Paysafe (US:PSFE)2024-11-13 15:31Financial Data and Key Metrics Changes - Revenue increased by 8% year-over-year to $427 million, or 7% on a constant currency basis, with Merchant Solutions growing by 11% and Digital Wallets by 4% [10][27] - Adjusted EBITDA was $117.8 million, up 1% year-over-year, with an adjusted EBITDA margin of 27.6%, a decline of 170 basis points [11][28] - Net leverage ratio improved to 4.7 times, down from 5.1 times in Q3 2023 [12][36] Business Line Data and Key Metrics Changes - Merchant Solutions saw volume increase by 8% year-over-year to $32 billion, with revenue up 11% to $241.1 million, driven by strong growth in e-commerce and iGaming [32] - Digital Wallets experienced a volume increase of 5% to $5.9 billion, with revenue rising 4% to $190.9 million, supported by product initiatives and solid growth from merchants onboarded last year [34] Market Data and Key Metrics Changes - North American iGaming revenue grew over 50%, reflecting merchant wins and industry growth [21] - Transactions per active user in Digital Wallets grew by 16% year-over-year, marking the seventh consecutive quarter of growth for this metric [24] Company Strategy and Development Direction - The company is focused on four strategic priorities for 2024, including expanding sales capabilities, optimizing the portfolio, revamping consumer acquisition efforts, and enhancing product offerings [14][16] - The partnership with Revolut aims to expand user reach and enhance service offerings, with expectations for continued growth through 2025 [18][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth and margin expansion, with good visibility into future performance [49] - The company reaffirmed its full-year financial outlook for 2024, expecting revenue growth in the range of 7% to 8% and adjusted EBITDA margin between 27.5% to 28% [13][37] Other Important Information - The company welcomed a new CFO, John Crawford, who brings extensive experience in the payments industry [8] - The company is maintaining a disciplined approach to capital allocation and is focused on reducing debt while investing in growth [35] Q&A Session Summary Question: Portfolio optimization efforts and revenue contribution for next year - Management indicated that they are ahead of schedule with portfolio optimization efforts, expecting solid growth and visibility into revenue growth for 2025 [49] Question: Expectations for the Revolut partnership - Management expects continued expansion of the partnership with Revolut, anticipating growth in user transactions and potential for similar collaborations with other clients [50] Question: Impact of higher risk merchants on gross margin - Management confirmed that the exit of higher risk merchants has impacted gross margin, but they are focused on revenue and EBITDA growth [51][52] Question: Health of the pipeline for growth targets - Management reported a strong pipeline with solid growth in enterprise deals, indicating confidence in achieving growth targets for 2025 [57] Question: Progress in ramping new sales hires - Management noted that the enterprise sales team typically takes about six months to ramp fully, while SMB sales ramp up faster, with overall performance meeting expectations [59] Question: Deceleration in SMB direct growth - Management explained that the deceleration is due to proactive decisions to exit high-risk merchants, while still expecting overall revenue growth to exceed initial projections [60]