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Paysafe First-Quarter Revenue Rises Amid Europe Lockdowns, US Gaming Growth

05/11/2021 10:27

02:23 PM EDT, 05/11/2021 (MT Newswires) -- Paysafe (PSFE) topped analyst estimates on Tuesday with modest first-quarter revenue growth, as the London-based payments company benefited from rapid US adoption of online gaming and strong European demand for its eCash payments platform amid continuing COVID-19 lockdows.

Shares slumped 12% in afternoon trading amid broad market weakness.

Paysafe reported a net loss of $49.1 million for the quarter ended March 31, narrowing from a loss of $51.1 million a year earlier. Revenue rose 5% to $377.4 million, topping the average estimate of $366.4 million from three analysts in a Capital IQ poll. Adjusted EBITDA of $113.2 million beat analysts' view for earnings before interest, tax, depreciation, and amortization of $110.2 million.

It was the company's first report since it returned to public markets March 31 following a merger with Foley Trasimene Acquisition Corp. II, the blank-check vehicle of Bill Foley. Foley, founder and chairman of Fidelity National Financial (FNF), now also chairs Paysafe's board.

Paysafe did not report per-share earnings data. The first-quarter net loss included a share-based compensation charge of $72.4 million for shares that vested following the March merger, it said.

"As we embark on our next chapter as a public company, we are pleased to deliver solid financial results in the first quarter, including continued strength from online and e-commerce volumes," said Chief Executive Philip McHugh. "Alongside this, we made excellent progress on our strategic initiatives across North American iGaming and emerging eCommerce verticals. With our great market positions and unique, two-sided network, we believe that Paysafe remains well positioned to deliver consistent double-digit growth and drive operating leverage."

The company reiterated full-year 2021 guidance of $480 million to $495 million in adjusted EBITDA. Paysafe projected annual 2021 revenue of $1.53 billion to $1.55 billion, up $10 million in the low end from the prior outlook. Analysts expect 2021 EBITDA of $488.6 million on revenue of $1.54 billion. For the second quarter, Paysafe projected $110 million to $120 million in adjusted EBITDA on revenue of $365 million to $385 million. The Street is looking for second-quarter EBITDA of $117 million on revenue of $369.3 million, based on the average of three analyst estimates.

Payments volume in the integrated processing segment that includes online gaming payments and payouts rose 17% year-over-year to $21.6 billion, while revenue fell 5% to $176.9 million and segment adjusted EBITDA plunged 19% to $44.9 million. The volume gain reflected strong US growth with Europe "muted due to slower economic recovery," the company said. The revenue and segment earnings declines reflected "channel and merchant mix shift to optimize risk/reward profile," according to Paysafe.

The eCash segment turning cash into online payments saw payments volume surge 61% to $1.5 billion, while revenue soared 63% to $112.9 million and segment adjusted EBITDA jumped 110% to $48.1 million, with growth driven by extended lockdowns in Europe and the related gains in online spending, according to Paysafe.

The digital wallet segment competing against the likes of PayPal (PYPL) saw payment volume drop 25% as revenue declined 13% to $94.9 million and segment EBITDA slid 30% $37.8 million. The declines reflect "targeted actions/exits" in 2020, with year-over-year growth expected to return in Q2 on easier comparisons and more sporting events, the company said.

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