What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-11 · 113 added, 64 removed, 154 unchanged (53% of the section changed)

34 unchanged sentences

Terms Used in this Quarterly Report on Form 10-Q

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to the terms "Company," "Priority," "we," "us" and "our" refer to Priority Technology Holdings, Inc.

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to the terms "Company," "Priority Commerce," "we," "us" and "our" refer to Priority Technology Holdings, Inc.

and its consolidated subsidiaries.

Results of Operations

This section includes certain components of our results of operations for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

This section includes certain components of our results of operations for the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025.

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, 2025.

For the three months ended March 31, 2026, our consolidated revenue of $249.6 million increased by $24.9 million, or 11.1%, from $224.6 million for the three months ended March 31, 2025.

This overall increase was mainly driven by increase in total card processing dollar value and total card transaction count in our Merchant Solutions segment, an increase in number of billed clients and higher interest income which is partially offset by lower new enrollments in our Treasury Solutions segment, and, increases in buyer funded card processing dollar value, supplier funded issuing dollar value, incentive income, and ACH transactions count in our Payables Segment.

For the three months ended June 30, 2026, our consolidated revenue of $262.3 million increased by $22.4 million, or 9.4%, from $239.8 million for the three months ended June 30, 2025.

This overall increase was mainly driven by increase in total card processing dollar value which was partially offset by lower total card transaction count in our Merchant Solutions segment, increases in buyer funded card processing dollar value, and supplier funded issuing dollar value which was partially offset by lower ACH transactions count in our Payables Segment, and, an increase in number of billed clients and higher interest income which is partially offset by lower new enrollments in our Treasury Solutions segment.

For the six months ended June 30, 2026, our consolidated revenue of $511.8 million increased by $47.4 million, or 10.2%, from $464.4 million for the six months ended June 30, 2025.

This overall increase was mainly driven by increase in total card processing dollar value in our Merchant Solutions segment, increases in buyer funded card processing dollar value, supplier funded issuing dollar value, incentive income, and ACH transactions count in our Payables Segment, and, an increase in number of billed clients and higher interest income which was partially offset by lower new enrollments in our Treasury Solutions segment.

The following table presents our revenues by type:

(in thousands) Three Months Ended March 31,

2026 2025 $ Change

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

2026 2025 $ Change 2026 2025 $ Change

Revenue Type:

5 unchanged sentences

Merchant card fees

Merchant card fees revenue for the three months ended March 31, 2026 was $185.9 million an increase of $18.9 million or 11.3%, from $167.1 million for the three months ended March 31, 2025.

The increase was primarily driven by an increase in total card dollar value, and the transaction count processed by the Company.

Merchant card fees revenue for the three months ended June 30, 2026, was $199.1 million an increase of $18.6 million or 10.3%, from $180.5 million for the three months ended June 30, 2025.

The increase was primarily driven by an increase in total card dollar value which was partially offset by lower total card transaction count processed by the Company.

Merchant card fees revenue for the six months ended June 30, 2026, was $385.0 million an increase of $37.5 million or 10.8%, from $347.6 million for the six months ended June 30, 2025.

The increase was primarily driven by an increase in total card dollar value.

Money transmission services

Money transmission services for the three months ended March 31, 2026 was $41.7 million, an increase of $4.3 million, or 11.5%, from $37.4 million for the three months ended March 31, 2025.

Money transmission services for the three months ended June 30, 2026, was $42.0 million, an increase of $2.7 million, or 6.9%, from $39.3 million for the three months ended June 30, 2025.

This increase was primarily driven by an increase in average billed clients which was partially offset by lower new customer enrollments.

Money transmission services for the six months ended June 30, 2026, was $83.7 million, an increase of $7.0 million, or 9.1%, from $76.7 million for the six months ended June 30, 2025.

This increase was primarily driven by an increase in average billed clients which was partially offset by lower new customer enrollments.

Outsourced services and other services revenue

Outsourced services and other services revenue of $19.8 million for the three months ended March 31, 2026 increased by $2.8 million, or 16.6%, from $17.0 million for the three months ended March 31, 2025, primarily due to growth in interest income from higher balances of permissible investments driven by higher account balances offset by reduction in interest rates.

Equipment revenue of $2.1 million for the three months ended March 31, 2026 decreased by $1.0 million, or 33.8% from $3.1 million for the three months ended March 31, 2025.

Outsourced services and other services revenue of $18.9 million for the three months ended June 30, 2026, increased by $2.0 million, or 11.9%, from $16.9 million for the three months ended June 30, 2025, primarily due to growth in interest income from higher balances of permissible investments driven by higher account balances offset by reduction in interest rates.

Outsourced services and other services revenue of $38.7 million for the six months ended June 30, 2026, increased by $4.8 million, or 14.3%, from $33.9 million for the six months ended June 30, 2025, primarily due to growth in interest income from higher balances of permissible investments driven by higher account balances offset by reduction in interest rates.

Equipment revenue of $2.3 million for the three months ended June 30, 2026, decreased by $0.9 million, or 27.6% from $3.2 million for the three months ended June 30, 2025.

The decrease was primarily due to lower point-of-sale equipment sales caused by a decrease in demand from merchants.

Equipment revenue of $4.4 million for the six months ended June 30, 2026, decreased by $1.9 million, or 30.7% from $6.3 million for the six months ended June 30, 2025.

The decrease was primarily due to lower point-of-sale equipment sales caused by a decrease in demand from merchants.

Operating expenses were as follows:

(in thousands) Three Months Ended March 31,

2026 2025 $ Change

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

2026 2025 $ Change 2026 2025 $ Change

Operating expenses

5 unchanged sentences

Cost of revenue (excludes depreciation and amortization)

Cost of revenue (excludes depreciation and amortization) of $150.8 million for the three months ended March 31, 2026 increased by $13.4 million, or 9.8%, from $137.4 million for the three months ended March 31, 2025, primarily due to the corresponding increase in revenues.

Cost of revenue (excludes depreciation and amortization) of $162.4 million for the three months ended June 30, 2026, increased by $15.0 million, or 10.1%, from $147.4 million for the three months ended June 30, 2025, primarily due to the corresponding increase in revenues.

Cost of revenue (excludes depreciation and amortization) of $313.1 million for the six months ended June 30, 2026, increased by $28.4 million, or 10.0%, from $284.8 million for the six months ended June 30, 2025, primarily due to the corresponding increase in revenues.

Salary and employee benefits

Salary and employee benefits expense of $28.5 million for the three months ended March 31, 2026 increased by $2.7 million, or 10.7%, from $25.8 million for the three months ended March 31, 2025, primarily due to merit increases, increased headcount to support overall growth of the Company and from the acquisition of Sila, Boom and DMS, and increased stock based compensation related to long term incentive awards to executives.

Salary and employee benefits expense of $29.2 million for the three months ended June 30, 2026, increased by $2.1 million, or 7.7%, from $27.1 million for the three months ended June 30, 2025, primarily due to merit increases, and increased headcount to support overall growth of the Company and from the acquisition related activity.

Salary and employee benefits expense of $57.7 million for the six months ended June 30, 2026, increased by $4.8 million, or 9.2%, from $52.8 million for the six months ended June 30, 2025, primarily due to merit increases, and increased headcount to support overall growth of the Company and from the acquisition related activity.

Depreciation and amortization expense

Depreciation and amortization expense of $17.6 million for the three months ended March 31, 2026 increased by $3.8 million, or 27.9%, from $13.8 million for the three months ended March 31, 2025, primarily due to the addition of intangible assets from the Letus, Sila, Boom and DMS acquisitions and software capitalization.

Depreciation and amortization expense of $20.9 million for the three months ended June 30, 2026, increased by $6.8 million, or 48.3%, from $14.1 million for the three months ended June 30, 2025, primarily due to the addition of intangible assets from the acquisition related activity and software capitalization.

Depreciation and amortization expense of $38.5 million for the six months ended June 30, 2026, increased by $10.6 million, or 38.2%, from $27.9 million for the six months ended June 30, 2025, primarily due to the addition of intangible assets from the acquisition related activity and software capitalization.

Selling, general and administrative

Selling, general and administrative expenses of $19.2 million for the three months ended March 31, 2026 increased by $4.1 million, or 27.4%, from $15.1 million for the three months ended March 31, 2025, primarily due to increase in professional and legal charges related to the Company's go-private project, increased marketing and software expenses to support overall growth and cloud migration, expenses related to acquired businesses and assets, which was partially offset by legal and other expenses related to the Company's secondary offering of common shares incurred during the quarter ended March 31, 2025.

Selling, general and administrative expenses of $16.8 million for the three months ended June 30, 2026, increased by $2.9 million, or 20.8%, from $13.9 million for the three months ended June 30, 2025, primarily due to increase in legal fees related to the Company's on-going special committee process, and increased marketing, telecommunications and software expenses to support overall growth and cloud migration, which was partially offset by decreased accounting expenses.

Selling, general and administrative expenses of $36.1 million for the six months ended June 30, 2026, increased by $7.0 million, or 24.3%, from $29.0 million for the six months ended June 30, 2025, primarily due to increase in professional and legal charges related to the Company's on-going special committee process, increased marketing, telecommunications and

software expenses to support overall growth and cloud migration, expenses related to acquired businesses and assets, which was partially offset by decreased accounting expenses.

Other Expense, net

Other expense, net were as follows:

(in thousands) Three Months Ended March 31,

2026 2025 $ Change

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

2026 2025 $ Change 2026 2025 $ Change

Other expense

4 unchanged sentences

Interest expense

Interest expense of $21.0 million for the three months ended March 31, 2026 decreased by $2.2 million, or (9.3)%, from $23.2 million for the three months ended March 31, 2025, due to decreased SOFR rates and beneficial changes in margin from the recent refinancing which was partially offset by increased outstanding balances of the 2024 Credit Agreement and the Residual Finance credit facility established during the quarter ended September 30, 2025.

Interest expense of $21.1 million for the three months ended June 30, 2026, decreased by $2.0 million, or 8.7%, from $23.1 million for the three months ended June 30, 2025, due to decreased SOFR rates and beneficial changes in margin from the recent refinancing which was partially offset by increased outstanding balances of the 2024 Credit Agreement and the Residual Finance Credit Facility established during the quarter ended September 30, 2025.

Interest expense of $42.1 million for the six months ended June 30, 2026, decreased by $4.2 million, or 9.0%, from $46.2 million for the six months ended June 30, 2025, due to decreased SOFR rates and beneficial changes in margin from the recent refinancing which was partially offset by increased outstanding balances of the 2024 Credit Agreement and the Residual Finance Credit Facility established during the quarter ended September 30, 2025.

Income tax expense

Income tax expense was as follows:

(in thousands) Three Months Ended March 31,

2026 2025 $ Change

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

2026 2025 $ Change 2026 2025 $ Change

Income before income taxes $ 13,637 $ 15,302 $ (1,665) $ 27,043 $ 25,820 $ 1,223

13 unchanged sentences

Merchant Solutions

(in thousands) Three Months Ended March 31,

2026 2025 Change

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

2026 2025 Change 2026 2025 Change

Revenues $ 175,778 $ 163,230 $ 12,548 $ 337,564 $ 314,920 $ 22,644

3 unchanged sentences

Total card transaction count 228,600 230,721 (2,121) 440,039 439,674 365

Revenue from our Merchant Solutions segment was $161.8 million for the three months ended March 31, 2026, compared to $151.7 million for the three months ended March 31, 2025.

The increase of $10.1 million, or 6.7%, was primarily driven by an increase in merchant card fee rate, increased total card processing dollar value and total card transaction count.

The Company's merchant card fee revenue from the Merchant Solutions segment ($158.5 million for three months ended March 31, 2026 and $147.5 million for the three months ended March 31, 2025) as a percentage of total card processing dollar value during the three months ended March 31, 2026 increased to 0.87% from 0.83% as compared to the three months ended March 31, 2025.

Revenue from our Merchant Solutions segment was $175.8 million for the three months ended June 30, 2026, compared to $163.2 million for the three months ended June 30, 2025.

The increase of $12.5 million, or 7.7%, was primarily driven by acquisition related activity, an increase in merchant card fee rate, and increased total card processing dollar value which was partially offset by a decrease in total card transaction count.

The Company's merchant card fee revenue from the Merchant Solutions segment ($171.9 million for three months ended June 30, 2026 and $158.8 million for the three months ended June 30, 2025) as a percentage of total card processing dollar value during the three months ended June 30, 2026 increased to 0.88% from 0.84% as compared to the three months ended June 30, 2025.

Revenue from our Merchant Solutions segment was $337.6 million for the six months ended June 30, 2026, compared to $314.9 million for the six months ended June 30, 2025.

The increase of $22.6 million, or 7.2%, was primarily driven by acquisition related activity, an increase in merchant card fee rate, and increased total card processing dollar value.

The Company's merchant card fee revenue from the Merchant Solutions segment ($330.4 million for six months ended June 30, 2026 and $306.3 million for the six months ended June 30, 2025) as a percentage of total card processing dollar value during the six months ended June 30, 2026 increased to 0.87% from 0.84% as compared to the six months ended June 30, 2025.

Adjusted EBITDA

Adjusted EBITDA from our Merchant Solutions segment was $27.7 million for the three months ended March 31, 2026, compared to $25.7 million for the three months ended March 31, 2025.

The increase of $2.0 million, or 7.9% was primarily driven by an increase in revenue, offset by mix related margin compression, certain chargeback losses, and increase in other operating expenses.

(in thousands) Three Months Ended March 31,

2026 2025 Change

Adjusted EBITDA from our Merchant Solutions segment was $30.9 million for the three months ended June 30, 2026, compared to $27.7 million for the three months ended June 30, 2025.

The increase of $3.1 million, or 11.3% was primarily driven by an increase in revenue and the Boom Commerce acquisition, which was partially offset by mix related margin compression, and increase in other operating expenses.

Adjusted EBITDA from our Merchant Solutions segment was $58.6 million for the six months ended June 30, 2026, compared to $53.5 million for the six months ended June 30, 2025.

The increase of $5.2 million, or 9.7% was primarily driven by an increase in revenue and the Boom Commerce acquisition, which was partially offset by mix related margin compression, and increase in other operating expenses.

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

2026 2025 Change 2026 2025 Change

Revenues $ 30,430 $ 25,033 $ 5,397 $ 62,871 $ 48,951 $ 13,920

4 unchanged sentences

ACH transaction count 4,726 4,776 (50) 9,785 9,417 368

Revenue from our Payables segment was $32.4 million for the three months ended March 31, 2026, compared to $23.9 million for the three months ended March 31, 2025.

The increase of $8.5 million, or 35.6% was primarily driven by increased buyer

funded card processing dollar value, certain incentive income, ACH transaction count, supplier funded issuing dollar value, and interest from higher account balances.

Revenue from our Payables segment was $30.4 million for the three months ended June 30, 2026, compared to $25.0 million for the three months ended June 30, 2025.

The increase of $5.4 million, or 21.6% was primarily driven by increased buyer funded card processing dollar value, supplier funded issuing dollar value, and interest from higher account balances which was partially offset by a decrease in ACH transaction count.

Revenue from our Payables segment was $62.9 million for the six months ended June 30, 2026, compared to $49.0 million for the six months ended June 30, 2025.

The increase of $13.9 million, or 28.4% was primarily driven by increased buyer funded card processing dollar value, certain incentive income, ACH transaction count, supplier funded issuing dollar value, and interest from higher account balances.

Adjusted EBITDA

Adjusted EBITDA from our Payables segment of $5.5 million for the three months ended March 31, 2026, compared to $3.5 million for the three months ended March 31, 2025.The increase in Adjusted EBITDA of $1.9 million or 55.1% was contributed by $4.0 million in the supplier funded business (driven by increase in revenues) and $1.5 million in the buyer funded business (driven by increased processing volume which was partially offset by mix related margin compression).

Adjusted EBITDA from our Payables segment was $3.1 million for the three months ended June 30, 2026, compared to $3.8 million for the three months ended June 30, 2025.The decrease in Adjusted EBITDA of $0.7 million or 17.5% was contributed by $0.8 million in the buyer funded business, driven by mix related margin compression, which was partially offset by increased processing volume.

The decrease in Adjusted EBITDA was partially offset by a $0.1 million increase in the supplier funded business, driven by increase in operating income.

Adjusted EBITDA from our Payables segment was $8.6 million for the six months ended June 30, 2026, compared to $7.3 million for the six months ended June 30, 2025.The increase in Adjusted EBITDA of $1.3 million or 17.5% was contributed by $2.3 million in the supplier funded business, driven by increase in revenues and operating income, which was partially offset by a decrease of $1.0 million in the buyer funded business, driven by mix related margin compression partially offset by increased processing volume.

Treasury Solutions

(in thousands) Three Months Ended March 31,

2026 2025 Change

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

2026 2025 Change 2026 2025 Change

Revenues $ 60,519 $ 52,658 $ 7,861 $ 119,359 $ 102,746 $ 16,613

5 unchanged sentences

$ 1,475,537 $ 1,145,715 $ 329,822 $ 1,447,412 $ 1,093,530 $ 353,882

(1) This represents the average total account balance in the Treasury Solutions segment, and excludes the deposits and balances maintained in the Merchant Solutions and Payables segments.

The total account and deposit balances as of March 31, 2026 and 2025, were $1.8 billion and $1.3 billion, respectively.

Revenue from our Treasury Solutions segment was $58.8 million for the three months ended March 31, 2026, compared to $50.1 million for the three months ended March 31, 2025.

The increase of $8.8 million, or 17.5%, was primarily driven by an increase in average billed clients and average total account balances, acquisition of Sila, and growth in interest income due to higher balances of permissible investments offset by a reduction in interest rates and decreased average monthly enrollments.

(1) This represents the average total account balance in the Treasury Solutions segment, and excludes the deposits maintained in the Merchant Solutions and Payables segments.

The total account and deposit balances as of June 30, 2026 and 2025, were $1.8 billion and $1.4 billion, respectively.

Revenue from our Treasury Solutions segment was $60.5 million for the three months ended June 30, 2026, compared to $52.7 million for the three months ended June 30, 2025.

The increase of $7.9 million, or 14.9%, was primarily driven by an increase in average billed clients and average total account balances, the acquisition of Sila, and growth in interest income due to higher balances of permissible investments offset by a reduction in interest rates and decreased average monthly enrollments.

Revenue from our Treasury Solutions segment was $119.4 million for the six months ended June 30, 2026, compared to $102.7 million for the six months ended June 30, 2025.

The increase of $16.6 million, or 16.2%, was primarily driven by an increase in average billed clients and average total account balances, the acquisition of Sila, and growth in interest income due to higher balances of permissible investments offset by a reduction in interest rates and decreased average monthly enrollments.

Adjusted EBITDA

Adjusted EBITDA from our Treasury Solutions segment was $46.7 million for the three months ended March 31, 2026, compared to $42.4 million for the three months ended March 31, 2025.

Adjusted EBITDA from our Treasury Solutions segment was $47.5 million for the three months ended June 30, 2026, compared to $45.6 million for the three months ended June 30, 2025.

The increase of $2.0 million, or 4.3%, was primarily driven by increases in revenues.

(in thousands) Three Months Ended March 31, 2026

Adjusted EBITDA from our Treasury Solutions segment was $94.2 million for the six months ended June 30, 2026, compared to $88.0 million for the six months ended June 30, 2025.

The increase of $6.2 million, or 7.0%, was primarily driven by increases in revenues.

(in thousands) Three Months Ended June 30, 2026

Merchant Solutions Payables Treasury Solutions Corporate Total Consolidated

8 unchanged sentences

Net income $ 9,863

(in thousands) Three Months Ended March 31, 2025

(in thousands) Three Months Ended June 30, 2025

Merchant Solutions Payables Treasury Solutions Corporate Total Consolidated

3 unchanged sentences

Depreciation and amortization (6,633) (1,262) (4,941) (1,257) (14,093)

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

Non-cash stock based compensation 5 (84) (33) (3,094) (3,206)

Income (loss) before taxes $ 21,121 $ 1,634 $ 40,341 $ (47,794) $ 15,302

Income tax expense (4,423)

Net income $ 10,879

(in thousands) Six Months Ended June 30, 2026

Merchant Solutions Payables Treasury Solutions Corporate Total Consolidated

Reconciliation of Adjusted EBITDA to GAAP Measure:

Adjusted EBITDA $ 58,627 $ 8,564 $ 94,184 $ (43,886) $ 117,489

Interest expense (2,229) — (669) (39,169) (42,067)

Depreciation and amortization (23,011) (2,577) (10,500) (2,420) (38,508)

Selling, general and administrative (non-recurring) — — — (5,500) (5,500)

Non-cash stock based compensation — (72) (1) (4,298) (4,371)

Income (loss) before taxes $ 33,387 $ 5,915 $ 83,014 $ (95,273) $ 27,043

Income tax expense (7,420)

Net income $ 19,623

(in thousands) Six Months Ended June 30, 2025

Merchant Solutions Payables Treasury Solutions Corporate Total Consolidated

Reconciliation of Adjusted EBITDA to GAAP Measure:

Adjusted EBITDA $ 53,454 $ 7,286 $ 88,001 $ (41,397) $ 107,344

Interest expense — (1,796) (243) (44,191) (46,230)

Depreciation and amortization (13,258) (2,523) (9,583) (2,506) (27,870)

Debt modification and extinguishment expenses — — — (38) (38)

7 unchanged sentences

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, 2025.

There have been no material changes to these critical accounting policies and estimates as of March 31, 2026.

There have been no material changes to these critical accounting policies and estimates as of June 30, 2026.

Liquidity and Capital Resources

3 unchanged sentences

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 $122.9 million at March 31, 2026 and $61.9 million at March 31, 2025.

As of March 31, 2026, we had cash totaling $92.2 million compared to $47.6 million at March 31, 2025.

These cash balances do not include restricted cash of $16.4 million and $11.5 million at March 31, 2026 and March 31, 2025, 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 $0.5 million and $1.9 million at March 31, 2026 and March 31, 2025, respectively.

At March 31, 2026, we had availability of approximately $100.0 million under our revolving credit facility.

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

(in thousands) Three Months Ended March 31,

Our working capital, defined as current assets less current liabilities, was $151.8 million at June 30, 2026 and $76.7 million at June 30, 2025.

As of June 30, 2026, we had cash totaling $120.3 million compared to $50.6 million at June 30, 2025.

These cash balances do not include restricted cash of $17.4 million and $14.2 million at June 30, 2026 and June 30, 2025, respectively, which reflects cash accounts holding customer settlement funds, cash reserves for potential losses and other contractual restricted cash balances.

The current portion of long-term debt included in current liabilities was $3.1 million and $4.3 million at June 30, 2026 and June 30, 2025, respectively.

At June 30, 2026, we had availability of approximately $100.0 million under our revolving credit facility.

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

(in thousands) Six Months Ended June 30,

Net cash provided by (used in):

2 unchanged sentences

Financing activities 83,230 178,091

Net increase in cash and cash equivalents and restricted cash $ 105,883 $ 47,501

Net (decrease)/increase in cash and cash equivalents and restricted cash $ (64,449) $ 184,026

Cash Provided by Operating Activities

Net cash provided by operating activities was $23.8 million for the three months ended March 31, 2026 compared to $10.0 million for the three months ended March 31, 2025.

Net cash provided by operating activities was $55.3 million for the six months ended June 30, 2026 compared to $27.1 million for the six months ended June 30, 2025.

The $28.2 million increase was driven by an increase in net income and favorable non-cash adjustments and changes in the operating assets and liabilities.

Cash Provided by/(Used in) Investing Activities

Net cash provided by investing activities was $11.4 million for the three months ended March 31, 2026, compared to $9.7 million of cash used in investing activities for the three months ended March 31, 2025.

For the three months ended March 31, 2026, investing activities included the $25.0 million redemption of short-term investments of MTL funds offset by $8.1 million related to net funding of new loans to ISOs and $5.5 million additions to property, equipment and software.

For the three months ended March 31, 2025, net cash used in investing activities included additions to property, equipment and software of $5.1 million, $0.1 million related to net funding of new loans to ISOs and $4.5 million related to the acquisition of a business.

Cash Provided by Finance Activities

Net cash provided by financing activities was $70.6 million and $47.3 million for the three months ended March 31, 2026 and 2025, respectively.

The net cash provided by financing activities for the three months ended March 31, 2026, included borrowings under the Residual Finance credit facility of $6.8 million and changes in the net obligations for funds held on the behalf of customers of $65.0 million, offset by $0.2 million of cash used for the repayment of the Residual Finance credit facility, $0.9 million of cash used to purchase shares withheld for taxes, and $0.1 million for a deferred consideration payment.

The net cash used in financing activities for the three months ended March 31, 2025, included changes in the net obligations for funds held on the behalf of customers of $59.1 million and proceeds from the exercise of stock options of $0.1 million offset by $10.0 million of cashed used for the unscheduled repayment of the term loan principal for the 2024 Credit Agreement, $1.5 million of cash used for shares withheld for taxes and $0.4 million of payments of contingent consideration.

Cash Used in Investing Activities

Net cash used in investing activities was $203.0 million for the six months ended June 30, 2026, compared to $21.1 million of cash used in investing activities for the six months ended June 30, 2025.

For the six months ended June 30, 2026, investing activities included the $12.6 million additions to property, equipment and software, $3.0 million related to net funding of new loans to ISOs and ISVs, $185.0 million net short-term investments of MTL funds, and $2.4 million related to residual purchases and investments in unconsolidated entities.

For the six months ended June 30, 2025, net cash used in investing activities included additions to property, equipment and software of $13.0 million, $1.4 million related to net funding of new loans to ISOs and ISVs, $4.5 million related to the acquisition of a business and $2.3 million investments in unconsolidated entities.

Cash Provided by Financing Activities

Net cash provided by financing activities was $83.2 million and $178.1 million for the six months ended June 30, 2026 and 2025, respectively.

The net cash provided by financing activities for the six months ended June 30, 2026, included borrowings under the Residual Finance credit facility of $7.7 million and changes in the net obligations for funds held on the behalf of customers of $77.4 million, offset by $0.2 million of cash used for the repayment of the Residual Finance credit facility, $1.5 million of cash used to purchase shares withheld for taxes, and $0.1 million for a deferred consideration payment.

The net cash used in financing activities for the six months ended June 30, 2025, included changes in the net obligations for funds held on the behalf of customers of $190.9 million and proceeds from the exercise of stock options of $0.3 million offset by $10.0 million of cash used for the unscheduled repayment of the term loan principal, $2.3 million of cash used to purchase shares withheld for taxes and $0.8 million for payments of deferred consideration.

Long-term Debt

As of March 31, 2026, we had outstanding debt obligations, including the current portion and unamortized debt discount of $1.06 billion, compared to $1.06 billion at December 31, 2025, resulting in an increase due to net borrowings from the Residual Finance credit facility.

The debt balance at March 31, 2026 consisted of $1.02 billion outstanding under the 2024 Credit Agreement's (as amended) term facility and $0.04 billion under the Residual Finance Credit Facility's term facility offset by $15.6 million of unamortized debt discounts and issuance costs.

As of June 30, 2026, we had outstanding debt obligations, including the current portion and unamortized debt discount of $1,062.9 million, compared to $1,055.4 million at December 31, 2025, resulting in an increase due to net borrowings from the Residual Finance credit facility.

The debt balance at June 30, 2026 consisted of $1,020.0 million outstanding under the 2024 Credit Agreement's (as amended) term facility and $42.9 million under the Residual Finance Credit Facility's term facility offset by $15.1 million of unamortized debt discounts and issuance costs.

Minimum amortization of the 2024 Credit Agreement's term facility are equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal, with the balance paid upon maturity.

8 unchanged sentences

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