Paysafe Limited · NYSE:PSFE
Paysafe — Q1 2024 Earnings Presentation
29 slides from Paysafe's earnings presentation, May 13, 2024
Slide 1: First Quarter 2024 Earnings
First Quarter 2024 Earnings May 13, 2024
Slide 2: Forward-looking statements and non-GAAP financial measures
Forward-looking statements and non-GAAP financial measures Forward-Looking Statements This presentation and today’s webcast include “forward-looking statements” within the meaning of U.S. federal securities laws. These forward-looking statements are provided for illustrative purposes only and are no
Slide 3: Summary
Summary Volume Revenue Adj. EBITDA Adj. Net Income Net Leverage $36bn $418m $112m $35m 4.9x +7% YoY +8% YoY; 7% cc1 26.8% margin (-100 bps) Adj. EPS $0.57; +6% YoY versus 5.0x Dec-23 • Sales and portfolio optimization initiatives on track, including robust YTD hiring across the sales function • Reve
Slide 4: Q1 update: sales and portfolio initiatives on track
Q1 update: sales and portfolio initiatives on track SMB progress Enterprise wins Fintech Services >2X 9% Doubling direct New referral partners 9% iGaming & Video sales team FY24 improving acquisition 46% Gaming (29 hired Q1) cost and targeting YoY growth in Travel, Leisure & enterprise wins (Q1 67)
Slide 5: Winning in iGaming, strengthening product suite
Winning in iGaming, strengthening product suite Connecting operators and players to the market’s most comprehensive range of payment methods Winning with new and Launching new ways existing clients to pay +6% Q1 global iGaming Securely fund your online gambling apps revenue growth directly from your
Slide 6: Supporting enhanced payment experiences with Paysafe's white label wallet platform
Supporting enhanced payment experiences with Paysafe’s white label wallet platform Paysafe white label wallet • Merchants can offer wallet experiences supported • An innovative leader in game commerce by Paysafe capabilities and platform (B2B2C) • Debuted its Xsolla Wallet in Q1, empowering • Seamle
Slide 7: Evolution of Paysafe wallet leverages our assets to unlock opportunities
Evolution of Paysafe wallet leverages our assets to unlock opportunities with consumers & merchants Branded Consumer Wallets White Label Wallet Business Wallet Unlocking use cases (e.g., trading, Powering entertainment Empowering SMBs with turnkey cross-border, digital assets) verticals business sol
Slide 8: Focused on scalable consumer acquisition across the entire wallet portfolio
Focused on scalable consumer acquisition across the entire wallet portfolio Q1 2024 Driving growth Prioritizing strategic in consumers and markets and ~1.4m consumers added engagement targeted channels 7.5m1 3-month active users, stable YoY Incl. 0.95m classic digital wallet users, +5% YoY Focusing
Slide 9: Digital Wallets segment metrics
Digital Wallets segment metrics Updated view, representing the entire consumer business Average transactions per active user (TPA) TPA based on 3-month active users +14% 12 13 11 12 12 7.5m 3-month active users1 1Q’23 2Q’23 3Q’23 4Q’23 1Q’24 Actives flat YoY. Declines isolated within Average revenue
Slide 10: 1Q24 Financial Results
1Q24 Financial Results
Slide 11: Q1 financial highlights
Q1 financial highlights Volume ($bn) Revenue ($m) Adj. EBITDA2 ($m) LTM uFCF2 ($m) Adj. Net Income2 ($m) +7% +8% +4% +28% +7% +7% cc1 +3% cc1 $36.1 $345.3 $33.8 $417.7 $35.3 $387.8 $111.9 $269.3 $33.1 $107.8 65% 75% 1.1% 1.2% 27.8% 26.8% conversion conversion $0.54 $0.57 take rate take rate margin m
Slide 12: Merchant Solutions
Merchant Solutions Volume ($bn) Revenue ($m) Adj. EBITDA ($m) • Strong performance driven by +8% +11% -6% robust e-commerce volumes -5% cc1 (e.g., iGaming) and initiatives (sales and portfolio optimization) $30.8 $231.4 • Adj. EBITDA margin decline $28.6 mainly reflects the investments $208.5 $52.3
Slide 13: Digital Wallets
Digital Wallets Volume ($bn) Revenue ($m) Adj. EBITDA ($m) • Reflects growth across +5% +5% gambling and broader product +4% +4% cc1 +4% cc1 and engagement initiatives $5.7 • Adj. EBITDA margin stable YoY $190.5 $5.4 $181.4 $83.3 $79.2 3.3% 3.4% 43.7% 43.7% take rate take rate margin margin 1Q23 1Q2
Slide 14: Continued to reduce leverage and invest in the business, while also repurchasing shares
Continued to reduce leverage and invest in the business, while also repurchasing shares Liquidity position ($m) 3/31/24 Committed RCF(1) $305 Amounts drawn (54) Cash and cash equivalents 202 • ~$15m debt repayments/repurchases during Q1 Total $453 • Avg. interest rate (incl. interest rate swap) at ~
Slide 15: Reaffirming 2024 Guidance
Reaffirming 2024 Guidance 2024 FY Guidance $millions (unchanged) Revenue $1,688 – $1,712 • >6% revenue growth at midpoint reflects higher quality of revenue Year-over-year growth +5.5% to +7% • Efficiencies and cost discipline offsets gross margin headwind (driven by mix), and partially absorbs inve
Slide 16: Closing
Closing Strong start to the year with 8% Q1 revenue growth (7% cc) Sales and portfolio optimization initiatives on track with solid pace of hiring; positioning for margin improvement exiting FY24 Pleased with our strategic progress and deal execution, further supporting our confidence in the full ye
Slide 17: Appendix
Appendix
Slide 18: Classic Digital Wallet metrics
Classic Digital Wallet metrics Average transactions per active user (TPA) TPA based on 3-month active users +30% 35 33 31 27 28 Three quarters of growth in 3-month actives 1Q’23 2Q’23 3Q’23 4Q’23 1Q’24 Average revenue per user (ARPU) 0.95m ARPU excluding interest revenue, based on 3-month active use
Slide 19: Supplemental
Supplemental Continued progress on business turnaround Revenue Growth (nominal, YoY) Total Revenue Growth SMB (ISO) 11% 10% 8% 8% 7% 1% Focus areas for continued improvement: 2022 2023 1Q24 2022 2023 1Q24 • SMB (Direct): +6% 1Q24 e-comm Classic Digital Wallet* • eCash*: +6% in 1Q24 29% 27% 16% 10% (
Slide 20: Summary of segment results
Summary of segment results 2023 2024 Q1 Q2 Q3 Q4 FY2023 Q1 Volume ($m) Merchant Solutions $ 28,571 $ 30,301 $ 29,644 $ 30,159 $ 118,675 $ 30,787 Digital Wallets 5,443 5,394 5,645 5,963 22,445 5,675 Intersegment (196) (222) (187) (301) (906) (340) Total $ 33,818 $ 35,473 $ 35,102 $ 35,821 $ 140,214 $
Slide 21: 2024 other assumptions
2024 other assumptions $millions assumptions for Adj. EPS Interest expense, net $135 – $140 • D&A excludes amortization of acquired intangibles Depreciation and amortization $135 - $140 • Other operating income excludes the impact of Other operating income $2 - $4 other non-operating income and expe
Slide 22: Statement regarding non-GAAP financial measures
Statement regarding non-GAAP financial measures This presentation also contains non-GAAP financial information. Paysafe management believes the presentation of these non-GAAP financial measures, when considered together with the Company’s results presented in accordance with GAAP, provide users with
Slide 23: Reconciliation of GAAP Gross Profit to Gross Profit (excl. D&A)
Reconciliation of GAAP Gross Profit to Gross Profit (excl. D&A) Three Months Ended March 31, ($ in thousands) 2024 2023 Revenue $ 417,738 $ 387,849 Cost of services (excluding depreciation and amortization) 170,373 158,939 Depreciation and amortization 68,310 63,547 Gross Profit ( 1) $ 179,055 $ 165
Slide 24: Reconciliation of GAAP net income (loss) to Adj. EBITDA
Reconciliation of GAAP net income (loss) to Adj. EBITDA Three Months Ended March 31, ($ in thousands) 2024 2023 Net income / (loss) $ 3,056 $ (3,808) Income tax expense 7,299 3,879 Interest expense, net 34,965 37,456 Depreciation and amortization 68,310 63,547 Share-based compensation expense 9,359
Slide 25: Reconciliation of GAAP net income (loss) to Adj. net income
Reconciliation of GAAP net income (loss) to Adj. net income Three Months Ended March 31, ($ in thousands) 2024 2023 Net income / (loss) $ 3,056 $ (3,808) (1) Other non operating income, net (9,774) (764) Impairment expense on goodwill and intangible assets 653 82 (2) Amortization of acquired assets
Slide 26: Supplemental: Adj. EBITDA to Adj. net income walk
Supplemental : Adj. EBITDA to Adj. net income walk Three Months Ended March 31, ($ in thousands) 2024 2023 Adjusted EBITDA $ 111,916 $ 107,815 (1) Depreciation and amortization 34,707 29,874 Other operating income / expense, net (2) (2,581) (1,783) Interest expense, net 34,965 37,456 Adjusted income
Slide 27: Net income (loss) per share: Adjusted and GAAP
Net income (loss) per share: Adjusted and GAAP Three Months March 31, Non-GAAP 2024 2023 Numerator ($ in thousands) Adjusted net income - basic $35,306 $33,076 Adjusted net income - diluted $35,306 $33,076 Denominator (in millions) Weighted average shares – basic 61.6 61.0 Adjusted weighted average
Slide 28: Reconciliation of Operating Cash Flow to Unlevered Free Cash Flow
Reconciliation of Operating Cash Flow to Unlevered Free Cash Flow Three Months Ended March 31, ($ in thousands) 2024 2023 ( 1) Net cash inflows from operating activities $ 58,835 $ 20,014 Capital expenditure (24,425) (30,368) Cash paid for interest 31,331 28,893 Payments relating to Restructuring an
Slide 29: Thank You
Thank You 29