\nPaysafe Limited (\u201cPaysafe\u201d or the \u201cCompany\u201d) (NYSE: PSFE), a leading payments platform, announced a definitive agreement to sell its direct marketing payment processing business line (\u201cthe disposed business\u201d). Paysafe also announced preliminary select results for the fourth quarter and full year 2024, along with supplemental financial information for comparability purposes, giving effect to the disposed business.<\/p>\n
\nBruce Lowthers, CEO of Paysafe commented: \u201cThe divestiture of our direct marketing payment processing business reflects our commitment to portfolio and resource optimization to focus on our largest growth opportunities as a company. This accelerates our transformation by exiting a non-strategic business line, bringing a close to the repositioning of our Merchant Solutions segment. This represents a significant milestone that enhances long-term shareholder value by positioning Paysafe to deliver resilient growth and sharpen our focus on Paysafe’s ideal customers and verticals in the experience economy.\u201d<\/p>\n
Agreement to sell direct marketing payment processing business<\/b><\/p>\n
\nPaysafe has entered into a definitive agreement to sell substantially all assets related to its direct marketing payment processing business line (Paysafe Direct LLC) to KORT Payments, a specialized omnichannel payments provider, led by Joel Leonoff, founder and former CEO of Paysafe. The business primarily consists of direct marketing and other card-not-present volume in both complex and traditional industry verticals.<\/p>\n
\nThe transaction includes reseller and merchant contracts, as well as dedicated technology and employees related to the business. The consideration for this transaction largely consists of annual earnout payments over the next five years. The transaction is expected to close in 30 days subject to finalizing certain transition services-related items.<\/p>\n
Additional background<\/b><\/p>\n
\nDuring the Company\u2019s prior two earnings calls, management discussed that strategically it was in the best interest of Paysafe\u2019s shareholders to reduce the Company\u2019s exposure to direct marketing, a business line within the SMB portfolio of its Merchant Solutions segment. In the fourth quarter, the Company continued reviewing alternatives for the business line and exiting higher risk merchants and determined that an accelerated exit would best support long-term shareholder value and minimize disruption to the impacted employees and remaining customers.<\/p>\n
\nJohn Crawford, CFO of Paysafe commented: \u201cThis is a meaningful step forward to improve our financial performance by eliminating a declining, non-core revenue stream while significantly reducing Paysafe\u2019s exposure to higher risk verticals. It\u2019s important to highlight that the core businesses performed in line with our expectations for 2024, including 10% revenue growth from our Merchant Solutions segment, excluding the disposed business, and 4% revenue growth from our Digital Wallets segment. We look forward to providing more detail on our 2024 performance and 2025 outlook during our earnings call next month.\u201d<\/p>\n
Preliminary select financial results<\/b><\/p>\n
\nTo supplement the preliminary financial results, which were impacted by the accelerated merchant exits and associated credit losses during the fourth quarter, the Company has provided additional historical information for comparability purposes giving effect to the disposed business.<\/p>\n
Full year 2024<\/span><\/p>\n \nSubject to the finalization of financial reporting processes, including the finalization of our review of income taxes, net income for 2024 is expected to be between $19 million and $25 million, compared to a net loss of $20 million in 2023.<\/p>\n \nFull year revenue for 2024 is estimated to be $1,705 million, an increase of 6% compared to 2023, or 7% when excluding the disposed business.<\/p>\n \nAdjusted EBITDA for the full year 2024 is estimated to be $452 million, a decrease of 2%, compared to 2023, or an increase of 2%, when excluding the disposed business. This includes total credit losses of $47 million in 2024, an increase of $26 million compared to 2023. As previously discussed on the Company\u2019s earnings calls, Paysafe made significant investments in 2024 totaling approximately $29 million to expand its sales capabilities and optimize the portfolio.<\/p>\n \nThe combined year-over-year headwinds from movements in foreign exchange rates and interest on consumer deposits to full year revenue and adjusted EBITDA were approximately $6 million and $7 million, respectively.<\/p>\n Fourth quarter 2024<\/span><\/p>\n \nSubject to the finalization of financial reporting processes, including the finalization of income taxes, net income for the fourth quarter of 2024 is expected to be between $31 million and $37 million, compared to a net loss of $12 million in the fourth quarter of 2023.<\/p>\n \nRevenue for the fourth quarter of 2024 is estimated to be $420 million, an increase of 1% compared to the fourth quarter of 2023, or 4% when excluding the disposed business.<\/p>\n \nAdjusted EBITDA for the fourth quarter of 2024 is estimated to be $103 million, a decrease of 16%, or an increase of 1% when excluding the disposed business. This includes total credit losses of $23 million in the fourth quarter of 2024, an increase of $16 million compared to the fourth quarter of 2023.<\/p>\n \nThe combined year-over-year headwinds from movements in foreign exchange rates and interest on consumer deposits to fourth quarter revenue and adjusted EBITDA were approximately $5 million and $4 million, respectively.<\/p>\n Summary of estimated segment results<\/b><\/p>\n