Paysafe (US:PSFE)2022-08-10 15:58Financial Data and Key Metrics Changes - The second quarter revenue was $379 million, with adjusted EBITDA of $103 million, aligning with guidance despite unexpected foreign exchange headwinds [7][28] - Total volume was $33.4 billion, reflecting a 7% sequential increase and a 3% year-over-year increase [29] - Adjusted net income for Q2 was $37.5 million, down from $66.4 million in the prior year, primarily due to increased depreciation and interest expenses [34] Business Line Data and Key Metrics Changes - Digital Commerce segment saw volumes of $111.2 billion, a decline of 5% year-over-year, with revenue down 13% due to FX impacts and soft iGaming activity in Europe [35] - U.S. Acquiring segment reported volumes of $22.1 billion, an 8% year-on-year increase, with revenue increasing 14% to $187.2 million and adjusted EBITDA rising 30% to $53 million [38] Market Data and Key Metrics Changes - The Americas region experienced strong growth, particularly in U.S. Acquiring and regulated iGaming, which grew 18% in the first half of 2022 [18] - European markets continued to show weakness, particularly in iGaming, influenced by regulatory changes and the Russia-Ukraine conflict [30][41] Company Strategy and Development Direction - The company aims to enhance product innovation and improve cross-selling opportunities to better serve merchant and consumer customers [12][21] - A focus on operational efficiency and simplifying the organizational structure is underway to support sales and product innovation [20][23] - The company is committed to returning to growth in 2023, with plans to align product direction and improve client experience [26][46] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of macroeconomic factors on consumer spending, particularly in Europe, and revised guidance to reflect these challenges [10][41] - The company expects revenue for the full year to be between $1.47 billion and $1.49 billion, indicating a flat year-over-year performance [43] Other Important Information - The company reported a GAAP net loss of $631.5 million due to goodwill impairment, which is a non-cash charge [33] - Free cash flow for the 12-month period was $222 million, reflecting a 53% conversion rate [31] Q&A Session Summary Question: Does the new revenue guide assume softening trends in verticals outside of European gaming? - Management indicated that the revenue guide predominantly reflects weakness in European gaming, driven by macroeconomic factors affecting discretionary spending [50] Question: What are the expectations for interest expense and leverage by year-end? - Management expects leverage to end in the 5.5x range, with minimal changes in interest expense due to effective hedging against rate changes [52] Question: What are the key takeaways regarding the business after a few months? - Management expressed confidence in the company's position within the merchant acquiring and issuing platforms, highlighting opportunities for product innovation and sales improvement [55] Question: What is the growth rate in the iGaming segment this quarter? - The iGaming segment saw a 25% volume growth year-on-year, with regulated iGaming close to 70% growth [75] Question: Is the weakness in European gambling due to increased competition or macro factors? - Management clarified that the weakness is primarily macro-driven, with some regulatory impacts, rather than competitive pressures [62]