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Provides Preliminary Select Financial Results for Q4 and Full Year 2024
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Provides Preliminary Outlook for Full Year 2025
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Board Authorizes Additional $70 Million to Existing Share Repurchase Program
Paysafe Limited, a leading payments platform, announced a definitive agreement to sell its direct marketing payment processing business line (“the disposed business”). Paysafe also announced preliminary select results for the fourth quarter and full year 2024, along with supplemental financial information for comparability purposes, giving effect to the disposed business.
Bruce Lowthers, CEO of Paysafe commented: “The divestiture of our direct marketing payment processing business reflects our commitment to portfolio and resource optimization to focus on our largest growth opportunities as a company. This accelerates our transformation by exiting a non-strategic business line, bringing a close to the repositioning of our Merchant Solutions segment. This represents a significant milestone that enhances long-term shareholder value by positioning Paysafe to deliver resilient growth and sharpen our focus on Paysafe’s ideal customers and verticals in the experience economy.”
Agreement to sell direct marketing payment processing business
Paysafe has entered into a definitive agreement to sell substantially all assets related to its direct marketing payment processing business line (Paysafe Direct LLC) to KORT Payments, a specialized omnichannel payments provider, led by Joel Leonoff, founder and former CEO of Paysafe. The business primarily consists of direct marketing and other card-not-present volume in both complex and traditional industry verticals.
The transaction includes reseller and merchant contracts, as well as dedicated technology and employees related to the business. The consideration for this transaction largely consists of annual earnout payments over the next five years. The transaction is expected to close in 30 days subject to finalizing certain transition services-related items.
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Additional background
During the Company’s prior two earnings calls, management discussed that strategically it was in the best interest of Paysafe’s shareholders to reduce the Company’s exposure to direct marketing, a business line within the SMB portfolio of its Merchant Solutions segment. In the fourth quarter, the Company continued reviewing alternatives for the business line and exiting higher risk merchants and determined that an accelerated exit would best support long-term shareholder value and minimize disruption to the impacted employees and remaining customers.
John Crawford, CFO of Paysafe commented: “This is a meaningful step forward to improve our financial performance by eliminating a declining, non-core revenue stream while significantly reducing Paysafe’s exposure to higher risk verticals. It’s important to highlight that the core businesses performed in line with our expectations for 2024, including 10% revenue growth from our Merchant Solutions segment, excluding the disposed business, and 4% revenue growth from our Digital Wallets segment. We look forward to providing more detail on our 2024 performance and 2025 outlook during our earnings call next month.”
Preliminary select financial results
To supplement the preliminary financial results, which were impacted by the accelerated merchant exits and associated credit losses during the fourth quarter, the Company has provided additional historical information for comparability purposes giving effect to the disposed business.
Full year 2024
Subject to the finalization of financial reporting processes, including the finalization of our review of income taxes, net income for 2024 is expected to be between $19 million and $25 million, compared to a net loss of $20 million in 2023.
Full year revenue for 2024 is estimated to be $1,705 million, an increase of 6% compared to 2023, or 7% when excluding the disposed business.
Adjusted EBITDA for the full year 2024 is estimated to be $452 million, a decrease of 2%, compared to 2023, or an increase of 2%, when excluding the disposed business. This includes total credit losses of $47 million in 2024, an increase of $26 million compared to 2023. As previously discussed on the Company’s earnings calls, Paysafe made significant investments in 2024 totaling approximately $29 million to expand its sales capabilities and optimize the portfolio.
The combined year-over-year headwinds from movements in foreign exchange rates and interest on consumer deposits to full year revenue and adjusted EBITDA were approximately $6 million and $7 million, respectively.
Fourth quarter 2024
Subject to the finalization of financial reporting processes, including the finalization of income taxes, net income for the fourth quarter of 2024 is expected to be between $31 million and $37 million, compared to a net loss of $12 million in the fourth quarter of 2023.
Revenue for the fourth quarter of 2024 is estimated to be $420 million, an increase of 1% compared to the fourth quarter of 2023, or 4% when excluding the disposed business.
Adjusted EBITDA for the fourth quarter of 2024 is estimated to be $103 million, a decrease of 16%, or an increase of 1% when excluding the disposed business. This includes total credit losses of $23 million in the fourth quarter of 2024, an increase of $16 million compared to the fourth quarter of 2023.
The combined year-over-year headwinds from movements in foreign exchange rates and interest on consumer deposits to fourth quarter revenue and adjusted EBITDA were approximately $5 million and $4 million, respectively.
Summary of estimated segment results
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|
|
Three Months Ended December 31, (1) |
|||||||||||||||
|
|
|
Paysafe |
|
|
YoY |
|
Results of disposed business (2) |
||||||||||
|
($ in millions) (unaudited) |
|
2024 |
|
|
2023 |
|
|
change |
|
2024 |
|
|
2023 |
||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Merchant Solutions |
|
$ |
230 |
|
|
$ |
227 |
|
|
1% |
|
$ |
13 |
|
|
$ |
24 |
|
Digital Wallets |
|
$ |
194 |
|
|
$ |
191 |
|
|
2% |
|
$ |
0 |
|
|
$ |
0 |
|
Intersegment |
|
$ |
(4 |
) |
|
$ |
(4 |
) |
|
0% |
|
$ |
0 |
|
|
$ |
0 |
|
Total Revenue |
|
$ |
420 |
|
|
$ |
415 |
|
|
1% |
|
$ |
13 |
|
|
$ |
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Merchant Solutions |
|
$ |
33 |
|
|
$ |
57 |
|
|
-42% |
|
$ |
(6 |
) |
|
$ |
13 |
|
Digital Wallets |
|
$ |
89 |
|
|
$ |
82 |
|
|
9% |
|
$ |
0 |
|
|
$ |
0 |
|
Corporate |
|
$ |
(18 |
) |
|
$ |
(17 |
) |
|
-6% |
|
$ |
0 |
|
|
$ |
0 |
|
Total Adjusted EBITDA |
|
$ |
103 |
|
|
$ |
122 |
|
|
-16% |
|
$ |
(6 |
) |
|
$ |
13 |
|
|
|
Twelve Months Ended December 31, (1) |
|||||||||||||||
|
|
|
Paysafe |
|
|
YoY |
|
Results of disposed business (2) |
||||||||||
|
($ in millions) (unaudited) |
|
2024 |
|
|
2023 |
|
|
change |
|
2024 |
|
|
2023 |
||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Merchant Solutions |
|
$ |
958 |
|
|
$ |
878 |
|
|
9% |
|
$ |
104 |
|
|
$ |
102 |
|
Digital Wallets |
|
$ |
766 |
|
|
$ |
735 |
|
|
4% |
|
$ |
0 |
|
|
$ |
0 |
|
Intersegment |
|
$ |
(18 |
) |
|
$ |
(12 |
) |
|
50% |
|
$ |
0 |
|
|
$ |
0 |
|
Total Revenue |
|
$ |
1,705 |
|
|
$ |
1,601 |
|
|
6% |
|
$ |
104 |
|
|
$ |
102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Merchant Solutions |
|
$ |
191 |
|
|
$ |
222 |
|
|
-14% |
|
$ |
43 |
|
|
$ |
58 |
|
Digital Wallets |
|
$ |
339 |
|
|
$ |
319 |
|
|
6% |
|
$ |
0 |
|
|
$ |
0 |
|
Corporate |
|
$ |
(78 |
) |
|
$ |
(82 |
) |
|
5% |
|
$ |
0 |
|
|
$ |
0 |
|
Total Adjusted EBITDA |
|
$ |
452 |
|
|
$ |
459 |
|
|
-2% |
|
$ |
43 |
|
|
$ |
58 |
|
(1) |
Amounts may not sum due to rounding. |
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(2) |
The adjusted EBITDA amounts for the disposed business exclude certain indirect costs that were historically allocated to the disposed business. Such allocations included labor and non-labor expenses related to the business line’s shared functions (e.g., finance, technology and legal, among others). Indirect costs associated with the disposed business were $4 million and $2 million for three months ended December 31, 2024 and 2023, respectively, and $14 million and $5 million for the twelve months ended December 31, 2024 and 2023, respectively. |
Outlook
For full year 2025, Paysafe expects year-over-year revenue growth to be between 6.5% and 8.0% and adjusted EBITDA margin to be between 27.1% and 27.6%, with adjusted EBITDA growth in the mid-teens. This preliminary outlook excludes the results of the disposed business for 2024 and 2025.
Paysafe continues to expect to generate strong free cash flow and to reduce leverage, including its goal to achieve 3.5x net leverage by the end of 2026.
Share repurchase program
The Company is also announcing that its Board of Directors has authorized a $70 million increase to its existing share repurchase program. Including the $70 million increase announced today, approximately $77 million in aggregate remains available under the share repurchase program.
Under the share repurchase program, management is authorized to purchase shares of our common stock from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. This program does not obligate the Company to acquire any particular amount of common stock and the program may be extended, modified, suspended or discontinued at any time at the Company’s discretion.
Basis of preliminary financial information
Paysafe intends to provide its full financial results and a more detailed update with our scheduled fourth quarter earnings call on March 4, 2025, alongside formal guidance for 2025. Until that time, the preliminary results described in this press release reflect management’s estimates based upon information available to management as of the date of this release, are unaudited, and are subject to the finalization of our financial reporting processes. These preliminary estimates should not be viewed as a substitute for full annual financial statements prepared in accordance with GAAP. There is a possibility that these preliminary results could differ materially from the actual results when they are finalized and publicly disclosed.
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