Paysafe NYSE: PSFE reported second-quarter revenue growth and reaffirmed its full-year outlook as the payments company emphasized debt reduction following a refinancing and a preliminary settlement of legacy litigation tied to its SPAC-era history.
Chief Executive Officer Bruce Lowthers said the second quarter and first half represented an “important inflection point” for the company. Paysafe reported first-half revenue growth of 7%, while adjusted EBITDA was essentially flat year over year as it increased spending on marketing and information technology to support growth initiatives.
Lowthers said the company reached a settlement in principle in the Farzad litigation, involving claims from pre-SPAC shareholders. He said the resolution addressed a significant restructuring expense associated with Paysafe’s indemnification obligations. The company also refinanced a significant portion of its debt, extending maturities and increasing its revolving credit facility.
Second-Quarter Results
Revenue rose 4% on both a reported and organic basis to $447.4 million in the second quarter. Chief Financial Officer John Crawford said the quarter included $12.5 million from additional data-licensing deals, part of the company’s effort to commercialize its data assets. First-half reported revenue growth was 7%, while organic growth was 6%.
Adjusted EBITDA declined 2% to $102.8 million, and adjusted EBITDA margin fell to 23% from 24.5% a year earlier. Crawford said Paysafe increased marketing and IT investment by $7 million during the quarter and by $16 million in the first half.
The company generated $45 million in unlevered free cash flow during the quarter, equivalent to 44% conversion of adjusted EBITDA. On a last-12-month basis, unlevered free cash flow increased 10% from the prior year to $298 million, representing 69% conversion.
Adjusted net income was $23.1 million and adjusted earnings per share were $0.43, down 7%. Crawford attributed the decline to lower adjusted EBITDA and other income, as well as a modest increase in interest expense, which offset the benefit of a lower share count.
Segment Performance and Consumer Growth
Digital-wallet revenue rose 3% to $206.6 million, while organic growth was 1% after normalizing for currency movement and interest revenue. Segment volume was approximately flat year over year at $6.6 billion.
Three-month active users increased 8%, led by Latin America and the company’s PaysafeWallet offering in Europe. Paysafe reported 7.8 million three-month active users overall, marking its fifth consecutive quarter of growth. The company said it continues to see double-digit user growth in Latin America.
Digital-wallet adjusted EBITDA declined 9% to $74.9 million, with margin falling to 36.2%. Crawford cited higher consumer marketing investments, product mix and a roughly $4 million VAT accrual adjustment related to distributor commissions. Excluding that adjustment and an additional $3 million in marketing investment, he said segment margin would have been about 40%.
PaysafeWallet is now live in 19 European countries, including a recent launch in Poland. Lowthers said initial results from additional marketing spending in priority European markets have produced double-digit consumer-acquisition growth and active-user growth.
Merchant segment revenue increased 6% to $246.1 million on a 5% rise in volume to $37.3 billion. Results were driven by North American iGaming volumes and data-licensing deals, while the small-and-medium-sized-business business line was flat.
Merchant adjusted EBITDA increased 28% to $50.6 million, and margin rose 350 basis points to 20.6%. The segment benefited from favorable mix related to the licensing deal and the release of a previously recorded accrual. Excluding the approximately $6 million accrual release, Crawford said merchant margin would have been around 18%.
Debt Reduction Remains Central Focus
Total debt stood at $2.5 billion at the end of the quarter, down $106 million from the end of 2025. The reduction included $79 million of net repayments and a $34 million foreign-exchange-related reduction in total debt.
Paysafe’s net leverage ratio was 5.3 times at quarter-end, compared with 5.5 times at the end of 2025. Including the preliminary legal settlement and refinancing fees, management expects to end 2026 with net leverage between 5.1 times and 5.2 times.
The preliminary litigation settlement is expected to result in a $39 million cash payment in the second half. Crawford said the resolution removes a significant cash-flow and GAAP profit-and-loss burden, noting that the company had incurred nearly $19 million of last-12-month cash outflows and $57 million of restructuring expenses related to its indemnification agreement and legal costs.
The refinancing will increase interest expense. Crawford said the all-in increase would have been about $30 million without a lower-rate debt stub, with the company expecting roughly $25 million of incremental interest cost. He added that, on a cash basis next year, the added interest expense is largely offset by eliminating lawsuit-indemnification costs.
Lowthers said Paysafe’s midterm net-leverage target remains 3.5 times. He said the company intends to direct the substantial majority of free cash flow toward debt reduction while continuing investments in growth and product development.
Outlook and Product Initiatives
Paysafe reaffirmed its 2026 revenue and adjusted EBITDA guidance, while updating adjusted EPS guidance to reflect refinancing-related interest expense in the second half. Management expects the fourth quarter to be the company’s strongest period, supported by seasonal trends, sporting events, consumer marketing investments, recent client wins and product initiatives.
Crawford said the company expects $25 million to $30 million of lower operating expenses in the second half compared with the first half. The anticipated improvement reflects elevated credit losses in the first quarter, front-loaded marketing and IT investment, and additional operational efficiencies.
Management said June trends and its early July data supported its outlook, including higher iGaming growth in Merchant Solutions, continued strength in Latin America and double-digit growth in three-month active users during July.
Lowthers also said Paysafe expects its data business to become an ongoing revenue stream. The company believes the product could ultimately exceed a $50 million annual revenue run rate as it expands monetization of merchant and consumer data assets.
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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