Paysafe Limited

Greetings, and welcome to the Paysafe fourth 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 into question queue at any time by pressing star 1 on your telephone keypad, and we ask that you please ask one question and one follow-up, then return to the queue. 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. Please go ahead.

Thank you, and welcome to Paysafe's earnings conference call for the fourth quarter and full year 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 may cause actual results to differ materially from those forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements during this call 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 these non-GAAP measures and reconciliations to the most directly comparable GAAP financial measures in today's press release and in the appendix of this presentation. which are available in the investor relations section of the website. With that, I'll turn the call over to Bruce.

Good morning, everyone, and thank you for joining us today. I'll start off with a few key messages. In 2025, we delivered our third consecutive year of organic revenue growth, while continuing to sharpen our focus on experience-driven commerce. While our business mix led to a different margin outcome than the original outlook called for, I want to reiterate that we've made incredible progress in 2025. For the last three years, we have made deep structural changes, modernizing our platform, upgrading our talent, and positioning Paysafe for its next phase of growth. During this timeframe, we renewed our focus on product innovation, which is reflected in the progress of our Vitality Index. I'm confident that the positive impact of this work will become increasingly evident through our financial results as we move forward. I'm grateful for the dedication of our 2,800 colleagues worldwide whose resilience has driven us through the challenges and laid a foundation of accelerated growth and exceptional experiences for both customers and employees. Let's move to slide four. The full year, we reported $1.7 billion in revenue, growth of 6%, excluding the disposition. While we saw softer results in the SMB business, this was offset by double-digit growth from e-commerce, including record iGaming volumes across the U.S. football season. We also saw a strong demand for our local payment solutions in Latin America, and increasingly, consumer engagement from product initiatives across Europe. Importantly, our digital wallet consumers reached $7.8 million at quarter end, our highest level in three years. We generated an impressive $298 million in unlevered free cash flow in 2025, despite divesting a business line that generated $40 million in EBITDA the prior year. This provided us with the flexibility to return more than $90 million to shareholders in 2025, as valuation levels were a compelling opportunity. As John will discuss later, we expect to continue to return capital through open market purchases, but reducing our leverage ratio will be a higher priority in 2026. Turning to the full year revenue walk on slide five. Revenue growth was balanced across the existing client base and our new sales and product initiatives. which contributed 8% and 10% to revenue growth respectively. Revenue attrition ended up at 12%, slightly higher than our original expectation for the full year. We continue to see improvement throughout the year. In Q4, attrition was 11%. When we put all of this together, our performance reflects strong cross-selling and growth with existing clients as well as new clients and new products. On slide six, We've shared our regional performance for the full year. Our largest market North America grew 5% in 2025, excluding the disposition and Europe grew 7% normalized for FX. Latin America was flat for the year, but after lapping and the impact of a large customer renewal, we saw more than 20% growth from the region in Q4 and continued strength in January. The non-core rest of world region, we saw a decline from our consumer wallets as a function of both the market dynamics and our own actions to trim this exposure over the years. This gives you a sense of our balanced regional profile, which we'll plan to provide on an annual basis going forward. Slide seven is a look back on our 2025 priorities. Having shifted our focus to the key growth engines of the company, Our aim was to drive more revenue from new products, deliver on our longer-term innovation roadmap, and mature the sales organization, bolstering both areas through new partnerships. Despite strong progress, we had a bit more groundwork to complete, including advancement of our wallet platform, such as our business wallet and white-label wallets, and monetizing our pipeline and targeted e-commerce verticals. Overall, we are confident that the operational and strategic progress that we made in 2025 is already enabling us to improve execution in 2026 by reaching new merchants and consumers and expanding our product and service delivery across our core regions. Moving to slide eight. For us enterprise-level merchants, our growth in e-commerce continues to be strong, reaching 24% in the fourth quarter and 27% for the full year. North America iGaming had a standout year with 50% growth in processing revenue. As we discussed on the last call, total e-commerce growth did moderate compared to the more than 30% growth in the first half and compared to what we planned for the year, driven by softer performance across other verticals. Just to take a step back, we delivered $196 million in e-comm revenue for 2025, an impressive three-year CAGR of 29%. Turning to the enterprise bookings, we increased our total deal count by 38% compared to 2024, along with 10% growth in larger size deals. Cross-selling was a strong component overall with 40% of our total bookings from existing clients. We also wanted to highlight the evolution of our enterprise sales function, which was built over 2023 and 2024, and now generating a meaningful revenue contribution from those cohorts since inception, driving nearly $260 million in revenue in 2025. On the SMB side of the business, we saw a total new mid-growth of 6%, driven by 18% year-over-year growth in the second half led by our direct sales channels, along with positive growth in revenue per merchant. S&B revenue growth for the year was a modest 1%, coupled with a margin headwind due to the ongoing mix shift to our lower margin ISO channel. Throughout 2025, we have focused on retooling and optimizing our S&B portfolio and believe we have a stronger foundation to improve growth in 2026. supported by the expansion of our agent programs and value-added services. Turning to the consumer snapshot on slide nine, I mentioned at the start of the call that our digital wallet active users reached 7.8 million at quarter end, reflecting a growth of 6% year-over-year, with notable strength in Latin America across iGaming and broader e-commerce. In Europe, we saw continued growth from product initiatives and expansion of Paysafe's digital banking partnerships. Other KPIs remained healthy with 6% growth in transactions per user, while ARPU was relatively stable. Additionally, we believe our classic wallet Skrill remains a high-value asset, despite not accelerating to the level we planned for in 2025. As a stable user base, exceeding 900,000 actives for the last five quarters, we focused on reducing friction and improving user experience. At the same time, our product initiatives have effectively elevated both new and existing eCash users to our wallet platform. We continue to believe higher growth and value can be created here as we deliver on our initiatives to deepen consumer engagement coupled with successful rollout of our business wallet and white label solutions. Turning to slide 10. One of the clearest measures of our progress is our new product vitality index. This is how we measure the health of our organization and the momentum we have around innovation that directly addresses our customers' evolving needs. 2025, we reached $270 million of vitality revenue, representing 16% of the total company revenue. It has fueled mainstream sustainable revenue, enabling us to reduce high-risk, non-core revenue streams while improving our overall growth profile. As we continue to innovate and launch new solutions, we expect this momentum to carry Paysafe towards industry-leading benchmarks, So let's look at how one recently launched product is contributing to this progress on slide 11. As you may recall, as highlighting growth from new products within our eCash business or account and card product, which we've recently rebranded as PaySafe Wallet, this began as an initiative to cross-sell and shift eCash users towards online account-based distributions. SafeWallet serves as a full-service consumer solution, including a personal bank account and a debit card, allowing customers to send, receive, spend, and withdraw money. We first launched in a few European markets to offer cash and store-valued consumers the benefits of a wallet and later expanding into banking services. What we saw was a strong adoption with signups surpassing 500,000 by October 2025. reaching a scale that took some of the leading digital banks nearly two years, despite their broader offerings and large marketing budgets. So what's different here and advantageous is that we already have a sizable base of users we can target, which allows us to scale at a much lower cost of acquisition, which is around $21 for Paysafe. Today, we are live in 18 countries and continue to drive functionality and regional expansion. SafeWallet is built to deliver innovative and value-added services at each step of the consumer journey, ranging from cash solutions to prepaid cards to digital banking and wallet solutions. On slide 12, we share the key priorities and outcomes that we're driving in 2026. Starting with consumer business, We will continue to enhance our classic wallet user experience, including loyalty programs and value added features and services. Our Paysafe wallet and Pago Efectivo wallet in Latin America will continue to expand on core capabilities with the goal in both regions focused on building a simple, everyday digital banking wallet that customers can rely on to manage their daily spend. To support user growth, we will scale our marketing strategy, leveraging our expanding wallet portfolio and localized go-to-market plays to drive acquisition, retention, and lifetime value. Coming to our merchant priorities, we are focused on capturing opportunities in existing and target e-commerce verticals, supported by enhancements to our gateway and bank network to incrementally offer more flexibility. For both large merchants and SMBs, we will focus on elevating customer experience with faster onboarding and activation with seamless access to evaluated services. Success with these top initiatives will support continued growth in our vitality index company-wide, which we see as one of the most important markers of our success. Turning to slide 13. Before I hand the call over to John, I want to take a moment and reflect on the transformation we've driven over the last few years and how it's positioning Paysafe for the future. I joined nearly four years ago. I shared with the team my vision for building a truly modern payments company. It wasn't just about adopting new technologies like AI or eventually quantum computing. It is about fundamentally reimagining our business processes for scale, adaptability, and resilience in a high-volume, always-on payments infrastructure. We've made meaningful progress. Our go-to-market motion has strengthened. We've launched innovative products, and we've opened new revenue streams in adjacent markets, such as our Paysafe wallet, which offers a modern, consumer-friendly solution comparable to what other players like Revolut and Chime have delivered in digital banking and embedded finance. Clear measure of this innovation momentum is our vitality index, the percentage of revenue from new product initiatives. We've grown this from less than 2% in 2022 to 16% in 2025. Looking ahead, our long-term aspiration is to reach over 30% in line with world-class innovative companies that consistently drive sustained growth through fresh offerings. Every core function has felt this impact, We've stayed disciplined, focusing on process improvement first and deploying tools only where there is a clear ROI. Over the last three years, we've reduced aggregated FTEs by approximately 20% through automation and efficiency gains. More importantly, we've reallocated those savings to fuel growth, investing in higher impact areas. We've upgraded our talent significantly, eliminating about 30% of our senior executive roles from three years ago. And of the remaining executive team, roughly 77% are new additions, bringing fresh perspectives and expertise. Our capital allocation has shifted dramatically from roughly 90% maintenance focused to now 80% directed towards growth initiatives. This reflects a deliberate move from sustaining the status quo to building for the future. For me, Modernization goes beyond just any single tool like AI. It's about re-engineering processes that enable us to operate at scale in a complex 24-7 payments environment while staying agile and cost-effective. That's the foundation that we're building. Embedded AI across the enterprise, not as experiments, but as operating system powering how we work. It accelerates decision-making, enhancing experiences for merchants and consumers, and strengthens our position in sectors like gaming, digital entertainment, travel, and e-commerce, where seamless, personalized, trust-building interactions are increasingly the standard. In operations, we've automated high-volume workflows and customer support that spews reconciliations, and back office functions driving higher productivity and improved service levels. In product development, AI is now end-to-end shortening cycles and enabling smarter adaptive solutions that boost engagement and modernization. We've reduced integration times for new payment methods by approximately 80%, putting us in line with industry leaders. In risk and compliance, AI drives real-time onboarding monitoring, fraud detection, and reporting, listing auto-decisioning on direct applications to around 50%, cutting false positives by over 20%. And in our tech stack, modernization has delivered strong results. Over 30% of the code generated via AI in 2025, speeding time to market while maintaining quality. Across the board, we're moving faster, deciding with better data, scaling with tighter controls, and doing it at a lower cost. This has made intelligent systems foundational to how we compete. Looking ahead on slide 14, our AI strategy is structured around three clear pillars. Product innovation, scaling AI-native offerings like our embedded wallet and intelligent tools, Modern wallet platform enables merchants to deploy commercially ready, fully brandable embedded wallets, delivering white label solutions they own end-to-end for seamless deposits, withdrawals, identity verification, and enriched user experiences. Identic commerce, aligning with emerging standards by leveraging protocols like model context protocol, MCP, agent payment protocol, AP2, and Universal Commercial Commerce Protocol, UCP, to ensure agent-driven protocols remain secure, compliant, and governed by clear financial policies. AI-driven automation, continuing to deliver structural efficiency gains while enhancing quality controls and fraud prevention. We see AI and agentic commerce as a meaningful expansion of our addressable market, and a structural opportunity for platforms that bring together scale, regulatory expertise, and orchestration capabilities. That's where Paysafe is differentiated. Stop here and turn it over to John.

Thank you, Bruce. Let's move to slide 16 for a summary of our fourth quarter results. Revenue for Q4 was $438.4 million, an increase of 4% on both the reported and organic basis, as the impact from the business disposal and a modest headwind from interest revenue was offset by favorable FX. Organic performance in the fourth quarter reflects 6% growth from digital wallets led by Latin America, which increased more than 20%, and 2% organic growth from merchant solutions, driven by continued strong volumes from e-commerce merchants, which offset a decline from SMB. Relative to the revised expectations we outlined in November, our Q4 performance was in line overall. Adjusted EBITDA declined 1% to 102.1 million in the fourth quarter, and adjusted EBITDA margin declined 130 basis points, mainly due to higher marketing investment and OPEX timing items. It impacts the margin comparisons throughout the second half compared to 2024. generated $103 million in unlevered free cash flow in the quarter, bringing our cash flow conversion to 101%, which benefited from the license deal completed in Q3, as well as timing-related working capital flows. This brings our full-year cash conversion to 69%, which is at the high end of our targeted range. Adjusted EPS decreased 4% to $0.46, compared to $0.48 in Q4 of last year. including higher depreciation and amortization expense, fully offset by a reduction in our adjusted tax rate, as well as a reduction in share count from our share repurchase activity. Moving to slide 17. As a quick recap, our full-year reported revenue growth was flat year-over-year at $1.7 billion. Including impacts from FX, interest revenue, and the disposed business, organic revenue growth was 5%. Adjusted EBITDA declined 5% to $429 million, and adjusted EBITDA margin was 25.2%. Excluding the noise from the business disposal, which was a $41 million headwind, our adjusted EBITDA margin would have declined only 40 basis points. This included a headwind of 120 basis points from gross margin, two-thirds from mix, and one-third from interest revenue, which was offset by tight cost management in SG&A. Despite the puts and takes behind the margins here, we believe this full-year margin profile to be a sustainable margin for 2026, which we will discuss in a moment. We generated $298 million in unlevered free cash flow for the full year, and it's worth pointing out that we continue to generate this attractive cash flow conversion despite divesting a business line that generated more than $40 million in EBITDA in the prior year. Finally, adjusted EPS declined 9% to $1.95 per share, predominantly reflecting the adjusted EBITDA loss due to the business disposal, partially offset by the denominator benefit from our share buybacks. Let's move to slide 18 to discuss the merchant solution segment. Revenue in the fourth quarter for merchant solutions was $222.7 million, resulting in a full-year revenue of $904.7 million. This represents organic growth of 2% for the fourth quarter and 5% for the full year. A reminder, the underlying performance was led by e-commerce, which grew 24% in Q4 and 27% for the full year, having moderated somewhat from a growth rate north of 30% in the first half of the year. This was partly offset by soft performance from the SMB business, which declined 3% in the fourth quarter and grew modestly at 1% for the full year. Adjusted EBITDA for the merchant solution segment was $28.8 million for the fourth quarter, reflecting a margin of 12.9%, leading to full-year adjusted EBITDA of $145.7 million, with the full-year adjusted EBITDA margin of 16.1%. Looking past the impact from the business disposal, adjusted EBITDA margin declined 130 basis points for the full year, the main driver being the channel mix dynamic due to stronger growth within our third-party ISO channel, which outpaced the higher margin direct sales in merchant solutions as we discussed all year. Additionally, the Q4 margin of 12.9% included the bulk of the higher marketing expense I mentioned earlier and timing-related items in OpEx. Going forward, we expect adjusted EBITDA margin for the segment back into the mid-teens in 2026. Turning to the digital wallet segment on slide 19. Revenue from digital wallets in the fourth quarter increased 13% to $220.2 million, or 6% on an organic basis, leading to full-year revenue of $815 million, with 6% reported growth and 4% organic growth for the year. In Q4, adjusted EBITDA grew 4% to $93.1 million, helped by favorable FX and reflecting a margin of 42.3%. while full-year adjusted EBITDA was $352 million with a margin of 43.2%. Margin declines in the segment were driven by lower interest revenue, $3 million in Q4 and $13 million for the full year, as well as the business mix dynamics we've discussed throughout the year, higher growth in e-cash products, fourth quarter also reflecting an increase in segment S-G&A. mainly due to timing, with full-year SG&A being favorable as a percent of segment revenue. Turning to slide 20 for a summary of debt and leverage. At the end of the year, total debt was $2.6 billion, an increase of $252 million, largely due to fluctuations in the Euro-USD exchange rate, which increased total debt by $144 million, along with net withdrawals of $105 million. Net leverage ratio was 5.5 times at year end compared to 4.7 times at the end of 2024. At the bottom right of this slide, you can see that this increase was attributable to FX and the business disposal. In 2025, we allocated more than $90 million to share repurchases. We are laser focused on reducing our net leverage ratio in 2026 and expect to be below five times by the end of this year. We repaid $64 million of our revolver in the month of January. And while we continue to think our shares are materially undervalued, we will prioritize debt repayment this year. Let's move to the full year guidance on slide 21, which is consistent with the preliminary outlook we discussed on our November earnings call. We expect revenue in the range of $1.79 billion to $1.83 billion, representing 5% to 8% growth. Includes a small full year uplift from FX, mainly in the first half of the year, assuming current FX rates. Rounding out to roughly 5% to 7% organic growth. As for the cadence, we expect the first quarter and the first half growth to be in the mid-single digits on an organic basis, and the second half to improve towards the higher single digits. We expect adjusted EBITDA in the range of $449 million to $464 million. to reflecting 5% to 8% growth. For the cadence here, we expect first half adjusted EBITDA margins to be around 24%, and the second half averaging above 25%, leading to flat adjusted EBITDA margin for the full year compared to 2025. In terms of the year-on-year comparisons and shaping quarterly models, recall that we had the $10 million license deal that benefited the third quarter results in 2025. And finally, We expected just the DPS to be in the range of $2.12 per share to $2.32 per share, aiming for double digit growth versus 2025. Turning to slide 22, let me wrap up with a few comments on our current financial position before we open the call for questions. 2025 marks our third consecutive year of positive organic revenue growth, a meaningful step forward considering our flat growth profile four years ago. We've achieved this while enhancing the quality of our revenue base, notably de-risking our portfolio, including the direct marketing divestiture at the start of 2025. Although these actions created short-term noise in our results, they position us for a stronger future, and we expect our financials to be much cleaner in 2026. The operational improvements we've made have allowed us to allocate more investment to our growth functions, we're beginning to see the benefits reflected in our financial results and new product delivery. Our outlook is further supported by the strong free cash flow we continue to generate, providing a path to reducing leverage to below five times by the end of this year. To close, we're starting 2026 in our healthiest position since going public, which gives us confidence in the business and our ability to deliver on our long-term objectives. Now let's begin the Q&A session.

Thank you. We'll now be conducting a question and answer session. If you'd like to be placed into question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue, and we ask that you please ask one question and one follow-up, then return to the queue. If you'd like to remove yourself from the queue, please press star 2. One moment, please, while we poll for questions. Our first question is coming from Dan Perling from RBC Capital Markets. Your line is now live.

Hey, good morning, everyone. Bruce, I was wondering if we could just revisit a little bit the kind of strategic initiatives as you see them to kind of reaccelerate SMB as we think about going into 26. You kind of alluded to a little bit in the prepared remarks, but anything will be helpful. Thank you.

Good morning. So on the SMB side of things, we have been putting a lot of energy around that in the 2025 and building momentum into 2026, which we can see already emerging early in Q1. So we feel very good about the product sets that we have, seeing significant lift with our clover sales in Q4, really pretty strong. I think we were north of 30% in new mids year over year in Q4 with clover. So feel very good about that. We've engaged new management. So we have a new team that's leading us in the SMB space. So I think that's going to really pay tremendous dividends. And we're excited about having the team on board. From a product standpoint, we feel very good about the product set that we have. It really now is just about execution. We've really honed our marketing on the SMB side. We see really strength in the direct channel. So we feel like we're in a pretty good position overall with the new team, strong product, value-added services, and increased marketing around merchant acquisition. So overall, feel like we're coming into 26 in a very good place.

That's great. And then just on the guide for 26, I'm just wondering, kind of given the state of the world, what kind of expectations you kind of have baked in in terms of macro? Again, I think you touched a little bit on FX. And then if there's any kind of delineations you can draw between SMB and e-comm growth, that'd be great.

Thank you. John, do you want to?

On the macro, I think we're baking in relative stability on the FX side. So that's why we talked about having some FX benefit at the beginning of the year in 26, as folks probably remember Q1. Last year, the euro was much lower and moved a lot at the end of the quarter. I think we don't have dramatic changes other than what's projected in the current curves out there in terms of interest rate changes as well, and no significant real change in macroeconomic environment.

Yeah, I think as John said in the prepared remarks, the nice thing about 26 is It's a very clean year for us. We don't have a lot of activity. Obviously, the divestitors worked its way through. All the grow-overs have kind of worked their way through. And so it looks like a very clean year for us as we go into 26.

Great. Thank you so much.

Thank you. As a reminder, that's star 1 to be placed in the question queue. Our next question is coming from Darren Baller from Wolf Research, from Linus and Ella.

Hi, thanks. This is Paul Obrecht on for Darren. Bruce, can you help frame the opportunity of the PaySafe wallet? You know, where are you seeing momentum with this product initially? What do consumer engagement trends look like? And then in the deck, you also called out plans to expand it to more geos. Just curious where you see the most opportunity.

Good morning, and thank you for the question. We're very excited about the PaySafe wallet. Obviously, we've had a lot of momentum with that product over the last 12, 18 months as we've kind of been flying under the radar with it. It's something that we've invested in quite a bit over last year. We're in 18 countries right now. Just really, as we look at the growth of that product, it's really about just continued execution on the rollout. The product is very solid. We feel very good. We've talked a little bit about the 500,000 registered users for it. When we look at that, it's really on pace with what the others that are in that vertical embedded finance have done. When you go back and look at their initial couple of years, we're tracking right in line with them, which is really great to see. I think the big differential is that when we talk about the cost of acquisition, because we have roughly 8 million active users out there, we're marketing a lot to our own users and driving those users into the organization or into the PaySafe wallet. So feel very good from a feature functionality standpoint, from cost of acquisition right now. And so we're gonna invest some marketing behind this and really drive it in 2026. So I think from a geographic footprint, With the PaySafe wallet for 26, we're going to continue just to focus within Europe and really drive within Europe. So it's not an aggressive geographic expansion outside of Europe. We'll do some test and learn in probably a couple of markets, but predominant growth is expected within the Europe region.

Great. That's really helpful. And then you briefly touched on your prepared remarks, but just curious if you could provide any more detail on how you see PACE's role evolving in agentic commerce and what steps you're taking today to prepare for eventual consumer adoption down the line.

So for us, we have been really incorporating a foundational change to the organization. And so when we look at agenda commerce, it's really about TAM expansion for us. We are going to stay within the entertainment area or the experience economy is really where we like to play. So you'll see us continue to stay within those verticals. But for us, it gives us the ability to kind of accelerate product into travel and leisure. For example, when we look at our verticals, We have tremendous strength in the gaming space, whether that be video gaming or the sports betting. We think eugenic commerce allows us to step into some of these adjacent verticals that will help really drive an overall experience for us in our market within the experiential economy. So for us, we think it's a great opportunity. It's something that we've been working with over the last few years. You know, going back to when the first co-pilot rolled out a few years ago, we were one of the 200 companies to adopt that. We've had our head of technology out on the West Coast working with all the major players in this space on protocols and making sure that we're aligned with how the market's moving. So we feel very good about our level of engagement around this.

That's a helpful color. Thank you.

Thank you. Our next question is coming from Andrew Hart from BTIG. Your line is now live.

Hey, thanks for the question. Good morning. So, Bruce, last quarter we talked about the digital wallet segment still being under construction, but then, you know, it feels like in 4Q the business seems to have really accelerated. So, I guess, what changed there and how should we think about it going forward and Are there any one-off benefits we should think about that happened in the fourth quarter?

There was really nothing in one-off context in Q4 around the digital wallet space. I think we have a lot of momentum building. Earlier in 25, we had some issues that we needed to work through as we continued to expand the use cases around our wallet. But I think those are just normal new product launches. You can see our vitality index is getting very strong, moving from 2% in 22 to 16%. We'll see that accelerate in 26. So we feel very good about the new products that we're bringing to market. When you look at what we do in the payment space, it's a very complex process. a network or ecosystem that we participate in. There's a lot of moving parts from the networks themselves, dealing with them, the backend processors, the banks that are the bank sponsors. There's just a lot of components, moving components that all have to be aligned, including regulators by country. And so sometimes there's a little bit of puts, starts and stops, as you're rolling out this product, as each of them are making their own determination as to how it's going to work within their institution or regulatory framework. So we've kind of worked our way through that. We feel some good momentum building, and we feel like we're in a pretty good spot for our vitality index to continue to accelerate in 26 and ultimately 27. So overall, really good progress in the back half of the year on our product set.

Helpful. Thanks. And then on the merchant side, I know you called out the expectation for 2026 e-commerce revenue growth in the mid-teens and then SMB to return to growth. But I guess, could you maybe also break that out, how we should think about direct sales versus ISO, any growth rates we should think about those two, and maybe e-com as well, and then maybe help us with how we should think about the relative margin contributions of each?

Yeah, we can have Kirsten follow up with you. I don't think we've provided that historically on the direct sales versus ISO segmentation. But overall, we feel very good about SMB returning to positive growth in 26. It'll be kind of in line with the overall segment guidance that we've given. And I think we're already seeing a positive coming into Q1. So we've moved in the right direction early here in Q1.

Okay. Thank you both.

Thank you. As a reminder, that's star one to be placed in the question queue. Our next question is coming from Timothy Chiodo from UBS. Your line is now live.

Great. Thanks a lot. Slide eight had some really good data around the revenue contribution in year from the sales hires. So the number was $257 million for 2025. I'm assuming that the gross margin on that is relatively high, given generally the direct margins are higher on a gross margin basis. So the question kind of comes to, If you could give us a rough sense, even if it's not the exact numbers, but rough sense of how many productive kind of infield salespeople were contributing to that number earlier in the year, call it January, 2025. And then how many ended the year. So we can get a sense of just the, the average number of salespeople that produce that in-year contribution of 257 million in revenue. Thanks. And then I have a follow-up on agentic commerce.

I don't have the number of active enterprise salespeople in front of me. Maybe, John, you've got it there. But there hasn't been a tremendous amount of movement in the number of salespeople throughout the year on the enterprise sales team. So it's been relatively consistent through 2025.

I was going to say the same thing, Bruce. The number at the end of 2025 is very similar to the number at the end of 2024.

Great. And are you able to share roughly what that number was, just as a reminder?

About 132.

That's just our enterprise sales team. Right. Yeah, exactly. The ones associated with the 257. Yes. Yep. All right. Perfect. Thank you so much. And then the agentic commerce topic, clearly topical, and you brought up a few points around some readiness that you're kind of working on slide 14 specifically. And in your prepared remarks, you talked about getting ready to support ACP, MCP, UCP, the various Visa MasterCard initiatives as well. I was hoping you could just take a moment to bring to life for Paysafe and for merchant acquirers in general, when you say that you're preparing to accept payments in that environment, what does that mean? What do you have to do on the ground to make sure that you can receive that information through that channel, process the payment? What are some of the additional complexities to consider relative to a traditional e-commerce transaction? Is this something that you think all merchant acquirers will be doing, or will this be a more select group because of some of this effort that's required that you're taking? Would love to, if you could just answer that from both an industry perspective and a Paysafe perspective.

Yeah, sure. Look, I think this creates an opportunity. I would imagine that most payment organizations get involved with these new standards as we're moving forward. It is extremely complex. So when you think about this new kind of emerging commerce, it's really about elevating the experience for consumers, and through that creates tremendous amount of complexity. So it creates personalization, which is options and different sets of data sets that have to be exchanged, interrogated, and determined what to do with those. You have coordination between all kinds of embedded software, not just the schemes, but also with the information you're sharing with sponsored banks, with the information you're sharing with additional software providers and consumers themselves. So the biggest things that you hear a lot of people talk about right now is really around liability management and how do we deal with the liability management of agenda commerce. Those things still have a long way to go before they're worked out and the governance rules. And so every organization that's dealing with this has to deal with setting up the right governance framework from a board level, from an operating level. So this is not an easy product that is just going to roll out quickly. This is going to take time to roll out. And, you know, I think this is a great opportunity for us to accelerate into new verticals and create great experiences around the experience economy. But I think this is something that everyone's going to find a way to participate in some form or fashion within our industry. So I wouldn't say that this is going to be a one or two player winner take all type of thing. This is going to be something that the industry as a whole participates in.

Thank you.

Thank you. Next question is coming from Jamie Friedman from Susquehanna International Group. Your line is now live.

Hi. Good morning. Good finish to the year. Just to step back, though, about the sales strategy, Bruce, without getting into the details of the commission per head or margin characteristics, could you just share with us what you see as the, you know, strengths and challenges between a direct and ISO strategy?

Sure. I think – and good morning, Jamie, and thank you for the question. So between the ISO and direct, you know, one, obviously the direct is a much higher margin profile, and that's why we've put so much energy behind that side of the sales channel. So we really are focusing on building the infrastructure that drives scaled sales. So we feel like we've got now the management team in place for that, We feel we have the product in place. As I mentioned, we have a variety of products that we sell in the SMB space, but our partnership with Fiserv has really been working in the back half of the year. We've had a lot of success selling Clover, and we feel like that is a great model for us in the SMB space, not only because it provides the merchant aquarium, but the value-added services that SMBs need to be successful, we provide that in a great form factor through Clover. So not everybody's going to want that. So we have optionality. We have other products that we use for people that aren't looking for such a robust solution. But I would argue that Clover is probably the best solution in market in the U.S. for SMB today. When you look at the ISO channel, it's a little bit different, right? So it's us trying to help our partners be successful, making sure that they're trained on the products that we have, making sure they're creating good second-line support for them, and helping them find ways to grow their customer base. And that's really what we've been focused on with the last year of trying to figure out how do we continue to reframe that ISO marketplace. I think the last thing I would just say on the SMB space is you've probably seen a lot of energy around the agent space. We've rolled out a new agent program, which we're very excited about. We like the agent program quite a bit. We can see tremendous amount of growth coming from the agent side of the business as well. And that's kind of a hybrid, Jamie, between the margin profile of the ISO and the margin profile of the direct business. So this is, again, where think of it, Jamie, in kind of creating a mini franchise program for independent sales agents. and providing the support that they need to go out and be successful, the training they need. And that's really what we're focused on overall within the SMB space.

Okay. That's really helpful context. And then let's see. I could ask you about the wallet, but I think I'll go more general. You referenced the success in cross-sales between the products and services on the platform. Could you elaborate on that and what a good account looks like? Is there any metric you may have shared in the past about how many products each is taking or what you target for the cross-sale opportunity? Thank you.

Yeah, Jamie. Look, I think this is a point of pride for us. We've really seen tremendous growth here on the cross-sale. If If you recall going back a few years in 22, 23, we had virtually no cross-sell. This was a theory that we had that we would be able to cross-sell to our existing customer base, especially in the video gaming and gambling space. We felt that those larger clients of ours had the opportunity to take more than one product. And so we really have focused on that. And so to see 40% of Q4 sales have cross-sell as part of that is really a remarkable task from really zero just a few years before. So overall, when we look at it, it's really about focusing in on those enterprise customers, getting the digital wallet customers to do acquiring with us, and the other way around. I think the big focus now for us is really through our product organization, bringing more products to market, and giving us more products to go back and cross-sell into those existing customers. And that's really what we're focused on as we move into 26, 27, 28, is really continuing to accelerate that vitality index with new products and services.

Thank you, Bruce. I'll drop back at you.

Thank you, Jamie.

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Bruce for any further closing comments.

Yeah, thank you. Look, just a couple of comments before we head out. We entered 26. We're in a very good position. We feel good about the foundation we've built. We're operating with more discipline, clear priorities, stronger execution across the business. Our outlook is really rooted in what we control, continuing to innovate, deepening relationships with our customers, allocating capital in the way that drives sustainable value. And that's really what we're focused on. I also want to take a moment to welcome our new board members. I think everybody's probably seen we've added four new board members in the last month. So we're very excited about Rupert and Rupert Keeley, Pete Thompson, Karen Timponi, and Edward joining the team. So very excited about that. And I also just want to quickly thank our departing board members from CVC and congratulate them on their career journeys. And Peter Rutland and Matthew Bryant, just congratulations. We are so proud of them, what they've been able to do and wish them all the success in their new roles as they're moving forward. Just delighted for each of them. So it has been a lot of change for us here in the last month, but we're incredibly excited about it as we move forward. And then finally, I just want to thank our employees for their continued commitment and hard work. You know, as we start 26, we're really starting from a position of strength for the for really what feels like the first time we've had really a clean year to start the year and feel very good about that. We're confident in our ability to build momentum that we've created off of Q4. And that's about it. Thank you for joining us today and look forward to speaking with everyone next quarter.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.