Paysafe Ltd. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Bruce mentioned sympathy for Florida and SE US hurricane victims, welcomed new CFO John Crawford, thanked outgoing CFO Alex Gersh.
• Q3 results: Revenue $427 million (+8% Y/Y, +7% constant currency), Adjusted EBITDA $117.8 million (+1% Y/Y), net leverage reduced to 4.7 times.
• Strategic priorities: Expansion of sales capabilities (83 enterprise wins, 170 new sales reps hired), portfolio optimization (on track to $50M revenue benefit in 2024), revamp of consumer acquisition efforts (collaboration with Revolut, 28,000 transacting users in 3 months), new product introductions revenue up significantly.
• Merchant Business: E-commerce growth, North American iGaming up over 50%, cross-selling (28% of Q3 enterprise deals with existing clients), net revenue retention above 100%, billable MIDs down slightly, revenue per new merchant up double-digits, SMB direct book grew 5%.
• Digital Wallets: Transactions per active user up 16%, average revenue per user up 5%, 7 million active users, consumer acquisition cost stable.

Segment Performance

• Merchant Solutions: Volume increased 8% year-over-year to $32 billion, revenue increased 11% to $241.1 million. Adjusted EBITDA was $52.6 million, a decline of 8%. E-commerce within this segment had double-digit growth, North American iGaming revenue grew over 50%, billable MIDs down slightly, revenue per new merchant up double-digits, SMB direct book grew 5%.
• Digital Wallets: Volume increased 5% to $5.9 billion, revenue increased 4% to $190.9 million. Adjusted EBITDA was $84.1 million, an increase of 5%. Transactions per active user grew 16% year-over-year, average revenue per user grew 5%, acquired 1.3 million users, active user base 7 million, consumer acquisition cost stable at ~$17.

Guidance

• Maintained full year 2024 guidance: Revenue 7%-8% growth, adjusted EBITDA margin 27.5%-28%, net leverage between 4.6-4.7 times. Reiterated revenue range $1.713B-$1.729B.

Risks

• No specific risks detailed in the provided transcript beyond general forward-looking statement cautions.

Question and Answer

Q: Andrew Harte asked about portfolio optimization and Revolut partnership.

A: Bruce said progress on portfolio optimization, Revolut partnership seeing growth with 28,000 transacting users, expecting continued expansion.

Q: Spencer James asked about FY'25 playbook.

A: Bruce said clear path for '25 with initiatives setting up '26, pipeline strong.

Q: Paul Obrecht asked about SMB direct and sales hires.

A: Bruce explained SMB decline due to exiting risky merchants, sales hires progressing well.

Q: Jing asked about value added services.

A: Bruce discussed loan program partnership, Clover distribution, and expansion of ancillary services.