Paysafe Wallet Users Rise 8% as iGaming Volume Accelerates

Paysafe added more consumers to its digital wallets in the second quarter, but those additional users did not lift overall wallet volume.

According to a second-quarter earnings presentation Thursday (Aug. 13), three-month active consumers increased 8% from a year earlier to 7.8 million, the fifth consecutive quarter of growth. Digital Wallets volume, however, remained roughly flat at $6.6 billion. Transactions per active user were unchanged, while average revenue per active user declined 5%.

The mix of those consumers is changing. Paysafe’s materials and commentary from the Thursday earnings call noted that wallet growth was led by Latin America and Paysafe Wallet in Europe, offset partly by declines elsewhere and tougher comparisons in sweepstakes and cryptocurrency trading. Paysafe Wallet acquisitions rose 11% in the quarter, and the product is now available in 19 European countries after its launch in Poland.

“We continue to see double-digit user growth in Latin America,” CEO Bruce Lowthers said during the call with analysts.

The company also reported double-digit consumer acquisition growth from additional marketing in priority European markets.

Elsewhere, Merchant Solutions volume increased 5% to $37.3 billion, and revenue rose 6% to $246.1 million. North American iGaming grew 17%, while the small- to medium-sized business (SMB) business was flat.

During the analyst Q&A, Lowthers broke down what was happening inside the SMB business.

“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 MPI initiatives,” Lowthers said.

Clover was one of the stronger pieces of the SMB portfolio. Lowthers said Paysafe’s Clover revenue was up double digits and the company is not seeing pricing pressure. Value-added services are contributing additional growth, singling out lending as performing particularly well.

Acceleration in iGaming

Paysafe reported 17% iGaming growth for Merchant Solutions during the quarter, and processing volumes accelerated as the quarter ended, rising more than 25% year over year in June and more than 30% in July. Consumer trends also remained strong entering the third quarter, with three-month active users growing at a double-digit rate in July.

Chief Financial Officer John Crawford specifically cited higher iGaming growth, continued Latin American strength and double-digit active user growth as supporting the company’s second-half outlook.

Companywide revenue increased 4% to $447.4 million. The first half was up 7% reported and 6% organically, with the second quarter also including $12.5 million from additional data licensing deals.

Paysafe expects second-half revenue growth to come from several sources rather than a single spending trend, Crawford said. During the Q&A, he divided the expected contribution roughly into thirds, including scheduled launches and customers already ramping; pipeline and new sales; and continuation of existing trends, including Latin America and consumer interactive growth.

Paysafe reaffirmed its full-year revenue guidance and expects the fourth quarter to be its strongest, supported by seasonality, sporting events, client wins and consumer marketing.

Shares were up 3% in early trading Thursday.

Data is also beginning to contribute to the top line. Paysafe has spent roughly two years building infrastructure around its merchant and consumer data, Lowthers said. The company uses it internally for fraud, attrition and customer engagement algorithms and has begun licensing it externally.

Paysafe initially believes the data business can develop into an annual revenue stream north of $50 million, Lowthers said.

Paysafe also briefly addressed the corporate work running alongside its payments strategy. It refinanced much of its debt and reached a preliminary settlement of litigation inherited from its SPAC period. Lowthers said the company has completed its portfolio rationalization and made major changes across technology, sales, talent and product delivery.