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Paysafe (PSFE) - 2025 Q1 - Earnings Call Transcript
2025-05-13 13:32
Financial Data and Key Metrics Changes - The company reported organic revenue growth of 5% for Q1 2025, driven by strong growth from existing customers and new product initiatives [6][20] - Adjusted EBITDA was $95 million, down from $112 million in the same quarter last year, reflecting a flat performance when normalizing for inorganic impacts [6][20] - Revenue declined by 4% to $401 million on a reported basis, but increased 5% organically when excluding inorganic headwinds from FX, interest, and divestiture [20][21] - Adjusted EBITDA margin was 23.7%, slightly ahead of expectations due to the timing of certain cost items [21] Business Line Data and Key Metrics Changes - Merchant Solutions volume increased by 11% to $34.3 billion, with organic revenue growth of 6% [25] - Digital Wallet segment saw a volume increase of 5% to $5.9 billion, with revenue from digital wallets at $187.6 million, reflecting a 3% organic growth [26] - The enterprise side of the sales organization signed over 100 enterprise-level contracts in Q1, with strong growth in gaming and e-commerce [7][14] Market Data and Key Metrics Changes - E-commerce growth was strong at 31% for Q1, with processing growth in iGaming up over 50% year over year [14] - The company anticipates that the Latin American market will contribute to mid to upper single-digit growth in Q1, with expectations for low double-digit growth as the year progresses [81] Company Strategy and Development Direction - The company is focusing on expanding its PaySafe wallet platform to unlock geographic expansion and market to new consumer groups [9] - New partnerships, such as with Fiserv and Tilde, are aimed at enhancing product offerings and driving growth in both SMB and enterprise segments [18][19] - The strategy includes a shift towards direct sales in the SMB space to improve margins and balance the sales approach between direct and ISO channels [55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in accelerating growth in the second half of the year, driven by existing contracts and new product initiatives [8][30] - The company remains mindful of macroeconomic dynamics but is optimistic about achieving full-year guidance [28][29] - Management noted that while attrition in SMB has been slightly higher than expected, they anticipate improvements as new tools for relationship management are implemented [29] Other Important Information - The company generated $57 million in unlevered free cash flow for the quarter, reflecting a 60% conversion of adjusted EBITDA [22] - Total debt at the end of the quarter was just under $2.4 billion, with net leverage increasing slightly to 4.9 times [27] - The company repurchased 613,000 shares during Q1 and an additional 693,000 shares in April, returning approximately $20 million to shareholders year to date [28] Q&A Session Summary Question: Visibility on Sales Pipeline and Guidance - Management indicated strong visibility in the sales pipeline, with a robust quarter in enterprise sales and improved SMB sales in April [35][38] Question: Expectations for Q2 EBITDA Margin - Management expects Q2 EBITDA margin to be similar to Q1, with an increase in the second half of the year, potentially reaching 28% to 30% in Q4 [39][40] Question: E-commerce Mix and iGaming Strategy - E-commerce currently represents about a quarter of the merchant segment revenue, with iGaming being a significant vertical [44][45] Question: SMB Strategy and Market Share - The company is focusing on building its SMB direct sales channel to improve margins and is optimistic about growth prospects in this area [56][58] Question: Clover Partnership and Product Offerings - Management confirmed that they are expanding product offerings through the Clover partnership, including digital wallets and capital solutions for SMBs [68][69] Question: Commission Structures and Unit Economics - The commission structures differ significantly between ISO and direct channels, with direct sales having shorter-term residuals, which should benefit margins over time [72][74] Question: Growth from New Products - Management expressed confidence in achieving growth from new products, citing strong sales performance and new product launches like the Pago Effectivo wallet [78][80]
Paysafe (PSFE) - 2025 Q1 - Earnings Call Transcript
2025-05-13 13:30
Paysafe (PSFE) Q1 2025 Earnings Call May 13, 2025 08:30 AM ET Speaker0 Greetings. Welcome to PaySafe's First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kirsten Nielsen, Head of Investor Relations. Thank you. Please go ahead. Speaker1 Thank you, and welcome to PaySafe's earnings co ...