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Paysafe (PSFE)
NYSE:PSFE
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Paysafe
(NYSE:PSFE)
55Neutral
Positive Factors
Business Strategy
The disposal reduces PSFE's exposure to higher-risk verticals and helps PSFE focus on its core growth assets.
Leverage Reduction
Strong FCF generation is enabling the company to quickly reduce net debt, which is expected to create equity value over time.
Share Repurchase Program
PSFE authorized a $70mm increase to its share repurchase program which brings its total available authorization to $77mm (~5% of market cap).
Negative Factors
Execution Risk
The stock is rated as Underperform due to execution risk concerns.
Financial Performance
Paysafe shares were down approximately 17% after preliminary Q4 results and initial FY25 guidance which was below expectations.
Leverage Profile
Some of PSFE's depressed valuation is due to the company's elevated leverage profile.
Paysafe (PSFE) vs. S&P 500 (SPY)
Market Cap
$1.04B
Dividend YieldN/A
Average Volume (3M)464.19K
Price to Earnings (P/E)49.1
Beta (1Y)1.90
Revenue Growth6.48%
EPS GrowthN/A
CountryUS
Employees3,200
SectorTechnology
Sector Strength51
IndustrySoftware
Share Statistics
EPS (TTM)0.35
Shares Outstanding59,888,306
10 Day Avg. Volume425,285
30 Day Avg. Volume464,189
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.61
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$18.17Price Target Upside4.85% Upside
Rating ConsensusHold
Number of Analyst Covering6
Paysafe Business Overview & Revenue Model
Company DescriptionPaysafe Limited is an online payments company. It operates under several brands, including Paysafe, Skrill, paysafecard, Paysafecash, and Paysafe. Headquartered in the U.K., the company was originally listed on the London Stock Exchange. Following its acquisition by a consortium of U.S. companies, it has been listed on the NYSE since March 2021. Paysafe specializes in payment processing, digital wallets, and online cash solutions.
How the Company Makes MoneyPaysafe generates revenue primarily through transaction fees charged to its business clients for payment processing services. This includes fees for facilitating credit card payments, digital wallet transactions, and alternative payment methods. The company's digital wallets, such as Skrill and Neteller, provide additional revenue streams through currency conversion fees, withdrawal fees, and other service charges. Paysafe also earns money from its online cash solutions, like Paysafecard, which enable consumers to make online purchases without needing a bank account or credit card. Significant partnerships with merchants, financial institutions, and technology providers enhance its service offerings and expand its market reach, contributing to its overall earnings.
Paysafe Financial Statement Overview
Summary
Paysafe has shown steady revenue growth and improved profitability. However, its high leverage poses a financial risk, and the growth in free cash flow is limited. Managing debt levels is crucial for long-term stability.Income Statement
Paysafe's revenue has shown a steady growth trajectory, increasing from $1.42 billion in 2020 to $1.70 billion in 2024. The gross profit margin remains strong at 58%, while the net profit margin improved to 1.3% in 2024 from negative values in previous years. Despite this, EBIT and EBITDA margins reveal moderate profitability. The revenue growth rate between 2023 and 2024 was approximately 6.5%, reflecting stable growth.65
Positive
Balance Sheet
Paysafe's balance sheet reveals a high debt-to-equity ratio of 2.74, suggesting significant leverage, which poses financial risks. The equity ratio is relatively low at 18.3%, indicating a higher dependence on liabilities. However, the return on equity (ROE) improved to 2.52% in 2024, showing a positive yet modest return on shareholders' capital.55
Neutral
Cash Flow
The cash flow statement indicates a stable operating cash flow, with a free cash flow growth rate of 1.1% from 2023 to 2024. The operating cash flow to net income ratio is healthy, suggesting efficient cash generation relative to net income. However, the free cash flow to net income ratio is lower, reflecting reduced cash available after capital expenditures.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.70B | 1.60B | 1.50B | 1.49B | 1.43B | Gross Profit |
| 989.07M | 673.78M | 882.11M | 887.24M | 891.67M | EBIT |
| 133.35M | 166.36M | 164.56M | 320.42M | 150.26M | EBITDA |
| 429.58M | 435.88M | -1.52B | 241.28M | 257.60M | Net Income Common Stockholders |
| 22.16M | -20.25M | -1.86B | -110.33M | -126.71M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 216.68M | 202.32M | 260.22M | 313.44M | 387.62M | Total Assets |
| 4.81B | 5.23B | 5.96B | 7.27B | 7.41B | Total Debt |
| 2.41B | 2.53B | 2.68B | 2.80B | 3.31B | Net Debt |
| 2.19B | 2.32B | 2.42B | 2.48B | 2.92B | Total Liabilities |
| 3.93B | 4.34B | 5.10B | 4.56B | 5.48B | Stockholders Equity |
| 879.26M | 883.31M | 859.64M | 2.57B | 1.92B |
| Cash Flow | Free Cash Flow | |||
| 133.31M | 131.85M | 774.03M | 76.72M | 322.19M | Operating Cash Flow |
| 253.80M | 234.02M | 924.08M | 224.47M | 409.11M | Investing Cash Flow |
| -108.38M | -135.24M | -575.59M | -411.27M | -51.22M | Financing Cash Flow |
| -280.80M | -771.03M | -80.54M | 483.28M | -75.47M |
Paysafe Technical Analysis
Neutral
17.33
Price Trends
18.35
Negative
18.88
Negative
19.67
Negative
Market Momentum
-0.60
Negative
49.89
Neutral
94.77
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PSFE, the sentiment is Neutral. The current price of 17.33 is above the 20-day moving average (MA) of 16.97, below the 50-day MA of 18.35, and below the 200-day MA of 19.67, indicating a neutral trend. The MACD of -0.60 indicates Negative momentum. The RSI at 49.89 is Neutral, neither overbought nor oversold. The STOCH value of 94.77 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PSFE.
Paysafe Risk Analysis
Paysafe disclosed 49 risk factors in its most recent earnings report. Paysafe reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Paysafe Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $120.16B | 30.81 | 83.72% | 1.94% | 7.09% | 11.51% | |
74 Outperform | $69.43B | 17.56 | 20.00% | ― | 7.10% | 4.45% | |
73 Outperform | $37.86B | 13.43 | 14.50% | ― | 10.06% | 38060.98% | |
69 Neutral | $3.60B | 3.88 | 129.04% | 8.83% | -3.38% | 63.33% | |
58 Neutral | $21.97B | 10.49 | -18.75% | 2.40% | 4.80% | -25.17% | |
55 Neutral | $1.04B | 49.15 | 2.51% | ― | 6.48% | ― | |
51 Neutral | $38.85B | 51.73 | 4.65% | 1.96% | -17.38% | ― |
* Technology Sector Average
Performance Comparison
PSFE
Paysafe
17.33
2.60
17.65%
ADP
Automatic Data Processing
295.32
56.26
23.53%
FIS
Fidelity National Info
73.35
3.59
5.15%
WU
Western Union
10.64
-1.94
-15.42%
PYPL
PayPal Holdings
70.19
4.19
6.35%
XYZ
Block
61.11
-21.51
-26.03%
Paysafe Earnings Call Summary
Earnings Call Date: Mar 4, 2025 | % Change Since: -9.83% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Neutral
Paysafe demonstrated solid growth, especially in organic revenue and shareholder returns. There were strategic investments and successful debt reduction efforts. However, challenges like EBITDA decline and increased credit losses dampened the overall financial performance. The company is poised for improvement in 2025 with portfolio rationalization completed.Highlights
Organic Revenue Growth
Paysafe delivered 7% organic revenue growth in 2024, supported by all key regions and product lines.
Shareholder Returns
The company returned more than $40 million to shareholders through its first-ever share repurchase program.
Debt Reduction
Net leverage reduced to 4.7x at year-end 2024 from 5x at the end of 2023.
Consumer Acquisition and Product Growth
Classic wallet users surpassed 1 million for the first time in 3 years. Revenue from online distribution of eCash Solutions nearly doubled compared to last year.
Positive GAAP Net Income
Paysafe achieved a positive GAAP net income of $22 million for the full year of 2024 compared to a net loss of $20 million last year.
Lowlights
Adjusted EBITDA Decline
Adjusted EBITDA was down 1% for the full year, largely reflecting accelerated merchant exits and increased credit losses related to the direct marketing business.
Credit Losses Impact
The direct marketing business and associated credit losses significantly impacted Merchant Solutions, particularly on adjusted EBITDA, which declined 43% in Q4.
Increased Investment Expenses
Incremental investments totaling $29 million were made as part of 2024 objectives, impacting adjusted EBITDA.
Company Guidance
During the Paysafe Fourth Quarter 2024 Earnings Conference Call, the company provided several key metrics and guidance for 2025. Paysafe achieved 7% organic revenue growth in 2024, with full-year revenue reaching $1.7 billion, marking a 6% increase from the previous year. The company reported an adjusted EBITDA of $452 million for 2024, albeit down 1% from the previous year, largely due to the divestiture of its direct marketing business and an increase in credit losses. Net leverage was reduced to 4.7x by year-end 2024, and Paysafe launched its first share repurchase program, returning over $40 million to shareholders. The company anticipates organic revenue growth of 6.5% to 8% in 2025, excluding divested business impacts, with adjusted EBITDA expected to be between $463 million and $478 million, reflecting a 150 to 200 basis point margin increase. Paysafe also achieved a positive GAAP net income of $22 million for 2024, a significant turnaround from a $20 million net loss in the prior year. Looking forward, Paysafe plans to focus on product initiatives, with a goal to expand its sales team productivity and achieve further operational efficiencies.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.