Paysafe posts strong numbers as it continues pivot away from gambling

Payment solutions provider Paysafe reported an 11% year-on-year rise in first-half revenue growth to $538.7m on Tuesday, which was down from 118% growth at the interim last year.

The FTSE 250 company said organic constant currency year-on-year revenue growth was 12% for the six months to 30 June, compared to 20% a year ago, while adjusted EBITDA improved to $169.2m from $144.2m.

Its adjusted EBITDA margin rose to 31.4% from 29.6%.

Paysafe said its statutory operating profit was $99.6m for the period, up from $89.7m, with an adjusted profit after tax of $124m compared to $101.4m, and a statutory profit after tax improving to $73.7m from $64.5m.

Adjusted fully diluted earnings per share were 25 cents, rising from 20 cents a year ago, with statutory fully diluted earnings per share of 15 cents an improvement on 13 cents in 2016.

The board said adjusted cash conversion before payments working capital was 77%, down slightly from 78%, while its adjusted cash conversion after payments working capital improved significantly to 98% from 74%.

Net debt reduced during the period to $259.9m from $279.8m on 31 December, with the company’s net debt-to-LTM-adjusted EBITDA ratio standing at 0.8x on 30 June, compared to 0.9x at the start of the period.

“After exceptional trading in 2016, Paysafe Group has returned to a more sustainable level of low-double-digit revenue growth in the first half of 2017,” said Paysafe chairman Dennis Jones .

“This reflects our increasingly diversified set of businesses as the management team continues to build a stable and robust global payments platform.

“To that end, we were pleased to announce the acquisition of US-based MCPS in July, which strengthens our processing business, increases Paysafe Group's scale in North American acquiring and helps us to continue re-balancing our portfolio away from online gambling.”

Among the company’s operational highlights, the board did confirm that on 21 July Paysafe acquired Merchants' Choice Payment Solutions for $470m in an all-cash deal.

The board said headcount increased by 9% to 2,299 during the period, which was driven by its platform development operation in Hyderabad, India and its operations, compliance and risk operation in Sofia, Bulgaria.

It said the prepaid division launched ‘paysafecard direct’, a QR code-based e-commerce platform enabling consumers to complete online purchases with a cash payment.

The company also joined forces with Google to be one of the first payment service providers to launch in-app Android Pay capabilities to Paysafe merchants in Canada.

Spain's state-owned postal company Correos also chose Paysafe during the period as a recommended payment provider for businesses using Comandia, its e-commerce platform.

Since the period ended, on 1 August Paysafe Group migrated its tax residence from the Isle of Man to the UK.