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We came across a bullish thesis on Priority Technology Holdings, Inc. (PRTH) on The 10x Radar’s Substack by Aditya. In this article, we will summarize the bulls’ thesis on PRTH. Priority Technology Holdings, Inc. (PRTH)'s share was trading at $11.40 as of Jan 8th. PRTH’s forward P/E was 25.91 according to Yahoo Finance.
A close-up of hands counting bills, depicting the payment services the company offers.
Priority Technology Holdings (PRTH) is a fintech company that provides a unified platform designed to streamline payments, banking, and vendor management for businesses. By solving the complex issue of disconnected financial systems, PRTH has established itself as an essential player in the fintech space. Its platform integrates payments, payables, and cash flow management, providing businesses with a seamless solution they didn’t realize they needed but now cannot function without. The company’s offerings cater to a range of clients, from small businesses to large enterprises, making it indispensable across various sectors.
PRTH's market positioning is solid, not as a flashy payments company but as the foundational infrastructure that powers business operations. Its unique model has led to growing revenue and deepening customer relationships, which generate recurring income. However, the company does carry a significant debt burden of around $800 million, a concern for many investors. This debt largely stems from acquisitions made to expand its services and capabilities. But management has proactively addressed this issue through a series of strategic actions, including redeeming preferred stock to save $30 million annually and filing a shelf registration to reduce debt and interest expenses by $65.8 million per year.
Despite these challenges, PRTH has shown strong growth potential. With projections of 16% year-over-year revenue growth and 20% adjusted EBITDA growth in 2024, the company is on track to scale efficiently under CEO Tom Priore’s leadership. These figures point to a clear path toward reducing debt, lowering interest expenses, and improving profitability, which, by 2025, could result in a substantial upside for investors. The company’s revenue is expected to grow to around $975 million, with adjusted EBITDA reaching $230 million, creating an environment where PRTH could see a 100%+ upside by 2025 based on multiple valuation methods.
The company’s expansion into key sectors, including digital payments, B2B payables, and enterprise banking solutions, puts it at the intersection of multi-trillion-dollar markets. PRTH is strategically tapping into the growing demand for digital payments, the shift from checks to digital solutions in B2B payables, and the need for modernization in enterprise banking through Banking-as-a-Service (BaaS). These markets are expected to grow significantly, and PRTH is well-positioned to capture a portion of this expansion. Additionally, the company has bolstered its capabilities with the 2023 acquisition of Plastiq, which transformed a bankruptcy asset into a $6-$7 million monthly revenue generator, strengthening its B2B payables position.