Paysafe Limited (“Paysafe” or the “Company”) (NYSE: PSFE), a
leading payments platform, today announced its financial results
for the third quarter of 2023.
Third Quarter 2023 Financial Highlights (Metrics compared
to third quarter of 2022)
- Revenue of $396.4 million, increased 8%; increased 5% on a
constant currency basis
- Total Payment Volume of $35.1 billion1, increased 8%
- Net loss attributable to the Company of $2.5 million, or
($0.04) per diluted share, compared to $1.0 million net income
attributable to the Company, or $0.02 per diluted share
- Adjusted net income of $35.3 million, or $0.57 per diluted
share, compared to $29.2 million, or $0.48 per diluted share
- Adjusted EBITDA of $116.1 million, increased 22%; increased 18%
on a constant currency basis
- Net leverage2 decreased to 5.1x as of September 30, 2023,
compared to 5.8x as of December 31, 2022
Bruce Lowthers, CEO of Paysafe, commented: “Paysafe has
continued to build momentum through the third quarter led by
double-digit growth from our e-commerce solutions and classic
digital wallets. Overall, our third quarter results reflect 8%
year-over-year revenue growth, 22% Adjusted EBITDA growth and
accelerated leverage reduction. These results reaffirm that the
execution of our playbook is working and providing the foundation
for us to deliver on our strategic initiatives and commitment to
achieving our mid-term growth targets. I want to thank our
extraordinary team for all their hard work as we continue to
realign Paysafe in its pursuit of operational excellence.”
Strategic and Operational Highlights
- Announced that Paysafe's Board has authorized a $50 million
share repurchase program
- Delivered fifth consecutive year-over-year quarterly revenue
growth
- Continued to progress Paysafe's sales transformation, fueling
growth in enterprise-level bookings
- Advanced Paysafe’s priorities across client experience and
product innovation, including continued improvement to branded
wallet portfolio, enhancing customer journey and merchant checkout
experience, as well as leveraging our wallet platform to drive
value, scale and expanded use cases
- Announced a new partnership with Fanatics Betting and Gaming to
offer its customers traditional card payments alongside a full
suite of alternative payment methods
- Won ‘Best Digital Wallet’ and highly acclaimed for ‘Best
Payments led Financial Inclusion Initiative’ by The Digital
Banker’s Global Payments Innovation Awards 2023
- Recognized by CNBC’s list of the World’s Top FinTech Companies
(Digital Payments)
- Won 2023 ‘Payment Provider of the Year’ by Gambling.com and the
American Gambling Awards
(1)
Excludes embedded wallet related volumes
of $3.9 billion and $10.4 billion in the third quarter of 2023 and
2022, respectively.
(2)
Paysafe defines net leverage as the
calculation of net debt (total debt less cash and cash equivalents)
divided by the sum of the last twelve months (LTM) of Adjusted
EBITDA. For the period ending September 30, 2023, total debt was
$2,514.7 million and cash and cash equivalents was $226.5 million,
and LTM Adjusted EBITDA was $444.5 million, respectively. For the
period ending December 31, 2022, total debt was $2,643.5 million
and cash and equivalents was $260.2 million, and LTM Adjusted
EBITDA was $410.0 million, respectively.
Third Quarter of 2023 Summary of Consolidated Results
Three Months Ended
Nine Months Ended
September 30,
September 30,
($ in thousands) (unaudited)
2023
2022
2023
2022
Revenue
$
396,410
$
365,988
$
1,186,597
$
1,112,569
Gross Profit (excluding depreciation and
amortization)
$
232,333
$
214,178
$
696,967
$
654,669
Net (loss) / income attributable to the
Company
$
(2,549
)
$
978
$
(8,122
)
$
(1,828,944
)
Adjusted EBITDA
$
116,076
$
95,470
$
336,922
$
302,390
Adjusted EBITDA margin
29.3
%
26.1
%
28.4
%
27.2
%
Adjusted net income attributable to the
Company
$
35,272
$
29,152
$
103,026
$
103,954
Total revenue for the third quarter of 2023 was $396.4 million,
an increase of 8%, compared to $366.0 million in the prior year
period, reflecting 8% growth in total payment volume. Excluding an
$11.9 million favorable impact from changes in foreign exchange
rates, total revenue increased 5%. Revenue from the Merchant
Solutions segment increased 6%, led by double-digit growth from
e-commerce solutions. Revenue from the Digital Wallets segment
increased 12% on a reported basis and 5% on a constant currency
basis, as a decline from eCash solutions was more than offset by
double-digit growth from classic digital wallets, partly reflecting
the Company's initiatives to increase consumer engagement and
merchant checkout conversion rates. Growth from the Digital Wallets
segment was also supported by new product features and interest
revenue on consumer deposits.
Net loss attributable to the Company for the third quarter was
$2.5 million, compared to net income of $1.0 million in the prior
year period. The decrease in net income reflects an increase in
operating income, which was offset by a reduction in other income
as a result of foreign exchange and fair value adjustments.
Adjusted net income for the third quarter increased 21% to $35.3
million, compared to $29.2 million in the prior year period as
strong growth in Adjusted EBITDA more than offset higher expenses
related to depreciation and amortization, interest and taxes.
Adjusted EBITDA for the third quarter was $116.1 million, an
increase of 22%, compared to $95.5 million in the prior year
period. Excluding a $3.4 million favorable impact from changes in
foreign exchange rates, Adjusted EBITDA increased 18% compared to
the prior year period. Adjusted EBITDA margin for the third quarter
increased 320 basis points to 29.3%, compared to 26.1% in the prior
year period, reflecting lower credit losses and operating
leverage.
Third quarter net cash used in operating activities was $2.5
million, compared to $6.2 million in the prior year period, mainly
reflecting the timing of working capital, as well as settlement of
funds payable and amounts due to customers. Free cash flow was
$105.3 million, compared to $106.5 million in the prior year
period, which includes the movement in customer accounts and other
restricted cash which was an increase of $99.8 million in the third
quarter of 2023, compared to an increase of $110.0 million in the
prior year period.
Balance Sheet
As of September 30, 2023, total cash and cash equivalents were
$226.5 million, total debt was $2.5 billion and net debt was $2.3
billion. Compared to June 30, 2023, total debt decreased by $61.0
million, reflecting net repayments of $22 million as well as
movement in foreign exchange rates.
Summary of Segment Results
Three Months Ended
Nine Months Ended
September 30,
YoY
September 30,
YoY
($ in thousands) (unaudited)
2023
2022
change
2023
2022
change
Revenue:
Merchant Solutions
$
216,847
$
203,733
6
%
$
651,066
$
608,848
7
%
Digital Wallets
$
182,855
$
162,992
12
%
$
543,382
$
509,024
7
%
Intersegment
$
(3,292
)
$
(737
)
347
%
$
(7,851
)
$
(5,303
)
48
%
Total Revenue
$
396,410
$
365,988
8
%
$
1,186,597
$
1,112,569
7
%
Adjusted EBITDA:
Merchant Solutions
$
57,467
$
45,631
26
%
$
165,572
$
149,282
11
%
Digital Wallets
$
79,930
$
68,142
17
%
$
236,350
$
212,286
11
%
Corporate
$
(21,321
)
$
(18,303
)
-16
%
$
(65,000
)
$
(59,178
)
-10
%
Total Adjusted EBITDA
$
116,076
$
95,470
22
%
$
336,922
$
302,390
11
%
Adjusted EBITDA margin:
Merchant Solutions
26.5
%
22.4
%
410 bps
25.4
%
24.5
%
90 bps
Digital Wallets
43.7
%
41.8
%
190 bps
43.5
%
41.7
%
180 bps
Total Adjusted EBITDA margin
29.3
%
26.1
%
320 bps
28.4
%
27.2
%
120 bps
Full Year 2023 Financial Guidance
($ in millions) (unaudited)
Full Year 2023
Revenue
$1,595 - $1,608
Adjusted EBITDA
$454 - $462
Share Repurchase Program
Paysafe also announced today that its Board of Directors has
authorized the commencement of a share repurchase program. The
share repurchase program authorizes the Company to purchase up to
$50 million of Paysafe’s common stock.
“This buyback program reinforces the Board’s and management’s
confidence in Paysafe,” said Alex Gersh, CFO of Paysafe. “With our
healthy cash flow generation and consistent progress towards
reducing our net leverage ratio over the last several quarters, we
believe now is the appropriate time to include share repurchases as
part of our capital allocation strategy. We continue to expect the
majority of our excess cash flow to be committed to de-leveraging,
while we also continue to invest in innovation to drive long-term
growth.”
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.
Webcast and Conference Call
Paysafe will host a live webcast to discuss the results today at
8:30 a.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
Tuesday, November 14, 2023, at 8:30 a.m.
ET
Webcast
Go to the Investor Relations section of
the Paysafe website to listen and view slides
Dial in
877-407-3037 (U.S. toll-free);
215-268-9852 (International)
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 20 years of online payment experience, an annualized
transactional volume of over $130 billion in 2022, and
approximately 3,300 employees located in 12+ countries, Paysafe
connects businesses and consumers across 100 payment types in over
40 currencies around the world. Delivered through an integrated
platform, Paysafe solutions are geared toward mobile-initiated
transactions, real-time analytics and the convergence between
brick-and-mortar and online payments. Further information is
available at www.paysafe.com.
Forward-looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the United States
Private Securities Litigation Reform Act of 1995. These
forward-looking statements are provided for illustrative purposes
only and are not intended to serve as, and must not be relied on by
any investor as, a guarantee, an assurance, a prediction or a
definitive statement of fact or probability. Paysafe Limited’s
(“Paysafe,” “PSFE” or the “Company”) actual results may differ from
their expectations, estimates, and projections and, consequently,
you should not rely on these forward-looking statements as
predictions of future events. Words such as “anticipate,” “appear,”
“approximate,” “believe,” “budget,” “continue,” “could,”
“estimate,” “expect,” “forecast,” “foresee,” “guidance,” “intends,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “seek,” “should,” “would” and variations of such words
and similar expressions (or the negative version of such words or
expressions) may identify forward-looking statements, but the
absence of these words does not mean that a statement is not
forward-looking. These forward-looking statements include, without
limitation, Paysafe’s expectations with respect to future
performance.
These forward-looking statements involve significant risks and
uncertainties that could 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 Bermuda, the UK, Ireland,
Switzerland, the United States, Canada and elsewhere; risks related
to our focus on specialized and high-risk verticals; geopolitical
events and the economic and other impacts of such geopolitical
events and the responses of governments around the world; acts of
war and terrorism; the effects of global economic uncertainties,
including inflationary pressure and rising interest rates, on
consumer and business spending; risks associated with foreign
currency exchange rate fluctuations; changes in our relationships
with banks, payment card networks, issuers and financial
institutions; risk related to processing online payments for
merchants and customers engaged in the online gambling and foreign
exchange trading sectors; risks related to becoming an unwitting
party to fraud or be deemed to be handling proceeds of crimes being
committed by customers; the effects of chargebacks, merchant
insolvency and consumer deposit settlement risk; changes to our
continued financial institution sponsorships; failure to hold,
safeguard or account accurately for merchant or customer funds;
risks related to the availability, integrity and security of
internal and external IT transaction processing systems and
services; our ability to manage regulatory and litigation risks,
and the outcome of legal and regulatory proceedings; failure of
third parties to comply with contractual obligations; changes and
compliance with payment card network operating rules; substantial
and increasingly intense competition worldwide in the global
payments industry; risks related to developing and maintaining
effective internal controls over financial reporting; managing our
growth effectively, including growing our revenue pipeline; any
difficulties maintaining a strong and trusted brand; keeping pace
with rapid technological developments; risks associated with the
significant influence of our principal shareholders; the effect of
the COVID-19 pandemic on our business; and other factors included
in the “Risk Factors” in our Form 20-F and in other filings we make
with the SEC, which are available at https://www.sec.gov. Readers
are cautioned not to place undue reliance upon any forward-looking
statements, which speak only as of the date made. 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
Balance Sheets (unaudited)
($ in thousands)
September 30, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
226,451
$
260,219
Customer accounts and other restricted
cash
1,291,662
1,866,976
Accounts receivable, net of allowance for
credit losses of $5,496 and $10,558, respectively
163,430
159,324
Settlement receivables, net of allowance
for credit losses of $5,126 and $5,398, respectively
140,273
147,774
Prepaid expenses and other current
assets
103,434
60,810
Total current assets
1,925,250
2,495,103
Deferred tax assets
104,538
104,538
Property, plant and equipment, net
18,563
11,947
Operating lease right-of-use assets
25,473
35,509
Derivative asset
16,053
17,321
Intangible assets, net
1,188,622
1,291,458
Goodwill
1,990,603
1,999,132
Other assets – noncurrent
4,271
2,048
Total assets
$
5,273,373
$
5,957,056
Liabilities and equity
Current liabilities
Accounts payable and other liabilities
$
225,003
$
241,529
Short-term debt
10,190
10,190
Funds payable and amounts due to
customers
1,464,102
1,997,867
Operating lease liabilities – current
8,625
7,953
Income taxes payable
—
11,325
Contingent and deferred consideration
payable – current
10,639
18,171
Liability for share-based compensation –
current
2,543
11,400
Total current liabilities
1,721,102
2,298,435
Non-current debt
2,504,498
2,633,269
Operating lease liabilities –
non-current
20,165
29,913
Deferred tax liabilities
136,132
118,791
Warrant liabilities
2,264
3,094
Liability for share-based compensation –
non-current
2,927
4,942
Contingent and deferred consideration
payable – non-current
8,378
8,975
Total liabilities
4,395,466
5,097,419
Commitments and contingent liabilities
Total shareholders' equity
877,907
859,637
Total liabilities and shareholders'
equity
$
5,273,373
$
5,957,056
Paysafe Limited Condensed Consolidated
Statements of Operations (unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
($ in thousands)
2023
2022
2023
2022
Revenue
$
396,410
$
365,988
$
1,186,597
$
1,112,569
Cost of services (excluding depreciation
and amortization)
164,077
151,810
489,630
457,900
Selling, general and administrative
121,195
132,250
383,106
397,527
Depreciation and amortization
67,074
66,088
197,046
199,096
Impairment expense on goodwill and
intangible assets
—
4,036
275
1,886,223
Restructuring and other costs
835
6,443
4,165
60,636
Loss on disposal of subsidiary and other
assets, net
—
699
—
1,359
Operating income / (loss)
43,229
4,662
112,375
(1,890,172
)
Other income, net
9,661
38,230
19,584
97,863
Interest expense, net
(38,421
)
(34,631
)
(112,639
)
(89,013
)
Income / (loss) before taxes
14,469
8,261
19,320
(1,881,322
)
Income tax expense / (benefit)
17,018
7,283
27,442
(52,749
)
Net (loss) / income
$
(2,549
)
$
978
$
(8,122
)
$
(1,828,573
)
Less: net income attributable to
non-controlling interest
—
—
—
371
Net (loss) / income attributable to the
Company
$
(2,549
)
$
978
$
(8,122
)
$
(1,828,944
)
Net (loss) / income per share attributable
to the Company – basic
$
(0.04
)
$
0.02
$
(0.13
)
$
(30.24
)
Net (loss) / income per share attributable
to the Company – diluted
$
(0.04
)
$
0.02
$
(0.13
)
$
(30.24
)
Net (loss) / income
$
(2,549
)
$
978
$
(8,122
)
$
(1,828,573
)
Other comprehensive (loss) / income , net
of tax of $0:
(Loss) / gain on foreign currency
translation
(8,853
)
(33,532
)
1,525
(55,660
)
Total comprehensive loss
$
(11,402
)
$
(32,554
)
$
(6,597
)
$
(1,884,233
)
Less: comprehensive income attributable to
non-controlling interest
—
—
—
371
Total comprehensive loss attributable
to the Company
$
(11,402
)
$
(32,554
)
$
(6,597
)
$
(1,884,604
)
Paysafe Limited Consolidated Net (loss) /
income per share attributable to the Company
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Numerator ($ in thousands)
Net (loss) / income attributable to the
Company - basic
$
(2,549
)
$
978
$
(8,122
)
$
(1,828,944
)
Net (loss) / income attributable to the
Company - diluted
$
(2,549
)
$
978
$
(8,122
)
$
(1,828,944
)
Denominator (in millions)
Weighted average shares – basic
61.6
60.6
61.3
60.5
Weighted average shares – diluted
61.6
60.7
61.3
60.5
Net (loss) / income per share attributable
to the Company
Basic
$
(0.04
)
$
0.02
$
(0.13
)
$
(30.24
)
Diluted
$
(0.04
)
$
0.02
$
(0.13
)
$
(30.24
)
Paysafe Limited Condensed Consolidated
Statements of Cash Flow (unaudited)
Nine Months Ended
September 30,
($ in thousands)
2023
2022
Cash flows from operating
activities
Net loss
$
(8,122
)
$
(1,828,573
)
Adjustments for non-cash items:
Depreciation and amortization
197,046
199,096
Unrealized foreign exchange loss /
(gain)
4,907
(49,319
)
Deferred tax expense / (benefit)
17,453
(64,165
)
Interest expense, net
5,392
25,393
Share-based compensation
23,061
45,248
Other income, net
(19,828
)
(40,559
)
Impairment expense on goodwill and
intangible assets
275
1,886,223
Allowance for credit losses and other
13,857
24,792
Loss on disposal of subsidiary and other
assets, net
-
1,359
Non-cash lease expense
6,686
5,505
Movements in working capital:
Accounts receivable, net
(15,857
)
(24,046
)
Prepaid expenses, other current assets,
and related party receivables
(1,332
)
(21,772
)
Settlement receivables, net
2,090
(10,581
)
Accounts payable, other liabilities, and
related party payables
(26,623
)
29,194
Funds payable and amounts due to
customers
(529,888
)
1,210,744
Income tax payable and receivable
(24,485
)
(15,320
)
Net cash flows (used in) / provided by
operating activities
(355,368
)
1,373,219
Cash flows in investing
activities
Purchase of property, plant &
equipment
(12,129
)
(2,637
)
Purchase of merchant portfolios
(26,749
)
(38,347
)
Purchase of other intangible assets
(69,393
)
(67,056
)
Acquisition of business, net of cash
acquired
—
(424,722
)
Net cash outflow on disposal of
subsidiary
—
(826
)
Receipts under derivative financial
instruments
7,520
—
Cash outflow for merchant reserves
(24,400
)
—
Other investing activities, net
(410
)
—
Net cash flows used in investing
activities
(125,561
)
(533,588
)
Cash flows from financing
activities
Cash settled equity awards
(484
)
(154
)
Repurchases of shares withheld for
taxes
(7,857
)
—
Proceeds from exercise of warrants
5
3
Repurchase of borrowings
(124,344
)
(31,365
)
Proceeds from loans and borrowings
90,138
86,246
Repayments of loans and borrowings
(68,592
)
(130,672
)
Payments under derivative financial
instruments, net
—
(1,305
)
Payment of debt issuance costs
—
(6,261
)
Proceeds under line of credit
675,000
571,600
Repayments under line of credit
(675,000
)
(565,600
)
Contingent consideration received
—
2,621
Contingent and deferred consideration
paid
(9,210
)
(16,717
)
Net cash flows used in financing
activities
(120,344
)
(91,604
)
Effect of foreign exchange rate
changes
(7,809
)
(284,334
)
(Decrease) / increase in cash and cash
equivalents, including customer accounts and other restricted cash
during the period
$
(609,082
)
$
463,693
Cash and cash equivalents, including
customer accounts and other restricted cash, at beginning of the
period
2,127,195
1,971,718
Cash and cash equivalents, including
customer accounts and other restricted cash, at end of the
period
$
1,518,113
$
2,435,411
Nine Months Ended
September 30,
2023
2022
Cash and cash equivalents
$
226,451
$
220,191
Customer accounts and other restricted
cash, net
1,291,662
2,215,220
Total cash and cash equivalents,
including customer accounts and other restricted cash, net
$
1,518,113
$
2,435,411
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), Gross Profit
Margin (excluding depreciation and amortization), Adjusted EBITDA,
Adjusted EBITDA margin, Free cash flow and Free cash flow
conversion, 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 the United States (“U.S. GAAP”).
Gross Profit (excluding depreciation and amortization) is
defined as revenue less cost of services (excluding depreciation
and amortization). Gross Profit Margin (excluding depreciation and
amortization) is defined as Gross Profit (excluding depreciation
and amortization) as a percentage of revenue. 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. Adjusted
EBITDA margin is defined as Adjusted EBITDA as a percentage of
Revenue. 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.
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,
cash paid for interest and movements in customer accounts and other
restricted cash. 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. Free cash flow conversion
is defined as free cash flow as a percentage of Adjusted EBITDA.
Management believes 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, Gross Profit Margin, Adjusted
EBITDA, Adjusted EBITDA margin, Free cash flow and Free cash flow
conversion, 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 (Loss) / Income to Adjusted
EBITDA
Three Months Ended
Nine Months Ended
September 30,
September 30,
($ in thousands)
2023
2022
2023
2022
Net (loss) / income
$
(2,549
)
$
978
$
(8,122
)
$
(1,828,573
)
Income tax expense / (benefit)
17,018
7,283
27,442
(52,749
)
Interest expense, net
38,421
34,631
112,639
89,013
Depreciation and amortization
67,074
66,088
197,046
199,096
Share-based compensation expense
4,938
13,542
23,061
45,248
Impairment expense on goodwill and
intangible assets
—
4,036
275
1,886,223
Restructuring and other costs
835
6,443
4,165
60,636
Loss on disposal of subsidiaries and other
assets, net
—
699
—
1,359
Other income, net
(9,661
)
(38,230
)
(19,584
)
(97,863
)
Adjusted EBITDA
$
116,076
$
95,470
$
336,922
$
302,390
Adjusted EBITDA Margin
29.3
%
26.1
%
28.4
%
27.2
%
Reconciliation of Operating Cash Flow to Non-GAAP Free Cash
Flow
Three Months Ended
Nine Months Ended
September 30,
September 30,
($ in thousands)
2023
2022
2023
2022
Net cash (outflows) / inflows from
operating activities
$
(2,483
)
$
(6,228
)
$
(355,368
)
$
1,373,219
Capital Expenditure
(25,696
)
(24,962
)
(81,522
)
(69,693
)
Cash paid for interest
32,363
19,010
107,247
63,620
Payments relating to Restructuring and
other costs
1,397
8,732
30,562
28,868
Movement in Customer Accounts and other
restricted cash (1)
99,757
109,967
569,431
(1,189,690
)
Free Cash Flow
$
105,338
$
106,519
$
270,350
$
206,324
Adjusted EBITDA
116,076
95,470
336,922
302,390
Free Cash Flow Conversion
91
%
112
%
80
%
68
%
(1)
Management considers the movement in
customer accounts and other restricted cash as settlement related,
and have therefore offset against movements in Settlement
Receivables and Funds payable and amounts due to customers.
Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit
(excluding depreciation and amortization)
Three Months Ended
Nine Months Ended
September 30,
September 30,
($ in thousands)
2023
2022
2023
2022
Revenue
$
396,410
$
365,988
$
1,186,597
$
1,112,569
Cost of services (excluding depreciation
and amortization)
164,077
151,810
489,630
457,900
Depreciation and amortization
67,074
66,088
197,046
199,096
Gross Profit (1)
$
165,259
$
148,090
$
499,921
$
455,573
Depreciation and amortization
67,074
66,088
197,046
199,096
Gross Profit (excluding depreciation
and amortization)
$
232,333
$
214,178
$
696,967
$
654,669
(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 (Loss) / Income to Adjusted Net
Income
Three Months Ended
Nine Months Ended
September 30,
September 30,
($ in thousands)
2023
2022
2023
2022
Net (loss) / income attributable to the
Company
$
(2,549
)
$
978
$
(8,122
)
$
(1,828,944
)
Other non-operating income, net (1)
(7,274
)
(39,802
)
(12,852
)
(103,821
)
Impairment expense on goodwill and
intangible assets
—
4,036
275
1,886,223
Amortization of acquired assets (2)
34,094
41,479
101,862
127,028
Restructuring and other costs
835
6,443
4,165
60,636
Loss on disposal of subsidiaries and other
assets, net
—
699
—
1,359
Share-based compensation expense
4,938
13,542
23,061
45,248
Discrete tax items (3)
14,313
4,663
25,198
11,639
Income tax benefit on non-GAAP adjustments
(4)
(9,085
)
(2,886
)
(30,561
)
(95,414
)
Adjusted net income attributable to the
Company
$
35,272
$
29,152
$
103,026
$
103,954
(in millions)
Weighted average shares -
diluted
61.6
60.7
61.3
60.5
Adjusted diluted impact
0.1
0.0
0.3
0.1
Adjusted weighted average shares -
diluted
61.7
60.7
61.6
60.6
(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 loss on contingent consideration and gain / loss on
foreign exchange. For the three and nine months ended September 30,
2023, this item also includes the gain to repurchase secured notes
and fair value loss on derivative instruments.
(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 represents certain
amounts within income tax (benefit)/expense, including changes in
uncertain tax positions and the remeasurement of certain deferred
tax balances due to changes in the statutory tax rates in certain
jurisdictions.
(4)
Income tax benefit on non-GAAP adjustments
reflects the tax impact of the non-GAAP adjustments to net loss
attributable to the Company to calculate adjusted net income.
Adjusted Net Income per Share
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Numerator ($ in thousands)
Adjusted net income attributable to the
Company - basic
$
35,272
$
29,152
$
103,026
$
103,954
Adjusted net income attributable to the
Company - diluted
$
35,272
$
29,152
$
103,026
$
103,954
Denominator (in millions)
Weighted average shares – basic
61.6
60.6
61.3
60.5
Adjusted weighted average shares – diluted
(1)
61.7
60.7
61.6
60.6
Adjusted net income per share attributable
to the Company
Basic
$
0.57
$
0.48
$
1.68
$
1.72
Diluted
$
0.57
$
0.48
$
1.67
$
1.72
(1)
The denominator used in the calculation of
diluted adjusted net income per share attributable to the Company
for the three and nine months ended September 30, 2023 and 2022 has
been adjusted to include the dilutive effect of the Company's
restricted stock units.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231114063637/en/
Media Kate Aldridge Paysafe kate.aldridge@paysafe.com +44 750
079 7547
Investors Kirsten Nielsen Paysafe kirsten.nielsen@paysafe.com +1
(646) 901-3140
Paysafe (NYSE:PSFE)
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