Slowing eCommerce Growth Slams Paysafe Shares

Paysafe shares sank Thursday (Nov. 13) on the heels of third-quarter earnings results.

Although eCommerce growth was in the double digits, it moderated somewhat. Digital wallets and other product roadmaps also faced headwinds, tempering forward guidance.

CEO Bruce Lowthers told analysts during a conference call that the updated outlook “reflects our current business dynamics and a longer timeline for the delivery of key product initiatives as we navigate the complex ecosystem required to bring innovative new solutions to the market.”

By the numbers, the company’s largest market, North America, grew by 8% in the third quarter, marked by 50% in iGaming and small- to medium-sized business (SMB) growth of 4%, he said.

The eCommerce picture was mixed. An earnings presentation released in tandem with results indicated 22% growth in eCommerce revenues tied to larger enterprise merchants, tied to iGaming.

“Total eCommerce growth moderated compared to more than 30% in recent quarters due to softer performance across other verticals concentrated within lower-tier merchants, mainly in non-core areas,” Lowthers said during the call.

In reference to top-line composition, Lowthers said the company’s “overall revenue mix has shifted to the lower-margin ISO business as we continue to deliver double-digit revenue growth from this third-party channel in Q3 and year to date. We continue to focus on optimizing our SMB portfolio, but given the comparative size and the growth profiles of the portfolios, we expect pressure on the total segment margin as we continue to ramp up our direct efforts.”

Grappling With Some ‘Inertia’

Digital wallets remain “a work in progress,” Lowthers said during the call. Consumer engagement has been strong on eCash, “as we continue to cross-sell and shift towards online account-based distribution.” Last month, Paysafe’s account and card offerings surpassed 500,000 registrations.

Digital banking partnerships are ramping up in Europe. But the “classic” wallets are not “accelerating to the level we had planned for in 2025 as weakness in the rest of the world partly offsets strong progress in Europe,” Lowthers said. “…This is a function of a complex ecosystem across the regulatory, risk and banking needs required to develop innovative new products and supporting infrastructure to bring merchants and consumers together in a seamless experience.”

“The inertia across these legacy systems has resulted in some delay in execution of our product roadmaps,” he added. “While implementing and integrating these new models is complex, our customer pipeline remains strong…”

Chief Financial Officer John Crawford said during the call that the overall organic revenue growth was “slightly below our expectations in terms of the overall revenue performance as well as business mix.” EBITDA margins are expected to decline from the current 29% to about 23% in the fourth quarter.

Revenues are expected to be at the low end of prior guidance, in part due to slower growth from the wallet segment, slower rollouts of new wallet solutions and “lower-than-expected eCommerce growth,” he said.

“As a reminder, these business lines contribute the highest gross margins…,” he said during the call.

Shares were 21% lower in early trading Thursday.

Longer Product Timelines

Asked about eCommerce during a question-and-answer session with analysts, Lowthers said: “I want to be very clear. The eComm iGaming piece is still rocking along north of 50% growth rate. It’s really the non-core piece. And candidly, coming into even the last day of the quarter, we thought we were rocking along pretty well. We had a last-minute client that had to shut down. That caused a several-million-dollar write-down in Q3… we’re in kind of a lower-tier market. A lot of … travel or things that are more higher risk MCC codes. And so those things sometimes are a little difficult to bank, even if you have existing clients that are with the bank as they try to expand. Sometimes the banks aren’t open to the additional risk, and then you’ve got to find other places for them to bank.”

The wallets have been taking longer, even with demand in place from end clients, due in part to “getting our regulators, getting our banks … aligned on these new risk opportunities,” he said during the call. “Sometimes it takes a little longer … The analogy we have here is where the FinTech ecosystem is this big boulder, and as we move into some of these newer spaces, pushing that boulder uphill takes a little bit longer than we anticipated.”