What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-09 compared with 2023-11-09 · 75 added, 122 removed, 135 unchanged (59% of the section changed)

26 unchanged sentences

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject.

These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially

available relevant information.

These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

7 unchanged sentences

Results of Operations

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

This section includes certain components of our results of operations for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

We have derived this data, except the key indicators, from our Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q and our Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

For the three months ended September 30, 2023, our consolidated revenue of $189.0 million increased by $22.6 million, or 13.6%, from $166.4 million for the three months ended September 30, 2022.

This overall increase was mainly driven by an increase in new enrollments and higher interest income in our Enterprise Payments segment and revenue from the Plastiq business acquired during the quarter in our B2B Payments segment.

For the nine months ended September 30, 2023, our consolidated revenue of $556.3 million increased by $70.2 million, or 14.4%, from $486.1 million for the nine months ended September 30, 2022.

The overall increase was driven by increases in merchant card fee rates, offset by a decrease in certain fee based revenue in our SMB Payments segment, an increase in new enrollments and higher interest income in our Enterprise Payments segment and revenue from the Plastiq business acquired during the quarter in our B2B 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 three months ended March 31, 2024, our consolidated revenue of $205.7 million increased by $20.7 million, or 11.2%, from $185.0 million for the three months ended March 31, 2023.

The overall increase was driven by an increase in new enrollments and higher interest income in our Enterprise Payments segment and revenue from the Plastiq business in our B2B Payments segment that was acquired in the quarter ended September 30, 2023.

These increases were partially offset by a decrease in revenues in our SMB Payments segment due to decreased volumes.

The following table presents our revenues by type:

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

2023 2022 $ Change 2023 2022 $ Change

(in thousands) Three Months Ended March 31,

2024 2023 $ Change

Revenue Type:

5 unchanged sentences

Merchant card fees

Merchant card fees revenue for the three months ended September 30, 2023 was $147.0 million an increase of $9.3 million, or 6.8%, from $137.7 million for the three months ended September 30, 2022.

This increase was primarily driven by revenue from the Plastiq business that was acquired during the quarter and rate increases.

These increases were partially offset by a decrease in volume due to diversification of merchant portfolio by one of our referral partners.

Merchant card fees revenue for the nine months ended September 30, 2023 was $441.1 million an increase of $35.7 million, or 8.8%, from $405.4 million for the nine months ended September 30, 2022.

This increase was primarily driven by the Plastiq business that was acquired in the quarter ended September 30, 2023 and rate increases.

These increases were partially offset by a decrease in volume due to diversification of merchant portfolio by one of our referral partners.

Merchant card fees revenue for the three months ended March 31, 2024 was $157.9 million an increase of $8.3 million or 5.5%, from $149.6 million for the three months ended March 31, 2023.

The increase was primarily driven by the Plastiq business and rate increases.

These increases were partially offset by a decrease in volume due to the diversification of our merchant portfolio by one of our referral partners.

Money transmission services

Money transmission services for the three months ended September 30, 2023 was $25.8 million an increase of $7.5 million, or 41.0%, from $18.3 million for the three months ended September 30, 2022.

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

Money transmission services for the nine months ended September 30, 2023 was $71.0 million an increase of $19.2 million, or 37.1%, from $51.8 million for the nine months ended September 30, 2022.

Money transmission services for the three months ended March 31, 2024 was $29.1 million an increase of $7.7 million, or 36.1%, from $21.4 million for the three months ended March 31, 2023.

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

Outsourced services and other services revenue

Outsourced services and other services revenue of $13.2 million for the three months ended September 30, 2023 increased by $5.3 million, or 67.1%, from $7.9 million for the three months ended September 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 $34.8 million for the nine months ended September 30, 2023 increased by $12.9 million, or 58.9%, from $21.9 million for the nine months ended September 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 $3.0 million for the three months ended September 30, 2023 increased by $0.5 million, or 20.0%, from $2.5 million for the three months ended September 30, 2022.

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

Equipment revenue of $9.5 million for the nine months ended September 30, 2023 increased by $2.5 million, or 35.7%, from $7.0 million for the nine months ended September 30, 2022.

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

Outsourced services and other services revenue of $15.7 million for the three months ended March 31, 2024 increased by $4.7 million, or 42.3%, from $11.0 million for the three months ended March 31, 2023, primarily due to growth in interest income due to higher interest rates and deposit balances.

Equipment revenue of $3.0 million for the three months ended March 31, 2024 remained consistent with $3.0 million for the three months ended March 31, 2023.

Operating expenses were as follows:

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

2023 2022 $ Change 2023 2022 $ Change

(in thousands) Three Months Ended March 31,

2024 2023 $ Change

Operating expenses

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Cost of services (excludes depreciation and amortization)

Cost of services (excludes depreciation and amortization) of $116.7 million for the three months ended September 30, 2023 increased by $8.7 million, or 8.1%, from $108.0 million for the three months ended September 30, 2022, primarily due to corresponding increase in revenues.

Cost of services (excludes depreciation and amortization) of $353.9 million for the nine months ended September 30, 2023, increased by $33.7 million, or 10.5%, from $320.2 million for the nine months ended September 30, 2022, primarily due to the corresponding increase in revenues.

Cost of services (excludes depreciation and amortization) of $129.3 million for the three months ended March 31, 2024, increased by $7.3 million, or 6.0%, from $122.0 million for the three months ended March 31, 2023, primarily due to the corresponding increase in revenues.

Salary and employee benefits

Salary and employee benefits expense of $20.1 million for the three months ended September 30, 2023 increased by $3.7 million, or 22.6%, from $16.4 million for the three months ended September 30, 2022, primarily due to merit increases, an increase in stock-based compensation and increased headcount from the acquisition of the Plastiq business and to support overall growth of the Company.

Salary and employee benefits expense of $58.3 million for the nine months ended September 30, 2023 increased by $10.1 million, or 21.0%, from $48.2 million for the nine months ended September 30, 2022, primarily due to merit increases, an increase in stock-based compensation and increased headcount from the acquisition of the Plastiq business and to support overall growth of the Company.

Salary and employee benefits expense of $22.2 million for the three months ended March 31, 2024 increased by $3.1 million, or 16.3%, from $19.0 million for the three months ended March 31, 2023, primarily due to merit increases, certain performance based non-recurring bonuses and increased headcount from the acquisition of the Plastiq business and to support the overall growth of the Company.

Depreciation and amortization expense

Depreciation and amortization expense of $17.3 million for the three months ended September 30, 2023 decreased by $0.5 million, or 2.8%, from $17.8 million for the three months ended September 30, 2022, primarily due to full amortization of certain intangible assets, partially offset by the depreciation of new assets placed in service.

Depreciation and amortization expense of $53.3 million for the nine months ended September 30, 2023 increased by $0.6 million, or 1.1%, from $52.7 million for the nine months ended September 30, 2022, primarily due to the depreciation of new assets placed in service, partially offset by full amortization of certain intangible assets.

Depreciation and amortization expense of $15.3 million for the three months ended March 31, 2024 decreased by $2.8 million, or 15.5%, from $18.0 million for the three months ended March 31, 2023, primarily due to full amortization of certain intangible assets during 2023.

Selling, general and administrative

Selling, general and administrative expenses of $11.4 million for the three months ended September 30, 2023 increased by $1.2 million, or 11.8%, from $10.2 million for the three months ended September 30, 2022, primarily due to certain nonrecurring expenses related to the acquisition of the Plastiq business and other expenses to support overall growth of the Company.

Selling, general and administrative expenses of $31.3 million for the nine months ended September 30, 2023 increased by $4.3 million, or 15.9%, from $27.0 million for the nine months ended September 30, 2022, primarily due to certain nonrecurring expenses related to the acquisition of the Plastiq business and other expenses to support overall growth of the Company.

Selling, general and administrative expenses of $11.0 million for the three months ended March 31, 2024 increased by $1.9 million, or 20.6%, from $9.1 million for the three months ended March 31, 2023, primarily due to certain software and maintenance expenses and other expenses to support overall growth of the Company.

Other Expense, net

Other expenses, net were as follows:

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

2023 2022 $ Change 2023 2022 $ Change

(in thousands) Three Months Ended March 31,

2024 2023 $ Change

Other (expense) income

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Interest expense

Interest expense of $20.0 million for the three months ended September 30, 2023 increased by $6.6 million, or 49.3%, from $13.4 million for the three months ended September 30, 2022, due to increased interest rates and increased outstanding balance in the revolving credit facility used for the acquisition of the Plastiq business in the three months ended September 30, 2023.

Interest expense of $55.5 million for the nine months ended September 30, 2023 increased by $18.2 million, or 48.8%, from $37.3 million for the nine months ended September 30, 2022, due to increased interest rates and increased outstanding balance in the revolving credit facility used for the acquisition of the Plastiq business in the nine months ended September 30, 2023.

Interest expense of $20.9 million for the three months ended March 31, 2024 increased by $3.2 million, or 18.0%, from $17.7 million for the three months ended March 31, 2023, due to increased interest rates and increased outstanding balance for the term loan facility used for the acquisition of the Plastiq business, offset by a decrease in the revolving credit facility.

Income tax (benefit) expense

Income tax expense was as follows:

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

2023 2022 $ Change 2023 2022 $ Change

Income before income taxes $ 4,241 $ 899 $ 3,342 $ 5,345 $ 995 $ 4,350

Income tax expense $ 4,328 $ 1,691 $ 2,637 $ 6,550 $ 1,833 $ 4,717

(in thousands) Three Months Ended March 31,

2024 2023 $ Change

Income (loss) before income taxes $ 7,775 $ (639) $ 8,414

Income tax expense (benefit) $ 2,582 $ (133) $ 2,715

Effective tax rate 33.2 % 20.8 %

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The EAETR for 2024 is 29.9% and includes the income tax provision on pre-tax income and a tax provision related to establishment of a valuation allowance for deferred income tax on the future portion of the Section 163(j) limitation created by additional 2024 interest expense.

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

The effective tax rate for 2024 changed primarily due to an increase in certain forecasted nondeductible expenses.

Our consolidated effective income tax rates differ from the statutory rate due to timing and permanent differences between amounts calculated under accounting principles GAAP and the U.S.

The consolidated effective income tax rate for 2024 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 do not expect the enactment of the IRA will have a material effect on our reported results, cash flows, or financial position.

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

Segment Results

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

2023 2022 $ Change 2023 2022 $ Change

(in thousands) Three Months Ended March 31,

2024 2023 $ Change

Revenue $ 143,751 $ 154,933 $ (11,182)

6 unchanged sentences

Merchant bankcard transaction count 175,228 163,406 11,822

Revenue from our SMB Payments segment of $140.1 million for the three months ended September 30, 2023, remained consistent to $139.9 million for the three months ended September 30, 2022.

The Company experienced a decline in its processed merchant bankcard volume due to diversification of merchant portfolio by one of its referral partners.

The decrease in revenue due to decline in volume was partially offset by increased transaction count and merchant card fee rate increases.

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 $442.9 million for the nine months ended September 30, 2023, compared to $412.4 million for the nine months ended September 30, 2022.

The increase of $30.5 million, or 7.4%, was primarily driven by increased transaction count, merchant card fee rate increases 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 diversification of merchant portfolio by one of its referral partners.

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.

Revenue from our SMB Payments segment was $143.8 million for the three months ended March 31, 2024, compared to $154.9 million for the three months ended March 31, 2023.

The decrease of $11.2 million, or 7.2%, was primarily driven by a decrease in certain incentives and, decreased transaction count and processed merchant bankcard volume due to diversification of merchant portfolios by one of the Company's referral partners.

The Company's merchant card fee revenue from the SMB Payments segment ($139.5 million for 2024 and $148.7 million for 2023) as a percentage of merchant bankcard processing dollar value during 2024 decrease to 0.9% from 1.0% during 2023.

The decrease was primarily driven by changes in merchant and card mix.

Operating Income

Operating income from our SMB Payments segment was $11.8 million for the three months ended September 30, 2023, compared to $13.4 million for the three months ended September 30, 2022.

The decrease of $1.6 million, or 11.9%, was primarily driven by the timing of certain billing adjustments in the three months ended September 30, 2022, the mix related margin compression, a $1.3 million increase in salary and employee benefits due to higher headcount, higher stock-based compensation and annual pay raises, and a $0.3 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 $35.4 million for the nine months ended September 30, 2023, compared to $39.9 million for the nine months ended September 30, 2022.

The decrease of $4.5 million, or 11.3%, was primarily driven by the timing of certain billing adjustments in the three months ended September 30, 2022, the mix related margin compression, a $4.9 million increase in salary and employee benefits due to higher headcount, higher stock-based compensation and annual pay raises, and a $2.2 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 $12.4 million for the three months ended March 31, 2024, compared to $12.0 million for the three months ended March 31, 2023.

The increase of $0.4 million or 3.1% was the result of a decrease in operating income of $4.0 million in merchant card fee revenue driven by the diversification of merchant portfolios by one of the Company's referral partners, the mix related margin compression and a decrease in certain incentive revenue.

This decrease was offset by decreases in the allocation of salary and employee benefits expense of $1.7 million, a decrease in selling, general and administrative expenses of $0.7 million due to efficiencies and realignment at the corporate level and a decrease in depreciation and amortization expense of $2.0 million due to full amortization of certain intangible assets in 2023.

Depreciation and Amortization

Depreciation and amortization expense of our SMB Payments segment was $9.9 million for the three months ended September 30, 2023, compared to $11.0 million for the three months ended September 30, 2022.

The decrease of $1.1 million is due to full amortization of certain intangible assets.

Depreciation and amortization expense of our SMB Payments segment was $31.5 million for the nine months ended September 30, 2023, compared to $32.8 million for the nine months ended September 30, 2022.

The decrease of $1.3 million is due to full amortization of certain intangible assets.

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

2023 2022 $ Change 2023 2022 $ Change

Depreciation and amortization expense of our SMB Payments segment was $8.8 million for the three months ended March 31, 2024, compared to $10.8 million for the three months ended March 31, 2023.

The decrease of $2.0 million is due to full amortization of certain intangible assets in 2023.

(in thousands) Three Months Ended March 31,

2024 2023 $ Change

Revenue $ 21,115 $ 2,786 $ 18,329

Operating expenses 21,908 3,635 18,273

Operating income (loss) $ 78 $ 217 $ (139) $ (790) $ 1,289 $ (2,079)

Operating loss $ (793) $ (849) $ 56

Operating margin (3.8) % (30.5) %

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B2B issuing transaction count 240 280 $ (40)

Revenue from our B2B Payments segment was $13.7 million for the three months ended September 30, 2023, compared to $4.9 million for the three months ended September 30, 2022.

The increase of $8.8 million, or 179.6%, was primarily driven by revenue from the Plastiq business that was acquired during the quarter.

Revenue from our B2B Payments segment was $19.5 million for the nine months ended September 30, 2023, compared to $16.1 million for the nine months ended September 30, 2022.

The increase of $3.4 million, or 21.1%, was primarily driven by revenue from the Plastiq business that was acquired during the quarter, partially offset 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.

Operating Income (Loss)

Operating income from our B2B Payments segment was $0.1 million for the three months ended September 30, 2023 compared to an operating income of $0.2 million for the three months ended September 30, 2022.

The decrease of $0.1 million was primarily attributable to the Plastiq business that was acquired during the quarter and currently being stabilized.

Operating loss from our B2B Payments segment was $0.8 million for the nine months ended September 30, 2023 compared to an operating income of $1.3 million for the nine months ended September 30, 2022.

The decrease of $2.1 million was primarily attributable to decreases in revenue from managed services business business and the Plastiq business that was acquired during the quarter and currently being stabilized.

Revenue from our B2B Payments segment was $21.1 million for the three months ended March 31, 2024, compared to $2.8 million for the three months ended March 31, 2023.

The increase of $18.3 million was primarily driven by revenue from the Plastiq business.

Operating Loss

Operating loss from our B2B Payments segment of $0.8 million for the three months ended March 31, 2024 remained consistent compared to the three months ended March 31, 2023.

The increase in operating income due to increased revenue was offset by certain performance based non-recurring bonuses related to the Plastiq business and processing losses related to the CPX business.

Depreciation and Amortization

Depreciation and amortization from our B2B Payments segment was $0.8 million for the three months ended September 30, 2023, compared to $0.3 million depreciation and amortization expense for the three months ended September 30, 2022.

Depreciation and amortization from our B2B Payments segment was $1.0 million for the three months ended September 30, 2023, compared to $0.4 million depreciation and amortization expense for the three months ended September 30, 2022.

Depreciation and amortization from our B2B Payments segment was $1.6 million for the three months ended March 31, 2024, compared to $125.0 thousand depreciation and amortization expense for the three months ended March 31, 2023.

The increase is primarily attributable to the Plastiq business.

Enterprise Payments

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

2023 2022 $ Change 2023 2022 $ Change

(in thousands) Three Months Ended March 31,

2024 2023 $ Change

Revenue $ 40,853 $ 27,309 $ 13,544

6 unchanged sentences

Average new enrollments 53,551 45,948 7,603

Revenue from our Enterprise Payments segment was $35.2 million for the three months ended September 30, 2023, compared to $21.7 million for the three months ended September 30, 2022.

The increase of $13.5 million or 62.2%, 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 $93.9 million for the nine months ended September 30, 2023, compared to $57.6 million for the nine months ended September 30, 2022.

Revenue from our Enterprise Payments segment was $40.9 million for the three months ended March 31, 2024, compared to $27.3 million for the three months ended March 31, 2023.

The increase of $13.5 million or 49.6%, was primarily driven by an increase in billed clients and customer enrollments, and growth in interest income due to higher interest rates and deposit balances.

Operating Income

Operating income from our Enterprise Payments segment was $21.3 million for the three months ended September 30, 2023, compared to $9.3 million for the three months ended September 30, 2022.

The increase of $12.0 million or 129.0%, was primarily driven by increases in revenues.

Operating income from our Enterprise Payments segment was $50.1 million for the nine months ended September 30, 2023, compared to $19.5 million for the nine months ended September 30, 2022.

Operating income from our Enterprise Payments segment was $25.5 million for the three months ended March 31, 2024, compared to $12.7 million for the three months ended March 31, 2023.

The increase of $12.9 million or 101.7%, was primarily driven by increases in revenues.

Depreciation and Amortization

Depreciation and amortization from our Enterprise Payments segment was $6.2 million for the three months ended September 30, 2023, which was consistent with $6.2 million depreciation and amortization expense for the three months ended September 30, 2022.

Depreciation and amortization from our Enterprise Payments segment was $19.6 million for the nine months ended September 30, 2023, compared to $18.6 million depreciation and amortization expense for the nine months ended September 30, 2022.

The increase of $1.0 million or 5.4%, was primarily driven by the amortization of additional capitalized internal use software.

Depreciation and amortization from our Enterprise Payments segment was $4.4 million for the three months ended March 31, 2024, compared to $6.7 million depreciation and amortization expense for the three months ended March 31, 2023.

The decrease of $2.3 million or 34.9%, was primarily driven by full amortization of certain intangible assets in 2023.

Critical Accounting Policies and Estimates

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, 2022.

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

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, 2023.

There have been no material changes to these critical accounting policies and estimates as of March 31, 2024.

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 had repurchased shares of $5.7 million during the year ended December 31, 2022.

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 $16.6 million at September 30, 2023 and $18.6 million at September 30, 2022.

As of September 30, 2023, we had cash totaling $24.6 million compared to $12.7 million at September 30, 2022.

These cash balances do not include restricted cash of $13.9 million and $11.6 million at September 30, 2023 and September 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 September 30, 2023 and September 30, 2022.

At September 30, 2023, we had availability of approximately $32.0 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,

Our working capital, defined as current assets less current liabilities, was $32.4 million at March 31, 2024 and $8.9 million at March 31, 2023.

As of March 31, 2024, we had cash totaling $34.3 million compared to $15.9 million at March 31, 2023.

These cash balances do not include restricted cash of $12.7 million and $11.0 million at March 31, 2024 and March 31, 2023, respectively, which reflects cash accounts holding customer settlement funds and cash reserves for potential losses.

The current portion of long-term debt included in current liabilities was $6.7 million and $6.2 million at March 31, 2024 and March 31, 2023, respectively.

At March 31, 2024, we had availability of approximately $65.0 million under our revolving credit facility.

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

Three Months Ended March 31,

(in thousands) 2024 2023

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Financing activities (10,279) 57,537

Net increase in cash and cash equivalents and restricted cash $ 178,485 $ 21,364

Net (decrease) increase in cash and cash equivalents and restricted cash $ (4,641) $ 77,631

Cash Provided by Operating Activities

Net cash provided by operating activities was $72.7 million for the nine months ended September 30, 2023 compared to $50.6 million for the nine months ended September 30, 2022.

The $22.1 million increase in 2023 was primarily driven by changes in the operating assets and liabilities.

Net cash provided by operating activities was $13.3 million for the three months ended March 31, 2024 compared to $27.7 million for the three months ended March 31, 2023.

The $14.4 million decrease in 2024 was primarily driven by changes in the operating assets and liabilities.

Cash Used in Investing Activities

Net cash used in investing activities was $51.2 million and $21.1 million for the nine months ended September 30, 2023 and 2022, respectively.

For the nine months ended September 30, 2023, net cash used in investing activities included the acquisition of business of $28.2 million, additions to property, equipment and software of $15.3 million, and, acquisitions of intangible assets of $7.9 million, which was offset by $0.2 million related to the net payments received on loans to ISOs.

For the nine months ended September 30, 2022, net cash used in investing activities included $6.5 million of cash used to fund acquisitions

of intangible assets, $3.3 million related to the funding of new loans to ISOs and $11.4 million of cash used to acquire property, equipment and software.

Net cash used in investing activities was $7.7 million and $7.6 million for the three months ended March 31, 2024 and 2023, respectively.

For the three months ended March 31, 2024, investing activities included additions to property, equipment and software of $6.6 million and $1.1 million related funding of new loans to ISOs.

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

Cash Provided by Financing Activities

Net cash provided by financing activities was $157.0 million for the nine months ended September 30, 2023, compared to $8.1 million of cash used in financing activities for the nine months ended September 30, 2022.

The net cash provided by financing activities for the nine months ended September 30, 2023 included changes in the net obligations for funds held on the behalf of customers of $165.6 million and $44.0 million in borrowings under the revolving credit facility, offset by $28.2 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, $4.7 million of payments of contingent consideration for business combinations and $0.9 million of debt modification costs .

The net cash used in financing activities for the nine months ended September 30, 2022 included $36.7 million of cash used for the repayment of debt, $11.5 million of cash dividends paid to redeemable senior preferred stockholders and $4.7 million of cash used for shares withheld for taxes and share repurchases, and $4.0 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 $25.7 million and borrowings under the revolving credit facility of $23.0 million.

Net cash used in financing activities was $10.3 million for the three months ended March 31, 2024, compared to $57.5 million of cash provided by financing activities for the three months ended March 31, 2023.

The net cash used in financing activities for the three months ended March 31, 2024 included changes in the net obligations for funds held on the behalf of customers of $1.9 million, offset by $1.7 million of cash used for the repayment of debt, $7.0 million of cash dividends paid to redeemable senior preferred stockholders, $0.4 million of cash used for shares withheld for taxes and $3.1 million of payments of contingent consideration.

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

Long-term Debt

As of September 30, 2023, we had outstanding debt obligations, including the current portion and net of unamortized debt discount of $623.0 million, compared to $605.1 million at December 31, 2022, resulting in a increase of $17.9 million.

The debt balance at September 30, 2023 consisted of $606.1 million outstanding under the term facility and $33.0 million outstanding under the revolving credit facility, offset by $16.1 million of unamortized debt discounts and issuance costs.

As of March 31, 2024, we had outstanding debt obligations, including the current portion and net of unamortized debt discount of $638.1 million, compared to $638.7 million at December 31, 2023, resulting in a decrease of $0.6 million.

The debt balance at March 31, 2024 consisted of $652.7 million outstanding under the term facility offset by $14.6 million of unamortized debt discounts and issuance costs.

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

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

As of September 30, 2023, the Company was in compliance with the covenants in the Credit Agreement.

As of March 31, 2024, 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