Updates Full Year Outlook
Paysafe Limited (“Paysafe” or the “Company”) (NYSE: PSFE)
(PSFE.WS), a leading specialized payments platform, today announced
its financial results for the second quarter of 2022.
Second Quarter 2022 Financial Highlights (Metrics
compared to second quarter of 2021)
- Total Payment Volume of $33.4 billion*, increased 3%
- Revenue of $378.9 million, decreased 1%; Revenue increased 3%
on a constant currency basis
- Net loss attributable to the Company of $631.5 million,
compared to net income attributable to the Company of $6.6 million,
and inclusive of a non-cash impairment charge of $676.5
million
- Adjusted net income of $37.5 million, compared to adjusted net
income of $66.4 million
- Adjusted EBITDA of $103.0 million, decreased 13%; Adjusted
EBITDA decreased 9% on a constant currency basis
Bruce Lowthers, CEO of Paysafe, commented: “Through the first
half of the year, Paysafe has delivered financial results in line
with our overall expectations, marked by double-digit growth in the
US SMB market. I remain very excited to be at the helm of Paysafe
as we drive transformational change to unlock our full growth
potential with a laser focus on accelerating sales, innovative
product delivery and operating at speed. While strong execution has
enabled us to absorb headwinds from foreign exchange rates and a
soft European gambling market, at this time we believe it is
prudent to adjust our outlook to reflect the current macroeconomic
environment.”
Recent Strategic and Operational Highlights
- Announced Rob Gatto as chief revenue officer to transform
Paysafe's sales engine and ensure exceptional client
experiences
- Continued strong growth from US Acquiring – Q2 revenue
increased 14%
- Launched with additional iGaming operators in Ontario’s new
private market – Paysafe is now live with or onboarding 14
operators
- Won ‘Payment Innovation’ Award at SBC Awards North America,
recognized for Skrill USA upgrades to support instant funding of
deposits and payouts plus VIP player program
- Entered Arkansas iGaming market with BetSaracen
- Integrated Mastercard Send into Paysafe's platform, enhancing
payout capabilities in the UK and EU
Impairment of Goodwill
Due to a sustained decline in Paysafe’s market capitalization,
as well as current market and macroeconomic conditions, Paysafe
recognized a $676.5 million impairment of goodwill during the
second quarter. The non-cash impairment charge will not have any
impact on the Company’s compliance with its debt covenants, cash
flows or liquidity. Additional information about the results of the
goodwill impairment test and related disclosures will be available
in the Company's interim financial report on Form 6-K to be filed
with the SEC.
* Volumes exclude embedded finance related volumes of $13.5
billion.
Second Quarter 2022 Summary of
Consolidated Results
Three Months Ended
Six Months Ended
June 30,
June 30,
($ in thousands) (unaudited)
2022
2021
2022
2021
Revenue
$
378,913
$
384,343
$
746,581
$
761,767
Gross Profit (excluding depreciation and
amortization)
$
219,926
$
228,565
$
440,491
$
454,952
Net (loss) / income attributable to the
Company
$
(631,521
)
$
6,597
$
(1,802,704
)
$
(54,050
)
Adjusted EBITDA
$
102,953
$
118,804
$
206,920
$
232,034
Adjusted EBITDA margin
27.2
%
30.9
%
27.7
%
30.5
%
Adjusted net income attributable to the
Company
$
37,541
$
66,372
$
74,802
$
110,016
Total revenue for the second quarter of 2022 was $378.9 million,
a decrease of 1%, compared to $384.3 million in the prior year
period. Excluding a $18.3 million unfavorable impact from changes
in foreign exchange rates, revenue increased 3% compared to the
prior year period. Strong growth from US Acquiring, which increased
14%, was offset by declines in Digital Commerce. Excluding the
aforementioned foreign currency impact, Digital Commerce revenue
decreased 4%, primarily reflecting market headwinds related to
gambling regulations in Europe as well as the Russia-Ukraine war.
Additionally, in the prior year period, Paysafe’s eCash solutions
benefited from comparably strong volumes associated with COVID-19
lockdowns in Europe. These impacts were partially offset by growth
from acquisitions completed in the last twelve months as well as
growth from new products.
Net loss attributable to the Company for the second quarter was
$631.5 million, compared to net income of $6.6 million in the prior
year period, largely reflecting the aforementioned impairment
charge.
Adjusted EBITDA for the second quarter was $103.0 million, a
decrease of 13%, compared to $118.8 million in the prior year
period. Excluding a $5.1 million unfavorable impact from changes in
foreign exchange rates, Adjusted EBITDA decreased 9% compared to
the prior year period. Adjusted EBITDA margin decreased to 27.2%,
compared to 30.9% in the prior year period, primarily reflecting
business mix.
Adjusted net income for the second quarter was $37.5 million,
compared to adjusted net income of $66.4 million in the prior year
period. The change in adjusted net income was largely attributable
to the same factors impacting Adjusted EBITDA as well as an
increase in depreciation and amortization expense, excluding the
amortization of acquired intangibles, and higher interest expense,
excluding the impact of the acceleration of deferred debt financing
expense.
Second quarter net cash inflow from operating activities was
$875.6 million, compared to $7.7 million net outflow in the prior
year period. Free cash flow was $39.7 million, compared to $54.6
million in the prior year period.
Summary of Segment
Results
Three Months Ended
Six Months Ended
June 30,
YoY
June 30,
YoY
($ in thousands) (unaudited)
2022
2021
change
2022
2021
change
Revenue:
US Acquiring
$
187,150
$
164,642
13.7
%
$
356,294
$
317,983
12.0
%
Digital Commerce
$
191,763
$
219,701
-12.7
%
$
390,287
$
443,784
-12.1
%
Total Revenue
$
378,913
$
384,343
-1.4
%
$
746,581
$
761,767
-2.0
%
Adjusted EBITDA:
US Acquiring
$
53,036
$
40,660
30.4
%
$
100,278
$
79,916
25.5
%
Digital Commerce
$
71,722
$
95,064
-24.6
%
$
147,517
$
186,579
-20.9
%
Unallocated Corporate
$
(21,805
)
$
(16,920
)
28.9
%
$
(40,875
)
$
(34,461
)
18.6
%
Total Adjusted EBITDA
$
102,953
$
118,804
-13.3
%
$
206,920
$
232,034
-10.8
%
Adjusted EBITDA margin:
US Acquiring
28.3
%
24.7
%
360 bps
28.1
%
25.1
%
300 bps
Digital Commerce
37.4
%
43.3
%
-590 bps
37.8
%
42.0
%
-420 bps
Total Adjusted EBITDA margin
27.2
%
30.9
%
-370 bps
27.7
%
30.5
%
-280 bps
Revenue Disaggregation
Three Months Ended
Six Months Ended
June 30,
YoY
June 30,
YoY
($ in thousands) (unaudited)
2022
2021
change
2022
2021
change
Revenue:
US Acquiring
$
187,150
$
164,643
13.7
%
$
356,294
$
317,983
12.0
%
eCash (1)
$
95,717
$
103,877
-7.9
%
$
196,829
$
216,793
-9.2
%
Digital Wallets (1)
$
78,818
$
97,269
-19.0
%
$
161,005
$
192,193
-16.2
%
Integrated & Ecommerce Solutions (IES)
(1)
$
25,620
$
26,587
-3.6
%
$
48,821
$
50,149
-2.6
%
Intracompany (1)
$
(8,392
)
$
(8,033
)
4.5
%
$
(16,368
)
$
(15,351
)
6.6
%
Total Revenue
$
378,913
$
384,343
-1.4
%
$
746,581
$
761,767
-2.0
%
(1) These business lines are part of the Digital Commerce
segment.
Financial Guidance
For full year 2022, Paysafe is now anticipating revenue and
adjusted EBITDA to be in the ranges provided below. These revised
expectations reflect the impact of foreign currency as well as
macroeconomic uncertainty. Excluding the impact of movement in
foreign exchange rates, Paysafe anticipates mid single-digit
revenue growth for full year 2022.
($ in millions) (unaudited)
Q3 2022
Full Year 2022 - prior
Full Year 2022 -
updated
Revenue
$350 - $365
$1,530 - $1,580
$1,470 - $1,490
Adjusted EBITDA
$90 - $95
$440 - $460
$400 - $415
Webcast and Conference Call
Paysafe will host a live webcast to discuss the results today at
8:30 a.m. (ET). The webcast and supplemental information can be
accessed on the investor relations section of the Paysafe website
at ir.paysafe.com. An archive will be available after the
conclusion of the live event and will remain available via the same
link for one year.
Time
Wednesday, August 10, 2022, at
8:30 a.m. ET
Webcast
Go to the Investor Relations
section of the Paysafe website to listen and view slides
Dial in
877-407-3037 (U.S. toll-free);
215-268-9852 (International)
Reorganization and Recapitalization (the
“Transaction”)
On March 30, 2021, Paysafe completed the previously announced
transaction with FTAC, a special purpose acquisition company, which
resulted in Paysafe Limited acquiring, and becoming the successor
to, the Accounting Predecessor. Simultaneously, it completed the
merger with FTAC with an exchange of the shares and warrants issued
by Paysafe Limited for those of FTAC. The acquisition was accounted
for as a capital reorganization followed by the merger with FTAC,
which was treated as a recapitalization. Following the transaction,
both the Accounting Predecessor and FTAC are indirect wholly owned
subsidiaries of Paysafe Limited. Upon completion of the
Transaction, the common stock and warrants began trading on the New
York Stock Exchange under the ticker symbols “PSFE” and “PSFE WS,”
respectively, on March 31, 2021.
Basis of Presentation
The financial information for the three and six months ended
June 30, 2021 included in this press release reflect, and is based
upon, information of Paysafe Limited after giving effect to the
transaction with Foley Trasimene Acquisition Corporation II
(“FTAC”) completed on March 30, 2021.
About Paysafe
Paysafe Limited (“Paysafe”) (NYSE: PSFE) (PSFE.WS) is a leading
specialized payments platform. Its core purpose is to enable
businesses and consumers to connect and transact seamlessly through
industry-leading capabilities in payment processing, digital
wallet, and online cash solutions. With over 20 years of online
payment experience, an annualized transactional volume of over US
$120 billion in 2021, and approximately 3,500 employees located in
12+ global locations, Paysafe connects businesses and consumers
across 100 payment types in over 40 currencies around the world.
Delivered through an integrated platform, Paysafe solutions are
geared toward mobile-initiated transactions, real-time analytics
and the convergence between brick-and-mortar and online payments.
Further information is available at www.paysafe.com.
Forward-looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the United States
Private Securities Litigation Reform Act of 1995. These
forward-looking statements are provided for illustrative purposes
only and are not intended to serve as, and must not be relied on by
any investor as, a guarantee, an assurance, a prediction or a
definitive statement of fact or probability. Paysafe Limited’s
(“Paysafe,” “PSFE” or the “Company”) actual results may differ from
their expectations, estimates, and projections and, consequently,
you should not rely on these forward-looking statements as
predictions of future events. Words such as “anticipate,” “appear,”
“approximate,” “believe,” “budget,” “continue,” “could,”
“estimate,” “expect,” “forecast,” “foresee,” “guidance,” “intends,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “seek,” “should,” “would” and variations of such words
and similar expressions (or the negative version of such words or
expressions) may identify forward-looking statements, but the
absence of these words does not mean that a statement is not
forward-looking. These forward-looking statements include, without
limitation, Paysafe’s expectations with respect to future
performance.
These forward-looking statements involve significant risks and
uncertainties that could cause the actual results to differ
materially, and potentially adversely, from those expressed or
implied in the forward-looking statements. While the Company
believes its assumptions concerning future events are reasonable, a
number of factors could cause actual results to differ materially
from those projected, including, but not limited to: cyberattacks
and security vulnerabilities; complying with and changes in money
laundering regulations, financial services regulations,
cryptocurrency regulations, consumer and business privacy and data
use regulations or other regulations in Bermuda, the UK, Ireland,
Switzerland, the United States, Canada and elsewhere; geopolitical
events, including acts of war and terrorism, including the conflict
in Ukraine, the economic and other impacts of such conflict and the
responses of governments around the world thereto; changes in our
relationships with banks, payment card networks, issuers and
financial institutions; risk related to processing online payments
for merchants and customers engaged in the online gambling and
foreign exchange trading sectors; risks related to our focus on
specialized and high-risk verticals; risks related to becoming an
unwitting party to fraud or be deemed to be handling proceeds of
crimes being committed by customers; the effects of chargebacks,
merchant insolvency and consumer deposit settlement risk; changes
to our continued financial institution sponsorships; failure to
hold, safeguard or account accurately for merchant or customer
funds; risks related to the availability, integrity and security of
internal and external IT transaction processing systems and
services; our ability to manage regulatory and litigation risks,
and the outcome of legal and regulatory proceedings; failure of
third parties to comply with contractual obligations; changes and
compliance with payment card network operating rules; substantial
and increasingly intense competition worldwide in the global
payments industry; the effect of the COVID-19 pandemic on our
business; the effects of global economic uncertainties, including
inflationary pressure and rising interest rates, on consumer and
business spending; risks associated with foreign currency exchange
rate fluctuations; risks related to developing and maintaining
effective internal controls over financial reporting; managing our
growth effectively, including growing our revenue pipeline; any
difficulties maintaining a strong and trusted brand; keeping pace
with rapid technological developments; risks associated with the
significant influence of our principal shareholders; terrorism; and
other factors included in the “Risk Factors” in our Form 20-F and
in other filings we make with the SEC, which are available at
https://www.sec.gov. Readers are cautioned not to place undue
reliance upon any forward-looking statements, which speak only as
of the date made. The Company expressly disclaims any obligations
or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change
in their expectations with respect thereto or any change in events,
conditions, or circumstances on which any statement is based,
except as required by law.
Paysafe Limited Condensed
Consolidated Balance Sheets (unaudited)
($ in thousands)
June 30, 2022
December 31, 2021
Assets
Current assets
Cash and cash equivalents
$
243,533
$
313,439
Customer accounts and other restricted
cash, net of allowance for credit losses of $595 and $673,
respectively
2,467,780
1,658,279
Accounts receivable, net of allowance for
credit losses of $12,152 and $8,642, respectively
150,508
147,780
Settlement receivables, net of allowance
for credit losses of $3,388 and $4,049, respectively
110,883
149,852
Prepaid expenses and other current
assets
95,100
64,497
Related party receivables – current
3,984
6,492
Contingent consideration receivable –
current
—
2,842
Total current assets
3,071,788
2,343,181
Deferred tax assets
24,961
21,926
Property, plant and equipment, net
12,852
14,907
Operating lease right-of-use assets
24,384
33,118
Derivative Assets
8,788
—
Intangible assets, net
1,334,529
1,202,204
Goodwill
1,993,451
3,650,037
Other assets – noncurrent
2,283
1,856
Total non-current assets
3,401,248
4,924,048
Total assets
$
6,473,036
$
7,267,229
Liabilities and equity
Current liabilities
Accounts payable and other liabilities
$
222,677
$
211,841
Short-term debt
10,190
10,190
Funds payable and amounts due to
customers
2,539,762
1,400,057
Operating lease liabilities – current
6,877
8,845
Income taxes payable
—
11,041
Contingent and deferred consideration
payable – current
12,454
13,673
Liability for share-based compensation –
current
7,565
3,360
Total current liabilities
2,799,525
1,659,007
Non-current debt
2,657,188
2,748,178
Operating lease liabilities –
non-current
20,293
28,008
Deferred tax liabilities
57,864
64,886
Warrant liabilities
14,521
35,575
Liability for share-based compensation –
non-current
4,745
6,664
Accounts payable and other liabilities -
non-current
150
—
Contingent and deferred consideration
payable – non-current
12,687
17,142
Total non-current liabilities
2,767,448
2,900,453
Total liabilities
5,566,973
4,559,460
Commitments and contingent liabilities
Shareholders' equity in the
Company
805,982
2,569,764
Non-controlling interest
100,081
138,005
Total shareholders' equity
906,063
2,707,769
Total liabilities and shareholders'
equity
$
6,473,036
$
7,267,229
Paysafe Limited Condensed
Consolidated Statements of Operations (unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
($ in thousands)
2022
2021
2022
2021
Revenue
$
378,913
$
384,343
$
746,581
$
761,767
Cost of services (excluding depreciation
and amortization)
158,987
155,778
306,090
306,815
Selling, general and administrative
134,709
113,037
265,277
307,035
Depreciation and amortization
69,585
70,114
133,008
135,576
Impairment expense on goodwill and
intangible assets
676,456
1,357
1,882,187
1,935
Restructuring and other costs
7,999
4,518
20,590
7,488
Loss / (gain) on disposal of subsidiary
and other assets, net
660
(28
)
660
(28
)
Operating income / (loss)
(669,483
)
39,567
(1,861,231
)
2,946
Other income, net
56,155
46,558
59,633
79,083
Interest expense, net
(28,426
)
(62,650
)
(54,382
)
(125,019
)
(Loss) / income before taxes
(641,754
)
23,475
(1,855,980
)
(42,990
)
Income tax (benefit) / expense
(10,233
)
16,690
(53,647
)
10,754
Net (loss) / income
$
(631,521
)
$
6,785
$
(1,802,333
)
$
(53,744
)
Less: net income attributable to
non-controlling interest
—
188
371
306
Net (loss) / income attributable to the
Company
$
(631,521
)
$
6,597
$
(1,802,704
)
$
(54,050
)
Net (loss) / income per share attributable
to the Company – basic
$
(0.87
)
$
0.01
$
(2.49
)
$
(0.07
)
Net loss per share attributable to the
Company – diluted
$
(0.87
)
$
(0.04
)
$
(2.49
)
$
(0.07
)
Net (loss) / income
$
(631,521
)
$
6,785
$
(1,802,333
)
$
(53,744
)
Other comprehensive income / (loss), net
of tax of $0:
(Loss) / gain on foreign currency
translation
(36,771
)
12,956
(22,375
)
4,458
Total comprehensive (loss) /
gain
$
(668,292
)
$
19,741
$
(1,824,708
)
$
(49,286
)
Less: comprehensive income attributable to
non-controlling interest
—
188
371
306
Total comprehensive (loss) / gain
attributable to the Company
$
(668,292
)
$
19,553
$
(1,825,079
)
$
(49,592
)
Paysafe Limited Consolidated
Net (loss) / income per share attributable to the Company
For the three months ended
June 30,
For the six months ended June
30,
2022
2021
2022
2021
Numerator ($ in thousands)
Net (loss) / income attributable to the
Company - basic
$
(631,521
)
$
6,597
$
(1,802,704
)
$
(54,050
)
Net loss attributable to the Company -
diluted (1)
$
(631,521
)
$
(32,751
)
$
(1,802,704
)
$
(54,050
)
Denominator (in millions)
Weighted average shares – basic
725.9
723.7
724.9
723.7
Weighted average shares – diluted (2)
725.9
728.0
724.9
723.7
Net (loss) / income per share attributable
to the Company
Basic
$
(0.87
)
$
0.01
$
(2.49
)
$
(0.07
)
Diluted
$
(0.87
)
$
(0.04
)
$
(2.49
)
$
(0.07
)
(1)
The numerator used in the
calculation of diluted net income / (loss) per share attributable
to the Company for the three months ended June 30, 2021 has been
adjusted to exclude the $39,348 fair value gain on the warrant
liabilities.
(2)
The denominator used in the
calculation of diluted net income / (loss) per share attributable
to the Company for the three months ended June 30, 2021 has been
adjusted to include an additional 4,314,601 shares representing the
dilutive effect of the warrants.
Paysafe Limited Condensed
Consolidated Statements of Cash Flow (unaudited)
Six Months Ended
June 30,
($ in thousands)
2022
2021
Cash flows from operating
activities
Net loss
$
(1,802,333
)
$
(53,744
)
Adjustments for non-cash items:
Depreciation and amortization
133,008
135,576
Unrealized foreign exchange (gain) /
loss
(34,408
)
2,245
Deferred tax (benefit) / expense
(58,985
)
4,714
Interest expense, net
9,772
69,155
Share based compensation
31,706
84,117
Other income, net
(23,009
)
(75,901
)
Impairment expense on goodwill and
intangible assets
1,882,187
1,935
Allowance for credit losses and other
14,874
9,600
Loss / (gain) on disposal of subsidiary
and other assets, net
660
(28
)
Non-cash lease expense
3,491
4,909
Movements in working capital:
Accounts receivable, net
(14,280
)
(21,342
)
Prepaid expenses, other current assets,
and related party receivables
(26,020
)
(9,282
)
Settlement receivables, net
27,624
44,113
Accounts payable, other liabilities, and
related party payables
6,360
(21,139
)
Funds payable and amounts due to
customers
1,250,221
(116,268
)
Income tax payable
(21,421
)
(17,650
)
Net cash flows from operating
activities
1,379,447
41,010
Cash flows in investing
activities
Purchase of property, plant &
equipment
(1,839
)
(1,169
)
Purchase of merchant portfolios
(23,983
)
(36,703
)
Purchase of other intangible assets
(42,892
)
(37,452
)
Acquisition of business, net of cash
acquired
(424,722
)
(23,531
)
Net cash outflow on disposal of
subsidiary
(826
)
—
Net cash flows used in investing
activities
(494,262
)
(98,855
)
Cash flows from financing
activities
Cash settled equity awards
(154
)
—
Proceeds from exercise of warrants
3
—
Net cash inflow from reorganization and
recapitalization
—
1,167,874
Payment of equity issuance costs
—
(149,496
)
Repurchase of loan notes
(9,508
)
—
Proceeds from loans and borrowings
86,246
2,112,816
Repayments of loans and borrowings
(92,867
)
(3,267,269
)
Payment of debt issuance costs
(6,261
)
(1,068
)
Payments under derivative financial
instruments, net
(1,371
)
(31,515
)
Cash outflow on foreign exchange forward
contract
—
(6,504
)
Proceeds under line of credit
373,082
300,000
Repayments under line of credit
(350,000
)
(300,000
)
Contingent consideration received
2,621
7,942
Contingent and deferred consideration
paid
(14,165
)
(1,002
)
Net cash flows used in financing
activities
(12,374
)
(168,222
)
Effect of foreign exchange rate
changes
(133,216
)
(40,716
)
Increase / (decrease) in cash and cash
equivalents, including customer accounts and other restricted cash
during the period
$
739,595
$
(266,783
)
Cash and cash equivalents, including
customer accounts and other restricted cash at beginning of the
period
1,971,718
1,763,852
Cash and cash equivalents at end of the
period, including customer accounts and other restricted
cash
$
2,711,313
$
1,497,069
Six Months Ended
June 30,
2022
2021
Cash and cash equivalents
$
243,533
$
247,801
Customer accounts and other restricted
cash, net
2,467,780
1,249,268
Total cash and cash equivalents,
including customer accounts and other restricted cash, net
$
2,711,313
$
1,497,069
Non-GAAP Financial Measures
To supplement the Company’s condensed consolidated financial
statements presented in accordance with generally accepted
accounting principles, or GAAP, the company uses non-GAAP measures
of certain components of financial performance. This includes Gross
Profit (excluding depreciation and amortization), Gross Profit
Margin (excluding depreciation and amortization), Adjusted EBITDA,
Adjusted EBITDA margin, Free cash flow and Free cash flow
conversion, Adjusted net income and Adjusted net income per share,
which are supplemental measures that are not required by, or
presented in accordance with, accounting principles generally
accepted in the United States (“U.S. GAAP”).
Gross Profit (excluding depreciation and amortization) is
defined as revenue less cost of services (excluding depreciation
and amortization). Gross Profit Margin (excluding depreciation and
amortization) is defined as Gross Profit (excluding depreciation
and amortization) as a percentage of revenue. Management believes
Gross Profit to be a useful profitability measure to assess the
performance of our businesses and ability to manage cost.
Adjusted EBITDA is defined as net income/(loss) before the
impact of income tax (benefit)/expense, interest expense, net,
depreciation and amortization, share based compensation, impairment
expense on goodwill and intangible assets, restructuring and other
costs, loss/(gain) on disposal of a subsidiaries and other assets,
net, and other income/(expense), net. These adjustments also
include certain costs and transaction items that are not reflective
of the underlying operating performance of the Company. Adjusted
EBITDA margin is defined as Adjusted EBITDA as a percentage of
Revenue. Management believes Adjusted EBITDA to be a useful
profitability measure to assess the performance of our businesses
and improves the comparability of operating results across
reporting periods.
Adjusted net income excludes the impact of certain
non-operational and non-cash items. Adjusted net income is defined
as net income/(loss) attributable to the Company before the impact
of other non-operating income / (expense), net, impairment expense
on goodwill and intangible assets, restructuring and other costs,
accelerated amortization of debt fees, amortization of acquired
assets, loss/(gain) on disposal of subsidiaries and other assets,
share based compensation, discrete tax items and the income tax
(benefit)/expense on these non-GAAP adjustments. Adjusted net
income per share is adjusted net income as defined above divided by
adjusted weighted average dilutive shares outstanding. Management
believes the removal of certain non-operational and non-cash items
from net income enhances shareholders ability to evaluate the
Company’s business performance and profitability by improving
comparability of operating results across reporting periods.
Free cash flow is defined as net cash flows provided by/used in
operating activities, adjusted for the impact of capital
expenditure, payments relating to restructuring and other costs,
cash paid for interest and movements in customer accounts and other
restricted cash. Capital expenditure includes purchases of property
plant & equipment and purchases of other intangible assets,
including software development costs. Capital expenditure does not
include purchases of merchant portfolios. Free cash flow conversion
is defined as free cash flow as a percentage of Adjusted EBITDA.
Management believes free cash flow to be a liquidity measure that
provides useful information about the amount of cash generated by
the business.
Management believes the presentation of these non-GAAP financial
measures, including Gross Profit, Gross Profit Margin, Adjusted
EBITDA, Adjusted EBITDA margin, and Adjusted net income, when
considered together with the Company’s results presented in
accordance with GAAP, provide users with useful supplemental
information in comparing the operating results across reporting
periods by excluding items that are not considered indicative of
Paysafe’s core operating performance. In addition, management
believes the presentation of these non-GAAP financial measures
provides useful supplemental information in assessing the Company’s
results on a basis that fosters comparability across periods by
excluding the impact on the Company’s reported GAAP results of
acquisitions and dispositions that have occurred in such periods.
However, these non-GAAP measures exclude items that are significant
in understanding and assessing Paysafe’s financial results or
position. Therefore, these measures should not be considered in
isolation or as alternatives to revenue, net income, cash flows
from operations or other measures of profitability, liquidity or
performance under GAAP.
You should be aware that Paysafe’s presentation of these
measures may not be comparable to similarly titled measures used by
other companies. In addition, the forward-looking non-GAAP
financial measures of Adjusted EBITDA and Gross Profit provided
herein have not been reconciled to comparable GAAP measures due to
the inherent difficulty in forecasting and quantifying certain
amounts that are necessary for such reconciliations. We have
reconciled the historical non-GAAP financial measures presented
herein to their most directly comparable GAAP financial measures. A
reconciliation of our forward-looking non-GAAP financial measures
to their most directly comparable GAAP financial measures cannot be
provided without unreasonable effort because of the inherent
difficulty of accurately forecasting the occurrence and financial
impact of the adjusting items necessary for such reconciliations
that have not yet occurred, are out of our control, or cannot be
reasonably predicted. For the same reasons, we are unable to
address the probable significance of the unavailable information,
which could be material to future results.
Reconciliation of GAAP Net
Income (loss) to Adjusted EBITDA
Three Months Ended
Six Months Ended
June 30,
June 30,
($ in thousands)
2022
2021
2022
2021
Net (loss) / income
$
(631,521
)
$
6,785
$
(1,802,333
)
$
(53,744
)
Income tax (benefit) / expense
(10,233
)
16,690
(53,647
)
10,754
Interest expense, net
28,426
62,650
54,382
125,019
Depreciation and amortization
69,585
70,114
133,008
135,576
Share based compensation expense
17,736
3,276
31,706
84,117
Impairment expense on goodwill and
intangible assets
676,456
1,357
1,882,187
1,935
Restructuring and other costs
7,999
4,518
20,590
7,488
Loss / (gain) on disposal of subsidiaries
and other assets, net
660
(28
)
660
(28
)
Other income, net
(56,155
)
(46,558
)
(59,633
)
(79,083
)
Adjusted EBITDA
$
102,953
$
118,804
$
206,920
$
232,034
Adjusted EBITDA Margin
27.2
%
30.9
%
27.7
%
30.5
%
Reconciliation of Operating
Cash Flow to Non-GAAP Free Cash Flow
Three Months Ended
Six Months Ended
June 30,
June 30,
($ in thousands)
2022
2021
2022
2021
Net cash inflows / (outflows) from
operating activities
$
875,599
$
(7,730
)
$
1,379,447
$
41,010
Capital Expenditure
(24,092
)
(23,215
)
(44,731
)
(38,621
)
Cash paid for interest
29,856
19,011
44,610
55,864
Payments relating to Restructuring and
other costs
7,995
725
20,136
4,180
Movement in Customer Accounts and other
restricted cash
(849,697
)
65,805
(1,300,579
)
100,691
Free Cash Flow
$
39,661
$
54,596
$
98,883
$
163,124
Adjusted EBITDA
102,953
118,804
206,920
232,034
Free Cash Flow Conversion
39
%
46
%
48
%
70
%
Reconciliation of GAAP Gross
Profit to Non-GAAP Gross Profit (excluding depreciation and
amortization)
Three Months Ended
Six Months Ended
June 30,
June 30,
($ in thousands)
2022
2021
2022
2021
Revenue
$
378,913
$
384,343
$
746,581
$
761,767
Cost of services (excluding depreciation
and amortization)
158,987
155,778
306,090
306,815
Depreciation and amortization
69,585
70,114
133,008
135,576
Gross Profit (1)
$
150,341
$
158,451
$
307,483
$
319,376
Depreciation and amortization
69,585
70,114
133,008
135,576
Gross Profit (excluding depreciation
and amortization)
$
219,926
$
228,565
$
440,491
$
454,952
(1)
Gross Profit has been calculated
as revenue, less cost of services and depreciation and
amortization. Gross profit is not presented within the Company's
consolidated financial statements.
Reconciliation of GAAP Net
(Loss) / Income to Adjusted Net Income
Three Months Ended
Six Months Ended
June 30,
June 30,
($ in thousands)
2022
2021
2022
2021
Net (loss) / income attributable to the
Company
$
(631,521
)
$
6,597
$
(1,802,704
)
$
(54,050
)
Other non operating income, net (1)
(58,611
)
(50,546
)
(64,019
)
(89,266
)
Impairment expense on goodwill and
intangible assets
676,456
1,357
1,882,187
1,935
Accelerated amortization of debt fees
(2)
—
40,538
—
62,262
Amortization of acquired assets (3)
43,283
50,298
85,549
100,363
Restructuring and other costs
7,999
4,518
20,590
7,488
Loss / (gain) on disposal of subsidiaries
and other assets, net
660
(28
)
660
(28
)
Share based compensation expense
17,736
3,276
31,706
84,117
Discrete tax items (4)
13,601
25,394
6,976
22,300
Income tax (benefit) / expense on non-GAAP
adjustments (5)
(32,062
)
(15,032
)
(86,143
)
(25,105
)
Adjusted net income attributable to the
Company
$
37,541
$
66,372
$
74,802
$
110,016
Weighted average shares -
diluted
725.9
728.0
724.9
723.7
Adjusted diluted impact
1.8
1.7
1.5
3.1
Adjusted weighted average shares -
diluted
727.7
729.7
726.5
726.8
(1)
Other non operating (income)
/expense, net primarily consists of income and expenses outside of
the Company's operating activities, including fair value gain on
derivative instruments, fair value gain on warrant liabilities and
(gain) / loss on contingent consideration payable and receivables
and gain on foreign exchange. For the three months and six months
ended June 30, 2022, this item includes the gain on the repurchase
of secured notes.
(2)
Accelerated amortization of debt
fees represents the non-cash amortization of debt fees relating to
the refinancing in 2021.
(3)
Amortization of acquired asset
represents amortization expense on the fair value of intangible
assets acquired through various Company acquisitions, including
Brands, Customer relationships, software and merchant
portfolios.
(4)
Discrete tax items represents
certain amounts within income tax (benefit)/expense, including
changes in uncertain tax positions and the remeasurement of certain
deferred tax balances due to changes in the statutory tax rates in
certain jurisdictions.
(5)
Income tax (benefit) / expense on
non-GAAP adjustments reflects the tax impact of the non-GAAP
adjustments to net (loss)/income attributable to the Company to
calculated adjusted net income.
Adjusted Net (Loss) / Income
per Share
For the three months ended
June 30,
For the six months ended June
30,
2022
2021
2022
2021
Numerator ($ in thousands)
Adjusted net income attributable to the
Company - basic
$
37,541
$
66,372
$
74,802
$
110,016
Adjusted net income attributable to the
Company - diluted
$
37,541
$
66,372
$
74,802
$
110,016
Denominator (in millions)
Weighted average shares – basic
725.9
723.7
724.9
723.7
Adjusted weighted average shares – diluted
(1)
727.7
729.7
726.5
726.8
Adjusted net income per share attributable
to the Company
Basic
$
0.05
$
0.09
$
0.10
$
0.15
Diluted
$
0.05
$
0.09
$
0.10
$
0.15
(1)
The denominator used in the
calculation of diluted adjusted net income per share attributable
to the Company for the three and six months ended June 30, 2022 and
June 30, 2021 has been adjusted to include the dilutive effect of
the Company's warrants, LLC units and restricted stock awards.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220810005212/en/
Media Kate Aldridge Paysafe kate.aldridge@paysafe.com +44 750
079 7547
Investors Kirsten Nielsen Paysafe +1 (646) 901-3140
kirsten.nielsen@paysafe.com
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