Companywide payment volume grew at a high-single-digit rate in July before growth slowed in August and September, according to management commentary on a Thursday earnings call. The slowdown continued into October as banking, regulatory and market pressures weighed on digital wallets and eCommerce. The euro weakened against the dollar, and data licensing deals fell short of what management had counted on to help offset the weaker payment activity.
“The second half has been more challenging than we expected,” Paysafe CEO Bruce Lowthers said on call.
Shares were down more than 30% at the beginning of trading Thursday.
Latin America continued to grow at a double-digit rate, but Lowthers said tougher market conditions limited how much the region could make up for weakness elsewhere. The region’s rapid user growth also changed the mix of the wallet business, putting pressure on average revenue per user.
In eCommerce outside iGaming, Chief Financial Officer John Crawford said Paysafe had moved more slowly than planned on banking relationships and some products. He said he expects these constraints to persist through the fourth quarter. Paysafe plans to expand its network and banking relationships so it can start processing payments for new enterprise merchants sooner.
Merchant Solutions processed $36 billion in payments, up 3% from a year earlier, according to an earnings presentation. Small business revenue rose 4%, with combined revenue from direct sales and agents up 8%. The number of active agents has risen 17% this year.
“On the SMB side, it’s been candidly a battle throughout the year, and it was great to see the direct and agent side of that business kind of rebound,” Lowthers said during the call.
Wallet Users Grow as Revenue per User Falls
Digital wallets processed $6.7 billion in the quarter, a 1% year-over-year increase, per the presentation. The number of users active over three months rose 14% year over year to 8.1 million, while average revenue per active user fell 11% to $26. Lowthers said the company’s branded PaysafeWallet grew more than 30% in the quarter and continued to expand into additional European markets.
Crawford described a shift from buying prepaid cards to funding wallets. In Paysafe’s two major eCash markets, its wallet products generate two to three times as much revenue per user as its cash-in products. The wallet products still serve a smaller base.
North American iGaming posted double-digit growth and helped lift merchant processing. In video gaming, Paysafe launched Arena in August to give players a place to discover games and make purchases. Crypto and financial trading faced weaker markets and regulatory pressure. Lowthers said the crypto slowdown hit Paysafe more sharply in September and October.
Lowthers told analysts he expects artificial intelligence to drive further regulatory changes. Paysafe is broadening its product mix to reduce its exposure as rules evolve.
Crawford reported quarterly revenue of $439.6 million, up 1% year over year. Paysafe lowered its full-year revenue forecast to $1.761 billion to $1.771 billion from $1.79 billion to $1.83 billion. Crawford said sales to new clients and same-store sales had fallen short of plan.
