What changed in this filing

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Item 1. Financial Statements

2025-08-07 compared with 2025-05-06 · 373 added, 207 removed, 470 unchanged (55% of the section changed)

Financial Statements

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Current assets:

5 unchanged sentences

Current portion of notes receivable, net of allowance of $ 0 and $ 0 , respectively

Settlement assets and customer/subscriber account balances 1,003,034 940,798

Settlement assets 1,125,934 940,798

Total current assets 1,305,885 1,105,085

12 unchanged sentences

Current portion of long-term debt 4,254 9,503

Settlement and customer/subscriber account obligations 1,003,395 940,213

Settlement obligations 1,127,266 940,213

Total current liabilities 1,229,171 1,051,671

6 unchanged sentences

100,000,000 shares authorized;

0 issued or outstanding at March 31, 2025 and December 31, 2024

0 issued or outstanding at June 30, 2025 and December 31, 2024

Common Stock, $ 0.001 par value;

1,000,000,000 shares authorized;

84,219,962 and 81,866,711 shares issued at March 31, 2025 and December 31, 2024, respectively;

and 79,711,642 and 77,479,908 shares outstanding at March 31, 2025 and December 31, 2024, respectively

Treasury stock at cost, 4,508,320 and 4,386,803 shares at March 31, 2025 and December 31, 2024, respectively

84,524,131 and 81,866,711 shares issued at June 30, 2025 and December 31, 2024, respectively;

and 79,897,665 and 77,479,908 shares outstanding at June 30, 2025 and December 31, 2024, respectively

Treasury stock at cost, 4,626,466 and 4,386,803 shares at June 30, 2025 and December 31, 2024, respectively

( 21,921 ) ( 19,607 )

9 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended

Three Months Ended June 30, Six Months Ended

2025 2024 2025 2024

Revenues $ 239,812 $ 219,867 $ 464,442 $ 425,586

43 unchanged sentences

March 31, 2025 79,712 $ 80 4,508 $ ( 21,077 ) $ 1,669 $ ( 133 ) $ ( 138,866 ) $ ( 158,327 ) $ 1,902 $ ( 156,425 )

Equity-classified stock-based compensation — — — — 1,625 — — 1,625 — 1,625

Vesting of stock-based compensation and ESPP compensation 270 — — — 111 — — 111 — 111

Shares withheld for taxes ( 118 ) — 118 ( 844 ) — — — ( 844 ) — ( 844 )

Exercise of stock options 34 — — — 224 — — 224 — 224

Issuance of profit interests in subsidiaries — — — — — — — — 79 79

Foreign currency translation adjustment — — — — — 217 — 217 — 217

Net income — — — — — — 10,879 10,879 — 10,879

June 30, 2025 79,898 $ 80 4,626 $ ( 21,921 ) $ 3,629 $ 84 $ ( 127,987 ) $ ( 146,115 ) $ 1,981 $ ( 144,134 )

Priority Technology Holdings, Inc.

Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest

(in thousands)

Stock Treasury

13 unchanged sentences

March 31, 2024 75,835 $ 76 4,183 $ ( 18,491 ) $ — $ ( 42 ) $ ( 141,412 ) $ ( 159,869 ) $ 1,747 $ ( 158,122 )

Equity-classified stock-based compensation — — — — 1,744 — — 1,744 — 1,744

ESPP compensation and vesting of stock-based compensation 190 — — — 60 — — 60 — 60

Shares withheld for taxes ( 57 ) — 57 ( 182 ) — — — ( 182 ) — ( 182 )

Redemption of PHOT redeemable NCI — — — — 3,765 — — 3,765 — 3,765

Return on PHOT redeemable NCI — — — — ( 58 ) — — ( 58 ) ( 58 )

Dividends on redeemable senior preferred stock — — — — ( 8,426 ) — — ( 8,426 ) — ( 8,426 )

Accretion of redeemable senior preferred stock — — — — ( 10,139 ) — — ( 10,139 ) — ( 10,139 )

Issuance of profit interests/ common equity in subsidiaries — — — — — — — — 85 85

Foreign currency translation adjustment — — — — — 4 — 4 — 4

Reclassification of negative additional paid-in capital — — — — 13,054 — ( 13,054 ) — — —

Net income — — — — — — 994 994 — 994

June 30, 2024 75,968 $ 76 4,240 $ ( 18,673 ) $ — $ ( 38 ) $ ( 153,472 ) $ ( 172,107 ) $ 1,832 $ ( 170,275 )

Priority Technology Holdings, Inc .

1 unchanged sentence

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

6 unchanged sentences

Deferred income tax ( 2,318 ) ( 3,023 )

Change in contingent consideration 1,006 972

Change in deferred consideration 2,039 2,213

Other non-cash items, net ( 228 ) ( 929 )

4 unchanged sentences

Notes receivable — ( 584 )

Accounts payable and other accrued liabilities ( 5,796 ) 1,590

Accounts payable and accrued expenses ( 6,810 ) 10,225

Accrued residuals commissions 2,966 3,066

Customer deposits and advance payments 1,187 ( 365 )

Other assets and liabilities, net 465 ( 1,395 )

Other noncurrent assets and liabilities, net ( 1,922 ) ( 5,859 )

Net cash provided by operating activities 27,080 42,007

3 unchanged sentences

Notes receivable, net ( 1,430 ) ( 1,406 )

Acquisitions of assets and other investing activities ( 2,275 ) ( 7,474 )

Net cash used in investing activities ( 21,145 ) ( 20,598 )

Cash flows from financing activities:

Proceeds from issuance of long-term debt, net of issue discount — 830,200

Debt issuance and modification costs paid ( 40 ) ( 7,555 )

Repayments of long-term debt ( 10,000 ) ( 654,372 )

Redemption of PHOT redeemable NCI — ( 2,130 )

Repurchases of shares withheld for taxes ( 2,314 ) ( 604 )

Redemption of senior preferred stock — ( 136,936 )

Redemption of accumulated unpaid dividend on redeemable senior preferred stock — ( 30,819 )

Dividends paid to redeemable senior preferred stockholders — ( 16,393 )

Proceeds from exercise of stock options 334 —

Settlement and customer/subscriber accounts obligations, net 59,060 1,918

Payment of contingent consideration related to business combination ( 400 ) ( 3,071 )

Net cash provided by (used in) financing activities 47,260 ( 10,279 )

Settlement obligations, net 190,863 40,914

Payment of deferred/contingent consideration related to business combination ( 752 ) ( 4,156 )

Net cash provided by financing activities 178,091 18,149

Net change in cash and cash equivalents and restricted cash:

5 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Reconciliation of cash and cash equivalents, and restricted cash:

1 unchanged sentence

Restricted cash 14,205 12,625

Cash and cash equivalents included in settlement assets and customer/subscriber account balances (restricted in nature) (see Note 4 )

Cash and cash equivalents included in settlement assets (restricted in nature) (see Note 4 )

1,113,121 788,530

3 unchanged sentences

Non-cash investing and financing activities:

Deferred consideration accrual $ 6,500 $ —

Foreign currency adjustment to goodwill $ 62 $ —

Acquisition of intangible asset $ — $ ( 5,751 )

Issuance of NCI $ — $ 178

Foreign currency adjustment to goodwill and intangibles $ 488 $ —

Exercise of stock options $ 11 $ —

See Notes to Unaudited Consolidated Statements

8 unchanged sentences

Priority is a payments and banking fintech that streamlines collecting, storing, lending and sending money through its innovative commerce engine to unlock revenue and generate operational success for businesses.

Our mission is to provide a personalized financial toolset to accelerate cashflow and optimize working capital for our customers by providing merchant services, payables and banking and treasury solutions.

Our mission is to provide a personalized financial tool set to accelerate cashflow and optimize working capital for our customers by providing merchant services, payables and banking and treasury solutions.

The Company operates on a calendar year ending each December 31 and reports quarterly results on four calendar quarters ending on March 31, June 30, September 30 and December 31 of each year.

6 unchanged sentences

Changes in the Company's ownership interest while the Company retains its controlling interest are accounted for as equity transactions.

As of March 31, 2025, there was no income attributable to NCI in accordance with the applicable operating agreements.

As of June 30, 2025, there was no income attributable to NCI in accordance with the applicable operating agreements.

In the opinion of the Company's management, all known adjustments necessary for a fair presentation of the Unaudited Consolidated Financial Statements for interim periods have been made.

1 unchanged sentence

These Unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Certain amounts from prior periods have been reclassified to conform to the current period’s presentation.

The effect of these reclassifications on the Company’s previously reported consolidated financial statements was not material.

Use of Estimates

10 unchanged sentences

Translation adjustments are reported as a component of accumulated other comprehensive income (loss).

Deferred Consideration

The deferred considerations related to acquisitions are recorded at the fair value on the date of the acquisition and accreted to their redemption value through interest expense.

Amounts due within 12 months under the terms of the agreement are classified as current within the Consolidated Unaudited Balance Sheets.

Allowance for Expected Losses

As of June 30, 2025 and December 31, 2024, there was no allowance for expected loss on notes receivable.

Notes Receivable .

The allowance for expected loss from accounts receivable was $ 5.2 million and $ 3.0 million at June 30, 2025 and December 31, 2024, respectively.

As of June 30, 2025 and December 31, 2024, the allowance for expected losses on settlement assets was $ 8.6 million and $ 7.9 million, respectively.

Settlement Assets and Obligations .

A reconciliation of the beginning and ending amount of allowance for expected losses is as follows:

(in thousands) Accounts Receivables Settlement assets

Balance at January 1, 2025 $ ( 3,045 ) $ ( 7,936 )

Charge-offs (recoveries), net 392 1,492

Provision ( 715 ) ( 3,481 )

Balance at March 31, 2025 ( 3,368 ) ( 9,925 )

Charge-offs (recoveries), net 127 2,627

Provision ( 469 ) ( 2,789 )

Reclassification ( 1,509 ) 1,509

Balance at June 30, 2025 $ ( 5,219 ) $ ( 8,578 )

The Company has elected not to measure expected losses for accrued interest on notes receivable but instead recognize losses for accrued interest within the period losses are incurred.

Recently Issued Accounting Standards

1 unchanged sentence

In March 2024, the FASB issued ASU 2024-01, Profit Interest and Similar Awards ("ASU 2024-01"), to improve GAAP by adding an illustrative example to demonstrate how an entity should apply the scope in paragraph 718-10-15-3 to determine whether profit interest and similar awards should be accounted for in accordance with Topic 718, Compensation- Stock Compensation.

This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

Implementation of this standard is not expected to have any significant impact on results of operations, financial position or cash flows, however, the Company is in the process of evaluating the potential effects.

This guidance is effective for annual and interim periods beginning after December 15, 2024.

Adoption of this standard did not have any significant impact on results of operations, financial position or cash flows.

Income Taxes ASU 2023-09

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This guidance is expected to only impact the disclosures with no impact on the results of operations, financial position or cash flows.

On January 21, 2025, PRTH’s indirect subsidiary, Priority Canada Acquisition Company, Inc.

On January 21, 2025, PRTH’s wholly owned subsidiary, Priority Canada Acquisition Company, Inc.

(the "acquiring entity"), acquired 100 % of the equity interest in Payslate Inc.

(Canada), and its subsidiary Rentmoola Payment Solutions Ltd (United Kingdom) (jointly referred as "Letus business").

The Letus business is engaged in processing of rent payments for property management companies in the United States and Canada and will complement the Company's Enterprise Payments business.

The acquisition is aimed to provide an opportunity to expand Priority's services in Canada and compliment our existing rent payments business.

The total purchase consideration was $ 11.0 million, consisting of $ 4.5 million in cash consideration funded by the Company’s cash flows and deferred consideration of $ 6.5 million.

The Company has not yet completed its preliminary purchase price allocation and valuation of identified assets (including the acquired intangible assets such as customer relationships, trademarks, technology, etc.) and assumed liabilities.

The tangible assets and liabilities assumed including acquired cash was not material.

The preliminary purchase price allocation is expected to be completed during the period ended June 30, 2025.

Results for the Letus business is included within the Enterprise Payments segment, which includes $ 0.4 million in revenue and a net loss of $ 0.1 million for the three months ended March 31, 2025.

The Letus business is engaged in processing of rent payments for property management companies in the United States and Canada.

The acquisition will provide synergy opportunities to the Company's Enterprise Payments rent payment business and expand Priority's services in Canada.

The acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations .

The total purchase consideration was $ 9.0 million, consisting of $ 4.6 million in cash consideration funded by the Company’s cash flows, deferred consideration of $ 4.3 million and contingent consideration of $ 0.1 million.

The deferred consideration of $ 4.3 million was recorded at the fair value on the acquisition date.

The deferred consideration will be paid monthly equal to 40 % of gross profit under the agreement.

Any amount remaining but unpaid will be paid in full by January 21, 2030.

The Company will accrete interest expense on the deferred consideration throughout the period, which was $ 0.2 million for three and six months ended June 30, 2025.

As of June 30, 2025, total deferred consideration was $ 4.5 million, $ 0.6 million included in accounts payable and accrued expenses and $ 3.9 million included in noncurrent liabilities on the Unaudited Consolidated Balance Sheets.

Results for the Letus business since the acquisition are included within the Enterprise Payments segment, which includes $ 0.1 million and $ 0.4 million in revenue and a net loss of $ 0.2 million and $ 0.2 million for the three and six months ended June 30, 2025, respectively.

The preliminary purchase price allocation is set forth in the table below:

(in thousands)

Consideration:

Deferred consideration (2)

Contingent consideration (3)

cash acquired ( 175 )

Total purchase consideration, net of cash acquired $ 8,838

Recognized amounts of assets acquired and liabilities assumed (4) :

Accounts receivable $ 149

Prepaid expenses 229

Property, equipment and software 8

Goodwill 6,070

Intangible assets:

Customer relationships 1,555

Trademarks 480

Technology 706

Accounts payable and accrued expenses ( 359 )

Total purchase consideration $ 8,838

(1) Cash at closing net of adjustments from estimated net working capital to actual working capital.

(2) The fair value of the deferred consideration was determined utilizing a Monte Carlo simulation.

The payments were calculated based on the path for the simulated metrics and the contractual terms of the deferred consideration payments and were discounted to present value at a rate reflecting a risk associated with the payoffs.

The fair value was estimated to be the average present value of the deferred consideration payments over all iterations of the simulation.

(3) The contingent consideration represents the fair value of the share of net operating loss carryforwards owed to the seller in the future.

(4) Includes deferred tax asset of $ 3.8 million which has a full valuation allowance.

The Company incurred $ 0.5 million in acquisition related costs, which primarily consisted of consulting, legal and accounting and valuation expenses.

These expenses were recorded in selling, general and administrative expenses in the Company's Consolidated Statements of Operations and Comprehensive Loss.

Based on the purchase consideration and pre-acquisition operating results, this business combination did not meet the materiality requirements for pro forma disclosures.

Disaggregation of Revenues

The following table presents a disaggregation of our consolidated revenues by type:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2025 2024 2025 2024

9 unchanged sentences

The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material.

(2) Approximately $ 12.6 million and $ 11.9 million of interest income on customer funds for the three months ended March 31, 2025 and 2024, respectively, is included in outsourced services and other services revenue in the table above.

Approximately $ 1.1 million and $ 0.6 million of interest income on corporate funds for the three months ended March 31, 2025 and 2024, respectively, is included in other income, net on the Company's Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) and not reflected in the table above.

(2) Approximately $ 14.1 million and $ 26.7 million of interest income on customer funds for the three and six months ended June 30, 2025, respectively, and $ 13.1 million and $ 25.0 million for the three and six months ended June 30, 2024, respectively, is included in outsourced services and other services revenue in the table above.

Approximately $ 1.0 million and $ 2.1 million of interest income on corporate funds for the three and six months ended June 30, 2025 and $ 0.6 million and $ 1.2 million for the three and six months ended June 30, 2024, respectively, is included in other income, net on the Company's Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) and not reflected in the table above.

The following table presents a disaggregation of our consolidated revenues by segment:

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

(in thousands) Merchant Card Fees Money Transmission Services Outsourced and Other Services Equipment Total

4 unchanged sentences

Total revenues $ 180,483 $ 39,273 $ 16,853 $ 3,203 $ 239,812

Three Months Ended March 31, 2024

Six Months Ended June 30, 2025

(in thousands) Merchant Card Fees Money Transmission Services Outsourced and Other Services Equipment Total

4 unchanged sentences

Total revenues $ 347,562 $ 76,722 $ 33,855 $ 6,303 $ 464,442

Deferred revenues were not material for the three months ended March 31, 2025 and 2024.

Three Months Ended June 30, 2024

(in thousands) Merchant Card Fees Money Transmission Services Outsourced and Other Services Equipment Total

SMB Payments $ 150,696 $ — $ 1,380 $ 3,025 $ 155,101

B2B Payments 18,682 — 3,199 — 21,881

Enterprise Payments 451 31,340 11,879 — 43,670

Eliminations ( 583 ) — ( 202 ) — ( 785 )

Total revenues $ 169,246 $ 31,340 $ 16,256 $ 3,025 $ 219,867

Six Months Ended June 30, 2024

(in thousands) Merchant Card Fees Money Transmission Services Outsourced and Other Services Equipment Total

SMB Payments $ 290,496 $ — $ 2,621 $ 5,988 $ 299,105

B2B Payments 36,971 — 6,254 — 43,225

Enterprise Payments 804 60,484 23,372 — 84,660

Eliminations ( 1,078 ) — ( 326 ) — ( 1,404 )

Total revenues $ 327,193 $ 60,484 $ 31,921 $ 5,988 $ 425,586

Deferred revenues were not material for the three and six months ended June 30, 2025 and 2024.

Contract Assets and Contract Liabilities

Material contract assets and liabilities are presented net at the individual contract level in the Unaudited Consolidated Balance Sheets and are classified as current or noncurrent based on the nature of the underlying contractual rights and obligations.

Contract liabilities were $ 0.4 million and $ 0.2 million as of March 31, 2025 and December 31, 2024, respectively.

Contract liabilities were $ 0.4 million and $ 0.2 million as of June 30, 2025 and December 31, 2024, respectively.

Substantially all of these balances are recognized as revenue within 12 months.

Net contract assets were not material for any period presented.

Impairment losses recognized on contract assets arising from the Company's contracts with customers were not material for the three months ended March 31, 2025 and 2024.

Impairment losses net of recoveries recognized on receivables arising from the Company's contracts with customers were $ 0.3 million for the three months ended March 31, 2025.

Impairment losses recognized on receivables were immaterial for the three months ended March 31, 2024.

Settlement Assets and Customer/Subscriber Account Balances and Related Obligations

SMB Payments Segment

In the Company's SMB Payments reportable segment, funds settlement refers to the process of transferring funds for sales and credits between card issuers and merchants.

Net contract assets were $ 0.3 million for the period ended June 30, 2025 and were not material for the period ended December 31, 2024.

Impairment losses recognized on contract assets arising from the Company's contracts with customers were not material for the three and six months ended June 30, 2025 and 2024.

Settlement Assets and Obligations

Settlement assets and obligations include, 1) funds due from merchants arising from settlement of funds for sales and credits between card issuers, merchants, 2) card settlement funds due from networks due to timing and its related obligations, and 3) Customer/Subscriber account balances and related obligations resulting from licensed money transmitter services.

Card settlements due from merchants, net

The merchant acquiring services of the Company include settlement of funds for sales and credits between card issuers, card networks and merchants.

The standards of the card networks require possession of funds during the settlement process by a member bank which controls the clearing transactions.

1 unchanged sentence

Therefore, neither is recognized in the Company's Unaudited Consolidated Balance Sheets.

Member banks held merchant funds of $ 128.2 million and $ 106.2 million at March 31, 2025 and December 31, 2024, respectively.

Exception items that become the liability of the Company are recorded as merchant losses, a component of cost of revenue in the Company's Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss).

Exception items that the Company is still attempting to collect from the merchants through the funds settlement process or merchant reserves are recognized as settlement assets and customer/subscriber account balances in the Company's Unaudited Consolidated Balance Sheets, with an offsetting reserve for those amounts the Company estimates it will not be able to recover.

Expenses for merchant losses net of recoveries for the three months ended March 31, 2025 and 2024 were $ 2.0 million and $ 4.7 million, respectively.

B2B Payments Segment

In the Company's B2B Payments segment, the Company earns revenues by processing transactions for FIs and other business customers.

Customers transfer funds to the Company, which are held in either company-owned bank accounts controlled by the Company or bank-owned FBO accounts controlled by the banks, until such time that the transactions are settled with the customer payees.

Amounts due to customer payees that are held by the Company in company-owned bank accounts are included in restricted cash in the Company's Unaudited Consolidated Balance Sheets.

Amounts due to customer payees that are held in bank-owned FBO accounts are not assets of the Company, and the associated obligations are not liabilities of the Company.

Therefore, neither is recognized in the Company's Unaudited Consolidated Balance Sheets.

Bank-owned FBO accounts held funds of $ 66.1 million and $ 64.8 million at March 31, 2025 and December 31, 2024, respectively.

Company-owned bank accounts held $ 1.2 million and $ 1.6 million at March 31, 2025 and December 31, 2024, respectively, which are included in restricted cash and settlement and customer/subscriber account obligations in the Company's Unaudited Consolidated Balance Sheets.

Exception items that the Company is still attempting to collect from the customers through the funds settlement process are recognized as settlement assets and customer/subscriber account balances in the Company's Unaudited Consolidated Balance Sheets, with an offsetting reserve for those amounts the Company estimates it will not be able to recover.

Expenses for these merchant losses for the three months ended March 31, 2025 and 2024 were $ 0.2 million, respectively.

The Company also accepts card payments from its B2B Payments segment customers and processes disbursements to their vendors within the Plastiq business.

Exception items that the Company is still attempting to collect from the merchants through the funds settlement process or merchant reserves are recognized as settlement assets in the Company's Unaudited Consolidated Balance Sheets, with an offsetting reserve for those amounts the Company estimates it will not be able to recover.

Exception items that the Company has deemed uncollectible are recorded as merchant losses, a component of cost of revenue in the Company's Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss).

Expenses for merchant losses net of recoveries for the three and six months ended June 30, 2025 were $ 0.2 million and $ 1.9 million, respectively.

Recoveries for merchant losses, net of expense for the three months ended June 30, 2024, were $ 1.7 million.

Expenses for merchant losses net of recoveries for the six months ended June 30, 2024 were $ 0.9 million.

Card settlements due from networks and Dues to Customers’ Payees

As part of the Payables service offering:

• Priority accepts card payments for its customers and processes disbursements to their vendors (customers’ payees) .

The time lag between authorization and settlement of card transactions creates certain receivables (from card networks) and payables (to the vendors of customers).

These receivables and payables arise from the settlement activities that the Company performs on the behalf of its customers and therefore, are presented as settlement assets and related obligations.

Enterprise Payments Segment

In the Company's Enterprise Payments segment revenue is derived primarily from licensed money transmission services.

As part of its licensed money transmission services, the Company accepts deposits from consumers and subscribers which are held in bank accounts maintained by the Company on behalf of consumers and subscribers.

After accepting deposits, the Company is allowed to invest available balances in these accounts in certain permitted investments, and the return on such investments contributes to the Company's net cash inflows.

These balances are payable on demand.

As such, the Company recorded these balances and related obligations as current assets and current liabilities.

The nature of these balances are cash and cash equivalents which is restricted in nature as they are not available for day-to-day operations of the Company.

Therefore, the Company has classified these balances as settlement assets and customer/subscriber account balances and the related obligations as settlement and customer/subscriber account obligations in the Company's Unaudited Consolidated Balance Sheets and these cash and cash equivalents balances are presented as restricted cash on the Company's Unaudited Consolidated Statement of Cash Flows.

Expenses for merchant losses for the three months ended March 31, 2025 and 2024 were immaterial .

In certain states, the Company accepts deposits under agency arrangement with member banks wherein accepted deposits remain under the control of the member banks.

Therefore, the Company does not record assets for the deposits accepted and liabilities for the associated obligation.

Agency owned accounts held $ 45.2 million and $ 22.6 million at March 31, 2025 and December 31, 2024, respectively.

The Company's consolidated settlement assets and customer/subscriber account balances and settlement and customer/subscriber account obligations were as follows:

(in thousands) March 31, 2025 December 31, 2024

• Priority processes payments to the customers’ payees wherein customers funds are received either in company-owned bank accounts controlled by the Company or bank-owned FBO accounts controlled by the banks, until such time that the transactions are settled with the customers’ payees.

Balances in the bank-owned FBO accounts and related obligations are not considered assets and obligations of the Company.

Therefore, neither is recognized in the Company's Unaudited Consolidated Balance Sheets.

Amounts due to customers’ payees that are held in company-owned bank accounts are included in restricted cash in the Company's Unaudited Consolidated Balance Sheets and related obligations are presented as due to customers’ payees.

MTL Customer cash and cash equivalents (restricted in nature) and MTL Customer account obligations

The Company provides banking and treasury services to its customers through its money transmission licenses in 46 states and 3 territories of the United States and through agency relationships with banks in the remaining states.

These services include the acceptance and disbursement of funds.

While waiting for disbursement, these funds are held in bank accounts maintained by the Company on the behalf of its customers.

Per the money transmission regulations, the Company is allowed to invest available balances in these accounts in certain permitted investments, and returns on such investments contribute to the Company's net cash inflows.

As such, the Company recognized these balances and related obligations on its balance sheet.

Considering these balances are payable on demand and are related to settlement activities, they are presented as settlement assets (as part of the current assets) and the related obligations as settlement obligations (as part of the current liabilities) in the Company's Unaudited Consolidated Balance Sheets.

Further, the nature of these assets is cash and cash equivalent, but they are restricted in nature and therefore these balances are presented as restricted cash on the Company's Unaudited Consolidated Statement of Cash Flows.

The Company's consolidated settlement assets and obligations were as follows:

(in thousands) June 30, 2025 December 31, 2024

Settlement Assets, net of estimated losses (1) :

Card settlements due from merchants $ 827 $ 2,587

Card settlements due from merchants, net (1)(2)

$ 1,481 $ 2,587

Card settlements due from networks 11,332 12,307

Other settlement assets — 1,730

Customer/subscriber account balances

Cash and cash equivalents (restricted in nature) 982,288 924,174

Total settlement assets and customer/subscriber account balances $ 1,003,034 $ 940,798

Settlement and Customer/Subscriber Account Obligations:

Customer account obligations $ 964,231 $ 897,497

Subtotal 12,813 16,624

MTL Customer cash and cash equivalents (restricted in nature) (3)

1,113,121 924,174

Total settlement assets $ 1,125,934 $ 940,798

Settlement Obligations:

MTL Customer account obligations $ 1,095,509 $ 897,497

Subscriber account obligations 17,612 26,677

2 unchanged sentences

14,145 16,039

Total settlement and customer/subscriber account obligations $ 1,003,395 $ 940,213

(1) Allowance for estimated losses were $ 9.9 million and $ 7.9 million as of March 31, 2025 and December 31, 2024, respectively.

(2) Includes $ 17.2 million and $ 12.3 million as of March 31, 2025 and December 31, 2024, respectively, of card settlements due from networks and the remainder is included in restricted cash on our Unaudited Consolidated Balance Sheets.

Total settlement obligations $ 1,127,266 $ 940,213

(1) Allowance for estimated losses were $ 8.6 million and $ 7.9 million as of June 30, 2025 and December 31, 2024, respectively.

(2) Excludes merchant funds held at member banks of $ 122.9 million and $ 106.2 million on June 30, 2025 and December 31, 2024, respectively.

(3) Excludes funds held under agency arrangement with member banks (in states where the Company does not have a money transmitter license), balances remain under the control of the member banks (therefore not the assets or obligation of the Company).

Agency owned accounts held $ 58.4 million and $ 22.6 million at June 30, 2025 and December 31, 2024, respectively.

(4) Includes $ 11.3 million and $ 12.3 million as of June 30, 2025 and December 31, 2024, respectively, of card settlements due from networks and the remainder is included in restricted cash on our Unaudited Consolidated Balance Sheets.

(5) Excludes amounts due to customer payees that are held in bank-owned FBO accounts which are not assets of the Company, and the associated obligations are not liabilities of the Company.

Therefore, neither is recognized in the Company's Unaudited Consolidated Balance Sheets.

Bank-owned FBO accounts held funds of $ 70.6 million and $ 64.8 million at June 30, 2025 and December 31, 2024, respectively.

Notes Receivable

The Company had notes receivable of $ 8.7 million and $ 8.6 million as of March 31, 2025 and December 31, 2024, respectively, which are reported as current portion of notes receivable and notes receivable less current portion on the Company's Unaudited Consolidated Balance Sheets.

The notes receivable carried weighted-average interest rates of 16.8 % and 16.9 % as of March 31, 2025 and December 31, 2024, respectively.

The notes receivable are comprised of notes receivable from ISOs, and under the terms of the agreements the Company preserves the right to hold back residual payments due to the ISOs and to apply such residuals against future payments due to the Company.

As of March 31, 2025 and December 31, 2024, the Company had no allowance for doubtful notes receivable.

As of March 31, 2025, the principal payments for the Company's notes receivable are due as follows:

The Company had notes receivable of $ 10.0 million and $ 8.6 million as of June 30, 2025 and December 31, 2024, respectively, which are reported as current portion of notes receivable and notes receivable less current portion on the Company's Unaudited Consolidated Balance Sheets.

The notes receivable carried weighted-average interest rates of 16.0 % and 16.9 % as of June 30, 2025 and December 31, 2024, respectively.

The notes are receivables from ISOs, which are made with a term of 1 - 5 years.

Under the terms of the agreements, the Company will hold back residual payments due to the ISOs and apply such residuals against future payment due to the Company.

The following table provides a reconciliation for activity within the notes receivable as of June 30, 2025 :

(in thousands)

Twelve months ending March 31,

After 2029 2,083

Balance at January 1, 2025 $ 8,557

Principal payments ( 508 )

Advances during the period 655

Balance at March 31, 2025 $ 8,704

Principal payments ( 1,290 )

Advances during the period 2,573

Balance at June 30, 2025 $ 9,987

As of June 30, 2025, the principal payments for the Company's notes receivable are due as follows:

(in thousands)

Twelve months ending June 30,

Total $ 9,987

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A summary of property, equipment and software, net was as follows:

(in thousands) March 31, 2025 December 31, 2024

(in thousands) June 30, 2025 December 31, 2024

Computer software $ 115,355 $ 104,683

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Property, equipment and software, net $ 57,529 $ 52,477

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2025 2024 2025 2024

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Fully depreciated assets are retained in property, equipment and software, net, until removed from service.

No assets were removed from service during three months ended March 31, 2025 while certain fully depreciated assets were removed from service during the three months ended March 31, 2024.

Certain fully depreciated assets were removed from service during the three and six months ended June 30, 2025 and 2024.

Goodwill and Other Intangible Assets

The Company's goodwill relates to the following reporting units:

(in thousands) March 31, 2025 December 31, 2024

The Company's goodwill relates to the following segments:

(in thousands) June 30, 2025 December 31, 2024

SMB Payments $ 124,139 $ 124,139

Enterprise Payments 251,118 244,712

Plastiq (B2B Payments) 7,240 7,240

B2B Payments 7,240 7,240

Total $ 382,497 $ 376,091

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Balance at December 31, 2024 $ 376,091

Payslate acquisition 10,669

Letus business acquisition 6,070

Foreign currency translation adjustment 336

Balance at March 31, 2025

As of March 31, 2025, the Company is not aware of any triggering events for impairment that have occurred since the last annual impairment test.

Balance at June 30, 2025

As of June 30, 2025, the Company is not aware of any triggering events for impairment that have occurred since the last annual impairment test.

Other Intangible Assets

Other intangible assets consisted of the following:

March 31, 2025 Weighted-average

June 30, 2025 Weighted-average

(in thousands, except weighted-average data) Gross Carrying Value Accumulated Amortization Net Carrying Value

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(1) These assets have an indefinite useful life.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2025 2024 2025 2024

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$ 10,018 $ 11,816 $ 19,933 $ 23,899

(1) Included in amortization expense is $ 0.6 million and $ 0.4 million for the three months ended March 31, 2025 and 2024, respectively, related to the amortization of certain contract acquisition costs.

As of March 31, 2025, there were no impairment indicators present.

(1) Included in amortization expense is $ 0.6 million and $ 1.2 million for the three and six months ended June 30, 2025, respectively, and $ 0.4 million and $ 0.8 million for the three and six months ended June 30, 2024, respectively, related to the amortization of certain contract acquisition costs.

As of June 30, 2025, there were no impairment indicators present.

Debt Obligations

Outstanding debt obligations consisted of the following:

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

2024 Credit Agreement

Term facility - matures May 16, 2031, interest rate of 9.07 % and 9.11 % at March 31, 2025 and December 31, 2024, respectively

Term facility - matures May 16, 2031, interest rate of 9.08 % and 9.11 % at June 30, 2025 and December 31, 2024, respectively

$ 935,537 $ 945,537

Revolving credit facility - $ 70.0 million line matures May 16, 2029, interest rate of 8.57 % and 8.61 % at March 31, 2025 and December 31, 2024, respectively

Revolving credit facility - $ 70.0 million line matures May 16, 2029, interest rate of 8.58 % and 8.61 % at June 30, 2025 and December 31, 2024, respectively

Total debt obligations 935,537 945,537

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Interest expense for outstanding debt, including fees for undrawn amounts and amortization of deferred financing costs and debt discounts was as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2025 2024 2025 2024

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$ 23,054 $ 21,710 $ 46,230 $ 42,590

(1) Included in interest expense is $ 1.0 million and $ 1.0 million related to the accretion of contingent consideration from acquisitions for the three months ended March 31, 2025 and 2024, respectively.

(2) Interest expense included amortization of deferred financing costs and debt discounts of $ 0.4 million and $ 1.1 million for the three months ended March 31, 2025 and 2024, respectively.

(1) Included in interest expense is $ 1.0 million and $ 2.0 million related to the accretion of deferred consideration from acquisitions for the three and six months ended June 30, 2025, respectively, and $ 1.2 million and $ 2.2 million for the three and six months ended June 30, 2024, respectively.

(2) Interest expense included amortization of deferred financing costs and debt discounts of $ 0.5 million and $ 0.9 million for the three and six months ended June 30, 2025, respectively, and $ 0.8 million and $ 1.8 million for the three and six months ended June 30, 2024, respectively.

Debt Covenants

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

1) 6.90 :1.00 at each fiscal quarter

ended September 30, 2024 through December 31, 2025;

1) 6.90 :1.00 at each fiscal quarter ended September 30, 2024 through December 31, 2025;

2) 6.40 :1.00 at each fiscal quarter ended March 31, 2026 and each fiscal quarter thereafter.

As of March 31, 2025, the Company was in compliance with the covenants in the 2024 Credit Agreement.

The Company's consolidated effective income tax rate for the three months ended March 31, 2025 was 21.4 % compared to a consolidated effective income tax rate of 33.2 % for the three months ended March 31, 2024, respectively.

As of June 30, 2025, the Company was in compliance with the covenants in the 2024 Credit Agreement.

The Company's consolidated effective income tax rate for the three and six months ended June 30, 2025 was 28.9 % and 25.8 %, respectively, compared to a consolidated effective income tax rate of 71.7 % and 45.2 % for the three and six months ended June 30, 2024, respectively.

The effective rates differed from the statutory rate of 21.0% primarily due to an increase in the valuation allowance against certain business interest carryover deferred tax assets, and certain forecasted nondeductible expenses.

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In accordance with the provisions of ASC 740, Income Taxes , the Company is required to provide a valuation allowance against deferred income tax assets when it is "more likely than not" that some portion or all of the deferred tax assets will not be realized.

Based on management's assessment, as of March 31, 2025, the Company continues to record a full valuation allowance against non-deductible interest expense and net operating losses acquired as part of the Payslate acquisition.

Based on management's assessment, as of June 30, 2025, the Company continues to record a full valuation allowance against non-deductible interest expense, and net deferred tax assets acquired as part of the Payslate acquisition.

The Company will continue to evaluate the realizability of the net deferred tax asset on a quarterly basis and, as a result, the valuation allowance may change in future periods.

On July 4, 2025, the U.S.

government enacted legislation known as the One Big Beautiful Bill Act ("OBBBA") into law.

The OBBBA, among other provisions, extends or reinstates certain provisions of the 2017 Tax Cuts and Jobs Act ("TCJA"), including but not limited to, 100% bonus depreciation on eligible property, immediate expensing of domestic research and

development costs, and the restoration of an EBITDA based interest expense limitation calculation.

The Company is in the process of evaluating the provisions of the OBBBA, and their impact on the Company's financial statements.

Stockholders' Deficit

The Company is authorized to issue 100,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors.

As of March 31, 2025 and December 31, 2024, the Company has not issued any shares of preferred stock.

As of June 30, 2025 and December 31, 2024, the Company has not issued any shares of preferred stock.

Share Repurchase Program

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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.

On May 5, 2025, the Company's Board of Directors amended the program to increase the authorization to 5,000,000 shares of it's outstanding common stock for a total of $ 40.0 million.

As of June 30, 2025, the Company has purchased 1,309,374 shares for $ 5.8 million under this plan.

There have been no shares repurchased under this plan since December 2022.

As of March 31, 2025, the Company has purchased 1,309,374 shares for $ 5.8 million under this plan.

Stock-based Compensation

Stock-based compensation expense was as follows:

Three Months Ended March 31,

Stock-based compensation expense, which is included in salary and employee benefits within the Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss), was as follows:

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2025 2024 2025 2024

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Incentive units compensation expense 79 85 166 178

Liability-classified compensation expense 1,502 — 1,502 —

ESPP compensation expense 28 14 43 26

Total $ 3,206 $ 1,829 $ 4,792 $ 3,462

Income tax benefit for stock-based compensation was $ 0.7 million for the three months ended March 31, 2025 and was immaterial for the three months ended March 31, 2024.

No stock-based compensation has been capitalized.

Awards granted for the three months ended March 31, 2025 and 2024, were not material.

Income tax benefit for stock-based compensation was $ 0.1 million and $ 0.8 million respectively, for the three and six months ended June 30, 2025 and was immaterial for the three and six months ended June 30, 2024.

No stock-based compensation has been capitalized in any period presented.

Awards granted during the three and six months ended months ended June 30, 2025 and June 30, 2024, were not material.

The Company's 2018 Plan initially provided for the issuance of up to 6,685,696 shares of the Company's Common Stock.

On March 17, 2022, the Company's Board of Directors unanimously approved an amendment to the 2018 Plan, which was subsequently approved by our shareholders, to increase the number of shares authorized for issuance under the plan by 2,500,000 shares, resulting in 9,185,696 shares of the Company's Common Stock authorized for issuance under the plan.

As of March 31, 2025, the Company had 2,935,912 shares available for issuance under the 2018 Plan.

2021 Stock Purchase Plan

The 2021 Stock Purchase Plan provides for up to 200,000 shares to be purchased under the plan.

As of June 30, 2025, the Company had 3,033,500 shares available for issuance under the 2018 Plan.

2021 Employee Stock Purchase Plan

The 2021 Employee Stock Purchase Plan ("ESPP") provides for up to 200,000 shares to be purchased under the plan.

Shares issued under the plan may be authorized but unissued or reacquired shares of Common Stock.

All employees of the Company who work more than 20 hours per week and have been employed by the Company for at least 30 days may participate in the 2021 Stock Purchase Plan.

Under the 2021 Stock Purchase Plan, participants are offered, on the first day of the offering period, the option to purchase shares of Common Stock at a discount on the last day of the offering period.

All employees of the Company who work more than 20 hours per week and have been employed by the Company for at least 30 days may participate in the ESPP.

Under the ESPP, participants are offered, on the first day of the offering period, the option to purchase shares of Common Stock at a discount on the last day of the offering period.

The offering period shall be for a period of three months and the first offering period began on January 10, 2022.

The 2021 Stock Purchase Plan provides eligible employees the opportunity to purchase shares of the Company's Common stock at 95 % of the lesser of the fair value on the first and last trading day of each offering period.

As of March 31, 2025, the Company had 35,261 shares available for issuance under the 2021 Stock Purchase Plan.

The ESPP provides eligible employees the opportunity to purchase shares of the Company's Common stock at 95 % of the lesser of the fair value on the first and last trading day of each offering period.

The ESPP was amended by shareholder approval on June 13, 2025, to increase the number of shares available by 200,000 .

As of June 30, 2025, the Company had 219,587 shares available for issuance under the 2021 Stock Purchase Plan.

Non-voting Incentive Units

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Related Party Transactions

In February 2019, PHOT, a subsidiary of the Company, received a contribution of substantially all of the operating assets of eTab and Cumulus under asset contribution agreements.

PHOT is a part of the Company's SMB reportable segment.

These contributed assets were primarily composed of technology-related assets.

Prior to these transactions, eTab was 80.0 % owned by the Company's Chairman and Chief Executive Officer ("CEO").

No cash consideration was paid to the contributors of the eTab or Cumulus assets on the date of the transactions.

As consideration for these contributed assets, the contributors were issued redeemable non-controlling preferred equity interests ("redeemable NCIs") in PHOT.

Under these redeemable NCIs, the contributors were eligible to receive up to $ 4.5 million of profits earned by PHOT, plus a preferred yield ( 6.0 % per year) on any undistributed preferred equity interest ("Total Preferred Equity Interest").

Once the total preferred equity interest is distributed to the holders, the redeemable NCIs cease to exist.

The Company's CEO initially owned 83.3 % of the redeemable NCIs, which ownership interest was subsequently reduced to 35.3 % through the CEO's disposition of interests to others.

In November 2020, the Company agreed with the contributors to an exchange of shares of common stock of the Company, or cash, for the remaining undistributed Total Preferred Equity Interests of $ 4.8 million.

An exchange valuation for the Company's common stock was established as of November 12, 2020 at the prior 20-day volume weighted average price of $ 2.78 per share.

The exchange was contingent upon receiving approval of the Company's lenders;

therefore, the binding exchange agreements were not entered into until after lender approval was received in April 2021 in connection with the debt refinancing.

In May 2021, the Company entered into exchange agreements and completed the exchange of 1,428,358 shares of common stock and $ 0.8 million of cash for the Total Preferred Equity Interests.

The CEO received 605,623 shares of common stock of the Company in exchange for his 35.3 % interest, and the Company's Chief Operating Officer (“COO”) received 413,081 shares of common stock of the Company in exchange for her 24.1 % interest.

On October 31, 2023, a lawsuit was filed alleging that the Board breached its fiduciary duties by approving the above mentioned exchange transaction.

The Company denied any wrongdoing.

The lawsuit was settled on January 30, 2024, wherein the Company agreed to unwind the exchange transaction and received previously issued shares of common stock of the Company and promissory notes for the amount of cash paid from the CEO, COO and others in exchange of the reissuance of PHOT redeemable preferred units.

The returned shares of common stock of the Company are recorded as treasury stock at their closing market price as of the settlement date of January 30, 2024.

The reissued PHOT redeemable preferred units are recorded as redeemable NCI at their estimated fair value as of the settlement date on the Company’s Consolidated Balance Sheets.

As of May 30, 2024, the Company approved redemption of PHOT redeemable preferred units for cash, common stock of the Company or a combination of both, at the sole discretion of the Company.

The redeemable preferred units were accreted to their redemption value of $ 5.9 million as of May 30, 2024, through net loss available to common shareholders in the Company’s Statements of Operations and Comprehensive Income (Loss).

The exchange value of the Company's common stock was established based on the 30-day volume weighted average close price adjusted for market illiquidity.

During the quarter ended June 30, 2024, the PHOT redeemable preferred units held by the CEO were redeemed in cash for $ 2.1 million and the promissory notes were satisfied.

During the quarter ended September 30, 2024, the PHOT redeemable preferred units held by the COO were redeemed for 408,013 shares of the Company's common stock and PHOT redeemable preferred units held by other holders were redeemed for 404,628 shares of the Company's common stock.

There was no subsequent activity for the three months ended March 31, 2025.

In February 2019, the Company's CEO contributed assets of certain businesses to PHOT (a subsidiary of the Company).

In consideration, PHOT issued redeemable preferred equity interest (preferred units) to the CEO and COO of the Company.

These preferred units were eligible to receive up to $ 4.5 million in profits earned by PHOT plus an annual preferred yield of 6 % on undistributed amounts.

On May 30, 2024, the Company approved the redemption of certain preferred units of PHOT either in cash or in exchange for shares of its common stock.

The redemption value of these preferred units was $ 5.9 million and exchange ratio was established based on the 30 days volume weighted average close price adjusted for market illiquidity.

During 2024, preferred units held by the CEO were redeemed for $ 2.1 million in cash and those held by the Chief Operating Officer were redeemed by issuance of 404,013 shares of the Company's common stock valued at $ 1.5 million.

There was no subsequent activity for the three and six months ended June 30, 2025 and June 30, 2024 .

Commitments and Contingencies

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Other Commitments

As of March 31, 2025 and December 31, 2024, the Company had a capital contribution commitment of $ 10.7 million and $ 12.6 million, respectively to fund operations of certain subsidiaries.

As of June 30, 2025 and December 31, 2024, the Company had a capital contribution commitment $ 5.6 million and $ 12.6 million respectively, to fund operations of certain subsidiaries.

The Company is obligated to make the contributions within 10 business days of receiving notice for such contribution from the subsidiary.

Contingent/Deferred Consideration

The following table provides a reconciliation of the beginning and ending balance of the Company's contingent/deferred consideration liabilities related to completed acquisitions:

(in thousands) Contingent/Deferred Consideration Liabilities

As of June 30, 2025, the Company committed to making a minimum investment of $ 1.5 million in an unconsolidated entity.

The Company is expected to make the investment during 2025.

Deferred Consideration

The following table provides a reconciliation of the beginning and ending balance of the Company's deferred consideration liabilities related to completed acquisitions:

(in thousands) Deferred Consideration Liabilities

December 31, 2024 $ 10,685

Addition of deferred consideration (Related to acquisition, see Note 2 )

Accretion of contingent consideration 1,006

Payment of contingent consideration ( 400 )

March 31, 2025 $ 17,791

Addition of contingent consideration (Related to acquisition, see Note 2 )

Accretion of deferred consideration 2,039

Payment of deferred consideration ( 752 )

June 30, 2025 $ 16,358

Legal Proceedings

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The Complaint seeks to certify a class of affected businesses and an award of $ 5,000 per violation of the Act.

On January 24, 2025, the court preliminarily approved the settlement agreement entered into by the parties wherein defendants agree to pay $ 19.5 million to settle this litigation.

Any contribution toward the settlement by the Company will be nominal, and will not have any material impact on the Company's results of operations, financial conditions or cash flows.

As of June 30, 2025, the court granted final approval of the settlement agreement wherein the defendants agree to pay $ 19.5 million to settle this litigation on a class basis.

There was no contribution from the Company towards this settlement agreement.

Concentration of Risks

While providing SMB Acquiring, B2B Payables, and Enterprise Payments processing services, Priority manages funds that are held on behalf of its customers.

Because Priority is not a member bank, these customer funds are held in bank accounts maintained with member banks pursuant to sponsorship agreements which require, among other things, that the Company abide by the by-laws and regulations of the card associations and MTL regulators.

As of March 31, 2025, the Company's customer account balances of $ 964.2 million are maintained in accounts with certain FIs which are eligible to pass-through insurance subject to FDIC rules and regulations (refer to Note 4.

Settlement Assets and Customer/Subscriber Account Balances and Related Obligations ).

While providing payment processing services, Priority manages funds that are held on behalf of its customers.

Because Priority is not a member bank, these customer funds are held in bank accounts maintained with member banks pursuant to sponsorship agreements which require, among other things, that the Company abide by the laws and regulations of the card associations and MTL regulators.

As of June 30, 2025, the Company's customer account balances of $ 1,095.5 million are maintained in accounts with certain FIs which are eligible to pass-through insurance subject to FDIC rules and regulations (refer to Note 4.

Settlement Assets and Obligations ).

A majority of the Company's cash, restricted cash and off-balance sheet settlement funds are held in certain FIs, substantially all of which is in excess of FDIC limits.

The Company does not believe it is exposed to any significant credit risk from these transactions.

Fair Value Measurements

The Company's contingent consideration liabilities derived from business combinations are classified within Level 3 of the fair value hierarchy due to the uncertainty of the fair value measurement created by the absence of quoted market prices, the inherent lack of liquidity and unobservable inputs used to measure fair value which require judgement.

The Company uses valuation techniques including discounted cash flow analysis based on cash flow projections and Monte Carlo simulations to estimate fair value based on projection period and assumed growth rates.

A change in inputs in the valuation techniques used might result in a significantly higher or lower fair value measurement than what is reported.

The current portion of contingent consideration is included in accounts payable and accrued expenses on the Company's Unaudited Consolidated Balance Sheets and the noncurrent portion of contingent consideration is included in other noncurrent liabilities on the Company's Unaudited Consolidated Balance Sheets.

The deferred consideration derived from an acquisition is currently recorded at contractual amount and the fair valuation of the same is in process.

Liabilities measured at fair value on a recurring basis consisted of the following:

(in thousands) Fair Value Hierarchy March 31, 2025 December 31, 2024

Contingent /deferred consideration, current portion Level 3 $ 3,774 $ 3,891

Contingent/deferred consideration, noncurrent portion Level 3 14,017 6,794

Total contingent/deferred consideration $ 17,791 $ 10,685

During the three months ended March 31, 2025, there were no transfers into, out of, or between levels of the fair value hierarchy.

Fair Value Disclosures

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Substantially all of the Company's notes receivable are secured, and the Company provides for allowances when it believes that certain notes receivable may not be collectible.

The carrying value of the Company's notes receivable, net approximates fair value and was approximately $ 8.7 million and $ 8.6 million at March 31, 2025 and December 31, 2024, respectively.

On the fair value hierarchy, Level 3 inputs are used to estimate the fair value of these notes receivable.

The carrying value of the Company's notes receivable, net approximates fair value and was approximately $ 10.0 million and $ 8.6 million at June 30, 2025 and December 31, 2024, respectively and is within the Level 3 of the fair value hierarchy.

Debt Obligations

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Debt Obligations ) are reflected in the Company's Unaudited Consolidated Balance Sheets at carrying value since the Company did not elect to remeasure debt obligations to fair value at the end of each reporting period.

The fair value of the term facility was estimated to be $ 935.5 million and $ 944.4 million at March 31, 2025 and December 31, 2024, respectively, and was estimated using binding and non-binding quoted prices in an active secondary market, which considers the credit risk and market related conditions, and is within Level 2 of the fair value hierarchy.

The carrying values of the other long-term debt obligations approximate fair value due to mechanisms in the credit agreements that adjust the applicable interest rates and the lack of a market for these debt obligations.

The fair value of the term facility was estimated to be $ 936.7 million and $ 944.4 million at June 30, 2025 and December 31, 2024, respectively, and was estimated using binding and non-binding quoted prices in an active secondary market, which considers the credit risk and market related conditions, and is within Level 2 of the fair value hierarchy.

During the three and six months ended June 30, 2025, there were no transfers into, out of, or between levels of the fair value hierarchy.

Segment Information

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• B2B Payments :

Provides market-leading AP automation solutions to corporations, software partners and industry leading FIs (including Citibank, Visa and Mastercard) in addition to improving cash flows by providing instant access to working capital.

Provides market-leading AP automation solutions to corporations, software partners and industry leading FIs in addition to improving cash flows by providing instant access to working capital.

• Enterprise Payments :

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The Company's chief operating decision makers ("CODM") are our CEO and CFO.

Historically, the CODM used operating income (loss) as the measure of segment profit or loss to allocate resources.

However, during the quarter ended June 30, 2024, the segment performance measure was updated to adjusted earnings before interest expense, income tax and depreciation and amortization expenses ("Adjusted EBITDA") to have consistent measure of results across the organization.

The CODM uses adjusted earnings before interest expense, income tax and depreciation and amortization expenses ("Adjusted EBITDA") as the measure of segment profit or loss to allocate resources.

Adjusted EBITDA represents EBITDA (i.e.

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Segment level assets information is not provided or subject to review by the CODM and therefore not provided.

Due to the recent acquisitions, growth, implementation of a shared services model and management of a single unified commerce engine across our payments infrastructure, the costs of operating overhead and shared services became less identifiable at the segment level.

Therefore, the process of review of the CODM was updated during the quarter ended June 30, 2024.

Operating overhead and shared costs are managed centrally and included in the corporate segment.

All comparative periods have been recasted to reflect this update.

Information on reportable segments and reconciliations to income before income taxes are as follows:

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

(in thousands) SMB Payments B2B

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Revenue from external customers $ 162,788 $ 24,668 $ 52,356 $ 239,812

Intersegment revenues (elimination) ( 449 ) ( 324 ) ( 293 ) ( 1,066 )

Intersegment revenues 442 365 302 1,109

163,230 25,033 52,658 240,921

Elimination of intersegment revenues ( 1,109 )

Total consolidated revenues 239,812

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Other segment items 3

Segment Adjusted EBITDA $ 27,749 $ 3,770 $ 45,558 $ 77,077

Reconciliation of Segment Adjusted EBITDA to income (loss) before income taxes

Segment Adjusted EBITDA $ 77,077

Adjustment for corporate items 4

Intersegment revenue elimination ( 1,109 )

Depreciation and amortization ( 14,093 )

Interest expense ( 23,054 )

Selling, general and administrative (non-recurring) ( 395 )

Non-cash stock based compensation ( 3,206 )

Income before income taxes $ 15,302

(1) The significant expense categories and amounts align with the segment level information regularly provided to the CODM.

(2) Other operating expenses including salary and employee benefits, and selling, general and administrative expenses.

(3) Other segment items for each reportable segment include other income, net, and stock based compensation expense.

(4) Adjustment for corporate items include:

(in thousands) Three Months Ended June 30, 2025

Elimination of cost of services (excludes depreciation and amortization) $ 1,105

Other operating expenses 2

Other items 5

(5) Other items include other income net, stock based compensation expense, and selling general and administrative (non-recurring expense)

(in thousands) Other specified segment disclosure

Three Months Ended June 30, 2025

SMB Payments B2B

Payments Enterprise Payments Total

Depreciation and amortization $ 6,633 $ 1,262 $ 4,941 $ 12,836

Six Months Ended June 30, 2025

(in thousands) SMB Payments B2B

Payments Enterprise Payments Total

Revenue from external customers $ 314,029 $ 48,356 $ 102,057 $ 464,442

Intersegment revenue 891 595 689 2,175

314,920 48,951 102,746 466,617

Elimination of intersegment revenues ( 2,175 )

Total consolidated revenues 464,442

Cost of services (excludes depreciation and amortization) 1

( 246,386 ) ( 34,376 ) ( 6,160 )

Other operating expenses 1,2

( 16,580 ) ( 7,534 ) ( 9,066 )

Other segment items 3

1,500 245 481

Segment Adjusted EBITDA $ 53,454 $ 7,286 $ 88,001 $ 148,741

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(2) Other operating expenses including salary and employee benefits, and selling, general and administrative expenses.

(3) Other segment items for each reportable segment include other income, net, intersegment revenue and stock based compensation expense.

(3) Other segment items for each reportable segment include other income, net, and stock based compensation expense.

(4) Adjustment for corporate items include:

(in thousands) March 31, 2025

(in thousands) Six Months Ended June 30, 2025

Elimination of cost of services (excludes depreciation and amortization) $ 2,170

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(in thousands) Other specified segment disclosure

Three Months Ended March 31, 2025

Six Months Ended June 30, 2025

SMB Payments B2B

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Depreciation and amortization $ 13,258 $ 2,523 $ 9,583 $ 25,364

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

(in thousands) SMB Payments B2B

1 unchanged sentence

Revenue from external customers $ 154,769 $ 21,614 $ 43,484 $ 219,867

Intersegment revenue (eliminations) ( 254 ) ( 229 ) ( 137 ) ( 620 )

Intersegment revenues 332 267 186 785

155,101 21,881 43,670 220,652

Elimination of intersegment revenues ( 785 )

Total consolidated revenues 219,867

11 unchanged sentences

Interest expense ( 21,710 )

Debt modification and extinguishment expenses ( 8,623 )

Selling, general and administrative (non-recurring) ( 636 )

3 unchanged sentences

(2) Other operating expenses including salary and employee benefits, and selling, general and administrative expenses.

(3) Other segment items for each reportable segment include other income, net, intersegment revenue and stock based compensation expense.

(3) Other segment items for each reportable segment include other income, net, and stock based compensation expense.

(4) Adjustment for corporate items include:

(in thousands) March 31, 2024

(in thousands) Three Months Ended June 30, 2024

Elimination of cost of services (excludes depreciation and amortization) $ 783

3 unchanged sentences

(in thousands) Other specified segment disclosure

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

SMB Payments B2B

1 unchanged sentence

Depreciation and amortization $ 8,541 $ 1,261 $ 4,087 $ 13,889

Six Months Ended June 30, 2024

(in thousands) SMB Payments B2B

Payments Enterprise Payments Total

Revenue from external customers $ 298,516 $ 42,729 $ 84,341 $ 425,586

Intersegment revenue 589 496 319 1,404

299,105 43,225 84,660 426,990

Elimination of intersegment revenues ( 1,404 )

Total consolidated revenues 425,586

Cost of services (excludes depreciation and amortization) 1

( 231,585 ) ( 31,469 ) ( 5,761 )

Other operating expenses 1,2

( 14,714 ) ( 8,706 ) ( 7,266 )

Other segment items 3

Segment Adjusted EBITDA $ 53,620 $ 3,276 $ 71,971 $ 128,867

Reconciliation of Segment Adjusted EBITDA to income (loss) before income taxes

Segment Adjusted EBITDA $ 128,867

Adjustment for corporate items 4

Intersegment revenue elimination ( 1,404 )

Depreciation and amortization ( 30,497 )

Interest expense ( 42,590 )

Debt modification and extinguishment expenses ( 8,623 )

Selling, general and administrative (non-recurring) ( 1,435 )

Non-cash stock based compensation ( 3,462 )

Income before income taxes $ 11,284

(1) The significant expense categories and amounts align with the segment level information regularly provided to the CODM.

(2) Other operating expenses including salary and employee benefits, and selling, general and administrative expenses.

(3) Other segment items for each reportable segment include other income, net, and stock based compensation expense.

(4) Adjustment for corporate items include:

(in thousands) Six Months Ended June 30, 2024

Elimination of cost of services (excludes depreciation and amortization) $ 1,400

Other operating expenses 2

Other items 5

(5) Other items include other income net, stock based compensation expense, and selling general and administrative (non-recurring expense)

(in thousands) Other specified segment disclosure

Six Months Ended June 30, 2024

SMB Payments B2B

Payments Enterprise Payments Total

Depreciation and amortization $ 17,127 $ 2,731 $ 8,126 $ 27,984

Earnings (Loss) per Common Share

The following tables set forth the computation of the Company's basic and diluted earnings (loss) per common share:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands except per share amounts) 2025 2024 2025 2024

9 unchanged sentences

Diluted Earnings (loss) per share $ 0.14 $ ( 0.23 ) $ 0.24 $ ( 0.33 )

(1) For the three months ended March 31, 2024, the weighted-average common shares outstanding includes 1,803,841 warrants.

(1) For the three and six months ended June 30, 2024, the weighted-average common shares outstanding includes 1,803,841 warrants.

These shares of common stock had an exercise price of $ 0.001 and were exercised on January 14, 2025.

The warrants are considered to be equity contracts indexed in the Company's own shares and therefore were recorded at their inception date relative fair value and are included in additional paid-in capital on the Company's Unaudited Consolidated Balance Sheets.

For the three months ended March 31, 2025, the Company had 1.1 million dilutive securities that were included in the Company's diluted earnings per share.

For the three months ended March 31, 2024, all potentially dilutive securities were anti-dilutive, so diluted net loss per share was equivalent to basic net loss per share.

For the three and six months ended June 30, 2025, the Company had 0.9 million and 1.1 million, respectively, dilutive securities that were included in the Company's diluted earnings per share.

For the three and six months ended June 30, 2024, all potentially dilutive securities were anti-dilutive, so diluted net loss per share was equivalent to basic net loss per share.

Anti-dilutive securities that were excluded from the Company's earnings (loss) per common share are as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2025 2024 2025 2024

Restricted stock awards (1)

Liability-classified restricted stock units — — — —

Outstanding stock option awards (1)

1 unchanged sentence

(1) Granted under the 2018 Plan.

Subsequent Events

We have evaluated subsequent events and determined that no events or transactions met the definition of a subsequent event for purposes of recognition or disclosure in the accompanying unaudited consolidated financial statements except as disclosed in Note 9 Income Taxes and included herein.

On July 31, 2025, the Company entered into a credit agreement which provides 1) a $ 1,000 million senior secured first lien term loan facility and 2) a $ 100.0 million senior secured revolving credit facility.

Proceeds from the term loan were used to refinance the existing credit facilities under the 2024 Credit Agreement, to accelerate payments of certain deferred considerations related to prior acquisitions, acquisition of non-controlling interests in one of the Company's subsidiaries and the remainder will be used for corporate purposes.

The revolving credit facility remained undrawn.

The Company is in the process of evaluating this transaction in accordance with ASC 470.

On July 31, 2025, the Company accelerated the timing of payment of deferred consideration related to the Plastiq acquisition.

The total payment was $ 19.0 million.

On July 31, 2025, the Company purchased the noncontrolling interest in it's subsidiary Plastiq, Powered by Priority, LLC., for $ 6.0 million.

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 1. Financial Statements