Can Priority's Revenue Mix Support Further Margin Expansion?

Priority Technology Holdings’ PRTH margin opportunity depends less on pushing harder in card processing and more on selling a broader set of financial tools. Its platform links merchant payments, payables and treasury services, giving the company several ways to earn from one customer relationship.

The profit mix is already changing. Payables and Treasury Solutions generated 63% of adjusted gross profit in the first quarter, or 66%, excluding acquisitions. Faster growth of these lines gives Priority a path to lift companywide margins, even if Merchant Solutions remains the largest revenue source.

Treasury Solutions has the strongest economics. The segment posted an 89.8% adjusted gross margin, supported by $1.8 billion of balances under administration. Higher balances helped offset lower interest rates, although rapid growth in Passport and Priority Technology Ventures reduced the segment margin by 370 basis points.

Payables shows why percentage margins do not tell the whole story. Its gross margin fell to 28.4% as lower-margin buyer-funded revenues expanded, but adjusted EBITDA grew 55.1%. Revenue growth, lower operating expenses and better scale allowed profit to rise faster than gross profit.

Merchant Solutions still provides the customer base and transaction volume needed for cross-selling. The Steelers partnership, which combines ticketing payments with Passport treasury services, illustrates that approach. Further margin expansion will depend on adding these higher-value products without allowing technology, legal and acquisition-related costs to grow at the same pace.

How Do Margin Trends Compare With Shift4 and Repay?

Shift4 Payments FOUR is moving beyond core acquiring through tax-free shopping, subscriptions and vertical software. Shift4 Payments generated $549 million of gross revenue less network fees in first-quarter 2026, up 49%, while adjusted EBITDA reached $234 million. Shift4 Payments’ 43% margin shows scale benefits, though acquisition mix caused near-term margin pressure. 

Repay Holdings RPAY is leaning on business payments and operating discipline rather than rapid headline growth. Repay Holdings’ Business Payments revenues rose 18% in first-quarter 2026 compared with 4% companywide growth. Repay Holdings expects roughly 42% adjusted EBITDA margins for 2026, supported by supplier-network expansion and tighter cost control across operations.

PRTH’s Price Performance, Valuation and Estimates

Shares of PRTH have risen 16.6% over the past three months against the industry’s fall of 2.3%. 

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PRTH stock trades at 4.6X forward P/E, which is far below the sector's average.

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Over the past 30 days, earnings estimates for both 2026 and 2027 have remained unchanged.

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At present, PRTH carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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