PSFE-WT — Paysafe Limited

Summary of Paysafe Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $442.7 million, up 10% year-over-year; organic growth of 8%.
• Adjusted EBITDA: $99.2 million, a 4% increase, with a margin decline of 130 basis points.
• Adjusted EPS: $0.41, a 21% increase.
• Unlevered Free Cash Flow: $67 million, up 17% year-over-year, with a conversion rate of 67% of adjusted EBITDA.
• Net Leverage Ratio: Improved to 5.2x from 5.5x in Q4 2025.
• Active Users: Reached 7.9 million, a 9% increase year-over-year.

2. Strategic Updates and Business Highlights

• Consumer Growth: Strong performance in Latin America, with a focus on digital wallets and e-commerce, particularly in gaming.
• Digital Wallets: Volume increased 19% to $7.1 billion; revenue rose 15% to $216.3 million, driven by strong growth in Latin America.
• Merchant Solutions: E-commerce revenue grew 17%, with iGaming up 28%. The SMB segment saw modest growth of 2%.
• AI Initiatives: Increased investment in data infrastructure to support AI-driven commerce and enhance customer experience.
• Partnerships: Collaborations with Norwegian Air for AI-powered payment solutions and MoonPay for cryptocurrency transactions.

3. Forward Guidance and Outlook

• 2026 Guidance: Reaffirmed revenue growth and adjusted EBITDA expectations of 5% to 8%, with double-digit growth in adjusted EPS.
• Q2 Expectations: Anticipated growth to be moderately below full-year guidance at approximately 4%, with a stronger Q4 expected.
• Operating Expenses: Expected to increase due to marketing and IT investments, particularly in the first half of the year.

4. Bad News, Challenges, or Points of Concern

• Margin Pressure: Adjusted EBITDA margin declined due to increased marketing and IT expenses, along with a rise in credit loss expenses.
• Credit Losses: Experienced a $10 million increase in credit losses in Q1, attributed to transitioning to a new risk management platform.
• SMB Growth: Limited expectations for significant improvement in the SMB segment, with only modest growth anticipated throughout the year.

5. Notable Q&A Insights

• Merchant Solutions Margins: Expected to improve slowly through the year, with Q2 likely similar to Q1, but potential for better margins in Q3 and Q4.
• iGaming Seasonality: Q1 and Q4 are historically strong quarters, with Q2 expected to be muted.
• World Cup Strategy: Conservative forecasting for customer acquisition during the World Cup, focusing on marketing campaigns in Latin America and North America.
• Clover Partnership: Continued strength in Clover offerings, with double-digit growth in merchant acquisitions.
• Data Licensing: The recent licensing deal was anticipated in full-year guidance, with expectations for ongoing sales opportunities.

Overall, Paysafe reported a strong start to 2026, with solid revenue and cash flow growth, but faces challenges with margin pressures and credit losses. The company remains optimistic about its strategic initiatives and market positioning.