Paysafe Limited (“Paysafe” or the “Company”) (NYSE:PSFE) (PSFE.WS), a leading specialized payments platform, today announced its financial results for the second quarter of 2021.
Second Quarter 2021 Financial Highlights
(metrics compared to second quarter of 2020)
- Total Payment Volume of $32.3 billion, increased 41%
- Revenue of $384.3 million, increased 13%
- Net income attributable to the Company of $6.6 million, compared to net loss of $15.9 million
- Adjusted EBITDA of $118.8 million, increased 8%
- Reaffirmed 2021 full year outlook
Philip McHugh, CEO of Paysafe, stated, “We are pleased with the continued momentum Paysafe exhibited over the second quarter with impressive growth and several key wins across iGaming and other attractive digital commerce verticals, including crypto. Paysafe also continues to drive value across the other pillars of our strategy, including strong execution on our cost program and our recently announced acquisitions in Latin America, creating the largest open banking solution in the region. In total, we remain confident in our 2021 outlook and the years ahead as we continue to see the combination of our eCommerce gateway, digital wallets, online banking, and eCash solutions as a true differentiator in the market.”
Strategic and Operational Highlights
- Excluding the direct marketing vertical and a 2020 business divestiture, growth from all other revenue was 23% compared to the prior year
- Continued strong momentum in North American iGaming, including 48% revenue growth; piloting enhanced Skrill digital wallet for U.S. iGaming with eight major brands
- Expanded digital commerce across attractive verticals including digital goods (e.g., eCash live on Microsoft Store on Xbox), crypto (e.g., added 22 new cryptocurrencies to Skrill digital wallet), financial services (multiple eCash wins) and travel (e.g., launched safeguarding solution for travel industry)
- 68% volume growth in U.S. Acquiring compared to the prior year
- Delivered on transformation initiatives, including $17 million of cost savings achieved year to date of approximately $30 million targeted for 2021
- Announced acquisitions of PagoEfectivo and SafetyPay, leading open banking solutions in Latin America
- Appointment of Mark Brooker brings deep iGaming experience and further strengthens Paysafe’s Board
Basis of Presentation
The financial information for the three and six months ended June 30, 2021 included in this press release reflect, and is based upon, information of Paysafe Limited after giving effect to the transaction with Foley Trasimene Acquisition Corporation II (“FTAC”) completed on March 30, 2021 (as further discussed below under Reorganization and Recapitalization (the “Transaction”). The comparative financial information for the three and six months ended June 30, 2020 is based upon information of Pi Jersey Holdco 1.5 Limited (the “Accounting Predecessor”), prior to giving effect to the Transaction. Prior to the Transaction, Paysafe Limited had no material operations, assets or liabilities.
As of December 31, 2020, an out of period adjustment related to the period ended March 31, 2020 was identified and corrected for the impairment of certain Digital Wallet’s intangible assets. This resulted in the overstatement of Intangible assets, net and understatement of Impairment expense on intangible assets, net of $21.4 million ($15.8 million net of tax), respectively, as of March 31, 2020. The prior period results have been revised to reflect the correction of this misstatement.
Second Quarter 2021 Summary of Consolidated Results
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Three months ended |
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Six months ended |
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June 30, |
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June 30, |
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($ in thousands) (unaudited) |
|
2021 |
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2020 |
|
2021 |
|
2020 |
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|
Revenue |
|
$ |
384,343 |
|
|
$ |
341,034 |
|
|
$ |
761,767 |
|
|
$ |
700,699 |
|
|
Gross Profit (excluding depreciation and amortization) |
|
$ |
228,565 |
|
|
$ |
214,789 |
|
|
$ |
454,952 |
|
|
$ |
445,066 |
|
|
Net income / (loss) attributable to the Company |
|
$ |
6,597 |
|
|
$ |
(15,901 |
) |
|
$ |
(54,050 |
) |
|
$ |
(85,193 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
118,804 |
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|
$ |
110,375 |
|
|
$ |
232,034 |
|
|
$ |
223,145 |
|
|
Adjusted EBITDA margin |
|
|
30.9 |
% |
|
|
32.4 |
% |
|
|
30.5 |
% |
|
|
31.8 |
% |
Total revenue for the second quarter of 2021 was $384.3 million, an increase of 13%, compared to $341.0 million in the prior year. Growth was partially offset by an $8.8 million impact of a business divestiture (Pay Later) in October 2020. Excluding Pay Later, revenue increased 16%. Revenue performance compared to the prior year also reflects the impact of actions taken to improve the Company’s overall risk/reward profile in certain markets and channels, specifically related to the exit of certain clients in the direct marketing vertical, which had an unfavorable impact on growth.
Excluding the divested business and the direct marketing vertical, growth from all other revenue was approximately 23% compared to the prior year, reflecting growth from all three segments. In eCash Solutions, growth was supported by extended COVID-19 lockdowns in Europe and an associated increase in online consumer spending. In Integrated Processing, growth was driven by the U.S. acquiring business, which continued to benefit from the macroeconomic recovery, as well as growth across integrated eCommerce, including iGaming and other specialized eCommerce verticals. Digital Wallet growth was driven by favorable foreign currency movement, a higher level of sporting events as well as crypto and trading activity, partially offset by the impact of targeted actions and country exits that occurred in 2020.
Net income attributable to the Company for the second quarter was $6.6 million, compared to a loss of $15.9 million in the prior year. Results included a fair value gain on the measurement of the warrant liability at period-end. This increase was partially offset by a $20.1 million increase in interest expense, reflecting the expense of capitalized debt fees as a result of debt repayment, as well as the impact of income tax expense of $16.7 million in the second quarter compared with an income tax benefit of $2.7 million in the prior year.
Adjusted EBITDA for the second quarter was $118.8 million, an increase of 8%, compared to $110.4 million in the prior year. Adjusted EBITDA margin decreased 150 basis points to 30.9%, reflecting business mix, including the headwind from the high margin direct marketing vertical, as described above. These impacts were partially offset by strong cost optimization. Additionally, the prior year margin benefited from temporary cost reductions related to the COVID-19 pandemic.
Second quarter net cash from operating activities was negative $7.7 million, compared to positive $123.5 million in the prior year. Free cash flow was $54.6 million, compared to $96.2 million in the prior year.
Summary of Segment Results
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Three months ended |
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Six months ended |
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June 30, |
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YoY |
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June 30, |
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YoY |
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($ in thousands) (unaudited) |
2021 |
|
2020 |
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change |
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2021 |
|
2020 |
|
change |
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Revenue: |
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|
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|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Integrated Processing |
$ |
191,242 |
|
$ |
178,397 |
|
7.2 |
% |
$ |
368,145 |
|
$ |
364,614 |
|
1.0 |
% |
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|
Digital Wallet |
$ |
97,271 |
|
$ |
91,108 |
|
6.8 |
% |
$ |
192,194 |
|
$ |
199,601 |
|
-3.7 |
% |
||||||
|
eCash Solutions |
$ |
103,876 |
|
$ |
75,998 |
|
36.7 |
% |
$ |
216,792 |
|
$ |
145,067 |
|
49.4 |
% |
||||||
|
Intersegment |
$ |
(8,046 |
) |
$ |
(4,469 |
) |
80.0 |
% |
$ |
(15,364 |
) |
$ |
(8,583 |
) |
79.0 |
% |
||||||
|
Total Revenue |
$ |
384,343 |
|
$ |
341,034 |
|
12.7 |
% |
$ |
761,767 |
|
$ |
700,699 |
|
8.7 |
% |
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Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Integrated Processing |
$ |
45,764 |
|
$ |
52,050 |
|
-12.1 |
% |
$ |
90,691 |
|
$ |
107,264 |
|
-15.5 |
% |
||||||
|
Digital Wallet |
$ |
46,927 |
|
$ |
40,305 |
|
16.4 |
% |
$ |
84,700 |
|
$ |
93,999 |
|
-9.9 |
% |
||||||
|
eCash Solutions |
$ |
43,033 |
|
$ |
27,297 |
|
57.6 |
% |
$ |
91,104 |
|
$ |
50,164 |
|
81.6 |
% |
||||||
|
Unallocated Corporate |
$ |
(16,920 |
) |
$ |
(9,277 |
) |
82.4 |
% |
$ |
(34,461 |
) |
$ |
(28,282 |
) |
21.8 |
% |
||||||
|
Total Adjusted EBITDA |
$ |
118,804 |
|
$ |
110,375 |
|
7.6 |
% |
$ |
232,034 |
|
$ |
223,145 |
|
4.0 |
% |
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|
|
|
|
|
|
|
|
|
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Adjusted EBITDA margin: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Integrated Processing |
|
23.9 |
% |
|
29.2 |
% |
(530) bps |
|
|
24.6 |
% |
|
29.4 |
% |
(480) bps |
|
||||||
|
Digital Wallet |
|
48.2 |
% |
|
44.2 |
% |
400 bps |
|
|
44.1 |
% |
|
47.1 |
% |
(300) bps |
|
||||||
|
eCash Solutions |
|
41.4 |
% |
|
35.9 |
% |
550 bps |
|
|
42.0 |
% |
|
34.6 |
% |
740 bps |
|
||||||
|
Total Adjusted EBITDA margin |
|
30.9 |
% |
|
32.4 |
% |
(150) bps |
|
|
30.5 |
% |
|
31.8 |
% |
(130) bps |
|
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Financial Guidance
|
($ in millions) |
|
Q3 2021 |
|
Full Year 2021 |
|
Revenue |
|
$360 – $375 |
|
$1,530 – $1,550 |
|
Gross Profit (excluding depreciation and amortization) |
|
$210 – $220 |
|
$930 – $970 |
|
Adjusted EBITDA |
|
$95– $110 |
|
$480 – $495 |
Refinancing
In the second quarter Paysafe refinanced its existing senior secured loan facility totaling $2.1 billion with a combination of a new $1.1 billion senior secured loan facility and $0.9 billion of senior secured notes, as well as increased its revolving credit facility from $225 million to $305 million. The refinancing extended the Company’s maturity profile, lowered its borrowing rate and improved Paysafe’s financial flexibility.
Webcast and Conference Call
Paysafe will host a live webcast to discuss the results today at 8:30 a.m. (EDT). 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 |
Monday, August 16, 2021 at 8:30 a.m. EDT |
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Hosts |
Philip McHugh, Chief Executive Officer and Director |
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|
Izzy Dawood, Chief Financial Officer |
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Webcast |
Go to the Investor Relations section of the Paysafe website to listen and view slides |
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Dial in |
877-407-3037 (U.S. toll-free) |
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215-268-9852 (International) |
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