Paysafe Limited · NYSE:PSFE
Paysafe — Investor Day (March 2021)
62 slides from Paysafe's investor day presentation, Mar 9, 2021
Slide 1: Analyst Day Presentation
Analyst Day Presentation March 9th, 2021
Slide 2: Legal disclaimer
Legal disclaimer Important Information About the Proposed Business Combination and Where to Find It In connection with the proposed business combination, a registration statement on Form F-4 (the “Form F-4”) has been filed by Paysafe Limited, an exempted limited company incorporated under the laws o
Slide 3: Presenters
Presenters Philip McHugh Danny Chazonoff Izzy Dawood Chief Executive Officer & Director Chief Operating Officer Chief Financial Officer • Philip joined Paysafe in 2019 as CEO • Danny is one of the founders of the • Izzy joined Paysafe in 2020 as CFO Company and has served as COO • Philip has been an
Slide 4: 1. Overview of Paysafe
1. Overview of Paysafe Paysafe:
Slide 5: Our evolution continues
Our evolution continues Significant investment, platform Creation of a pioneer in digital Scaled and expanded across PSFE & Bill Foley: integration and business commerce and iGaming products and geography the next frontier diversification 2021 Drive scale and growth Win in key verticals 2017 Imp
Slide 6: Exciting future with the Foley team
Exciting future with the Foley team Bill Foley has substantially grown the size and scale of the companies he’s been involved with 1 1 2 Data & Industry Real Estate FinTech HCM3 Mortgage FinTech Deeply embedded in attractive Analytics markets Initial 1984 2003 2007 20144 2019 2020 Upside from integr
Slide 7: The Leading Specialized Payments Platform
VISION The Leading Specialized Payments Platform Sports betting The Global Leader Online casino Two-Sided Network Lottery in iGaming eSports Fantasy sports Digital goods Proprietary APMs Growing Digital Commerce Fintech services in Attractive Verticals Travel & entertainment Integrated verticals Ris
Slide 8: A global pioneer in digital commerce
A global pioneer in digital commerce Highly differentiated B2B and B2C global network with a powerful suite of digital wallet, 1 eCash and integrated processing solutions 2 Significant growth opportunities in massive TAM with expertise in highest value verticals Long history as the global market lea
Slide 9: Proprietary integrated solutions
1 Proprietary integrated solutions… Digital Wallets eCash Integrated Processing #2 Global stored value Digital Wallet (1) #1 iGaming eCash network (4) #4 Independent merchant acquirer in the U.S. (6) • Network of digital wallet solutions enable users • Proprietary digital currency solutions • Integr
Slide 10: …with attractive scale and financial profile…
1 …with attractive scale and financial profile… Digital Integrated eCash Wallets Processing 3.5m ~$1bn 13m ~650k 250k+ 150+ KPIs Active users (1) Balance(2) Active users (3) Distribution points (4) Merchants (5) ISV Integrations (6) Revenue Mix Online(7) ~100% ~100% 50%+ 75%+ % Volume ~$20bn ~$5bn ~
Slide 11: …creating a powerful Paysafe Network
1 …creating a powerful Paysafe Network Proprietary network of digital wallet solutions • Digital solving complex • Integrated and Wallets commerce friction and enabling the use of Full stack of Online Solutions global APMs integrated commerce solutions • Scaled SMB enabling businesses Platform Netwo
Slide 12: Leadership in the fast growing lanes of digital commerce
2 Leadership in the fast growing lanes of digital commerce Online iGaming Commerce Commerce 75%+ 36% $ 58 trillion (1) of Paysafe’s Revenue(2) of Paysafe’s Revenue(2) potential TAM 55% with digitized cash and APMs 12% 11% 10% 8% 6% Traditional SMBs Integrated eCommerce International U.S. Payments Ma
Slide 13: Right to Win in valuable verticals
2 Right to Win in valuable verticals iGaming Travel & Entertainment Digital Goods FinTech Services Integrated Payments TAM $80bn+(1) $2.2tn+(5) $1.5tn+(2) $2.9tn+(4) $500bn+(3) Note: TAM reflects 2020E volumes except iGaming. (1) Represents deposit volumes. EDC and H2 Gambling Capital research 2020-
Slide 14: We are a global leader in iGaming
3 We are a global leader in iGaming Europe and Rest of World Canada United States Launched in 1999 Launched in 2010 Launched in 2013 Global leader with 100% of Canada iGaming Live in 14 states over 1,000(1) operators coverage – deployed Paysafe Serves over 34 operators, Market Playbook after launch
Slide 15: Global Platform integrated cloud technology
4 Global Platform integrated cloud technology Unity Platform Single API Automated underwriting Integration of multiple payment methods Timing: 2020 – 2021 Integration API’s Onboarding Reporting/ BI/Analytics Cloud Data Store Back Office / Admin Card Issuing Web & Mobile Migration of eCash
Slide 16: Global Platform risk & compliance
4 Global Platform risk & compliance Highly developed 300+ Global Risk & Compliance Capabilities: Professionals Dedicated to Risk & Compliance Proven by Years of Successful Development in Complex Markets and Analytics US: Registered with the Canada: Registered Michigan Gaming Control supplier in Onta
Slide 17: Paysafe Platform expansion & M&A engine
4 Paysafe Platform expansion & M&A engine Advantaged Platform for Consolidation Global Capabilities Unity Management Team Integration Large & Diverse Pool of “Plug & Play” Platform Deal Experience Paysafe Culture Opportunities for Growth Seasoned Team • Digital Wallet & eCommerce • Platform Consolid
Slide 18: Executed by a team of experienced industry leaders
5 Executed by a team of experienced industry leaders Philip McHugh Danny Chazonoff Izzy Dawood Chief Executive Officer Chief Operating Officer Chief Financial Officer Afshin Yazdian Paulette Rowe Lorenzo Pellegrino Udo Müller CEO, US Acquiring CEO, Integrated & CEO, Skrill, NETELLER, CEO, paysafecar
Slide 19: Doing things the right way
5 Doing things the right way Customer-centric Diverse and inclusive Engaged organization Part of our communities Drive an improving positive >80% score on inclusive Market leading employee Maintain Carbon NPS culture engagement score >80% Neutrality Commitment to diversity on the Board Open Focused
Slide 20: The Leading Specialized Payments Platform
VISION The Leading Specialized Payments Platform Sports betting The Global Leader Online casino Lottery Consistent strong top- and in iGaming eSports bottom-line organic growth Fantasy sports Digital goods Growing Digital Commerce Fintech services in Attractive Verticals Travel & entertainment Integ
Slide 21: 2. Product overview
2. Product overview 21
Slide 22: 3. Vision and growth strategy
3. Vision and growth strategy 22
Slide 23: The Leading Specialized Payments Platform
VISION The Leading Specialized Payments Platform The Global Leader Connected to ~75% of operators in the Two-Sided Network in iGaming U.S. and 100% of Canadian iLotteries Proprietary APMs Growing Digital Commerce ~40% of revenue in fast growing and in Attractive Verticals emerging verticals Risk Man
Slide 24: A Global Leader in iGaming with clear right to win in the U.S.
A Global Leader in iGaming with clear right to win in the U.S. Europe & RoW Canada United States Since 1999 Since 2010 Since 2013 Established global leader… Serve over 1,000(1) operators globally Live in 14 states Single integration 100% of Canadian iLottery coverage Serves over 34 operators
Slide 25: Continuing to win and expand market share
Continuing to win and expand market share Live in 14 states and connections to ~75% of operators U.S. iGaming today The market is opening at a rapid pace. We’re all in. WA Unity ME MT ND OR MN VT NH ID SD WI NY MA WY CT RI MI NE IA PA NJ NJ Processing NV UT OH MD IL IN DE CO WV CA VA KS DC MO KY NC
Slide 26: Leveraging the Paysafe Playbook to win in U.S. iGaming
Leveraging the Paysafe Playbook to win in U.S. iGaming Our right to win in the U.S. Already live in 14 states and connected to ~75% of U.S. operators Stellar reputation and industry experience Deep understanding of what both operators and consumers require to be successful COVID-19 accelerat
Slide 27: Right to Win in valuable verticals
Right to Win in valuable verticals iGaming Travel & Entertainment Digital Goods FinTech Services Integrated Payments TAM $80bn+(1) $2.2tn+(5) $1.5tn+(2) $2.9tn+(4) $500bn+(3) Note: TAM reflects 2020E volumes except iGaming. (1) Represents deposit volumes. EDC and H2 Gambling Capital research 2020-20
Slide 28: Selling the Paysafe experience – opportunity to unlock over $100m of adj. EBITDA
Selling the Paysafe experience – opportunity to unlock over $100m of adj. EBITDA Operational leverage Enterprise sales Drive growth and streamline Unity platform Global servicing Plug into Paysafe costs Global risk services One integrated Enhanced value added platform Optimize acceptance and service
Slide 29: Significant acquisition opportunities across all segments
Significant acquisition opportunities across all segments iGaming Digital Wallet eCash eCommerce • Own more of the cashier • 170+ specialized wallets • 20+ geography based • New markets and through APM globally which lack scale targets verticals consolidation and have limited • Add distribution / •
Slide 30: 4. Financial overview
4. Financial overview 30
Slide 31: Paysafe has a compelling financial profile
Paysafe has a compelling financial profile US-listed Public Equities • $100 – 110 billion in • 10% revenue growth ~4,300 2021E transactional Strong CAGR 2020A-2023E(3) Significant volume(2) Scale Growth Significant • $1.52 – 1.55 billion in Scale revenue in 2021E(3) 1,490 Strong Growth 329 High • Hi
Slide 32: Highly diversified business
Highly diversified business Diversified Diversified Diversified revenue by revenue by revenue by segment(1) geography(1)(2) vertical(1)(5) 14% 23% 39% 36% 39% 50% 27% 47% 25% iGaming(3) SMB & All Other Processing Wallets eCash Europe North America RoW Emerging verticals (4) 75%+ Revenue from online
Slide 33: Asset light operating model
Asset light operating model $466 ($ in millions, unaudited) $426 $408 $356 $362 $311 • Strong underlying cash generation • Asset light and scalable business model • Expect free cash flow conversion(1) in the range of 70-80% in 2021E 2018 2019 2020 (1) Adj. EBITDA (1) Free Cash Flow Free Cash Flow 76
Slide 34: Leverage profile
Leverage profile Total Net Leverage(1) / 2021E Adj. EBITDA(2)(3) ($ in millions, unaudited) 6.0x – 6.2x • Significant deleveraging post-merger with Foley Trasimene 3.6x – 3.8x • $1,805m of pro forma net debt • Lower leverage levels provides greater flexibility ability to pursue M&A opportunities • L
Slide 35: Sources of revenue and gross profit
Sources of revenue and gross profit Segment Digital wallets eCash Processing Monetization • Fees charged for: • Fees charged to merchant • Acquiring fees charged based methods ˗ Consumer deposits into wallet ˗ Distribution fee paid to on percent of volume ˗ Money transfer between wallets distributio
Slide 36: Near term look back
Near term look back ($ in millions, unaudited) 2020E Organic 2020A Volume $88,687 $91,166 • Revenue and adjusted EBITDA(1) outperformed relative to prior estimates due to higher volumes Revenue $1,380 $1,403 • Reported EBITDA(1) is $5m higher in 2020 than Organic EBITDA(1) Adjusted EBITDA (1) $420 $
Slide 37: Strong volume growth historically and going forward
Strong volume growth historically and going forward Commentary ($ in billions) 2020A 2021E • Double digit volume growth Digital Wallets $20.4 $21 – $23 • Growth across all segments eCash $4.6 $5 – $6 Processing $67.6 $75 – $85 Total $92.1(1) $100 – $110(1) Volume ($ in billions, unaudited) $135 $100
Slide 38: Driving consistent revenue growth
Driving consistent revenue growth Commentary • 2021E revenue on higher end of prior guidance • Revenue growth expected across all segments • Continued momentum in Integrated Processing and eCash Revenue ($ in millions) % take rate 1.5% 1.4% 1.5% 1.4% - 1.5% 1.4% $1,881 $1,520 - $1,550 $1,418 $1,426
Slide 39: Attractive gross profit profile
Attractive gross profit profile Commentary • 2021E gross profit expected to be marginally lower due to business mix • Integrated Processing and eCash momentum continue to drive strong growth Gross profit ($ in millions) % gross 66% 64% 63% 61% - 63% 64% margin $1,197 $909 $892 $930 - $970 $750 2018A
Slide 40: Scalable expenses generate operating leverage
Scalable expenses generate operating leverage Commentary ($ in millions) 2020A 2021E • Expenses to grow at low to mid single digits Cost of services(2) $535 $580 – $610 • Assumes public company expenses(1) of $9-14 million in 2021E SG&A $466 $450 – $475 • Credit costs also expected to be lower Cost
Slide 41: Strong and expanding adjusted EBITDA margin
Strong and expanding adjusted EBITDA margin Commentary (Ranges reflect low to high) 2021E • Scalable business model and continued cost discipline drives EBITDA growth Dec. 7th IP Organic Adj. EBITDA $501 • Adjusted EBITDA includes PubCo costs(1) of $9 – 14 million in 2021E (–) PubCo costs(1) $9 - 14
Slide 42: Q1 2021E and 2021 Guidance
Q1 2021E and 2021 Guidance • Current guidance in-line with December 7th Investor Presentation 2021 Q1 2021E Metrics December 7th IP Guidance Guidance Revenue $1,523 $1,520 – $1,550 $360 – $380 Gross Profit N/A $930 – $970 $220 – $230 Margin N/A 61% – 63% ~61% Adjusted EBITDA $487 – 492(1) $480 – $49
Slide 43: The Leading Specialized Payments Platform
VISION The Leading Specialized Payments Platform Sports betting The Global Leader Online casino Lottery Consistent strong top- and in iGaming eSports bottom-line organic growth Fantasy sports Digital goods Growing Digital Commerce Fintech services in Attractive Verticals Travel & entertainment Integ
Slide 44: Q&A
Q&A Paysafe: hisag uN MURRAY
Slide 45: Appendix
Appendix 45
Slide 46: Leading specialized digital wallet
Leading specialized digital wallet Business model is unique and very profitable as this can be multiplied many times, depending on consumer profile Consumer deposits $200 Consumer sends $50 to friend Consumer transfers $150 to Merchant Blended take Merchant transfers $200 to Consumer rate of ~2% Con
Slide 47: Digital Wallet segment overview
Digital Wallet segment overview Digital Wallets NA 1% Digital wallets • Diversified network of digital wallet solutions solving complex 27% Europe commerce friction and enabling the use of global APMs 2020A 2020A 51% Revenue Geography RoW mix • Enables consumers to upload, store, withdraw, and pay f
Slide 48: Digital Wallet: Millennial and sophisticated digital consumers
Digital Wallet: Millennial and sophisticated digital consumers Specialized Wallets, Payments, and P2P transfers I’m able to upload and withdraw funds with ease. I enjoy sports betting and online pok er at my favorite brands. I love to trade crypto and move money into multiple currencies. My Sk rill
Slide 49: eCash: Making cash available for digital commerce
eCash: Making cash available for digital commerce Find payment point Generate barcode A customer searches for the nearest sales outlet with the online The customer selects‘Paysafecash‘ as his payment method in the store locator web shop, loads the generated barcode onto a wallet, sends it to his mob
Slide 50: eCash segment overview
eCash segment overview eCash eCash RoW 4% NA 1% • Proprietary digital currency solutions empowering online, 23% mobile and in-app commerce for the cash consumer 2020A 2020A Revenue Geography mix • Enables consumers to use cash to pay for goods and services Europe online through both a prepaid and a
Slide 51: eCash: Serving Gen Z, Millennial and Underbanked consumers across 50+ countries
eCash: Serving Gen Z, Millennial and Underbanked consumers across 50+(1) countries Migrating 80% of volume to account / app-based I pre-buy cash vouchers to upload for online gaming upgrades. I buy online but I pay in cash at my local convenience store. paysafecard is everywhere… I’m never far from
Slide 52: Processing segment overview
Processing segment overview Processing • Provides merchant acquiring and processing solutions to SMB RoW 0% Processing Europe 7% merchants 50% 2020A 2020A • Full stack of integrated and online solutions enabling a broad Revenue Geography mix NA 93% range of small businesses to accept payments online
Slide 53: Processing: Overview of distribution channels
Processing: Overview of distribution channels eCommerce and Integrated Direct Distribution partners • Full stack of integrated and eCommerce • Highly efficient, direct sales force accounting • Large and growing alternative referral solutions partnering with leading ISV and for ~30% of new merchant a
Slide 54: Statement Regarding Non-GAAP Financial Measures
Statement Regarding Non-GAAP Financial Measures This presentation includes Gross Profit (excluding depreciation and amortization), Gross Profit Margin (excluding depreciation and amortization), Adjusted EBITDA, Adjusted EBITDA margin, Free cash flow and Free cash flow conversion, w hich are suppleme
Slide 55: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Adjusted EBITDA(2) $' m, unaudited 2018 2019 2020 Net Loss (40) (110) (126) Income tax (benefit)/expense 6 (17) (43) Interest expense, net 156 165 165 Depreciation and amortization 234 280 272 Impairment expense on intangibe assets - 89 109 Restructuring and other cos
Slide 56: GAAP to Non-GAAP Reconciliation (cont’d)
GAAP to Non-GAAP Reconciliation (cont’d) Gross Profit (excluding depreciation and amortization) (1) $' m, unaudited 2018 2019 2020 Net Loss (40) (110) (126) Income tax (benefit)/expense 6 (17) (43) Interest expense, net 156 165 165 Depreciation and amortization 234 280 272 Impairment expense on inta
Slide 57: GAAP to Non-GAAP Reconciliation (cont’d)
GAAP to Non-GAAP Reconciliation (cont’d) Free Cash Flow $'m, unaudited 2020 2019 2018 Net cashflows provided by/(used in) operating activities: 412 289 (27) Capital Expenditure1 (66) (71) (77) Cash paid for interest 154 167 153 2 Payments relating to restructuring and other costs 18 48 91 Movement i
Slide 58: Impact of translation of results of non USD entities – FY 2020
Impact of translation of results of non USD entities – FY 2020 • A significant proportion of Paysafe’s businesses report in non-USD currencies; principally Euros. Upon consolidation, the results of these entities are translated into USD, driving currency related variances • The below table shows the
Slide 59: Q4 2020 and FY 2020 results
Q4 2020 and FY 2020 results ($ in millions, unaudited) Q4 19 Q4 20 FY19A FY20A Revenue Digital Wallets $110 $96 $428 $395 YoY growth (13%) (8%) eCash 73 106 273 333 YoY growth 45% 22% Processing 186 175 735 720 YoY growth (6%) (2%) Intersegment revenue (5) (7) (18) (21) YoY growth 42% 15% Total $365
Slide 60: Quarterly selected information
Quarterly selected information 2020A ($ in millions, unaudited) Q1 Q2 Q3 Q4 2020A Volume $23,746 $20,924 $23,999 $23,433 $92,101 Revenue 358 342 356 370 1,426 Gross Profit 229 216 220 226 892 SG&A 118 106 111 131 466 Adjusted EBITDA 111 110 109 96 426 Memo: SG&A + Cost of Sales 247 232 246 275 1,001
Slide 61: Select balance sheet data (2019A, 2020A)
Select balance sheet data (2019A, 2020A) ($ in millions, unaudited) 12/31/2019A 12/31/2020A Cash and Cash Equivalents $235 $388 Customer accounts and other restricted cash 1,151 1,376 Settlement receivables (1) 250 223 Accounts receivable 120 117 Other current assets (2) 135 98 Total current assets
Slide 62: Glossary: Summary of Definitions
Glossary: Summary of Definitions API Application Programming Interface APM Alternate Payment Methods Online Online refers to any transaction that significantly relies on online activity by the merchant or consumer. This includes, but is notlimited to, online credit card purchases, merchant purchases