Paysafe Ltd. Q1 FY2025 earnings call

• Organic revenue growth of 5% in the quarter. Adjusted EBITDA was $95 million, roughly flat when normalizing for inorganic impacts. - Closed sale of direct marketing business in February. - Signed over 100 enterprise level contracts in Q1 across gaming, Latin America, and broader e-commerce. - Evolved Paysafe wallet platform with examples like PagoEfectivo brand in Peru. - Enterprise sales organization ramping up, with 20% year-over-year increase in annual contract value per active rep in Q1. - Launched new partnerships, including expansion with Fiserv and partnership with Tilled, and live with Selfpay's self-checkout kiosk in Ireland.

Merchant Solutions: Volume increased by 11% to $34.3 billion, organic revenue growth of 6%. Adjusted EBITDA was $29.4 million with a margin of 13.5%. Digital Wallet: Volume increased by 5% to $5.9 billion, revenue from digital wallets was $187.6 million, an increase of 3% organically. Adjusted EBITDA was $82.5 million, down 1% year-over-year, with a margin of 44%.

• Full year guidance remains confident despite some macroeconomic dynamics. - Q2 organic revenue growth expected to be similar to Q1. - Second half organic revenue growth expected to accelerate to 8%-10%. - Q4 expected to be the strongest quarter for reported growth, organic growth, and margin performance. - Driven by existing contracts, sales pipeline execution, partnership collaborations, product initiatives, mix improvement in segments, margin improvement in merchant solutions, and disciplined operating expenses.

• FX rates have been volatile. - Interest revenue contribution has decreased. - SMB attrition has been slightly higher than original assumption.

Q: Andrew Harte asked about the sales pipeline and visibility into second half acceleration.

A: Bruce Lowthers said they have good visibility, strong enterprise sales in Q1, and strong SMB sales in April, with good visibility into onboarding merchants.

Q: Trevor Williams asked about e-commerce mix in merchant segment and new distribution partnerships.

A: John Crawford said e-commerce is about a quarter of merchant segment revenue; Bruce Lowthers discussed significance of partnerships like with Fiserv and Tilled for TAM expansion.

Q: Darrin Peller asked about SMB strategy and product needs.

A: Bruce Lowthers talked about rebalancing to sell more direct on SMB side, moving upstream from micro merchants, progress seen in April, and confidence in SMB space.

Q: Timothy Chiodo asked about commission payout and unit economics for direct vs indirect.

A: Bruce Lowthers discussed differences in residual payments for ISO and direct channels; John Crawford added that margin flows through faster on direct as commissions roll off sooner.

Q: Matthew Inglis asked about growth from new products and Pago wallet in Peru.

A: Bruce Lowthers mentioned strong sales start, new products like PagoEfectivo wallet, and bullish on LatAm growth.

Q: Jamie Friedman asked about merchant KPIs and sales force incentives.

A: John Crawford discussed billable mids, net revenue retention, and revenue per merchant; Bruce Lowthers talked about sales force investments and redeployment of assets for better performance