Paysafe (US:PSFE)2022-03-02 17:00Financial Data and Key Metrics Changes - Fourth quarter revenue reached $372 million, exceeding the high-end of revised guidance, with adjusted EBITDA of $105.5 million, also above expectations [8][31] - For the full year 2021, total revenue was $1.49 billion, a 4% increase from 2020, and adjusted EBITDA was $444 million, also up 4% [34][36] - Free cash flow for Q4 was $53 million, representing a 50% conversion on adjusted EBITDA, while full year free cash flow was $286 million, or 65% conversion [33][35] Business Line Data and Key Metrics Changes - Digital Commerce segment had volumes of $44 billion and revenues of $837 million, accounting for 56% of total revenue, with adjusted EBITDA margins of 42% [30] - U.S. acquiring segment reported volumes of $78 billion and revenues of $650 million, making up 44% of total revenue, with adjusted EBITDA margins of 26% [30] - Digital wallets experienced a volume decline of 19% year-over-year in Q4, with revenues of $87.9 million, down 9% compared to the prior year [40] Market Data and Key Metrics Changes - North America iGaming saw a 58% volume growth year-on-year, with expansion into new states and partnerships with major operators [20][21] - The U.S. SMB market in acquiring reported a 20% year-on-year revenue growth in Q4, with a 15% growth compared to 2019 [24] - eCash volumes were $1.6 billion in Q4, up 9% year-over-year, with full year revenue of $406 million, a 22% increase [38] Company Strategy and Development Direction - The company is focusing on a digital commerce strategy that integrates card processing, digital wallets, eCash, and real-time banking solutions [10][16] - A significant partnership with Binance was announced, launching a white-label wallet solution to enhance crypto capabilities [18][19] - The company aims to strengthen its digital wallet business by optimizing pricing and improving user experience, with a focus on core product features [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining the 2022 outlook despite headwinds from Europe and a reset of the digital wallet business [11][45] - The company anticipates 2022 to be a transitional year, with expectations for growth in U.S. acquiring and stabilization in digital wallets [15][46] - Management highlighted the importance of adapting to regulatory changes in Europe, particularly in Germany and the Netherlands, while remaining optimistic about growth in North America and Latin America [64] Other Important Information - The company successfully delivered $40 million in cost savings in 2021, exceeding the initial target of $30 million, with plans for an additional $20 million in 2022 [11][25] - A leadership change was announced, with Dan Henson appointed as the new Chairman of the Board [48][49] Q&A Session Summary Question: Can you discuss cash flow conversion dynamics for FY '22? - Management expects free cash flow conversion to remain around 65% for FY '22, driven by growth in the U.S. acquiring business and increased cash taxes [55] Question: What are the competitive dynamics in iGaming? - The company is live in 21 states and offers a comprehensive set of APIs, making it competitive in the iGaming space [57][58] Question: Can you elaborate on the 2022 guidance despite headwinds? - Management remains confident in the guidance due to strong momentum in U.S. acquiring, eCash, and North America iGaming [62] Question: What are the regulatory risks in Europe? - The company has accounted for regulatory impacts in Germany and the Netherlands, with expectations for stabilization in the second half of the year [64] Question: What is the strategy for consumer growth in digital wallets? - Management is focused on improving user experience and pricing, with expectations for growth in the second half of the year [72][73]