[Management View]
Key metrics: Merchant solutions volume composition includes 16-17% from restaurants, mid-single digits from construction, and slightly higher from wholesale trade.
Strategic priorities: Focus on segments with defensive characteristics like automotive commerce and benefits/payroll to deliver stable cash flows.

[Outlook]
Performance guidance: Full-year revenue guidance range of $15 million, dependent on large enterprise client activation. Fiscal Q4 expected to benefit from recent acquisitions and improving transaction volumes.
Future plans: Mid-single digit organic growth in merchant solutions, low double-digit growth in payables, and high teens growth in treasury solutions.

[Financial Performance]
YoY/QoQ trends: Year-over-year headwind of $2 million due to historical residual purchase runoff and lower revenue from end markets. Quarter-over-quarter cost control demonstrated by a $1 million decline in salary and benefits compared to fiscal Q2.

[Q&A Highlights]
Question 1: When did you start seeing same store sales weakness, and which segments were affected?
Answer: We started seeing weakness in August, which accelerated in September. The most affected segments were restaurants, construction, and wholesale trade, with some impact on education and other verticals.

Question 2: What was the impact of residuals and merchant attrition, and how long will it last?
Answer: Lower revenue from end markets and historical residual purchases had a $2 million impact in the quarter. This headwind is expected to continue but at a reduced level compared to the first half of the year.

Question 3: Will there be a moderation in salary and benefits expenses next year?
Answer: The increase in expenses was driven by acquisitions, higher benefit costs, and non-cash components like stock compensation. We expect some growth in software and public cloud expenses but will maintain cost discipline.

Question 4: What is the composition of merchant solutions in terms of verticals?
Answer: Restaurants account for 16-17% of volume, construction is in the mid-single digits, and wholesale trade is slightly higher. The slowdown was broad-based but more pronounced in these verticals.

Question 5: Are you looking to increase the risk profile of your portfolio?
Answer: No, we manage risk effectively and are not looking to increase it. We focus on defensive industries like automotive commerce and benefits/payroll to ensure stable cash flows.

Question 6: What are the key factors driving the $15 million revenue guidance range for the full year?
Answer: The activation pace of large enterprise clients is the major factor. Faster activation will positively impact the bottom line.

Question 7: How much of the portfolio is still in specialized acquiring, and what is the potential volatility?
Answer: Specialized acquiring has grown quarter over quarter. The historical residual purchases will continue to run off, impacting revenue by about $0.5-$1 million per quarter.

Question 8: Are there any impacts from strategic changes at large partners like Fiserv/Clover?
Answer: We have not seen significant changes in trends. Our positioning allows us to maintain constructive relationships and cost advantages in bulk purchases.

Question 9: What drives the acceleration in gross profit from Q3 to Q4?
Answer: Higher organic growth in merchant solutions, recent acquisitions, and onboarded larger customer wins are the main drivers.

Question 10: How are you thinking about growth next year given the macro challenges?
Answer: We expect mid-single digit organic growth in merchant solutions, low double-digit growth in payables, and high teens growth in treasury solutions. The growth rate in treasury solutions has moderated but remains strong.

[Sentiment Analysis]
Tone of analysts: Generally positive, with a focus on understanding the impact of market challenges and strategic shifts.
Tone of management: Confident and focused on cost discipline, strategic acquisitions, and maintaining stable cash flows.

[Quarterly Comparison]
| Metric | Q3 FY2025 | Q2 FY2025 | YoY Change |
|-------------------------------|-----------|-----------|------------|
| Revenue Impact (Residuals) | -$2M | -$4.5M | Improved |
| Salary and Benefits Expense | -$1M | | Improved |
| Organic Growth (Merchant Sol.)| 4% | | |
| Deposits Under Administration | +$200M | | Increased |

[Risks and Concerns]
- Same store sales weakness in key verticals like restaurants, construction, and wholesale trade.
- Ongoing headwinds from historical residual purchase runoff.
- Higher benefit costs and non-cash expenses expected to persist.
- Potential impacts from strategic changes at large partners like Fiserv/Clover.

[Final Takeaway]
Priority Technology Holdings is navigating market challenges with a strategic focus on defensive segments and cost discipline. Despite same store sales weakness in key verticals, the company remains confident in its ability to deliver stable cash flows and long-term shareholder value. The outlook for fiscal Q4 is positive, supported by recent acquisitions and improving transaction volumes. Investors should monitor the activation pace of large enterprise clients and the ongoing impact of historical residual purchase runoff.