PSFE - Earnings call 4 2023

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Operator

Greetings. Welcome to the Paysafe Fourth Quarter 2023 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Kirsten Nielsen, Head of Investor Relations. Thank you.

begin. may You

Kirsten Nielsen

welcome fourth and earnings call conference Thank and to full the quarter year for you, Paysafe's XXXX.

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

forward-looking that with conjunction statements most contained release call reminder recent considered earnings cautionary a our the begin, should be we will Before contain and statements in SEC and in this company's reports.

cause from current are subject that may These those and to materially differ statements. expectations statements actual assumptions reflect to and management's forward-looking results factors

undue these on place not should You reliance statements.

statements this call speak obligation Forward-looking of as this them. no update only undertake date during of call, the and to we

Today's financial presentation measures. non-GAAP also contains

You can of which of are financial measures GAAP measures reconciliations find in Investor our available today's website. on this to presentation, the and these Relations appendix and the press section most the comparable information additional directly release about in

over the I'll call that, to With Bruce. turn

Bruce Lowthers

performance, our better of a pleased continued Kirsten, better and full Thanks, today. us for year Great. We're 'XX reflects thank execution. joining and and fourth with XXXX Paysafe, marked quarter for improvement financial guidance. all which the with growth of you year our achievement

their teams work I want for of, a and lot and Our thank them dedication. to proud to have be hard

is in of many While excited we've made progress be the more business, done. deliver goals areas well for are underway. there our to to we're And XXXX, which

a increase financial basis. XXXX more a strong billion, but a resulting detail, on compared X% the in full-year basis, the that results or you currency on with quarter and of fourth a in through X% we currency to $X.X X% is Alex delivered will revenue a constant take constant revenue X% headline growth

of resulted of EBITDA an leading XXXX adjusted of increase $XXX This EBITDA adjusted on of currency. EBITDA a XXX increase adjusted to in XXXX, basis quarter for an full-year compared XX%, XX% or to margin XX.X% million, constant increased XX% Fourth points.

for XXXX, end, at at X.Xx and year. net the target our which down last was end overachieving our original reduced also X.Xx of from leverage, quarter We

in Turning to build provides Slide X, us with I'll recap upon achievements solid to the a in XXXX. of XXXX, which our highlights foundation

with headcount our team First, enterprise was in reps XXX sales, deals to quota-carrying increase supported we in which This comparable sales a by roughly second when is nearly XX% in-year from XX the starting a strong for and deals XXXX. XXXX, members, double enterprise closed drove were the sales plans first the transformation revenue of half new growth this to signed. contribution from our established,

e-commerce We which increased for also XX% double-digit recorded growth, XXXX.

Paysafe third J.D. all Power for last On customer year, place up the outperforming the I'm the dimensions. study reaching rankings X thrilled reached coming experience, among average in and industry after top that has brands, now

was deal on we launch the merchant what improvement, continued XX frame including success system process consolidation our onboarding. delivering were contract faster is about efficiency, highlight side time than the average to a customer our focused QX, team. Another creation QX, of faster days in In improved by and driven

customer the into resulting the service a XX% [ building and web consumer we customer by in side, ]. mobile experience journeys, tools reduction the On in contacts improved self-serve

first rates We growth increased also in wallet. in to automation out classic and growth Digital service by engagement conversion key encouraging actives NPS the our closed [ improvements, We customer and with sign-ups Wallet. These score X-month usage enhanced including and progress the customer resulted XXXX, increased the converting tools. service have year in an throughout implementing seeing success ], metrics, in in payment our next-gen

commitment our support we've focus the customer improving to organizational this capital to in to development. innovation. changes on new of experience, addition renewed in sharpened made a Lastly, adapted We've product our number XXXX, spend

we've leverage. made that debt reducing financial optimized we and methods in and are the to across metrics In number also key board, progress our available methods merchants year, and our great of increased summary, the while payment our expanded the During growth payment available resulting the in enterprise-wide.

is Moving each This same view unit. to last quarter, Slide our business demonstrating X. supplemental provided the that growth by we

As improved Digital XXXX, X% our and results, we've growth channel. by the across SMB e-commerce double-digit revenue business, growth in in Wallet to our third-party you've seen classic solutions driven

softer for well growth a I'll X partially performance acquiring channel this business, in back our eCash This U.S. was offset areas business. moment the I the by discuss of come XXXX. from our direct to in focus as our when as

In deal Turning across enterprise booked XX wins, with we our activity QX, X. verticals. new to balanced target Slide

Florida the in Hard relaunched the and Additionally, we with our one Rock online players. state are forward to market, U.S. sports now continuing pleased anticipated legalized for to its our into is largest markets with be look betting grow with We to relationship of Bet largest to relationship newly betting payments supporting Hardrock, which the expanded have sports

moving priorities, phase investment an and For and we're into important to our growth XXXX sales scale. of support future execution continued

XXX expansion where have scope to plan our the X new SMB the add XX SMB also states we headcount our about territory this beyond covered by to primarily this we include expanding while of also initiative hired in level not states This agents, will to today include enterprise salespeople to XXXX, us. additional already business. In year.

of mix, At to calls, direct recruitment and focused in on business are same prior growth the by channel. expansion focused programs. As favorable portfolio entire particularly of a we've the be partly touched channels drive improve SMB supported we acquisition time, will agent XXXX, optimization the more on the we to the our of during on portfolio

out retention. rolling we're further value-added and Also, and support services to satisfaction capabilities expanded enhance client

the on our base. into into Importantly, client we'll continue cross-selling made deliver XXXX, continued progress we including to

XX% years. key our we our grow very lot opportunity, than to from more to base merchants, [ is of which prior of reflect a continues cross-sold up our existing of ] XXX merchants. products runway a with cross-selling XXXX, with this enterprise little in into During client And

Turning to Slide X.

settlement with manage planned in business their that roadmap our to for one in U.S. finances rolling phased digital wallet the place. receive We out to a are of wallet merchant our approach leverages and acquiring SMBs SMBs

We wallets and banks, and fragmented see growing being where a solutions. checking the are this market, met currently solutions SMB various opportunity across in as needs by software-as-a-service

Paysafe, opportunity an our with intuitive move businesses bring to and simple, experiences. help and a ways with money For easy to through mission together digital to capabilities, represents convenient BXB BXC this

Moving X. to Slide

continue constant revenue the from the show growth first quarters progress XX% users, growth digital consecutive We and the actives. half year X with to in prior our from reflects of in of X-month classic growth 'XX. XXX,XXX year active currency the we saw fourth wallets. of wallets, in following stabilization classic quarter, approximately X% In ending This the

client initiatives calendars pricing as activities engagement loyalty the experience such revamping cards program, our prepaid supported campaigns, such promotion promotions, of as in was and launch This product Brazil. virtual and by VIP

from forward view by the merchant as comprehensive demonstrate in to the interest deposits, well revenue this side on supported a In relationships, progress This of XXXX, consumer consumer ongoing expand eCash improvement as we conversion. of new business. the view checkout was further to merchant look more to growth our the providing also solutions,

X. Slide to Turning

delivering As we consumer strategy our our of acquisition move growth to forward, improving business. side marketing sustainable customer is the on and key

new while point example, Wallet in is test one recently Digital to channels more campaign European key our delivering localized our Skrill outreach Here, The effective, X that markets. a as we messaging. expanded for conducted we

results we improved to improved their to fund also promising, conversion strongest subsequent funded transactions, implemented The than and driving double-digit initial engagement. We new accounts and months. and and encourage year-over-year activity in are growth and incentives sign-ups more rewards new perform contributed the accounts to sign-up XX

as sponsoring have result a a This we the start promotions on influencer is also partners, was our acquisition. as of across collaborations with Wallet rollout in Skrill broader channels of campaign solid as consumer eCash to of of focused on consumer markets, for e-tournament. an select what this drive the various we're just While key in promotions part registered and marketing acquisition such QX new of users our gaming higher goals country-specific quarter of the working

Turning bring summarize to of Slide together XX, priorities to XXXX. let's all for our this

advance and acquisition. to our of will strengthen strategies go-to-market the merchants with to consumer our sides both new we new existing on ecosystem expand reach First,

we business. touched to the we've on a dynamics also initiatives have I of particularly portfolio, number the earlier, mix experienced SMB As the to address optimize underway in

and territories. program adding moving focus headcount, enhancing expanding and and additional with sharper our Here, offering on acquisition capabilities, expanding are we our upmarket merchant a product

Lastly, projects this our our half to initiatives in are year eCash, drive online customer experience. continue around of solutions, on we About product such including new deposit consumer account innovation new methods. focused and products features and our scaling as

loyalty the such Wallet Digital prove and methods, experience payment while Latin payment key continuing regions payouts expanding are in America. local programs We as also to

and half of expand side, merchant focused unbranded our solutions. are other our the product such to continuing as acceptance initiatives on our advancing authorization The

investment The investments to important enhancing we to our areas Slide initiatives XX. verticals efficiencies. portfolio growth In and Turning key target are operational optimization. while are making sales XXXX, drive in two

$XX investment 'XX. margin from and incremental their Overall, in the million of about contribution full remaining this our of short-term reflect XXXX, with represents sales prior expense, to revenue reflecting new which in onetime headwind half the XXXX hires margin will in half

the coupled as next deliver at operating these revenue We $XX of with least and contribution expect initiatives improved the in million to X the million over of leverage realized XXXX, benefits $XXX approximately in in-year years.

Alex results. the I'll that, financial ask With to review

Alexander Gersh

Thank you, Bruce.

total an basis. $XX.X XX quarter Let's our was of Volume currency constant the summary fourth and the for million, a a increase Slide X% or X% of revenue $XXX.X increased X% quarter, fourth move year-over-year; of results. to financial in billion on

interest and full e-commerce benefit within million well the as million of compared included wallets, Solutions by deposits, XXXX. a segment or for was revenue in classic was QX growth year-on-year revenue volume double-digit which to digital on consumer Growth $XX as in Merchant led year the $X

for more quarter Excluding was currency. increase in margin FX growth year. points, the increase constant XX% or operating including approximately than $XXX.X Adjusted Adjusted the interest, EBITDA by leverage, the of was of quarter credit lower primarily which was basis a X% decline Paysafe year-over-year XXX EBITDA revenue gross XX% driven an losses, full for benefit margin. offset XX.X%, fourth and and fourth year-on-year million, from an both

down Our $XX.X of total the EBITDA. quarter, million in revenue We fourth unlevered the XX% SG&A conversion quarter. generated the fourth was flow in in XX.X% for of quarter, free XX.X% revenue prior-year of cash from adjusted reflecting

have to flow flow free free cash changed for our note from we convention I'll naming unlevered that clarity purposes. cash

the to reclassify cash the present flow payable them and customers Additionally, of as receivables activities from the we to funds within financing to elected statement. activities operating settlement presentation

in in accounts flow and a restricted is to the reconciling result, related As required customer cash no item movement longer cash our unlevered non-GAAP other reconciliation.

You the of more on our reconciliations appendix presentation. non-GAAP our definitions information find in and can

our adjusted fourth XX% margin in and growth Overall, and to expectations, in achievement improvements Adjusted quarter more year-over-year and our fourth EPS net for full-year offset income to as depreciation resulting quarter of $X.XX increased XX% our and in $XX.X XXXX. than guidance share the increase were for increased with results the tax million, amortization line per expense. our

Volume Let's of move summary X% constant the X% for And billion. to was currency. $X.X or XX $XXX year. Slide of billion, increased XXXX to increase in XXXX full-year an to full X% revenue compared the

grew year largest for X% Our the approximately largest grew America, approximately North full X%. our region, Europe, second region, XXXX.

growth the continued our -- and and focus wallets key trends e-commerce, the are performance in and year, business performance ] market, digital SMB Overall, reflecting consistent XXXX. improvement our strength improvements softer been eCash in for by in direct channel. which throughout We U.S. in resilience our key the third-party business, saw in have driven SMB in [ classic

adjusted to XX% basis EBITDA Adjusted of EBITDA increased for year $XXX margin in of increase million, XXX XX.X%, the points. resulting an full

Our of revenue, XX.X% down total from XX.X% SG&A XXXX. in was year full

Our expected in and to EBITDA, XXXX XX% line X% an for to of conversion reflecting adjusted our flow XX%. conversion XXXX increase million, $XXX cash unlevered range XX% of free compared with was of

rates reflecting Adjusted partially and was we and net In adjusted in in and repayments amortization $X.XX year as income for in a an offset $XXX increased current for expect interest. in increase interest see expense. well as and to interest debt increased reduction X% expansion per FX X% share increase to $XX expense million XXXX, the a by adjusted EPS depreciation as full growth to million, EBITDA

also move Solutions Merchant was billion, was $XXX.X increased million. iGaming. for full-year full quarter, year-over-year, X% Slide Let's Fourth resulting results. billion, $XX.X up fourth to of the In $XXX.X to quarter XX X%. full-year segment in discuss volume an to the volume year-over-year year-over-year increase which Performance X% in XX% e-commerce, our revenue strong momentum by North with to $XXX.X year, and X% increased increased revenue American of led million,

$XXX.X increased growth verticals million, million market, respectively. and services. the XX% full-year In as eating and such Solutions' $XX.X and to petrol places, EBITDA fourth SMB both we drinking saw in adjusted and grocery quarter continued and Merchant personal

gross Fourth stronger points, channel. headwind lower by full-year operational the improvements, XX as losses, offset of quarter from basis adjusted EBITDA more lower-margin margin reflecting expanded our basis than points, mix in credit which expanded including by SMB was and XX channel margin growth third-party margin

As merchants, strong of QX, this SMB was third-party channel. Solutions growth XX% segment our roughly XX% channel XXXX, the direct mix e-commerce grow SMB XX%, revenue of optimization or XXXX the In in X% annualization to Merchant our of by revenues within between expect the we supported portfolio. XX% wins and SMB and e-commerce, to enterprise-level

of Turning year has billion X% increased an or Revenue and quarter Digital was for $XXX.X currency. increased XX, to Wallet X% million, constant full-year Slide of an to $XXX.X fourth the increase full X% constant fourth million, volume segment X% Wallet volume Digital the currency. on was $X and XX% year-over-year for revenue to increase X% XX.X%. quarter the

quarter of points basis year-over-year X% and points, on $XXX.X to an a Full-year Digital basis currency, constant $XX.X improving X% for the Wallets EBITDA margin, an increase XXX or to reflecting down by a X% due Fourth XX% XX currency XX.X%. constant margins EBITDA million, basis segment with was was adjusted product up increase of adjusted mix. mainly XX.X% million, and

key In in eCash digits, the accounting cross-selling the America. Digital Latin deposit in expect XXXX, our rollout new in Wallet of merchant in features such and expanding online growth wallet growth for products as as the low users, such while segment, we Europe expansion active the methods, of reflecting and regions into single

be to modest a from by growth We headwind offset revenue. partly interest expect

back advantage At to opportunity during debt In continue market was XXXX, Slide to million total $XXX our XX debt end debt a the we repaid of debt the million discounts fourth the as for reflecting we summary take leverage. Turning at repayment or to and debt billion, quarter, of of par. of approximately to $X.X buy quarter. $XX of repurchases

leverage XXXX, X.Xx and At of leverage further continue at year-end, We debt net in net midterm the X.Xx. was on ratio work to target net was and XXXX. of $X.X towards reducing end X.Xx our to reduced focused billion remain leverage we'll our compared to

Additionally, rate was X.X%. as the December, debt on interest our of average

], deposits our which in earned interest recognized also of at customer We rate is on revenue. a X.X% [

which As authorized the we last you in Board to $XX earnings commence in November, repurchase saw expect weeks. in our coming a Paysafe's share million program,

excess to the we We continue to innovation flow while long-term to invest drive cash in committed expect majority continue our of to growth. deleveraging be to

Moving outlook to full-year on Slide XX.

$X.XXX expect we coming the new XXXX, X% to above reflecting in including base, be midpoint, to with contribution wins the For our revenue client in the $X.XXX XXXX. largest at of enterprise existing billion range growth billion, from

saw FX with when particularly that we you reflects believe the improvement continued consider tailwind that quality outlook of growth We higher this revenue growth, and interest benefits in of XXXX.

result EBITDA and adjusted as are discipline expect offsetting a business with operational $XXX of while $XXX this expect the XXXX in within gross of we we We headwind margin efficiencies. to And million. cost range to be a million decline continued see in to mix,

we portfolio $XX support of for sales adjusted basis the OpEx highlighted, Bruce of approximately team which EBITDA impact has our expansion million incremental optimization, also points margins. XXX an planning approximately to of and As on investment are

these margin EBITDA expansion. and Excluding be investments, reflect than adjusted $XXX greater would million

from from decline throughout well modest expect our to typically We which QX seasonal to growth of follow as the QX normal seasonal patterns, seasonal reflect as QX, the a year cadence QX. to uplift

revenue and about prior sales to pace including As start contribution months to to timing reflecting producing. the our from QX quarter, and we of new years, the hires X our onboard product sales with take be also strongest expect initiatives, of

the due Adjusted roughly in second our XX% the year in in XX% incremental expect of largely the the are the the expected cost $XX half be same margins as second of will half influence and half. to EBITDA be We first operating faced which drivers million to to stronger well, leverage.

margins and beyond. adjusted leverage for as points the operating XXXX, to least at including ahead these accelerate or onboarded outlook, to XXXX XXXX revenue year growth our to more end XXX annualized from contribution in and high generating investments, of a the we this XXXX normalized new enhanced above reflect margin, EBITDA are basis Looking expect and hires excluding revenue

call to take questions. I will for before back the we closing turn Bruce Now remarks

Bruce Lowthers

with like across In lot that in positions a We Alex. . with serve our closing, Paysafe, markets. see client you, we of significant geographies. I'd Thank significant opportunities to reiterate market potential accelerate global growth. to strong value runway high-value base in premier maintain cross-selling We

experience, entering client value. financial to execute shareholder unlock business strategy, are in can innovation, also XXXX and that meaningful a We value. continuing and position, while cash we the create prioritize stakeholder our product strong By go-to-market believe solid with to opportunities deleveraging we generation

Now, session. Q&A let's begin the

Kirsten Nielsen

a ] shareholders question. which from we'll allows We'll questions you, [ ] Thank Technologies the our upvote Stay [ Okay. questions couple analyst that, Bruce. submit take an community. to platform, . of to from After research turn

We As may this addressed a questions share were group questions in on call prior that that pass or may reminder, common also recent we quarters. over already together theme. a

is in question one? this have asks, order restore to Matthew could in we first what goals set Our take investor Paysafe? from Bruce, you confidence who

Bruce Lowthers

stabilize Look, have Sure. back that Kirsten. Thank done a think begin we grow that the going once our what of that. as goals growth revenue we streams question couple then accelerate set, think we started you, posed, would out, then the have said clearly Matthew's I company, to years, and I we we we'd

and the achievements see that all remarks, we leverage net improved the results metrics in across I in 'XX results financial can that debt also think our growth key essentially as back reducing our look we you at in our while ratio. highlighted

and of We've that existing highly merchants significant and positioned to merchant really strengthen sides our of and and both kind under -- our with to to year, well new on our reach advancing for operating and in go-to-market a deliver We're the progress position in 'XX. expand stronger changes confident the ecosystem consumer that gone strategies during new today acquisition. continue on are future. I'm we past We the

Kirsten Nielsen

Bruce. you, Thank Okay.

Web next to you about adding one Our in able asks Bruce, this who or from be will question X.X equity to invest as users capabilities want well? is asked markets. do Daniel, cryptocurrency Skrill and address if

Bruce Lowthers

to. And question. for thanks the Happy Daniel, Yes.

the Web -- I environment I space. And of a combination going across The think enpreneurs of crypto to regulatory focused quite experience future and is do we sell new economy. to we're how the and X.X the as that, serve assets talent, in ways virtual and to about say, generation and the part time. have experiential evolve buy of to a right enable entertainment the would think in very functionality digital we over bit that's new

To address crypto piece a the small very our less of than question is, today, our X% more of business, directly, revenue.

globally, does offer in X.X. with cryptocurrencies different features wallet including with Our countries over XX complementary trading crypto XX Web available

But point, at we at forward. don't this equity we're of functionality interest, trading really offering moving our as have any looking future we're as

the And X.X X.X. as of space feel we crypto the do part we we're -- forward. on very Web of emergence Web be gaming our strongly in about in -- especially part as of So that and moving offering plan have to

Kirsten Nielsen

Bruce. Okay. Thanks,

capital questions this one? of stock [indiscernible], allocation our recently Lastly, buyback on asked have had the to you the question another couple plans Alex, we initiate debt. on Ganesh can a the I from And your about take repaying who program. approved and for did strategy of nature

Alexander Gersh

question. the take to Happy Sure.

we end In recap to at of approximately repaid and our this was in the our our for the Just reduced year. leverage what better we've prepared targeted compared remarks, we to actually X.Xx what at million XXXX, to shared X.Xx than XXXX. $XXX debt, of was year-end, initially ratio

towards XXXX, midterm reducing in of to and on work focused we'll X.Xx. remain net target leverage leverage net We our continue

million reducing you innovation while $XX to the weeks. saw focus to earnings our Board leverage growth. November, in drive to on release we As the and plan maintain continue share program, we in in repurchase We last which in authorized to to long-term commence flexibility invest a expect continue coming

Kirsten Nielsen

Alex. Thanks,

the open up analyst Let's Operator? Q&A. our line for

Operator

[Operator Instructions].

line Dan Capital the first with of come questions RBC Perlin from Our Markets.

Daniel Perlin

the implies XX% on commentary revenues. I happen be just will I but appreciate million I the $XX mean, on quick The this speak, kind pretty a wanted guess $XX you touch said of on kind payback in ramp, $XX it so the in-year million, kind think period, the of I of million to to of the second-half turnaround. half. also cadence the of I a to investments, first seems

the a and I'm wondering before should efficiencies really the putting would So maybe ramp kind And sales fourth see that maybe we like we something aggressively in Or kind the just just of that quarter? point, from that? expecting third is even you're finer maybe that be thinking of team.

Alexander Gersh

that $XXX of the this with pretty this Well, quick within $XX we think occurs payback right, be million And year, XX Dan, you're I to -- incurring million Okay. within obviously, do year next cost. somewhere months expect the payback. a the and

So it's a no brainer, quite frankly, from our perspective.

Daniel Perlin

Yes.

kind just the follow-up continue there's us a then might what of gross And Is to any in to given maybe quantify of with parts? margins. totality, that that of you Okay. I kind of some way the look there. help and pacing going said a to or moving like headwind know there on be

Alexander Gersh

the, growth think we're and [ EBITDA So said margin, margin. we've gross obviously on I very and much this revenue focused the I before, ], think on

As different in seen Wallet, deterioration digital wallets, we in and base, some we the and you customer have see different us verticals see Digital both margin. moving particularly could into in

expanding call from a It's our really was years deterioration really, a capability wallet I almost would it that ago. is few where it, significantly

continue. of So is on But continue cost we SG&A EBITDA we make operating that leverage that improve sure terms to and continue also will said may to in what efficiencies margins. to focus we've

a mentioned already channel higher-margin up channel. is do than direct which third-party really channel, what we've ramp SMB course, of we really the side, to is that need Solutions Merchant the On a

We are on this. working

a turn have some margin should SMB and this see to see margin. see of still improvements can -- quarterly gross basis. you in now, right And do, the you lot work as we around, on As that on we will you a reporting be

Operator

questions from ISI. line Togut the Evercore next of with Our David come

David Togut

Wallet quarter? rate are Digital a of for drivers the rate in as what compression discuss year expectations you the Could Digital this And your for take fourth whole? Wallet take

Bruce Lowthers

Yes, go Dave. want you Alex, do and... ahead to

Alexander Gersh

Sure, Bruce. Yes.

think I and our alluded have we as I are think, in we as to segment. reaccelerating I right, significant -- just a Wallet I -- in we segment, Digital right? our -- growth just And -- said, this, remarks are we that

We are at and parts to growth. different the . drive are looking targeting products of different ecosystem that

is therefore, Some story of lower -- for a use products really Digital those the products, again, customers rate it gross margin because expanding good -- what take But it's is deterioration simple with the as and of rate. does it's Wallet. we're little answer see of those really case the come product the some some it with But take and mix. we a those --

Bruce Lowthers

to profiles. pricing points different pressure Yes. different new What market Alex bringing we're for seeing our Probably, has not price existing clarify at with seeing and to just product. margin we're you, product us said, as is,

basis, different So stability when we're introducing and at on things different points our a new at seeing look within we we're apples-to-apples price margin profiles. take rates an but rates, our

David Togut

just expectations XXXX leverage what as and cash then unlevered And your follow-up, target? a Understood. XXXX year-end for flow are free

Alexander Gersh

possible. -- as balance the what the on and we're we're -- sheet our buyback, would the because We as much -- include would of because so include really it buyback the again, focusing of It leverage. optimizing

net as that X.Xx, The the we is leverage, target, focus to of net aren't but We target. the said, we XXXX midterm we in continue reducing and a giving stand really leverage. for behind terms on target

expectations EBITDA that be The would increases. our

a stay year, where to it our cash-generative expect But would maybe -- our cash invest are we I a flow to as continue execute we is stable on see now. in buyback. so or So and from overall, increase to the strong deleverage where continue to unlevered XXXX very able bit business,

Operator

next questions Wurtzel the line of Wolfe Scott with come from Our Research.

Scott Wurtzel

start products services you wondering to side merchant to into this you're of but the be you share if talked merchant wanted SMB you introducing just base. ecosystem on know any the business, wallet, out color year? the rolling other of could about maybe the introducing off Just your and some on value-added value-added I can services and the

Bruce Lowthers

evolving what the for our thanks excited total. Scott, merchant business in SMB about very Yes, is with we're business, question. our Yes,

So around ancillary focus you'll I businesses. lot on those us a see services are think what of

So we'll look we're . we're where for merchants really at facilitating opportunity capital. that working creating, working our to third-party capital partnerships a access

We PCI. have some

launched. have supplemental that's device being We POS program some

So we of around programs the that market to help them for a we're and smaller that bit run lot their how a asking merchants things bringing to little our have better. are business

So we'll through these of early bullish a progress more on we're we launching. we're programs year color the the the as But the on, go give that of lot very programs. of success

Scott Wurtzel

the Great. you top-of-funnel looks Wallet success And And helpful. segment. on like That's just a it some guys follow-up Digital had good classic in this campaign.

X to markets, is go markets with more campaign incremental that? in -- the did in, this have Just there that room terms wondering going those expand And markets? kind then, we to in you Are of almost to where plans you of are there kind forward? of do still

Bruce Lowthers

do we're doing and last you focused marketing and meeting to -- on marketing for in This were our and last that. we what we're really acquisition of organization on higher to we as consumer about and the the proof that focusing thank of one Yes, well. Scott, started have we we modernizing is our in efforts. impact quarter point. And our talked bringing cost about had, discipline centralizing how really as The it going in

were they tournament the do, I type where program we us XXX,XXX sponsoring within we do it when did to we love for that own partnership that tournament, had continue for. of will programs. We members launched community was that and our these to really the great eSports a

Every use, these our one them whether of opportunity have So wallet product product. target our the eCash were or even customers. our to

but be our the necessarily efforts. have, approach moving absolutely marketing throughput this we higher aggregate funds maximizing will we're a our excited across to expanding increasing not a as getting point, the on very And So have profile type we really spend on about these an really really of programs today. sophisticated that more that marketing bringing we we're forward. I'm at

Operator

of from come line Harte questions next with Andrew Our BTIG. the

Andrew Harte

how you mentioned a year that you Bruce, cross-sell further? where bit we that ago maybe opportunity? ahead? the cross-sell. about do Can had see were How enterprise you just XX% And unpack that base a in on evolving the year opportunity

Bruce Lowthers

opportunity I we things Andrew, of of various the there really that the little was almost one businesses when was as in that ago, I into top cross-selling we had. It had cross-sell existing the because . products our here XX that Yes. less came of customer than now months-plus customers. base, silos we very XXX X% on executing that noted started those we were

was from opportunity a than -- a X%, a that from our Wallet amount them primary go to start eCash into sell us Wallet of customers. their ago year [ this Digital us and of to existing in our revenue some and moving acquiring merchant and sell that for customer in I underscores Digital business trying year really and ago, with our X% is stream go there forward, XX% it great make was the huge to to point So going and a step whether year just was that less ]

especially ramp we expand existing would forward, progress. I focused her on Nicole base. the to continue about and be starting new good into team as is and to expect moving now going with selling to that very feel that are So will this our product, up absolutely we're

about us. it's through lot to I and do of the and 'XX. this and 'XX opportunity team driving been ourselves able better-quality So very runway Rob for a what they've 'XX. about excited really of revenue is now a We're Gatto's for and scaling up And in proud stream think

Andrew Harte

of on you'd a then, Or that merchant top outgrowth about solutions the page Wallet the out outpacing And is is there Digital on headwinds, each within of margin on mix, more line? function just segment comments trends? gross margin Alex, guidance the call anything kind

Alexander Gersh

is It those all things. of

merchant It So we improve see the in outpacing a then now, driving faster growth segment solution it versus first by improved inside Wallet growth right is margin this indirect in is our much indirect as absolutely merchant solution, Digital which growing segment, to faster. direct is opportunity the thing.

the impact an margin. has obviously that's So on

attacking I getting it's of wallet as mix said, Wallet, new customers the new Digital and as the the product markets. expand and on exactly And we is the it usage

Operator

the Our next line UBS. questions of Chiodo Timothy with come from

Timothy Chiodo

the in the direct channel around ISO question U.S. Similar versus the

it the are the just Is underlying related growth to can the the adds? so reasons direct it Maybe growth there, divergence? why divergent? Is you What reasons product being are it's different at of some versus through of gross is ISO channel. the Is churn Looking sold it a characterize pricing? business? reasons? What the growth the divergence for the

Bruce Lowthers

thank dialing the asking in Yes, and for and you question.

a the in that our things smaller at we couple merchant ISO channel, the when our in in than is on going a merchant direct book of channel, -- there: So versus direct are book is there really the ISO One, book. much look SMB there's underlying the

the Xx what ISO merchant about the than we book is direct larger experienced So in book.

rates take in Our in in stability rate direct actually and the Those smaller higher other. the both pricing our book. a see We're We experiencing good just our well. is selling at the team than candidly pressure. direct very across much not merchants ISO board, churn

would selling that little we're in direct necessarily there product a between same not client merchant things is SMB I the to that the channel. looking book. they're our we're it direct the servicing for of in through Because bit say, the a two larger ISO difference the is smaller book,

kind on a profile. of those things little going within there's the So of each bit of

after, state going -- going the where opportunity into attrition direct mitigate we're side. to want about the churn that good our the on feel that We help adjust and to direct ability merchants who and great off of expand channel. us type to we going we Certainly, gives new markets, after, we're as correct each

Timothy Chiodo

on ISO a side. the And follow-up as related Excellent.

years? take talk mentioned are over -- XX-year across to year, changed? How the the in And both and if it, stable that revenue in to been X direct little the X- being last, at call rates have X last much the about there's change the ISOs period? the maybe you or ISO Could over out might commissions channel. So a all any paid you the that bit trends

Bruce Lowthers

as I far this changed little ISO -- channel say industry you as XX rates I've to what that out quite has on well as seen no as the I know, would years in that percentage last years Tim, channel. you the the ISO we're been as Yes, payout know X over Certainly, on there's change that last dramatically in paying the the are. residuals

is than escalated really going X back -- X, here. stable percentage. They years else's. in anybody book Our we're not higher a relatively years of any different time over and been ago, last the it's couple

really it the that impacts So book. of margin

Timothy Chiodo

it more so but stepped might time. checks for thought recently. more the completely longer term, have would out. But the much stable up, have Thank you I over exactly. Yes,

Operator

[Operator Instructions].

with Our Jamie line next SIG. Friedman come from questions the of

James Friedman

There's about obviously Digital XXXX. work hard I first ask lot of to here. want on Congratulations a the Wallet.

inputs on could What the you looking through is the those think it it if think was if transaction the I'm per Slide flywheel, through you the we're inputs? trying help X, think and users? how to through to is wondering us in revenue advise the user? growth average you Is the ARPU? So would it Or I

Bruce Lowthers

Yes, Jamie.

we in on on I I So I where at business of kind as that. test acquisition X-month not on well. I been or gravitate ARPU That's well going this me is And and click going number. in as whether business I personally, into try at consumer I've are really kind litmus to I Then to really focus things around. the focused the where look how continue our turn my of of really . dial active. look

metrics that really are follow. the those So I

guys of as turnaround consumer business, more move we continued the you of side the of about we'll into some of can track Wallet business, as eCash we easily think as side this continue our I Digital to slides 'XX. progress the especially that we well as so get the and 'XX, evolve these business that in into think

probably So guys you new to introducing forward. help we'll some slides be as moving we're

James Friedman

And want then to merchant ask rate. take I did the about

at alluded we be So some did of to get as rate we model? Alex, take it there, the inputs to to I increase but the to revenue. Because contemplating what we points. appendix, XX and you think basis just should the looking model volume with

'XX? thinking rates we should how take be about So in merchant

Bruce Lowthers

Yes.

I We feel amount to some the the we're where of opportunity introduce think good, merchant be tremendous product having -- seeing stable in we It's new the them a to SMB side. pricing space. you're not think to see pressure we're I going into are.

doing e-commerce well. And space, we're very the in

I the and think strong in as about we've that, growth mentioned really business. had will previously, continue merchant very our we feel e-comm feel book. that We solid

Alexander Gersh

And I million of $XX as about rate support stability. optimization some our the incremental that only although will we've that that to that go that investment, also talked part would add portfolio is of thing take

Operator

remarks. Lowthers We would turn of like have end back now closing over to our reached Bruce the to I question-and-answer session. for the floor

Bruce Lowthers

joining Thank Thank every you. into us everyone for here I have. really goes one want us to together, I each is in hard tell much these team. helping today. this and thank their with calls. Kirsten all that I to we want calls quarterly work morning Matthew these appreciate you for how appreciate work pull of this quarterly just us her and

work really we're year. for a I the very appreciate team also want our great in transformation about We year, XXXX. all and to just thank excited this

a in very you Thank months. you couple of much. see we'll So

Operator

appreciate teleconference. Thank you. participation. your conclude We today's That does

Enjoy at the disconnect your time. lines your may of day. rest You this

Paysafe Limited (PSFE) 7 Mar 242023 Q4 Earnings call transcript