Paysafe Limited (“Paysafe” or the “Company”) (NYSE: PSFE), a leading payments platform, today announced its financial results for the fourth quarter and full year of 2023.

Fourth Quarter 2023 Financial Highlights

(Metrics compared to fourth quarter of 2022)

• Revenue of $414.5 million, increased 8%; increased 6% on a constant currency basis
• Total Payment Volume of $35.8 billion¹, increased 8%
• Net loss attributable to the Company of $12.1 million, or ($0.20) per diluted share, compared to $33.7 million, or ($0.56) per diluted share
• Adjusted net income of $40.9 million, or $0.66 per diluted share, compared to $33.1 million, or $0.54 per diluted share
• Adjusted EBITDA of $121.7 million, increased 13%; increased 11% on a constant currency basis
• Net leverage² decreased to 5.0x as of December 31, 2023, compared to 5.8x as of December 31, 2022

Full Year 2023 Financial Highlights

(Metrics compared to full year 2022)

• Revenue of $1,601.1 million, increased 7%; increased 6% on a constant currency basis
• Total Payment Volume of $140.2 billion¹, increased 8%
• Net loss attributable to the Company of $20.3 million, or ($0.33) per diluted share, compared to $1,862.7 million, or ($30.78) per diluted share
• Adjusted net income of $143.9 million, or $2.33 per diluted share, compared to $137.0 million, or $2.25 per diluted share
• Adjusted EBITDA of $458.7 million, increased 12%; increased 11% on a constant currency basis

Bruce Lowthers, CEO of Paysafe, commented: “We closed out 2023 strong with 8% revenue growth in Q4 and full year growth of 7%, reflecting our best year since coming public. We have undergone significant operating changes during this past year which has allowed us to deliver on the commitments that we set last March, driving revenue growth, Adjusted EBITDA expansion and a reduction in our net debt leverage ratio. Our team is excited about the opportunities ahead, and we look forward to building on this momentum in 2024 by investing in profitable growth, positioning us well for 2025 and beyond.”

Recent Strategic and Operational Highlights

• Announced investment plans to expand Paysafe's go-to-market capabilities to support growth in target verticals, while enhancing client experience and operational efficiency
• Paysafe ranked 2nd in the J.D. Power 2024 U.S. Merchant Services Satisfaction Study^SM, outperforming the industry average for all study dimensions
• Published Paysafe research highlighting a shift in how consumers plan to allocate disposable income, with 42% of survey respondents planning to prioritize spending on experiences over possessions
• Improved consumer engagement and satisfaction, while reducing the rate of customer service contacts through enhancements to self-service, automation and next-gen customer service tools
• Integrated Visa Network Tokens, adding an additional layer of protection for cardholders
• Paysafe is now processing iGaming payments in 32 U.S. states and territories, adding seven new states in 2023, including the launch of Florida in Q4

Fourth Quarter and Full Year 2023 Summary of Consolidated Results

Fourth Quarter 2023 Results

Total revenue for the fourth quarter of 2023 was $414.5 million, an increase of 8%, compared to $383.6 million in the prior year period, reflecting 8% growth in total payment volume. Excluding an $8.6 million favorable impact from changes in foreign exchange rates, total revenue increased 6%. Revenue from the Merchant Solutions segment increased 9%, led by double-digit growth from e-commerce solutions. Revenue from the Digital Wallets segment increased 8% on a reported basis and 3% on a constant currency basis, as a decline from eCash solutions was more than offset by double-digit growth from classic digital wallets, partly reflecting the Company's initiatives to increase consumer engagement and merchant checkout conversion rates. Growth from the Digital Wallets segment was also supported by new product features and interest revenue on consumer deposits.

Net loss attributable to the Company for the fourth quarter was $12.1 million, compared to $33.7 million in the prior year period. The decrease in net loss primarily reflects growth in operating income, including a decrease in share-based compensation expense, partly offset by an increase in tax expense.

Adjusted net income for the fourth quarter increased 23% to $40.9 million, compared to $33.1 million in the prior year period as strong growth in Adjusted EBITDA more than offset higher depreciation and amortization expense, excluding the amortization of acquired intangibles.

Adjusted EBITDA for the fourth quarter was $121.7 million, an increase of 13%, compared to $107.6 million in the prior year period. Excluding a $2.6 million favorable impact from changes in foreign exchange rates, Adjusted EBITDA increased 11% compared to the prior year period, primarily reflecting revenue growth, operating leverage and lower credit losses.

Fourth quarter operating cash flow was $61.6 million, compared to $64.1 million in the prior year period. Unlevered free cash flow was $89.6 million, compared to $99.9 million in the prior year period, which was mainly driven by movements in working capital.

Full Year 2023 Results

Total revenue for the full year 2023 was $1,601.1 million, an increase of 7%, compared to $1,496.1 million in the prior year. Excluding a $16.3 million favorable impact from changes in foreign exchange rates, total revenue increased 6% compared to the prior year. Revenue from the Merchant Solutions segment increased 7%. Revenue from the Digital Wallets segment increased 7% on a reported basis and 5% on a constant currency basis. Growth drivers for the full year 2023 were consistent with those in the fourth quarter of 2023, driven by Paysafe's e-commerce solutions and classic digital wallets, including the benefit of interest revenue earned on consumer deposits, coupled with continued growth and resilience in the U.S. SMB market.

Net loss attributable to the Company for the full year 2023 was $20.3 million, compared to $1,862.7 million in the prior year. The decrease in net loss was largely attributable to non-cash charges related to the impairment of goodwill and intangibles recognized in 2022, as well as a decrease in restructuring expense, partly offset by the recognition of income tax expense in 2023, compared to an income tax benefit in 2022, as well as a decrease in other income.

Adjusted EBITDA for the full year 2023 was $458.7 million, an increase of 12%, compared to $410.0 million in the prior year. Excluding an $5.6 million favorable impact from changes in foreign exchange rates, Adjusted EBITDA increased 11%, primarily reflecting revenue growth, operating leverage and lower credit losses.

Adjusted net income for the full year 2023 increased 5% to $143.9 million, compared to $137.0 million in the prior year. The increase in adjusted net income was largely attributable to the same factors that contributed to growth in Adjusted EBITDA, partly offset by an increase in depreciation and amortization expense, excluding the amortization of acquired intangibles, and an increase in interest expense.

Operating cash flow for 2023 was $234.0 million, compared to $237.2 million in the prior year. Unlevered free cash flow increased to $318.3 million, compared to $295.8 million in the prior year due to movements in working capital, partly offset by an increase in capital expenditures.

Balance Sheet

As of December 31, 2023, total cash and cash equivalents were $202.3 million, total debt was $2.5 billion and net debt was $2.3 billion. Compared to December 31, 2022, total debt decreased by $141.6 million, reflecting net repayments of $174.3 million as well as movement in foreign exchange rates.

Summary of Segment Results

Full Year 2024 Financial Guidance

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.

About Paysafe

Paysafe Limited (“Paysafe”) (NYSE: PSFE) (PSFE.WS) is a leading payments platform with an extensive track record of serving merchants and consumers in the global entertainment sectors. 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 $140 billion in 2023, and approximately 3,200 employees located in 12+ countries, Paysafe connects businesses and consumers across 260 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 U.S. federal securities laws. 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,” the “Company,” “we,” “us,” or “our”) 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,” “likely,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” "will," “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, uncertainties, and events that may 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; risks related to our focus on specialized and high-risk verticals; geopolitical events and the economic and other impacts of such geopolitical events and the responses of governments around the world; acts of war and terrorism; 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; 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 becoming an unwitting party to fraud or being deemed to be handling proceeds resulting from the criminal activity 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 fourth 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; 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; the effect of regional epidemics or a global pandemic on our business; 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.

Paysafe Limited Condensed Consolidated Balance Sheets (unaudited)

Paysafe Limited Condensed Consolidated Statements of Operations (unaudited)

Paysafe Limited Consolidated Net (loss) / income per share attributable to the Company

Paysafe Limited Condensed Consolidated Statements of Cash Flow (unaudited)

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), Adjusted EBITDA, Unlevered free cash flow, Adjusted net income, Adjusted net income per share, and Net leverage 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). 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. 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.

Unlevered 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 and cash paid for interest. 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. Management believes unlevered free cash flow to be a liquidity measure that provides useful information about the amount of cash generated by the business.

Net leverage is defined as net debt (gross debt less cash and cash equivalents) divided by the last twelve months Adjusted EBITDA. Management believes net leverage is a useful measure of the Company's credit position and progress towards leverage targets.

Management believes the presentation of these non-GAAP financial measures, including Gross Profit, Adjusted EBITDA, Unlevered free cash flow, Adjusted net income, Adjusted net income per share, and Net leverage 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 measure of Adjusted EBITDA provided herein have not been reconciled to the comparable GAAP measure 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 Loss to Adjusted EBITDA

Reconciliation of Operating Cash Flow to Non-GAAP Unlevered Free Cash Flow

Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit (excluding depreciation and amortization)

Reconciliation of GAAP Net Loss to Adjusted Net Income

Adjusted Net Income per Share

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