Paysafe Disappoints Wall Street With Its Third-Quarter Results – Digital Transactions

Disappointing third-quarter results sent Paysafe Ltd.’s shares down in early trading Thursday, as the processor and digital-wallet company sought to reassure analysts and the market. One early action at the company is the appointment of a chief commercial officer, Rob Schonfeld, who arrived in that role Nov. 2 with experience including work at Activision Blizzard and the Walt Disney Co.

But the company’s performance for the September quarter included misses in expected revenue, along with a drop in management’s estimate of expected full-year earnings per share. “We have a clear view of where we need to improve. We are strengthening our commercial execution,” said chief executive Bruce Lowthers during a conference call with equity analysts.

New products accounted for 20% of third-quarter revenue, Lowthers noted, pointing to strong results for the company’s digital wallets, Paysafe Wallet and PagoEffectivo, a product Paysafe launched last year in Peru. “Margins are really good with those businesses. We just need more of it,” he said.

Another area of concern is the company’s cryptocurrency business, Lowthers noted. “Crypto transactions are down meaningfully year-over-year. That’s starting to impact us,” he said, noting that “volumes started sloping down in August and September.” Paysafe’s crypto operations, including conversions between crypto and fiat money, chiefly focus on its online gaming business.

This business may not improve any time soon. “This quarter we’re seeing crypto trends as negative, the reverse of where we saw them in August,” chief financial officer John Crawford said during the call.

Another major trend, AI, “will drive change,” Lowthers said, adding, “we’ll just have to adapt to it.” In the meantime, he said, Paysafe is working to bring more products to market, though he did not elaborate.

For the quarter, Paysafe reported a 3% rise year-over-year in processing volume, with $42.4 billion on the books. Revenue was up 1%, to $439.6 million, while earnings per share sank 37%, to 44 cents, in one of the results that shook the market.

Merchant Solutions, the larger of the company’s two divisions, posted a 3% increase in volume year-over-year, to $36 billion, while revenue climbed 2%, to $236.7 million. The other unit, Digital Wallets, recorded flat volume, at $6.7 billion, along with a 1% rise in revenue, to $208.1 million.

Adjusted net income for the company as a whole fell 41%, to $23.8 million