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Paysafe Q2 earnings: Here’s 3 things investors should know

Paysafe (NYSE:PSFE) released their second quarterly earnings this morning, reporting strong revenue growth which beat analyst expectations. The company recorded revenue of $384.3 million which grew 13% year-on-year.

In the earnings presentation, Paysafe highlighted “exciting wins” across the iGaming and specialized digital commerce segment as they look to capitalize on the expanding North America market.

PaySafe first gained attention on Wallstreet after their SPAC merger with Foley Trasimene Acquisition Corp II. Paysafe offers payment solutions and merchant services similar to that offered by Square or Stripe Payments. The company has a strong 20 year history and generated $1.42 Billion in 2020.

Here’s three key points to takeaway from the Paysafe Q2 earnings.

Paysafe revenue grows across three main segments

In the second quarter, the company reported a 13% year-on-year growth across all segments. However, the best performing sector was the companies integrated processes which generated $191.2 Million (growth of 7.2% year-on-year). In particular, PaySafe’s integrated eCommerce verticals including iGaming, specialized eCommerce and independent software vendors (ISV) drove this growth.

In addition, its eCash Solutions segment saw a 36.7% year-on-year revenue improvement. However, the company expects eCash to seasonally slow down in Q3-Q4 and integrated processing to dominate revenue spread.

Paysafe Q3 revenue guidance lower than consensus

The company reaffirmed their 2021 Full Year outlook however the Q3 guidance was set lower than analyst consensus. Paysafe expects to generate between $360 Million – $375 Million in revenue for Q3 vs. the $389 Million consensus from analysts.

The reason for this lower guidance is due to seasonal changes in demand, with quieter summer gaming activity in Europe expected and absorption of direct marketing client exits.

The full year revenue outlook remains unchanged with guidance between $1.53 Billion and $1.55 Billion. The primary reason for the reaffirmed FY outlook is due to robust volume forecasted for the remainder of 2021. It definitely is worth noting that the companies acquisition benefits are not included into the guidance. The PagoEfectivo and SafetyPay acquisitions are expected to add $10-12 Million in revenue in 2021.

Paysafe announces acquisition of SafetyPay

Lastly, the company also announced today that they have entered an agreement to acquire SafetyPay for $441 million in an all-cash transaction. The all-cash transaction means that SafetyPay shareholders will receive an all-cash payment for their shares.

The good news for PaySafe investors is that the acquisition will not require additional shares to be distributed to SafetyPay shareholders, excluding direct dilution of the share price. However, Paysafe will use debt to finance the acquisition which is to be completed in Q3.

“We are really pleased to see SafetyPay and PagoEfectivo become part of Paysafe and expand our payment solutions across card payment processing, digital wallets, eCash and online banking payments with a strong foothold in high growth Latin American markets. We see exciting synergies in key industry verticals like iGaming where we want to win” commented Bill Foley, Chairman of Paysafe’s Board of Directors.

The Bottom Line – PaySafe Q2 earnings

In summary, the Paysafe Q2 earnings highlighted some growth points investors should take notice of, including the dominance of its integrated processing segment. However, the lowered Q3 guidance may rattle some investors as the company prepares for seasonal changes in revenue. Lastly, the companies acquisition of SafetyPay will strengthen its strategic foothold in Latin America.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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