What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-10 compared with 2022-08-09 · 105 added, 98 removed, 190 unchanged (52% of the section changed)

37 unchanged sentences

Results of Operations

This section includes certain components of our results of operations for the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021.

We have derived this data, except key indicators for merchant bankcard processing dollar values and transaction volumes, from our Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q and our Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

For the three months ended June 30, 2022, our consolidated revenue of $166.4 million increased by $41.4 million, or 33.1%, from $125.0 million for the three months ended June 30, 2021.

This section includes certain components of our results of operations for the three and nine months ended September 30, 2022, compared to the three and nine months ended September 30, 2021.

We have derived this data, except key indicators for merchant bankcard processing dollar values, transaction volumes and average billed accounts from our Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q and our Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

For the three months ended September 30, 2022, our consolidated revenue of $166.4 million increased by $33.9 million, or 25.6%, from $132.5 million for the three months ended September 30, 2021.

This overall increase was mainly driven by an increase in bankcard volumes resulting from increased consumer spending and acquisitions completed by the Company in 2021.

For the six months ended June 30, 2022, our consolidated revenue of $319.7 million increased by $81.4 million, or 34.2%, from $238.3 million for the six months ended June 30, 2021.

For the nine months ended September 30, 2022, our consolidated revenue of $486.1 million increased by $115.2 million, or 31.1%, from $370.9 million for the nine months ended September 30, 2021.

This overall increase was primarily driven by an increase in bankcard volumes resulting from increased consumer spending, an increase in certain fee-based revenue and acquisitions completed by the Company in 2021.

The following table presents our revenues by type for the three and six months ended June 30, 2022 and 2021:

(in thousands) Three Months Ended June 30, Six Months Ended June 30,

The following table presents our revenues by type for the three and nine months ended September 30, 2022 and 2021:

(in thousands) Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 $ Change 2022 2021 $ Change

1 unchanged sentence

Merchant card fees $ 137,659 $ 122,175 $ 15,484 $ 405,404 $ 348,244 $ 57,160

Outsourced services and other services 6,887 4,825 2,062 13,984 9,203 4,781

Money transmission services revenue 18,291 2,873 15,418 51,757 2,873 48,884

Outsourced services and other services 7,933 5,778 2,155 21,917 14,981 6,936

Equipment 2,534 1,716 818 7,008 4,755 2,253

Total revenues $ 166,417 $ 132,542 $ 33,875 $ 486,086 $ 370,853 $ 115,233

For the three months ended June 30, 2022, our merchant card fees revenue of $139.8 million increased by $21.4 million, or 18.1%, from $118.4 million for the three months ended June 30, 2021.

For the three months ended September 30, 2022, our merchant card fees revenue of $137.7 million increased by $15.5 million, or 12.7%, from $122.2 million for the three months ended September 30, 2021.

This increase was primarily driven by an increase in the merchant bankcard volume processed by the Company slightly offset by rate decreases.

For the six months ended June 30, 2022, our merchant card fees revenue of $267.7 million increased by $41.6 million, or 18.4%, from $226.1 million for the six months ended June 30, 2021.

This increase was primarily driven by an increase in the merchant bankcard volume processed by the Company, an increase in certain fee-based revenue slightly offset by rate decreases.

Outsourced services and other services revenue of $6.9 million for the three months ended June 30, 2022 increased by $2.1 million, or 43.8%, from $4.8 million for the three months ended June 30, 2021, primarily due to growth in revenue from AP automation solutions and the acceleration of certain customer programs which were scaled back in 2021 due to the impact of the COVID-19 pandemic.

Outsourced services and other services revenue of $14.0 million for the six months ended June 30, 2022 increased by $4.8 million, or 52.2%, from $9.2 million for the six months ended June 30, 2021.

This increase was primarily driven by growth in revenue from AP automation solutions and the acceleration of certain customer programs which were scaled back in 2021 due to the impact of the COVID-19 pandemic.

Money transmission services revenue of $17.2 million and $33.5 million for the three and six months ended June 30, 2022, respectively, is related to the business acquired from Finxera in September 2021.

Equipment revenue of $2.6 million for the three months ended June 30, 2022 increased by $0.8 million, or 44.4%, from $1.8 million for the three months ended June 30, 2021.

For the nine months ended September 30, 2022, our merchant card fees revenue of $405.4 million increased by $57.2 million, or 16.4%, from $348.2 million for the nine months ended September 30, 2021.

This increase was primarily driven by an increase in the merchant bankcard volume processed by the Company and an increase in certain fee-based revenue slightly offset by rate decreases.

Money transmission services revenue of $18.3 million and $51.8 million for the three and nine months ended September 30, 2022, respectively, is related to the business acquired from Finxera in September 2021.

Outsourced services and other services revenue of $7.9 million for the three months ended September 30, 2022 increased by $2.1 million, or 36.2%, from $5.8 million for the three months ended September 30, 2021, primarily due to growth in revenue from AP automation solutions and increased volumes in the card issuing business offset by decreases due to the wind down of certain customer programs in the managed services business.

Outsourced services and other services revenue of $21.9 million for the nine months ended September 30, 2022 increased by $6.9 million, or 46.0%, from $15.0 million for the nine months ended September 30, 2021.

This increase was primarily driven by growth in revenue from AP automation solutions and increased volumes in the card issuing business.

Equipment revenue of $2.5 million for the three months ended September 30, 2022 increased by $0.8 million, or 47.1%, from $1.7 million for the three months ended September 30, 2021.

The increase was primarily due to increased sales of mobile card reader equipment and other equipment from our MX product line.

Equipment revenue of $4.5 million for the six months ended June 30, 2022 increased by $1.5 million, or 50.0%, from $3.0 million for the six months ended June 30, 2021.

Equipment revenue of $7.0 million for the nine months ended September 30, 2022 increased by $2.2 million, or 45.8%, from $4.8 million for the nine months ended September 30, 2021.

This increase was primarily due to increased sales of mobile card reader equipment and other equipment from our MX product line.

Operating expenses for three and six months ended June 30, 2022 and 2021 were as follows:

(in thousands) Three Months Ended June 30, Six Months Ended June 30,

Operating expenses for three and nine months ended September 30, 2022 and 2021 were as follows:

(in thousands) Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 $ Change 2022 2021 $ Change

Operating expenses

Cost of revenue $ 110,749 $ 89,831 $ 20,918 $ 212,229 $ 171,694 $ 40,535

Cost of revenue (excludes depreciation and amortization) $ 107,958 $ 92,833 $ 15,125 $ 320,187 $ 264,527 $ 55,660

Salary and employee benefits 16,384 11,909 4,475 48,231 31,808 16,423

2 unchanged sentences

Total operating expenses $ 152,337 $ 124,292 $ 28,045 $ 448,120 $ 350,671 $ 97,449

Cost of Revenue

Cost of revenue of $110.7 million for the three months ended June 30, 2022 increased by $20.9 million, or 23.3%, from $89.8 million for the three months ended June 30, 2021, primarily due to the corresponding increase in revenues.

For the three months ended June 30, 2022, cost of revenue as a percentage of total revenues decreased to 66.5% as compared to 71.9% for the three months ended June 30, 2021.

This decrease was primarily due to the impact of the Finxera acquisition on gross profit margins, partially offset by mix of bankcard volume growth from larger partners with higher commissions.

Cost of revenue of $212.2 million for the six months ended June 30, 2022 increased by $40.5 million, or 23.6% from $171.7 million for the six months ended June 30, 2021.

For the six months ended June 30, 2022 cost of revenue as a percentage of total revenues decreased to 66.4% as compared to 72.0% for the six months ended June 30, 2021.

This decrease was primarily due to the impact of the Finxera acquisition on gross profit margins, partially offset by mix of bankcard volume growth from larger partners with higher commissions and the temporary pull-back of the specialized merchant acquiring portfolio, resulting from risk-pairing action taken by the company during the prior year period.

Cost of Revenue (excludes depreciation and amortization)

Cost of revenue (excludes depreciation and amortization) of $108.0 million for the three months ended September 30, 2022 increased by $15.2 million, or 16.4%, from $92.8 million for the three months ended September 30, 2021, primarily due to the corresponding increase in revenues.

For the three months ended September 30, 2022, cost of revenue (excludes depreciation and amortization) as a percentage of total revenues decreased to 64.9% as compared to 70.0% for the three months ended September 30, 2021.

This decrease was primarily due to the impact of the Finxera acquisition, partially offset by mix of bankcard volume growth from larger partners with higher commissions.

Cost of revenue (excludes depreciation and amortization) of $320.2 million for the nine months ended September 30, 2022 increased by $55.7 million, or 21.1% from $264.5 million for the nine months ended September 30, 2021.

For the nine months ended September 30, 2022 cost of revenue (excludes depreciation and amortization) as a percentage of total revenues decreased to 65.9% as compared to 71.3% for the nine months ended September 30, 2021.

This decrease was primarily due to the impact of the Finxera acquisition, partially offset by mix of bankcard volume growth from larger partners with higher commissions and risk management initiatives taken by the Company in the specialized merchant acquiring portfolio during the prior year period.

Salary and Employee Benefits

Salary and employee benefits expense of $15.8 million for the three months ended June 30, 2022 increased by $5.4 million, or 51.9%, from $10.4 million for the three months ended June 30, 2021, primarily due to annual pay raises, increases in headcount related to our acquisition of Finxera in September 2021, an increase in stock-based compensation and overall growth of the Company.

Salary and employee benefits expense of $31.8 million for the six months ended June 30, 2022 increased by $11.9 million, or 59.8%, from $19.9 million for the six months ended June 30, 2021, primarily due to in headcount related to our acquisition of Finxera in September 2021, an increase in stock-based compensation and overall growth of the Company.

Salary and employee benefits expense of $16.4 million for the three months ended September 30, 2022 increased by $4.5 million, or 37.8%, from $11.9 million for the three months ended September 30, 2021, primarily due to pay raises, increases in headcount related to our acquisition of Finxera in September 2021, an increase in stock-based compensation and overall growth of the Company.

Salary and employee benefits expense of $48.2 million for the nine months ended September 30, 2022 increased by $16.4 million, or 51.6%, from $31.8 million for the nine months ended September 30, 2021, primarily due to increases in headcount related to our acquisition of Finxera in September 2021, an increase in stock-based compensation and overall growth of the Company.

Depreciation and Amortization Expense

Depreciation and amortization expense of $17.5 million for the three months ended June 30, 2022 increased by $6.8 million, or 63.6%, from $10.7 million for the three months ended June 30, 2021, primarily due to the amortization of finite-lived intangible assets acquired from the business combinations completed during 2021.

Depreciation and amortization expense of $34.9 million for the six months ended June 30, 2022 increased by $15.1 million, or 76.3%, from $19.8 million for the six months ended June 30, 2021, primarily due to the amortization of finite-lived intangible assets acquired from the business combinations completed during 2021.

Depreciation and amortization expense of $17.8 million for the three months ended September 30, 2022 increased by $5.5 million, or 44.7%, from $12.3 million for the three months ended September 30, 2021, primarily due to the amortization of finite-lived intangible assets acquired from the business combinations completed during 2021.

Depreciation and amortization expense of $52.7 million for the nine months ended September 30, 2022 increased by $20.6 million, or 64.2%, from $32.1 million for the nine months ended September 30, 2021, primarily due to the amortization of finite-lived intangible assets acquired from the business combinations completed during 2021.

Selling, General and Administrative

Selling, general and administrative expenses of $9.3 million for the three months ended June 30, 2022 increased by $2.6 million, or 38.8%, from $6.7 million for the three months ended June 30, 2021, primarily due to an increase in expenses from acquired businesses and certain non-recurring expenses.

Selling, general and administrative expenses of $16.8 million for the six months ended June 30, 2022 increased by $1.8 million, or 12.0%, from $15.0 million for the six months ended June 30, 2021, primarily due to an increase in expenses from acquired businesses, offset by a decrease in certain non-recurring transaction related expenses.

Selling, general and administrative expenses of $10.2 million for the three months ended September 30, 2022 increased by $3.0 million, or 41.7%, from $7.2 million for the three months ended September 30, 2021, primarily due to an increase in expenses from acquired businesses and certain non-recurring expenses.

Selling, general and administrative expenses of $27.0 million for the nine months ended September 30, 2022 increased by $4.8 million, or 21.6%, from $22.2 million for the nine months ended September 30, 2021, primarily due to an increase in expenses from acquired businesses, offset by a decrease in certain non-recurring transaction related expenses.

Other Expense, net

Other expenses, net for three and six months ended June 30, 2022 and 2021 were as follows:

(in thousands) Three Months Ended June 30, Six Months Ended June 30,

Other expenses, net for three and nine months ended September 30, 2022 and 2021 were as follows:

(in thousands) Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 $ Change 2022 2021 $ Change

2 unchanged sentences

Debt extinguishment and modification costs — — — — (8,322) 8,322

Other income (expense), net 29 215 (186) 80 (54) 134

Other income, net 231 146 85 311 92 219

Total other expense, net $ (13,181) $ (8,009) $ (5,172) $ (36,971) $ (32,838) $ (4,133)

Interest Expense

Interest expense of $12.3 million for the three months ended June 30, 2022 increased by $5.0 million, or 68.5%, from $7.3 million for the three months ended June 30, 2021, due to additional borrowings to fund the acquisition of Finxera in September 2021.

Interest expense of $23.9 million for the six months ended June 30, 2022 increased by $7.4 million, or 44.8%, from $16.5 million for the six months ended June 30, 2021, primarily due to additional borrowings to fund the acquisition of Finxera in September 2021.

Interest expense of $13.4 million for the three months ended September 30, 2022 increased by $5.2 million, or 63.4%, from $8.2 million for the three months ended September 30, 2021, due to additional borrowings to fund the acquisition of Finxera in September 2021 and increased interest rates in the three months ended September 30, 2022.

Interest expense of $37.3 million for the nine months ended September 30, 2022 increased by $12.7 million, or 51.6%, from $24.6 million for the nine months ended September 30, 2021, primarily due to additional borrowings to fund the acquisition of Finxera in September 2021 and increased interest rates in the nine months ended September 30, 2022.

Debt Extinguishment and Modification Costs

1 unchanged sentence

Income Tax Expense (Benefit)

Income tax expense (benefit) for three and six months ended June 30, 2022 and 2021 was as follows:

(in thousands) Three Months Ended June 30, Six Months Ended June 30,

Income tax expense (benefit) for three and nine months ended September 30, 2022 and 2021 was as follows:

(in thousands) Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 $ Change 2022 2021 $ Change

Income (loss) before income taxes $ 899 $ 241 $ 658 $ 995 $ (12,656) $ 13,651

Income tax expense (benefit) $ 467 $ 1,490 $ (1,023) $ 142 $ (741) $ 883

Income tax expense $ 1,691 $ 790 $ 901 $ 1,833 $ 49 $ 1,784

Effective tax rate 188.1 % 327.8 % 184.2 % (0.4) %

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The consolidated effective income tax rate for 2022 may not be indicative of our effective tax rate for future periods.

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act into law.

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 shall take effect in tax years beginning after December 31, 2022.

We are in the process of evaluating the provisions of the IRA, but we do not currently believe the IRA will have a material effect on our reported results, cash flows, or financial position when it becomes effective.

If applicable, we expect to reflect the excise tax within equity as part of the repurchase price of common stock.

Segment Results

3 unchanged sentences

The impact of the restatement of the prior period results is as follows:

(in thousands) Three Months Ended June 30, 2021

(in thousands) Three Months Ended September 30, 2021

SMB Payments (1)

13 unchanged sentences

Difference $ 78 $ — $ (78)

(in thousands) Six Months Ended June 30, 2021

(in thousands) Nine Months Ended September 30, 2021

SMB Payments (1)

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(4) Amounts may not net to zero due to rounding differences.

(in thousands) Three Months Ended June 30, Six Months Ended June 30,

(in thousands) Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 $ Change 2022 2021 $ Change

7 unchanged sentences

Merchant bankcard transaction volume 165,796 153,053 12,743 476,084 431,369 44,715

Revenue from our SMB Payments segment was $142.5 million for the three months ended June 30, 2022, compared to $120.3 million for the three months ended June 30, 2021.

Revenue from our SMB Payments segment was $139.9 million for the three months ended September 30, 2022, compared to $124.7 million for the three months ended September 30, 2021.

The increase of $15.2 million, or 12.2%, was primarily driven by increased merchant bankcard volume.

1 unchanged sentence

The increase was primarily driven by increased volume (transaction count) related fees revenues and changes in the merchant mix.

Revenue from our SMB Payments segment was $272.5 million for the six months ended June 30, 2022, compared to $229.4 million for the six months ended June 30, 2021.

Revenue from our SMB Payments segment was $412.4 million for the nine months ended September 30, 2022, compared to $354.1 million for the nine months ended September 30, 2021.

The increase of $58.3 million, or 16.5%, was primarily driven by increased merchant bankcard volume and an increase in certain fee-based revenue.

2 unchanged sentences

Operating Income

Operating income from our SMB Payments segment was $14.0 million for the three months ended June 30, 2022, compared to $14.4 million for the three months ended June 30, 2021.

The decrease of $0.4 million, or 2.8%, was primarily driven by mix related margin compression, a $1.7 million increase in salary and employee benefits due to higher headcount, higher stock-based compensation and annual pay raises, a $1.2 million increase in selling, general and administrative expenses driven by higher software, travel and other operating costs and a $0.6 million increase in depreciation and amortization.

Operating income from our SMB Payments segment was $13.4 million for the three months ended September 30, 2022, compared to $14.6 million for the three months ended September 30, 2021.

The decrease of $1.2 million, or 8.2%, was primarily driven by mix-related margin compression, a $1.7 million increase in salary and employee benefits due to higher headcount, higher stock-based compensation and pay raises, a $0.7 million increase in selling, general and administrative expenses driven by higher travel and other operating costs and a $0.1 million increase in depreciation and amortization, offset by an increase in operating income from higher revenue.

The increase in headcount and selling, general and administrative expenses are mainly attributable to growth initiatives.

Operating income from our SMB Payments segment was $26.5 million for the six months ended June 30, 2022, compared to $27.7 million for the six months ended June 30, 2021.

The decrease of $1.2 million, or 4.3%, was primarily driven by mix related margin compression, a $3.2 million increase in salary and employee benefits due to higher headcount, higher stock-based compensation and annual pay raises, a $1.6 million increase in selling, general and administrative expenses driven by higher software and travel and other operating costs and a $2.7 million increase in depreciation and amortization.

Operating income from our SMB Payments segment was $39.9 million for the nine months ended September 30, 2022, compared to $42.4 million for the nine months ended September 30, 2021.

The decrease of $2.5 million, or 5.9%, was primarily driven by mix related margin compression, a $5.3 million increase in salary and employee benefits due to higher headcount, higher stock-based compensation and annual pay raises, a $2.3 million increase in selling, general and administrative expenses driven by higher software and travel and other operating costs and a $2.7 million increase in depreciation and amortization offset by an increase in operating income from higher revenue.

The increase in headcount and selling, general and administrative expenses are mainly attributable to growth initiatives.

Depreciation and Amortization

Depreciation and amortization expense from our SMB Payments segment was $11.0 million for the three months ended June 30, 2022, compared to $10.4 million for the three months ended June 30, 2021.

The increase of $0.6 million was primarily driven by the amortization of acquired intangibles resulting from the C&H and Wholesale Payments, Inc.

acquisitions.

Depreciation and amortization expense from our SMB Payments segment was $21.8 million for the six months ended June 30, 2022, compared to $19.1 million for the six months ended June 30, 2021.

The increase of $2.7 million was primarily driven by the amortization of acquired intangibles resulting from the C&H and Wholesale Payments, Inc.

Depreciation and amortization expense from our SMB Payments segment was $11.0 million for the three months ended September 30, 2022, compared to $11.0 million for the three months ended September 30, 2021.

Depreciation and amortization expense from our SMB Payments segment was $32.8 million for the nine months ended September 30, 2022, compared to $30.1 million for the nine months ended September 30, 2021.

The increase of $2.7 million

was primarily driven by the amortization of acquired intangibles resulting from the C&H and Wholesale Payments, Inc.

acquisitions.

(in thousands) Three Months Ended June 30, Six Months Ended June 30,

(in thousands) Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 $ Change 2022 2021 $ Change

7 unchanged sentences

Merchant bankcard transaction volume 63 55 8 239 143 96

Revenue from our B2B Payments segment was $5.3 million for the three months ended June 30, 2022, compared to $4.0 million for the three months ended June 30, 2021.

The increase of $1.3 million, or 32.5%, was primarily driven by an increase of $0.4 million as a result of the acceleration of certain programs in the Managed Services business operations that were scaled back in 2021 as a result of the COVID-19 pandemic, an increase of $0.9 million in the CPX business, of which $0.5 million is related to volume growth, and the remaining increase of $0.4 million is from the recognition of certain revenues for which recovery became probable during the current quarter.

Revenue from our B2B Payments segment was $11.2 million for the six months ended June 30, 2022, compared to $7.5 million for the six months ended June 30, 2021.

The increase of $3.7 million, or 49.3%, was primarily driven by an increase of $1.2 million as a result of the acceleration of certain programs in the Managed Services business operations that were scaled back in 2021 as a result of the COVID-19 pandemic, an increase of $2.5 million in the CPX business, of which $1.5 million is related to

volume growth, and the remaining increase of $1.0 million is from the recognition of certain revenues for which recovery became probable during the current quarter.

Revenue from our B2B Payments segment was $4.9 million for the three months ended September 30, 2022, compared to $4.2 million for the three months ended September 30, 2021.

The increase of $0.7 million, or 16.7%, was primarily driven by an increase of $1.1 million in the CPX business, of which $0.5 million is related to volume growth, and the remaining increase of $0.6 million is from the recognition of certain revenues for which recovery became probable during the current quarter.

This increase was offset by a decrease of $0.4 million driven by wind down of certain customer programs in managed services business.

Revenue from our B2B Payments segment was $16.1 million for the nine months ended September 30, 2022, compared to $11.7 million for the nine months ended September 30, 2021.

The increase of $4.4 million, or 37.6%, was primarily driven by an increase of $0.8 million, during the first six months of 2022, as a result of the acceleration of certain programs in the managed services business operations that were scaled back in 2021 as a result of the COVID-19 pandemic, an increase of $3.6 million in the CPX business, of which $2.0 million is related to volume growth, and the remaining increase of $1.6 million is from the recognition of certain revenues for which recovery became probable.

Operating Income (Loss)

Operating income from our B2B Payments segment was $0.7 million for the three months ended June 30, 2022, compared to $21 thousand for the three months ended June 30, 2021.

Operating income from our B2B Payments segment was $0.2 million for the three months ended September 30, 2022, compared to a loss of $29 thousand for the three months ended September 30, 2021.

The increase was primarily attributable to increases in revenue.

Operating income from our B2B Payments segment was $1.1 million for the six months ended June 30, 2022.

compared to an operating loss of $0.4 million for the six months ended June 30, 2021.

Operating income from our B2B Payments segment was $1.3 million for the nine months ended September 30, 2022.

compared to an operating loss of $0.4 million for the nine months ended September 30, 2021.

The increase of $1.7 million was primarily attributable to increases in revenue.

Enterprise Payments

(in thousands) Three Months Ended June 30, Six Months Ended June 30,

(in thousands) Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 $ Change 2022 2021 $ Change

7 unchanged sentences

Merchant bankcard transaction volume 808 — 808 2,023 — 2,023

Revenue from our Enterprise Payments segment was $18.6 million for the three months ended June 30, 2022, compared to $0.7 million for the three months ended June 30, 2021.

Average billed clients 387,384 342,789 44,595 363,993 349,595 14,398

Revenue from our Enterprise Payments segment was $21.7 million for the three months ended September 30, 2022, compared to $3.6 million for the three months ended September 30, 2021.

The increase of $18.1 million was primarily driven by revenues contributed by the Finxera business acquired in September 2021.

Revenue from our Enterprise Payments segment was $36.0 million for the six months ended June 30, 2022, compared to $1.4 million for the six months ended June 30, 2021.

Revenue from our Enterprise Payments segment was $57.6 million for the nine months ended September 30, 2022, compared to $5.0 million for the nine months ended September 30, 2021.

The increase of $52.6 million was primarily driven by revenues contributed by the Finxera business acquired in September 2021.

Operating Income

Operating income from our Enterprise Payments segment was $5.7 million for the three months ended June 30, 2022, compared to $0.2 million for the three months ended June 30, 2021.

Operating income from our Enterprise Payments segment was $9.3 million for the three months ended September 30, 2022, compared to $1.2 million for the three months ended September 30, 2021.

The increase of $8.1 million was primarily driven by operating income contributed by the Finxera business acquired in September 2021.

Operating income from our Enterprise Payments segment was $10.2 million for the six months ended June 30, 2022, compared to $0.3 million for the six months ended June 30, 2021.

Operating income from our Enterprise Payments segment was $19.5 million for the nine months ended September 30, 2022, compared to $1.6 million for the nine months ended September 30, 2021.

The increase of $17.9 million was primarily driven by operating income contributed by the Finxera business acquired in September 2021.

Depreciation and Amortization

Depreciation and amortization expense from our Enterprise Payments segment was $6.2 million for the three months ended June 30, 2022, compared to no depreciation and expense for the three months ended June 30, 2021.

Depreciation and amortization expense from our Enterprise Payments segment was $6.2 million for the three months ended September 30, 2022, compared to $0.9 million depreciation and expense for the three months ended September 30, 2021.

The increase of $5.3 million was primarily driven by the amortization of acquired intangibles resulting from the Finxera acquisition in September 2021.

Depreciation and amortization from our Enterprise Payments segment was $12.4 million for the six months ended June 30, 2022, compared to no depreciation and amortization expense for the six months ended June 30, 2021.

Depreciation and amortization from our Enterprise Payments segment was $18.6 million for the nine months ended September 30, 2022, compared to $0.9 million depreciation and amortization expense for the nine months ended September 30, 2021.

The increase of $17.7 million was primarily driven by the amortization of acquired intangibles resulting from the Finxera acquisition in September 2021.

1 unchanged sentence

Our Unaudited Consolidated Financial Statements have been prepared in accordance with GAAP for interim periods, which often require the judgment of management in the selection and application of certain accounting principles and methods.

Our critical accounting policies and estimates are discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021.

There have been no material changes to these critical accounting policies and estimates as of June 30, 2022.

critical accounting policies and estimates are discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021.

There have been no material changes to these critical accounting policies and estimates as of September 30, 2022.

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.

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 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 12 months.

This is based upon management's estimates and assumptions, including utilizing the most currently available information regarding the effects of the COVID-19 pandemic on our financial results.

Actual future results could differ materially, as the magnitude, duration and effects of the COVID-19 pandemic are difficult to predict, and ultimately could negatively impact our liquidity and capital resources.

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 and other anticipated needs, including our acquisition strategy.

We anticipate that cash on hand, funds generated from operations and available borrowings under our revolving credit facility are sufficient to meet our working capital requirements for at least the next 12 months.

During the second quarter of 2022, PRTH's Board of Directors authorized the Company to implement a general share repurchase program under which the Company may purchase up to 2.0 million shares of its outstanding Common Stock for a total of up to $10.0 million.

Under the terms of this plan, the Company may purchase shares through open market purchases, unsolicited or solicited privately negotiated transactions, or in another manner so long as it complies with applicable rules and regulations.

As of September 30, 2022, 1,005,918 shares were repurchased under the plan, with a total purchase price of $4.2 million.

Average price per share was $4.20 and there were approximately 1.0 million shares available for repurchase under the plan.

Our principal uses of cash are to fund business operations and administrative costs, and to service our debt.

Our working capital, defined as current assets less current liabilities, was $23.8 million at June 30, 2022 and $19.6 million at December 31, 2021.

As of June 30, 2022, we had cash totaling $22.2 million compared to $20.3 million at December 31, 2021.

These cash balances do not include restricted cash of $11.7 million and $28.9 million at June 30, 2022 and December 31, 2021, respectively, which reflects cash accounts holding customer settlement funds and cash reserves for potential losses.

The current portion of long-term debt included in current liabilities was $6.2 million at June 30, 2022 and December 31, 2021.

At June 30, 2022, we had availability of approximately $25.5 million under our revolving credit arrangement.

The following table and discussion reflect our changes in cash flows for the comparative six month periods.

Six Months Ended June 30,

Our working capital, defined as current assets less current liabilities, was $18.6 million at September 30, 2022 and $19.6 million at December 31, 2021.

As of September 30, 2022, we had cash totaling $12.7 million compared to $20.3 million at December 31, 2021.

These cash balances do not include restricted cash of $11.6 million and $28.9 million at September 30, 2022 and December 31, 2021, respectively, which reflects cash accounts holding customer settlement funds and cash reserves for potential losses.

The current portion of long-term debt included in current liabilities was $6.2 million at September 30, 2022 and December 31, 2021.

At September 30, 2022, we had availability of approximately $34.0 million under our revolving credit facility.

The following table and discussion reflect our changes in cash flows for the comparative nine month periods.

Nine Months Ended September 30,

(in thousands) 2022 2021

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Financing activities (8,099) 871,010

Net increase (decrease) in cash and cash equivalents and restricted cash $ 18,161 $ (58,777)

Net increase in cash and cash equivalents and restricted cash $ 21,364 $ 405,565

Cash Provided by (Used in) Operating Activities

Net cash provided by operating activities was $30.3 million for the six months ended June 30, 2022 compared $9.8 million of net cash used in operating activities for the six months ended June 30, 2021.

The $40.1 million, or 409.2%, increase in 2022 was primarily driven by cash generated from the operations of the Company, offset by changes in operating assets and liabilities.

Net cash provided by operating activities was $50.6 million for the nine months ended September 30, 2022 compared to $2.6 million of net cash used in operating activities for the nine months ended September 30, 2021.

The $53.2 million increase in 2022 was primarily driven by the PIK interest upon the refinancing of our credit facilities in April 2021 and cash generated from the operations of the Company, offset by changes in operating assets and liabilities.

Cash Used in Investing Activities

Net cash used in investing activities was $12.7 million and $83.1 million for the six months ended June 30, 2022 and 2021, respectively.

For the six months ended June 30, 2022, net cash used in investing activities included $2.8 million related to the funding of new loans to ISOs, additions to property, equipment and software of $6.0 million, and acquisitions of intangible assets of $3.7 million.

For the six months ended June 30, 2021, net cash used in investing activities included $43.4 million of cash used to fund acquisitions of intangible assets, $34.5 million of net cash used for the acquisition of a business and $5.2 million of cash used to acquire property, equipment and software.

Cash Provided by Financing Activities

Net cash provided by financing activities was $0.6 million for the six months ended June 30, 2022, compared to $34.1 million of cash provided by financing activities for the six months ended June 30, 2021.

The net cash provided by financing activities for the six months ended June 30, 2022 included changes in the net obligations for funds held on the behalf of customers of $15.2 million and $12.0 million related to additional borrowings under the revolving credit facility, offset by $15.6 million of cash used for the repayment of debt, $7.1 million of cash dividends paid to redeemable senior preferred stockholders, $2.1 million of cash used for stock repurchases, including a portion related to shares withheld for taxes, and $1.9 million of payments of contingent consideration for business combinations and asset acquisitions.

The net cash provided by financing activities for the six months ended June 30, 2021 included $286.0 million of cash proceeds from the issuance of long-term debt, net of debt issuance and modification costs, $139.5 million of proceeds from the issuance of the redeemable senior preferred stock, net of issuance fees and costs, and $30.0 million related to borrowings under the revolving credit facility, offset by $358.3 million of cash used for the repayment of debt, $61.6 million of cash used related to changes in the net obligations for funds held on behalf of customers, and $1.6 million of cash dividends paid to the redeemable senior preferred stockholders.

Net cash used in investing activities was $21.1 million and $462.9 million for the nine months ended September 30, 2022 and 2021, respectively.

For the nine months ended September 30, 2022, net cash used in investing activities included $3.3 million

related to the funding of new loans to ISOs, additions to property, equipment and software of $11.4 million, and acquisitions of intangible assets of $6.7 million.

For the nine months ended September 30, 2021, net cash used in investing activities included $48.2 million of cash used to fund acquisitions of intangible assets, $407.1 million of net cash used for the acquisition of businesses and $7.5 million of cash used to acquire property, equipment and software.

Cash (Used in) Provided by Financing Activities

Net cash used in financing activities was $8.1 million for the nine months ended September 30, 2022, compared to $871.0 million of cash provided by financing activities for the nine months ended September 30, 2021.

The net cash provided by financing activities for the nine months ended September 30, 2022 included changes in the net obligations for funds held on the behalf of customers of $25.7 million and $23.0 million related to additional borrowings under the revolving credit facility, offset by $36.7 million of cash used for the repayment of debt, $11.5 million of cash dividends paid to redeemable senior preferred stockholders, $4.7 million of cash used for stock repurchases, including a portion related to shares withheld for taxes, and $4.0 million of payments of contingent consideration for business combinations and asset acquisitions.

The net cash provided by financing activities for the nine months ended September 30, 2021 included $598.2 million of cash proceeds from the issuance of long-term debt, net of debt issuance and modification costs, $211.0 million of proceeds from the issuance of the redeemable senior preferred stock, net of issuance fees and costs, and $30.0 million related to borrowings under the revolving credit facility, offset by $359.9 million of cash used for the repayment of debt, $396.3 million of cash provided by related to changes in the net obligations for funds held on behalf of customers, and $4.0 million of cash dividends paid to the redeemable senior preferred stockholders.

Long-term Debt

As of June 30, 2022, we had outstanding debt obligations, including the current portion and net of unamortized debt discount of $608.4 million, compared to $610.3 million at December 31, 2021, resulting in a decrease of $1.9 million.

The debt balance at June 30, 2022 consisted of $613.8 million outstanding under the term facility and $14.5 million outstanding under the revolving credit facility, offset by $19.9 million of unamortized debt discounts and issuance costs.

The $14.5 million outstanding under the revolving credit facility was fully repaid subsequent to June 30, 2022.

As of September 30, 2022, we had outstanding debt obligations, including the current portion and net of unamortized debt discount of $599.3 million, compared to $610.3 million at December 31, 2021, resulting in a decrease of $11.0 million.

The debt balance at September 30, 2022 consisted of $612.3 million outstanding under the term facility and $6.0 million outstanding under the revolving credit facility, offset by $19.0 million of unamortized debt discounts and issuance costs.

Minimum amortization of the term facility are equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal, with the balance paid upon maturity.

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The Credit Agreement contains representations and warranties, financial and collateral requirements, mandatory payment events, events of default and affirmative and negative covenants, including without limitation, covenants that restrict among other things, the ability to create liens, pay dividends or distribute assets from the loan parties to the Company, merge or consolidate, dispose of assets, incur additional indebtedness, make certain investments or acquisitions, enter into certain transactions (including with affiliates) and to enter into certain leases.

If the aggregate principal amount of outstanding revolving loans and letters of credit under the Credit Agreement exceeds 35% of the total revolving facility thereunder, the loan parties are required to comply with certain restrictions on its Total Net Leverage Ratio.

If the aggregate principal amount of outstanding revolving loans and letters of credit under the Credit Agreement exceeds 35% of the total revolving credit facility thereunder, the loan parties are required to comply with certain restrictions on its Total Net Leverage Ratio.

If applicable, the maximum permitted Total Net Leverage Ratio is:

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and 3) 5.50:1.00 at each fiscal quarter ended September 30, 2023 each fiscal quarter thereafter.

As of June 30, 2022, the Company was in compliance with our financial covenants.

As of September 30, 2022, the Total Net Leverage Ratio was not applicable and the Company was in compliance with our financial covenants.

Effect of New Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis