Paysafe (PSFE) - 2024 Q2 - Quarterly Report

Q1 2024 Financial & Operational Highlights Paysafe reported an 8% revenue increase to $417.7 million, achieving a net income of $3.1 million and reducing net leverage to 4.9x, alongside key operational advancements Q1 2024 Key Financial Metrics (vs. Q1 2023) | Metric | Q1 2024 | Change (YoY) | | :--- | :--- | :--- | | Revenue | $417.7 million | +8% | | Total Payment Volume | $36.1 billion | +7% | | Net Income | $3.1 million | N/A (from loss) | | Diluted EPS | $0.05 | N/A (from -$0.06) | | Adjusted EBITDA | $111.9 million | +4% | | Adjusted Diluted EPS | $0.57 | +5.6% | - Net leverage decreased to 4.9x as of March 31, 2024, down from 5.0x at the end of 2023, indicating progress in deleveraging[5] - Strategic and operational progress in Q1 2024 includes expanding sales team, repurchasing $14 million of common shares, partnering with Xsolla, launching Pay by Bank for U.S. iGaming, and completing network tokenization offering[5] Q1 2024 Consolidated Financial Results Total revenue grew 8% to $417.7 million, driven by both segments, resulting in a net income of $3.1 million and a significant increase in operating cash flow Q1 2024 Consolidated Results Summary (in thousands) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $417,738 | $387,849 | +8% | | Gross Profit (excl. D&A) | $247,365 | $228,910 | +8% | | Net Income / (Loss) | $3,056 | $(3,808) | N/A | | Adjusted EBITDA | $111,916 | $107,815 | +4% | - Revenue growth was driven by an 11% increase in Merchant Solutions and a 5% increase in Digital Wallets[6] - The shift from a net loss to net income was primarily due to an increase in other income and a decrease in interest expense, which offset higher depreciation, amortization, and tax expenses[7] - Operating cash flow significantly increased to $58.8 million from $20.0 million in the prior year, mainly driven by lower taxes paid and the timing of bonus payments[10] Segment Performance Merchant Solutions revenue grew 11% to $231.4 million with a 6% EBITDA decline, while Digital Wallets saw 5% growth in both revenue and EBITDA Q1 2024 Segment Results (in thousands) | Segment | Revenue | Revenue YoY Change | Adjusted EBITDA | Adjusted EBITDA YoY Change | | :--- | :--- | :--- | :--- | :--- | | Merchant Solutions | $231,398 | +11% | $49,178 | -6% | | Digital Wallets | $190,457 | +5% | $83,274 | +5% | - The decline in Merchant Solutions' Adjusted EBITDA occurred despite strong revenue growth, while Digital Wallets showed balanced growth in both top-line revenue and profitability[15] Full Year 2024 Financial Guidance Paysafe reaffirmed its full-year 2024 guidance, projecting revenue between $1,688 million and $1,712 million, and Adjusted EBITDA from $473 million to $488 million Full Year 2024 Guidance (in millions) | Metric | Full Year 2024 Range | | :--- | :--- | | Revenue | $1,688 - $1,712 | | Adjusted EBITDA | $473 - $488 | Balance Sheet and Cash Flow As of March 31, 2024, Paysafe held $202.1 million cash, reduced total debt to $2.5 billion, and generated strong operating cash flow of $58.8 million Balance Sheet Summary (as of March 31, 2024) | Metric | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $202.1 | | Total debt | $2,457.4 | | Net debt | $2,255.3 | - Total debt decreased by $44.5 million compared to December 31, 2023, reflecting net repayments and favorable foreign exchange rate movements[11] Q1 Cash Flow Summary (in millions) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Operating Cash Flow | $58.8 | $20.0 | | Unlevered Free Cash Flow | $69.2 | $42.2 | Corporate Updates Paysafe published its inaugural Sustainability Report, outlining a new strategy based on four pillars: trusted technology, engaged employees, thriving society, and responsible business principles - The company published its inaugural Sustainability Report, demonstrating its commitment to acting as a responsible fintech company[12] - The sustainability strategy is built on four pillars: Trusted technology, Engaged employees, Thriving society, and Responsible business practices[16] Financial Statements and Non-GAAP Reconciliations This section provides detailed unaudited financial statements for Q1 2024, including Statements of Operations, Balance Sheets, and Cash Flows, along with reconciliations for key non-GAAP measures Condensed Consolidated Statements of Operations Q1 2024 revenue reached $417.7 million, with operating income of $33.0 million, resulting in a net income of $3.1 million or $0.05 per diluted share Q1 2024 Statement of Operations Highlights (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue | $417,738 | $387,849 | | Operating income | $32,965 | $34,980 | | Income before taxes | $10,355 | $71 | | Net income / (loss) | $3,056 | $(3,808) | | Diluted EPS | $0.05 | $(0.06) | Condensed Consolidated Balance Sheets As of March 31, 2024, total assets were $5.05 billion, total liabilities $4.18 billion, and total shareholders' equity $873.9 million Balance Sheet Summary (in thousands) | Line Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $1,792,093 | $1,906,493 | | Total assets | $5,054,153 | $5,227,701 | | Total current liabilities | $1,596,050 | $1,712,668 | | Total liabilities | $4,180,247 | $4,344,388 | | Total shareholders' equity | $873,906 | $883,313 | Condensed Consolidated Statements of Cash Flow Q1 2024 saw $58.8 million net cash from operating activities, $13.8 million used in investing, and $142.4 million used in financing, leading to an overall cash decrease Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $58,835 | $20,014 | | Net cash used in investing activities | $(13,825) | $(32,543) | | Net cash used in financing activities | $(142,376) | $(194,558) | Non-GAAP Reconciliations This section details reconciliations of GAAP net income of $3.1 million to Adjusted EBITDA of $111.9 million, Adjusted Net Income of $35.3 million, and operating cash flow to Unlevered Free Cash Flow of $69.2 million Reconciliation of Net Income to Adjusted EBITDA (Q1 2024, in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $3,056 | | Adjustments (Taxes, Interest, D&A, etc.) | $108,860 | | Adjusted EBITDA | $111,916 | Reconciliation of Net Income to Adjusted Net Income (Q1 2024, in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $3,056 | | Adjustments (Amortization, SBC, Tax items, etc.) | $32,250 | | Adjusted net income | $35,306 | Reconciliation of Operating Cash Flow to Unlevered Free Cash Flow (Q1 2024, in thousands) | Line Item | Amount | | :--- | :--- | | Net cash inflows from operating activities | $58,835 | | Capital expenditure | $(24,425) | | Cash paid for interest | $31,331 | | Payments for Restructuring | $3,453 | | Unlevered Free Cash Flow | $69,194 |