Paysafe Limited · NYSE:PSFE
Paysafe — Q3 2021 Earnings Presentation
31 slides from Paysafe's earnings presentation, Nov 10, 2021
Slide 1: Third Quarter 2021 Earnings Presentation
Third Quarter 2021 Earnings Presentation November 11, 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: Key messages
Key messages Continued execution across Paysafe’s strategy: Digital Wallet weaker than 3Q Adj. EBITDA in line Winning in NA iGaming expected; addressing As a result, resetting with guidance, despite and other high growth performance challenges 2021 and 2022 softer revenue verticals (e.g., crypto) an
Slide 4: Performance relative to expectations
Performance relative to expectations Expectations as of August 16, 2021 Today • Direct Marketing vertical improvement in 2H21 ✓ Direct Marketing recovering as expected (incr. Q/Q) • Continued execution on cost savings ✓ Delivered $26m cost savings YTD; expect >$35m FY21 • Strong pipeline in eCommerc
Slide 5: Digital Wallet performance weaker than expected
Digital Wallet performance weaker than expected… Spring: fundamentals improving with Summer: quiet European sports betting Late Summer / Early Fall: Even weaker than cleaner portfolio as a result of earlier activity (expected soft Q3, followed by expected and further softening in Europe, exits/restr
Slide 6: Headwinds: taking action to reset Digital Wallet
…taking action to reset Digital Wallet Actions to reposition for long-term success •1 Networks issue lapped Short term Digital Wallet challenges •2 Improvements to customer experience and pricing changes 1• Lap legacy issues (networks) •3 Exit non-performing product features •3 Rightsize the organiz
Slide 7: Direct Marketing vertical is recovering as expected
Direct Marketing vertical is recovering as expected Paysafe Direct Marketing Recovery Net new merchants • Net new merchants turned positive in June and Q3 • Strong momentum continuing into Q4 Oct* Q1’21 Q2’21 Q3’21 Q4’21 * October actuals ~100% of Q3 growth 7
Slide 8: Delivering strong growth across the majority of Paysafe's businesses
Delivering strong growth across the majority of Paysafe’s businesses ~70% of revenue eCash Integrated Processing Growth moderating post-covid with (excl. direct marketing) higher run rate vs 2019. Strong eCommerce growth across attractive digital commerce verticals. US SMB Acquiring remains healthy.
Slide 9: Recent progress on our strategic priorities
Recent progress on our strategic priorities Q3 and recent highlights Win in NA iGaming Grow key digital commerce verticals • Revenue +50% YTD • Adding 4,600 Walmart stores, enabling bill pay with eCash through Incomm partnership • Live in 19 states • eCash – a leading solution for the growing neoban
Slide 10: Recent progress on our strategic priorities (contd.)
Recent progress on our strategic priorities (contd.) Q3 and recent highlights Drive global scale M&A • Achieved target to migrate ~70% of business • PagoEfectivo and viafintech closed to new tech/cloud by 2021 • Strong interest from existing merchants and pipeline (e.g., • Exceeded cost saving plan
Slide 11: Delivering against strategic pillars
Continued momentum and execution across Paysafe’s strategy Easy connectivity to ALL payment methods through a single API Gateway / Card Digital Wallets eCash Open Banking Delivering against strategic pillars Win in NA iGaming 50% revenue growth 2021 YTD with expanding pipeline Grow New Verticals Exp
Slide 12: Q3 performance versus guidance
Q3 performance versus guidance Q3 2021 $millions Guidance Actual Revenue $360 – $375 $354 Gross Profit (excl. D&A) $210 – $220 $209 Adj. EBITDA $95 – $110 ✓ $106 Cost of Services (excl. D&A) + SG&A (excl. SBC) ~$265 ✓ $247 12
Slide 13: Q3 financial highlights
Q3 financial highlights Volume ($bn) Revenue ($m) +19% -1% $31.1 $26.2 $355.5 $353.6 +2% Ex. PL • Volume. YoY growth led by Integrated Processing • Revenue. Growth from Integrated Processing and eCash offset by Digital Wallet Q3 2020 Q3 2021 Q3 2020 Q3 2021 take rate 1.4% 1.1% • Adj. EBITDA. Margin
Slide 14: Underlying growth, excl. direct marketing impact
Underlying growth, excl. direct marketing impact Direct marketing vertical improves sequentially; YoY headwind moderating in 2H YTD Revenue $m Q3 Revenue $m $1,115 $348 $354 $1,033 Direct Marketing(1) Direct Marketing(1) 13% growth(3) excl. 5% growth(3) excl. Pay Later and Pay Later and Direct Marke
Slide 15: Q3 summary of consolidated results
Q3 summary of consolidated results $ in millions, except volume Q3'20(1) Q3'21 Change Volume $26.2bn $31.1bn 19% • Impairment charge of $322m Revenue $355.5 $353.6 (1%) relating to intangible assets within Digital Wallet segment Gross Profit (excluding D&A) $220.2 $208.7 (5%) Margin % 61.9% 59.0% •
Slide 16: eCash segment
eCash segment Volume ($bn) Revenue ($m) Adj. EBITDA ($m) +10% +18% +10% $90.2 $82.0 $36.3 $30.8 $1.3 $1.2 Q3 2020 Q3 2021 Q3 2020 Q3 2021 Q3 2020 Q3 2021 take rate 7.1% 7.1% margin 37.6% 40.3% • Strong revenue and Adj. EBITDA growth - moderating with the end of lockdowns in Europe and regulatory imp
Slide 17: Digital Wallet segment
Digital Wallet segment Volume ($bn) Revenue ($m) Adj. EBITDA ($m) -15% -17% $98.5 $83.7 -17% $4.8 $48.1 $4.0 $39.9 Q3 2020 Q3 2021 Q3 2020 Q3 2021 Q3 2020 Q3 2021 take rate 2.0% 2.1% margin 48.8% 47.7% • Volume and revenue reflect a combination market softness including regulatory impacts in Europe
Slide 18: Integrated Processing segment
Integrated Processing segment Volume ($bn) Revenue ($m) Adj. EBITDA ($m) +8% +28% +30% Ex. PL +4% Ex. PL -9% -7% $26.0 $186.9 Ex. PL $180.6 Pay Later $48.7 $44.4 $20.2 $172.8 Pay Later Pay Later $19.9 $47.5 Q3 2020 Q3 2021 Q3 2020 Q3 2021 Q3 2020 Q3 2021 take rate 0.9% 0.7% margin 27.0% 23.8% • Stro
Slide 19: Sustained take rates across segments
Sustained take rates across segments Long term take rates 7.2% 7.2% 7.2% 7.3% 7.3% 7.3% 7.3% 7.1% 7.1% ~7% 2.0% 2.0% 2.0% 2.1% 2.1% 2.1% 1.8% ~1.8% 1.6% 1.6% 1.0% 1.0% 1.0% 1.0% ~0.8% 0.9% 0.9% 0.8% 0.7% 0.7% '18FY '19FY 'Q1'20 'Q2'20 'Q3'20 'Q4'20 'Q1'21 'Q2'21 'Q3'21 Paysafe take rate: 1.4% 1.4% 1
Slide 20: Leverage summary
Leverage summary Liquidity summary ($m) 9/30/21 • Increased draw on revolving credit facility (Q3 Cash and cash equivalents $262 acquisition of PagoEfectivo) Undrawn amounts under revolving credit facility(1) $170 • Committed $390m and €275m incremental senior secured loans to refinance drawn revolv
Slide 21: Revising 2021 guidance
Revising 2021 guidance 2021 FY Guidance $millions Prior Current Q4 Guidance Revenue $1,530 – $1,550 $1,470 – $1,480 $355 – $365 Year-over-year growth(1) 9% – 10% ~5% (4%) – (1%) Gross Profit (excl. D&A) $930 – $970 $870 – $880 $205 – $215 Gross Margin 61% – 63% ~59% 58% – 59% Adj. EBITDA $480 – $495
Slide 22: 2022 preliminary expectations
2022 preliminary expectations 2022 $millions preliminary • eCash moderating; regulatory impacts in 1H; inorganic growth (PagoEfectivo, viafintech, SafetyPay*) Revenue $1,530 – $1,580 • Direct Marketing recovery • Integrated Processing - double-digit growth Adj. EBITDA $440 – $460 • Digital wallet re
Slide 23: Summary
Summary Focused on delivering on our strategic priorities, underscored by multiple payment options and risk management, to partner with leading-edge companies in fast growing verticals Resetting the Clear path forward to address Confident in our 2021 and 2022 challenges and unlock value long-term ou
Slide 24: Appendix
Paysafe: Appendix
Slide 25: Integrated Processing: absorbing direct marketing headwind in 2021
Integrated Processing: absorbing direct marketing headwind in 2021 Direct marketing improves sequentially; YoY headwind moderating in 2H YTD Revenue $m Q3 Revenue $m $555 $187 $522 $173 Direct Marketing(1) Direct Marketing(1) 16% growth(3) excl. 16% growth(3) excl. Pay Later and Pay Later and Direct
Slide 26: Supplemental segment data
Supplemental segment data Q1 2021 Q2 2021 Q3 2021 Volume ($m) Integrated Processing $ 21,565 $ 26,356 $ 25,953 Digital Wallets 4,602 4,698 3,995 eCash 1,549 1,432 1,268 Intersegment (204) (194) (156) Total $ 27,512 $ 32,292 $ 31,060 Take Rate Integrated Processing 0.8% 0.7% 0.7% Digital Wallets 2.1%
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 Nine months ended September 30, September 30, ($ in thousands) 2021 2020 2021 2020 Net Loss $ (147,106) $ (38,622) $ (200,850) $ (123,702) Income tax benefit (76,859) (14,305) (66,105) (38,073) Interest expense, net 19,272 42,578 1
Slide 29: GAAP to Non-GAAP reconciliation – growth excluding business disposal
GAAP to Non-GAAP reconciliation – growth excluding business disposal Three months ended Nine months ended September 30, % September 30, % 2020 2021 change 2020 2021 change FY2020 ($ in thousands) Paysafe total revenue $355,505 $353,585 -1% $1,056,204 $1,115,352 6% $1,426,490 Adjustment for disposed
Slide 30: Operating Cash Flow to Free Cash Flow reconciliation
Operating Cash Flow to Free Cash Flow reconciliation Three months ended Nine months ended September 30, September 30, ($ in thousands) 2021 2020 2021 2020 Net cash inflows from operating activities $ 51,590 $ 37,764 $ 92,600 $ 172,806 Capital expenditure(1) (22,914) (15,903) (61,535) (45,659) Cash p
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 Nine months ended September 30, September 30, ($ in thousands) 2021 2020 2021 2020 Revenue $ 353,585 $ 355,505 $ 1,115,352 $ 1,056,204 Cost of services (excluding depreciation and amortization) 144,852 135,352 451,667 39