Paysafe Limited (PSFE) is experiencing a mixed bag of news today, with the company exceeding earnings estimates but seeing its stock plunge in pre-market trading. The third-quarter results showcased a positive performance, exceeding analyst expectations. However, the 8% year-over-year revenue growth, while positive, fell short of some analyst projections, triggering a sell-off among investors.
Breaking Down the Numbers
Paysafe reported adjusted earnings per share of 51 cents, significantly beating the Street’s expectation of 2 cents. Quarterly sales reached $427.10 million, an increase of 8% year-over-year, exceeding the analyst consensus of $423.096 million. The company’s Total Payment Volume (TPV) also saw a positive trend, rising 7% to $37.5 billion. Adjusted EBITDA grew by 1%, or 1% on a constant currency basis, reaching $117.8 million.
The company’s net leverage decreased to 4.7x as of September 30, 2024, compared to 5.0x at year-end 2023. Revenue from Merchant Solutions, a key driver for Paysafe, saw an impressive 11% rise, fueled by strong e-commerce and small and medium business (SMB) growth resulting from expanded sales efforts. Digital Wallets revenue, while positive, saw a more modest 4% growth, driven by product enhancements and new merchants onboarded in the past year.
Paysafe emphasized its eCommerce channel’s double-digit growth, fueled by strong demand within North America’s iGaming sector. The company also highlighted a new partnership with Revolut, aimed at providing cash deposit services for Revolut’s U.K. customers, with plans to expand to other European markets.
CEO’s Outlook
Bruce Lowthers, CEO of Paysafe, expressed satisfaction with the company’s continued revenue growth, stating: “Revenue growth continues to be strong this year, reaching 8% for the third quarter and year-to-date, demonstrating execution on our strategic priorities and our focus on delivering higher quality, sustainable revenue growth, while investing in the business and progressively reducing net leverage. We are pleased to reaffirm our full year financial outlook for 2024 and we remain confident that we are taking the right actions to drive continued momentum in 2025 and beyond.”
Financial Projections
Paysafe reaffirmed its FY24 sales guidance, projecting sales between $1.713 billion and $1.729 billion, which aligns with the $1.723 billion estimate. The company anticipates adjusted EBITDA to range between $471 million and $484 million.
Stock Performance
Despite the positive earnings report, PSFE shares are experiencing a significant drop, declining by 13.6% to $22.00 in pre-market trading. This downturn highlights the market’s sensitivity to the revenue growth rate, with investors seeking even more robust expansion.
The future of Paysafe’s stock will likely depend on how the company can address investor concerns regarding the pace of revenue growth and demonstrate a clear path towards achieving sustainable, long-term growth.
