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Item 2. Management’s Discussion and Analysis

2023-08-10 compared with 2023-05-11 · 108 added, 72 removed, 141 unchanged (56% of the section changed)

37 unchanged sentences

Results of Operations

This section includes certain components of our results of operations for the three months ended March 31, 2023, compared to the three months ended March 31, 2022.

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, 2022.

For the three months ended March 31, 2023, our consolidated revenue of $185.0 million increased by $31.8 million, or 20.8%, from $153.2 million for the three months ended March 31, 2022.

This overall increase was mainly driven by increased volumes across all segments.

The following table presents our revenues by type for the three months ended March 31, 2023 and 2022:

(in thousands) Three Months Ended March 31,

2023 2022 $ Change

This section includes certain components of our results of operations for the three and six months ended June 30, 2023, compared to the three and six months ended June 30, 2022.

We have derived this data, except the key indicators, from our Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q and our Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.

For the three months ended June 30, 2023, our consolidated revenue of $182.3 million increased by $15.9 million, or 9.6%, from $166.4 million for the three months ended June 30, 2022.

This overall increase was mainly driven by increases in merchant card fee rates, offset by merchant bankcard volume decreases in our SMB Payments segment, an increase in new enrollments and higher interest income in our Enterprise Payments segment.

These increases were partially offset by a decrease in revenue in B2B Payments segment due to wind down of certain managed services programs.

For the six months ended June 30, 2023, our consolidated revenue of $367.3 million increased by $47.6 million, or 14.9%, from $319.7 million for the six months ended June 30, 2022.

The overall increase was driven by increases in merchant card fee rates, increased merchant bankcard volume, offset by a decrease in certain fee based revenue in our SMB Payments segment and an increase in new enrollments and higher interest income in our Enterprise Payments segment.

These increases were partially offset by a decrease in revenue in B2B Payments segment due to wind down of certain managed services programs.

The following table presents our revenues by type for the three and six months ended June 30, 2023 and 2022:

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

2023 2022 $ Change 2023 2022 $ Change

Revenue Type:

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Total revenues $ 182,290 $ 166,430 $ 15,860 $ 367,318 $ 319,669 $ 47,649

For the three months ended March 31, 2023, our merchant card fees revenue of $149.6 million increased by $21.7 million, or 17.0%, from $128.0 million for the three months ended March 31, 2022.

This increase was primarily driven by an increase in the merchant bankcard volume processed by the Company.

Money transmission services of $21.4 million increased by $5.1 million, or 31.3%, from $16.3 million for the three months ended March 31, 2022.

Merchant card fees

Merchant card fees revenue for the three months ended June 30, 2023 was $144.5 million an increase of $4.7 million, or 3.4%, from $139.8 million for the three months ended June 30, 2022.

This increase was primarily driven by an increase in the transaction count processed by the Company and rate increases, offset by merchant bankcard dollar volume decreases with certain partners.

Merchant card fees revenue for the six months ended June 30, 2023 was $294.2 million an increase of $26.5 million, or 9.9%, from $267.7 million for the six months ended June 30, 2022.

This increase was primarily driven by an increase in the merchant bankcard volume processed by the Company and rate increases.

Money transmission services

Money transmission services for the three months ended June 30, 2023 was $23.7 million an increase of $6.5 million, or 37.8%, from $17.2 million for the three months ended June 30, 2022.

This increase was primarily driven by an increase in customer enrollments.

Outsourced services and other services revenue of $11.0 million for the three months ended March 31, 2023 increased by $3.9 million, or 54.9%, from $7.1 million for the three months ended March 31, 2022, primarily due to growth in revenue from AP automation solutions, increased volumes in the card issuing business and growth in interest income due to higher interest rates and deposit balances offset by decreased managed services revenue due to wind down of certain programs.

Equipment revenue of $3.0 million for the three months ended March 31, 2023 increased by $1.1 million, or 57.9%, from $1.9 million for the three months ended March 31, 2022.

Money transmission services for the six months ended June 30, 2023 was $45.1 million an increase of $11.6 million, or 34.6%, from $33.5 million for the six months ended June 30, 2022.

This increase was primarily driven by an increase in customer enrollments.

Outsourced services and other services revenue

Outsourced services and other services revenue of $10.6 million for the three months ended June 30, 2023 increased by $3.7 million, or 53.6%, from $6.9 million for the three months ended June 30, 2022, primarily due to growth in interest income due to higher interest rates and deposit balances offset by decreased managed services revenue due to wind down of certain programs.

Outsourced services and other services revenue of $21.6 million for the six months ended June 30, 2023 increased by $7.6 million, or 54.3%, from $14.0 million for the six months ended June 30, 2022, primarily due to growth in interest income due to higher interest rates and deposit balances offset by decreased managed services revenue due to wind down of certain programs.

Equipment revenue of $3.5 million for the three months ended June 30, 2023 increased by $0.9 million, or 34.6%, from $2.6 million for the three months ended June 30, 2022.

The increase was primarily due to increased sales of point of sale equipment.

Operating expenses for three months ended March 31, 2023 and 2022 were as follows:

(in thousands) Three Months Ended March 31,

2023 2022 $ Change

Equipment revenue of $6.4 million for the six months ended June 30, 2023 increased by $1.9 million, or 42.2%, from $4.5 million for the six months ended June 30, 2022.

The increase was primarily due to increased sales of point of sale equipment.

Operating expenses for three and six months ended June 30, 2023 and 2022 were as follows:

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

2023 2022 $ Change 2023 2022 $ Change

Operating expenses

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Cost of services (excludes depreciation and amortization)

Cost of revenue (excludes depreciation and amortization) of $122.0 million for the three months ended March 31, 2023 increased by $20.5 million, or 20.2%, from $101.5 million for the three months ended March 31, 2022, primarily due to the corresponding increase in revenues.

Cost of services (excludes depreciation and amortization) of $115.3 million for the three months ended June 30, 2023 increased by $4.6 million, or 4.2%, from $110.7 million for the three months ended June 30, 2022, primarily due to corresponding increase in revenues.

Cost of services (excludes depreciation and amortization) of $237.2 million for the six months ended June 30, 2023, increased by $25.0 million, or 11.8%, from $212.2 million for the six months ended June 30, 2022, primarily due to the corresponding increase in revenues.

Salary and employee benefits

Salary and employee benefits expense of $19.0 million for the three months ended March 31, 2023 increased by $2.9 million, or 18.0%, from $16.1 million for the three months ended March 31, 2022, primarily due to pay raises, an increase in stock-based compensation and increased headcount to support overall growth of the Company.

Salary and employee benefits expense of $19.1 million for the three months ended June 30, 2023 increased by $3.3 million, or 20.9%, from $15.8 million for the three months ended June 30, 2022, primarily due to merit increases, an increase in stock-based compensation and increased headcount to support overall growth of the Company.

Salary and employee benefits expense of $38.2 million for the six months ended June 30, 2023 increased by $6.4 million, or 20.1%, from $31.8 million for the six months ended June 30, 2022, primarily due to merit increases, an increase in stock-based compensation and increased headcount to support overall growth of the Company.

Depreciation and amortization expense

Depreciation and amortization expense of $18.0 million for the three months ended March 31, 2023 increased by $0.6 million, or 3.4%, from $17.4 million for the three months ended March 31, 2022, primarily due to the depreciation of capitalized internal use software.

Depreciation and amortization expense of $18.0 million for the three months ended June 30, 2023 increased by $0.5 million, or 2.9%, from $17.5 million for the three months ended June 30, 2022, primarily due to the depreciation of new assets placed in service.

Depreciation and amortization expense of $36.0 million for the six months ended June 30, 2023 increased by $1.1 million, or 3.2%, from $34.9 million for the six months ended June 30, 2022, primarily due to the depreciation of new assets placed in service.

Selling, general and administrative

Selling, general and administrative expenses of $9.1 million for the three months ended March 31, 2023 increased by $1.6 million, or 21.3%, from $7.5 million for the three months ended March 31, 2022, primarily due to an increase in travel and other expenses to support overall growth of the Company.

Selling, general and administrative expenses of $10.8 million for the three months ended June 30, 2023 increased by $1.5 million, or 16.1%, from $9.3 million for the three months ended June 30, 2022, primarily due to certain nonrecurring expenses related to an upcoming business combination and other expenses to support overall growth of the Company.

Selling, general and administrative expenses of $19.9 million for the six months ended June 30, 2023 increased by $3.1 million, or 18.5%, from $16.8 million for the six months ended June 30, 2022, primarily due to certain nonrecurring expenses related to an upcoming business combination and other expenses to support overall growth of the Company.

Other Expense, net

Other expenses, net for three months ended March 31, 2023 and 2022 were as follows:

(in thousands) Three Months Ended March 31,

2023 2022 $ Change

Other expenses, net for three and six months ended June 30, 2023 and 2022 were as follows:

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

2023 2022 $ Change 2023 2022 $ Change

Other (expense) income

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Interest expense

Interest expense of $17.7 million for the three months ended March 31, 2023 increased by $6.2 million, or 53.9%, from $11.5 million for the three months ended March 31, 2022, due to increased interest rates in the three months ended March 31, 2023.

Income tax benefit

Income tax benefit for three months ended March 31, 2023 and 2022 was as follows:

(in thousands) Three Months Ended March 31,

2023 2022 $ Change

Loss before income taxes $ (639) $ (658) $ 19

Income tax benefit $ (133) $ (325) $ 192

Interest expense of $17.8 million for the three months ended June 30, 2023 increased by $5.5 million, or 44.7%, from $12.3 million for the three months ended June 30, 2022, due to increased interest rates in the three months ended June 30, 2023.

Interest expense of $35.5 million for the six months ended June 30, 2023 increased by $11.6 million, or 48.5%, from $23.9 million for the six months ended June 30, 2022, due to increased interest rates in the six months ended June 30, 2023.

Income tax (benefit) expense

Income tax benefit for three and six months ended June 30, 2023 and 2022 was as follows:

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

2023 2022 $ Change 2023 2022 $ Change

Income before income taxes $ 1,743 $ 754 $ 989 $ 1,105 $ 96 $ 1,009

Income tax expense $ 2,355 $ 467 $ 1,888 $ 2,222 $ 142 $ 2,080

Effective tax rate 135.1 % 61.9 % 201.2 % 147.9 %

We compute our interim period income tax expense or benefit by using a forecasted EAETR and adjust for any discrete items arising during the interim period and any changes in our projected full-year business interest expense and taxable income.

The EAETR for 2023 is 63.8% and includes the income tax provision on pre-tax income and a tax provision related to establishment of a valuation allowance for deferred income tax on the future portion of the Section 163(j) limitation created by additional 2023 interest expense.

EAETR for 2023 is 174.5% and includes the income tax provision on pre-tax income and a tax provision related to establishment of a valuation allowance for deferred income tax on the future portion of the Section 163(j) limitation created by additional 2023 interest expense.

The effective tax rate for 2023 changed primarily due to an increase in the valuation allowance against certain business interest carryover deferred tax assets.

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Segment Results

(in thousands) Three Months Ended March 31,

2023 2022 $ Change

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

2023 2022 $ Change 2023 2022 $ Change

Revenue $ 147,895 $ 142,506 $ 5,389 $ 302,828 $ 272,465 $ 30,363

6 unchanged sentences

Merchant bankcard transaction count $ 180,343 $ 164,341 $ 16,002 $ 343,749 $ 310,289 $ 33,460

Revenue from our SMB Payments segment was $154.9 million for the three months ended March 31, 2023, compared to $130.0 million for the three months ended March 31, 2022.

The increase of $24.9 million, or 19.2%, was primarily driven by increased merchant bankcard volume, accrual of certain incentives, offset by decrease in certain fee-based revenue.

The Company's revenue from the SMB Payments segment as a percentage of merchant bankcard processing dollar value during

2023 increased to 1.0% from 0.92% during 2022.

The increase was primarily driven by an increase in the incentive revenue and changes in the merchant mix.

Revenue from our SMB Payments segment was $147.9 million for the three months ended June 30, 2023, compared to $142.5 million for the three months ended June 30, 2022.

The increase of $5.4 million, or 3.8%, was primarily driven by increases in transaction count and merchant card fee rate increases, offset by merchant bankcard volume decreases and a true up of an invoice from one of the partner banks for certain services provided in Q1 2022.

The Company's revenue from the SMB Payments segment as a percentage of merchant bankcard processing dollar value during 2023 increased to 0.98% from 0.93% during 2022.

The increase was primarily driven by a rate increase and changes in the merchant mix.

Revenue from our SMB Payments segment was $302.8 million for the six months ended June 30, 2023, compared to $272.5 million for the six months ended June 30, 2022.

The increase of $30.3 million, or 11.1%, was primarily driven by increased merchant bankcard volume, increased transaction count, merchant card fee rate increases and accrual of certain incentives, offset by a decrease in certain fee-based revenue and a true up of an invoice from one of the partner banks for certain services provided in Q1 2022.

The Company's revenue from the SMB Payments segment as a percentage of merchant bankcard processing dollar value during 2023 increased to 1.0% from 0.92% during 2022.

The increase was primarily driven by an increase in incentive revenue and changes in the merchant mix.

Operating Income

Operating income from our SMB Payments segment was $12.0 million for the three months ended March 31, 2023, compared to $12.5 million for the three months ended March 31, 2022.

The decrease of $0.5 million, or 4.0%, was primarily driven by mix related margin compression, a $2.1 million increase in salary and employee benefits due to higher headcount, higher stock-based compensation and annual pay raises, and a $1.0 million increase in selling, general and administrative expenses driven by higher software and travel and other operating costs offset by an increase in operating income from higher revenue.

Operating income from our SMB Payments segment was $11.5 million for the three months ended June 30, 2023, compared to $14.0 million for the three months ended June 30, 2022.

The decrease of $2.5 million, or 17.9%, 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, and a $0.6 million increase in selling, general and administrative expenses driven by higher software and travel and other operating costs.

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

Operating income from our SMB Payments segment was $23.6 million for the six months ended June 30, 2023, compared to $26.5 million for the six months ended June 30, 2022.

The decrease of $2.9 million, or 10.9%, was primarily driven by mix related margin compression, a $3.7 million increase in salary and employee benefits due to higher headcount, higher stock-based compensation and annual pay raises, and a $1.6 million increase in selling, general and administrative expenses driven by higher software and travel and other operating costs.

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

Depreciation and Amortization

Depreciation and amortization expense of our SMB Payments segment was $10.8 million for the three months ended March 31, 2023, which is consistent with $10.8 million for the three months ended March 31, 2022.

(in thousands) Three Months Ended March 31,

2023 2022 $ Change

Depreciation and amortization expense of our SMB Payments segment was $10.8 million for the three months ended June 30, 2023, which is consistent with $11.0 million for the three months ended June 30, 2022.

Depreciation and amortization expense of our SMB Payments segment was $21.6 million for the six months ended June 30, 2023, which is consistent with $21.8 million for the six months ended June 30, 2022.

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

2023 2022 $ Change 2023 2022 $ Change

Revenue $ 2,971 $ 5,295 $ (2,324) $ 5,757 $ 11,220 $ (5,463)

Operating expenses 2,990 4,632 (1,642) 6,625 10,148 (3,523)

Operating income (loss) $ (849) $ 409 $ (1,258)

Operating (loss) income $ (19) $ 663 $ (682) $ (868) $ 1,072 $ (1,940)

Operating margin (0.6) % 12.5 % (15.1) % 9.6 %

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B2B issuing transaction count 282,000 247 $ 35 562 435 127

Revenue from our B2B Payments segment was $2.8 million for the three months ended March 31, 2023, compared to $5.9 million for the three months ended March 31, 2022.

Revenue from our B2B Payments segment was $3.0 million for the three months ended June 30, 2023, compared to $5.3 million for the three months ended June 30, 2022.

The decrease of $2.3 million, or 43.4%, was primarily driven by a decrease in managed services business due to wind down of certain programs and recognition of certain revenues during 2022 related to a contract termination.

Revenue from our B2B Payments segment was $5.8 million for the six months ended June 30, 2023, compared to $11.2 million for the six months ended June 30, 2022.

The decrease of $5.4 million, or 48.2%, was primarily driven by a decrease in managed services business due to wind down of certain programs and recognition of certain revenues during 2022 related to a contract termination.

This decrease was partially offset by certain nonrecurring items.

Operating Income (Loss)

Operating loss from our B2B Payments segment was $0.8 million for the three months ended March 31, 2023 compared to an operating income of $0.4 million for the three months ended March 31, 2022.

Operating loss from our B2B Payments segment was $0.0 million for the three months ended June 30, 2023 compared to an operating income of $0.7 million for the three months ended June 30, 2022.

The decrease of $0.7 million was primarily attributable to decreases in revenue.

Operating loss from our B2B Payments segment was $0.9 million for the six months ended June 30, 2023 compared to an operating income of $1.1 million for the six months ended June 30, 2022.

The decrease of $2.0 million was primarily attributable to decreases in revenue.

Enterprise Payments

(in thousands) Three Months Ended March 31,

2023 2022 $ Change

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

2023 2022 $ Change 2023 2022 $ Change

Revenue $ 31,424 $ 18,629 $ 12,795 $ 58,733 $ 35,984 $ 22,749

6 unchanged sentences

Average new enrollments 53,374 28,251 25,123 49,661 25,846 23,815

Revenue from our Enterprise Payments segment was $27.3 million for the three months ended March 31, 2023, compared to $17.4 million for the three months ended March 31, 2022.

The increase of $9.9 million or 56.9%, was primarily driven by an increase in customer enrollments, and growth in interest income due to higher interest rates and deposit balances.

Revenue from our Enterprise Payments segment was $31.4 million for the three months ended June 30, 2023, compared to $18.6 million for the three months ended June 30, 2022.

The increase of $12.8 million or 68.8%, was primarily driven by an increase in billed clients and customer enrollments, and growth in interest income due to higher interest rates and deposit balances.

Revenue from our Enterprise Payments segment was $58.7 million for the six months ended June 30, 2023, compared to $36.0 million for the six months ended June 30, 2022.

The increase of $22.7 million or 63.1%, was primarily driven by an increase in billed clients and customer enrollments, and growth in interest income due to higher interest rates and deposit balances.

Operating Income

Operating income from our Enterprise Payments segment was $12.7 million for the three months ended March 31, 2023, compared to $4.5 million for the three months ended March 31, 2022.

Operating income from our Enterprise Payments segment was $16.1 million for the three months ended June 30, 2023, compared to $5.7 million for the three months ended June 30, 2022.

The increase of $10.4 million or 181.4%, was primarily driven by increases in revenues.

Operating income from our Enterprise Payments segment was $28.7 million for the six months ended June 30, 2023, compared to $10.2 million for the six months ended June 30, 2022.

The increase of $18.5 million or 182.5%, was primarily driven by increases in revenues.

Depreciation and Amortization

Depreciation and amortization from our Enterprise Payments segment was $6.7 million for the three months ended March 31, 2023, compared to $6.2 million depreciation and amortization expense for the three months ended March 31, 2022.

Depreciation and amortization from our Enterprise Payments segment was $6.7 million for the three months ended June 30, 2023, compared to $6.2 million depreciation and amortization expense for the three months ended June 30, 2022.

The increase of $0.5 million or 8.1%, was primarily driven by the amortization of additional capitalized internal use software and acquired intangibles.

Depreciation and amortization from our Enterprise Payments segment was $13.4 million for the six months ended June 30, 2023, compared to $12.4 million depreciation and amortization expense for the six months ended June 30, 2022.

of $1.0 million or 8.1%, was primarily driven by the amortization of additional capitalized internal use software and acquired intangibles.

Critical Accounting Policies and Estimates

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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, 2022.

There have been no material changes to these critical accounting policies and estimates as of March 31, 2023.

There have been no material changes to these critical accounting policies and estimates as of June 30, 2023.

Liquidity and Capital Resources

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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.

The Company did not repurchase any shares under the share repurchase program during the first quarter of 2023.

The Company had repurchased shares of $5.7 million during the year ended December 31, 2022 and has not repurchased any shares under the share repurchase program for the six months ended June 30, 2023.

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 $8.9 million at March 31, 2023 and $22.5 million at December 31, 2022.

As of March 31, 2023, we had cash totaling $15.9 million compared to $18.5 million at December 31, 2022.

These cash balances do not include restricted cash of $11.0 million and $10.6 million at March 31, 2023 and December 31, 2022, 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 March 31, 2023 and December 31, 2022.

At March 31, 2023, we had availability of approximately $33.5 million under our revolving credit facility.

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

Three Months Ended March 31,

Our working capital, defined as current assets less current liabilities, was $3.4 million at June 30, 2023 and $22.5 million at June 30, 2022.

As of June 30, 2023, we had cash totaling $17.6 million compared to $18.5 million at June 30, 2022.

These cash balances do not include restricted cash of $12.4 million and $10.6 million at June 30, 2023 and June 30, 2022, 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, 2023 and June 30, 2022.

At June 30, 2023, we had availability of approximately $49.5 million under our revolving credit facility.

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

Six Months Ended June 30,

(in thousands) 2023 2022

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Cash Provided by Operating Activities

Net cash provided by operating activities was $27.7 million for the three months ended March 31, 2023 compared to $9.6 million of net cash used in operating activities for the three months ended March 31, 2022.

Net cash provided by operating activities was $46.9 million for the six months ended June 30, 2023 compared to $30.3 million of net cash used in operating activities for the six months ended June 30, 2022.

The $16.6 million increase in 2023 was primarily driven by changes in the operating assets and liabilities.

Cash Used in Investing Activities

Net cash used in investing activities was $7.6 million and $5.7 million for the three months ended March 31, 2023 and 2022, respectively.

For the three months ended March 31, 2023, net cash used in investing activities included additions to property, equipment and software of $5.0 million, and acquisitions of intangible assets of $2.7 million offset by $0.2 million related to the net payments received on loans to ISOs.

For the three months ended March 31, 2022, net cash used in investing activities included $0.9 million of cash used to fund acquisitions of intangible assets, $2.4 million related to the funding of new loans to ISOs and $2.4 million of cash used to acquire property, equipment and software.

Net cash used in investing activities was $13.1 million and $12.7 million for the six months ended June 30, 2023 and 2022, respectively.

For the six months ended June 30, 2023, net cash used in investing activities included additions to property, equipment and software of $9.9 million, acquisitions of intangible assets of $2.7 million, and $0.5 million related to the net payments received on loans to ISOs.

For the six months ended June 30, 2022, net cash used in investing activities included $4.0 million of cash used to fund acquisitions of intangible assets, $2.8 million related to the funding of new loans to ISOs and $6.0 million of cash used to acquire property, equipment and software.

Cash Provided by Financing Activities

Net cash used in financing activities was $57.5 million for the three months ended March 31, 2023, compared to $2.5 million of cash provided by financing activities for the three months ended March 31, 2022.

The net cash provided by financing activities for the three months ended March 31, 2023 included changes in the net obligations for funds held on the behalf of customers of $79.3 million, offset by $7.6 million of cash used for the repayment of debt, $11.4 million of cash dividends paid to redeemable senior preferred stockholders, $0.8 million of cash used for shares withheld for taxes, and $2.0 million of payments of contingent consideration for business combinations.

The net cash provided by financing activities for three months ended March 31, 2022 included $6.6 million of cash used for the repayment of debt, $3.5 million of cash dividends paid to redeemable senior preferred stockholders and $0.2 million of cash used for other financing activities, offset by changes in the net obligations for funds held on the behalf of customers of $12.7 million.

Net cash provided by financing activities was $144.1 million for the six months ended June 30, 2023, compared to $0.6 million of cash provided by financing activities for the six months ended June 30, 2022.

The net cash provided by financing activities for the six months ended June 30, 2023 included changes in the net obligations for funds held on the behalf of customers of $175.5 million and $5.0 million in borrowings under the revolving credit facility, offset by $15.5 million of cash used for the repayment of debt, $17.9 million of cash dividends paid to redeemable senior preferred stockholders, $1.0 million of cash used for shares withheld for taxes, and $2.0 million of payments of contingent consideration for business combinations.

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

Long-term Debt

As of March 31, 2023, we had outstanding debt obligations, including the current portion and net of unamortized debt discount of $598.5 million, compared to $605.1 million at December 31, 2022, resulting in a decrease of $6.6 million.

The debt balance at March 31, 2023 consisted of $609.2 million outstanding under the term facility and $6.5 million outstanding under the revolving credit facility, offset by $17.2 million of unamortized debt discounts and issuance costs.

As of June 30, 2023, we had outstanding debt obligations, including the current portion and net of unamortized debt discount of $596.1 million, compared to $605.1 million at December 31, 2022, resulting in a decrease of $9.0 million.

The debt balance at June 30, 2023 consisted of $607.2 million outstanding under the term facility and $5.5 million outstanding under the revolving credit facility, offset by $16.5 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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and 3) 5.50:1.00 at each fiscal quarter ended September 30, 2023 each fiscal quarter thereafter.

As of March 31, 2023, the Total Net Leverage Ratio was not applicable and the Company was in compliance with the covenants in the Credit Agreement.

As of June 30, 2023, the Total Net Leverage Ratio was not applicable and the Company was in compliance with the covenants in the Credit Agreement.

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