Earnings call transcript Q1 2023

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Operator

Hello and welcome to the Paysafe Q1 2023 Earnings Conference Call and Webcast. [Operator Instructions]. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure of the Investor my Kirsten over now Head Nielsen, Relations. is to call turn to It Please go ahead, Kirsten.

Kirsten Nielsen

Thank you, the XXXX. for Conference Earnings and welcome First to Quarter Paysafe’s Call of

Alex Lowthers, Executive Bruce are today Financial Officer. me Officer; Joining and Gersh, Chief Chief

that begin, and with These contain conjunction forward-looking call we subject Company’s reports. those expectations contained statements assumptions reflect in should Before management’s results actual forward-looking materially release this considered most and SEC statements. and the be will factors to that statements current reminder a cause are in cautionary statements our differ earnings and recent could to from

You should not undue place these statements. on reliance

them. during call, contains non-GAAP Today’s date call this as only financial of measures. statements and of no this undertake the update presentation Forward-looking we also speak to obligation

find on Investor additional in financial GAAP reconciliations turn appendix of which these directly that, to With non-GAAP this and the the about of measures most the I’ll call information Bruce. in the measures over presentation, to Relations available You section and our comparable website. today’s release press can are

Bruce Lowthers

you thank everyone joining us and Kirsten Thanks today. for

back our you of off our following IPO. let’s the begin are XXXX, Slide After strongest delivering returning growth in XXXX the If we X. by quarter revenue kicked webcast to on along half since

e-commerce performance basis. Wallets. increased double-digit basis including million recorded including currency X% our First classic quarter from X% X% the currency guidance Solutions on our Digital a was segment revenue We constant Digital year-over-year constant exceeded growth In $XXX range and strong Wallets a on increased Merchant growth. in revenue

increased basis. year-over-year of was million our on of a In guidance, first adjusted EBITDA currency at the quarter high constant end X% and $XXX

We adjusted been so payment or institutions. other growth. SBB, to the needed. approximately to turbulence banking of XXX the with personnel executive the have route revenue we with has our line direct in through can failures roughly always unaffected EBITDA and one-off we Signature no have operate First increased banks flows Excluding market a Throughout Silvergate globally our constant that relationships as by currency these into Republic of look related would resilience expenses in Paysafe X% partners payments and severance, network build

place risk robust have FBO ring operate of and the customers. in acquiring safeguarding the through to customer to business fencing our ensure further We we of in any manage accounts our U.S. funds,

customer balances U.S. through insurance. supported Our are pass by FDIC

where our welcomed us Turning our to lead of a our our and we few key Experian will vision across that strategic she links joined Paysafe, core geographies a from highlights. business Nicole who technology strategy APMs verticals. to April, In support for wallet with innovation Carroll, set and extensive

recently Power's in the Satisfaction mentioned recent to Day, third Services standard and focus team's on well industry Merchant Paysafe ranked the our testament above the I Investor J.D. the a Survey, on As was experience. customer

states to three PointsBet, in now DraftKings, activity partnerships continue launch regulated iGaming, QX, several including North strong American among the see Caesars payments XX fantasy up QX skill and social the states, growth sports, at sub year. we're payments for of other our powers states We in with brands, gaming, of as strong and Paysafe expanding such from others. major Outside XX including of in which verticals gaming. is last regulated end seeing

card merchants and acquiring Ontario, our In are both three e-transfer we new launched leveraging interactive who capabilities.

QX for Wallet excited Digital our about existing our of in several and e-cash launch We clients Ontario. Skrill also activated are

multiple with XX XXX,XXX out a quarter, maintaining value deals we plan progress that to more transformation sales XX contract We In on to on each double growth Paysafe reinvigorate than our function, first included in annual building and enterprise also deals enterprise our products. XXXX. the team's focus continue to our closed sales make headcount in with the

geographic and XX% opportunities time cross-selling also We expansion in integrate process, reduction also in that integration to the the improved pipeline prior new signing. of from resulting deal highlight a a our I'll quarter. from point our the contract average we've of expanded merchant

X our key focus a wins. Investor few Slide recent of outlined sales examples three we At Turning of Day, part our for areas to transformation. as

new cross-selling to merchants. existing First, products Paysafe

Second, base And existing merchant our geographies. pursuing into new in verticals. our expanding new merchants third, key

provide of across are European in existing merchant a specific single not global customer these the digital API, material coming upselling large smaller footprint our winning. the region. across Merchants ability available why base, with to are closed deliver card standing momentum long With clients, set wallet to and and we're around our customer While experience. gaming Paysafe examples to we're payment they size, manage options three some and seeing for highlighting add through along our base, into color our recognition deals brand the leveraging we better relationships our in our to extensive risk acquiring progress

in and merchant In FOREX UK support our expanded wallet growth and existing the leading digital financial Latin client their aspirations vertical, in ATFX trading relationship to the with America. we

provide wallet entire Orange final pay our e-cash of global example, their improving a a an were market across and with as a into entered our As wins also Paysafe main we credit verticals the average sales function and structure, including card processing in the out supported core while size, deal sell new key pay payments products, methods, to as and by deal rates. win suite to strategic as entire including by the partnership improved well has execution payment infrastructure, and to Paysafe geographical increasing offering These which recently ability Crypto pipeline, our go our our digital footprint. organizes as

provided Slide Moving classic our focused with wallets. quarter, we X, this on digital last the update view consistent to is

from QX asked XX% per classic year of our more pronounced transactions was compared repeated user see stronger classic user again? continued only war recorded the average our stabilization of including of not growth was did seasonal up supported by FX. year, excluding could revenue but to and following One QX. to also QX wallets a in we uptick active in last wallets revenue questions digital a the classic get in in Well, I deposits double-digit we ago and in engagement, Ukraine currency double-digits and Consumer underlying grow user base, per active wallet Russia again constant growth we were

we rates improvements As and conversion as on deposit drivers service, include KYC, the prior and rates. call, personalization, enhance mentioned to of to merchant friction experience improvement as user onboarding, as checkout customer the well success and initiatives such ongoing reduce related

also support retention. adoption features We well enhancements with new to and are resonating rewards are including and piloting loyalty that new consumers,

while and will appeal of TPA the which our wallet we ahead, growth growth. Alex that, product user revenue and user our ask review across use platform cases broadening the leverage Looking progress average enhancements, to I'll adjacent With our markets, to experience the temper driving metrics financial and in may results.

Alex Gersh

you, Thank Bruce.

move Let's Slide X. to

guidance financial quarter EBITDA above the with pleased and our performance range are the for our with at of top revenue the first We adjusted guidance range.

top personnel would well. approximately exceeded costs, guidance million the EBITDA adjusted our of X as Excluding non-recurring have of

resiliency Merchant strong Moving Wallet In the Digital in reflecting growth to Volume for continued in and of improvement increase continued business was saw X% saw spend. we where X Americas an Slide summary quarter iGaming Digital strength to in XX.X slight and from or the Wallets, Solutions compared XX% from of sequentially, continued assets our growth the results. of billion, was QX movement. shift roughly Merchant last e-commerce XX% year digital the mix from FX. for segment offset for adjusted underlying with a reflecting the FX and Solutions mix to by flat year-over-year, merchant consumer U.S. Volume not financial

Total revenue for X% on the first to increased XXX.X million quarter basis. reported a

in foreign segments. was of changes reflecting quarter adjusted rate, Adjusted for the from growth exchange EBITDA from XXX.X X% increased the XX.X%. Excluding impact in revenue resulted EBITDA first margin million, both

reflecting Adjusted to first X in been per $X.XX costs prior XX% million share QX reflecting income for higher points at related to personnel margin or flow was executive in conversion was off year. XX XX.X% increase cash the mainly on year-on-year. cash have generated in compared In XX.X conversion, one which XX%. the million period, reflecting expense. is free Free quarter LTM XXX than net million QX, severance, percentage last million Excluding the $X.XX flat XX.X we or would flow interest of share per or the basis

Slide to another the quarter discuss strong results. segment Solutions to delivered growth. Merchant move of X Let's

volume well the of period to same five was an the million, an XXX.X as billion, merchants. increase year, new last the of reflecting along last reflecting increased was with largely increase launch e-commerce year-over-year first consistent X% quarter first Adjusted First the including with onboarding margin, as a the XX.X% EBITDA XX.X of states million, new quarter year. of strength XX.X quarter for over in XX% in of strong continued led and SMB iGaming, X%, space, revenue by growth U.S. our

Turning to on Wallets segment XX. Digital Slide

for up million, an which for segment was reflecting flat XX% of $XXX.X and adjusted volume constant billion, basis $X.X XX.X% in Adjusted the Wallet was the revenue quarter FX Wallet currency XXX headwinds. increase year-over-year, First EBITDA not million, constant was first $XX.X Digital a Digital of quarter is an currency on basis. X% increase points. a margin,

product are highlighted, sales FX was seeing our user partly the the deposit, on Bruce innovation, from As and growth also by progress Growth war. we transformation. and Russia-Ukraine which supported continued revenue led interest offset focused on initiatives experience, headwinds by

repayment leverage. the total At debt $X.X Turning for in of to reflecting $XX debt XX debt roughly approximately debt by Movement quarter, was of our repurchases and increased balance FX of Slide in and billion, million the $XX QX. summary the first end million.

debt EBITDA highly growth EBITDA at adjusted focused remain times and debt-to-LTM we in X.X was net further and leverage quarter repayment ratio XXXX. on reducing Our through end,

times be believe to of to year-end. X.X continue times We X.X the in we will range by

XXXX on in on outlook. results, outlook Slide Based maintaining our QX we feel the to our confident XX. Moving

We to reflecting continue $X.X the $X.XX billion, of billion above reported in midpoint. revenue at expect X% the growth to range

$XXX million, at We point improvement. $XXX adjusted basis range of million continue EBITDA to of XXX to least margin the expect in reflecting

ramp-up guidance quarter, last on turn back the view broadly of our and And half call, the our year which the we and revenue year other high is single-digit strategic ranges away transformation will moving guidance. quarterly by and current on will low our sales said, initiatives. the Bruce. full we in guidance explicit was that from to in the our of being full focusing our I this earnings first reflected what single-digit with be call the half year now second on That cadence driven growth consistent growth Starting providing discussed

Bruce Lowthers

want reiterate positioned markets. In We strong in and Thank I positions to closing, and growth for large attractive thank hard their team well margins. you, our that improve maintain is reaccelerate Paysafe work Alex. to

innovation, product global cross-selling significant By years opportunities when see our are revenue transformation, across to from that coming to can for XX% we to prioritize core meaningful client continuing We base experience, and we opportunities and of a unlock our about our value serve and and geographies. with fortunate client premier products sales believe we online stakeholder come.

actively learning the efficiencies. to to technologies, the and money with provide a of data over of in Paysafe deliver XX have our last Lastly, risk support decision-making. AI we fraud improved as of AI benefits team. customer analyze our company-wide of experience, fight seeing risk, our years machine been defense modules growth, science against in-house engaged and two developed habits models We're laundering the a manage in that has tools as range by well onboarding development acceleration active sales spending partnership enhance Today,

capabilities natural we playing servicing user per month respond and and of AI department is processing customer e-mails our where that important also around an role use learning machine have to in and understand appropriately. XXX,XXX inquiries language virtual assistance AI

Our service. deliver and personalized adapt improve advanced to time learn, virtual assistance over

as sales, about which payment future We excited developments, management. the continue risk acceptance pricing, and the areas further will optimization, be to overall enhance

Now with the begin let's Q&A.

Kirsten Nielsen

Say from which questions take turn We'll up vote Bruce. our analyst we'll you, questions. from to the of Thank After Technologies submit community. research questions allows shareholders a that, couple and platform, to

question Ivan like asked about would is of Bruce, first the Our the to selling from you who address company? possibility one? this

Bruce Lowthers

Sure, Kirsten.

Board, we that I'll quarterly the remains and The leadership strongest since about back to We focused growth margins, are building and strategic the a in in I actively Paysafe. continue priorities, while the half our returning opportunities team have the say with very the the on to our company and and QX. stronger revenue right be profile into across what we full now excited of the had Board IPO we on is year the of involved last achieved So QX. progress expanding support

Kirsten Nielsen

Thanks, Bruce.

is who can versus as Our expect next from we you take question Bruce, in XXXX? XXXX Joshua, what this can well? asks question

Bruce Lowthers

Sure. Happy to do it.

revenue than that control believe environment that for position in X% the achieving our rate we XXXX, thanks to flat today question. to we a We a Joshua, that deliver a year which want in from can't today outlook So stronger I strong to growth were a in the we're impacts be anything aren't is effectively X% ago. but the macro full I improvement seeing confidence XXXX. in growth clear year

we We along war, also headwinds market lapped reforms in saw of a regulatory with some last couple year that the of Russian-Ukraine the like Europe.

different? One our sales about is change you what's heard So important that transformation.

it's leveraging global much markets. larger optimization, rates, and multiple And wallet cross-selling our we existing pipeline early then adjacent And While a we're year up second the base. and half, we've going like our the within have we're than initiatives APM seeing. opportunities we around merchant more that's was on have in days, the side, targeting, our to deals but geographically improving that the we won ramp early to that and authorization seeing product we're the platform results it already product wins last that's key

that positioned our So again, and this year margins. reaccelerate we really believe we're growth to improve

Kirsten Nielsen

Okay.

a have about of this also to topic? the redeem Bruce, to We potential couple for buybacks. want warrants share questions you address the do or potential asking

Bruce Lowthers

that. Sure. I'll take

as have not you talked we've share a buyback a about this so in And do We program lot. know, probably place.

our debt is focus reducing higher Our at priority time. a and level, it's this

higher ratio wanted be. is leverage than Our to we

that. at program to capital focused basis. priorities a expect I'm sure continue place. to buyback on in I look But or we we're review reducing us on renew a this we'll not So regular would put our allocation as

debt a primary debt is growth fall, and for last from reduction focus repeatedly organic said we've us, As reduction.

Kirsten Nielsen

turn operator to to the lines Thanks, back Bruce. let's up open questions from With to call that, analysts. Alright. over the the take Operator? the

Operator

Instructions]. [Operator

is Jamie Susquehanna. coming question from from first Friedman Our

now is line Your live.

James Friedman

and and morning today sales strategy ask I two. in repeated of Bruce, good kind And on here. Analyst Day part was March at you the hoping then articulated you, congratulations. is early those so of unpack the Hi, Good the innovation. I acceleration results and and wanted could product the to

In or terms by sales in still coming as engine growth is that said what verticals it time, time? you the broad-based is from those target of of verticals, example, as new articulated concentrated the it sales the much for at acceleration, was, the at verticals, how that is you it aligned really

Bruce Lowthers

the question. Jamie. Thanks Yes, you for Thank joining morning. us this for

the doing. very been starting what look, Rob with excited the I'm sales So about have question, and team

made the I think the on team, team, the inroads in right our building out the great talent here early on team, has that getting turnaround.

the you when think has up the at I look success that really having, pipeline they're considerably. built

a really customers. do said back couple ago, quarters we're we go those I talk and existing when As cross-sell start to on our going we customers really into to to of how focusing starting were this, about

expansion we cross-sell existing think for talked and bit I remarks the sales little about multi-product in into a prepared our customers.

existing stuff in that base. selling our the majority client been So vast the of we've have been

So really very targeted.

us we of about being even from talked coming those and verticals Investor back from fall, being that last XX% have five remember, you successful the our focused to little share that the has going by those revenue cross-selling. and team And we customers in get and five a when with on very the If and did been we wallet Jamie, verticals going that. back maximizing Day we bit

want we well. those expand, So and team overall, on verticals. is continue to five We'll doing to but focus think continue in tight very to the I be

As far as the product...

Speakers] [Multiple

James Friedman

in evolution, that like -- market there going on side, do the but side, the know on you it's the the wondering, is you what's were need hand the that you'd have the just interesting, call have the in was so anything I I an you innovation now do really innovation statistics Yes, product engagement killer app side? out, a on

Bruce Lowthers

a of there's think things right. I happening, Well, that couple are

all on product. So see, our going digital We're when really it's the a with We're and on experience though coming APMs. you of we focus to wallet site. user couple authorizations, side, everyone results went what going focus about having quarters you back from wallet we can on it's And see core ago, this talked early, great -- focus going is on results to even we're e-commerce what to can that. that the

quarter. focusing growth great job You here see of things nice her first experience. on around that Really user team double-digit Megan out doing in and the

also group, driving that, And transaction ARPU it's growth growth so through it's with driving and as that well.

a unbranded talked is do platform We We overall, So be that a very good about feel the is come. allow talked about pace the bring Day, wallet to that, targeting Still Wallet delivered. from product of really towards platform. the here. XXXX very still of more a with very us We're I to as beginning that type year We opportunity -- that, of releases nice about pipeline Merchant as our we're to Investor move and of there. what year we're we forward. business wallet we end perspective we're about as branded going believe on doing that's excited a going both we've for believe Wallet the got there. the to and to We're at excited

we things strength wallet. standpoint. So We a and the have about again, and on. feel e-comm see the in site good are pipe innovation a throughout on product innovation lot product an strength see of standpoint, we're organization, our our We the in building progress early from building that in making

James Friedman

in the you, I will Thank back queue. jump

Bruce Lowthers

you Thank Jamie.

Operator

you. Thank

question coming Chiodo from from next is Suisse. Timothy Your Credit

now is live. Your line

Timothy Chiodo

industry and you, clarifier everyone. good a question then quick I thank first guidance. morning have an Great, the on

Slide a you Investor it slide, XX. great your had was at So Day

used in that methods You that chart iGaming remember, various the it today. payment the are was all had had pie might that one the

wanted chart, you that the card it acquiring of through portion going are volumes found or XX% that ourselves card. guess, or an in in lot bigger were helpful, so any look I at and that I It willingness of was guess, with was portion included. words, think in expect of loosening to seeing of few perspective, changes pie pie From on about pie some that. of become on approving I if years? really card touch I you do a a iGaming all industry terms ability at to of their, a or other transactions, issuers those chart we more chart comfort, of to people that

Bruce Lowthers

Tim. Yes, morning question. and thanks the Good for

and What evolve, continue as what see being experiences. XX% the payment our to move emerge is I say would from is to number. think you're you'll going around as that So do really rail I some card in options forward things movement see industry,

so card And debit things the see to just importance you're going personalization more or card. data versus of really a credit and a using driving

And see you I so believe that. will with that movement some

I wallets positioned think for very coming I the point. emerge years, all and this the well over think opportunities for types you'll see we're at payment really to

of crossroads good emerge. feel we So the sit where payment types new about as

Timothy Chiodo

Okay, revenue so much is great. follow-up the guidance. Thank that. you around for The

there maybe in implied second could a specific giving without that you're So and second you other half. the give a you a it slowdown half. about were on changes, some bit earlier of QX deceleration QX? little it as came digits in imply is first a in of sort little context the the there's but of about in stronger, moving Maybe in bit thought a reacceleration for seems to more the just it quarter talking low some year, Is parts, but single guide, the QX ahead

Alex Gersh

do to you I the on of -- the the rate said digits, higher exactly low call, can of we half quarter I I I of very is it's that what exactly and want initiatives second we reiterate, that for time, single it below which to half by first last said what And exactly for the think our decided year difficult tell what our so expectations. what reiterate the want I to to is X% year. not the mean, we look, these quarter, exactly to than just X% just far to. Yes, we Sorry. said some and sales second as

Timothy Chiodo

Excellent, thank you that. for

Operator

Thank Instructions]. you. [Operator

question of from next coming America. from is Buddhavarapu Bank today Our Aditya

live. now line Your is

Aditya Buddhavarapu

headwind, you're question more seen up XQ? on change just verticals, different taking to sort seeing be what you but think any do of I similar then the questions. what could you as reason if there seen on there you is growth for continue fact momentum so might have just shouldn't early should thanks in the XQ you you given particular why we you second, upon what headwinds of XQ you my -- sticking not the in able to -- said sorry, the previously the touch on And touching Could in you've so you have overlapping, [indiscernible] part in on maybe a about Russia earlier far? outlook, the Hi, that I think the some compared comment any of bit some mean, you're being to guess

Bruce Lowthers

Yes. Thank the and I question. you, appreciate

really growth if the understand and So I question mix. was around the first product mix

you of So the at you business acceleration the was an look when within growth segment double-digits. QX, mix saw what from to our Merchant really e-comm

was So there going told you improve some that is done But strong with we platform and as focus for a that us things platform. to good great growth we're what We've about operationally happening feel forward. be moving e-comm. to that in

on that the segment, there. e-comm of you vertical. the see And from within the So bit vertical to then a side little nice shift recovery Wallet SMB there a

the we out than a growth there I anticipated, we good classic in coming had QX. stronger of think wallet but very growth probably little

if question, I think geographies, that interpreted solid I North on correctly. standpoint, in growth was no We from shift really North upper around would of a say, really single-digits I the still your America, geographical America. in half see real it back

thought it You've got a in where kind going LatAm rest the was the low of be. growth double-digit to we of and world,

the in off. year Americas consistent starting how saw we to solid the So

half of of saw beginning So much we the the of way the unfolding. kind year very at the first

Aditya Buddhavarapu

Great, thank you.

question just outlook itself. on my think second I the was more

last year, some XQ have don't let's you Given in say, the headwinds from of had you Russia. still

that that cause is apart else just growth? maintained for from Just that low you've outlook in deceleration XQ because there might single-digit wondering, which anything

Bruce Lowthers

ahead. go Alex, Yes.

Alex Gersh

about right. I you in we talked a I QX, again, lot -- think about growth in iGaming, if instance, for our think

into more a into states, So this lot a as more to say versus in lot Bowl of sales. we March because more year and Madness year and mean get got a QX we us Super last

that if may extra which and look you I the April, time is an at Wallet think generally have look weekend, not you fact you Easter the for at right. Digital best in

absolutely So I you're think in while may why, go QX that are headwinds would know is away which reiterate things repeat where not just there saying in for want plan maybe there this. are that -- some be of itself, highlighted that right we also QX happen. is certain where how again, to to the growth this going we all We it's of

I just expectations And make on reiterate. our we've and our so QX understands exactly that that that the everybody again, want sure to started we given, guidance just

Aditya Buddhavarapu

That’s great. Thank you.

Operator

or [Operator no closing there any the you. turn comments. further further If floor this Thank over are Instructions]. back questions time, like to for at I'd

Bruce Lowthers

Look, in just up. Thank recognize or on. much. relentless but you great. on successful focused to really It's focus turnaround couple it sustainable of achieved a that and two, not really that's what we're very here pretty a a quarter growth We wrap Yes, comments execution. requires

positive we're to remain bear the plan results Our on and optimistic is right we then beginning path. that

and support of through and navigate journey. team appreciates work our management the employees and we shareholders Our our as patience of this customers hard the transformative

and this morning, attention day. a So great appreciate that, everybody's with have you, really thank

Alex Gersh

Thank you.

Operator

does That and teleconference conclude you. Thank today's webcast.

We you at lines and for your day. wonderful participation your disconnect today. thank have time, a this may You

Paysafe Limited (PSFE) 16 May 232023 Q1 Earnings call transcript