Priority Technology Holdings Inc (PRTH) saw its stock plummet 5.55% in pre-market trading on Friday, as the company's fourth-quarter 2024 earnings and outlook failed to impress investors.
In its Q4 2024 earnings call, PRTH reported strong revenue growth of 14% year-over-year, reaching $227.1 million. However, the company's guidance for 2025 turned more cautious, with revenue growth projected to slow down to 10-14% and adjusted EBITDA growth of only 8-13%.
PRTH cited several factors that could weigh on its performance in 2025, including:
- Headwinds related to lower interest rates, which could impact its Enterprise segment's profitability.
- A somewhat murky macroeconomic environment, which could impact the demand for its services.
- Higher expenses resulting from the migration of certain platforms to the cloud, which converts CapEx to OpEx and pressures profitability in the short term.
- Increased accounting costs related to SOX compliance and remediation efforts due to a disclosed material weakness in internal controls.
While PRTH management remained optimistic about the company's long-term prospects and its ability to drive industry-leading results, investors appeared to be disappointed by the more muted growth expectations for 2025, triggering the sell-off in the stock.