Priority Technology Holdings, Inc. Reports Third Quarter Financial Results
Priority Technology Holdings, Inc. (NASDAQ: PRTH) ("Priority Commerce" or the "Company"), delivers payments and banking solutions that power connected commerce. Through a unified platform of payables,...
Third Quarter Performance Driven by Strength of Unified Commerce Platform
ALPHARETTA, Ga.: Priority Technology Holdings, Inc. (NASDAQ: PRTH) ("Priority Commerce" or the "Company"), delivers payments and banking solutions that power connected commerce. Through a unified platform of payables, merchant services, and banking and treasury, Priority Commerce helps businesses manage money more effectively and unlock growth. The Priority Commerce Engine accelerates cash flow, improves working capital, reduces costs, and creates new revenue opportunities. Today, the Company has announced its third quarter 2026 financial results including strong year-over-year revenue growth.
Highlights of Consolidated Results and Additional Information1
Third Quarter 2026 Financial Highlights compared with Third Quarter 2025
- Revenue of $268.6 million increased 11.3% from $241.4 million, including organic growth of 9.2%
- Gross profit of $97.0 million increased 8.1% from $89.8 million
- Adjusted gross profit (a non-GAAP measure2) of $102.7 million increased 8.4% from $94.8 million
- Gross profit margin of 36.1% decreased by nearly 110 basis points from 37.2%
- Adjusted gross profit margin (a non-GAAP measure2) of 38.2% decreased by nearly 100 basis points from 39.2%
- Operating income of $35.9 million decreased 5.0% from $37.8 million
- Net Income of $12.2 million decreased 55.7% from $27.6 million
- Adjusted EBITDA (a non-GAAP measure2) of $60.9 million increased 5.5% from $57.8 million
- Diluted EPS of $0.14 decreased by $0.20, or by 58.8%, from $0.34
- Adjusted Diluted EPS (a non-GAAP measure2) of $0.30 increased by $0.02, or 7.1%, from $0.28
(1) | Certain amounts/percentages may not compute accurately due to rounding. | |
(2) | See "Non-GAAP Financial Measures" and the reconciliations of Adjusted Gross Profit (non-GAAP), Adjusted Gross Profit Margin (non-GAAP), Adjusted EBITDA (non-GAAP), and Adjusted EPS- diluted (non-GAAP) to their most comparable GAAP measures provided within this document for additional information. |
Announced Go-Private Transaction
As previously announced on September 21, 2026, Priority Commerce entered into an Agreement and Plan of Merger (the “Merger Agreement”) under which certain affiliates of WD Capital Partners Parent Inc. will acquire the outstanding common stock of Priority Commerce for $8.05 per share in cash and the Company will become privately held (the "Transaction"). The Company expects to complete the Transaction in the first half of 2027, subject to fulfillment of customary closing conditions, including approval of Priority Commerce stockholders and receipt of required regulatory approvals.
Business Outlook and Earnings Conference Call
In light of the pending Transaction, Priority Commerce will not be providing forward-looking guidance or updates to previously issued guidance and will not host an earnings conference call or webcast for its third quarter fiscal 2026 results and does not expect to do so for any future quarters. Earnings materials are publicly available on the Investor Relations page of Priority Commerce's website at ir.prioritycommerce.com.
Non-GAAP Financial Measures
This communication includes certain non-GAAP financial measures that we regularly review to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions. We believe these non-GAAP measures help to illustrate the underlying financial and business trends relating to our results of operations and comparability between current and prior periods. We also use these non-GAAP measures to establish and monitor operational goals. However, these non-GAAP measures are not superior to or a substitute for prominent measurements calculated in accordance with GAAP. Rather, the non-GAAP measures are meant to be a complement to understanding measures prepared in accordance with GAAP.
Adjusted Gross Profit and Adjusted Gross Profit Margin
The Company's adjusted gross profit metric represents revenues less cost of revenue (excluding depreciation and amortization). Adjusted gross profit margin is adjusted gross profit divided by revenues. We review these non-GAAP measures to evaluate our underlying profit trends. The reconciliation of adjusted gross profit to its most comparable GAAP measure is provided below:
(in thousands) | Three Months Ended |
| Nine Months Ended | ||||||||||||
|
| 2026 |
|
|
| 2025 |
|
|
| 2026 |
|
|
| 2025 |
|
Revenues | $ | 268,623 |
|
| $ | 241,439 |
|
| $ | 780,437 |
|
| $ | 705,881 |
|
Cost of revenue (excluding depreciation and amortization) |
| (165,908 | ) |
|
| (146,681 | ) |
|
| (479,053 | ) |
|
| (431,433 | ) |
Adjusted gross profit | $ | 102,715 |
|
| $ | 94,758 |
|
| $ | 301,384 |
|
| $ | 274,448 |
|
Adjusted gross profit margin |
| 38.2 | % |
|
| 39.2 | % |
|
| 38.6 | % |
|
| 38.9 | % |
Depreciation and amortization of revenue generating assets |
| (5,715 | ) |
|
| (4,985 | ) |
|
| (16,458 | ) |
|
| (14,581 | ) |
Gross profit | $ | 97,000 |
|
| $ | 89,773 |
|
| $ | 284,926 |
|
| $ | 259,867 |
|
Gross profit margin |
| 36.1 | % |
|
| 37.2 | % |
|
| 36.5 | % |
|
| 36.8 | % |
EBITDA and Adjusted EBITDA
EBITDA and adjusted EBITDA are performance measures. EBITDA is earnings before interest, income tax, depreciation, and amortization expenses ("EBITDA"). Adjusted EBITDA begins with EBITDA but further excludes certain non-cash costs, such as stock-based compensation and the write-off of the carrying value of investments or other assets, as well as debt extinguishment and modification expenses and other expenses and income items considered non-recurring, such as acquisition integration expenses, certain professional fees, and litigation settlements. We review the non-GAAP adjusted EBITDA measure to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions.
The reconciliation of adjusted EBITDA to its most comparable GAAP measure is provided below:
(in thousands) | Three Months Ended |
| Nine Months Ended | ||||||||||
|
| 2026 |
|
| 2025 |
|
|
| 2026 |
|
| 2025 |
|
Net income | $ | 12,223 |
| $ | 27,588 |
|
| $ | 31,846 |
| $ | 46,735 |
|
Interest expense |
| 21,190 |
|
| 22,463 |
|
|
| 63,257 |
|
| 68,693 |
|
Income tax expense (benefit) |
| 4,371 |
|
| (20,201 | ) |
|
| 11,791 |
|
| (13,528 | ) |
Depreciation and amortization |
| 18,231 |
|
| 15,122 |
|
|
| 56,739 |
|
| 42,992 |
|
EBITDA |
| 56,015 |
|
| 44,972 |
|
|
| 163,633 |
|
| 144,892 |
|
Debt modification and extinguishment expenses |
| - |
|
| 12,476 |
|
|
| - |
|
| 12,514 |
|
Selling, general and administrative (non-recurring) |
| 2,905 |
|
| 1,491 |
|
|
| 8,405 |
|
| 4,085 |
|
Non-cash stock-based compensation |
| 1,652 |
|
| 2,327 |
|
|
| 6,023 |
|
| 7,119 |
|
Bargain purchase adjustment/(gain) (non-recurring) |
| 354 |
|
| (3,507 | ) |
|
| 354 |
|
| (3,507 | ) |
Adjusted EBITDA | $ | 60,926 |
| $ | 57,759 |
|
| $ | 178,415 |
| $ | 165,103 |
|
Further detail of certain of these adjustments, and where these items are recorded in our unaudited consolidated statements of operations, is provided below:
(in thousands) | Three Months Ended |
| Nine Months Ended | ||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
Selling, general and administrative expenses (non-recurring): |
|
|
|
|
|
|
| ||||
Legal fees(1) |
| 1,080 |
|
| 833 |
|
| 4,290 |
|
| 2,443 |
Professional, accounting and consulting fees(2) |
| 1,679 |
|
| 115 |
|
| 3,784 |
|
| 1,223 |
Other expenses, net(3) |
| 146 |
|
| 253 |
|
| 331 |
|
| 289 |
Litigation settlement |
| - |
|
| 290 |
|
| - |
|
| 130 |
| $ | 2,905 |
| $ | 1,491 |
| $ | 8,405 |
| $ | 4,085 |
(1) These legal expenses primarily relate to litigation matters, mergers and acquisitions, and other transactions (e.g., the pending Transaction), all of which are non-recurring in nature. |
(2) These professional, accounting, and consulting fees are associated with non-recurring projects, including professional fees and incremental audit fees incurred for valuation and audit work related to the pending Transaction, acquisitions, disposals, and automation initiatives. |
(3) These other expenses primarily include non-recurring director and management fees related to the pending Transaction, as well as non-recurring fees for web and security hosting, and software licenses. |
Adjusted Earnings Per Share (Adjusted EPS)
Adjusted EPS is a performance measure. Adjusted EPS is calculated by dividing adjusted net income attributable to common stockholders by weighted average number of shares outstanding for the respective periods.
Adjusted net income attributable to common stockholders begins with net income attributable to common stockholders adjusted to exclude various items listed below. We believe adjusted EPS is a measure that is useful to investors and management in understanding our ongoing profitability and in analysis of ongoing profitability trends.
(in thousands) |
| Three Months Ended |
| Nine Months Ended | ||||||||||||
|
|
| 2026 |
|
|
| 2025 |
|
|
| 2026 |
|
|
| 2025 |
|
Reconciliation of Adjusted EPS | ||||||||||||||||
Net income attributable to common stockholders |
| $ | 12,223 |
|
| $ | 27,588 |
|
| $ | 31,846 |
|
| $ | 46,735 |
|
Non-recurring release of valuation allowance on deferred tax assets |
|
| - |
|
|
| (21,170 | ) |
|
| - |
|
|
|
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