Paysafe Limited

Greetings, and welcome to the Paysafe Third Quarter 2025 Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star 1 on your telephone keypad. We ask that you please limit yourselves to one question and one follow-up, then return to the queue. If anyone should require operator assistance, please press star 0. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Kirsten Nielsen, Head of Investor Relations. Kirsten, please go ahead.

Thank you, and welcome to PaySafe's earnings conference call for the third quarter of 2025. Joining me today are Bruce Lothers, Chief Executive Officer, and John Crawford, Chief Financial Officer. Before we begin, a reminder that this call will contain forward-looking statements and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent SEC reports. These statements reflect management's current assumptions and expectations and are subject to factors that could cause actual results to differ materially from those forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements speak only as of the date of this call, and we undertake no obligation to update them. Today's presentation also contains non-GAAP financial measures. You can find additional information about non-GAAP measures and, where relevant, reconciliations to the most directly comparable GAAP measures in today's press release and in the appendix of this presentation, which are available in the investor relations section of our website. Now, I'll turn the call over to Bruce.

Good morning, and thank you for joining us today. PaySafe delivered accelerated financial results in the third quarter, including 6% organic revenue growth, 7% adjusted EBITDA growth, and 37% adjusted EPS growth. Growth from our existing customers, or same-store sales, contributed 5% to growth while contribution from new sales and product accelerated to double digits, and the overall attrition level was stable, around 11%. We returned another $20 million to shareholders by repurchasing 1.5 million shares during the third quarter, bringing our year-to-date total to $50 million, as our shares remain significantly undervalued, and we remain confident in Paysafe's long-term strategy and growth potential. To that effect, our board has authorized an additional $70 million to our existing share repurchase program. While we're pleased with our third quarter and year-to-date progress, we continue to see outperformance of our lower margin product and sales channels. Our updated 2025 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. We'll discuss both of these areas in more detail throughout the call. So, let's start with our regional performance on slide four. The largest market, North America, grew 8% in the third quarter, excluding the divestiture. This was driven by approximately 50% growth from iGaming, while SMB grew 4%. Europe is our next largest market, which also grew 8%, normalizing for FX. Latin America was roughly flat in Q3, and this was mainly related to a large customer contract renewal in the prior year. As we lapped that impact in Q4, we're seeing a normalized growth rate of 10%. In the non-core rest-of-world countries, we saw a double-digit decline, attributable to our Skrill and Neteller wallets. Here, the market landscape is unfavorable, and this region has come down from 5% of total revenue three years ago to 3% of revenue today as a function of both macro dynamics and our own actions to trim this exposure over the years. So this gives you a sense of the puts and takes from a regional perspective, including a very strong organic growth from our largest core markets that represent about 90% of our revenue. Turning to slide five. I'd like to highlight some of our recent client wins, starting with iGaming. In the third quarter, we signed an agreement with BetMGM to provide payments for their online players in Ontario, where PaySafe already maintains a strong market presence. They were looking for a new partner who could deliver high approval rates with stronger customer support and reliability. What's awesome about this deal is that BetMGM is one of the largest merchants in North America that PaySafe did not have integrated, so we're thrilled to partner with them in Ontario. It's also worth highlighting that PaySafe is very well positioned in the up-and-coming predictions market, where PaySafe is in active discussions with several key players. As one example, we're expanding our partnership with Underdog to support their growth in the predictions market across 16 states. This win reflects our strong customer relationship and our ability to support our clients' growth aspirations by launching in new jurisdictions at speed. We also signed agreements with new international iGaming operators, such as state.com, to provide eCash, digital wallet solutions, and our local APMs across Latin America and Europe for pay-ins and payouts. We're also expanding our relationship with Bitano, to offer e-cash solutions in support of their recent launch in Belgium. Outside of iGaming, we continue to make progress expanding our pipeline and winning deals in other core verticals. For several years, PaySafe has been a trusted partner of Campminder, a leading ISV whose technology powers thousands of camps and recreational organizations. We are now taking our joint success across borders expanding with them into Canada. Lastly, in the fintech space, we signed a new client agreement with Paysagie in Europe. By integrating with Paysafe's acquiring platform, Paysagie can now offer their global online merchants instant access to major payment methods. Collectively, these are great examples of how our operational improvements, sales team investment, and product focus is enabling us to expand our TAM and growth opportunities across new and existing clients. Turning to slide six. Across enterprise-level merchants, our growth in e-commerce continues to be very strong, exceeding 20% in the third quarter, driven by iGaming growth of more than 50%. Total e-commerce 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. Importantly, we booked over 100 enterprise-level deals in Q3, an increase of 25% compared to last year, along with double-digit growth in the annual contract value of those bookings. We also continue to see higher-quality deals, which supports continued revenue growth along with the durability and diversity of our merchant base. We believe our e-commerce business remains on track to reach approximately $200 million in revenue this year, reflecting a three-year CAGR of 29%. On the SMB side, after driving 6% new mid growth in Q2, we accelerated new mid growth to more than 20% in Q3, led by our direct sales channel, along with positive growth in S&B revenue and revenue per merchant. We also saw strong acceleration with our new mid acquisition for Clover in Q3, up 49% from Q3 2024, a very impressive result with great progress from the team. We're excited to build on this momentum as we look ahead to 2026. Even with the strong execution on the direct side of the business, Our 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. Let's turn to slide seven. To take this a step further and discuss our focus areas to optimize the SMB portfolio, as we've shared before, our merchant solution segment today is comprised of three business lines, e-commerce, which serves our larger enterprise merchants, SMB direct sales, and SMB sales through ISOs. When you look at the aggregate of our e-com and SMB direct sales, which go to market under the Paysafe brand, compared to the third-party ISO channel, the direct revenue streams are not outpacing the stronger ISO growth, which now represents more than one-third of the merchant solution segment, up five percentage points from two years ago. ISObook has an EBITDA margin profile in the single digits. The direct channels across S&B and e-comm have attractive EBITDA margins in the mid-20s range on average. So, while we were focused on the right things to improve our growth profile of the segment, we were frankly too optimistic in our assumption around shifting this mixed dynamic in 2025. However, as I mentioned on the prior slide, we drove an acceleration in new SMB mid-growth in Q3, up more than 20% from last year, led by the direct channel. We'll build on this momentum in new merchant acquisition and continue to implement the improvement plans underway, including new SMB leadership and the expansion of our agent programs where we've seen an increase in demand from single agents who want to sell under the Paysafe brand. Finally, we continue to roll out value-added services with plans to bring several new products throughout 2026. This represents The marketplace that Paysafe will support is part of a fully integrated and streamlined onboarding experience for value adds that help our customers manage their businesses. Shifting gears to digital wallets on slide eight. To put it simply, the digital wallets remains a work in progress. Starting with the positives, we're seeing strong consumer engagement related to eCash product initiatives as we continue to cross-sell and shift towards online account-based distribution. In October, our account and card product surpassed 500,000 registrations, a major milestone that reflects the team's drive and stronger consumer engagement. In just over two years since introducing the product, we've reached a scale that took even some of the leading digital banks nearly two years, despite their broader offerings and massive marketing budgets. And this was achieved through targeted regions across Europe. So we still see opportunity for further geographic expansion. Next, our digital banking partnerships continue to ramp up and deliver growth across Europe, including our recent launch with BBVA to offer their consumers seamless cash solutions to deposit and withdraw to and from their bank accounts at any of our point of sale partners locations in Germany. Additionally, we see strong demand for Paysafe's suite of local payment solutions in Latin America, including double-digit volume growth from Pago Efectivo and SafetyPay in Q3 and year-to-date. The rollout of our new Pago Efectivo wallet in Peru is progressing very nicely, and in the third quarter, we launched our iOS app, along with product enhancements that have helped drive onboarding efficiency and build trust across merchants and consumers. These are the key areas and products collectively driving strong double-digit revenue growth, while Classic Wallets is 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. At the same time, some of our new product initiatives, such as our Business Wallet, are taking longer to deliver and gain momentum than we planned. 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. While implementing and integrating these new models is complex, our customer pipeline remains strong and we identify more and more money movement opportunities where the wallet helps solve the unique challenges and opportunities our clients face. To wrap up, before I hand the call over to John, I want to reiterate that we delivered strong results in Q3 and our sales team is becoming more productive, driving higher bookings and quality of revenue Through our operational transformation, we now have a strong platform to build upon and launch new products and services. With that, I'll ask John to review the financial results and outlook.