In the headiness of the special-purpose acquisition company (SPAC) boom, FinTechs are playing aggressively. And while it’s easy to focus on the sheer volume of listings and announcements of new SPAC formations and mergers, it’s easy to overlook just what investors may be paying for when they buy into a SPAC merger.
Paysafe is set to begin trading on the New York Stock Exchange on Wednesday (March 31) after having merged with the blank-check firm known as Foley Trasimene Acquisition II Corp.
As reported by CNBC earlier in the week, billionaire Bill Foley, founder and chairmen of the SPAC and chairman of Fidelity National, said in an interview that the merger and IPO (which had been announced at the end of 2020 and which values Paysafe at about $9 billion) comes as “Paysafe … is ubiquitous. It’s just everywhere in terms of the gaming world and digital wallets, e-cash solutions.” He said Paysafe would seek to gain ground in the domestic gaming market (where the current focus is international).
Delving into the SEC filings tied to the SPAC deal, some details of the how the great digital shift has been providing a tailwind to Paysafe stand starkly illuminated: The company said it had processed $98 billion in payments volume in 2019, and at the end of 2020 had 15 million active users in more than 120 countries, with more than 250,000 small and medium-sized businesses (SMBs) across North America and Europe, with 70 alternative payment methods.
Roughly 75 percent of its revenues came from eCommerce and integrated commerce solutions, according to the document, which noted that “eCommerce and brick and mortar merchants are continuing to demand partnering with highly sophisticated payments providers with a broad range of solutions.”
SPAC deals are known for providing investors with financial projections, and in materials presented at the time the merger was announced, Paysafe is targeting $103 billion in payments volume in the current year, with an estimated top line of about $1.5 billion in fiscal year 2021. Volume growth has been consistent through the last few years at about 12 percent, according to the materials, and stands to accelerate from the 2020 to 2023 timeframe to a compound annual growth rate of about 15 percent. Along the same timeframe, according to company estimates, organic revenue growth will be about 11 percent, on a compound annual growth rate, through 2023.
The company also estimated that the U.S. iGaming market (from which is drawn about a third of Paysafe’s organic revenue) is poised to grow at a more than 50 percent CAGR through 2025, to be worth as much as $24 billion (with an upside case of $47 billion) in 2025.
Drilling down a bit, the company said that its digital wallet segment, at a bit more than a quarter of the total tally in the current fiscal year, may contribute $441 million in 2021, with a 14 percent organic CAGR moving forward.
During the conference call announcing the merger, Paysafe Group Chief Executive Officer Philip McHugh noted that “because 75% of our revenues are eCommerce and integrated, and we are a vertically focused business, we’re expose to the faster growth lanes of payments, and the deeper, more valuable ones where it’s harder to get into.”
He noted later in the call that “we can go to a merchant with a full set of payment acceptance value propositions across eCommerce, integrated solutions, and proprietary APMs to help a merchant accept payments. But we actually bring customers to the merchant. Across digital wallets and eCash, we have 15 million consumers that we bring into the network, and that creates a two-sided impact.”
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