Paysafe Q1 Earnings Call Highlights

Key Points

• Paysafe posted a solid Q1, with revenue up 10% to $442.7 million and adjusted EPS up 21%, while adjusted free cash flow rose to $67 million. Management reaffirmed its full-year 2026 guidance for 5% to 8% revenue and adjusted EBITDA growth, with double-digit EPS growth expected.
• Growth was led by digital wallets, iGaming and Latin America, where active users hit a record 3.3 million. Digital wallet volume climbed 19% and iGaming revenue grew 20%, with the company expecting strong double-digit Latin America growth through 2026.
• Debt reduction remains the top priority, as Paysafe cut net leverage to 5.2x and lowered total debt to just under $2.5 billion. Management said margin improvement should come later in the year, but near-term profitability will be pressured by higher marketing, IT and credit loss costs.

Paysafe NYSE: PSFE reported a stronger start to 2026, with first-quarter revenue rising 10% and adjusted earnings per share increasing 21%, while management reaffirmed its full-year outlook and emphasized debt reduction as a key priority.

On the company’s first-quarter earnings call, Chief Executive Officer Bruce Lowthers said Paysafe delivered “strong revenue growth of 10%, adjusted EBITDA growth of 4%, and 21% growth in adjusted EPS.” The payments company generated $67 million in unlevered free cash flow during the quarter, up 17% from the prior year, and reduced its net leverage ratio to 5.2x.

Lowthers said the quarter benefited from sports betting activity during the NFL playoffs, outperformance in the consumer business, favorable foreign exchange and another licensing agreement to monetize company data. Active consumer users reached 7.9 million, up 9% year over year.

Revenue Growth Led by Digital Wallets, iGaming and Latin America

Chief Financial Officer John Crawford said first-quarter revenue was $442.7 million, up 10% on a reported basis. Organic growth was 8%, or approximately 6% after normalizing for a $7 million contribution from a licensing data deal. Across Paysafe’s top 20 countries, revenue grew 13% in the quarter.

Adjusted EBITDA rose 4% to $99.2 million, while adjusted EBITDA margin declined 130 basis points. Crawford attributed the margin pressure to a $6 million increase in marketing and IT investment and a $10 million increase in credit loss expense, partly offset by the benefit of the data deal.

In digital wallets, volume rose 19% to $7.1 billion, or 9% on a constant-currency basis. Revenue in the segment increased 15% to $216.3 million, with organic growth of 7%. Three-month active users grew 9%, led by Latin America. Adjusted EBITDA for digital wallets rose 15% to $94.9 million, and the segment’s adjusted EBITDA margin was 43.9%, down 10 basis points despite higher consumer marketing spending.

Lowthers highlighted Latin America as a major growth driver, saying Paysafe’s local and alternative payment offerings are benefiting as the region shifts from a cash-oriented culture toward digital wallets and account-to-account payments. Active users in Latin America reached 3.3 million in the first quarter, the company’s highest level to date in the region.

Lowthers said Paysafe expects “strong double-digit growth throughout 2026” in Latin America as it continues to build momentum with product innovation and go-to-market efforts.

Merchant Segment Shows Growth, But Mix Weighs on Margins

In merchant solutions, volume increased 9% to $37.2 billion. Organic revenue growth was 9%, or about 5% excluding the data deal. Crawford said the segment’s underlying gross margin declined because of business mix, reflecting stronger growth from the lower-margin ISO channel.

Adjusted EBITDA in the merchant segment was $28.1 million, down from $29.4 million in the prior-year period. During the question-and-answer portion of the call, Crawford said merchant margins are expected to improve gradually later in the year, with the second quarter likely to look similar to the first quarter.

“We expect to be in the upper mid-teens, potentially higher than that, by the end of the year,” Crawford said, adding that better performance in the direct channel during the second half should support margin improvement.

The company said e-commerce revenue grew 17% in the quarter, led by iGaming growth of 28%. The small and medium-sized business segment grew 2%, reflecting modest improvement in attrition. Lowthers said attrition was better than expected, though the company has not yet modeled that improvement for the full year.

iGaming, Crypto Pilots and AI Commerce Highlight Strategic Focus

Lowthers said global iGaming revenue grew 20% year over year, with strength across both company segments and core regions. He cited robust activity during the NFL playoffs, Super Bowl and March Madness.

Paysafe also announced a partnership with MoonPay to allow players to deposit stablecoins and cryptocurrencies with iGaming and daily fantasy sports brands in the U.S. Lowthers said five operator pilots are underway, and described crypto payment capability as another local payment method that responds to consumer demand.

“For us, we look at it as really just another LPM that we’re providing, that consumers want,” Lowthers said.

The company also discussed its efforts in AI-enabled commerce. Lowthers said Paysafe partnered with Norwegian Air to demonstrate end-to-end “agentic payment” capabilities aligned with emerging protocols from Visa and Mastercard. He said one Paysafe integration can enable merchants to offer AI-powered commerce across ChatGPT, Claude and Gemini, as well as their own portals and apps.

Lowthers also pointed to AI as a factor in Paysafe’s marketing transformation, including automated segmentation, smarter targeting and more personalized customer experiences. In Europe, he said campaigns in Spain and France have helped drive momentum for PaysafeWallet, which recorded its strongest month to date in March.

Debt Reduction Remains a Priority

Paysafe ended the quarter with total debt just under $2.5 billion, down $122 million from the fourth quarter after repaying more than $100 million and receiving a modest benefit from foreign exchange. Net leverage declined to 5.2x from 5.5x at the end of the prior quarter.

Crawford said Paysafe repurchased 588,000 shares in January, related to a December order, but noted that deleveraging is the company’s priority this year.

“While we continue to think our shares are undervalued, reducing leverage is our priority this year, supported by our expected growth in adjusted EBITDA and strong cash flow generation,” Crawford said.

Lowthers said net leverage should be a key indicator for shareholders over the next 24 months because of its potential impact on valuation.

Full-Year Guidance Reaffirmed

Paysafe reaffirmed its 2026 outlook for revenue growth, adjusted EBITDA and adjusted earnings per share. Crawford said the company continues to expect revenue and adjusted EBITDA to grow in the range of 5% to 8% for the full year, while adjusted EPS is expected to grow by double digits.

For the second quarter, the company expects revenue growth to be moderately below the full-year guidance range, at approximately 4%, reflecting the first quarter’s licensing deal, foreign exchange tailwind and seasonally high sports betting volumes. Crawford said first-half revenue growth is expected to be about 7%.

Management also expects operating expenses to be weighted toward the first half of the year, including a $14 million year-over-year increase related to marketing and IT investments. Following the first-quarter credit loss increase, Paysafe expects first-half adjusted EBITDA to be roughly flat year over year, with stronger performance anticipated in the second half.

Lowthers closed the call by saying the company’s priorities for 2026 are execution, product momentum and debt reduction. He also noted recent board changes, including the addition of Ignacio Caride and the transition of Eli Nagler to a board observer role, leaving Paysafe with nine independent directors out of 12 total board members.

About Paysafe NYSE: PSFE

Paysafe is a global payments provider that delivers a comprehensive suite of online and offline payment solutions. The company operates a diverse portfolio of products, including digital wallets under the Skrill and Neteller brands, prepaid voucher services through paysafecard, and integrated payment processing solutions for merchants. Paysafe's platform is designed to serve a wide range of industries, from e-commerce and digital goods to gaming, financial services, and regulated verticals, offering tailored risk and compliance management alongside its core transaction capabilities.

Founded through a series of mergers and strategic acquisitions, Paysafe traces its origins to the launch of paysafecard in 2000 and the establishment of Optimal Payments in 1996.

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