax Risks Legal proceedings could have a material adverse effect on our business, financial condition or results of operations.
In addition, any potential acquisition can subject us to a variety of other risks: • If we are unable to successfully integrate the benefits plans, duties and responsibilities and other factors of interest to management of employees of the acquired business, we could lose employees to our competitors in the region, which could significantly affect our ability to operate the business and complete the integration; • If the integration process causes any delays with the delivery of our services, or the quality of those services, we could lose customers to our competitors; • Any acquisition may otherwise cause disruption to the acquired company's business and operations and relationships with financial institution sponsors, customers, merchants, employees and other partners; • Any acquisition and the related integration could divert the attention of our management from other strategic matters including possible acquisitions and alliances and planning for new product development or expansion into new markets for payments technology and software solutions; and • The costs related to the integration of an acquired company's business and operations into ours may be greater than anticipated. 18 Table of Contents We are subject to economic and political risk, the business cycles of our merchants and distribution partners and the overall level of consumer and commercial spending, which could negatively impact our business, financial condition and results of operations.
In addition, any potential acquisition can subject us to a variety of other risks: • If we are unable to successfully integrate the benefits plans, duties and responsibilities and other factors of interest to management of employees of the acquired business, we could lose employees to our competitors in the region, which could significantly affect our ability to operate the business and complete the integration; • If the integration process causes any delays with the delivery of our services, or the quality of those services, we could lose customers to our competitors; • Any acquisition may otherwise cause disruption to the acquired company's business and operations and relationships with financial institution sponsors, customers, merchants, employees and other partners; • Any acquisition and the related integration could divert the attention of our management from other strategic matters including possible acquisitions and alliances and planning for new product development or expansion into new markets for payments technology and software solutions; and • The costs related to the integration of an acquired company's business and operations into ours may be greater than anticipated. 19 Table of Contents We are subject to economic and political risk, the business cycles of our customers and distribution partners and the overall level of consumer and commercial spending, which could negatively impact our business, financial condition and results of operations.
Examples of merchant fraud include when a merchant or other party knowingly uses a stolen or counterfeit credit or debit card, card number, or other credentials to record a false sales or credit transaction, processes an invalid card, or intentionally fails to deliver the merchandise or services sold in an otherwise valid transaction.
Examples of customer fraud include when a merchant or other party knowingly uses a stolen or counterfeit credit or debit card, card number, or other credentials to record a false sales or credit transaction, processes an invalid card, or intentionally fails to deliver the merchandise or services sold in an otherwise valid transaction.
The termination by our service or technology providers of their arrangements with us or their failure to perform their services efficiently and effectively may adversely affect our relationships with our merchants and, if we cannot find alternate providers quickly, may cause those merchants to terminate their relationship with us. 19 Table of Contents We also rely in part on third parties for the development and access to new technologies, or updates to existing products and services for which third parties provide ongoing support, which increases the cost associated with new and existing product and service offerings.
The termination by our service or technology providers of their arrangements with us or their failure to perform their services efficiently and effectively may adversely affect our relationships with our merchants and, if we cannot find alternate providers quickly, may cause those merchants to terminate their relationship with us. 20 Table of Contents We also rely in part on third parties for the development and access to new technologies, or updates to existing products and services for which third parties provide ongoing support, which increases the cost associated with new and existing product and service offerings.
Although the Company has developed, and continues to invest in, systems and processes that are designed to detect and prevent security breaches and cyberattacks, a breach of its 24 Table of Contents systems and global payments infrastructure or those of our non-bank financial service partners and processors could result in: losses to the Company and its customers; loss of business and/or customers; damage to its reputation; the incurrence of additional expenses (including the cost of notification to consumers, credit monitoring and forensics, and fees and fines imposed by the card networks); disruption to its business; an inability to grow its online services or other businesses; additional regulatory scrutiny or penalties; and/or exposure to civil litigation and possible financial liability — any of which could have a material adverse effect on the Company’s business, financial condition and results of operations.
Although the Company has developed, and continues to invest in, systems and processes that are designed to detect and prevent security breaches and cyberattacks, a breach of its systems and global payments infrastructure or those of our non-bank financial service partners and processors could result in: losses to the Company and its customers; loss of business and/or customers; damage to its reputation; the incurrence of additional expenses (including the cost of notification to consumers, credit monitoring and forensics, and fees and fines imposed by the card networks); disruption to its business; an inability to grow its online services or other businesses; additional regulatory scrutiny or penalties; and/or exposure to civil litigation and possible financial liability — any of which could have a material adverse effect on the Company’s business, financial condition and results of operations.
The termination of our registration, or any changes in the Visa or Mastercard rules that would impair our registration, could require us to stop providing Visa and Mastercard payment processing services, which would make it impossible for us to conduct our business on its current scale. 20 Table of Contents The loss of, for example, key personnel or of our ability to attract, recruit, retain and develop qualified employees could adversely affect our business, financial condition and results of operations.
The termination of our registration, or any changes in the Visa or Mastercard rules that would impair our registration, could require us to stop providing Visa and Mastercard payment processing services, which would make it impossible for us to conduct our business on its current scale. 21 Table of Contents The loss of, for example, key personnel or of our ability to attract, recruit, retain and develop qualified employees could adversely affect our business, financial condition and results of operations.
The timelines imposed by the payment networks or 17 Table of Contents sponsor banks for expected compliance with new rules have historically been, and may continue to be, highly compressed, requiring us to quickly implement changes to our systems which increases the risk of non-compliance with new standards or the reduction of certain types of merchant activity.
The timelines imposed by the payment networks or 18 Table of Contents sponsor banks for expected compliance with new rules have historically been, and may continue to be, highly compressed, requiring us to quickly implement changes to our systems which increases the risk of non-compliance with new standards or the reduction of certain types of merchant activity.
Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud. Failure to effectively manage risk and prevent fraud could increase in the future. Increases in chargebacks or other liabilities could have a material adverse effect on our financial condition, results of operations and cash flows.
Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud. Failure to effectively manage risk and prevent fraud could increase in the future. Increases in chargebacks, ACH returns or other liabilities could have a material adverse effect on our financial condition, results of operations and cash flows.
Our Board of Directors may take into account general and economic conditions, our financial condition, and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, and such other factors as our Board of Directors may deem relevant.
Our Board of Directors may take into account general and economic conditions, our financial condition, and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by us to our shareholders or by our subsidiaries to us, and such other factors as our Board of Directors may deem relevant.
Defects in our software and errors or delays in our processing of electronic transactions could result in additional development costs, diversion of technical and other resources from our other development efforts, loss of credibility with current or potential distribution partners and merchants, harm to our reputation, fines imposed by card networks, or exposure to liability claims.
Defects in our software and errors or delays in our processing of electronic transactions could result in additional development costs, diversion of technical and other resources from our other development efforts, loss of credibility with current or potential distribution partners and merchants, harm to our reputation, fines imposed by regulatory agencies, card networks, or exposure to liability claims.
We depend on the efficient and uninterrupted operation of our computer systems, software, data centers and telecommunications networks, as well as the systems and services of third parties. A system outage or data loss could have a 16 Table of Contents material adverse effect on our business, financial condition, results of operations and cash flows.
We depend on the efficient and uninterrupted operation of our computer systems, software, data centers and telecommunications networks, as well as the systems and services of third parties. A system outage or data loss could have a 17 Table of Contents material adverse effect on our business, financial condition, results of operations and cash flows.
These factors may allow our competitors to offer better pricing terms to merchants and more attractive compensation to distribution partners, which could result in a loss of our potential or current merchants and distribution partners. Our current and future competitors may also develop or offer services that have price or other advantages over the services we provide.
These factors may allow our competitors to offer better pricing terms to customers and more attractive compensation to distribution partners, which could result in a loss of our potential or current customers and distribution partners. Our current and future competitors may also develop or offer services that have price or other advantages over the services we provide.
Failure by these third-party providers to devote an appropriate level of attention to our products and services could result in delays in introducing new products or services, or delays in resolving any issues with existing products or services for which third-party providers provide ongoing support. Fraud by merchants or others could cause us to incur losses.
Failure by these third-party providers to devote an appropriate level of attention to our products and services could result in delays in introducing new products or services, or delays in resolving any issues with existing products or services for which third-party providers provide ongoing support. Fraud by customers or others could cause us to incur losses.
To remain competitive and to continue to increase our revenues and earnings, we must continually update our products and services, a process which could result in increased costs and the loss of revenues, earnings, merchants and distribution partners if the new products and services do not perform as intended or are not accepted in the marketplace.
To remain competitive and to continue to increase our revenues and earnings, we must continually update our products and services, a process which could result in increased costs and the loss of revenues, earnings, customers and distribution partners if the new products and services do not perform as intended or are not accepted in the marketplace.
We rely on FIs and other service and technology providers. If they fail or discontinue providing their services or technology generally or to us specifically, our ability to provide services to merchants may be interrupted, and, as a result, our business, financial condition and results of operations could be adversely impacted.
We rely on FIs and other service and technology providers. If they fail or discontinue providing their services or technology generally or to us specifically, our ability to provide services to customers may be interrupted, and, as a result, our business, financial condition and results of operations could be adversely impacted.
If we fail to comply with the applicable requirements of the card networks, they could seek to fine us, suspend us or terminate our registrations for membership. If we incur fines or penalties for which our merchants or ISOs are responsible that we cannot collect, we may have to bear the cost of such fines or penalties .
If we fail to comply with the applicable requirements of the card networks, they could seek to fine us, suspend us or terminate our registrations for membership. If we incur fines or penalties for which our customers or ISOs are responsible that we cannot collect, we may have to bear the cost of such fines or penalties .
We are subject to the risk that our existing products and services become obsolete, and that we are unable to develop new products and services in response to industry demands. Our future success will depend in part on our ability to develop or adapt to technological changes and the evolving needs of our resellers, merchants and the industry at large.
We are subject to the risk that our existing products and services become obsolete, and that we are unable to develop new products and services in response to industry demands. Our future success will depend in part on our ability to develop or adapt to technological changes and the evolving needs of our resellers, customers and the industry at large.
Application of such requirements and restrictions to our products and services could require us to make significant changes to our business practices (which may increase our operating expenses and/or decrease revenue) and, in the event of retroactive application of such laws, subject us to litigation or enforcement actions that could result in the payment of damages, restitution, monetary penalties, injunctive 23 Table of Contents restrictions, or other sanctions, any of which could have a material adverse effect on our business, financial position, and results of operations.
Application of such requirements and restrictions to our products and services could require us to make significant changes to our business practices (which may increase our operating expenses and/or decrease revenue) and, in the event of retroactive application of such laws, subject us to litigation or enforcement actions that could result in the payment of damages, restitution, monetary penalties, injunctive restrictions, or other sanctions, any of which could have a material adverse effect on our business, financial position, and results of operations.
In addition, given his level of control, Thomas Priore will be able to determine the outcome of all matters requiring stockholder approval and will be able to cause or prevent a change of control of the Company or a change in the composition of our Board of Directors and could preclude any unsolicited acquisition of the Company.
In addition, given his level of control, Thomas Priore will be able to determine the outcome of all matters requiring shareholders' approval and will be able to cause or prevent a change of control of the Company or a change in the composition of our Board of Directors and could preclude any unsolicited acquisition of the Company.
We experience attrition in merchant credit and debit card processing volume resulting from several factors, including business closures, transfers of merchant accounts to our competitors, unsuccessful contract renewal negotiations and account closures that we initiate for various reasons such as heightened credit risks or contract breaches by merchants. Our referral partners are a significant source of new business.
We experience attrition in customer credit and debit card processing volume resulting from several factors, including business closures, transfers of customers accounts to our competitors, unsuccessful contract renewal negotiations and account closures that we initiate for various reasons such as heightened credit risks or contract breaches by merchants. Our referral partners are a significant source of new business.
If our merchants make fewer sales of their products and services using Electronic Payments, or consumers spend less money through Electronic Payments, we will have fewer transactions to process at lower dollar amounts, resulting in lower revenue.
If our customers make fewer sales of their products and services using Electronic Payments, or consumers spend less money through Electronic Payments, we will have fewer transactions to process at lower dollar amounts, resulting in lower revenue.
We also face new, well capitalized, competition from emerging technology and non-traditional payment processing companies as well as traditional companies offering alternative Electronic Payments services and payment-enabled software solutions. If these new entrants gain a greater share of total Electronic Payments transactions, they could impact our ability to retain and grow our relationships with merchants and distribution partners.
We also face new, well capitalized, competition from emerging technology and non-traditional payment processing companies as well as traditional companies offering alternative banking services, Electronic Payments services and payment-enabled software solutions. If these new entrants gain a greater share of total Electronic Payments transactions, they could impact our ability to retain and grow our relationships with customers and distribution partners.
The Electronic Payments industry in which we compete is subject to rapid technological changes and is characterized by new technology, product and service introductions, evolving industry standards, changing merchant needs and the entrance of non-traditional competitors.
The Electronic Payments industry in which we compete is subject to rapid technological changes and is characterized by new technology, product and service introductions, evolving industry standards, changing customer needs and the entrance of non-traditional competitors.
Risk Factors Related to Our Business Unauthorized access to our systems or unauthorized disclosure of merchant or cardholder data, whether through breach of our computer systems, computer viruses, or otherwise, could expose us to liability, protracted and costly litigation and damage our reputation.
Risk Factors Related to Our Business Unauthorized access to our systems or unauthorized disclosure of customer or cardholder data, whether through breach of our computer systems, computer viruses, or otherwise, could expose us to liability, protracted and costly litigation and damage our reputation.
If a merchant or an ISO fails to comply with the applicable requirements of the card associations and networks, we or the merchant or ISO could be subject to a variety of fines or penalties that may be levied by the card associations or networks.
If a customer or an ISO fails to comply with the applicable requirements of the card associations and networks, we or the customer or ISO could be subject to a variety of fines or penalties that may be levied by the card associations or networks.
In addition, a weakening in the economy could force merchants to close at higher than historical rates, resulting in exposure to potential losses and a decline in the number of transactions that we process.
In addition, a weakening in the economy could force customers to close at higher than historical rates, resulting in exposure to potential losses and a decline in the number of transactions that we process.
If we cannot collect or pursue collection of such amounts from the applicable merchant or ISO, we may have to bear the cost of such fines or penalties, resulting in lower earnings for us.
If we cannot collect or pursue collection of such amounts from the applicable customer or ISO, we may have to bear the cost of such fines or penalties, resulting in lower earnings for us.
In addition, even an inadvertent failure to comply with laws and regulations, as well as rapidly evolving social expectations of corporate fairness, could damage our business or our reputation. We may not be able to successfully manage our intellectual property and may be subject to infringement claims.
In addition, even an inadvertent failure to comply with laws and regulations, as well as rapidly evolving social expectations of corporate fairness, could damage our business or our reputation. 23 Table of Contents We may not be able to successfully manage our intellectual property and may be subject to infringement claims.
We may also be subject to claims by third parties for patent, copyright or trademark 22 Table of Contents infringement, breach of license or violation of other third-party intellectual property rights. Any claim from third parties may result in a limitation on our ability to use the intellectual property subject to these claims.
We may also be subject to claims by third parties for patent, copyright or trademark infringement, breach of license or violation of other third-party intellectual property rights. Any claim from third parties may result in a limitation on our ability to use the intellectual property subject to these claims.
If a referral partner or an ISO switches to another processor, terminates our services, internalizes payment processing that we perform, merges with or is acquired by one of our competitors, or shuts down or becomes insolvent, we may no longer receive new merchant referrals from such referral partner, and we risk losing existing merchants that were originally enrolled by the referral partner or ISO.
If a referral partner switches to another processor, terminates our services, internalizes payment processing that we perform, merges with or is acquired by one of our competitors, or shuts down or becomes insolvent, we may no longer receive new customers referrals from such referral partner, and we risk losing existing merchants that were originally enrolled by the referral partner.
The Dodd-Frank Act also created the CFPB, which has assumed responsibility for enforcing federal consumer protection laws, and the FSOC, which has the authority to determine whether any non-bank financial company, which may include us within the definitional scope, should be supervised by the Federal Reserve because it is systemically important to the U.S. financial 21 Table of Contents system.
The Dodd-Frank Act also created the CFPB, which has assumed responsibility for enforcing federal consumer protection laws, and the FSOC, which has the authority to determine whether any non-bank financial company, which may include us within the definitional scope, should be supervised by the Federal Reserve because it is systemically important to the U.S. financial system.
If our policies and procedures are not fully effective or we are not always successful in capturing all risks to which we are or may be exposed, we may suffer harm to our reputation or be subject to litigation or regulatory actions that materially increase our costs and subject us to reputational damage that could limit our ability to grow and cause us to lose existing merchant clients.
If our policies and procedures are not fully effective or we are not always successful in capturing all risks to which we are or may be exposed, we may suffer harm to our reputation or be subject to litigation or regulatory actions that materially increase 24 Table of Contents our costs and subject us to reputational damage that could limit our ability to grow and cause us to lose existing merchant clients.
Our services include the processing, transmission and storing of sensitive business and personal information about our merchants, merchants' customers, vendors, partners and other third parties. This information may include credit and debit card numbers, bank account numbers, personal identification numbers, names and addresses or other sensitive business information.
Our services include the processing, transmission and storing of sensitive business and personal information about our customers, customers' customers, vendors, partners and other third parties. This information may include credit and debit card numbers, bank account numbers, personal identification numbers, names and addresses or other sensitive business information.
Should the ultimate judgments or settlements in any pending litigation or future litigation or investigation significantly exceed our insurance coverage, they could have a material adverse effect on our business, financial condition and results of operations.
Should the ultimate judgments or settlements in any pending litigation or 22 Table of Contents future litigation or investigation significantly exceed our insurance coverage, they could have a material adverse effect on our business, financial condition and results of operations.
We would be exposed to credit-related losses, which could impact the results of operations in the event of fluctuations in the fair value of the interest rate swaps due to a change in the credit worthiness or non-performance by the counterparties to the interest rate swaps.
We would be exposed to credit-related losses, which could impact the results 26 Table of Contents of operations in the event of fluctuations in the fair value of the interest rate swaps due to a change in the credit worthiness or non-performance by the counterparties to the interest rate swaps.
Additionally, we collect and store sensitive data, including the personally identifiable information of our customers and employees, in data centers and on information systems (including systems that may be controlled or maintained by third parties).
Additionally, we collect and store sensitive data, including the personally identifiable information of our customers and employees, in data centers and on information systems (including systems that 25 Table of Contents may be controlled or maintained by third parties).
Because we have no current plans to pay cash dividends on our Common Stock for the foreseeable future, you may not receive any return on investment unless you sell your Common Stock for a price greater than that which you paid for it.
Risks Related to Ownership of Our Stock Because we have no current plans to pay cash dividends on our Common Stock for the foreseeable future, you may not receive any return on investment unless you sell your Common Stock for a price greater than that which you paid for it.
We incur liability when our merchants refuse or cannot reimburse us for chargebacks resolved in favor of their customers. We have potential liability for chargebacks associated with the transactions we process.
We incur liability when our customers refuse or cannot reimburse us for chargebacks resolved in favor of their customers or ACH returns. We have potential liability for chargebacks associated with the transactions we process.
Among other things, these covenants will restrict our ability to: • pay dividends, or redeem or purchase equity interests; • incur additional debt; • incur liens; • change the nature of our business; • engage in transactions with affiliates; • sell or otherwise dispose of assets; • make acquisitions or other investments; and 25 Table of Contents • merge or consolidate with other entities.
Among other things, these covenants will limit our ability to: • pay dividends, or redeem or purchase equity interests; • incur additional debt; • incur liens; • change the nature of our business; • engage in transactions with affiliates; • sell or otherwise dispose of assets; • make acquisitions or other investments; and • merge or consolidate with other entities.
The payment processing industry is highly competitive and such competition is likely to increase, which may adversely influence the prices we can charge to merchants for our services and the compensation we must pay to our distribution partners, and as a result, our profit margins. The payment processing industry is highly competitive. We primarily compete in the SMB merchant industry.
The payment processing industry is highly competitive and such competition is likely to increase, which may adversely influence the prices we can charge to merchants for our services and the compensation we must pay to our distribution partners, and as a result, our profit margins. The payment processing industry is highly competitive.
We have potential liability for fraudulent electronic payment transactions or credits initiated by merchants or others.
We have potential liability for fraudulent Electronic Payment transactions or credits initiated by customers or others.
Our growth will depend on the continued growth of Electronic Payments, particularly Electronic Payments to SMB merchants, and our ability to increase our market share through successful competitive efforts to gain new merchants and distribution partners.
Our growth will depend on the continued growth of banking services, Electronic Payments, particularly Electronic Payments to SMB merchants, B2B payments and our ability to increase our market share through successful competitive efforts to gain new customers and distribution partners.
The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of Common Stock as part of a sale of the Company and ultimately might affect the market price of our Common Stock. 26 Table of Contents Item 1B. Unresolved Staff Comments N/A
The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of Common Stock as part of a sale of the Company and ultimately might affect the market price of our Common Stock.
Notwithstanding our programs and policies for managing credit risk, it is possible that a default on such obligations by one or more of our merchants could have a material adverse effect on our business.
We have policies to manage merchant-related credit risk and often mitigate such risk by requiring collateral and monitoring transaction activity. Notwithstanding our programs and policies for managing credit risk, it is possible that a default on such obligations by one or more of our customers could have a material adverse effect on our business.
We compete with FIs and their affiliates, independent payment processing companies and ISOs. We also compete with many of these same entities for production through distribution partners. Many of our distribution partners are not exclusive to us but also have relationships with our competitors, such that we have to continually expend resources to maintain those relationships.
Many of our distribution partners are not exclusive to us but also have relationships with our competitors, such that we have to continually expend resources to maintain those relationships.
As a result, you may not receive any return on an investment in our Common Stock unless you sell our Common Stock for a price greater than that which you paid for it. Mr. Thomas Priore, our President, Chief Executive Officer and Chairman, controls the Company, and his interests may conflict with ours or yours in the future.
As a result, you may not receive any return on an investment in our Common Stock unless you sell our Common Stock for a price greater than that which you paid for it. 27 Table of Contents Mr.
Acquirers may be susceptible to the adoption by the broader merchant community of payment-enabled software versus terminal based payments. Increased merchant, referral partner or ISO attrition could cause our financial results to decline.
Increased customer or referral partner attrition could cause our financial results to decline.
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Any increase in chargebacks not paid by our merchants could increase our costs and decrease our revenues. We have policies to manage merchant-related credit risk and often mitigate such risk by requiring collateral and monitoring transaction activity.
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We primarily compete in the SMB merchant, B2B customer, and Enterprise industry. We compete with FIs and their affiliates, independent payment processing companies and ISOs. We also compete with many of these same entities for production through distribution partners.
Added
Any increase in chargebacks not paid by our merchants could increase our costs and decrease our revenues. Similarly, if a return is made against a customer for whom we have collected an ACH payment and that customer does not have adequate funds to offset such a return, we may incur a loss.
Added
Operational failures and resulting interruptions in the availability of our products or services could harm our business and reputation. Our business depends heavily on the reliability of our systems. An operational failure that results in an interruption in the availability of our products and services could harm our business or cause us to lose clients.
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An operational failure could involve the hardware, software, data, networks or systems upon which we rely to deliver our services and could be caused by our actions, the actions of third parties or events over which we may have limited or no control.
Added
Events that could cause operational failures include, but are not limited to, hardware and software defects or malfunctions, ransomware, denial-of-service and other cyberattacks, human error, earthquakes, hurricanes, floods, fires, natural disasters, pandemics, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks, computer viruses or other malware, or other events.
Added
In the event of operational failures or damage or disruption to our business due to these occurrences, we may not be able to successfully or quickly recover all of our critical business functions, assets and data through our business continuity program.
Added
Implementation delays, interruptions of service or hardware device defects could damage our relationship with clients and could cause us to incur substantial expenses, including those related to the payment of service credits, product recalls or other liabilities.
Added
A prolonged interruption of our services or network could cause us to experience data loss or a reduction in revenue, and significantly impact our clients’ businesses and the customers they serve.
Added
In addition, a significant interruption of service or product recall could have a negative impact on our reputation and could cause our current and potential clients to choose another service provider. As a provider of payments solutions and other financial services, clients, regulators and others may require enhanced business continuity and disaster recovery plans including frequent testing of such plans.
Added
Thomas Priore, our Chief Executive Officer and Chairman, controls the Company, and his interests may conflict with ours or yours in the future.
Added
Future sales of common stock by our directors and officers, or their pledgees, as a result of foreclosure could adversely affect the price of common stock and could, in the future, result in a loss of control of our company.
Added
Upon the approval of our Board, our directors and officers may pledge shares of common stock as collateral for personal loans or investments in favor of third parties.
Added
Depending on the status of the various loan obligations for which the stock would ultimately serve as collateral and the trading price of our common stock, our directors and/or officers, and their affiliates, may experience foreclosure that could result in the sale of the pledged stock, in the open market or otherwise.
Added
Sales by these pledgees may not be subject to the volume limitations of Rule 144 of the Securities Act.
Added
Even in the absence of shares being sold, the act of pledging shares and the risk of sales of shares may create a misalignment of interests between insider pledgors and the Company’s shareholders, as the insider may be incentivized to take actions that limit his or her exposure to such sales.
Added
Either scenario could potentially subject the Company and its insiders to shareholder lawsuits, particularly in an environment of declining share prices. As of the date of this Form 10-K, no officer or director that has pledged shares of common stock.
Added
We have identified a material weakness in our internal control over financial reporting, and if our remediation of such material weakness is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.
Added
In the course of preparing our financial statements for the year ended December 31, 2024, we identified a material weakness in our internal control over financial reporting.
Added
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Added
The material weakness identified pertains to certain tools or applications involved in the transformation and ingestion of third-party processors’ data in the Company’s control environment.
Added
If we are unable to further implement and maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods could be adversely affected, which could subject us to litigation or investigations requiring management 28 Table of Contents resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.
Added
If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected and we could become subject to litigation or investigations by Nasdaq, the SEC or other regulatory authorities, which could require additional financial and management resources.
Added
Furthermore, we cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to our material weakness in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses.
Added
Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.
Added
Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods.
Added
Any failure to implement and maintain effective internal control over financial reporting could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports that are filed with the SEC.
Added
Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock.
Added
In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the Nasdaq. Item 1B. Unresolved Staff Comments N/A

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeGovernance Our Board considers cybersecurity risk as part of its risk oversight function. The Board oversees the Company’s overall risk framework including management’s implementation of our cybersecurity risk management program. The Board receives reports from the Chief Risk Officer on a regular basis on cybersecurity and information technology risk management.
Biggest changeWe have not identified risks from known cybersecurity threats that have materially affected us, including our operations, business strategy, results of operations or financial condition. Governance Our Board considers cybersecurity risk as part of its risk oversight function. The Board oversees the Company’s overall risk framework including management’s implementation of our cybersecurity risk management program.
Item 1C. Cybersecurity Risk management and strategy We recognize the importance of maintaining the trust and confidence of the customers we serve, our business partners, employees and our stockholders and are committed to protecting the confidentiality, integrity and reliance of our business operations and systems.
Item 1C. Cybersecurity Risk Management and Strategy We recognize the importance of maintaining the trust and confidence of the customers we serve, our business partners, employees and our shareholders and are committed to protecting the confidentiality, integrity and reliance of our business operations and systems.
We have adopted policies and procedures with an intended design to identify, assess and manage risks associated with cybersecurity threats. • We perform risk assessments periodically at both an enterprise level and system level in addition to assessments performed by third parties; • Our information security team performs threat monitoring services; • Our Internal Audit function performs annual reviews of selected systems and applications to test certain controls; • Independent consultants and auditors evaluate selected systems and applications on an annual basis; • We perform risk assessments of third-party vendors and perform ongoing risk-based monitoring of those third parties; and • We maintain a business continuity plan for execution in the event of a cybersecurity incident.
We have adopted policies and procedures with an intended design to identify, assess and manage risks associated with cybersecurity threats. • We perform risk assessments periodically at both an enterprise level and system level in addition to assessments performed by third parties; • Our information security team performs threat monitoring services; • Our Internal Audit function performs annual reviews of selected systems and applications to test certain controls; • Independent consultants evaluate selected systems and applications on an annual basis; • We perform risk assessments of third-party vendors and perform ongoing risk-based monitoring of those third parties; and • We maintain a business continuity plan for execution in the event of a cybersecurity incident. 29 Table of Contents We have not experienced any material cybersecurity incidents in the past calendar years and the expenses we have incurred from cybersecurity incidents during that time were immaterial.
Our Company’s cybersecurity team, overseen by our Chief Information Security Officer (“CISO”) is responsible for assessing and managing our risks from cybersecurity threats, including defining our security policy and furnishing related information for Board reporting. The CISO approves all security policies and oversees the identification, assessment, and management of security risks.
The Board receives reports from the Chief Risk Officer on a regular basis on cybersecurity and information technology risk management. Our Company’s cybersecurity team, overseen by our Chief Information Security Officer (“CISO”) is responsible for assessing and managing our risks from cybersecurity threats, including defining our security policy and furnishing related information for Board reporting.
The CISO regularly reports to management’s SOX Committee which may elevate cybersecurity issues to the Board at any time.
The CISO approves all security policies and oversees the identification, assessment, and management of security risks. The CISO regularly reports to management’s SOX Committee which may elevate cybersecurity issues to the Board at any time.
Removed
We have not experienced any material cybersecurity incidents in the past calendar years and the expenses we have incurred from cybersecurity incidents during that time were immaterial. We have not identified risks from known cybersecurity threats that have materially affected us, including our operations, business strategy, results of operations or financial condition.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur key office locations include: 27 Table of Contents • corporate headquarters in Alpharetta, GA; • administrative office in Hicksville, NY; • administrative office in New York, NY; • administrative office in Dallas, TX; • administrative office in Houston, TX; • administrative office in Chattanooga, TN; • administrative office in San Francisco, CA; • administrative office in Raleigh, NC; and • administrative office in Chandigarh, India.
Biggest changeOur key office locations include: • corporate headquarters in Alpharetta, GA; • administrative office in Hicksville, NY; • administrative office in New York, NY; • administrative office in Dallas, TX; • administrative office in Houston, TX; • administrative office in Nashville, TN; • administrative office in Chattanooga, TN; • administrative office in San Francisco, CA; • administrative office in Raleigh, NC; and • administrative office in Chandigarh, India.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

4 edited+2 added−1 removed2 unchanged
Biggest changeThe Complaint is a putative class action brought by Wyatt Miller d/b/a Hellam’s Tobacco and Wine Shop and Aguilar Auto Repair, LLC against The Credit Wholesale Company, Inc. (“Wholesale”), Priority Technology Holdings, Inc., Priority Payment Systems (“PPS”), LLC and Wells Fargo Bank, N.A. (“Wells Fargo”).
Biggest changeThe Complaint is a putative class action against The Credit Wholesale Company, Inc. (“Wholesale”), Priority Technology Holdings, Inc., Priority Payment Systems (“PPS”), LLC and Wells Fargo Bank, N.A. (“Wells Fargo”).
The Complaint alleges that Wholesale is an agent of Priority, PPS and Wells Fargo and that it made non-consensual recordation of telephonic communications with California businesses in violation of California Invasion of Privacy Act (the “Act”). The Complaint seeks to certify a class of affected businesses and an award of $5,000 per violation of the Act.
The Complaint alleges that Wholesale as an agent of Priority, PPS and Wells Fargo made non-consensual recordation of telephonic communications with California businesses in violation of California Invasion of Privacy Act (the “Act”). The Complaint seeks to certify a class of affected businesses and an award of $5,000 per violation of the Act.
In the opinion of the Company, based on consultations with inside and outside counsel, the results of any of these ordinary course matters, individually and in the aggregate, are not expected to have a material effect on our results of operations, financial condition, or cash flows.
In the opinion of the Company, based on consultations with inside and outside counsel, the results of any of these ordinary course matters, individually and in the aggregate, are not expected to have a material effect on our results of operations, financial condition, or 30 Table of Contents cash flows.
If and when we record such an accrual, it could be material and could adversely impact our results of operations, financial condition and cash flows. The Company is involved in a case that was filed on October 11, 2023 and is currently pending in the United States District Court for the Northern District of California (the “Complaint”).
If and when we record such an accrual, it could be material and could adversely impact our results of operations, financial condition and cash flows. The Company is a party in a case filed on October 11, 2023 in the United States District Court of Northern District of California (the “Complaint”).
Removed
As of March 12, 2024, the outcome of this legal proceeding is not probable nor is there any reasonable estimate of loss. Item 4. Mine Safety Disclosures N/A 28 Table of Contents PART II.
Added
On January 24, 2025, the court preliminarily approved the settlement agreement entered into by the parties wherein defendants agree to pay $19.5 million to settle this litigation. Any contribution toward the settlement by the Company will be nominal, and will not have any material impact on the Company's results of operations, financial conditions or cash flows. Item 4.
Added
Mine Safety Disclosures Not applicable 31 Table of Contents PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed1 unchanged
Biggest changeIssuer Purchases of Equity Securities The following table presents information with respect to purchases made by the Company of its Common Stock during the three months ended December 31, 2023 (shares are in whole units): Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1-31, 2023 38,817 $ 4.35 — 690,626 November 1-30, 2023 11,923 $ 3.53 — 690,626 December 1-31, 2023 17,343 $ 3.56 — 690,626 Total 68,083 — (1) Includes shares withheld to satisfy employees' tax withholding obligations in connection with the vesting of restricted stock awards.
Biggest changeIssuer Purchases of Equity Securities The following table presents information with respect to purchases made by the Company of its Common Stock during the three months ended December 31, 2024 (shares are in whole units): Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1-31, 2024 24,149 $ 6.77 — 690,626 November 1-30, 2024 — $ — — 690,626 December 1-31, 2024 14,553 $ 11.28 — 690,626 Total 38,702 — (1) 38,702 shares were withheld to satisfy employees' tax withholding obligations in connection with the vesting of PSUs and RSUs.
(2) The weighted-average exercise price set forth in this column is calculated for stock options outstanding and excludes outstanding RSU awards, since recipients are not required to pay an exercise price to receive the shares related to these awards. Unregistered Sales of Equity Securities and Use of Proceeds None.
(2) The weighted-average exercise price set forth in this column is calculated for stock options outstanding and excludes outstanding PSUs and RSU awards, since recipients are not required to pay an exercise price to receive the shares related to these awards. Unregistered Sales of Equity Securities and Use of Proceeds None.
The number of shares withheld was determined based on the fair market value on the vesting date. Item 6. Reserved 29 Table of Contents
The number of shares withheld was determined based on the fair market value on the vesting date. Item 6. Reserved 32 Table of Contents
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information On July 25, 2018, our Common Stock began trading on The Nasdaq Capital Market under the symbol "PRTH". As of March 7, 2024, we had 69 holders of record of our Common Stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information On July 25, 2018, our Common Stock began trading on The Nasdaq Capital Market under the symbol "PRTH". As of February 28, 2025, we had 62 holders of record of our Common Stock.
Equity Compensation Plan Information Period Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted-average exercise price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) Equity Compensation Plans approved by security holders 400,365 $ 6.870 3,547,798 Equity Compensation Plans not approved by security holders — $ — — (1) Represents stock options and RSUs outstanding under the Company's 2018 Plan.
Equity Compensation Plan Information Period Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted-average exercise price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) Equity Compensation Plans approved by security holders 2,453,018 $ 6.840 3,150,595 Equity Compensation Plans not approved by security holders — $ — — (1) Represents stock options PSUs, and RSUs outstanding under the Company's 2018 Plan.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 6. Reserved 29 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A. Qualitative and Quantitative Disclosure About Market Risk 38 Item 8. Financial Statements and Supplementary Data 39 Notes to Consolidated Financial Statements 49
Biggest changeItem 6. Reserved 32 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A. Qualitative and Quantitative Disclosure About Market Risk 41 Item 8. Financial Statements and Supplementary Data 43 Notes to Consolidated Financial Statements 54

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

49 edited+16 added−20 removed18 unchanged
Biggest changeIf applicable in future periods, we expect to reflect the excise tax within equity as part of the repurchase price of Common Stock. 32 Table of Contents Earnings Attributable to Common Shareholders (in thousands) Years Ended December 31, 2023 vs 2022 2023 2022 $ Change Net income (loss) $ (1,311) $ (2,150) $ 839 Less: Dividends and accretion attributable to redeemable senior preferred stockholders (47,744) (36,880) (10,864) Net loss attributable to common stockholders $ (49,055) $ (39,030) $ (10,025) Dividends and accretion attributable to redeemable senior preferred stockholders was $47.7 million for the year ended December 31, 2023, and was comprised of $18.0 million of accumulated dividends accrued as part of the carrying value of the redeemable senior preferred stock, $26.4 million of cash dividends, and $3.3 million related to accretion of discounts and issuance costs.
Biggest changeThe consolidated effective income tax rate for 2024 may not be indicative of our effective tax rate for future periods. 35 Table of Contents Earnings Attributable to Common Shareholders (in thousands) Years Ended December 31, 2024 vs 2023 2024 2023 $ Change Net income (loss) $ 24,015 $ (1,311) $ 25,326 Less: Dividends, accretion and related excise tax attributable to redeemable senior preferred stockholders (47,336) (47,744) 408 Less: NCI preferred unit redemptions, net of deferred tax benefit (639) — (639) Net loss attributable to common shareholders $ (23,960) $ (49,055) $ 25,095 Dividends, accretion and related excise tax attributable to redeemable senior preferred stockholders consists of $27.7 million of dividends, $16.9 million of accretion and $2.7 million of excise tax related to redemption of redeemable senior preferred stock and redeemable NCI for the year ended December 31, 2024.
We have derived this data, except key indicators including merchant bankcard processing dollar values and transaction volumes (SMB Payments), issuing dollar volume and transaction count (B2B Payments), and average billed clients and new enrollments (Enterprise Payments), from our audited Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
We have derived this data, except key indicators including merchant bankcard processing dollar values and transaction count (SMB Payments), issuing dollar volume and transaction count (B2B Payments), and average billed clients and new enrollments (Enterprise Payments), from our audited Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Certain amounts in this section may not add mathematically due to rounding. For a description and additional information about our three reportable segments, see Note 18. Segment Information , contained in " Item 8 - Financial Statements and Supplementary Data " of this Annual Report on Form 10-K.
Certain amounts in this section may not add mathematically due to rounding. For a description and additional information about our three reportable segments, see Note 19. Segment Information , contained in " Item 8 - Financial Statements and Supplementary Data " of this Annual Report on Form 10-K.
This was offset by $56.5 million of cash used for the repayment of borrowings under the revolving credit facility, $6.3 million of cash used for the repayment of the Term Facility, $24.7 million of cash dividends paid to redeemable senior preferred stockholders, $1.3 million of cash used for shares withheld for taxes, $4.7 million of payments of contingent consideration for business combinations and $1.2 million for debt issuance and modification costs paid related to the modification of the Term Facility and the revolving credit facility.
This was offset by $56.5 million of cash used for the repayment of borrowings under the revolving credit facility, $6.3 million of cash used for the repayment of the 2021 Credit Agreement's term facility, $24.7 million of cash dividends paid to redeemable senior preferred stockholders, $1.3 million of cash used for shares withheld for taxes, $4.7 million of payments of contingent consideration for business combinations and $1.2 million for debt issuance and modification costs paid related to the modification of the 2021 Credit Agreement.
Under the measurement step, the tax benefit is measured as the largest amount of 37 Table of Contents benefit that is more likely than not to be realized upon effective settlement. This is determined on a cumulative probability basis. The full impact of any change in recognition or measurement is reflected in the period in which such change occurs.
Under the measurement step, the tax benefit is measured as the largest amount of benefit that is more likely than not to be realized upon effective settlement. This is determined on a cumulative probability basis. The full impact of any change in recognition or measurement is reflected in the period in which such change occurs.
A valuation allowance is recognized if it is more likely than not that some portion or all of a deferred tax asset will not be realized based on the weight of available evidence, including expected future earnings.
A valuation allowance is recognized if it is more 40 Table of Contents likely than not that some portion or all of a deferred tax asset will not be realized based on the weight of available evidence, including expected future earnings.
The debt balance for the year ended December 31, 2023 consisted of funds outstanding under the term facility, offset by $15.7 million of unamortized debt discounts and issuance costs. There were no funds outstanding under the revolving credit facility as of December 31, 2023.
The debt balance for the year ended December 31, 2024 consisted of funds outstanding under the term facility, offset by $15.1 million of unamortized debt discounts and issuance costs. There were no funds outstanding under the revolving credit facility as of December 31, 2024 and 2023.
Discussions of 2021 items and year-over-year comparisons between 2022 and 2021 are not included in this Form 10-K, and can be found in " Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 202 2 .
Discussions of 2023 items and year-over-year comparisons between 2023 and 2022 are not included in this Form 10-K, and can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
We have used our funding sources to build our merchant portfolio, for technology solutions and to make acquisitions with the expectation that such investments will generate cash flows sufficient to cover our working capital needs and other anticipated needs, including for our acquisition strategy.
We have used our funding sources to build our customer base, for technology solutions and to make acquisitions with the expectation that such investments will generate cash flows sufficient to cover our working capital needs and other anticipated needs, including for our acquisition strategy.
We anticipate that cash on hand, funds generated from operations and available borrowings under our revolving credit agreement are sufficient to meet our working capital requirements for at least the next twelve months.
We anticipate that cash on hand, funds generated from operations and available borrowings under our revolving credit agreement are sufficient to meet our working 38 Table of Contents capital requirements for at least the next twelve months.
This section of this Form 10-K generally discusses 2023 and 2022 items and year-over-year comparisons between 2023 and 2022.
This section of this Form 10-K generally discusses 2024 and 2023 items and year-over-year comparisons between 2024 and 2023.
The current portion of long-term debt included in current liabilities was $6.7 million and $6.2 million at December 31, 2023 and 2022, respectively. At December 31, 2023, we had availability of approximately $65.0 million under our revolving credit arrangement. The following tables and narrative reflect our changes in cash flows for the comparative annual periods.
The current portion of long-term debt included in current liabilities was $9.5 million and $6.7 million at December 31, 2024 and 2023, respectively. At December 31, 2024, we had availability of approximately $70.0 million under our revolving credit arrangement. The following tables and narrative reflect our changes in cash flows for the comparative annual periods.
Results of Operations This section includes certain components of our results of operations for the years ended December 31, 2023 (or "2023"), December 31, 2022 (or "2022").
Results of Operations This section includes certain components of our results of operations for the years ended December 31, 2024 (or "2024"), and December 31, 2023 (or "2023").
Our working capital, defined as current assets less current liabilities, was $29.2 million at December 31, 2023 and $22.5 million at December 31, 2022. As of December 31, 2023, we had cash and cash equivalents with a balance of $39.6 million compared to $18.5 million at December 31, 2022.
Our working capital, defined as current assets less current liabilities, was $53.4 million at December 31, 2024 and $29.2 million at December 31, 2023. As of December 31, 2024, we had cash and cash equivalents with a balance of $58.6 million compared to $39.6 million at December 31, 2023.
These cash and cash equivalent balances do not include restricted cash of $11.9 million and $10.6 million at December 31, 2023 and December 31, 2022, respectively, which reflects cash accounts holding customer 35 Table of Contents settlement funds and cash reserves for potential losses.
These cash and cash equivalent balances do not include restricted cash of $11.1 million and $11.9 million at December 31, 2024 and 2023, respectively, which reflects cash accounts holding customer settlement funds and cash reserves for potential losses.
As of December 31, 2023, the Company was in compliance with the covenants in the Credit Agreement. Critical Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates.
Critical Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates.
Cash Provided by Financing Activities Net cash provided by financing activities was $210.1 million for the year ended December 31, 2023, compared to $8.5 million for the year ended December 31, 2022.
Cash Provided by Financing Activities Net cash provided by financing activities was $147.6 million for the year ended December 31, 2024, compared to $210.1 million for the year ended December 31, 2023.
Other income, net of $1.7 million for the year ended December 31, 2023 increased by $1.1 million, or 194.7%, from $0.6 million for the year ended December 31, 2022, due to increased interest income from the Company's operating accounts.
Other income, net of $3.2 million for the year ended December 31, 2024 increased by $1.4 million, or 83.0%, from $1.7 million for the year ended December 31, 2023, due to increased interest income from the Company's operating accounts.
This increase was offset by a decrease of $7.3 million driven by the wind down of certain customer programs in the managed services business during Q4 2022. Operating Loss Operating loss from our B2B Payments segment was $2.5 million for the year ended December 31, 2023, compared to operating income of $0.2 million for the year ended December 31, 2022.
This increase was offset by a decrease of $0.6 million driven by the wind down of certain customer programs in the managed services business during the fourth quarter of 2023. Adjusted EBITDA Adjusted EBITDA from our B2B Payments segment was $7.6 million for the year December 31, 2024, compared to $2.2 million for the year ended December 31, 2023.
The net cash provided by for 2023 included changes in the net obligations for funds held on the behalf of customers of $211.1 million, $49.8 million related to proceeds from the increase of the Term Facility and $44.0 million related to additional borrowings under the revolving credit facility.
For the year ended December 31, 2023, included changes in the net obligations for funds held on the behalf of customers of $211.1 million, 39 Table of Contents $49.8 million related to proceeds from the increase of the term Facility under the 2021 Credit Agreement and $44.0 million related to additional borrowings under the revolving credit facility.
The $10.8 million, or 15.2% increase in 2023 was driven by changes in the operating assets and liabilities. Cash Used in Investing Activities Net cash used in investing activities was $55.7 million compared to cash used investing activities of $36.5 million for the years ended December 31, 2023 and 2022, respectively.
The $4.3 million or 5.3% increase in 2024 was driven by net income increase, offset by changes in non-cash items and, operating assets and liabilities. Cash Used in Investing Activities Net cash used in investing activities was $35.5 million compared to cash used investing activities of $55.7 million for the years ended December 31, 2024 and 2023, respectively.
Income tax expense (in thousands) Years Ended December 31, 2023 vs 2022 2023 2022 $ Change Income (loss) before income taxes $ 7,152 $ 3,200 $ 3,952 Income tax expense $ 8,463 $ 5,350 $ 3,113 Effective tax rate 118.3 % 167.2 % The decrease in the effective tax rate from 2022 to 2023 is primarily due to a reduction in the amount of additional valuation allowance recorded against certain business interest carryover deferred tax assets.
Income tax expense (in thousands) Years Ended December 31, 2024 vs 2023 2024 2023 $ Change Income before income taxes $ 37,281 $ 7,152 $ 30,129 Income tax expense $ 13,266 $ 8,463 $ 4,803 Effective tax rate 35.6 % 118.3 % The decrease in the effective tax rate from 2023 to 2024 is primarily due to a reduction in the amount of additional valuation allowance recorded against certain business interest carryover deferred tax assets.
The Company's merchant card fee revenue from the SMB Payments segment ($563.9 million for 2023 and $549.6 million for 2022) as a percentage of merchant bankcard processing dollar value during 2023 increased to 0.95% from 0.92% during 2022. The increase was primarily driven by an increase in incentive revenue and changes in the merchant mix.
The Company's merchant card fee revenue from the SMB Payments segment ($595.0 million for 2024 and $564.3 million for 2023) as a percentage of merchant bankcard 36 Table of Contents processing dollar value during 2024 increased to 0.96% from 0.95% during 2023. The increase was primarily driven by changes in the merchant mix.
Long-Term Debt For the year ended December 31, 2023, we had outstanding debt obligations, including the current portion and net of unamortized debt discount of $638.7 million, compared to $605.1 million for the year ended December 31, 2022, resulting in an increase of $33.6 million.
Long-Term Debt For the year ended December 31, 2024, the Company had outstanding debt obligations, including the current portion and net of unamortized debt discount of $945.5 million, compared to $654.4 million for the year ended December 31, 2023, resulting in an increase of $291.1 million.
Salary and employee benefits Salary and employee benefits expense of $80.0 million for the year ended December 31, 2023 increased by $14.9 million, or 22.9%, from $65.1 million for the year ended December 31, 2022, primarily due to higher wages, an increase in stock-based compensation and increased headcount from acquisitions and to support overall growth of the Company.
Salary and employee benefits Salary and employee benefits expense of $89.2 million for the year ended December 31, 2024 increased by $9.2 million, or 11.6%, from $80.0 million for the year ended December 31, 2023, primarily due to higher wages, and increased headcount from acquisitions to support overall growth of the Company.
Net payments received of $0.4 million on loans to ISOs for the year ended December 31, 2023, compared to $4.7 million related to the funding of new loans to ISOs in 2022.
Net amount of $3.4 million was advanced for loans to ISOs for the year ended December 31, 2024, compared to $0.4 million related to payments received against loans to ISOs in 2023.
Years Ended December 31, (in thousands) 2023 2022 Net cash provided by (used in): Operating activities $ 81,256 $ 70,518 Investing activities (55,748) (36,503) Financing activities 210,105 8,502 Net increase in cash and restricted cash $ 235,613 $ 42,517 Cash Provided by Operating Activities Net cash provided by operating activities was $81.3 million and $70.5 million for the years ended December 31, 2023 and December 31, 2022, respectively.
Years Ended December 31, (in thousands) 2024 2023 Net cash provided by (used in): Operating activities $ 85,609 $ 81,256 Investing activities (35,546) (55,748) Financing activities 147,578 210,105 Net increase in cash and restricted cash $ 197,641 $ 235,613 Cash Provided by Operating Activities Net cash provided by operating activities was $85.6 million and $81.3 million for the years ended December 31, 2024 and 2023, respectively.
Operating Income Operating income from our SMB Payments segment was $46.5 million for the year ended December 31, 2023, compared to $54.9 million for the year ended December 31, 2022.
Adjusted EBITDA Adjusted EBITDA from our SMB Payments segment was $108.9 million for the year ended December 31, 2024, compared to $109.5 million for the year ended December 31, 2024.
Operating Expenses Operating expenses for 2023 and 2022 were as follows: (in thousands) Years Ended December 31, 2023 vs 2022 2023 2022 $ Change Operating expenses Cost of services (excludes depreciation and amortization) $ 480,307 $ 436,753 $ 43,554 Salary and employee benefits 79,974 65,077 14,897 Depreciation and amortization 68,395 70,681 (2,286) Selling, general and administrative 45,412 34,965 10,447 Total operating expenses $ 674,088 $ 607,476 $ 66,612 Costs of Services (excludes depreciation and amortization) Costs of services (excludes depreciation and amortization) of $480.3 million for the year ended December 31, 2023 increased by $43.6 million, or 10.0%, from $436.8 million for the year ended December 31, 2022, primarily due to the corresponding increase in revenues.
Operating Expenses Operating expenses for 2024 and 2023 were as follows: (in thousands) Years Ended December 31, 2024 vs 2023 2024 2023 $ Change Operating expenses Cost of services (excludes depreciation and amortization) $ 551,621 $ 480,307 $ 71,314 Salary and employee benefits 89,216 79,974 9,242 Depreciation and amortization 58,041 68,395 (10,354) Selling, general and administrative 47,403 45,412 1,991 Total operating expenses $ 746,281 $ 674,088 $ 72,193 Costs of Services (excludes depreciation and amortization) Costs of services (excludes depreciation and amortization) of $551.6 million for the year ended December 31, 2024 increased by $71.3 million, or 14.8%, from $480.3 million for the year ended December 31, 2023, primarily due to the corresponding increase in revenues.
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 2023 may not be indicative of our effective tax rate for future periods. On August 16, 2022, the U.S. government enacted the IRA into law.
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.
Revenue For the year ended December 31, 2023, our consolidated revenue of $755.6 million increased by $92.0 million, or 13.9%, from $663.6 million for the year ended December 31, 2022.
Revenue For the year ended December 31, 2024, our consolidated revenue of $879.7 million increased by $124.1 million, or 16.4%, from $755.6 million for the year ended December 31, 2023.
The Company's employee headcount increased to 983 in 2023 from 870 in 2022.
The Company's employee headcount increased to 1,019 in 2024 from 977 in 2023.
Minimum amortization of the term facility are equal quarterly 36 Table of Contents 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.
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. On May 16, 2024, the Company entered in to the 2024 Credit Agreement, which provided a $835.0 million term facility and a revolving credit facility of $70.0 million.
The increase of $49.5 million, or 60.0%, was primarily driven by an increase in customer enrollments, additional revenues generated by our Passport BaaS platform, and growth in interest income due to higher deposit balances and higher returns on the permissible investments related to our money transmission licenses.
The increase of $48.3 million, or 36.6%, was primarily driven by an increase in customer enrollments, additional revenues generated by our Passport platform, and growth in interest income due to higher deposit balances and higher returns on the permissible investments related to our money transmission licenses. 37 Table of Contents Adjusted EBITDA Adjusted EBITDA from our Enterprise Payments segment was $154.9 million for the year ended December 31, 2024, compared to $110.9 million for the year ended December 31, 2023.
Revenues by type for 2023 and 2022 were as follows: (in thousands) Years Ended December 31, 2023 vs 2022 2023 2022 $ Change Revenue Type: Merchant card fees $ 595,205 $ 553,037 $ 42,168 Money transmission services 98,137 71,536 26,601 Outsourced services and other services 49,600 29,627 19,973 Equipment 12,670 9,441 3,229 Total revenues $ 755,612 $ 663,641 $ 91,971 Merchant Card Fees For the year ended December 31, 2023, our merchant card fees revenue of $595.2 million increased by $42.2 million, or 7.6%, from $553.0 million for the year ended December 31, 2022.
Revenues by type for 2024 and 2023 were as follows: (in thousands) Years Ended December 31, 2024 vs 2023 2024 2023 $ Change Revenue Type: Merchant card fees $ 670,411 $ 595,205 $ 75,206 Money transmission services 130,123 98,137 31,986 Outsourced services and other services 67,018 49,600 17,418 Equipment 12,150 12,670 (520) Total revenues $ 879,702 $ 755,612 $ 124,090 Merchant Card Fees For the year ended December 31, 2024, our merchant card fees revenue of $670.4 million increased by $75.2 million, or 12.6%, from $595.2 million for the year ended December 31, 2023.
The increase of $21.8 million, or 115.6%, was primarily driven by an increase of $27.4 million in the Plastiq business and an increase of $1.7 million in the CPX business due to increased volumes.
The increase of $47.9 million, or 116.5%, was primarily driven by an increase of $44.4 million in the Plastiq business which was acquired during the third quarter of 2023 and an increase of $4.1 million in the CPX business due to increased interest revenue and volumes.
Depreciation and amortization expense Depreciation and amortization expense of $68.4 million for the year ended December 31, 2023 decreased by $2.3 million, or 3.2%, from $70.7 million for the year ended December 31, 2022, primarily due to full amortization of certain intangible assets partially offset by the depreciation of new assets placed in service. 31 Table of Contents Selling, general and administrative Selling, general and administrative expenses of $45.4 million for the year ended December 31, 2023 increased by $10.4 million, or 29.9%, from $35.0 million for the year ended December 31, 2022, primarily due to certain nonrecurring expenses and other expenses to support overall growth of the Company.
Depreciation and amortization expense Depreciation and amortization expense of $58.0 million for the year ended December 31, 2024 decreased by $10.4 million, or 15.1%, from $68.4 million for the year ended December 31, 2023, primarily due to full amortization of certain intangible assets partially offset by the depreciation of new assets placed in service. 34 Table of Contents Selling, general and administrative Selling, general and administrative expenses of $47.4 million for the year ended December 31, 2024 increased by $2.0 million, or 4.4%, from $45.4 million for the year ended December 31, 2023, primarily due to increase of $8.5 million in marketing, software, management fee, bad debt write offs and other operating expenses offset by decrease in restructuring expenses ($3.5 million), legal and professional expenses ($1.5 million) primarily related to acquisitions, and gain from changes in fair value of contingent consideration ($1.5 million).
For the year ended December 31, 2023, costs of services (excluding depreciation and amortization) as a percentage of total revenues decreased to 63.6% as compared to 65.8% for the year ended December 31, 2022. This decrease was primarily due to the increase in interest and money transmission revenues which do not have significant cost of services.
For the year ended December 31, 2024, costs of services (excluding depreciation and amortization) as a percentage of total revenues decreased to 62.7% as compared to 63.6% for the year ended December 31, 2023.
Outsourced Services and Other Services Outsourced services and other services revenue of $49.6 million for the year ended December 31, 2023 increased by $20.0 million, or 67.4%, from $29.6 million for the year ended December 31, 2022.
Money Transmission Services Money transmission services revenue of $130.1 million for the year ended December 31, 2024 increased by $32.0 million or 32.6%, from $98.1 million for the year ended December 31, 2023 and is primarily driven by an increase in customer enrollments. 33 Table of Contents Outsourced Services and Other Services Outsourced services and other services revenue of $67.0 million for the year ended December 31, 2024 increased by $17.4 million, or 35.1%, from $49.6 million for the year ended December 31, 2023.
Net cash used to acquire businesses in 2023 was $28.2 million compared to net cash used of $5.0 million in 2022. Additions to property, equipment and software was $21.3 million for 2023 compared to $18.9 million in 2022 and acquisitions of intangible assets was $6.6 million compared to $8.0 million in 2022.
Additions to property, equipment and software was $21.7 million for the year ended December 31, 2024 compared to $21.3 million in 2023 and acquisitions of intangible assets was $10.5 million for the year ended December 31, 2024, compared to $6.6 million in 2023.
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.
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 December 31, 2024, the Company was in compliance with the covenants in the 2024 Credit Agreement.
Other (Expenses) Income, net (in thousands) Years Ended December 31, 2023 vs 2022 2023 2022 $ Change Other (expense) income Interest expense $ (76,108) $ (53,554) $ (22,554) Other income, net 1,736 589 1,147 Total other expenses, net $ (74,372) $ (52,965) $ (21,407) Interest expense Interest expense of $76.1 million for the year ended December 31, 2023 increased by $22.5 million, or 42.1%, from $53.6 million for the year ended December 31, 2022, due to increased interest rates and higher debt balances to fund the acquisition of Plastiq in the third fiscal quarter of 2023.
Other Expenses, net (in thousands) Years Ended December 31, 2024 vs 2023 2024 2023 $ Change Other expense Interest expense $ (88,948) $ (76,108) $ (12,840) Debt extinguishment and modification costs (10,369) — (10,369) Other income, net 3,177 1,736 1,441 Total other expenses, net $ (96,140) $ (74,372) $ (21,768) Interest expense Interest expense of $88.9 million for the year ended December 31, 2024 increased by $12.8 million, or 16.9%, from $76.1 million for the year ended December 31, 2023, due to higher debt balances to fund the redemption of the redeemable senior preferred stock partially offset by a decrease in interest rates during the fourth quarter of 2024.
This overall increase was driven by increases in merchant card fee rates and equipment revenue, offset by a decrease in certain fee-based revenue, a true up of an invoice from one of the partner banks for certain services provided in Q1 2022 and a decline in processed merchant bankcard dollar value due to diversification of merchant portfolio by one of the referral partners in our SMB Payments segment, an increase in new enrollments and higher interest income in our Enterprise Payments segment and an increase in revenue from the Plastiq business acquired during the year offset by a decrease in revenue in B2B Payments segment due to the wind down of certain managed services programs in Q4 2022.
This overall increase was driven by increases in merchant bankcard processing dollar value and transaction count in our SMB Payments segment, an increase in new enrollments and higher interest income on permissible investments in our Enterprise Payments segment and an increase in revenue from CPX due to increase in volumes and Plastiq business acquired during the third quarter of 2023 in B2B Payments segment.
This increase was primarily driven by revenue from the Plastiq business that was acquired during the year and merchant card fee rate increases.
This increase was primarily driven by revenue from the Plastiq business that was acquired during the third quarter of 2023 and increased bankcard processing dollar values and transaction counts in SMB payments.
Per the amended terms, the outstanding borrowings under the Credit Agreement interest will accrue using the SOFR rate plus a term SOFR adjustment plus an applicable margin per year, subject to a SOFR floor of 1.00% per year.
The term facility was was further increased by $115.0 million (First Amendment to the 2024 Credit Agreement) effective November 21, 2024. The outstanding borrowings will accrue using the SOFR rate plus an applicable margin per year subject to a SOFR floor of 0.50%. The term facility matures in May 2031 and the revolving credit facility expires in May 2029.
The net cash provided by financing activities for 2022 included borrowings from the revolving credit facility of $29.5 million and changes in the net obligations for funds held on the behalf of customers of $43.1 million.
The net cash provided by for the year ended December 31, 2024 included changes in the net obligations for funds held on the behalf of customers of $179.6 million, borrowings under the 2024 Credit Agreement (including the First Amendment) net of issue discounts of $945.1 million, and proceeds for the exercise of stock options of $1.8 million.
Operating Income Operating income from our Enterprise Payments segment was $74.0 million for the year ended December 31, 2023, compared to $30.9 million for the year ended December 31, 2022. The increase of $43.1 million, or 139.1%, was primarily driven by the increase in revenue.
This increase was primarily due to growth in interest income on permissible investments due to higher interest rates and deposit balances and additional revenues generated by our B2B Payments segment. Equipment Equipment revenue of $12.2 million for the year ended December 31, 2024, decreased by $0.5 million, or 4.1%, from $12.7 million for the year ended December 31, 2023.
These cash inflows were offset by cash used for the repayment of debt of $38.2 million, cash used for the repurchase of Common Stock of $7.5 million, dividends paid to redeemable senior preferred stockholders of $11.5 million and $7.0 million of payments of contingent consideration for business combinations.
This was offset by repayment of the principal of the 2021 Credit Agreement and debt issuance and modification costs related to the refinancing of $666.5 million, redemption of the redeemable senior preferred stock including dividends of $303.2 million, redemption of non-controlling interest in subsidiary of $2.1 million, $1.5 million of cash used for shares withheld for taxes, and $5.6 million of payment of contingent consideration for business combinations.
B2B Payments (in thousands) Years Ended December 31, 2023 vs 2022 2023 2022 $ Change Revenue $ 40,726 $ 18,890 $ 21,836 Operating expenses 43,261 18,682 24,579 Operating (loss) income $ (2,535) $ 208 $ (2,743) Operating margin (6.2) % 1.1 % Depreciation and amortization $ 2,221 $ 744 $ 1,477 Key Indicators: B2B issuing dollar volume $ 851,948 $ 814,964 $ 36,984 B2B issuing transaction count 1,087 933 154 Revenue Revenue from our B2B Payments segment was $40.7 million for the year ended December 31, 2023, compared to $18.9 million for the year ended December 31, 2022.
B2B Payments (in thousands) Year Ended December 31, 2024 2023 Change Revenues $ 89,103 $ 41,156 $ 47,947 Adjusted EBITDA 7,605 2,250 5,355 Key Indicators: B2B issuing dollar volume $ 977,278 $ 851,948 $ 125,330 B2B issuing transaction 974 1,087 (113) Revenue Revenue from our B2B Payments segment was $89.1 million for the year ended December 31, 2024, compared to $41.2 million for the year ended December 31, 2023.
Removed
These increases were partially offset by a decrease in certain fee-based revenue, a true up of an invoice from one of the partner banks for certain services provided in Q1 2022 and a decline in processed merchant bankcard dollar value due to the diversification of processor services by one of the referral partners. 30 Table of Contents Money Transmission Services Money transmission services revenue of $98.1 million for the year ended December 31, 2023 increased by $26.6 million or 37.2%, from $71.5 million for the year ended December 31, 2022 and is primarily driven by an increase in customer enrollments.
Added
The decrease was primarily due to a decrease in point-of-sale equipment sales volume.
Removed
This increase was primarily due to growth in interest income due to higher interest rates and deposit balances, and additional revenues generated by our Passport platform, offset by decreased managed services revenue due to wind down of certain programs in Q4 2022.
Added
This decrease was primarily due to the increase in interest income on permissible investments and money transmission revenues which do not have significant cost of services offset by certain credit losses, obsolete inventory write offs and, mix related margin compression.
Removed
Equipment Equipment revenue of $12.7 million for the year ended December 31, 2023, increased by $3.3 million, or 34.2%, from $9.4 million for the year ended December 31, 2022. The increase was primarily due to increased sales of point-of-sale equipment.
Added
Debt extinguishment and modification costs Debt extinguishment and modification costs for the year ended December 31, 2024 increased by $10.4 million or 100%, from the year ended December 31, 2023, due to debt refinancings (see Note 10. Debt Obligations ).
Removed
Nonrecurring expenses for the year primarily include PayRight restructuring costs of $3.5 million, expenses related to the acquisition of the Plastiq business of $1.7 million and certain legal and other costs of $3.0 million.
Added
The balance remained consistent as compared to 2023 due to redemption of redeemable senior preferred stock during 2024. Segment Results The Company's chief operating decision makers ("CODM") are our CEO and CFO. The CODM uses adjusted earnings before interest expense, income tax and depreciation and amortization expenses ("Adjusted EBITDA") as measures of segment profit and loss to allocate resources.
Removed
The IRA, among other provisions, implements a 15% corporate alternative minimum tax based on global adjusted financial statement income and a 1% excise tax on share repurchases, which took effect for tax years beginning after December 31, 2022. The IRA did not have a material effect on our reported results, cash flows, or financial position during 2023.
Added
Adjusted EBITDA represents, EBITDA, adjusted for certain non-cash costs, such as stock-based compensation and the write-off of the carrying value of investments or other assets, as well as debt extinguishment and modification expenses and other expenses and income items considered non-recurring, such as acquisition integration expenses, certain professional fees, and litigation settlements.
Removed
The increase in dividends and accretion from 2022 to 2023 is due to an increase in the dividend rate for 2023 resulting from an increase in variable interest rates during the year and increase in carrying value of redeemable senior preferred stocks (as a result of accumulated accrued dividend).
Added
Adjusted EBITDA is a non-GAAP measure and therefore, a reconciliation to net income (loss) (a GAAP measure) is included herein. Operating overhead and shared costs are managed centrally and included in corporate.
Removed
Segment Results SMB Payments (in thousands) Years Ended December 31, 2023 vs 2022 2023 2022 $ Change Revenue $ 582,870 $ 562,237 $ 20,633 Operating expenses 536,388 507,371 29,017 Operating income $ 46,482 $ 54,866 $ (8,384) Operating margin 8.0 % 9.8 % Depreciation and amortization $ 41,036 $ 43,925 $ (2,889) Key Indicators: Merchant bankcard processing dollar value $ 59,054,039 $ 59,440,491 $ (386,452) Merchant bankcard transaction volume 696,203 636,576 59,627 Revenue Revenue from our SMB Payments segment was $582.9 million for the year ended December 31, 2023, compared to $562.2 million for the year ended December 31, 2022.
Added
This non-GAAP financial measure helps to understand 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.
Removed
The increase of $20.6 million, or 3.7%, was primarily driven by merchant card fee rate increases, equipment revenue, and accrual of certain incentives, offset by a decrease in certain fee-based revenue, a true up of an invoice from one of the partner banks for certain services provided in Q1 2022 and a decline in processed merchant bankcard volume due to the diversification of processor services by one of its referral partners.
Added
SMB Payments (in thousands) Year Ended December 31, 2024 2023 Change Revenues $ 613,547 $ 583,251 $ 30,296 Adjusted EBITDA 108,913 109,485 $ (572) Key Indicators: Merchant bankcard processing dollar value $ 61,703,021 $ 59,054,039 $ 2,648,982 Merchant bankcard transaction count 755,989 696,203 59,786 Total card processing dollar value $ 71,566,091 $ 68,489,886 $ 3,076,205 Revenue Revenue from our SMB Payments segment was $613.5 million for the year ended December 31, 2024, compared to $583.3 million for the year ended December 31, 2023.
Removed
The decrease of $8.4 million, or 15.3%, is due to a higher mix of volume growth from larger reseller partners with higher commissions of $3.2 million and an increase in other operating expenses.
Added
The increase of $30.3 million, or 5.2%, was primarily driven by merchant card fee rate and bankcard processing dollar value and transaction count increases.
Removed
Increase in other operating expenses include a $5.7 million increase in salary and employee benefits due to higher headcount and stock-based compensation and a $2.3 million increase in selling, general and administrative expenses driven by higher travel and other operating costs which was offset by a decrease of $2.8 million in depreciation and amortization for assets fully depreciated and amortized in the prior year. 33 Table of Contents Depreciation and Amortization Depreciation and amortization expense of our SMB Payments segment was $41.0 million for the year ended December 31, 2023, compared to $43.9 million for the year ended December 31, 2022.
Added
The decrease of $0.6 million or 0.6% was primarily due to certain credit losses, mix-related margin compression and increase in salary expenses partially offset by increased revenue and gain from changes in the fair value of contingent consideration from a past acquisition.
Removed
The decrease of $2.9 million or 6.6% is due to full amortization of certain intangible assets.
Added
The increase of $5.4 million was primarily driven by increase in revenues offset by increase in operating expenses.
Removed
This is primarily due to certain provisions for doubtful accounts in the CPX business, transaction bonuses in the Plastiq business, and loss of operating income from the managed services business.
Added
Enterprise Payments (in thousands) Year Ended December 31, 2024 2023 Change Revenues $ 180,448 $ 132,186 $ 48,262 Adjusted EBITDA 154,936 110,893 $ 44,043 Key Indicators: Average billed clients $ 797,567 $ 556,526 $ 241,041 Average new enrollments 56,072 51,059 5,013 Revenue Revenue from our Enterprise Payments segment was $180.4 million for the year ended December 31, 2024, compared to $132.2 million for the year ended December 31, 2023.
Removed
Depreciation and Amortization Depreciation and amortization from our B2B Payments segment was $2.2 million for the year ended December 31, 2023, compared to $0.7 million depreciation and amortization expense for the year ended December 31, 2022.
Added
The increase of $44.0 million or 39.8% was primarily due to increase in revenue offset by increased salaries.
Removed
The increase in depreciation and amortization expense is primarily due to assets acquired from the acquisition of the Plastiq business in the 3rd quarter of 2023. 34 Table of Contents Enterprise Payments (in thousands) Years Ended December 31, 2023 vs 2022 2023 2022 $ Change Revenue $ 132,016 $ 82,514 $ 49,502 Operating expenses 58,052 51,577 6,475 Operating income $ 73,964 $ 30,937 $ 43,027 Operating margin 56.0 % 37.5 % Depreciation and amortization $ 23,753 $ 24,892 $ (1,139) Key Indicators: Average billed clients $ 556,526 $ 379,725 $ 176,801 Average monthly new enrollments 51,059 32,013 19,046 Revenue Revenue from our Enterprise Payments segment was $132.0 million for the year ended December 31, 2023, compared to $82.5 million for the year ended December 31, 2022.
Added
Year Ended December 31, 2024 SMB Payments B2B Payments Enterprise Payments Corporate Total Consolidated Reconciliation of Adjusted EBITDA to GAAP Measure: Adjusted EBITDA $ 108,913 $ 7,605 $ 154,936 $ (67,187) $ 204,267 Interest expense (1) (4,340) — (84,607) (88,948) Depreciation and amortization (30,865) (5,258) (16,928) (4,990) (58,041) Debt modification and extinguishment expenses — — — (10,369) (10,369) Selling, general and administrative (non-recurring) — — — (3,510) (3,510) Non-cash stock based compensation (16) (220) (131) (5,751) (6,118) Income (loss) before taxes $ 78,031 $ (2,213) $ 137,877 $ (176,414) $ 37,281 Income tax expense (13,266) Net income $ 24,015 Year Ended December 31, 2023 SMB Payments B2B Payments Enterprise Payments Corporate Total Consolidated Reconciliation of Adjusted EBITDA to GAAP Measure: Adjusted EBITDA $ 109,485 $ 2,250 $ 110,893 $ (54,296) $ 168,332 Interest expense — (1,302) (357) (74,449) (76,108) Depreciation and amortization (36,715) (1,831) (22,426) (7,423) (68,395) Selling, general and administrative (non-recurring) — — — (9,825) (9,825) Non-cash stock based compensation (539) (549) (261) (5,419) (6,768) Non-cash other losses — — — (84) (84) Income (loss) before taxes $ 72,231 $ (1,432) $ 87,849 $ (151,496) $ 7,152 Income tax expense (8,463) Net loss $ (1,311) Liquidity and Capital Resources Liquidity and capital resource management is a process focused on providing the funding we need to meet our short-term and long-term cash and working capital needs.
Removed
Depreciation and Amortization Depreciation and amortization expense from our Enterprise Payments segment was $23.8 million for the year ended December 31, 2023, compared to $24.9 million for the year ended December 31, 2022.
Added
The Company had no business acquisitions for the year ended December 31, 2024, compared to net cash used of $28.2 million in 2023 to acquire Plastiq business.
Removed
The decrease of $1.1 million, or 4.6%, was primarily driven by full amortization of certain intangible assets in the prior year offset by depreciation expense on assets placed in service during the year.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed0 unchanged
Biggest changeAs of December 31, 2023, we had $654.4 million in outstanding borrowings under our Credit Agreement. Ignoring the 1.00% SOFR floor, a hypothetical 1.00% increase or decrease in the applicable SOFR rate on our outstanding indebtedness under the Credit Agreement would increase or decrease cash interest expense on our indebtedness by approximately $6.7 million per year.
Biggest changeAs of December 31, 2024, we had $945.5 million in outstanding borrowings under our Credit Agreement. Ignoring the 0.50% SOFR floor, a hypothetical 1.00% increase or decrease in the 41 Table of Contents applicable SOFR rate on our outstanding indebtedness under the Credit Agreement would increase or decrease cash interest expense by approximately $9.5 million per year.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest rate risk Our debt facilities under our Credit Agreement bear interest at either a base rate or a SOFR rate plus an applicable margin per year, subject to a SOFR rate floor of 1.00% per year.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest rate risk Our debt facilities under our Credit Agreement bear interest at either a base rate or a SOFR rate plus an applicable margin per year, subject to a SOFR rate floor of 0.50% per year.
We do not currently hedge against interest rate risk. 38 Table of Contents
We do not currently hedge against interest rate risk. 42 Table of Contents

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