Digital Wallet and eCommerce Growth Drive Paysafe Merchant Solution Sales

Shares of Paysafe slumped 25% Wednesday (Nov. 13) in the wake of earnings that missed Wall Street forecasts. But the company’s materials and management commentary revealed growth in core segments, gains in average transactions per active users of digital wallets and expanding reach in Europe.

Adjusted earnings of 51 cents a share for the third quarter that ended in September were below the 59 cents a share the Street had expected. Total revenues of $427.1 million, up 8% year over year, slightly exceeded consensus.

The company’s earnings supplementals detailed that merchant solutions volumes were up 8% to $32 billion, as revenues gathered 11% to $241 million. The company said eCommerce volumes were up double-digit percentage points. Digital wallet volumes were 5% higher to $5.9 billion; revenues gained 4% to $191 million. Within the digital wallet segment, the company recorded 7 million active users, and the average transactions per active user gained 16% year over year to 14 in the most recent quarter. Average revenues per user were 5% higher to $27 in the September quarter.

Paysafe reaffirmed its full-year outlook for 2024, with revenue growth expected in the range of 7% to 8%.

Bruce Lowthers, CEO, said on the conference call with analysts that, in the wake of the recent announcement through which Paysafe is collaborating with Revolut to bring its e-cash service to Revolut’s 10 million U.K. customer, “within the first three months, we’ve transacted with 28,000 unique Revolut consumers, and we expect this to increase over time through further adoption in the U.K., along with expansion to other markets.”

Gaming Leads eCommerce

Drilling down into the merchant business, Lowthers said that the double-digit eCommerce growth was led by North American gaming, as revenues tied to that vertical surged more than 50%; eCommerce now represents about 15% of the merchant portfolio by revenue.

“We also continue to see strength in our cross-selling efforts. Out of the 83 enterprise deals booked in Q3, 28% of those were with existing clients,” said the CEO. Revenue per new merchant was up double digits, and the small business direct book grew 5%, he told analysts.

Asked on the call about the roadmap and potential of the Revolut collaboration, Lowthers said, “You’ll see that continue to expand through 2025. It’s going to be a nice growth item for us.”

Paysafe has also inked a pact with Deutsche Bank to provide German customers with cash services, stating, “This is a kind of new initiative, really leveraging the assets that we have in Europe. Keep in mind, we’ve got over 600,000 merchants across the European landscape. So this is really a great opportunity for us to do something unique and different than what we’ve done historically, in essence, allowing for cash deposit and withdrawal at any one of our retailers across Europe.”

Elsewhere, as an analyst inquired about the recent introduction of an integrated loan program for short-term working capital support to merchants, Lowthers said, “The loan program is a great program that, as you look at our client base, we’ve got in aggregate … close to 900,000 merchants. So for us to have a program that offers working capital loans makes a lot of sense.

“I think you’ll see that from our standpoint, this is not something that we underwrite or take any risk on. This is something that we have just as a referral arrangement with or origination type of deal. … We will add others to that mix as we go forward.”

He added, “What we’re trying to do is provide the merchants the opportunity to run their business the best that they can. And that’s really what we’re trying to do on the merchant acquiring side.”