Paysafe Limited · NYSE:PSFE
Paysafe — Q2 2021 Earnings Presentation
31 slides from Paysafe's earnings presentation, Aug 16, 2021
Slide 1: Second Quarter 2021 Earnings Presentation
Second Quarter 2021 Earnings Presentation August 16, 2021
Slide 2: Forward Looking Statements and Non-GAAP Financial Measures
Forward Looking Statements and Non-GAAP Financial Measures Forward-Looking Statements This presentation includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements are
Slide 3: Strategy & Business Update
Introduction Strategy & Business Update Delivering on our strategy Beginning to lap digital Announced acquisitions of with exciting wins across Strong Q2 volume wallet headwinds, while PagoEfectivo and iGaming and specialized and direct marketing absorbs SafetyPay, creating the digital commerce and
Slide 4: Strategic Focus
The leading specialized payments platform Gateway / Card Digital Wallets eCash Open Banking Win in iGaming USA - Canada - Europe - RoW Strategic Focus Grow New Verticals Digital Goods - Crypto - Financial Services - Travel - Integrated Drive Scalability Tech Platform - Banking as a Service - Risk Mg
Slide 5: Leading in iGaming and well positioned to capitalize on the expanding North America market
Leading in iGaming and well positioned to capitalize on PSFE iGaming (FY20 % Rev.) PSFE NA iGaming (FY20 % Rev.) the expanding North America market… 36% ~1% (1) North America iGaming Market Today Large, Growing TAM (2025P) 55% US 15% Canada 10% Eur/RoW CAGR CAGR CAGR vs '19 $24-47bn vs '20 $2.5bn vs
Slide 6: …and we’re delivering
…and we’re delivering Q2 and current highlights – North America iGaming 1 Growing • NA iGaming: volume growth +72%, revenue growth +48% Q2 YoY 2 Winning • WynnBET plugging into Paysafe gateway across 4 U.S. states; affiliate program powered by Paysafe Income Access • Further expansion in Michigan: −
Slide 7: Growing digital commerce in attractive verticals
Growing digital commerce in attractive verticals Targeted Digital Commerce Verticals & TAM Q2 and current highlights (2020e Volume) Digital Goods • Live in 22 countries with Microsoft; enabling online cash transactions on Xbox • Skrill live with Riot Games (League of Legends) • Collaboration with Wi
Slide 8: Progressing transformation and Foley playbook
Progressing transformation and Foley playbook • Strong YTD cost savings across Banking, Risk (improving loss rates), Operations $30m+ FY21 and Procurement Cost Savings Target ($45m+ annualized) • Migration to New Tech incl. cloud migration and global platforms on track • Advancing Banking as a Servi
Slide 9: Acquisitions of PagoEfectivo and SafetyPay: Creating the leading open banking solution for Latin America
Acquisitions of PagoEfectivo and SafetyPay: Creating the leading open banking solution for Latin America Consolidating leading LATAM eCash and online banking solutions that allow merchants to offer alternative payment methods at check-out, enabling more consumers in the region to transact online Fou
Slide 10: Direct Marketing beginning to stabilize; expect strong recovery 1Q'22
Direct Marketing beginning to stabilize; expect strong recovery 1Q'22 Paysafe Direct Marketing - Net New Merchants Backdrop • Took decisive actions beginning of year to exit a discrete set of clients • Overall market experiencing temporary contraction as market adjusts to new compliance • Market rem
Slide 11: Q2 Revenue and Adj. EBITDA performance at high end of guidance
Q2 Revenue and Adj. EBITDA performance at high end of guidance Q2 2021 $millions Guidance Actual Revenue $365 – $385 ✓ $384 Gross Profit (excl. D&A) $225 – $235 ✓ $229 Adj. EBITDA $110 – $120 ✓ $119 Cost of Services (excl. D&A) + SG&A (excl. SBC) $250 – $275 ✓ $266 11
Slide 12: Q2 financial highlights
Q2 financial highlights Volume ($bn) Revenue ($m) +41% +13% $32.3 $384.3 +16% • Volume. YoY growth across all segments; sequential $341.0 Ex. PL growth across Integrated Processing and Digital Wallet $22.7 • Revenue. Strong growth led by eCash and Integrated Processing; take rate compression reflect
Slide 13: Delivered strong underlying growth (excl. direct marketing impact)
Delivered strong underlying growth (excl. direct marketing impact) Q2 Revenue $m Q2 Adj. EBITDA $m $384 $119 $109 29% growth(3) excl. 23% growth(3) excl. $332 Pay Later and Pay Later and Direct Marketing(1) Direct Marketing Direct Marketing Direct Marketing(1) (margin +140 bps) Other Revenue Other R
Slide 14: Q2 summary of consolidated results
Q2 summary of consolidated results $ in millions, except volume Q2'20(1) Q2'21 Change Volume $22.7bn $32.3bn 41% • Interest expense reflects expensing Revenue $341.0 $384.3 13% of capitalized debt fees as a result of debt repayment Gross Profit (excluding D&A) $214.8 $228.6 6% Margin % 63.0% 59.5% •
Slide 15: eCash segment
eCash segment Volume ($bn) Revenue ($m) Adj. EBITDA ($m) +37% +58% $103.9 +35% $43.0 $76.0 $1.4 $27.3 $1.1 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021 take rate 7.2% 7.3% margin 35.9% 41.4% • Continued strong growth driven by extended lockdowns in Europe and return of sporting events • Take rate
Slide 16: Digital Wallet segment
Digital Wallet segment Volume ($bn) Revenue ($m) Adj. EBITDA ($m) +7% +16% +3% $97.3 $91.1 $46.9 $40.3 $4.6 $4.7 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021 take rate 2.0% 2.1% margin 44.2% 48.2% • Performance YoY improved as we begin to lap targeted actions/exits that occurred in 2020, higher c
Slide 17: Integrated Processing segment
Integrated Processing segment Volume ($bn) Revenue ($m) Adj. EBITDA ($m) +13% +54% +57% Ex. PL +7% Ex. PL -12% -9% $26.4 $191.2 Ex. PL $178.4 $52.0 Pay Later Pay Later $45.8 $17.1 $169.6 $50.3 Pay Later $16.8 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021 take rate 1.0% 0.7% margin 29.2% 23.9% • Ro
Slide 18: Integrated Processing: absorbing direct marketing headwind in 2021
Integrated Processing: absorbing direct marketing headwind in 2021 Integrated Processing Q2 Revenue $m Integrated Processing Q2 Adj. EBITDA $m $191 $50 $46 $170 28% growth(3) excl. 36% growth(3) excl. Pay Later and Direct Marketing(1) Pay Later and Direct Marketing(1) Direct Marketing Direct Marketi
Slide 19: Sustained take rates across Digital Wallet and eCash segments
Sustained take rates across Digital Wallet and eCash segments Long term take rates 7.3% 7.2% 7.2% 7.2% 7.1% 7.3% 7.3% 7.3% ~7% 2.0% 2.0% 2.0% 2.1% 2.1% 1.8% 1.6% 1.6% ~1.8% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% ~0.8% 0.8% 0.7% '18FY '19FY 'Q1'20 'Q2'20 'Q3'20 'Q4'20 'Q1'21 'Q2'21 Paysafe Total take rate: 1.
Slide 20: Integrated Processing take rate variance driven by mix
Integrated Processing take rate variance driven by mix Q2'21 Take Rate $bn Volume YoY Range US Acquiring $19.6 +68% 0.7% to 0.9% Integrated eCommerce $5.8 +48% 0.5% to 0.6% Direct Marketing $0.9 -19% 2.0% to 3.0% • Integrated Processing segment volume $26.4 billion (+57% YoY excl. Pay Later) • Take
Slide 21: Strong balance sheet – Debt restructuring enhances financial flexibility
Strong balance sheet – Debt restructuring enhances financial flexibility Liquidity summary ($m) 6/30/21 • Refinanced existing senior secured loan facility ($2.1bn) with combination of new senior secured Cash and cash equivalents $248 loan facility ($1.1bn) and senior secured notes ($0.9bn) Undrawn a
Slide 22: Reaffirming 2021 guidance
Reaffirming 2021 guidance 2021 FY 2021FY Expectations Guidance • Robust volume >$125bn (up >25% YoY) $millions • Continued strong momentum in Integrated Revenue $1,530 – $1,550 Processing Year-over-year growth(1) 9% – 10% • Seasonally quieter summer gaming activity in Europe impacting eCash and Digi
Slide 23: 2021 supplemental view (excluding direct marketing impact)
2021 supplemental view (excluding direct marketing impact) FY Revenue $m FY Adj. EBITDA $m ~10% growth excl. ~15% growth excl. Pay Later Pay Later $1,540 $488 $1,402 $422 ~14% growth excl. 25%+ growth excl. Pay Later and Direct Marketing(1) Pay Later and Direct Marketing(1) Direct Marketing Direct M
Slide 24: Q3 Guidance
Q3 Guidance Q3 2021 Q3 Expectations $millions Guidance • Continued strong growth across eCommerce and US Acquiring Revenue $360 – $375 • Absorption of Direct Marketing client exits • Seasonally quieter summer gaming activity in Gross Profit (excl. D&A) $210 – $220 Europe (eCash and Digital Wallets)
Slide 25: Closing
Closing The Specialized Payments The global leader in Platform: powerful Driving global scale and iGaming; growing digital combination of gateway, positioned to win in commerce in digital wallets, eCash and market consolidation attractive verticals open banking solutions Long-term double digit Susta
Slide 26: Appendix
Paysafe: Appendix
Slide 27: Statement Regarding Non-GAAP Financial Measures
Statement Regarding Non-GAAP Financial Measures To supplement the Company’s condensed consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP, the company uses non-GAAP measures of certain components of financial performance. This includes Gro
Slide 28: GAAP Net Income to Adjusted EBITDA Reconciliation
GAAP Net Income to Adjusted EBITDA Reconciliation Three months ended Six months ended June 30, June 30, ($ in thousands) (unaudited) 2021 2020 2021 2020 Net Income (loss) $ 6,785 $ (15,829) $ (53,744) $ (85,080) Income tax expense (benefit) 16,690 (2,714) 10,754 (23,768) Interest expense, net 62,650
Slide 29: GAAP to Non-GAAP Reconciliation – Growth Excluding Business Disposal
GAAP to Non-GAAP Reconciliation – Growth Excluding Business Disposal $'000, unaudited Q2 2020 Q2 2021 Change 2020FY Paysafe Total Revenue $ 341,031 $ 384,343 13% $ 1,426,489 Adjustment for disposed business (Pay Later) 8,769 24,030 Paysafe Total Revenue Excluding Pay Later $ 332,262 $ 384,343 16% $
Slide 30: Operating Cash Flow to Free Cash Flow Reconciliation
Operating Cash Flow to Free Cash Flow Reconciliation Three months ended Six months ended June 30, June 30, ($ in thousands) (unaudited) 2021 2020 2021 2020 Net cash (outflows)/ inflows from operating activities $ (7,730) $ 123,463 $ 41,010 $ 135,042 (1) Capital Expenditure (23,215) (14,848) (38,621)
Slide 31: GAAP Gross Profit to Gross Profit (excl. D&A) Reconciliation
GAAP Gross Profit to Gross Profit (excl. D&A) Reconciliation Three months ended Six months ended June 30, June 30, ($ in thousands) (unaudited) 2021 2020 2021 2020 Revenue $ 384,343 $ 341,034 $ 761,767 $ 700,699 Cost of services (excluding depreciation and amortization) 155,778 126,245 306,815 255,6