Paysafe Reports First Quarter 2024 Results; Reaffirms Full Year Outlook
Paysafe (NYSE: PSFE) reported its Q1 2024 financial results, showcasing an 8% rise in revenue to $417.7 million and a 7% increase in total payment volume to $36.1 billion. Net income reached $3.1 million, reversing a net loss of $3.8 million in Q1 2023. Adjusted net income climbed 7% to $35.3 million, while adjusted EBITDA grew 4% to $111.9 million. The company reduced its net leverage to 4.9x from 5.0x. Key initiatives included expanding the sales team, launching a Pay by Bank solution in the U.S. iGaming market, and integrating Mastercard’s Secure Card on File. Paysafe reaffirmed its full-year 2024 revenue guidance of $1,688-$1,712 million and adjusted EBITDA of $473-$488 million. Additionally, Paysafe reported progress in sustainability, releasing its inaugural report.
- Revenue increased by 8% to $417.7 million.
- Total payment volume rose by 7% to $36.1 billion.
- Net income was $3.1 million, compared to a net loss of $3.8 million in Q1 2023.
- Adjusted net income increased by 7% to $35.3 million.
- Adjusted EBITDA grew by 4% to $111.9 million.
- Net leverage decreased to 4.9x from 5.0x.
- Paysafe repurchased 989,419 common shares for $14 million.
- Launched Pay by Bank solution for U.S. iGaming.
- Expanded sales team to support growth in target verticals.
- Integrated Mastercard’s Secure Card on File for enhanced security.
- First sustainability report published, outlining key pillars and commitments.
- Adjusted EBITDA for the Merchant Solutions segment decreased by 6%.
- Incremental expenses related to sales team expansion and portfolio optimization.
- Higher severance and credit loss expense impacting profitability.
- Total debt remains high at $2.5 billion.
Insights
Paysafe's Q1 2024 financial results show a notable year-over-year growth in key areas, making this data quite relevant to investors.
First, let’s talk numbers. Revenue climbed by 8% to
The increase in net income to $3.1 million from a net loss is significant. Although this is a modest net income, reversing a loss is always a positive sign. The adjusted net income of $35.3 million and Adjusted EBITDA of $111.9 million imply strong operational efficiency, although the EBITDA growth of 4% is relatively modest.
Of particular interest to investors is the decrease in net leverage from 5.0x to 4.9x. Reducing leverage, even incrementally, indicates prudent financial management and can lower financial risks in the long term.
However, the Merchant Solutions segment saw a slight decrease in Adjusted EBITDA despite revenue growth. This could mean heightened competition or higher costs, which warrants close monitoring.
Overall, Paysafe’s strategic initiatives seem to bear fruit, but the modest EBITDA growth and segment discrepancies suggest cautious optimism. Investors should keep an eye on debt reduction and segment performance for a clearer picture.
The Digital Wallets segment has shown a 5% revenue growth, primarily attributable to gambling merchants and enhanced consumer engagement. This segment's performance aligns with broader market trends, where digital wallets continue to gain traction, particularly in the iGaming sector. Investors should recognize this as a growth area, albeit with regulatory hurdles in the gambling industry across different U.S. states.
The introduction of Paysafe's Pay by Bank solution in U.S. iGaming is a strategic move aimed at staying ahead of competitors and capturing new market share. It's important to understand that iGaming is a rapidly growing field and being present in 33 states already gives Paysafe a competitive edge.
The partnership with Xsolla is another strategic highlight. Xsolla's expertise in game commerce complements Paysafe’s platform, potentially driving more revenue growth, especially as the gaming industry continues to expand. This partnership could open doors to new revenue streams and customer bases, making it a smart move for long-term growth.
However, while these initiatives are promising, their actual impact will depend on the execution and external market conditions, such as consumer adoption rates and regulatory changes.
Paysafe’s inaugural sustainability report reflects a growing focus on Environmental, Social and Governance (ESG) criteria, becoming increasingly important for both investors and consumers. The company’s four pillars—Trusted Technology, Engaged Employees, Thriving Society and Responsible Business Practices—lay a solid foundation for sustainable growth.
From an ESG perspective, the emphasis on trusted technology and engaged employees is crucial. Strengthening security measures and ensuring a positive work environment can enhance customer and employee loyalty, potentially reducing turnover and improving satisfaction scores.
In terms of societal impact, increasing accessibility to financial and digital products shows Paysafe’s commitment to inclusivity, which can foster brand loyalty among underserved communities. This initiative can also help in tapping into new customer segments, thus driving growth.
Moreover, the focus on responsible business practices ensures robust governance, which is a key factor for long-term investor confidence. Effective governance frameworks can mitigate risks and enhance the company’s reputation.
For retail investors, Paysafe’s commitment to sustainability not only signals a potential for stable, long-term returns but also aligns with the growing trend of ethical investing.
First Quarter 2024 Financial Highlights
(Metrics compared to first quarter of 2023, unless otherwise noted)
-
Revenue of
$417.7 million 8% ; increased7% on a constant currency basis -
Total Payment Volume of
$36.1 billion 7% -
Net income of
$3.1 million $0.05 $3.8 million $0.06 -
Adjusted net income of
$35.3 million $0.57 $33.1 million $0.54 -
Adjusted EBITDA of
$111.9 million 4% ; increased3% on a constant currency basis - Net leverage1 decreased to 4.9x as of March 31, 2024, compared to 5.0x as of December 31, 2023
Bruce Lowthers, CEO of Paysafe, commented: “We are off to a great start this year, delivering
Recent Strategic and Operational Highlights
- Published Paysafe's inaugural sustainability report
- Expanded sales team as part of previously announced investment plans to enhance Paysafe's go-to-market capabilities to support growth in target verticals
-
Capital returns - repurchased 989,419 of Paysafe's common shares for
$14 million - Advanced our white label wallet strategy through a partnership with Xsolla, a leader in game commerce
-
Launched Paysafe's Pay by Bank solution for
U.S. iGaming, allowing bettors to log-in directly to their bank accounts at online sportsbooks’ cashiers to fund real-time wagers -
Paysafe is now processing iGaming payments in 33 U.S. states and territories, including Q1 launches in
Vermont andNorth Carolina - Completed our network tokenization offering by integrating with Mastercard’s Secure Card on File, providing cardholders with an extra layer of protection and enhancing their payment journey
(1) |
Paysafe defines net leverage as net debt (total debt less cash and cash equivalents) divided by the sum of the last twelve months (LTM) Adjusted EBITDA. For the period ended March 31, 2024, total debt was |
First Quarter of 2024 Summary of Consolidated Results
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
($ in thousands) (unaudited) |
|
2024 |
|
|
2023 |
|
||
Revenue |
|
$ |
417,738 |
|
|
$ |
387,849 |
|
Gross Profit (excluding depreciation and amortization) |
|
$ |
247,365 |
|
|
$ |
228,910 |
|
Net income / (loss) |
|
$ |
3,056 |
|
|
$ |
(3,808 |
) |
|
|
|
|
|
|
|
||
Adjusted EBITDA |
|
$ |
111,916 |
|
|
$ |
107,815 |
|
Adjusted net income |
|
$ |
35,306 |
|
|
$ |
33,076 |
|
Total revenue for the first quarter of 2024 was
Net income for the first quarter increased to
Adjusted net income for the first quarter increased
Adjusted EBITDA for the first quarter was
First quarter operating cash flow was
Balance Sheet
As of March 31, 2024, total cash and cash equivalents were
2023 Sustainability Report
Demonstrating our commitment to acting as a responsible fintech company, Paysafe published its first Sustainability Report today, outlining the core tenets of the new strategy, its key pillars, and commitments. Paysafe’s approach to sustainability seeks to deepen the company’s work in four key areas where the greatest impact can be realized: Trusted technology, Engaged employees, Thriving society, and Responsible business principles.
Paysafe has established an oversight framework to drive the strategy and set targets across all focus areas to ensure accountability and monitor performance. Embedding sustainability practices into every level of the organization will increase the positive impact Paysafe makes on customers, employees, society and the environment.
The report can be accessed on the Sustainability section of Paysafe’s website at https://www.paysafe.com/en/about/sustainability/.
Paysafe’s Sustainability Report highlights the company’s commitment to focus on the following four pillars:
- Trusted technology: delivering security and protection for consumers and merchants alike by continually strengthening the security of our products, services and internal processes, providing a great customer experience, underpinned by trust, convenience and support for the vulnerable and a responsible approach to technology and innovation.
- Engaged employees: attracting and retaining the right talent through offering our people a great place to work, which rewards commitment, promotes engagement, offers development opportunities and prioritizes their wellbeing, building upon our diverse workforce at every level of the business.
- Thriving society: striving to make a positive contribution to society by increasing accessibility to financial and digital products for all customers, supporting community volunteer programs, corporate donations, and reducing the impact of our operations and value chain on the environment.
- Responsible business practices: operating in a responsible manner by promoting effective governance, ethics and compliance across our organization through experienced leaders, established committees and robust policies, standards and procedures to guide everyone that works for Paysafe, including our suppliers and partners.
Summary of Segment Results
|
|
Three Months Ended |
|
|
|
|
||||||
|
|
March 31, |
|
|
YoY |
|||||||
($ in thousands) (unaudited) |
|
2024 |
|
|
2023 |
|
|
change |
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|||
Merchant Solutions |
|
$ |
231,398 |
|
|
$ |
208,521 |
|
|
|
11 |
% |
Digital Wallets |
|
$ |
190,457 |
|
|
$ |
181,448 |
|
|
|
5 |
% |
Intersegment |
|
$ |
(4,117 |
) |
|
$ |
(2,120 |
) |
|
|
94 |
% |
Total Revenue |
|
$ |
417,738 |
|
|
$ |
387,849 |
|
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
|||
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|||
Merchant Solutions |
|
$ |
49,178 |
|
|
$ |
52,336 |
|
|
|
-6 |
% |
Digital Wallets |
|
$ |
83,274 |
|
|
$ |
79,209 |
|
|
|
5 |
% |
Corporate |
|
$ |
(20,536 |
) |
|
$ |
(23,730 |
) |
|
|
13 |
% |
Total Adjusted EBITDA |
|
$ |
111,916 |
|
|
$ |
107,815 |
|
|
|
4 |
% |
Full Year 2024 Financial Guidance
($ in millions) (unaudited) |
|
Full Year 2024 |
Revenue |
|
|
Adjusted EBITDA |
|
|
Webcast and Conference Call
Paysafe will host a live webcast to discuss the results today at 4:30 p.m. (ET). The webcast and supplemental information can be accessed on the investor relations section of the Paysafe website at ir.paysafe.com. An archive will be available after the conclusion of the live event and will remain available via the same link for one year.
| Time | Monday, May 13 2024, at 4:30 p.m. ET | |
| Webcast | Go to the Investor Relations section of the Paysafe website to listen and view slides | |
| Dial in | 877-407-0752 ( |
About Paysafe
Paysafe Limited (“Paysafe”) (NYSE: PSFE) (PSFE.WS) is a leading payments platform with an extensive track record of serving merchants and consumers in the global entertainment sectors. Its core purpose is to enable businesses and consumers to connect and transact seamlessly through industry-leading capabilities in payment processing, digital wallet, and online cash solutions. With over 25 years of online payment experience, an annualized transactional volume of
Forward-looking Statements
This press release includes “forward-looking statements” within the meaning of
These forward-looking statements involve significant risks, uncertainties, and events that may cause the actual results to differ materially, and potentially adversely, from those expressed or implied in the forward-looking statements. While the Company believes its assumptions concerning future events are reasonable, a number of factors could cause actual results to differ materially from those projected, including, but not limited to: cyberattacks and security vulnerabilities; complying with and changes in money laundering regulations, financial services regulations, cryptocurrency regulations, consumer and business privacy and data use regulations or other regulations in
The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in their expectations with respect thereto or any change in events.
Paysafe Limited Condensed Consolidated Statements of Operations (unaudited)
|
|
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 |
|
Selling, general and administrative |
|
|
144,808 |
|
|
|
128,311 |
|
Depreciation and amortization |
|
|
68,310 |
|
|
|
63,547 |
|
Impairment expense on goodwill and intangible assets |
|
|
653 |
|
|
|
82 |
|
Restructuring and other costs |
|
|
452 |
|
|
|
1,990 |
|
Loss on disposal of subsidiary and other assets, net |
|
|
177 |
|
|
|
— |
|
Operating income |
|
|
32,965 |
|
|
|
34,980 |
|
Other income, net |
|
|
12,355 |
|
|
|
2,547 |
|
Interest expense, net |
|
|
(34,965 |
) |
|
|
(37,456 |
) |
Income before taxes |
|
|
10,355 |
|
|
|
71 |
|
Income tax expense |
|
|
7,299 |
|
|
|
3,879 |
|
Net income / (loss) |
|
$ |
3,056 |
|
|
$ |
(3,808 |
) |
|
|
|
|
|
|
|
||
Net income / (loss) per share – basic |
|
$ |
0.05 |
|
|
$ |
(0.06 |
) |
Net income / (loss) per share – diluted |
|
$ |
0.05 |
|
|
$ |
(0.06 |
) |
|
|
|
|
|
|
|
||
Net income / (loss) |
|
$ |
3,056 |
|
|
$ |
(3,808 |
) |
Other comprehensive (loss) / income, net of tax of |
|
|
|
|
|
|
||
(Loss)/gain on foreign currency translation |
|
|
(7,612 |
) |
|
|
2,174 |
|
Total comprehensive loss |
|
$ |
(4,556 |
) |
|
$ |
(1,634 |
) |
Paysafe Limited Consolidated Net income / (loss) per share
|
Three Months Ended |
|
|||||
|
March 31, |
|
|||||
|
2024 |
|
|
2023 |
|
||
Numerator ($ in thousands) |
|
|
|
|
|
||
Net income / (loss) - basic |
$ |
3,056 |
|
|
$ |
(3,808 |
) |
Net income / (loss) - diluted |
$ |
3,056 |
|
|
$ |
(3,808 |
) |
Denominator (in millions) |
|
|
|
|
|
||
Weighted average shares – basic |
|
61.6 |
|
|
|
61.0 |
|
Weighted average shares – diluted (1) |
|
62.0 |
|
|
|
61.0 |
|
Net income / (loss) per share |
|
|
|
|
|
||
Basic |
$ |
0.05 |
|
|
$ |
(0.06 |
) |
Diluted |
$ |
0.05 |
|
|
$ |
(0.06 |
) |
(1) |
The denominator used in the calculation of diluted net income per share for the three months ended March 31, 2024, includes an additional 0.4 million shares representing the dilutive effect of the Company's restricted stock units. |
Paysafe Limited Condensed Consolidated Balance Sheets (unaudited)
($ in thousands) |
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Assets |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
202,134 |
|
|
$ |
202,322 |
|
Customer accounts and other restricted cash |
|
|
1,172,818 |
|
|
|
1,295,947 |
|
Accounts receivable, net of allowance for credit losses of |
|
|
176,283 |
|
|
|
162,081 |
|
Settlement receivables, net of allowance for credit losses of |
|
|
179,404 |
|
|
|
171,224 |
|
Prepaid expenses and other current assets |
|
|
61,454 |
|
|
|
74,919 |
|
Total current assets |
|
|
1,792,093 |
|
|
|
1,906,493 |
|
Deferred tax assets |
|
|
77,273 |
|
|
|
77,273 |
|
Property, plant and equipment, net |
|
|
18,925 |
|
|
|
17,213 |
|
Operating lease right-of-use assets |
|
|
28,649 |
|
|
|
22,120 |
|
Derivative financial assets |
|
|
11,097 |
|
|
|
10,427 |
|
Intangible assets, net |
|
|
1,109,934 |
|
|
|
1,163,935 |
|
Goodwill |
|
|
2,006,801 |
|
|
|
2,023,402 |
|
Other assets – non-current |
|
|
9,381 |
|
|
|
6,838 |
|
Total non-current assets |
|
|
3,262,060 |
|
|
|
3,321,208 |
|
Total assets |
|
$ |
5,054,153 |
|
|
$ |
5,227,701 |
|
|
|
|
|
|
|
|
||
Liabilities and equity |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Accounts payable and other liabilities |
|
$ |
206,649 |
|
|
$ |
202,699 |
|
Short-term debt |
|
|
10,190 |
|
|
|
10,190 |
|
Funds payable and amounts due to customers |
|
|
1,357,682 |
|
|
|
1,477,017 |
|
Operating lease liabilities – current |
|
|
8,241 |
|
|
|
8,233 |
|
Contingent and deferred consideration payable – current |
|
|
10,183 |
|
|
|
11,828 |
|
Liability for share-based compensation – current |
|
|
3,105 |
|
|
|
2,701 |
|
Total current liabilities |
|
|
1,596,050 |
|
|
|
1,712,668 |
|
Non-current debt |
|
|
2,447,162 |
|
|
|
2,491,643 |
|
Operating lease liabilities – non-current |
|
|
23,357 |
|
|
|
16,963 |
|
Deferred tax liabilities |
|
|
108,540 |
|
|
|
111,705 |
|
Warrant liabilities |
|
|
1,698 |
|
|
|
1,423 |
|
Liability for share-based compensation – non-current |
|
|
2,798 |
|
|
|
3,108 |
|
Contingent and deferred consideration payable – non-current |
|
|
642 |
|
|
|
6,878 |
|
Total non-current liabilities |
|
|
2,584,197 |
|
|
|
2,631,720 |
|
Total liabilities |
|
|
4,180,247 |
|
|
|
4,344,388 |
|
Commitments and contingent liabilities |
|
|
|
|
|
|
||
Total shareholders' equity |
|
|
873,906 |
|
|
|
883,313 |
|
Total liabilities and shareholders' equity |
|
$ |
5,054,153 |
|
|
$ |
5,227,701 |
|
Paysafe Limited Condensed Consolidated Statements of Cash Flow (unaudited)
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
($ in thousands) |
|
2024 |
|
|
2023 (1) |
|
||
Cash flows from operating activities |
|
|
|
|
|
|
||
Net income / (loss) |
|
$ |
3,056 |
|
|
$ |
(3,808 |
) |
Adjustments for non-cash items: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
68,581 |
|
|
|
63,547 |
|
Unrealized foreign exchange gain |
|
|
(2,519 |
) |
|
|
(5,598 |
) |
Deferred tax (benefit) / expense |
|
|
(1,767 |
) |
|
|
7,782 |
|
Interest expense, net |
|
|
3,634 |
|
|
|
8,563 |
|
Share-based compensation |
|
|
9,359 |
|
|
|
7,216 |
|
Other income, net |
|
|
(7,162 |
) |
|
|
(3,189 |
) |
Impairment expense on goodwill and intangible assets |
|
|
653 |
|
|
|
82 |
|
Allowance for credit losses and other |
|
|
11,739 |
|
|
|
3,923 |
|
Loss on disposal of subsidiary and other assets, net |
|
|
177 |
|
|
|
— |
|
Non-cash lease expense |
|
|
2,232 |
|
|
|
2,243 |
|
Movements in working capital: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
(24,222 |
) |
|
|
(12,766 |
) |
Prepaid expenses and other current assets |
|
|
(1,788 |
) |
|
|
(11,947 |
) |
Accounts payable and other liabilities |
|
|
(3,792 |
) |
|
|
(15,752 |
) |
Income tax receivable / (payable) |
|
|
654 |
|
|
|
(20,282 |
) |
Net cash flows from operating activities |
|
|
58,835 |
|
|
|
20,014 |
|
Cash flows in investing activities |
|
|
|
|
|
|
||
Purchase of property, plant & equipment |
|
|
(3,719 |
) |
|
|
(2,732 |
) |
Purchase of merchant portfolios |
|
|
— |
|
|
|
(4,399 |
) |
Other intangible asset expenditures |
|
|
(20,706 |
) |
|
|
(27,636 |
) |
Receipts under derivative financial instruments |
|
|
2,531 |
|
|
|
2,224 |
|
Cash inflow from merchant reserves |
|
|
6,510 |
|
|
|
— |
|
Other investing activities, net |
|
|
1,559 |
|
|
|
— |
|
Net cash flows used in investing activities |
|
|
(13,825 |
) |
|
|
(32,543 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
||
Cash settled equity awards |
|
|
— |
|
|
|
(484 |
) |
Repurchases of shares withheld for taxes |
|
|
(257 |
) |
|
|
(3,690 |
) |
Purchase of treasury shares |
|
|
(12,000 |
) |
|
|
— |
|
Settlement funds - merchants and customers, net |
|
|
(108,302 |
) |
|
|
(138,975 |
) |
Repurchase of borrowings |
|
|
(30,545 |
) |
|
|
(57,386 |
) |
Proceeds from loans and borrowings |
|
|
50,242 |
|
|
|
25,781 |
|
Repayments of loans and borrowings |
|
|
(33,759 |
) |
|
|
(13,329 |
) |
Proceeds under line of credit |
|
|
225,000 |
|
|
|
225,000 |
|
Repayments under line of credit |
|
|
(225,000 |
) |
|
|
(225,000 |
) |
Contingent consideration paid |
|
|
(7,755 |
) |
|
|
(6,475 |
) |
Net cash flows used in financing activities |
|
|
(142,376 |
) |
|
|
(194,558 |
) |
Effect of foreign exchange rate changes |
|
|
(25,951 |
) |
|
|
20,379 |
|
Decrease in cash and cash equivalents, including customer accounts and other restricted cash during the period |
|
$ |
(123,317 |
) |
|
$ |
(186,708 |
) |
Cash and cash equivalents, including customer accounts and other restricted cash at beginning of the period |
|
|
1,498,269 |
|
|
|
2,127,195 |
|
Cash and cash equivalents at end of the period, including customer accounts and other restricted cash |
|
$ |
1,374,952 |
|
|
$ |
1,940,487 |
|
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash and cash equivalents |
|
$ |
202,134 |
|
|
$ |
221,687 |
|
Customer accounts and other restricted cash |
|
|
1,172,818 |
|
|
|
1,718,800 |
|
Total cash and cash equivalents, including customer accounts and other restricted cash |
|
$ |
1,374,952 |
|
|
$ |
1,940,487 |
|
(1) |
During the fourth quarter of 2023, the Company elected to change its presentation of the cash flows associated with "Settlement receivables, net" and "Funds payable and amounts due to customers" from operating activities, to present them as financing activities within its Consolidated Statements of Cash Flows. Comparative amounts have been recast to conform to current period presentation. These recasts had no impact on the Consolidated Statements of Comprehensive Loss, Consolidated Statements of Financial Position or Consolidated Statements of Shareholders' Equity. |
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 Gross Profit (excluding depreciation and amortization), Adjusted EBITDA, Unlevered free cash flow, Adjusted net income, Adjusted net income per share, and Net leverage which are supplemental measures that are not required by, or presented in accordance with, accounting principles generally accepted in
Gross Profit (excluding depreciation and amortization) is defined as revenue less cost of services (excluding depreciation and amortization). Management believes Gross Profit to be a useful profitability measure to assess the performance of our businesses and ability to manage cost.
Adjusted EBITDA is defined as net income/(loss) before the impact of income tax (benefit)/expense, interest expense, net, depreciation and amortization, share-based compensation, impairment expense on goodwill and intangible assets, restructuring and other costs, loss/(gain) on disposal of a subsidiaries and other assets, net, and other income/(expense), net. These adjustments also include certain costs and transaction items that are not reflective of the underlying operating performance of the Company. Management believes Adjusted EBITDA to be a useful profitability measure to assess the performance of our businesses and improves the comparability of operating results across reporting periods.
Adjusted net income excludes the impact of certain non-operational and non-cash items. Adjusted net income is defined as net income/(loss) attributable to the Company before the impact of other non-operating income / (expense), net, impairment expense on goodwill and intangible assets, restructuring and other costs, accelerated amortization of debt fees, amortization of acquired assets, loss/(gain) on disposal of subsidiaries and other assets, share-based compensation, discrete tax items and the income tax (benefit)/expense on these non-GAAP adjustments. Adjusted net income per share is adjusted net income as defined above divided by adjusted weighted average dilutive shares outstanding. Management believes the removal of certain non-operational and non-cash items from net income enhances shareholders ability to evaluate the Company’s business performance and profitability by improving comparability of operating results across reporting periods.
Unlevered free cash flow is defined as net cash flows provided by/used in operating activities, adjusted for the impact of capital expenditure, payments relating to restructuring and other costs and cash paid for interest. Capital expenditure includes purchases of property plant & equipment and purchases of other intangible assets, including software development costs. Capital expenditure does not include purchases of merchant portfolios. Management believes unlevered free cash flow to be a liquidity measure that provides useful information about the amount of cash generated by the business.
Net leverage is defined as net debt (gross debt less cash and cash equivalents) divided by the last twelve months Adjusted EBITDA. Management believes net leverage is a useful measure of the Company's credit position and progress towards leverage targets.
Management believes the presentation of these non-GAAP financial measures, including Gross Profit, Adjusted EBITDA, Unlevered free cash flow, Adjusted net income, Adjusted net income per share, and Net leverage when considered together with the Company’s results presented in accordance with GAAP, provide users with useful supplemental information in comparing the operating results across reporting periods by excluding items that are not considered indicative of Paysafe’s core operating performance. In addition, management believes the presentation of these non-GAAP financial measures provides useful supplemental information in assessing the Company’s results on a basis that fosters comparability across periods by excluding the impact on the Company’s reported GAAP results of acquisitions and dispositions that have occurred in such periods. However, these non-GAAP measures exclude items that are significant in understanding and assessing Paysafe’s financial results or position. Therefore, these measures should not be considered in isolation or as alternatives to revenue, net income, cash flows from operations or other measures of profitability, liquidity or performance under GAAP.
You should be aware that Paysafe’s presentation of these measures may not be comparable to similarly titled measures used by other companies. In addition, the forward-looking non-GAAP financial measure of Adjusted EBITDA provided herein have not been reconciled to the comparable GAAP measure due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations. We have reconciled the historical non-GAAP financial measures presented herein to their most directly comparable GAAP financial measures. A reconciliation of our forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the adjusting items necessary for such reconciliations that have not yet occurred, are out of our control, or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.
Reconciliation of GAAP Net Income / (Loss) to Adjusted 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 |
|
|
|
7,216 |
|
Impairment expense on goodwill and intangible assets |
|
|
653 |
|
|
|
82 |
|
Restructuring and other costs |
|
|
452 |
|
|
|
1,990 |
|
Loss on disposal of subsidiaries and other assets, net |
|
|
177 |
|
|
|
— |
|
Other income, net |
|
|
(12,355 |
) |
|
|
(2,547 |
) |
Adjusted EBITDA |
|
$ |
111,916 |
|
|
$ |
107,815 |
|
Reconciliation of Operating Cash Flow to Non-GAAP 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 and other costs |
|
|
3,453 |
|
|
|
23,684 |
|
Unlevered Free Cash Flow |
|
$ |
69,194 |
|
|
$ |
42,223 |
|
Adjusted EBITDA |
|
|
111,916 |
|
|
|
107,815 |
|
(1) |
During the fourth quarter of 2023, the Company elected to change its presentation of "Settlement receivables, net" and "Funds payable and amounts due to customers" from operating activities, to present them as financing activities within its Consolidated Statements of Cash Flows. As a result, the reconciling item related to "Movements in customer accounts and other restricted cash" is no longer required in the unlevered free cash flow reconciliation. Comparative amounts have been recast to conform to current period presentation. |
Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit (excluding depreciation and amortization)
|
|
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 |
|
|
$ |
165,363 |
|
Depreciation and amortization |
|
|
68,310 |
|
|
|
63,547 |
|
Gross Profit (excluding depreciation and amortization) |
|
$ |
247,365 |
|
|
$ |
228,910 |
|
(1) |
Gross Profit has been calculated as revenue, less cost of services and depreciation and amortization. Gross profit is not presented within the Company's consolidated financial statements. |
Reconciliation of GAAP Net Income / (Loss) to Adjusted Net Income
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
($ in thousands) |
|
2024 |
|
|
2023 |
|
||
Net income / (loss) |
|
$ |
3,056 |
|
|
$ |
(3,808 |
) |
Other non operating income, net (1) |
|
|
(9,774 |
) |
|
|
(764 |
) |
Impairment expense on goodwill and intangible assets |
|
|
653 |
|
|
|
82 |
|
Amortization of acquired assets (2) |
|
|
33,603 |
|
|
|
33,673 |
|
Restructuring and other costs |
|
|
452 |
|
|
|
1,990 |
|
Loss on disposal of subsidiaries and other assets, net |
|
|
177 |
|
|
|
— |
|
Share-based compensation expense |
|
|
9,359 |
|
|
|
7,216 |
|
Discrete tax items (3) |
|
|
5,465 |
|
|
|
5,479 |
|
Income tax expense on non-GAAP adjustments (4) |
|
|
(7,685 |
) |
|
|
(10,792 |
) |
Adjusted net income |
|
$ |
35,306 |
|
|
$ |
33,076 |
|
(in millions) |
|
|
|
|
|
|
||
Weighted average shares - diluted |
|
|
62.0 |
|
|
|
61.0 |
|
Adjusted diluted impact |
|
|
0.0 |
|
|
|
0.4 |
|
Adjusted weighted average shares - diluted |
|
|
62.0 |
|
|
|
61.4 |
|
(1) |
Other non-operating income, net primarily consists of income and expenses outside of the Company's operating activities, including, fair value gain / loss on warrant liabilities and derivatives, gain / loss on repurchases of debt, gain / loss on foreign exchange and the release of certain provisions. |
(2) |
Amortization of acquired asset represents amortization expense on the fair value of intangible assets acquired through various Company acquisitions, including brands, customer relationships, software and merchant portfolios. |
(3) |
Discrete tax items mainly represent (a) valuation allowance recorded on deferred tax assets of |
(4) |
Income tax expense on non-GAAP adjustments reflects the tax expense on each taxable adjustment using the current statutory tax rate of the applicable jurisdiction specific to that adjustment. |
Adjusted Net Income per Share
|
Three Months Ended |
|
|||||
|
March 31, |
|
|||||
|
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 shares – diluted (1) |
|
62.0 |
|
|
|
61.4 |
|
Adjusted net income per share |
|
|
|
|
|
||
Basic |
$ |
0.57 |
|
|
$ |
0.54 |
|
Diluted |
$ |
0.57 |
|
|
$ |
0.54 |
|
(1) |
The denominator used in the calculation of diluted adjusted net income per share for the three months ended March 31, 2024 and 2023 includes the dilutive effect of the Company's restricted stock units. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240510776430/en/
Media
Crystal Wright
Paysafe
crystal.wright@paysafe.com
+1 (904) 328-7740
Investors
Kirsten Nielsen
Paysafe
+1 (646) 901-3140
kirsten.nielsen@paysafe.com
Source: Paysafe Limited
FAQ
What were Paysafe's Q1 2024 revenues?
How did Paysafe's total payment volume change in Q1 2024?
What was Paysafe's net income for Q1 2024?
How much did Paysafe's adjusted net income grow in Q1 2024?
What is Paysafe's adjusted EBITDA for Q1 2024?
How much did Paysafe's net leverage decrease in Q1 2024?
What are Paysafe's full-year 2024 revenue and adjusted EBITDA expectations?
