PSFE

Image source: The Motley Fool. Thursday, Aug. 13, 2026, at 8:30 a.m. ET Head of Investor Relations - Kirsten Nielsen Chief Executive Officer - Bruce Lowthers Chief Financial Officer - John Crawford Operator: Greetings. Welcome to the Paysafe Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Kirsten Nielsen, Head of Investor Relations. Thank you, Kirsten. You may begin. Kirsten Nielsen: Thank you, and welcome to Paysafe's Earnings Conference Call for the second quarter of 2026. Joining me today are Bruce Lowthers, Chief Executive Officer; and John Crawford, Chief Financial Officer. Before we begin, a reminder that this call will contain forward-looking statements and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent SEC reports. These statements reflect management's current assumptions and expectations and are subject to factors that may cause actual results to differ materially from those forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements during this call speak only as of the date of this call, and we undertake no obligation to update them. Today's presentation also contains non-GAAP financial measures. You can find additional information about these measures and reconciliations to the most directly comparable GAAP financial measures in today's press release and in the appendix of this presentation, which are available on the Investor Relations section of our website. With that, I'll turn the call over to Bruce. Bruce Lowthers: Thank you, and good morning, everyone. If you're following the webcast, let's start on Slide 3. The second quarter and first half of 2026 marked an important inflection point for Paysafe. We delivered strong first half revenue growth of 7%, while adjusted EBITDA was essentially flat year-over-year, even as we deliberately increased marketing and IT investment to support the next phase of growth. Just as important, we have now resolved the major inherited matters that have weighed on the company for some time. This summer, we resolved the final legacy overhang from the SPAC through a settlement in principle with the Farzad litigation which involved legal claims brought by pre-SPAC shareholders. John will take you through the financial implications, but this resolution addresses a significant restructuring expense tied to our indemnification obligations related to this case. We also successfully refinanced a significant portion of our debt. We believe the trajectory of our net leverage ratio is the most important near-term driver of equity value, and we remain focused on reducing leverage as a meaningful value creation opportunity over the next 24 months. Together, these actions put us in a much stronger position to focus on what matters most from here, consistent execution, sustainable growth and disciplined deleveraging. In our view, the SPAC area is now behind us. We have returned the company to consistent growth, completed the portfolio rationalization and made major rebuilds across talent, technology, sales and product delivery. This is evident through our product vitality index, which is tracking towards 20% for 2026 compared to less than 2% just 3 years ago. Finally, I want to welcome Naj Atkinson, our new Chief People Officer. Naj brings nearly 30 years of global HR experience, including leadership roles at Hasbro and Dell. She joins Paysafe at an important time as we continue to strengthen our culture, develop future leaders and build on our recognition as one of the 2026 Top 100 Inspiring Workplaces in North America. Turning to Slide 4. I'll share a few additional highlights on our recent progress. We had another strong quarter with 3-month actives at 7.8 million, reflecting 5 quarters of growth, and we continue to see double-digit user growth in Latin America. While it's still early, the initial results of our incremental marketing spend across priority countries in Europe have shown double-digit growth in consumer acquisitions, which has translated into active user growth in those markets. Across these markets, our World Cup marketing initiatives helped drive customer engagement, acquisition growth and brand awareness. Through brand campaigns, strategic partnerships, influencer activations and targeted consumer offers, we expanded our reach to new audiences and strengthened our acquisition engine. These investments are delivering results today while creating a stronger foundation to drive long-term customer value. Our PaysafeWallet solution also continued to gain traction in Europe, where we are now live in 19 countries. The recent launch in Poland demonstrates how we can build on the strong consumer trust and adoption of PaysafeCard while extending that relationship into broader wallet experience. By bringing everyday money movement into a single familiar platform, PaysafeWallet increases consumer engagement and expands our opportunity to deepen customer relationships over time. Finally, as a forward-looking highlight, we're pleased to preview our new partnership with Envision Racing, one of Formula E's most successful and innovative teams. This investment reflects our strategy of building brand awareness, reaching new audiences and fueling long-term customer growth across our priority markets. Formula E is one of the fastest-growing global motorsport platforms with an audience of over 550 million. They attract highly engaged digital native fan base at the intersection of sport, gaming and digital commerce, closely aligning with Paysafe's target audience and existing customer base. Through fan engagement, gaming, rewards and digital commerce experiences, we see an opportunity to introduce millions of consumers to our brands, strengthen customer acquisition and deepen engagement across our portfolio. More broadly, the partnership demonstrates how we are bringing our marketing and product strategies closer together to create differentiated customer experiences and support sustainable growth. With that, I will turn it over to John to discuss the financial results and outlook. John Crawford: Thank you, Bruce. Let's move to Slide 6 for a summary of our second quarter results. Revenue for Q2 was $447.4 million, an increase of 4% on both a reported and organic basis. As the FX tailwind in the second quarter was relatively small and last year's business disposal is no longer relevant to the comparisons since we lapped that in Q1. Our Q2 results also benefited from additional licensing data deals, which contributed $12.5 million as we continue to advance our strategy to commercialize data assets. This brings our first half growth rate to 7% on a reported basis and 6% on an organic basis with continued traction across our priority markets and products. This is consistent with the 6-K we issued 2 weeks ago in connection with our refinancing and in line with the expectations we communicated on our last earnings call. Adjusted EBITDA decreased 2% to $102.8 million in the second quarter and adjusted EBITDA margin declined to 23% compared to 24.5% in the prior period. As we previewed with you on our last call, this included an increase in marketing and IT investment of $7 million in Q2 and an incremental $16 million for the first half of 2026. Turning to cash flow. We generated $45 million of unlevered free cash flow with a 44% conversion of adjusted EBITDA. Q2 is typically a lighter cash flow quarter seasonally, coupled with some timing effects on receivables and capital expenditures. On an LTM basis, unlevered free cash flow was $298 million, an increase of 10% compared to the prior year and reflecting 69% conversion. I do want to point out that we expect to have a cash payment in the second half of $39 million related to the preliminary legal settlement. As a reminder, on an LTM basis, we had cash outflow of nearly $19 million and significant restructuring expenses of $57 million on the P&L related to our indemnification agreement and the associated legal costs for this case. So, this removes a significant drain on cash flow and the GAAP P&L. Adjusted net income for the second quarter was $23.1 million and adjusted EPS was $0.43, a decrease of 7% as the benefit of our reduced share count was offset by the decline in adjusted EBITDA and other income as well as a modest increase in interest expense. Turning to the segment results on Slide 7. Starting with Digital Wallets. Volume in Q2 was $6.6 billion, roughly flat year-on-year. Revenue from Digital Wallets increased 3% to $206.6 million with organic growth of 1% when normalizing for currency movement and interest revenue. Growth for the segment was driven by continued momentum and active user growth from both Latin America and PaysafeWallet in Europe. As we expected for Q2, the strong double-digit growth in these areas was partly offset by a decline from rest of world markets in which we're largely not active, coupled with short-term grow-over effects in certain subverticals such as sweepstakes and cryptocurrency trading, which were relatively strong in Q2 of last year. 3-month actives increased 8% year-over-year, again, led by strong growth in Latin America and PaysafeWallet in Europe. Transactions per active user was stable year-on-year and average revenue per user decreased 5%, with both metrics influenced by the regional and product mix, including the strong growth from LatAm. Adjusted EBITDA for Digital Wallets was $74.9 million, down 9% year-over-year, and adjusted EBITDA margin for the segment was 36.2%, reflecting higher investments in consumer marketing, a VAT accrual adjustment related to distributor commissions and product mix. Without the VAT adjustment, which was approximately $4 million and the increased marketing investment of $3 million, adjusted EBITDA margin for the segment would have been about 40%. Turning to the Merchant segment results. Volume increased 5% to $37.3 billion, resulting in revenue of $246.1 million, an increase of 6%, driven by iGaming volumes in North America and the benefit of additional data licensing deals, while the SMB business line was flat for the quarter. Adjusted EBITDA for the segment was $50.6 million, an increase of 28% and adjusted EBITDA margin for the segment increased 350 basis points to 20.6%, reflecting favorable mix as a result of the licensing deal and the release of a previously recorded accrual that was resolved during the quarter. Normalizing for the accrual release of approximately $6 million, the segment margin would have been around 18% for the quarter. Turning to Slide 8 for a summary of debt and leverage. At the end of the quarter, total debt was $2.5 billion, down $106 million versus Q4, mainly reflecting net repayments of $79 million as well as FX fluctuations which reduced total debt by $34 million. Our net leverage ratio was 5.3x at quarter end compared to 5.5x at Q4. And now factoring in the preliminary legal settlement and the debt refinancing fees, we expect to end the year with net leverage in the range of 5.1x to 5.2x. Lastly, on the right-hand side of this slide, we've included a supplemental cash walk in response to investor interest in better understanding our own cash balance. This separates Paysafe's own cash from customer accounts and other restricted cash, which is not available for general corporate use, making own cash the relevant measure for tracking net debt and leverage. Additional details for this walk are included in the appendix. Let's turn to Slide 9 to cover the refinancing. We are very pleased to have completed this transaction, which underscores our prudent approach to managing the balance sheet and liquidity. The refinancing extends our debt maturity profile, refinances a significant portion of our capital structure and upsizes our revolver while supporting our priorities to invest in the business and reduce leverage over time. We were also pleased with the reception in the market. Beyond the strong support from our existing lenders, we attracted a number of new bank and lender relationships as part of this transaction, pointing to confidence in the business from the debt community. Turning now to our full year outlook on Slide 10. We are reaffirming 2026 guidance for revenue and adjusted EBITDA while updating adjusted EPS to account for the refinancing. including the incremental interest expense in the second half. I will also note that next year, on a cash basis, the incremental interest expense is largely offset by the removal of the lawsuit indemnification costs I spoke about earlier. As for cadence in the second half, we expect revenue growth to be supported by continued traction across our priority markets, growth from recent client wins and continued delivery on our product priorities. We expect Q4 to be our strongest quarter of the year, consistent with the seasonality of the business and key sporting events, coupled with the benefit of the targeted marketing investments we have made on the consumer side. The business trends over the course of June and our early read on July's data support this outlook, including higher growth in iGaming from Merchant Solutions, continued strength in Latin America on the consumer side and double-digit growth in 3-month active users in July. Turning to SG&A. We expect roughly $25 million to $30 million of reduction in operating expenses in the second half compared to the first half. This reflects the elevated credit losses in Q1, the front-loaded marketing and IT investments as well as some additional operational efficiencies. Putting that together, our full year outlook is intact, and we're focused on strong execution in the second half to build momentum for 2027. Now I'll turn the call back to Bruce for closing remarks. Bruce Lowthers: Thank you, John. To wrap up on Slide 11, the message is straightforward. With the refinancing complete and the significant litigation matters resolved, we are entering the next phase of Paysafe's evolution from a stronger position. Sustainable growth and continued operating excellence remain essential. They generate the free cash flow that funds deleveraging, which should ultimately support a higher valuation multiple. A simple illustration, we believe every $200 million reduction in net debt, holding all else equal, equals to roughly $3 to $4 per share without multiple expansion. But for shareholders today, we believe the pace of deleverage is the primary value driver. Our capital allocation priority is therefore clear, generate strong free cash flow and direct the substantial majority of it to debt reduction while continuing to invest in the high-return initiatives that support growth and product vitality. With that, John and I are happy to take your questions. Operator: [Operator Instructions] Our first question is from Matthew Inglis with RBC Capital Markets. Matthew Nakajima-Inglis: This is Matthew Inglis on for Dan Perlin at RBC. Can you just walk us through some of the factors that give you confidence in the second half adjusted EBITDA ramp? In the past, you've talked about a portion of that second half ramp coming from new products being rolled out in the back half of the year. So I'm just curious if that's still on track. Bruce Lowthers: Yes, Matthew. I'll let John walk you through -- the walk for the back half of the year. But yes, we remain confident in our NPI, our vitality index is tracking as we expected, but I'll let John walk you through the mechanics. John Crawford: Yes. I think of it as 2 components. The second component is cost. I'll do that second. On the revenue side, think of it as roughly 1/3, 1/3, 1/3 between scheduled launches and ramps. So products that are on launch schedules, customers that are signed and active and ramping. And then 1/3 of pipeline, which is new sales, new execution forward ramp and then 1/3 of current trends, which is the things we're seeing that we highlighted from July, continued strength in LatAm, continued robust consumer active growth and so forth that are ahead of what we expected. And then the other piece is on the cost side. So, we had some substantial fraud losses in Q1 and front-loaded marketing and IT investments. Those combined to about $26 million, and that's roughly how we get to our $25 million to $30 million of SG&A-related improvement in the back half of the year. Q4 should be the largest beneficiary if you're thinking about the shape of that SG&A, where we'll be coming out of the year in Q4 at a run rate that's substantially below the full year SG&A number and probably below 2025's SG&A number on a run rate basis. Matthew Nakajima-Inglis: And just as a follow-up, on the Digital Wallet side, how much of Digital Wallet growth is now actually coming from LatAm at this point? And as that LatAm portion of the Digital Wallet business increases, what does that mix do to the margin profile? John Crawford: It's a meaningful piece, but LatAm is still -- remember, it's still relatively small. So even with LatAm growing north of 30%, you're talking about a P&L that's north of $100 million against a multi-hundred million dollar overall P&L. So it's impacting, but it's not the only source. The second comment is the gross profit profile in LatAm is very much in line with the -- I'd say, the overall segment margin. It's lower than the core wallet solutions and much more in line with kind of in between the 2. Some of it looks a little more like eCash, some of it looks, obviously, the PaysafeWallet solution as it ramps and gets to scale, ought to look and feel more like the core wallet businesses. But I'd say today, it's in between the eCash and core wallet business from a gross margin standpoint. Operator: Our next question is from Jamie Friedman with Susquehanna International Group. James Friedman: I appreciate the incremental disclosures and these slides are really helpful. Like this cash walk on Slide 8. But John, if you could just walk us through what the interest expense obligations look like going forward versus what they were previously. Am I reading this right that there's a $30 million to $35 million step-up in interest expense going forward? Or am I oversimplifying it? John Crawford: You are reading it correctly. Thank you. And that number, probably obvious, but that number includes some amortization of upfront costs and that sort of thing. And so that's why we also, on Slide 9, tried to clarify the -- roughly the cash increase in interest costs. So in simplest math, if we did all of the term loans without a stub with a plus or minus a 200-basis point increase in spread, we would have been looking at about $30 million all in. We've got a stub that's going to continue to run here at the lower rates. And so that's how we get to the roughly $25 million of incremental. James Friedman: And then your math, Bruce, is interesting on the equity -- the value that accrues to equity from the debt reduction. So do you have long-term objectives in terms of that 5.1 ratio -- net leverage ratio that you're targeting for year-end? Bruce Lowthers: Thank you for asking that. So it was a question that came up often during the lender process. Our midterm goal is 3.5x net leverage. James Friedman: And is there anything that's changed in that relative to -- I know the Analyst Day is a long time ago, but relative to -- I mean, is that up or down from any other previous message that you might have articulated? Or is this the same? John Crawford: I think I would think of it as about the same. I think the difference, Jamie, is we're really focused on a few other things now than that. And I think that's the messaging we're trying to make clear. I think with Bruce's algorithm at the end of the call, we think -- and certainly at today's stock price, there's a lot of value we can drive without multiple expansion, just paying down debt and growing EBITDA by about the same amount that we're trying to grow EBITDA this year and without doing anything fancy. So that's -- I think that's why we're trying to get that messaging really clear externally as well as internally. Operator: [Operator Instructions] Our next question is from Timothy Chiodo with UBS. Timothy Chiodo: I was hoping we could take a little bit of a deeper dive into the 5% Merchant Solutions volume growth and break down some of the components broadly speaking. So the contribution coming from newer customer additions of the new cohort, particularly with some of the sales efforts, there would be a same-store sales component and then, of course, a churn component. And then for this quarter in particular, particularly at the latter part of the quarter, there was the iGaming bump from the World Cup. And I was hoping you could just quantify what that might have contributed to the 5% alongside those components. Bruce Lowthers: Thank you, Tim. So we have a -- I don't know if we put a walk in the slides, but we have that general walk Tim that we've used before. So you saw on the SMB side, a slight improvement in attrition. You see a little bit of a slowdown in the existing customer same-store sales category. And then you're still seeing strong growth in the new sales and NPI initiatives. So really kind of in line generally with what we had forecasted previously and consistent with what our expectations have been in that space. So no real changes there. I think in regard to the World Cup, World Cup was successful, exceeded what we had from an expectation perspective in Q2 and candidly into Q3. I think for us, that is just a small piece of our total revenue stream. When you look at sports betting as a whole, it's just a small component of what we do. So while it exceeded our expectations, I don't -- it doesn't drive a material impact in the quarter. Timothy Chiodo: No problem. And just we didn't talk about Clover too much, but is there any just broader update you could give on your Clover trends or if there's anything changing there from either a pricing or competitive aspect or potentially any comments around Clover capital traction? Any kind of a broader update around the Clover portion of your business would be appreciated. Bruce Lowthers: Yes. For us, Clover is still doing exceptionally well. It's a great product, does very well in the marketplace. We're not seeing any pricing pressure candidly. Our Clover revenue is really up double digits. So we feel very strongly about the continued success of Clover leaning into that. I think one of the questions that did come up in the lending process was just pressure around pricing of the point of sale. We don't see that. As Tim, you know, we buy in bulk. So that kind of offsets probably any current pricing narratives. But right now, we feel very good about Clover and what it's doing. We also see some nice lift from the value-added services. So especially the lending product has done exceptionally well. So I feel very good about Clover and our relationship with Fiserv. Operator: [Operator Instructions] Our next question is from Leah Rosenstein with Susquehanna. Unknown Analyst: So my question is, could you guys maybe quantify the licensing revenue I discussed and by that I mean, like what was that from? And do you expect these to recur? Bruce Lowthers: Yes. So I think we've covered that. So in the past, we have started a variety of new product initiatives, which we categorize under a vitality index. Data is one of them. We have access to a tremendous amount of data, both on the merchant and consumer side. And we began about 18 months to almost 2 years now ago, building out a data foundation layer that allows us to monetize the data in a variety of ways. One, internally, we use it for algorithms on attrition and fraud, customer engagement. And so, we drive a lot of value out of the data infrastructure that we've built. And then about a year ago, we get to the point where we could start monetizing it as a product. As I've said before, we anticipate this is going to be a revenue stream for us going forward. And over time, as we build this new product, we think it will be north of a $50 million kind of annual run rate product for us, is probably our initial thoughts on it, maybe a little bit more as we get into it and really start uncovering what the true values are around the consumer side of the data. Hopefully, that helps you. Operator: [Operator Instructions] We have reached the end of the question-and-answer session. I would like to turn the floor back over to Bruce Lowthers for closing comments. Bruce Lowthers: Thank you. Look, to summarize, we delivered second quarter results in line with expectations and first half growth of 7% continues to reflect solid progress across our priority markets and products. We've also taken important steps to strengthen the balance sheet. The refinancing of our term loans and revolving credit facility extends our maturity profile to 2030 and increases the financial flexibility while preliminary resolution of our major legacy litigation removes significant overhang. These actions leave us with a more resilient capital structure and clear strategic foundation. We remain focused on disciplined execution, continued deleveraging and durable growth opportunities as we look ahead. I want to thank the team for their work with the refinancing and also with the litigation resolution. It's been a really busy second quarter to say the least, and truly appreciate everyone here at Paysafe and the work that they put in to get us to this point, closing out our SPAC era. So, thank you very much for joining the call today. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. 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Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. Paysafe is under fresh scrutiny after a reduced fair value estimate that moved from US$10.04 to US$8.50, a cut of about 15% in the latest analyst framework. Analysts link this reset to updated earnings models that factor in higher interest costs from recent debt refinancing and adjusted long term guidance, alongside mixed reactions to Q2 performance and segment trends. Read on to see how these shifting assumptions are shaping the current story around Paysafe and what to watch as the narrative continues to evolve. Analyst Price Targets don't always capture the full story. Head over to our Company Report to find new ways to value Paysafe. BTIG keeps a Buy rating on Paysafe and views the recent transaction to amend and extend the 2028 term loan facilities as a positive step for liability management, with debt reduction framed as a key management priority. RBC Capital highlights that Q2 revenue for Paysafe was in line with its estimates, supported by contributions from LatAM, North America iGaming and the Paysafe digital wallet in Europe, which supports confidence in execution across several regions. Several firms have lowered their price targets on Paysafe, including RBC Capital to US$9 from US$11, UBS to US$7 from US$7.50 and Susquehanna to US$7 from US$10, which signals a more cautious stance on valuation. RBC Capital and BTIG both flag higher annual interest expense following recent debt refinancing and term loan amendments, with RBC pointing to an incremental US$25m per year, which they see as a factor that slows the pace of potential balance sheet improvement. Do your thoughts align with the Bull or Bear Analysts? Perhaps you think there's more to the story. Head to the Simply Wall St Community to discover more perspectives! See how Paysafe's fair value stacks up across multiple valuation models — not just analyst targets. Fair value has been reduced from US$10.04 to US$8.50, which is a cut of about 15%. Revenue growth has moved from 5.47% to 5.39%. The net profit margin has shifted from 5.24% to 2.84%. The future P/E has moved from 5.63x to 8.93x. The discount rate has edged from 13.56% to 13.58%. Narratives connect Paysafe's business story to a set of assumptions about future earnings, margins, and fair value. They refresh as new guidance, refinancing activity, or segment trends are added to the picture. Head over to the Simply Wall St Community and follow the Narrative on Paysafe to stay up to date on: How Paysafe is using digital wallets, eCash, and embedded finance partnerships such as Fiserv and Clover to tap into changing global payment habits and cross border commerce. The role of iGaming, digital assets, and other high growth verticals in supporting recurring transaction volumes and operating efficiency initiatives like technology modernization and marketing automation. Key pressure points including high leverage at 5.4x, gross margin pressure from business mix and lower interest revenue, and customer attrition at 12% that could weigh on long term profitability. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include PSFE. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in Paysafe Limited? Here are five stocks we like better. Paysafe reaffirmed its 2026 revenue and adjusted EBITDA outlook after second-quarter revenue rose 4% to $447.4 million, although adjusted EBITDA fell 2% as the company increased marketing and IT spending. Debt reduction remains a central priority. Paysafe reduced total debt by $106 million year to date and plans to direct most free cash flow toward lowering net leverage, while a preliminary $39 million litigation settlement is expected to remove ongoing indemnification costs. Merchant Solutions delivered strong performance, with revenue up 6% and adjusted EBITDA up 28%, while active digital-wallet users grew 8%. Management also expects data licensing to become a recurring revenue stream that could eventually exceed a $50 million annual run rate. PaySafe Stock is an iGaming Growth Play After the SPAC Sell-Off Paysafe (NYSE:PSFE) reported second-quarter revenue growth and reaffirmed its full-year outlook as the payments company emphasized debt reduction following a refinancing and a preliminary settlement of legacy litigation tied to its SPAC-era history. Chief Executive Officer Bruce Lowthers said the second quarter and first half represented an “important inflection point” for the company. Paysafe reported first-half revenue growth of 7%, while adjusted EBITDA was essentially flat year over year as it increased spending on marketing and information technology to support growth initiatives. → Lumentum Just Delivered the AI Growth Investors Wanted Lowthers said the company reached a settlement in principle in the Farzad litigation, involving claims from pre-SPAC shareholders. He said the resolution addressed a significant restructuring expense associated with Paysafe’s indemnification obligations. The company also refinanced a significant portion of its debt, extending maturities and increasing its revolving credit facility. Revenue rose 4% on both a reported and organic basis to $447.4 million in the second quarter. Chief Financial Officer John Crawford said the quarter included $12.5 million from additional data-licensing deals, part of the company’s effort to commercialize its data assets. First-half reported revenue growth was 7%, while organic growth was 6%. → Ryman Checks Into a $1.38B Hospitality Upgrade Adjusted EBITDA declined 2% to $102.8 million, and adjusted EBITDA margin fell to 23% from 24.5% a year earlier. Crawford said Paysafe increased marketing and IT investment by $7 million during the quarter and by $16 million in the first half. The company generated $45 million in unlevered free cash flow during the quarter, equivalent to 44% conversion of adjusted EBITDA. On a last-12-month basis, unlevered free cash flow increased 10% from the prior year to $298 million, representing 69% conversion. → Joby’s Defense Pivot Accelerates With $500M Resonant Sciences Deal Adjusted net income was $23.1 million and adjusted earnings per share were $0.43, down 7%. Crawford attributed the decline to lower adjusted EBITDA and other income, as well as a modest increase in interest expense, which offset the benefit of a lower share count. Digital-wallet revenue rose 3% to $206.6 million, while organic growth was 1% after normalizing for currency movement and interest revenue. Segment volume was approximately flat year over year at $6.6 billion. Three-month active users increased 8%, led by Latin America and the company’s PaysafeWallet offering in Europe. Paysafe reported 7.8 million three-month active users overall, marking its fifth consecutive quarter of growth. The company said it continues to see double-digit user growth in Latin America. Digital-wallet adjusted EBITDA declined 9% to $74.9 million, with margin falling to 36.2%. Crawford cited higher consumer marketing investments, product mix and a roughly $4 million VAT accrual adjustment related to distributor commissions. Excluding that adjustment and an additional $3 million in marketing investment, he said segment margin would have been about 40%. PaysafeWallet is now live in 19 European countries, including a recent launch in Poland. Lowthers said initial results from additional marketing spending in priority European markets have produced double-digit consumer-acquisition growth and active-user growth. Merchant segment revenue increased 6% to $246.1 million on a 5% rise in volume to $37.3 billion. Results were driven by North American iGaming volumes and data-licensing deals, while the small-and-medium-sized-business business line was flat. Merchant adjusted EBITDA increased 28% to $50.6 million, and margin rose 350 basis points to 20.6%. The segment benefited from favorable mix related to the licensing deal and the release of a previously recorded accrual. Excluding the approximately $6 million accrual release, Crawford said merchant margin would have been around 18%. Total debt stood at $2.5 billion at the end of the quarter, down $106 million from the end of 2025. The reduction included $79 million of net repayments and a $34 million foreign-exchange-related reduction in total debt. Paysafe’s net leverage ratio was 5.3 times at quarter-end, compared with 5.5 times at the end of 2025. Including the preliminary legal settlement and refinancing fees, management expects to end 2026 with net leverage between 5.1 times and 5.2 times. The preliminary litigation settlement is expected to result in a $39 million cash payment in the second half. Crawford said the resolution removes a significant cash-flow and GAAP profit-and-loss burden, noting that the company had incurred nearly $19 million of last-12-month cash outflows and $57 million of restructuring expenses related to its indemnification agreement and legal costs. The refinancing will increase interest expense. Crawford said the all-in increase would have been about $30 million without a lower-rate debt stub, with the company expecting roughly $25 million of incremental interest cost. He added that, on a cash basis next year, the added interest expense is largely offset by eliminating lawsuit-indemnification costs. Lowthers said Paysafe’s midterm net-leverage target remains 3.5 times. He said the company intends to direct the substantial majority of free cash flow toward debt reduction while continuing investments in growth and product development. Paysafe reaffirmed its 2026 revenue and adjusted EBITDA guidance, while updating adjusted EPS guidance to reflect refinancing-related interest expense in the second half. Management expects the fourth quarter to be the company’s strongest period, supported by seasonal trends, sporting events, consumer marketing investments, recent client wins and product initiatives. Crawford said the company expects $25 million to $30 million of lower operating expenses in the second half compared with the first half. The anticipated improvement reflects elevated credit losses in the first quarter, front-loaded marketing and IT investment, and additional operational efficiencies. Management said June trends and its early July data supported its outlook, including higher iGaming growth in Merchant Solutions, continued strength in Latin America and double-digit growth in three-month active users during July. Lowthers also said Paysafe expects its data business to become an ongoing revenue stream. The company believes the product could ultimately exceed a $50 million annual revenue run rate as it expands monetization of merchant and consumer data assets. Paysafe is a global payments provider that delivers a comprehensive suite of online and offline payment solutions. The company operates a diverse portfolio of products, including digital wallets under the Skrill and Neteller brands, prepaid voucher services through paysafecard, and integrated payment processing solutions for merchants. Paysafe's platform is designed to serve a wide range of industries, from e-commerce and digital goods to gaming, financial services, and regulated verticals, offering tailored risk and compliance management alongside its core transaction capabilities. Founded through a series of mergers and strategic acquisitions, Paysafe traces its origins to the launch of paysafecard in 2000 and the establishment of Optimal Payments in 1996. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Paysafe Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management characterized the first half of 2026 as a strategic inflection point, having resolved the final legacy SPAC-related litigation overhang and successfully refinancing a significant portion of corporate debt. Revenue growth of 7% in the first half was driven by momentum in Latin America, PaysafeWallet in Europe, and North American iGaming, while the company deliberately increased marketing and IT investments to support future growth., which management believes are essential to support the next phase of sustainable growth. The Product Vitality Index is tracking towards approximately 20% for 2026., a significant increase from less than 2% three years ago, reflecting a complete rebuild of talent, technology, and product delivery capabilities. Digital Wallet performance was bolstered by double-digit user growth in Latin America and the expansion of the PaysafeWallet into 19 European countries, including a recent launch in Poland. Merchant segment growth was supported by iGaming volumes in North America and the successful commercialization of data assets through new licensing deals. Management emphasized that the trajectory of the net leverage ratio is now the primary driver of equity value, shifting focus toward consistent execution and disciplined deleveraging. Full-year 2026 revenue and adjusted EBITDA guidance remains intact, with Q4 expected to be the strongest quarter due to seasonality, sporting events, and realized benefits from front-loaded marketing spend. Management established a medium-term net leverage target of 3.5x, viewing debt reduction as a mechanical driver of share price appreciation independent of multiple expansion. Second-half profitability is expected to benefit from a $25 million to $30 million reduction in SG&A compared to the first half, driven by lower credit losses and operational efficiencies. The refinancing will result in an incremental interest expense of approximately $25 million on a cash basis, which management expects to be largely offset by the elimination of lawsuit indemnification costs in 2027. Revenue growth in the second half is modeled as a balanced mix of scheduled product launches, ramping of signed clients, and current positive trends in active user growth. A settlement in principle was reached regarding the Farzad litigation, addressing the final legacy overhang and removing a significant drain on cash flow and GAAP earnings. The company expects a one-time cash payment of $39 million in the second half related to the legal settlement, which will conclude ongoing restructuring expenses tied to indemnification obligations. Debt refinancing extended the maturity profile to 2030 and upsized the revolver, attracting new banking relationships and signaling debt market confidence in the business model. Data licensing deals contributed $12.5 million in Q2, part of a strategic initiative to monetize data assets that management expects to reach a $50 million annual run rate. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management attributed the expected ramp to a combination of product launches, new sales pipeline, and a $25 million to $30 million reduction in SG&A. Q4 is projected to have a run rate for SG&A that is substantially below the full year 2026 SG&A number and likely below the 2025 SG&A levels. While LatAm is growing north of 30%, it currently represents a P&L north of $100 million within the larger segment. Gross margins in LatAm are currently between eCash and core wallet levels, but are expected to align with core wallet margins as the PaysafeWallet scales. Clover revenue is growing at double digits, and management stated they are not seeing pricing pressure at the point of sale. Value-added services, particularly the lending product, are providing a significant lift to the Merchant segment. Management views data monetization as a durable revenue stream built on a foundation layer established over the last two years. The initial target for this product line is an annual run rate exceeding $50 million as they further explore consumer data value.

This article first appeared on GuruFocus. Revenue: Q2 revenue was $447.4 million, up 4% on both a reported and organic basis; first-half growth was 7% reported and 6% organic. Adjusted EBITDA: Decreased 2% to $102.8 million in Q2, with margin declining to 23% from 24.5% in the prior year. Adjusted Net Income: Q2 adjusted net income was $23.1 million, with adjusted EPS of $0.43, down 7% year-over-year. Unlevered Free Cash Flow: Q2 generated $45 million with a 44% conversion of adjusted EBITDA; on an LTM basis, it was $298 million, up 10% year-over-year with a 69% conversion. Digital Wallets Revenue: Increased 3% to $206.6 million, with organic growth of 1% when normalizing for currency and interest revenue. Digital Wallets Volume: Q2 volume was $6.6 billion, roughly flat year-over-year. Digital Wallets Adjusted EBITDA: Down 9% to $74.9 million, with margin at 36.2%. Merchant Solutions Revenue: Increased 6% to $246.1 million, driven by iGaming volumes in North America and additional data licensing deals. Merchant Solutions Volume: Increased 5% to $37.3 billion. Merchant Solutions Adjusted EBITDA: Increased 28% to $50.6 million, with margin up 350 basis points to 20.6%. Total Debt: $2.5 billion at quarter end, down $106 million versus Q4. Net Leverage Ratio: 5.3 times at quarter end, compared to 5.5 times at Q4; expected to end the year in the range of 5.1 to 5.2 times. Three-Month Actives: 7.8 million, up 8% year-over-year. Warning! GuruFocus has detected 5 Warning Signs with PSFE. Is PSFE fairly valued? Test your thesis with our free DCF calculator. Release Date: August 13, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Paysafe Ltd (NYSE:PSFE) resolved the final legacy SPAC-related litigation, removing a significant overhang and associated cash and P&L drain. The company successfully refinanced a significant portion of its debt, extending maturities to 2030 and increasing financial flexibility. First-half 2026 revenue grew 7%, with strong performance in priority markets and products, including double-digit user growth in Latin America. The Product Vitality Index is tracking towards 20% for 2026, up from less than 2% three years ago, indicating successful product innovation. The company generated strong unlevered free cash flow of $298 million on an LTM basis, a 10% increase year-over-year, supporting deleveraging efforts. Adjusted EBITDA decreased 2% in Q2 2026, with margins declining to 23% from 24.5%, due to increased marketing and IT investments. Digital wallets segment revenue growth was modest at 1% organic, with a 5% decline in average revenue per user due to regional and product mix. The company expects a $39 million cash payment in the second half related to the legal settlement, impacting cash flow. Net leverage remains high at 5.3 times, with expectations to end the year at 5.1-5.2 times, still above the mid-term target of 3.5 times. The refinancing will result in approximately $25 million of incremental interest expense in the second half, partially offsetting cash flow benefits. Q: Can you walk us through the factors that give you confidence in the second-half adjusted EBITDA ramp, and are new product rollouts still on track?A: John Crawford (CFO) broke the revenue ramp into three roughly equal parts: scheduled product launches and customer ramps, new sales pipeline execution, and current trends like continued strength in LatAm and robust consumer active growth. On the cost side, he highlighted that elevated Q1 fraud losses and front-loaded marketing/IT investments totaled about $26 million, which drives the expected $25 million to $30 million of SG&A improvement in the back half. Q4 is expected to be the largest beneficiary, exiting the year at a run rate substantially below the full-year SG&A number. Q: What are the interest expense obligations going forward versus previously, and is there a step-up in interest expense?A: John Crawford (CFO) confirmed there is roughly a $25 million incremental cash interest expense increase due to the refinancing. He clarified that while a full refinancing of all term loans at a 200 basis point higher spread would have resulted in about $30 million more in interest, the existing stub running at lower rates brings the incremental cost to approximately $25 million. Q: Do you have long-term objectives for the net leverage ratio, and has that target changed?A: John Crawford (CFO) stated the midterm goal remains 3.5 times net leverage, which is about the same as previously communicated. He emphasized that the company is now singularly focused on deleveraging, noting that at today's stock price, significant value can be driven simply by paying down debt and growing EBITDA without needing multiple expansion. Q: Can you break down the 5% Merchant Solutions volume growth into new customer additions, same-store sales, and churn, and quantify the World Cup iGaming contribution?A: Bruce Lowthers (CEO) noted the walk is generally in line with forecasts: slight improvement in SMB attrition, a slowdown in existing customer same-store sales, and strong growth in new sales and NPI initiatives. Regarding the World Cup, he said it exceeded expectations in Q2 and into Q3, but it remains a small piece of the total revenue stream and did not drive a material impact on the quarter. Q: Can you provide a broader update on Clover trends, including any pricing or competitive changes?A: Bruce Lowthers (CEO) stated Clover is doing exceptionally well with double-digit revenue growth and no pricing pressure. He noted the company buys in bulk, which offsets any current pricing narratives, and highlighted strong performance from value-added services, particularly the lending product. He expressed confidence in the Clover product and the relationship with Fiserv. Q: Can you quantify the licensing revenue, what it is from, and whether it will recur?A: Bruce Lowthers (CEO) explained that the company began building a data foundation layer about 18 months to 2 years ago to monetize its vast merchant and consumer data. After using it internally for attrition, fraud, and engagement algorithms, they began monetizing it as a product about a year ago. He anticipates this will become a revenue stream north of a $50 million annual run rate product, potentially more as they uncover the true value of consumer-side data. Q: How much of digital wallet growth is coming from LatAm, and what does that mix do to the margin profile?A: John Crawford (CFO) noted LatAm is growing north of 30% but remains a relatively small piece of the overall P&L. He clarified that the gross profit profile in LatAm is in between the eCash and core wallet businesses, with the PaysafeWallet solution expected to look more like the core wallet business as it ramps to scale. Q: What gives you confidence in the second-half revenue growth, and what is the expected cadence?A: John Crawford (CFO) reaffirmed full-year guidance, expecting Q4 to be the strongest quarter due to seasonality, key sporting events, and targeted marketing investments. He cited continued traction in priority markets, growth from recent client wins, and early July data showing higher iGaming growth, continued strength in LatAm, and double-digit growth in three-month active users. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Paysafe Limited (NYSE:PSFE) shares gained 0.8% following the release of mixed second-quarter results, as revenue came in ahead of Wall Street forecasts while adjusted earnings matched expectations. The payments platform also issued full-year 2026 earnings guidance below the analyst consensus, although its revenue outlook remained broadly in line with market forecasts. Paysafe generated second-quarter revenue of $447.4 million, exceeding the analyst consensus of $444.7 million and rising 4% from $428.2 million in the same quarter last year. Adjusted earnings were $0.43 per share, matching Wall Street expectations. On a GAAP basis, however, the company recorded a loss of $1.13 per diluted share, widening from a loss of $0.85 in the prior-year period. “We delivered second quarter results in line with our expectations, with revenue growing 4% in the quarter and 7% in the first half, driven by strong traction across our priority markets and products,” said Bruce Lowthers, CEO of Paysafe. Performance across Paysafe’s main operating divisions remained positive, although growth rates varied between the businesses. Digital Wallets generated revenue of $206.6 million, representing an increase of 3% compared with the prior-year period. Merchant Solutions delivered stronger growth, with revenue rising 6% to $246.1 million. Paysafe said the increase was supported by robust North American iGaming volumes and its data commercialisation initiatives. Despite higher group revenue, adjusted EBITDA declined 2% to $102.8 million from $105.0 million a year earlier, indicating some pressure on underlying profitability. For the full year, Paysafe expects adjusted earnings of between $1.90 and $2.03 per share. The midpoint of the range, at approximately $1.97, sits below the analyst consensus forecast of $2.15 per share. Paysafe said its updated EPS outlook reflects its recent refinancing transaction and the resulting changes to expected interest expenses. Revenue guidance was more closely aligned with Wall Street forecasts. The company expects full-year sales of between $1.79 billion and $1.83 billion, implying a midpoint of approximately $1.81 billion. That compares with the analyst consensus of $1.811 billion. Paysafe also completed a refinancing of portions of its existing term loan facilities on August 12, 2026. The transaction extends the company’s debt maturity profile to 2030, providing additional time before significant obligations come due. Paysafe also increased the size of its revolving credit facility to $372.5 million, with the facility now maturing in August 2031. The refinancing strengthens the company’s longer-term financing position, although associated changes in interest expense have been incorporated into its updated earnings guidance. While the lower full-year adjusted EPS outlook could temper investor expectations, Paysafe’s second-quarter revenue beat, continued growth across Digital Wallets and Merchant Solutions, and extended debt maturities helped support a modestly positive reaction in the shares. Paysafe stock price

Image source: The Motley Fool. Wednesday, May 13, 2026 at 8:30 a.m. ET Chief Executive Officer — Bruce Lowthers Chief Financial Officer — John Crawford Bruce Lowthers: Thank you, and good morning, everyone. Thank you for joining us today. We started off 2026 with a strong revenue growth of 10%, adjusted EBITDA growth of 4% and 21% growth in adjusted EPS. We generated $67 million in unlevered free cash flow in the first quarter, an increase of 17%, while improving our net leverage ratio to 5.2x. Our strong top line performance included strong sports betting growth during the NFL playoffs, some outperformance of the consumer business, where active users reached 7.9 million, an increase of 9% year-over-year. Growth also benefited from favorable FX and another licensing deal to monetize our data. In Q1, our operating expenses grew 6% versus the prior year, excluding bad debt, largely due to FX. We also increased our investment in data infrastructure to support our AI initiatives and data business as well as increased our marketing investment to accelerate growth. Additionally, we had increase in credit losses while converting to a new risk management platform. We believe these losses were contained over the course of a few weeks beginning in March and shouldn't have an impact on the business going forward as our models continue to mature. Later, John will discuss the revenue cadence and margin considerations for the year. But overall, we're pleased to start off on such a strong note. Our internal model for the year remains intact, supporting our confidence to reaffirm our growth outlook for 2026. I would also like to add another key indicator for the year for shareholders to focus on is our net leverage ratio, which should have a meaningful impact on our valuation over the next 24 months. First, I'll share a few highlights on our strategic progress for the quarter, starting with Slide 4. On the consumer side, we had a strong quarter with notable strength from Latin America across gaming and e-commerce. Our PaysafeWallet solution continued to see strong adoption across Europe. We're currently live in 18 countries with new countries expected to launch later this year. Paysafe continues to advance our digital-first support model as a driver of customer experience and operating efficiency, and our virtual assistants play a key role in delivering intelligent always-on support. In Q1, nearly 60% of all consumer contacts were resolved through digital assistance channels, representing a 25% increase compared to Q1 of 2025. Turning to the merchant side. E-commerce growth was 17% in the first quarter, led by iGaming, which grew 28%. The SMB business grew 2% in Q1, reflecting a modest improvement in attrition. Lastly, we continue to position Paysafe to support new AI native commerce channels from conversational interfaces to autonomous purchasing. In Q1, we partnered with one of our enterprise clients, Norwegian Air, to demonstrate end-to-end agentic payment capabilities aligned with emerging industry protocols from partners, Visa and Mastercard. With one integration, Paysafe can enable merchants to offer AI-powered commerce across ChatGPT, Claude and Gemini, along with their own portal and apps. The merchant stays in control, plugging in through standard SDK while Paysafe handles the payment infrastructure. Any AI assistant can use it, built on open standard MCP and Google's AP2 protocol. While still early, we see agentic commerce as a meaningful evolution and how transactions originate, and we are positioning Paysafe to participate at scale. It's also worth highlighting that our revenue per FTE increased 13% from a year ago normalized for FX. This is a strong testament to the hard work we've already done around productivity, resource allocation and building foundational intelligent systems. Now let's double-click on the growth drivers for the quarter, starting with Latin America on Slide 5. Paysafe offers a comprehensive network of alternative and local payment methods in Latin America. As the region's traditional cash culture rapidly evolves, digital wallets and account-to-account payments are becoming increasingly popular. Our refreshed consumer strategy is fueling user engagement, strengthened by targeted marketing and collaborative programs with key merchants. Our product strategy also continues to evolve with the unique needs of local consumers with ongoing enhancements to our product lineup, including PagoEfectivo Wallet, which launched last year, bringing together our trusted local brand and Paysafe's wallet platform to deliver a streamlined user-friendly experience. Lastly, our enterprise sales initiatives have been highly successful in driving strong cross-selling in the region. Our typical consumer in Latin America enjoys online gambling, video gaming and esports. They need fast, secure and affordable cash to digital solutions, along with quick access to their winnings. We also serve everyday consumers involved in e-commerce from paying bills to enjoying entertainment services, many of whom prefer cash or nonbank payment options. Additionally, a large portion of our customers regularly send and receive remittances and engage in peer-to-peer transactions. While Q1 benefited from a favorable comparison to the previous year, we anticipate strong double-digit growth throughout 2026 as we continue to build momentum with our product innovations and go-to-market strategies. Moving to Slide 6. Paysafe has a rich 30-year history built through acquisitions, but our story as a unified brand truly commenced in early 2024. Over the past 2 years, we have executed a multidimensional transformation, clarifying who we are and the value we deliver to our customers. This was a deliberate shift from a fragmented, siloed approach to a focused intentional model, aligning our brand, product and go-to-market around a cohesive narrative. Today, the alignment of our marketing and product strategy is delivering measurable commercial outcomes, particularly in our growth markets. In regions where we are making targeted investments, we are seeing strong performance across consumers, campaigns and countries. We are building a repeatable, scalable model that positions us to accelerate growth even further across our priority markets. We are seeing this in Latin America, where active users reached 3.3 million in Q1, the highest level to date. This combination of local relevance, clear positioning and targeted consumer activation is driving engagement reinforced through co-marketing programs with merchants. We're seeing it with our core wallet and cash solutions in high potential regions such as Spain and France, where our brand and product, and customer position align most strongly. That same approach extends to PaysafeWallet, which has had its strongest month on record in March. We believe this momentum represents the early stages of a much larger growth opportunity across the experience economy. AI is also a key driver of change in our marketing model, enabling us to scale through automated segmentation, smarter targeting and a more personalized customer experiences while increasing execution speed. Turning to Slide 7. iGaming continued to be a significant growth driver this quarter with global revenue increasing 20% year-over-year with strong growth across both segments in our core regions. We experienced robust activity during the NFL playoffs with outstanding operational performance during the Super Bowl and March Madness. Additionally, we announced a new partnerships with MoonPay, enabling players to seamlessly deposit stablecoins and cryptocurrencies with iGaming and daily fantasy sports brands in the U.S. Five operator pilots are currently underway, positioning us to meet evolving market demand. We also a strong quarter for new bookings, securing agreements with both new and existing merchants. We extended our partnerships with U.S. clients such as Hard Rock and Golden Nugget to support their expansion into Canada, and we signed a new agreement with Cheddr, a popular platform for sports and culture predictions in North America. In the broader entertainment sector, Paysafe has become a headline sponsor for BIG CLAN, Germany's largest esports organization, and will also sponsor Red Bull's Fortnite and EA SPORTS FC tournaments in 2026. These high-profile events and partnership attract top content creators and elite competitive players supporting premium brand visibility for Paysafe's Digital Wallets solutions at the forefront of entertainment. I will wrap up here. As you can see, we've had a very active quarter with a strong start to 2026 with impressive growth across revenue, cash flow and EPS. We're making good progress with our product initiatives, supported by our maturing sales motion and marketing investments. With that, I will turn it over to John. John Crawford: Thank you, Bruce. Let's move to Slide 9 for a summary of our first quarter results. Revenue for Q1 was $442.7 million, an increase of 10% on a reported basis, with organic growth of 8% as the remaining impact from last year's business disposal was more than offset by a tailwind from FX. Our first quarter results also benefited from another licensing data deal, which contributed $7 million. So the underlying organic growth was approximately 6%, normalizing for that. Across our top 20 countries, we saw growth of 13% in the first quarter, and we've consistently seen growth ranging from high single digits to low double digits over the past 4 quarters across these core markets. Adjusted EBITDA increased 4% to $99.2 million in the first quarter, and adjusted EBITDA margin declined 130 basis points. This reflects an increase in marketing and IT investment of $6 million as well as an increase in credit loss expense of $10 million, which was partly offset by the benefit of the data deal. Turning to cash flow. We generated $67 million in unlevered free cash flow in Q1, an increase of 17% year-over-year, with a 67% conversion of adjusted EBITDA, in line with our target range and a solid improvement versus the prior year quarter. On an LTM basis, unlevered free cash flow was $307 million, reflecting 71% conversion. Adjusted net income for the first quarter was $21 million and adjusted EPS was $0.41, an increase of 21%, reflecting our reduced share count. Overall, relative to our expectations for the quarter, the top line came in ahead and adjusted EBITDA was in line but at a lower margin. Turning to the segment results on Slide 10. Starting with Digital Wallets, volume in Q1 was $7.1 billion, an increase of 19% or 9% constant currency. Revenue from Digital Wallets increased 15% to $216.3 million with organic growth of 7%, as 3-month actives increased 9% year-over-year, led by strong growth in Latin America. Transactions per active user was flat year-on-year, and average revenue per user increased 6%, helped by FX, with both metrics influenced by the regional and product mix, including the strong growth from LatAm. Adjusted EBITDA for Digital Wallets was $94.9 million, up 15% year-over-year with 4% constant currency growth. Adjusted EBITDA margin for the segment was 43.9%, down only 10 basis points despite higher investments in consumer marketing. Turning to the Merchant segment results. Volume increased 9% to $37.2 billion, resulting in organic revenue growth of 9% or approximately 5%, excluding the data deal. Normalizing for the benefit of the data deal, we saw a decline in the underlying gross margin in Merchant Solutions due to business mix, reflecting stronger growth from the low-margin ISO channel. Given these puts and takes, the adjusted EBITDA for the segment was $28.1 million, down from $29.4 million in Q1 of last year. Turning to Slide 11 for a summary of debt and leverage. At the end of the quarter, total debt was just under $2.5 billion, down $122 million versus Q4 as we repaid more than $100 million during the quarter and saw a modest benefit from FX. Our net leverage ratio was 5.2x at quarter end compared to 5.5x at Q4. We repurchased 588,000 shares in January, which was a rollover from a December order. And while we continue to think our shares are undervalued, reducing leverage is our priority this year, supported by our expected growth in adjusted EBITDA and strong cash flow generation. Turning now to our full year outlook on Slide 12. We are reaffirming 2026 guidance for revenue growth, adjusted EBITDA and adjusted earnings per share. As for the cadence, in the second quarter, we currently expect growth to be moderately below our full year guidance range to approximately 4%. Considering, in Q1, we had the licensing deal, a strong tailwind from FX and seasonally high volumes from the NFL postseason in March Madness. This brings our first half growth expectation to 7%. We expect a seasonally strong Q4 in both segments, further supported by the investments we're making in marketing on the consumer side. We expect operating expenses to be weighted to the first half, including an increase of $14 million year-over-year related to marketing and IT investments. Given the $10 million increase in credit losses experienced in Q1, we expect adjusted EBITDA generated in the first half to be roughly flat year-over-year, while our second half expectation remains ahead of consensus. Putting that together, for the full year, we continue to expect revenue and adjusted EBITDA to grow in the range of 5% to 8% while driving double-digit growth in adjusted EPS. Now I'll turn the call back to Bruce for closing remarks. Bruce Lowthers: Thank you, John. We're pleased with our start to 2026 and are building on that with clear priorities to sharpen execution, drive product momentum through our vitality index and further reduce leverage. Before we begin our Q&A, I'd like to welcome Ignacio Caride to our Board. Ignacio brings decades of experience in digital platforms, omnichannel retail and payments, along with a deep knowledge of Latin America. We're excited to partner with him as we move forward and a sincere thank you to Eli Nagler, who has transitioned to a Board observer position. We've been very fortunate to have Eli's support and leadership during his many years of service to Paysafe. As you may have seen, we've announced several Board changes this year. As a result, the Board now includes 9 independent directors out of 12 total. While CVC and Blackstone remain significant shareholders and continue to support our strategic direction, we see this progression to greater independence as a step toward a governance structure more typical for a U.S. public company. Now let's begin the Q&A session. Operator: [Operator Instructions] Our first question comes from Jamie Friedman with SIG. James Friedman: It's Jamie at Susquehanna. So congratulations on the numbers. I wanted to get your perspective on how we should be thinking about the EBITDA margin in Merchant Solutions. I know you articulated some of this on the call, but how we should be thinking about mix and the impact on margins? And then how we should be thinking about the Merchant segment margins cadence for the rest of the year? Bruce Lowthers: Great. Jamie, I'm going to let John walk you through that. And John, over to you. John Crawford: Sure. Thank you. So I think we expect the margins to be slowly improving through the year. And by slowly, I really mean in Q3 and Q4. Q2 is most likely going to look similar to Q1, but we expect to be in the upper teens, potentially higher than that by the end of the year. And that's driven, as you mentioned and we mentioned on the call earlier, the mix side with the ISO channel outperforming early this year. And then as we get the -- our various pieces of the direct channel on better track in the second half, that should drive the margins up. James Friedman: Okay. No, that makes sense. And then -- in terms of the iGaming, I realize you called out that it's seasonally strong, especially in the fourth quarter. Is it super seasonal even though because there's seemingly a lot of gaming that others are talking about like Visa coming in the second half. Bruce Lowthers: Yes. On the seasonality of the gaming, obviously, Q1 is a big quarter for us with the playoffs, NFL playoffs and Super Bowl. And then really at Q4, you look at the back half of the year, there's just a tremendous amount of sporting activities as you're rolling into Q4. So those really have been historically the seasonality of the iGaming. Q2 is kind of muted, but Q1 and Q4 are usually the big quarters on a seasonality basis. Operator: Our next question comes from Matthew Inglis with RBC Capital Markets. Matthew Inglis: This is Matthew Inglis on for Dan Perlin. So for the LatAm business, the World Cup is obviously a huge opportunity to acquire customers. I know you mentioned increased marketing spend and co-marketing with your merchant partners. But wondering if you can unpack a little more of the customer acquisition strategy leading up to the World Cup and I guess, just your expectations. Bruce Lowthers: Yes. So when we look at the World Cup, it's an interesting dynamic. It gets a lot of airtime. For us, when we look at the Digital Wallets segment of the World Cup when we held it last, there wasn't a material impact on the digital wallet side. This time through, we've been relatively conservative in our forecasting of the impact of the digital wallet. We have a couple of different dynamics. One, Matthew, you just mentioned is LatAm. We have a much stronger business in LatAm. So not really sure what the real impact is going to be, but we have a very active marketing campaign, both in LatAm and in North America. There is a campaign that we're doing really for the very first time that we're hoping to build off of the popularity of World Cup on our consumer acquisition. And our initial campaigns have been very successful, but building around World Cup is something that will be new for us. So we've kind of remained conservative in our forecasting of that. But I think for us, as we look at it, we'll have a little bit of probably pop there in LatAm. And certainly, on our merchant acquiring side in North America because such a big component this time is in the U.S., we may have some opportunity there as well. If you recall, the last time, it was in a time zone that was very difficult. There wasn't a lot of visibility in the U.S. So this is really geared in a better way for us. But as I said, we've been conservative in our modeling because we really haven't experienced it at the size and scale that we are today. Operator: Our next question comes from Darrin Peller with Wolfe Research. Paul Obrecht: This is Paul Obrecht on for Darrin. Bruce, can you provide a bit more color on the momentum you're seeing with PaysafeWallet in Europe? I mean what's really resonating with consumers there? And how are they engaging with it? Bruce Lowthers: Yes, Paul, great question. We've really taken a very active stance with our marketing team on consumer acquisition there. So I think that for us has really driven quite a bit. We've had really strong campaigns in Spain and France most recently. So as we continue to, one, get more sophisticated in our marketing campaigns. For example, on a lead generation basis, we're very active in using bots to drive leads. We have thousands of bots a day out optimizing our lead generation. We've really transformed the way we go after consumer acquisition. I would also say that the PaysafeWallet is providing a great vehicle for us. We see really nice double-digit growth with the PaysafeWallet. And that creates a nice onboarding into our ecosystem from PaysafeCard. So I think we have a lot of things that are coming together, creating good opportunities. And probably the big historical difference for us is really the active engagement of our marketing team on consumer acquisition. We are much more aggressive about consumer acquisition today than we ever have been, but we're doing it in a very calculated and methodical way to make sure that we're maximizing the impact of the dollars that we spend. I think when you look at our marketing spend versus others, our marketing spend on a consumer basis is still well below the average as a percentage of revenue. But we -- for us, it's been a substantial increase as we've kind of looked at it on a historical basis. So we're really being very precise about the way we're doing it. And so far, our marketing team has really had a lot of success getting this turned around for us. John Crawford: The one thing I would add, too, in terms of engagement, we're pleased so far to see -- even though the business is relatively small compared to our core wallets business, the transactions per active user actually are very similar to the Skrill and NETELLER users, which we're excited as it shows real engagement and activity with the product. Paul Obrecht: Great. That's really helpful color. And then as a follow-up, it's great to see SMB revenue growth improved to 2% year-over-year. Can you just touch on the drivers here and your expectations for SMB for the remainder of the year? And then, John, I think in a previous question, you noted your expectation for better performance on the direct side in the second half. What's really needed to achieve this? Bruce Lowthers: Do you want to, John, jump in on? John Crawford: I'll start with the numbers piece first. I think, Paul, we're not expecting significant contribution from the SMB piece through the year. Our expectations of that business are better than Q1, but not dramatically better. We think it's going to sort of work its way through the year to a couple of points better than maybe where we were in Q1, but that -- we don't have that penciled in for a significant uplift through the year. Bruce Lowthers: I think the other thing we just point out is we did have better than expected or lower-than-expected attrition in our book. We have not really modeled that in for a full year. So we're very optimistic that we've made a lot of changes about trying to mitigate the attrition that we've had. And hopefully, this is an ongoing rate that we can kind of hang around, but we didn't model that in, in our forecasting at this point. So we'll see how Q2 unfolds and move forward with that. Operator: The next question comes from Timothy Chiodo with UBS. Timothy Chiodo: I want to start with an update on Clover. So it was about a year ago or so that you announced an expanded partnership around value-added services and Clover Capital. It's been some time. And I was hoping you could just give us a status update on how that's going in terms of the incremental sales of those services that are sort of an add-on to the core payments business. And then I'll have a brief follow-up. Bruce Lowthers: Yes. Tim, thanks for the question. We still see really strength with our Clover offering. We feel that it's a very strong offering in the marketplace. For us, it's something that we've poured a lot of energy into in the last year. We still see double-digit growth on the consumer -- on the merchant acquisition side of Clover. So we feel very good about the product offering. I think it's getting honed a little bit more. Obviously, it does very well in the restaurant vertical. And now in the services verticals, we're starting to see a lot of success there with it as well. So I still feel like it's a great product that is serving us well and serving our merchants well. Timothy Chiodo: Excellent. And the follow-up was, and I apologize juggling a few earnings this morning, but did you give any additional context or just the mechanics around the large data sale? In other words, what type of customer would be purchasing data in that manner? And how common are these or recurring/nonrecurring? Obviously, it's nonrecurring, but maybe these could happen more often? Bruce Lowthers: Yes. I got you. Timothy Chiodo: I don't know what the right word. Bruce Lowthers: Sorry? Timothy Chiodo: I was saying I'm not sure what the right word is recurring, nonrecurring, but kind of once in a while. Bruce Lowthers: Yes. No worries at all, Tim. So look, for us, as I mentioned in the last quarter, this is a business we're building. We feel that this is going to be something that will continue to build quarter-to-quarter. We expect sales throughout the year. We've modeled that for ourselves. As our pipeline continues to build, we think it will be a steady state for us as we move forward. Now it's early, like any new product that comes to market. So it's probably a little bit lumpy here in the beginning, but we expect that there'll be deals throughout the year and have a pipeline that suggests that we'll be able to do that. So we feel very good about this is a new way for us to monetize the investment we've made in our IT infrastructure. So people talk a lot about AI and the things that people are doing there. We really, over the last couple of years, have invested heavily in our data infrastructure. This has allowed us, one, to monetize through sales of data, and there are all kinds of uses for that. But the data that we sell is anonymized data. So this is not something that is traceable back to a particular merchant or consumer. These things are really being used on fraud modeling and the like. So when we look at our IT infrastructure around data, today, when you look at our organization, we have over 150 data engineers that we didn't have just a couple of years ago. And so we've really transformed our foundational data layer, and we think that does a couple of things. One, gives us some revenue opportunities; and two, it's driving a tremendous amount of efficiencies for us, whether it be on the marketing side about lead generation, whether it be in our attrition management and the algorithms we use now to predict merchants as they're moving forward. It can be in our client services. And so, we had 60% of our volume being handled by technology that our data engineers had created for us. So I feel very good about the investment. I think it's been a huge payback for us here early on in our kind of transformation over the last couple of years. Operator: [Operator Instructions] Our next question comes from Andrew Harte with BTIG. Andrew Harte: Bruce, that was really helpful color on the data licensing deal. I guess just a quick follow-up on that. Was that win included in full year guidance at the beginning of the year? I know we reiterated guidance, but just want to understand if that data licensing deal had any impact. I guess, really getting at how expectations for the back half of the year have potentially changed at all in overall visibility. Bruce Lowthers: Andrew, we had data in our guidance throughout the year. So I think from our standpoint, there's really -- the way we looked at it, there was nothing new here. We had data incorporated in -- if anything, I would say it was probably just a little bit bigger than we anticipated in Q1, but we had data deals in our model throughout the year. So no real change from our perspective. Andrew Harte: Okay. Very helpful. And then in iGaming, I would love to just kind of hear what the early adoption of Pay with Crypto has looked like. Anything you'd highlight with your MoonPay partnership and what adoption has been like since the launch? Bruce Lowthers: I apologize, Andrew, I missed the Pay with Crypto. Andrew Harte: Pay with Crypto? Bruce Lowthers: Yes. So look, the Pay with Crypto, we feel very bullish about it. It's really kind of in a pilot mode at this point. We've got about 5 merchants that we're really working with right now. We expect to be able to roll that out throughout the year. I think the key here on the crypto piece is really just being aware of what our consumers want to do and how they want to spend their money and us providing the mechanism for them to spend the money the way they want to spend their money, and where they want to spend the money. And so, when you look at the survey that we did, there was really an interest in paying with crypto. I think it was 83% of our survey respondents had expressed interest in it. So there was really a strong interest in it. So, for us, we look at it as really just another LPM that we're providing that consumers want, and now connecting it up to our merchants so that they can buy their video game or buy their -- place their sports bet, just trying to be there for the way they want to execute their transactions. Operator: Ladies and gentlemen, this concludes the question-and-answer session. I would now like to hand the conference over to Bruce Lowthers, Chief Executive Officer, for closing comments. Bruce Lowthers: Thank you very much. I just want to thank the team at Paysafe for all the work for the quarter. Overall, I think the theme, really strong quarter for us to start the year, which has us feeling optimistic about the year. We're very focused on executing the year. Biggest priorities, obviously, our continued execution, paydown of our debt, really continuing to optimize our leverage free cash flow. And that's the theme for 2026. So thank you very much for joining us today, and we look forward to connecting again soon. Operator: Ladies and gentlemen, the conference call of Paysafe has now concluded. Thank you for your participation. You may now disconnect your lines. Before you buy stock in Paysafe, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Paysafe wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Paysafe (PSFE) Q1 2026 Earnings Transcript was originally published by The Motley Fool

There's been a notable change in appetite for Paysafe Limited (NYSE:PSFE) shares in the week since its quarterly report, with the stock down 17% to US$7.71. Revenues of US$443m beat expectations by a respectable 4.3%, although statutory losses per share increased. Paysafe lost US$0.71, which was 387% more than what the analysts had included in their models. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Paysafe after the latest results. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. Taking into account the latest results, the most recent consensus for Paysafe from six analysts is for revenues of US$1.81b in 2026. If met, it would imply a reasonable 3.7% increase on its revenue over the past 12 months. Per-share statutory losses are expected to explode, reaching US$0.41 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.80b and earnings per share (EPS) of US$0.064 in 2026. While the analysts have made no real change to their revenue estimates, we can see that the consensus is now modelling a loss next year - a clear dip in sentiment compared to the previous outlook of a profit. See our latest analysis for Paysafe Despite expectations of heavier losses next year,the analysts have lifted their price target 13% to US$10.04, perhaps implying these losses are not expected to be recurring over the long term. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Paysafe at US$12.00 per share, while the most bearish prices it at US$7.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure. Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Paysafe's rate of growth is expected to accelerate meaningfully, with the forecast 4.9% annualised revenue growth to the end of 2026 noticeably faster than its historical growth of 3.9% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 4.1% per year. Paysafe is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors. The biggest low-light for us was that the forecasts for Paysafe dropped from profits to a loss next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving. Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Paysafe going out to 2028, and you can see them free on our platform here. You should always think about risks though. Case in point, we've spotted 1 warning sign for Paysafe you should be aware of. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

This article first appeared on GuruFocus. Release Date: May 13, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Paysafe Ltd (NYSE:PSFE) reported a strong revenue growth of 10% and adjusted EPS growth of 21% in Q1 2026. The company generated $67 million in unlevered free cash flow, marking a 17% increase year-over-year. Paysafe Ltd (NYSE:PSFE) saw a 9% increase in active users in its consumer business, reaching 7.9 million. The company experienced robust growth in its iGaming segment, with global revenue increasing by 20% year-over-year. Paysafe Ltd (NYSE:PSFE) successfully expanded its Paysafe Wallet solution across Europe, now live in 18 countries. Operating expenses grew by 6% year-over-year, largely due to unfavorable foreign exchange impacts. The company faced increased credit losses while transitioning to a new risk management platform. Adjusted EBITDA margin declined by 130 basis points due to increased marketing and IT investments. The SMB business only grew by 2% in Q1, indicating modest improvement in attrition. Paysafe Ltd (NYSE:PSFE) experienced a decline in underlying gross margin in its Merchant Solutions segment due to business mix. Warning! GuruFocus has detected 6 Warning Signs with PSFE. Is PSFE fairly valued? Test your thesis with our free DCF calculator. Q: How should we think about the EBITDA margin and merchant solutions, and what is the expected margin cadence for the rest of the year? A: John Crawford, CFO, explained that margins are expected to slowly improve through the year, particularly in Q3 and Q4. Q2 will likely resemble Q1, but by year-end, margins could be in the upper 15s or higher. This improvement is driven by the mix, with the ISO channel outperforming early in the year and better performance expected from the direct channel in the second half. Q: Can you elaborate on the customer acquisition strategy in Latin America leading up to the World Cup? A: Bruce Lothers, CEO, noted that while the World Cup is a significant event, its impact on the digital wallet segment was not substantial last time. However, with a stronger business presence in LATAM now, they are running active marketing campaigns in LATAM and North America. They remain conservative in forecasting the impact but expect some positive effects, especially given the World Cup's better time zone alignment with the U.S. Q: What momentum are you seeing with Paysafe Wallet in Europe, and how are consumers engaging with it? A: Bruce Lothers, CEO, highlighted that strong marketing campaigns in Spain and France have driven consumer acquisition. They are using sophisticated marketing techniques, including bots for lead generation. The Paysafe Wallet is experiencing double-digit growth, providing a good onboarding into their ecosystem. The marketing team is more aggressive and precise in consumer acquisition than before. Q: What are the expectations for SMB revenue growth for the remainder of the year? A: John Crawford, CFO, stated that they do not expect significant contribution from the SMB segment throughout the year. While performance is expected to be better than Q1, they do not anticipate a dramatic improvement. They are optimistic about reduced attrition but have not modeled it into their full-year forecast yet. Q: Can you provide an update on the Clover partnership and the incremental sales of value-added services? A: Bruce Lothers, CEO, reported continued strength with the Clover offering, seeing double-digit growth in merchant acquisition. The product is performing well, especially in the restaurant and services verticals, and is considered a strong offering in the marketplace. For the complete transcript of the earnings call, please refer to the full earnings call transcript.