Paysafe Ltd ((PSFE)) has held its Q3 earnings call. Read on for the main highlights of the call.
TipRanks Black Friday Sale
- Claim 60% off TipRanks Premium for the data-backed insights and research tools you need to invest with confidence.
- Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off
Paysafe Ltd’s recent earnings call painted a picture of robust financial growth, particularly in North America and Europe, with significant client acquisitions bolstering the company’s performance. However, the sentiment was tempered by ongoing challenges in the digital wallets segment and business mix dynamics that are impacting margins. The company remains committed to addressing these issues, despite acknowledging delays in product rollouts and leverage reduction.
Accelerated Financial Results
Paysafe reported impressive financial metrics for the third quarter, with a 6% organic revenue growth, 7% adjusted EBITDA growth, and a remarkable 37% increase in adjusted EPS. These results underscore the company’s ability to drive financial performance despite market challenges.
Strong Regional Performance
The company saw an 8% growth in both North America and Europe, when normalized for foreign exchange. Looking forward, Latin America is expected to achieve a normalized growth rate of 10% in the fourth quarter, highlighting Paysafe’s strong regional performance.
Significant Client Wins
Paysafe secured new agreements with major players such as BetMGM in Ontario and expanded its partnership with Underdog across 16 states. Additionally, new agreements with international iGaming operators were highlighted as key achievements, showcasing the company’s expanding footprint in the gaming sector.
Growth in E-commerce
E-commerce growth exceeded 20% in the third quarter, driven by a substantial 50% increase in iGaming. This surge underscores the company’s strategic focus on expanding its e-commerce capabilities.
Share Repurchase Program
Paysafe returned $20 million to shareholders by repurchasing 1.5 million shares in the third quarter. An additional $70 million has been authorized for the share repurchase program, reflecting the company’s commitment to enhancing shareholder value.
Challenges in Digital Wallets
The digital wallets segment, particularly the Classic Wallet, experienced slower growth, with delays in the rollout of new wallet solutions. This remains a challenge that the company is actively working to address.
Mix Dynamics Affecting Margins
A shift in revenue mix towards lower-margin ISO business has impacted total segment margins, despite strong execution in direct sales. This dynamic is a focal point for the company as it seeks to optimize profitability.
Moderation of E-commerce Growth
While e-commerce growth remained strong, it moderated compared to previous quarters due to softer performance in non-core verticals. This moderation is being closely monitored by the company.
Leverage Concerns
Paysafe’s net leverage remains high at 5.2 times, with deleveraging expected to take longer than initially anticipated. This remains a critical area of focus for the company’s financial strategy.
Forward-Looking Guidance
Looking ahead, Paysafe anticipates mid to high-single-digit organic revenue growth and high-single-digit adjusted EBITDA growth in 2026. The company expects adjusted EBITDA margins to be closer to 23% in the fourth quarter, with a 25% target for the full year. These projections reflect the company’s strategic focus on overcoming current challenges and driving future growth.
In summary, Paysafe’s earnings call highlighted a strong financial performance with significant regional growth and client wins. However, challenges in digital wallets and business mix dynamics remain areas of concern. The company’s forward-looking guidance suggests a positive trajectory, with strategic initiatives aimed at sustaining growth and enhancing profitability.