• Organic Revenue Growth: 7% for the full year 2024.
• Full Year Revenue: $1.7 billion, a 6% increase year-over-year.
• Adjusted EBITDA: $452 million for the full year, down 1% from the previous year.
• Net Leverage: Reduced to 4.7 times at year-end from 5 times at the end of 2023.
• Unlevered Free Cash Flow: $300 million for 2024, with a 66% conversion of adjusted EBITDA.
• GAAP Net Income: $22 million for the full year 2024, compared to a net loss of $20 million in the previous year.
• Same Store Sales Growth: Contributed roughly 9% to growth during the year.
• Merchant Solutions Revenue: Increased 9% to $957.6 million for the full year.
• Digital Wallets Revenue: Increased 4% for the full year.
• Share Repurchase: More than $40 million returned to shareholders through the share repurchase program.
• Debt Reduction: Total debt under $2.4 billion, with more than $100 million in debt repayments and repurchases during 2024.

• Warning! GuruFocus has detected 3 Warning Signs with PSFE.

Release Date: March 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Paysafe Ltd (NYSE:PSFE) achieved 7% organic revenue growth in 2024, supported by all key regions and product lines.
• The company completed its portfolio rationalization by divesting its direct marketing payment processing business, enhancing financial performance and reducing exposure to higher-risk merchants.
• Paysafe Ltd (NYSE:PSFE) returned over $40 million to shareholders through its first-ever share repurchase program.
• The company generated strong unlevered free cash flow of $300 million in 2024, reflecting a 66% conversion of adjusted EBITDA.
• For the first time since going public, Paysafe Ltd (NYSE:PSFE) achieved a positive GAAP net income of $22 million for the full year of 2024.

Negative Points

• Adjusted EBITDA for 2024 was down 1% compared to the previous year, largely due to accelerated merchant exits and increased credit losses.
• The disposed direct marketing business and associated credit losses significantly impacted the results for merchant solutions, particularly on adjusted EBITDA.
• The company faced a $15 million increase in credit loss expense in Q4, largely associated with portfolio actions in direct marketing.
• Paysafe Ltd (NYSE:PSFE) experienced a decline in free cash flow from Q4 of the previous year, mainly reflecting lower adjusted EBITDA and increased CapEx.
• The company expects Q1 2025 to be its softest quarter, with organic revenue growth of only 3% to 4%.

Q & A Highlights

Q: How should we think about the growth drivers for SMB in 2025, and what is your strategy around the SMB direct channel versus your ISO book? A: Bruce Lowthers, CEO, explained that Paysafe expects solid growth in the SMB channel, particularly with Clover sales, which are seeing low teens growth. The company is focusing on moving upstream within the SMB channel to attract larger clients, resulting in increased revenue per merchant. Additionally, Paysafe has added more sales personnel to the SMB channel, contributing to growth in both the ISO and direct sales segments.

Q: Can you provide more details on the mechanics of the direct marketing business sale and its impact on the income statement? A: Bruce Lowthers, CEO, clarified that the consideration for the transaction is largely annual earn-out payments over the next five years, which will be reflected below the EBITDA line. John Crawford, CFO, confirmed that this is included in the adjusted EPS guidance for 2025, but the impact is expected to be minimal in 2025.

Q: Can you share any details about the takeover interest mentioned in the press release? A: Bruce Lowthers, CEO, stated that Paysafe has received unsolicited proposals and inquiries, but the company is focused on executing its strategy and creating value. The Board will evaluate any proposals as part of its fiduciary responsibility. The interest was anticipated as the company successfully executed its turnaround strategy.

Q: What are the target customers and areas of focus for Paysafe in 2025? A: Bruce Lowthers, CEO, highlighted that Paysafe is focusing on cross-selling opportunities and expanding its product offerings, such as local payment methods and new products. The company aims to maintain consistent growth in existing verticals like SMB and e-commerce, while also seeing growth in Digital Wallets and eCash. The sales team is now more integrated, allowing for better cross-selling opportunities.

Q: Can you provide more color on the VAS capabilities and merchant adoption? A: Bruce Lowthers, CEO, mentioned that products like account and card, ePIN, and Digital Wallets have been well-received. The company is leveraging its white label wallet platform to expand into new markets, such as launching the Pago wallet in Peru. Additionally, a new product for managing subscriptions is set to launch, which has received positive feedback.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.