UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of
(Commission File No.
(Exact name of registrant as specified in its charter)
Not Applicable
(Translation of registrant’s name into English)
(Address of Principal Executive Offices) (Zip Code)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ |
Form 40-F ☐ |
Information Contained in this Form 6-K Report
Financial Statements
This report contains Paysafe Limited’s (“the Company”) Unaudited Condensed Consolidated Financial Statements as of March 31, 2024, including Management’s Discussion and Analysis of Financial Condition and Results of Operations for the period presented therein.
Incorporation by Reference
This Report shall be deemed to be incorporated by reference into the registration statement of the Company on Form S-8 (File No. 333-270582) and Form F-3 (File No. 333-263910) and to be a part thereof from the date on which this Report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.
Exhibits
Exhibit |
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Description |
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101.INS |
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Inline XBRL Instance Document* |
101.SCH |
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Inline XBRL Taxonomy Extension Schema Document* |
104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document)* |
*Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Paysa |
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PAYSAFE LIMITED |
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By: |
/s/ Alexander Gersh |
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Name: |
Alexander Gersh |
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Title: |
Chief Financial Officer |
Date: May 14, 2024
TABLE OF CONTENTS
1. |
Condensed Consolidated Interim Financial Statements (Unaudited) – March 31, 2024 |
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F-1 |
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2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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1 |
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INDEX TO FINANCIAL STATEMENTS
Paysafe Limited
Condensed Consolidated Financial Statements (Unaudited) |
Page No.
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F-2 |
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F-3 |
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F-4 |
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F-5 |
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F-7 |
F-1
Paysafe Limited
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
(Unaudited)
(U.S. dollars in thousands, except per share data)
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For the three months ended March 31, |
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2024 |
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2023 |
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Revenue |
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$ |
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$ |
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Cost of services (excluding depreciation and amortization) |
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Selling, general and administrative |
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Depreciation and amortization |
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Impairment expense on goodwill and intangible assets |
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Restructuring and other costs |
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Loss on disposal of subsidiaries and other assets, net |
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Operating income |
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Other income, net |
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Interest expense, net |
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( |
) |
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( |
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Income before taxes |
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Income tax expense |
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Net income / (loss) |
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$ |
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$ |
( |
) |
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Net income / (loss) per share – basic |
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$ |
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$ |
( |
) |
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Net income/(loss) per share – diluted |
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$ |
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$ |
( |
) |
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Net income / (loss) |
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$ |
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$ |
( |
) |
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Other comprehensive (loss) / income, net of tax of $0: |
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(Loss) / gain on foreign currency translation |
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( |
) |
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Total comprehensive loss |
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$ |
( |
) |
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$ |
( |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
Paysafe Limited
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited)
(U.S. dollars in thousands, except share data)
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March 31, 2024 |
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December 31, 2023 |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Customer accounts and other restricted cash |
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Accounts receivable, net of allowance for credit losses of $ |
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Settlement receivables, net of allowance for credit losses of $ |
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Prepaid expenses and other current assets |
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Total current assets |
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Deferred tax assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets |
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Derivative financial assets |
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Intangible assets, net |
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Goodwill |
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Other assets – non-current |
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Total assets |
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$ |
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$ |
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Liabilities and equity |
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Current liabilities |
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Accounts payable and other liabilities |
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$ |
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$ |
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Short-term debt |
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Funds payable and amounts due to customers |
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Operating lease liabilities – current |
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Contingent and deferred consideration payable – current |
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Liability for share-based compensation – current |
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Total current liabilities |
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Non-current debt |
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Operating lease liabilities – non-current |
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Deferred tax liabilities |
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Warrant liabilities |
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Liability for share-based compensation – non-current |
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Contingent and deferred consideration payable – non-current |
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Total liabilities |
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Shareholders' equity |
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Common shares - $ |
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Additional paid in capital |
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Accumulated deficit |
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( |
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( |
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Treasury shares - at cost; |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
Paysafe Limited
(Unaudited)
(U.S. dollars in thousands)
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Common |
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Additional paid in capital |
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Accumulated |
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Treasury shares |
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Accumulated other |
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Total |
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January 1, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Net income |
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- |
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- |
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- |
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- |
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Loss on foreign currency translation, net of tax of $ |
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- |
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- |
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- |
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- |
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( |
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( |
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Restricted stock units issued (Note 10) |
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( |
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- |
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- |
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- |
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- |
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Share-based compensation |
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- |
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- |
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- |
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- |
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Common shares repurchased (Note 11) |
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- |
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- |
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- |
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( |
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- |
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( |
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March 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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$ |
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Common |
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Additional paid in capital |
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Accumulated |
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Accumulated other |
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Total |
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January 1, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Net loss |
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- |
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- |
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( |
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- |
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( |
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Gain on foreign currency translation, net of tax of $ |
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- |
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- |
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- |
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Restricted stock units issued |
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( |
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- |
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- |
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— |
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Share-based compensation |
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- |
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- |
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- |
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Conversion of liability classified award to equity (Note 10) |
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- |
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- |
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- |
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Capital contribution |
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- |
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- |
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- |
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March 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
Paysafe Limited
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(U.S. dollars in thousands)
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Three months ended March 31, |
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2024 |
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2023 |
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Cash flows from operating activities |
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Net income / (loss) |
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$ |
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$ |
( |
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Adjustments for non-cash items: |
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Depreciation and amortization |
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Unrealized foreign exchange gain |
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( |
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( |
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Deferred tax (benefit) / expense |
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( |
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Interest expense, net |
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Share-based compensation |
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Other income, net |
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( |
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( |
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Impairment expense on goodwill and intangible assets |
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Allowance for credit losses and other |
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Loss on disposal of subsidiary and other assets, net |
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Non-cash lease expense |
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Movements in working capital: |
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Accounts receivable, net |
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( |
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( |
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Prepaid expenses and other current assets |
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( |
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( |
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Accounts payable and other liabilities |
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( |
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( |
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Income tax receivable / (payable) |
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( |
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Net cash flows provided by operating activities |
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Cash flows in investing activities |
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Purchase of property, plant & equipment |
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( |
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( |
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Purchase of merchant portfolios |
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( |
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Other intangible asset expenditures |
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( |
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( |
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Cash inflow from merchant reserves |
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Receipts under derivative financial instruments |
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Other investing activities |
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Net cash flows used in investing activities |
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( |
) |
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( |
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Cash flows from financing activities |
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Cash settled equity awards |
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( |
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Repurchases of shares withheld for taxes |
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( |
) |
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( |
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Purchase of treasury shares |
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( |
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Settlement funds - merchants and customers, net |
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( |
) |
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( |
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Repurchases of borrowings |
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( |
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( |
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Proceeds from loans and borrowings |
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Repayments of loans and borrowings |
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( |
) |
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( |
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Proceeds under line of credit |
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Repayments under line of credit |
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( |
) |
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( |
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Contingent consideration paid |
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( |
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( |
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Net cash flows used in financing activities |
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( |
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( |
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Effect of foreign exchange rate changes |
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( |
) |
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Decrease in cash and cash equivalents, including customer accounts and other restricted cash during the period |
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$ |
( |
) |
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$ |
( |
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Cash and cash equivalents, including customer accounts and other restricted cash at beginning of the period |
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Cash and cash equivalents at end of the period, including customer accounts and other restricted cash |
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$ |
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$ |
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Three months ended March 31, |
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2024 |
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2023 |
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Supplemental cash flow disclosures: |
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Cash paid for interest |
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$ |
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$ |
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Cash paid for income taxes, net |
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$ |
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$ |
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F-5
The table below reconciles cash, cash equivalents, customer accounts and other restricted cash as reported in the unaudited condensed consolidated statement of financial position to the total of the same amounts shown in the unaudited condensed consolidated statement of cash flows:
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Three months ended March 31, |
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2024 |
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2023 |
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Cash and cash equivalents |
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$ |
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$ |
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Customer accounts and other restricted cash |
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Total cash and cash equivalents, including customer accounts and other restricted cash |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-6
Paysafe Limited
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(U.S. dollars in thousands, except per share data)
1. Basis of presentation and summary of significant accounting policies
Description of the Business
In these unaudited condensed consolidated financial statements and related notes, Paysafe Limited, and its consolidated subsidiaries are referred to collectively as “Paysafe,” “we,” “us,” and “the Company” unless the context requires otherwise. Paysafe is a leading global provider of end-to-end payment solutions. Our core purpose is to enable businesses and consumers to connect and transact seamlessly through our payment platforms.
Paysafe Limited was incorporated as an exempted limited company under the laws of Bermuda on
In connection with the Transaction, which was consummated on March 31, 2021, the Company’s common shares and warrants were listed on the New York Stock Exchange under the symbols PSFE and PSFE.WS, respectively. Subsequent to the Transaction, Pi Jersey Topco Limited (“Topco”), funds advised by affiliates of CVC Capital Partners (such funds collectively, “CVC”) and The Blackstone Group Inc. (“Blackstone”) continue to retain ownership in the Company.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements for the three months ended March 31, 2024 and the comparative financial information for the three months ended March 31, 2023 and for the year ended December 31, 2023 include the accounts of the Company, and its subsidiaries, based upon information of Paysafe Limited.
All intercompany transactions have been eliminated in consolidation. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company’s financial position, results of operations and cash flows have been included.
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 on Form 20-F filed on March 20, 2024.
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any other interim period.
Disaggregation of Revenue
The Company provides payment solutions through two primary lines of business: Merchant Solutions and Digital Wallets. For each primary source of revenue within these business lines, the Company’s main performance obligation is to stand ready to provide payment services to merchants and consumers. Due to the concentration of economic factors, products and services in each of the business lines, the Company has presented disaggregated revenue at the segment level (See Note 15).
We do
F-7
Reclassifications
Certain prior period amounts have been reclassified in order to conform with the current period presentation. These reclassifications have no impact on the Company’s previously reported consolidated net loss.
Changes in presentation
During the fourth quarter of 2023, the Company elected to change its presentation of the cash flows associated with "Settlement receivables, net" and "Funds payable and amounts due to customers" from operating activities, to present them as financing activities within its Consolidated Statements of Cash Flows. Comparative amounts have been recast to conform to current period presentation. These recasts had no impact on the Consolidated Statements of Comprehensive Loss, Consolidated Statements of Financial Position or Consolidated Statements of Shareholders' Equity.
The following tables present the effects of the changes in presentation within the Statements of Cash Flows:
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For the three months ended March 31, 2023 |
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As Previously Reported |
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Adjustment |
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As Adjusted |
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Consolidated Statement of Cash Flows |
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Cash flows from operating activities |
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Settlement receivables, net |
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$ |
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$ |
( |
) |
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Funds payable and amounts due to customers |
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( |
) |
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Net cash provided by operating activities |
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$ |
( |
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$ |
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Cash flows from financing activities |
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Settlement funds - merchants and customers, net |
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$ |
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$ |
( |
) |
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( |
) |
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Net cash provided by financing activities |
|
$ |
( |
) |
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$ |
( |
) |
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( |
) |
Significant accounting policies
There have been
Accounting Pronouncements not yet Adopted
Segment Reporting
In November 2023, the FASB issued ASU 2023-07, which amends Segment reporting (Topic 280). This update enhances reportable segment disclosure requirements, primarily by requiring disclosure of the significant segment expenses for each reportable segment that are regularly provided to the Chief Operating Decision Maker, and aligning the segment reporting disclosure requirements in interim and annual reporting periods. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company expects to adopt this guidance in our December 31, 2024 annual financial statements and this guidance is not expected to have a material impact on the Company’s consolidated financial statements.
Crypto Assets
In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto assets. This update provides guidance on the accounting for and disclosure of crypto assets by requiring that crypto assets that meet criteria defined by the ASU to 1) be measured at fair value separately from other intangible assets in the statement of financial position, 2) to present remeasurement separately from other changes in other intangible assets in the statement of comprehensive income, and 3) to enhance disclosure requirements related to the crypto assets, including providing roll-forward information of crypto asset holdings. This update is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, with early adoption permitted.
The Company purchases cryptocurrency assets on behalf of its customers. All the risks and rewards associated with those assets are transferred to the customer at the time of purchase and the Company has no ability to control the assets and no requirement to safeguard the assets. As a result, the Company does not recognize either the cryptocurrency asset or liability to the customer on its balance sheet. The Company expects to adopt ASU 2023-08 on January 1, 2025 which is not expected to have a material impact on the Company’s consolidated financial statements.
Income Taxes
F-8
In December 2023, the FASB issued ASU 2023-09, which amends Income taxes (Topic 270). This update enhances income tax disclosure requirements, primarily by requiring public companies to provide disclosures regarding the statutory tax rate and effective tax rate in tabular format with specific categories identified, and to provide additional disclosures for reconciling items that meet quantitative thresholds. This update is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company expects to adopt this guidance on January 1, 2025 which is not expected to have a material impact on the Company’s consolidated financial statements.
2. Net income / (loss) per share
The following table sets forth the computation of the Company’s basic and diluted net income / (loss) per share attributable to the Company.
The Company uses the treasury stock method of calculating diluted net income / (loss) per share.
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For the three months ended March 31, |
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2024 |
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2023 |
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Numerator |
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Net income / (loss) - basic |
$ |
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$ |
( |
) |
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Net income / (loss) - diluted |
$ |
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$ |
( |
) |
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Denominator |
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Weighted average shares – basic |
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Weighted average shares – diluted (1) |
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Net income / (loss) per share |
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Basic |
$ |
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$ |
( |
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Diluted |
$ |
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$ |
( |
) |
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3. Taxation
We account for income taxes in interim periods pursuant to the provisions of ASC 740, Income Taxes. Under this method, our provision for or benefit from income taxes is computed by applying an estimated annual effective tax rate to the year to date pre-tax book income and the effects of any discrete income tax items are recognized in the periods in which they occur.
Our effective tax rate for the three months ended March 31, 2024 was
Our effective tax rate for the three months ended March 31, 2023 was abnormal due to near break-even year-to-date pre-tax income in relation to discrete items. The difference between our effective tax rate and the U.K. statutory rate of
On December 12, 2022, the European Union ("EU") Member States agreed in principle on the introduction of a global minimum tax rate of
F-9
4. Goodwill
Changes in the carrying amount of goodwill are as follows:
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Merchant Solutions(1) |
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Digital Wallets (2) |
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Total |
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Balance as of December 31, 2023 |
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$ |
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$ |
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$ |
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Foreign exchange |
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( |
) |
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( |
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Balance as of March 31, 2024 |
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$ |
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$ |
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$ |
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Merchant Solutions(1) |
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Digital Wallets (2) |
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Total |
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Balance as of December 31, 2022 |
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$ |
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$ |
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$ |
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Foreign exchange |
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Balance as of March 31, 2023 |
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$ |
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$ |
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$ |
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The Company performs its annual goodwill impairment test for all reporting units as of October 1st, or when events and circumstances have occurred that would indicate the carrying amount of goodwill exceeds its fair value. No such events and circumstances were identified during the three months ended March 31, 2024 or March 31, 2023. However, failure to achieve future cash flows or declines in the stock price may cause a future impairment of goodwill at the reporting unit level.
5. Intangible assets
The Company’s intangible assets consisted of the following:
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March 31, 2024 |
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December 31, 2023 |
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Brands |
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$ |
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$ |
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Software development costs |
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Customer relationships |
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Computer software |
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Gross carrying value |
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Brands |
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Software development costs |
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Customer relationships |
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Computer software |
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Accumulated amortization |
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Intangible assets, net |
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$ |
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$ |
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Amortization expense on intangible assets for the three months ended March 31, 2024 and 2023, was $
The Company performs an impairment analysis on intangible assets with finite lives when events and circumstances have occurred that would indicate the carrying amount of intangible assets may not be recoverable. No such events and circumstances were identified during the three months ended March 31, 2024 and 2023. For the three months ended March 31, 2024 and 2023, $
6. Allowance for credit losses
The Company has exposure to credit losses for financial assets, including settlement receivables, accounts receivable, and financial guarantee contracts to the extent that a chargeback claim is made against the Company directly or to the Company’s merchants on card purchases.
The following table summarizes the expected credit allowance activity for settlement receivables, net; accounts receivable, net; and financial guarantee contracts and other, for the three months ended March 31, 2024:
F-10
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Accounts |
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Settlement |
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Financial |
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Total |
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Balance as of December 31, 2023 |
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Credit loss expense |
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Recoveries |
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- |
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Write-Offs |
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( |
) |
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( |
) |
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( |
) |
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( |
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Other (1) |
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( |
) |
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( |
) |
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( |
) |
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( |
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Balance as of March 31, 2024 |
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Credit loss expense for the three months ended March 31, 2024 and 2023 was $
7. Debt
The Company's current facilities include the following:
(i) $
(ii) $
(iii) €
(iv) $
The Company has made drawdowns and repayments on the Revolving Credit Facility throughout the year. As of March 31, 2024 and December 31, 2023, $
On April 13, 2023, the Company entered into a debt amendment agreement to replace LIBOR with SOFR, following the Financial Conduct Authority's ("FCA") decision to phase out the use of LIBOR by June 30, 2023. The USD Term Loan Facility and USD Revolving Credit Facility previously bore interest at LIBOR plus margin. This contract modification qualified for the relief provided in ASU 2021-01. The Company applied the optional expedient in the standard, accounting for the amendment as if the modification was not substantial and thus a continuation of the existing contract, with the change in rate accounted for prospectively.
Line of Credit
The Company has a Line of Credit of $
F-11
The key terms of these facilities were as follows:
Facility |
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Currency |
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Interest Rate (1) |
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Effective Interest Rate (2) |
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Facility |
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Principal |
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Principal |
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Term Loan Facility (USD) (3) |
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USD |
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$ |
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$ |
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Term Loan Facility (EUR) (5) |
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EUR |
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Secured Loan Notes (EUR) |
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EUR |
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Secured Loan Notes (USD) |
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USD |
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Revolving Credit Facility (USD) |
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USD |
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Revolving Credit Facility (EUR) |
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EUR |
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Line of Credit |
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USD |
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Total Principal Outstanding |
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$ |
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March 31, 2024 |
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December 31, 2023 |
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Principal Outstanding |
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$ |
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$ |
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Unamortized debt issuance cost |
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( |
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( |
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Total |
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Short-term debt |
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Non-current debt |
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$ |
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$ |
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For the three months ended March 31, 2024 and 2023, interest expense, including amortization of deferred debt issuance cost, was $
Maturity requirements on debt as of March 31, 2024 by year are as follows:
Remainder 2024 |
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$ |
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2025 |
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2026 |
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2027 |
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2028 |
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2029 and thereafter |
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Total |
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$ |
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During both the three months ended March 31, 2024 and 2023, the Company made principal payments of $
As of March 31, 2024, we have committed to future repurchases of debt of $
F-12
Compliance with Covenants
The Company’s facilities as described above contain affirmative, restrictive and incurrence-based covenants, including, among others, financial covenants based on the Company’s leverage and Revolving Credit Facility utilization, as defined in the debt agreement. The financial covenants under the facilities require the Company to test its Consolidated First Lien Debt Ratio if the principal amount of the Revolving Credit Facility, less any cash and cash equivalents, at the reporting date exceeds
Letters of Credit
As of March 31, 2024 and December 31, 2023, the Company had issued approximately $
8. Derivative Instruments
The Company’s derivative instruments consist of interest rate swaps, which mitigate the exposure to the variable-rate debt by effectively converting the floating-rate payments to fixed-rate payments. The derivative financial instrument arrangements were entered into to manage its interest rate risk related to its variable rate Term Loan Facility. During the three months ended March 31, 2024, the Company entered into a forward starting interest rate swap. The interest rate swaps are measured at fair value and not designated as a hedge for accounting purposes; as such, any fair value changes are recorded in “Other income, net” in the unaudited condensed consolidated statement of comprehensive loss in the respective period of the change.
The following table summarized the notional amount at inception and fair value of these instruments recognized as "Derivative financial assets" in the unaudited condensed consolidated statements of financial position:
Derivative financial instrument |
Fixed rate |
Notional amount |
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Index |
Effective date |
Maturity Date |
Fair value as at |
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Fair value as at |
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Interest rate swap |
$ |
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USD-1 month SOFR |
$ |
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$ |
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Forward starting interest rate swap |
$ |
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USD-1 month SOFR |
$ |
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$ |
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The Company recognized a gain / (loss) for the three months ended March 31, 2024 and 2023 of $
For further information regarding the fair value of the derivative instruments see discussion in Note 12 and 14.
9. Contingent and deferred consideration payable
Contingent and deferred consideration payable is comprised of the following balances:
Balance as of December 31, 2023 |
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$ |
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Payments made during the period |
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( |
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Additions in the period |
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Fair value loss and other |
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( |
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Balance as of March 31, 2024 |
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$ |
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Current |
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$ |
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Non-current |
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$ |
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During the three months ended March 31, 2024, the Company paid $
F-13
10. Share-based Compensation
The Company operates
2021 Omnibus Incentive Plan (“2021 Plan”)
There are
In prior years, certain PRSUs were granted which were liability-classified share-based payment awards under ASC 718 as the value of the award was fixed and would be settled in a variable number of shares. These awards were settled during the three months ending March 31, 2023 which resulted in conversion of the full liability to additional paid in capital in the unaudited condensed consolidated statement of shareholder's equity. This conversion of $
The following table summarizes restricted stock unit activity during the three months ended March 31, 2024.
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Restricted Stock Units |
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Weighted average grant date fair value |
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Nonvested as of December 31, 2023 |
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$ |
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Granted (1) |
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$ |
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Vested (2) |
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( |
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$ |
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Forfeited |
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( |
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$ |
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Performance adjustments (3) |
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( |
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$ |
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Nonvested as of March 31, 2024 |
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$ |
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Stock options
There were
Share based compensation liability (2018 Plan)
Certain employee equity-based awards were modified in conjunction with the Transaction. Their settlement terms changed such that instead of Topco's shares, the awardees received Paysafe Limited common shares as well as Topco’s shares. The modification resulted in a change in the classification of the modified awards, with the Topco shares being accounted for as a liability-classified share-based payment award under ASC 718 as they will be settled in cash. The corresponding liability was measured at fair value at the modification date (i.e. the Transaction date), and subsequently it will be remeasured at fair value at each reporting date, with changes in its value reported as share-based compensation expense. The awards settled in Paysafe Limited common shares continue to be accounted for as equity-based awards.
As of March 31, 2024 and December 31, 2023, the share-based compensation liability was $
F-14
Employee Share Purchase Plan
Beginning April 1, 2023, employees became eligible to contribute to the Company’s Employee Share Purchase Plan (the “Purchase Plan”). The Purchase Plan is not intended to be an employee benefit plan under the Employee Retirement Income Security Act of 1974, as amended, nor qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. Under the Purchase Plan, eligible employees may designate from one percent to fifteen percent of their compensation to be withheld for the purchase of PSFE shares at the market price of the shares. The Company grants each participating employee one restricted stock unit for each four PSFE shares that are purchased on the last day of the offering period (“Match RSU Award”).
The Match RSU Award cliff vests one year from the last day of the offering period, subject to the employee’s continued employment at the vesting date. The fair value of the Match RSU Award is recognized on a straight-line basis over the vesting period. The maximum number of shares of common stock authorized under this Plan for participant contributions and Match RSU Awards is
Preference Shares
We have authorized
11. Share Repurchase Program
In November 2023, the Board approved a share repurchase program (the “Share Repurchase Program”), authorizing the Company to repurchase up to $
During the three months ended March 31, 2024, we repurchased
12. Fair Value Measurements
The Company uses the hierarchy prescribed in ASC 820, Fair Value Measurements, for fair value measurements, based on the available inputs to the valuation and the degree to which they are observable or not observable in the market.
The three levels of the hierarchy are as follows:
F-15
The fair value hierarchy of financial instruments measured at fair value as of March 31, 2024 is provided below.
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Level 1 |
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Level 2 |
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Level 3 |
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Financial assets measured at fair value: |
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Derivative financial assets |
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$ |
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$ |
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Financial liabilities measured at fair value: |
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Contingent consideration payable |
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Warrant liabilities (1) |
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Liability for share-based compensation (2) |
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$ |
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$ |
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$ |
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The fair value hierarchy of financial instruments measured at fair value as of December 31, 2023 is provided below.
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Level 1 |
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Level 2 |
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Level 3 |
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Financial assets measured at fair value: |
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Derivative financial asset |
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$ |
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$ |
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$ |
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Financial liabilities measured at fair value: |
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Contingent consideration payable |
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Warrant liabilities (1) |
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Liability for share-based compensation (2) |
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$ |
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$ |
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$ |
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There were no transfers between levels during the three months ended March 31, 2024 and 2023. A reconciliation of the movements in level 3 financial instruments in the period are described in Note 9 and 10.
The valuation techniques and significant unobservable inputs used in determining the fair value measurement of Level 3 financial instruments is set out in the table below. Other than this input, a reasonably possible change in one or more of the unobservable inputs listed below would not materially change the fair value of financial instruments listed below.
Financial instrument |
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Valuation technique used |
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Significant unobservable inputs |
Contingent consideration payable |
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Discounted cashflow |
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Discount rate of |
Liability for share-based compensation |
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Market and income approach |
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Discount rate of |
The Company considers that the carrying value of cash and cash equivalents, customer accounts and other restricted cash, accounts receivable, settlement receivables, prepaid expenses and other assets, accounts payable and accrued expenses, and liabilities to customers and merchants approximate fair value given the short-term nature of these items. As of March 31, 2024, the carrying amount of our debt approximated fair value (a Level 2 measurement) based on market yields for similar debt facilities and observable trading data related to the Company’s debt securities.
13. Commitments, Contingencies and Guarantees
Litigation provision
Through the normal course of the Company’s business, the Company is subject to a number of litigation proceedings both brought against and brought by the Company. The Company maintains liabilities for losses from legal actions that are recorded when they are determined to be both probable in their occurrence and can be reasonably estimated. On this basis, we have recognized a provision of $
On December 10, 2021, a class action complaint, Lisa Wiley v Paysafe Limited was filed, naming among others the Company, our former Chief Executive Officer, and our former Chief Financial Officer, as defendants. The complaint asserts claims, purportedly brought on behalf of a class of shareholders, under Sections 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder, and alleges that the Company and individual defendants made false and misleading statements to the market. In addition, the complaint asserts claims against the individual defendants, under Sections 20(a) of the Exchange Act, alleging that the individual defendants misled
F-16
the public. On January 21, 2022, a related complaint was brought in the Southern District of New York, which named additional defendants. In May 2022, the securities cases were consolidated into a single matter now captioned In Re: Paysafe Ltd. Securities Litigation.
The complaints seek unspecified damages and an award of costs and expenses, including reasonable attorneys’ fees, on behalf of a purported class of purchasers of our ordinary shares between December 7, 2020, and November 10, 2021. The Company intends to vigorously defend against the foregoing complaints. At this time, the Company is unable to estimate the potential loss or range of loss, if any, associated with these lawsuits, which could be material.
The Company vigorously defends its position on all open cases. While the Company considers a material outflow for any one individual case, unlikely, it is noted that there is uncertainty over the final timing and amount of any potential settlements. Management believes the disposition of all claims currently pending, including potential losses from claims that may exceed the liabilities recorded, and claims for loss contingencies that are considered reasonably possible to occur, will not have a material effect, either individually or in the aggregate, on the Company's consolidated financial condition, results of operations or liquidity.
Financial guarantee contracts
Through services offered in our Merchant Solutions segment, the Company is exposed to potential losses from merchant-related liabilities, including chargebacks. A chargeback occurs when a dispute between a cardholder and a merchant, including a claim for non-delivery of the product or service by the merchant, is not resolved in favor of the merchant and the transaction is charged back to the merchant resulting in a refund of the purchase price to the cardholder. If the Company is unable to collect this chargeback amount from the merchant due to closure, bankruptcy or other reasons, the Company bears the loss for the refund paid to the cardholder. The risk of chargebacks is typically greater for those merchants that promise future delivery of goods and services rather than delivering goods or rendering services at the time of payment. The Company has recorded an accrual for current expected credit losses on financial guarantees as of March 31, 2024 and December 31, 2023 (See Note 6).
As of March 31, 2024 and December 31, 2023, $
Contingencies
Following an internal review of the disclosures in our terms and conditions of foreign exchange rates in our Digital Wallets business for the period January 2018 to August 2022, and pursuant to discussions with our regulator that were initiated by us and concluded in September 2022, we agreed to provide payments to certain customers. The accrual was $
Leases
The Company has operating leases for offices, data centers, and corporate apartments. Leases have remaining lease terms of less than one year to ten years, some of which have the option to extend the lease term for an additional five years. Certain leases also include the option to terminate the lease within one year. We recognize lease extension and termination options that we are reasonably certain to exercise when determining the lease term used to establish our right-of-use assets and lease liabilities.
During the three months ended March 31, 2024, the Company entered into new lease agreements for office space in the United Kingdom and Austria and has recorded right of use assets of $
F-17
As of March 31, 2024, maturities of lease liabilities on an undiscounted cash flow basis were as follows:
Remainder 2024 |
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$ |
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2025 |
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2026 |
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2027 |
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2028 |
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2029 and beyond |
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Total lease payments |
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Less: interest |
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( |
) |
Total lease liability |
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$ |
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14. Other income, net
A summary of the amounts recorded in Other income, net is as follows:
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For the three months ended March 31, |
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2024 |
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2023 |
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Foreign exchange gain / (loss) |
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$ |
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$ |
( |
) |
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Fair value loss on contingent consideration |
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( |
) |
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( |
) |
Gain / (loss) on derivative instruments (1) |
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( |
) |
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Fair value loss on warrant liability (2) |
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( |
) |
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( |
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Gain on debt repurchases (3) |
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Other (4) |
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Other income, net |
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$ |
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$ |
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15. Operating segments
Operating segments are defined as components of an enterprise that engage in business activities and for which discrete financial information is available that is evaluated on a regular basis by the Chief Operating Decision Maker (“CODM”) to make decisions about how to allocate resources and assess performance. Our CODM is defined as our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), and Chief Operating Officer (“COO”). Our operating segments are: Merchant Solutions, which focuses on card not present and card present solutions for small to medium size business merchants; Digital Wallets, which provides wallet based online payment solutions through our Skrill and NETELLER brands; and also enables consumers to use cash to facilitate online purchases through paysafecard prepaid vouchers under the paysafecard and Paysafecash brands. These two operating segments, which are also reportable segments, as they have not been aggregated, are based on how the Company is organized, reflecting the difference in nature of the products and services they each sell. Shared costs are the cost of people and other resources consumed in activities that provide a benefit across more than one segment and are allocated to each segment and Corporate primarily based on applicable drivers including headcount, revenue and Adjusted EBITDA.
The CODM evaluates performance and allocates resources based on Adjusted EBITDA of each operating segment. Adjusted EBITDA of each operating segment includes the revenues of the segment less ordinary operating expenses that are directly related to those revenues and an allocation of shared costs. Corporate overhead costs and Corporate’s allocation of shared costs are included in Corporate in the following table. Corporate overhead costs are costs consumed in the execution of corporate activities that are not directly factored into the production of any service provided by the Company’s segments.
The CODM does not receive segment asset data to evaluate performance or allocate resources and therefore such information is not presented.
F-18
The information below summarizes revenue and Adjusted EBITDA by segment for the three months ended March 31, 2024:
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Merchant Solutions |
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Digital Wallets |
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Corporate (1) |
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Intersegment |
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Total |
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Revenue from external customers |
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$ |
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$ |
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$ |
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$ |
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$ |
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Interest Revenue |
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|
|
|
|
|
|||||
Intersegment Revenue (2) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
The information below summarizes revenue and Adjusted EBITDA by segment for the three months ended March 31, 2023:
|
|
Merchant Solutions |
|
|
Digital Wallets |
|
|
Corporate (1) |
|
|
Intersegment |
|
|
Total |
|
|||||
Revenue from external customers |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Interest Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Intersegment Revenue (2) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
A reconciliation of total segments Adjusted EBITDA to the Company’s income before taxes is as follows:
|
|
For the three months ended March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Segments Adjusted EBITDA |
|
$ |
|
|
$ |
|
||
Corporate costs |
|
|
( |
) |
|
|
( |
) |
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Share-based compensation |
|
|
( |
) |
|
|
( |
) |
Restructuring and other costs |
|
|
( |
) |
|
|
( |
) |
Impairment expense on goodwill and intangible assets |
|
|
( |
) |
|
|
( |
) |
Other income, net |
|
|
|
|
|
|
||
Loss on disposal of subsidiaries and other assets, net |
|
|
( |
) |
|
|
|
|
Interest expense, net |
|
|
( |
) |
|
|
( |
) |
Income before taxes |
|
$ |
|
|
$ |
|
||
16. Related party transactions
The Company has provided and purchased services to and from various affiliates of certain directors or entities under common control. The dollar amounts related to these related party activities are not significant to our unaudited condensed consolidated financial statements. Intercompany balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
During 2022, the Company entered into a lease with the affiliate of one of our directors. The balance of the right of use asset and lease liability as of March 31, 2024 was $
17. Subsequent events
Subsequent to March 31, 2024, the Company repurchased
F-19
PAYSAFE’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Paysafe Unaudited Condensed Consolidated Financial Statements included elsewhere in this Form 6-K, with our audited consolidated financial statements and the notes thereto included in our report filed on Form 20-F on March 20, 2024 (the “2023 Annual Report”), and with the information under the heading “Item 5. Operating and Financial Review and Prospects” in our 2023 Annual Report.
Any reference to “we,” “us,” “Paysafe,” the “Company,” “management” and “our” as used herein refers to Paysafe Limited. Amounts preceded with a dollar sign are denominated in U.S. dollars in thousands, unless otherwise noted.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 6-K (including information incorporated by reference herein, the “Report”) contains or may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve significant risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These forward-looking statements include information about our possible or assumed future results of operations or our performance. Words such as “anticipate,” “appear,” “approximate,” “believe,” “continue,” “could,” “estimate,” “expect,” “foresee,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “would” and variations of such words and similar expressions (or the negative version of such words or expressions) may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The risk factors and cautionary language referred to or incorporated by reference in this Report provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described in our forward-looking statements, including among other things, the items identified below and those identified in the section entitled “Item 3.D. Risk Factors” of our 2023 Annual Report.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. Although we believe that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Our Company
Paysafe is a leading, global pioneer in digital commerce with over $36 billion in volume processed during the three months ended March 31, 2024 and $34 billion processed during the three months ended March 31, 2023 generating $417,738 and $387,849 in revenue for the three months ended March 31, 2024 and 2023, respectively. Our specialized, integrated payments platform offers the full spectrum of payment solutions ranging from credit and debit card processing to digital wallet, eCash and real-time banking solutions. The combination of this breadth of solutions, our sophisticated risk management and our deep regulatory expertise and deep industry knowledge across specialized verticals enables us to empower millions of active users in more than 120 countries to conduct secure and friction-less commerce across online, mobile, in-app and in-store channels. We also provide Digital Wallets solutions for specialized
1
industry verticals, including iGaming (which encompasses a broad selection of online betting related to sports, e-sports, fantasy sports, poker and other casino games), gaming, digital goods, cryptocurrencies, travel and financial services, as well as Merchant Solutions for small and mid-sized businesses ("SMBs") and direct marketing clients.
We go to market, serve and support our clients through an omni-channel model that leverages our global reach and our B2B and B2C relationships. This enables us to manage and serve our clients through our network of offices around the world with strong knowledge of local and regional markets, customs and regulatory environments. We sell our solutions through a combination of direct and indirect sales strategies. We have a direct sales force who builds and develops relationships with larger merchants and help them configure or develop digital and point-of-sale commerce solutions from our suite technology services. We sell our solutions online to smaller merchants using targeted marketing campaigns designed to address specific use cases across verticals, geographies and user profiles. We also leverage a network of partners, such as independent software vendors ("ISVs") and independent sales organizations (“ISOs”), who integrate our solutions into their own services or resell our solutions by utilizing their own sales initiatives.
We operate across two business segments, which provide our digital and point of sale commerce solutions to different end markets: our Merchant Solutions Segment and our Digital Wallets Segment.
Merchant Solutions: Merchant Solutions is marketed under the Paysafe and Petroleum Card Services brands. These solutions include a full range of PCI-compliant payment acceptance and transaction processing solutions for merchants and integrated service providers including merchant acquiring, transaction processing, gateway solutions, fraud and risk management tools, data and analytics, point of sale systems and merchant financing solutions, as well as comprehensive support services that we provide to our independent distribution partners.
Digital Wallets: Our Digital Wallets is marketed under multiple brand names including the NETELLER, Skrill, paysafecard, Paysafecash, SafetyPay, PagoEfectivo, as well as a proprietary pay-by-bank solution marketed in Europe under the Rapid Transfer brand. Skrill and NETELLER remove friction from complex commerce situations and dramatically simplify the complexity of traditional payment mechanisms, such as card-based payments, enabling our active users to send, spend, store and accept funds online more easily. The paysafecard and Paysafecash brands provide consumers with a safe and easy way to purchase goods and services online without the need for a bank account or credit card and allow merchants to expand their target market to include consumers who prefer to pay with cash. SafetyPay, is a platform that enables eCommerce transactions in Latin American countries, and PagoEfectivo is the leading alternative payment platform and brand in Peru.
2
Trends and Factors Affecting Our Future Performance
Significant trends and factors that we believe may affect our future performance include the items noted below. For a further discussion of trends, uncertainties and other factors that could affect our operating results see the section entitled “Information on the Company – Business Overview” and “Risk Factors” included in our 2023 Annual Report.
Pillar Two
Work is currently being undertaken by the OECD on potential future recommendations related to the challenges arising from the digitalization of the global economy, specifically relating to reform of the international allocation of taxing rights (“Pillar One”) and a system ensuring a minimum level of tax for multinational enterprises (“Pillar Two”).
On December 12, 2022, the European Union (EU) Member States agreed in principle on the introduction of a global minimum tax rate of 15%. On December 15, 2022, the written procedure for formal adoption of a directive was signed, and transposed into the national law of EU Member States with effectiveness beginning January 1, 2024. The application of the minimum tax rate did not have a material impact on the Company’s consolidated financial statements.
Separately, on July 11, 2023, the UK enacted into domestic law measures to apply a top-up tax on subsidiary profits taxed at an effective rate of less than 15% for accounting periods beginning on or after December 31, 2023. The UK tax authority has confirmed that the commencement date will not be earlier than accounting periods beginning on or after December 31, 2024.
Furthermore, in response to members who are adopting OECD’s Pillar Two initiatives on global minimum tax, some countries considered to be tax-friendly have introduced corporate income taxes or increased their main rate of corporate income tax to 15% to align with the global minimum rate. For example, on August 8, 2023, the Government of Bermuda released an outline on its proposal to introduce a 15% corporate tax regime. The legislation was enacted on December 27, 2023, with an effective date for accounting periods beginning on or after January 1, 2025. We believe the Company will not be impacted by the new Bermuda income tax as we are tax resident in the United Kingdom. The application of these tax laws are not expected to have a material impact on the Company’s consolidated financial statements.
Global and regional economic conditions
Our operations and performance depend significantly on global and regional economic conditions. Uncertainty about global and regional economic events and conditions may impact our ability to conduct business in certain areas and may result in consumers and businesses postponing or lowering spending. This includes the impact of acts of war and terrorism, such as the military hostilities commenced in Ukraine during the first quarter of 2022. Operations within Russia, Ukraine and Israel represented approximately 1% of our revenues in the prior year and were predominantly within the Digital Wallets segment. While acts of war and terrorism continue, there have been no material impacts on our operations during the three months ended March 31, 2024 or 2023, although a change in circumstance could affect our results of operations in future periods.
Foreign currency impact
Our revenues and expenses are subject to changes in foreign currencies against the U.S. dollar which can impact our results of operations. It is difficult to predict the fluctuations of foreign currency exchange rates and how those fluctuations will impact our unaudited condensed consolidated statements of comprehensive income / loss in the future. As a result of the relative size of our international operations, these fluctuations may be material. During the three months ended March 31, 2024, our Digital Wallets segment was impacted by favorable foreign exchange.
Recent Company Initiatives and Events
Recent events
In November 2023, our Board approved a share repurchase program (the “Share Repurchase Program”), authorizing us to repurchase up to $50,000 of our common shares. We expect to fund future repurchases, if any, through a combination of cash on hand, cash generated by operations and future financing transactions, if appropriate. Accordingly, our Share Repurchase Program is subject to us having available cash to fund repurchases. Under the Share Repurchase Program, management is authorized to purchase shares of our common stock from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors.
During the three months ended March 31, 2024, the Company repurchased 989,419 shares under the Share Repurchase Program for a total amount of $14,000.
3
Key Performance Indicators
We regularly monitor the following key performance indicators to evaluate our business and trends, measure our performance, prepare financial projections and make strategic decisions. We believe that these key performance indicators are useful in understanding the underlying trends in the Company’s businesses.
There are limitations inherent in key performance indicators. Investors should consider any key performance indicator together with the presentation of our results of operations and financial condition under GAAP, rather than as an alternative to GAAP financial measures. These measures may not be comparable to other performance measures used by the Company’s competitors.
Volume and Take Rate
Gross dollar volume is calculated as the dollar value of payment transactions processed by the Company. To reflect the distinct nature of our products across each segment, this includes, but is not limited to, the following:
Volume (also known as gross dollar volume) is a meaningful indicator of our business and financial performance, as we typically generate revenue across our solutions based on per transaction fees that are calculated as a percentage of transaction dollar volume. In addition, volume provides a measure of the level of payment traffic we are handling for our consumers and merchants. Many marketing initiatives are focused on driving more volume, either through encouraging greater adoption of our payment products or increasing activity through existing merchants or consumers.
Take rate is calculated as operating segment revenue divided by gross dollar volume. Take-rate is a meaningful indicator of our business and financial performance as it describes the percentage of revenue collected by Paysafe on the volume of transactions processed. This is used by management as an indication of pricing or product mix trends over time rather than absolute pricing within each segment, due to the mix of product types and pricing agreements that will be in place with specific merchants. It will also factor in revenue from fees that are not directly linked to volume-based transactions, such as inactivity fees charged on dormant accounts.
The following table sets forth our gross dollar volume and take rate for the three months ended March 31, 2024 and 2023:
|
|
For the three months ended March 31, 2024 |
|
|||||||||||||
(U.S. dollars in millions) |
|
Merchant Solutions |
|
|
Digital Wallets |
|
|
Intersegment |
|
|
Total |
|
||||
Gross dollar volume (1) |
|
$ |
30,787 |
|
|
$ |
5,675 |
|
|
$ |
(340 |
) |
|
$ |
36,122 |
|
Take Rate |
|
|
0.8 |
% |
|
|
3.4 |
% |
|
|
1.2 |
% |
|
|
1.2 |
% |
|
|
For the three months ended March 31, 2023 |
|
|||||||||||||
(U.S. dollars in millions) |
|
Merchant Solutions |
|
|
Digital Wallets |
|
|
Intersegment |
|
|
Total |
|
||||
Gross dollar volume (1) |
|
$ |
28,571 |
|
|
$ |
5,443 |
|
|
$ |
(196 |
) |
|
$ |
33,818 |
|
Take Rate |
|
|
0.7 |
% |
|
|
3.3 |
% |
|
|
1.1 |
% |
|
|
1.1 |
% |
|
|
Increase / (Decrease) |
|
|||||||||||||
(U.S. dollars in millions) |
|
Merchant Solutions |
|
|
Digital Wallets |
|
|
Intersegment |
|
|
Total |
|
||||
Gross dollar volume (1) |
|
$ |
2,216 |
|
|
$ |
232 |
|
|
$ |
(144 |
) |
|
$ |
2,304 |
|
Take Rate |
|
|
0.1 |
% |
|
|
0.1 |
% |
|
|
0.1 |
% |
|
|
0.1 |
% |
Non-GAAP Financial Measure
We report our financial results in accordance with GAAP, which includes the standards, conventions, and rules in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, we have provided Adjusted EBITDA as a non-GAAP financial measure.
We include a non-GAAP measure in this Form 6-K because it is a basis upon which our management assess our performance and we believe it reflects the underlying trends and an indicator of our business. Although we believe the non-GAAP measure is useful for investors for the same reasons, the measure is not a substitute for GAAP financial measures or disclosures.
4
Our non-GAAP measure may not be comparable to other similarly titled measures used by other companies and has limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the operating results as reported under GAAP.
An explanation of the relevance of the non-GAAP measure, a reconciliation of the non-GAAP measure to the most directly comparable measure calculated and presented in accordance with GAAP is set out below. The non-GAAP measure has limitations in that it does not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. We do not regard the non-GAAP measure as a substitute for, or superior to, the equivalent measure calculated and presented in accordance with GAAP or the one calculated using a financial measure that is calculated in accordance with GAAP.
Adjusted EBITDA
Adjusted EBITDA is defined as net income/(loss) before the impact of income tax (benefit)/expense, interest expense, net, depreciation and amortization, share based compensation, impairment expense on goodwill and intangible assets, restructuring and other costs, loss/(gain) on disposal of subsidiaries and other assets, net, and other (expense)/income, net. These adjustments include certain costs and transaction items that are not reflective of the underlying operating performance of the Company. Management believes these adjustments improve the comparability of operating results across reporting periods.
We use Adjusted EBITDA as our measure of segment profitability to assess the performance of our businesses. Additionally, we believe it is important to consider our profitability on a basis that is consistent with that of our operating segments. Adjusted EBITDA reported for our segments is not, however, considered a non-GAAP measure as it is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of a non-GAAP measure under the Securities and Exchange Commission’s Regulation G and Item 10(e) of Regulation S-K. We believe that Adjusted EBITDA should be made available to securities analysts, investors and other interested parties to assist in their assessment of the performance of our businesses.
Despite the importance of this measure in analyzing our business, measuring and determining incentive compensation and evaluating our operating performance, as well as the use of Adjusted EBITDA by securities analysts, lenders and others in their evaluation of companies, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for net income (loss) or other methods of analyzing our results as reported under GAAP. We do not use or present Adjusted EBITDA as a measure of liquidity or cash flow.
Some of the limitations of Adjusted EBITDA are:
5
Results of Operations
Three months ended March 31, 2024 compared to three months ended March 31, 2023
The following table sets forth our results of operations for the three months ended March 31, 2024 and 2023:
|
|
For the three months ended March 31, |
|
|
Variance (1) |
|
||||||||||
(U.S. dollars in thousands) |
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||
Revenue |
|
$ |
417,738 |
|
|
$ |
387,849 |
|
|
|
29,889 |
|
|
|
7.7 |
% |
Cost of services (excluding depreciation and |
|
|
170,373 |
|
|
|
158,939 |
|
|
|
11,434 |
|
|
|
7.2 |
% |
Selling, general and administrative |
|
|
144,808 |
|
|
|
128,311 |
|
|
|
16,497 |
|
|
|
12.9 |
% |
Depreciation and amortization |
|
|
68,310 |
|
|
|
63,547 |
|
|
|
4,763 |
|
|
|
7.5 |
% |
Impairment expense on goodwill and intangible assets |
|
|
653 |
|
|
|
82 |
|
|
|
571 |
|
|
n/m |
|
|
Restructuring and other costs |
|
|
452 |
|
|
|
1,990 |
|
|
|
(1,538 |
) |
|
|
(77.3 |
)% |
Loss on disposal of subsidiaries and other |
|
|
177 |
|
|
|
- |
|
|
|
177 |
|
|
n/m |
|
|
Operating income |
|
|
32,965 |
|
|
|
34,980 |
|
|
|
(2,015 |
) |
|
|
(5.8 |
)% |
Other income, net |
|
|
12,355 |
|
|
|
2,547 |
|
|
|
9,808 |
|
|
|
385.1 |
% |
Interest expense, net |
|
|
(34,965 |
) |
|
|
(37,456 |
) |
|
|
2,491 |
|
|
|
(6.7 |
)% |
Income before taxes |
|
|
10,355 |
|
|
|
71 |
|
|
|
10,284 |
|
|
n/m |
|
|
Income tax expense |
|
|
7,299 |
|
|
|
3,879 |
|
|
|
3,420 |
|
|
|
88.2 |
% |
Net income / (loss) |
|
$ |
3,056 |
|
|
$ |
(3,808 |
) |
|
|
6,864 |
|
|
n/m |
|
|
Revenue
Revenue increased $29,889, or 7.7%, to $417,738 for the three months ended March 31, 2024 from $387,849 for the three months ended March 31, 2023. This increase is largely attributable to an increase of $22,877, or 11.0% in our Merchant Solutions segment mainly due to higher volumes and a $9,009, or 5.0% increase in our Digital Wallets segment primarily due to growth in core verticals driven by iGaming and digital assets.
For further detail on our segments, see “Analysis by Segments” below.
Cost of services (excluding depreciation and amortization)
Cost of services (excluding depreciation and amortization) increased $11,434, or 7.2%, to $170,373 for the three months ended March 31, 2024 from $158,939 for the three months ended March 31, 2023. The increase is largely attributable to an increase of $11,632 in our Merchant Solutions segments due to higher volumes noted above and an increase in our Digital Wallets segment of $1,799 mainly due to growth in higher margin verticals.
Selling, general and administrative
Selling, general and administrative expenses increased $16,497, or 12.9%, to $144,808 for the three months ended March 31, 2024 from $128,311 for the three months ended March 31, 2023. This movement is primarily driven by an increase in credit losses of $5,290, which was largely driven by increased volumes in Merchant Solutions during the three months ended March 31, 2024, an increase in personnel costs relating to performance based compensation and an increase in legal and professional fees related to consultancy fees related to optimizing our SMB portfolio.
Depreciation and amortization
Depreciation and amortization increased by $4,763, or 7.5%, to $68,310 for the three months ended March 31, 2024 from $63,547 for the three months ended March 31, 2023 mainly due to amortization on intangible assets placed into service subsequent to March 31, 2023.
Impairment expense on intangible assets and goodwill
Impairment expense on intangible assets and goodwill increased by $571, to $653 for the three months ended March 31, 2024 from $82 for the three months ended March 31, 2023. Impairment expense on intangible assets and goodwill is related to impaired software development costs.
6
Restructuring and other costs
Restructuring and other costs decreased by $1,538, or 77.3%, to $452 for the three months ended March 31, 2024 from $1,990 for the three months ended March 31, 2023. The decrease was primarily driven by reduced legal fees.
Other income, net
Other income, net increased by $9,808, or 385.1%, to $12,355 for the three months ended March 31, 2024 from $2,547 for the three months ended March 31, 2023. The increase was primarily driven by a gain on foreign exchange of $5,193 compared to a loss of $642 in the prior year due to strengthening of the Euro, a gain on the Company's derivative instruments of $3,201 compared to a loss of $1,208 in the prior year, and a decrease of $1,638 in the fair value loss recognized on the Company's warrant liabilities. This was offset by a decrease in gains on debt repurchases of $3,764.
Interest expense, net
Interest expense, net decreased by $2,491, or 6.7%, to $34,965 for the three months ended March 31, 2024 from $37,456 for the three months ended March 31, 2023. The decrease in interest expense, net was primarily due to a decrease in amortized issuance costs driven by a lower effective interest rate, as well as the benefit of debt repurchases subsequent to March 31, 2023.
Income tax expense
The income tax expense was $7,299 for the three months ended March 31, 2024 compared to an income tax expense of $3,879 for the three months ended March 31, 2023. The effective tax rate for the three months ended March 31, 2023 is abnormal due to items identified as discrete during the three months ended March 31, 2023 compared to near breakeven year-to-date pre-tax income. The U.K. statutory tax rate increased from 19% to 25% effective April 1, 2023. The change in the effective tax rate in 2024 compared to 2023 primarily arises as a result of discrete tax items identified during the prior year as noted above.
Net income / (loss)
The Company had a net income of $3,056 for the three months ended March 31, 2024 compared to a net loss of $3,808 for the three months ended March 31, 2023. The increase in net income was largely driven by an increase in revenue, offset partially by an increase in cost of services and selling, general and administrative expenses. An increase in other income, net and a decrease in interest expense, net as described above, also contributed to the increase in net income, offset by an increase in income tax expense.
Non-GAAP financial measure
Adjusted EBITDA
Adjusted EBITDA for the Company increased $4,101, or 3.8%, to $111,916 for the three months ended March 31, 2024 from $107,815 for the three months ended March 31, 2023. This increase was primarily driven by increased revenue of $29,889, offset by increased cost of services of $11,434 as described above.
A reconciliation of Net loss to Adjusted EBITDA is as follows for the three months ended March 31, 2024 and 2023:
|
|
For the three months ended March 31, |
|
|||||
(U.S. dollars in thousands) |
|
2024 |
|
|
2023 |
|
||
Net income / (loss) |
|
$ |
3,056 |
|
|
$ |
(3,808 |
) |
Income tax expense |
|
|
7,299 |
|
|
|
3,879 |
|
Interest expense, net |
|
|
34,965 |
|
|
|
37,456 |
|
Depreciation and amortization |
|
|
68,310 |
|
|
|
63,547 |
|
Share-based compensation |
|
|
9,359 |
|
|
|
7,216 |
|
Impairment expense on goodwill and intangible assets |
|
|
653 |
|
|
|
82 |
|
Restructuring and other costs (1) |
|
|
452 |
|
|
|
1,990 |
|
Loss on disposal of subsidiaries and other assets, net |
|
|
177 |
|
|
|
— |
|
Other income, net (2) |
|
|
(12,355 |
) |
|
|
(2,547 |
) |
Adjusted EBITDA |
|
$ |
111,916 |
|
|
$ |
107,815 |
|
7
Analysis by Segment
We operate in two operating segments: Merchant Solutions and Digital Wallets. Our reportable segments are the same as our operating segments. Adjusted EBITDA at the segment level is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. Adjusted EBITDA of each operating segment includes the revenues of the segment less ordinary operating expenses that are directly related to those revenues and an allocation of shared costs.
The Company allocates shared costs to the two segments and Corporate. Shared costs are the cost of people and other resources consumed in activities that provide a benefit across more than one segment. Shared costs are allocated to each segment primarily based on applicable drivers including headcount and revenue.
Three month ended March 31, 2024 compared to three months ended March 31, 2023
Our results by operating segment for the three months ended March 31, 2024 comprised of the following:
(U.S. dollars in thousands) |
|
Merchant Solutions |
|
|
Digital Wallets |
|
|
Corporate (2) |
|
|
Intersegment |
|
|
Total |
|
|||||
Revenue |
|
|
231,398 |
|
|
|
190,457 |
|
|
|
— |
|
|
|
(4,117 |
) |
|
|
417,738 |
|
Adjusted EBITDA(1) |
|
|
49,178 |
|
|
|
83,274 |
|
|
|
(20,536 |
) |
|
|
— |
|
|
|
111,916 |
|
Our results by operating segment for the three months ended March 31, 2023 comprised of the following:
(U.S. dollars in thousands) |
|
Merchant Solutions |
|
|
Digital Wallets |
|
|
Corporate (2) |
|
|
Intersegment |
|
|
Total |
|
|||||
Revenue |
|
|
208,521 |
|
|
|
181,448 |
|
|
|
— |
|
|
|
(2,120 |
) |
|
|
387,849 |
|
Adjusted EBITDA(1) |
|
|
52,336 |
|
|
|
79,209 |
|
|
|
(23,730 |
) |
|
|
— |
|
|
|
107,815 |
|
The increase (decrease) in results by operating segment is shown in the following table:
(U.S. dollars in thousands) |
|
Merchant Solutions |
|
|
Digital Wallets |
|
|
Corporate (2) |
|
|
Intersegment |
|
|
Total |
|
|||||
Revenue |
|
|
22,877 |
|
|
|
9,009 |
|
|
|
— |
|
|
|
(1,997 |
) |
|
|
29,889 |
|
Adjusted EBITDA(1) |
|
|
(3,158 |
) |
|
|
4,065 |
|
|
|
3,194 |
|
|
|
— |
|
|
|
4,101 |
|
Merchant Solutions
Revenue increased by $22,877, or 11.0%, to $231,398 for the three months ended March 31, 2024 from $208,521 for the three months ended March 31, 2023. This increase was mainly due to higher volumes.
Adjusted EBITDA decreased by $3,158, or 6.0%, to $49,178 for the three months ended March 31, 2024 from $52,336 for the three months ended March 31, 2023. This decrease was due to an increase in cost of services (excluding depreciation and amortization) of $11,632, or 10.6%, largely due to higher volumes, along with an increase in credit losses, personnel costs and legal and professional fees. This decrease was offset by an increase in revenue as noted above.
Digital Wallets
Revenue increased by $9,009, or 5.0%, to $190,457 for the three months ended March 31, 2024 from $181,448 for the three months ended March 31, 2023. This increase was primarily due to growth in core verticals driven by iGaming and digital assets.
Adjusted EBITDA increased by $4,065, or 5.1%, to $83,274 for the three months ended March 31, 2024 from $79,209 for the three months ended March 31, 2023. This increase was largely due to decreased personnel costs. This is partially offset by an increase in cost of services (excluding depreciation and amortization) of $1,799, or 3.5%, largely due to growth in higher margin verticals.
8
Corporate
Corporate Adjusted EBITDA, comprising of corporate overhead, increased $3,194, or 13.5% to a loss of $20,536 for the three months ended March 31, 2024 from a loss of $23,730 for the three months ended March 31, 2023. This increased Adjusted EBITDA was primarily driven by a decrease in personnel costs relating to severance expense.
Seasonality
We have experienced in the past, and expect to continue to experience, seasonal fluctuations in our business. For instance, our businesses historically experience increased activity during the traditional holiday period and around other nationally recognized holidays, when certain of our gaming operators may run promotions, consumers enjoy more leisure time and younger consumers may receive our products as gifts. Our Digital Wallets businesses experience increased activity based on the occurrence and timing of sporting events. Volatility in our revenue, key operating metrics or their rates of growth could result in fluctuations in our financial condition or results of operations.
Inflation
While inflation may impact our revenue and expenses, we believe the effects of inflation, if any, on our results of operations and financial condition have not been significant. However, there can be no assurance that our results of operations and financial condition will not be materially impacted by inflation in the future.
Quantitative and Qualitative Disclosure about Market Risk
Our market risk includes the potential loss arising from adverse changes in foreign currency exchange rates and interest rates. We monitor risk exposures on an ongoing basis. The Company utilizes derivative financial instruments to manage interest rate risk on its variable rate debt facilities and term loans. The company does not apply hedge accounting for its derivative financial instruments.
Interest Rate Risk
We are exposed to interest rate risk relating to the portion of our borrowings that are subject to variable interest rates, as well as investment revenue. The Company actively manages interest rate risk through the use of interest rate swaps or caps. Interest rate swaps convert floating rates to fixed, and interest rate caps limit the potential impact of rising interest rates.
As of March 31, 2024, an increase of 100 basis points in interest rates offered on the bank borrowings would result in a $15.5 million unfavorable impact and a decrease of 100 basis points would result in a $15.5 million favorable impact on annualized net loss. Due to the interest rate floors within the Company’s facility agreement of 0.5% on USD SOFR and 0% on EURIBOR, we may not realize the benefit of a decrease of 100 basis points in the applicable interest rates.
As of December 31, 2023, an increase of 100 basis points in interest rates offered on the bank borrowings would result in a $16.0 million unfavorable impact and a decrease of 100 basis points would result in a $16.0 million favorable impact. Due to the interest rate floors within the Company’s facility agreement of 0.5% on USD SOFR and 0% on EURIBOR, we may not realize the benefit of a decrease of 100 basis points in the applicable interest rates.
Foreign Currency Risk
We have global operations and trade in various foreign currencies, primarily the Great British Pound, Euro, Canadian Dollar, Norwegian Krone, Swiss Franc, Swedish Krona and Polish Zloty. In addition, we are exposed to currency risk associated with translating our functional currency financial statements into its reporting currency, which is the U.S. dollar. As a result, we are exposed to movements in the exchange rates of various currencies against the U.S. dollar.
We manage the exposure to currency risk by commercially transacting materially in U.S. dollars, Euros and Great British Pounds, the currencies in which we materially incur operating expenses. We limit the extent to which we incur operating expenses in other currencies, wherever possible, thereby minimizing the realized and unrealized foreign exchange gain/(loss). The currency of the Company’s borrowings is in part matched to the currencies expected to be generated from the Company’s operations. Intercompany funding is typically undertaken in the functional currency of the operating entities or undertaken to ensure offsetting currency exposures.
As of March 31, 2024, had the U.S. dollar strengthened by 10% in relation to all the other currencies, with all other variables held constant, the net assets of the Company would have decreased by $30.1 million. A weakening of the U.S. dollar by 10% against the above currencies would have had an equal and opposite effect.
As of December 31, 2023, had the U.S. dollar strengthened by 10% in relation to all the other currencies, with all other variables held constant, the net assets of the Company would have decreased by $27.5 million. A weakening of the U.S. dollar by 10% against the above currencies would have had an equal and opposite effect.
9
Credit Risk
Credit risk is the risk of financial loss if a consumer or merchant counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from our cash and cash equivalents, settlement receivables, restricted cash in respect to customer accounts, and trade receivables.
The Company is also exposed to potential losses from merchant-related chargebacks. A chargeback occurs when a dispute between a cardholder and a merchant, including a claim for non-delivery of the product or service by the merchant, is not resolved in favor of the merchant and the transaction is charged back to the merchant resulting in a refund of the purchase price to the cardholder. If the Company is unable to collect this chargeback amount from the merchant due to closure, bankruptcy or other reasons, the Company bears the loss for the refund paid to the cardholder. The risk of chargebacks is typically greater for those merchants that promise future delivery of goods and services rather than delivering goods or rendering services at the time of payment.
The cash and cash equivalents and restricted cash in respect to customer accounts are deposited with different banking partners with a variety of credit ratings. Credit exposures are regularly monitored and managed by the Group’s Treasury function with oversight from the Group Safeguarding and Treasury Committee ("STC").
Settlement receivables primarily relate to receivables from third party payment institutions , as well as receivables from distribution partners arising in our Digital Wallets business. These receivables are closely monitored on an ongoing basis. The Digital Wallets business utilizes credit limits and insurance to limit its overall gross exposure to distribution partners.
Credit quality of a customer and distributor is assessed based on their industry, geographical location and financial background, with credit risk managed based on this assessment (i.e. trading limits, shortened payment period and/or requiring collateral, usually in the form of bank guarantees, insurance or cash deposits or holdbacks which can legally be claimed by the Group to cover unpaid receivables). Outstanding trade receivables are regularly monitored to flag any unusual activities such as chargebacks. Having a significant number of consumers and merchants across multiple geographies and industries helps mitigate the Group’s exposure to concentration risk. Through the Group’s global credit risk framework we forecast, under normal business conditions, the probability of the occurrence of credit events before they occur. Customer credit risk is managed by each business unit subject to our established customer credit risk management policies, procedures and controls.
Liquidity Risk
Liquidity risk is the risk that we may be unable to meet our financial obligations as they fall due. We control and monitor both cash levels and cash flow on a regular basis, including forecasting future cash flows. Our objective to managing liquidity is to ensure that, as far as possible, we always have sufficient liquidity to meet our liabilities as they become due.
In order to mitigate short-term liquidity risk and fund future merger and acquisition activity, we have a $305,000 revolving credit facility available, from which we make draw downs and repayments throughout the period. The balance drawn on the revolving credit facility as of March 31, 2024 was $54,218. As of December 31, 2023 we had drawn down $35,640 on our revolving credit facility.
As of March 31, 2024, and December 31, 2023, the total principal amount of our external borrowings was $2,479,003 and $2,519,857. Subject to the limits contained in the credit agreements that govern our credit facilities, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. All interest and mandatory debt repayments were satisfied during December 31, 2023 and for the three months ended March 31, 2024.
Our key debt covenant governing these facilities is financial and is monitored monthly. Our primary financial covenant is to maintain a first lien debt ratio below 7.5x a Last Twelve Months EBITDA measure adjusted for certain items as stipulated in the company’s facilities agreement. As of March 31, 2024, and December 31, 2023, the Company was in compliance with all financial covenants associated with its debt.
In addition, the Company is required to maintain minimum levels of liquidity within its regulated businesses within the United Kingdom and Ireland in accordance with our regulatory requirements. We monitor liquidity levels within our regulated entities on an ongoing basis, in accordance with our liquidity and capital adequacy assessment framework.
Liquidity and Capital Resources
Our primary sources of liquidity have been funds generated from operations, issuance of debt, the use of our revolving credit facilities and a line of credit. We assess our liquidity through an analysis of our working capital together with our other sources of liquidity. As of March 31, 2024 and December 31, 2023, we had $202,134 and $202,322 in cash and cash equivalents. Furthermore, we had $250,782 available under our Revolving Credit Facility as of March 31, 2024. We had $269,360 available under our Revolving Credit Facility as of December 31, 2023, respectively.
In addition to our cash and cash equivalents on our unaudited condensed consolidated statements of financial position, we expect to continue to generate cash from our normal operations as well as the ability to draw down on our credit facilities, disclosed below, as
10
required. We believe that we have sufficient financial resources to fund our activities and execute our business plans during the next 12 months.
Share Repurchase Program
For further discussion regarding our Share Repurchase Program, refer to Note 11, Share Repurchase Program, within the unaudited condensed consolidated financial statements included elsewhere in this Report.
Debt
For further discussion regarding our debt facilities, refer to Note 7, Debt, within the unaudited condensed consolidated financial statements included elsewhere in this Report.
As market conditions warrant, we and/or certain equity holders, Blackstone, CVC and/or our respective affiliates, may from time to time seek to repurchase securities that we have issued or loans that we have borrowed in privately negotiated or open market transactions, by tender offer or otherwise. Subject to any applicable limitations contained in the agreements governing our indebtedness, any such purchases may be funded by existing cash or by incurring new secured or unsecured debt, including borrowings under our credit facilities. The amounts involved in any such purchase transactions, individually or in the aggregate, may be material. Any such purchases may relate to a substantial amount of a particular tranche of debt, with a corresponding reduction, where relevant, in the trading liquidity of that debt. In addition, any such purchases made at prices below the “adjusted issue price” (as defined for U.S. federal income tax purposes) may result in taxable cancellation of indebtedness income to us, which may be material, and result in related adverse tax consequences to us.
Cash Flow
Operating Activities
Net cash flows provided by (used in) operating activities mainly consists of our net income / loss adjusted for non-cash items and movements in working capital.
Non-cash items usually arise as a result of timing differences between expenses recognized and actual cash costs incurred or as a result of other non-cash income or expenses. Non-cash items include: depreciation and amortization; unrealized foreign exchange gain/(loss); deferred tax (expense)/benefit; non-cash interest expense, net; share-based compensation expense; other (expense)/income, net; impairment expense on goodwill and intangible assets; allowance for credit losses; gain/(loss) on disposal of subsidiaries and other assets, net; and non-cash lease expense.
Movements in working capital include the movements in: accounts receivable, net; prepaid expenses, other current assets; accounts payable, other liabilities, and income tax receivable / payable. Movements in working capital are affected by several factors including the timing of month-end and transaction volume, especially for accounts receivable, net and accounts payable.
Net cash flows from operating activities increased by $38,821 to $58,835 for the three months ended March 31, 2024 from $20,014 for the three months ended March 31, 2023. The key reason for the increase is due to lower taxes paid, along with lower restructuring costs paid and the timing of bonus payments.
For the three months ended March 31, 2024 net cash flows used in operating activities of $58,835 primarily consists of a net income of $3,056, adjusted for non-cash items of $84,927, largely driven by depreciation and amortization of $68,581, share-based compensation of $9,359 and allowance for credit losses of $11,739, offset by other income, net of $7,162. This was partially offset by net cash outflows of $29,148 from working capital.
For the three months ended March 31, 2023 net cash flows provided by operating activities of $20,014 primarily consists of a net loss of $3,808, adjusted for non-cash items of $84,569, largely driven by depreciation and amortization of $63,547, share-based compensation of $7,216, deferred tax expense of $7,782 and interest expense, net of $8,563, offset by other income, net and unrealized foreign exchange gain. This was partially offset by net cash outflows of $60,747 from working capital.
Investing Activities
Net cash used in investing activities decreased $18,718 to $13,825 for the three months ended March 31, 2024 from $32,543 for the three months ended March 31, 2023. This decrease is primarily attributed to a decrease in other intangible asset expenditures and the purchase of merchant portfolios of $6,930 and $4,399, respectively, and an inflow from merchant reserves of $6,510.
11
Financing Activities
Net cash used in financing activities decreased $52,182 to $142,376 for the three months ended March 31, 2024 from $194,558 for the three months ended March 31, 2023. The change primarily resulted from a decrease in the outflow of the movement in settlement funds – merchant and customers, net.
The Company’s regulatory obligations in the United Kingdom and Ireland include the requirement to safeguard customer funds that have been received either in exchange for electronic money (“e-money”) issued or within the transaction settlement cycle to merchants. Such amounts are recorded as an asset in our Consolidated Statements of Financial Position, in customer accounts and other restricted cash, net which is presented as part of cash, cash equivalents, customer accounts and other restricted cash, net as reported in the Consolidated Statements of Cash Flows.
The Company also has a corresponding liability to its customers recognized in our Consolidated Statements of Financial Position as funds payable and amounts due to customers, as well as settlement receivables, net, that represent timing differences in the settlement process between the cash settlement of a transaction and the recognition of the associated liability. The movements in these account balances are presented net within financing activities (collectively "Settlement funds - merchant and customer, net"). The current year outflow in Settlement funds - merchant and customers, net is consistent with the decline in customer accounts and other restricted cash, net.
Other factors contributing to the decrease include the repurchase of borrowings of $30,545 during the three months ended March 31, 2024, compared to $57,386 in the three months ended March 31, 2023. Borrowings and repayments on all facilities were $275,242 and $258,759, respectively, for the three months ended March 31, 2024 and $250,781 and $238,329, respectively for the three months ended March 31, 2023.
We believe that our current level of cash and borrowing capacity under debt facilities, together with future cash flows from operations will be sufficient to meet the needs of our existing operations and planned requirements for the foreseeable future.
Accounting Pronouncements Not Yet Adopted
Recently issued accounting pronouncements that may be relevant to our operations but have not yet been adopted are outlined in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, within the financial statements included elsewhere in this Report.
Critical Accounting Estimates
There have been no material changes in our critical accounting estimates during the three months ended March 31, 2024. A detailed discussion of our critical accounting estimates is included within our 2023 Annual Report.
12
Document and Entity Information |
May 14, 2024 |
|---|---|
| Document Information [Line Items] | |
| Document Type | 6-K |
| Amendment Flag | false |
| Document Period End Date | May 14, 2024 |
| Entity Registrant Name | PAYSAFE LIMITED |
| Entity Central Index Key | 0001833835 |
| Current Fiscal Year End Date | --12-31 |
| Entity File Number | 001-40302 |
| Entity Address, Address Line One | 2 Gresham Street |
| Entity Address, City or Town | London |
| Entity Address, Country | GB |
| Contact Personnel Name | Paysafe Limited |
| Entity Address, Postal Zip Code | EC2V 7AD |
Condensed Consolidated Statement of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Statement of Comprehensive Income [Abstract] | ||
| Total Revenue | $ 417,738 | $ 387,849 |
| Cost of services (excluding depreciation and amortization) | 170,373 | 158,939 |
| Selling, general and administrative | 144,808 | 128,311 |
| Depreciation and amortization | 68,310 | 63,547 |
| Impairment expense on goodwill and intangible assets | 653 | 82 |
| Restructuring and other costs | 452 | 1,990 |
| Loss on disposal of subsidiaries and other assets, net | 177 | 0 |
| Operating income | 32,965 | 34,980 |
| Other income, net | 12,355 | 2,547 |
| Interest expense, net | (34,965) | (37,456) |
| Income before taxes | 10,355 | 71 |
| Income tax expense | 7,299 | 3,879 |
| Net income / (loss) | $ 3,056 | $ (3,808) |
| Net income / (loss) per share - basic | $ 0.05 | $ (0.06) |
| Net income/(loss) per share - diluted | $ 0.05 | $ (0.06) |
| Net loss / (income) | $ 3,056 | $ (3,808) |
| (Loss) / gain on foreign currency translation | (7,612) | 2,174 |
| Total comprehensive loss | $ (4,556) | $ (1,634) |
Condensed Consolidated Statement of Financial Position (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Accounts Receivable, Allowance for Credit Loss, Current | $ 6,322 | $ 5,240 |
| Settlement Receivable, Allowance for Credit Loss, Current | $ 4,774 | $ 5,197 |
| Ordinary shares, Par or Stated Value Per Share | $ 0.012 | $ 0.012 |
| Common Stock, Shares Authorized | 1,600,000,000 | 1,600,000,000 |
| Common Stock, Shares, Issued | 61,762,538 | 61,719,443 |
| Common Stock, Shares, Outstanding | 60,773,119 | 61,719,443 |
| Treasury stock share issue | 989,419 | 0 |
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands |
Total |
Common shares [Member] |
Additional paid in capital [Member] |
Accumulated deficit [Member] |
Treasury shares [Member] |
Accumulated other comprehensive income / (loss) [Member] |
|---|---|---|---|---|---|---|
| Beginning balance at Dec. 31, 2022 | $ 859,637 | $ 730 | $ 3,136,426 | $ (2,239,443) | $ (38,076) | |
| Net loss / (income) | (3,808) | (3,808) | ||||
| Gain (loss) on foreign currency translation, net of tax of $0 | 2,174 | 2,174 | ||||
| Shared based compensation | 2,925 | 2,925 | ||||
| Restricted stock units issued | 6 | (6) | ||||
| Conversion of liability classified award to equity | 6,276 | 6,276 | ||||
| Capital contribution | 3,707 | 3,707 | ||||
| Ending balance at Mar. 31, 2023 | 870,911 | 736 | 3,149,328 | (2,243,251) | (35,902) | |
| Beginning balance at Dec. 31, 2023 | 883,313 | 741 | 3,166,012 | (2,259,694) | $ 0 | (23,746) |
| Net loss / (income) | 3,056 | 3,056 | ||||
| Gain (loss) on foreign currency translation, net of tax of $0 | (7,612) | (7,612) | ||||
| Shared based compensation | 9,149 | 9,149 | ||||
| Restricted stock units issued | 1 | (1) | ||||
| Common shares repurchased | (14,000) | (14,000) | ||||
| Ending balance at Mar. 31, 2024 | $ 873,906 | $ 742 | $ 3,175,160 | $ (2,256,638) | $ (14,000) | $ (31,358) |
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Statement of Stockholders' Equity [Abstract] | ||
| Gain (loss) on foreign currency translation, net of tax | $ 0 | $ 0 |
Basis of Presentation and Summary of Significant Accounting Policies |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation and Summary of Significant Accounting Policies | 1. Basis of presentation and summary of significant accounting policies Description of the Business In these unaudited condensed consolidated financial statements and related notes, Paysafe Limited, and its consolidated subsidiaries are referred to collectively as “Paysafe,” “we,” “us,” and “the Company” unless the context requires otherwise. Paysafe is a leading global provider of end-to-end payment solutions. Our core purpose is to enable businesses and consumers to connect and transact seamlessly through our payment platforms. Paysafe Limited was incorporated as an exempted limited company under the laws of Bermuda on November 23, 2020 for purposes of effectuating the merger (the “Transaction”) with Foley Trasimene Acquisition Corp. II (“FTAC”), a special purpose acquisition company that completed its Initial Public Offering (“IPO”) in August 2020, and Pi Jersey 1.5 Limited (“Legacy Paysafe”). In connection with the Transaction, which was consummated on March 31, 2021, the Company’s common shares and warrants were listed on the New York Stock Exchange under the symbols PSFE and PSFE.WS, respectively. Subsequent to the Transaction, Pi Jersey Topco Limited (“Topco”), funds advised by affiliates of CVC Capital Partners (such funds collectively, “CVC”) and The Blackstone Group Inc. (“Blackstone”) continue to retain ownership in the Company.
Basis of Presentation The accompanying unaudited condensed consolidated financial statements for the three months ended March 31, 2024 and the comparative financial information for the three months ended March 31, 2023 and for the year ended December 31, 2023 include the accounts of the Company, and its subsidiaries, based upon information of Paysafe Limited. All intercompany transactions have been eliminated in consolidation. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company’s financial position, results of operations and cash flows have been included.
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 on Form 20-F filed on March 20, 2024.
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any other interim period. Disaggregation of Revenue
The Company provides payment solutions through two primary lines of business: Merchant Solutions and Digital Wallets. For each primary source of revenue within these business lines, the Company’s main performance obligation is to stand ready to provide payment services to merchants and consumers. Due to the concentration of economic factors, products and services in each of the business lines, the Company has presented disaggregated revenue at the segment level (See Note 15).
We do not have any material contract balances associated with our contracts with customers as of March 31, 2024 and December 31, 2023. The Company has elected to exclude disclosing any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. The Company’s most significant performance obligations consist of variable consideration under a stand-ready series of distinct days of service, which typically represent all or almost all of the total transaction price for the related contract. The variable consideration that will be allocated to future days of service is not required to be disclosed as these days of services are wholly unsatisfied at the Company’s reporting date. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material.
Reclassifications
Certain prior period amounts have been reclassified in order to conform with the current period presentation. These reclassifications have no impact on the Company’s previously reported consolidated net loss.
Changes in presentation
During the fourth quarter of 2023, the Company elected to change its presentation of the cash flows associated with "Settlement receivables, net" and "Funds payable and amounts due to customers" from operating activities, to present them as financing activities within its Consolidated Statements of Cash Flows. Comparative amounts have been recast to conform to current period presentation. These recasts had no impact on the Consolidated Statements of Comprehensive Loss, Consolidated Statements of Financial Position or Consolidated Statements of Shareholders' Equity.
The following tables present the effects of the changes in presentation within the Statements of Cash Flows:
Significant accounting policies
There have been no material changes in our significant accounting policies during the three months ended March 31, 2024. A detailed discussion of our significant accounting policies is included within the audited consolidated financial statements for the year ended December 31, 2023 on Form 20-F filed on March 20, 2024. Accounting Pronouncements not yet Adopted
Segment Reporting
In November 2023, the FASB issued ASU 2023-07, which amends Segment reporting (Topic 280). This update enhances reportable segment disclosure requirements, primarily by requiring disclosure of the significant segment expenses for each reportable segment that are regularly provided to the Chief Operating Decision Maker, and aligning the segment reporting disclosure requirements in interim and annual reporting periods. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company expects to adopt this guidance in our December 31, 2024 annual financial statements and this guidance is not expected to have a material impact on the Company’s consolidated financial statements.
Crypto Assets
In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto assets. This update provides guidance on the accounting for and disclosure of crypto assets by requiring that crypto assets that meet criteria defined by the ASU to 1) be measured at fair value separately from other intangible assets in the statement of financial position, 2) to present remeasurement separately from other changes in other intangible assets in the statement of comprehensive income, and 3) to enhance disclosure requirements related to the crypto assets, including providing roll-forward information of crypto asset holdings. This update is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, with early adoption permitted.
The Company purchases cryptocurrency assets on behalf of its customers. All the risks and rewards associated with those assets are transferred to the customer at the time of purchase and the Company has no ability to control the assets and no requirement to safeguard the assets. As a result, the Company does not recognize either the cryptocurrency asset or liability to the customer on its balance sheet. The Company expects to adopt ASU 2023-08 on January 1, 2025 which is not expected to have a material impact on the Company’s consolidated financial statements.
Income Taxes
In December 2023, the FASB issued ASU 2023-09, which amends Income taxes (Topic 270). This update enhances income tax disclosure requirements, primarily by requiring public companies to provide disclosures regarding the statutory tax rate and effective tax rate in tabular format with specific categories identified, and to provide additional disclosures for reconciling items that meet quantitative thresholds. This update is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company expects to adopt this guidance on January 1, 2025 which is not expected to have a material impact on the Company’s consolidated financial statements. |
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Net income / (loss) per share |
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| Net income / (loss) per share attributable to the Company | 2. Net income / (loss) per share
The following table sets forth the computation of the Company’s basic and diluted net income / (loss) per share attributable to the Company.
The Company uses the treasury stock method of calculating diluted net income / (loss) per share. For the three months ended March 31, 2024 we excluded all potentially dilutive stock options and warrants in calculating diluted net income per share as the effect was antidilutive (See Note 10 and 12). For the three months ended March 31, 2023, we excluded all potentially dilutive restricted stock units, stock options and warrants in calculating diluted net loss per share as the effect was antidilutive.
(1) The denominator used in the calculation of diluted net income per share for the three months ended March 31, 2024, includes an additional 328,721 shares representing the dilutive effect of restricted stock units. |
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Taxation |
3 Months Ended |
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Mar. 31, 2024 | |
| Income Tax Disclosure [Abstract] | |
| Taxation | 3. Taxation
We account for income taxes in interim periods pursuant to the provisions of ASC 740, Income Taxes. Under this method, our provision for or benefit from income taxes is computed by applying an estimated annual effective tax rate to the year to date pre-tax book income and the effects of any discrete income tax items are recognized in the periods in which they occur.
Our effective tax rate for the three months ended March 31, 2024 was 70.5%. The difference between our effective tax rate and the U.K. statutory rate of 25% for the three months ended March 31, 2024 was primarily the result of changes to our valuation allowance related to our recoverability of deferred tax assets on restricted interest carryforwards.
Our effective tax rate for the three months ended March 31, 2023 was abnormal due to near break-even year-to-date pre-tax income in relation to discrete items. The difference between our effective tax rate and the U.K. statutory rate of 23.5% for the three months ended March 31, 2023 was primarily driven by these discrete items recorded during the quarter, in addition to fair value movements on warrants which are not subject to tax and changes to our valuation allowance related to our recoverability of deferred tax assets on restricted interest carryforwards.
On December 12, 2022, the European Union ("EU") Member States agreed in principle on the introduction of a global minimum tax rate of 15%. On December 15, 2022, the written procedure for formal adoption of a directive was signed, and transposed into the national law of EU Member States with effectiveness beginning January 1, 2024. The application of the minimum tax rate did not have a material impact on the Company’s consolidated financial statements. |
Goodwill |
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| Goodwill | 4. Goodwill Changes in the carrying amount of goodwill are as follows:
(1) Accumulated impairment loss was $1,159,145 as of March 31, 2024 and December 31, 2023 within the Merchant Solutions segment. (2) Accumulated impairment loss was $723,042 as of March 31, 2024 and December 31, 2023 within the Digital Wallets segment.
The Company performs its annual goodwill impairment test for all reporting units as of October 1st, or when events and circumstances have occurred that would indicate the carrying amount of goodwill exceeds its fair value. No such events and circumstances were identified during the three months ended March 31, 2024 or March 31, 2023. However, failure to achieve future cash flows or declines in the stock price may cause a future impairment of goodwill at the reporting unit level. |
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Intangible Assets |
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| Intangible Assets | 5. Intangible assets The Company’s intangible assets consisted of the following:
Amortization expense on intangible assets for the three months ended March 31, 2024 and 2023, was $66,379 and $62,132, respectively. The increase in gross intangible assets during the three months ended March 31, 2024, relates to capitalized development costs. The Company performs an impairment analysis on intangible assets with finite lives when events and circumstances have occurred that would indicate the carrying amount of intangible assets may not be recoverable. No such events and circumstances were identified during the three months ended March 31, 2024 and 2023. For the three months ended March 31, 2024 and 2023, $653 and $82 of impairment expense was recognized related to software development costs, respectively. |
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| Allowance for Credit Losses | 6. Allowance for credit losses The Company has exposure to credit losses for financial assets, including settlement receivables, accounts receivable, and financial guarantee contracts to the extent that a chargeback claim is made against the Company directly or to the Company’s merchants on card purchases.
The following table summarizes the expected credit allowance activity for settlement receivables, net; accounts receivable, net; and financial guarantee contracts and other, for the three months ended March 31, 2024:
(1) Other mainly relates to the impact of foreign exchange. (2) For the three months ended March 31, 2024 and 2023, recoveries from freestanding credit enhancements related to Settlement receivables, net were $289 and $454, respectively, which are recorded separately from expected credit losses in "Selling, general and administrative" in the unaudited condensed consolidated statement of comprehensive loss.
Credit loss expense for the three months ended March 31, 2024 and 2023 was $8,759 and $3,469, respectively. The increase in credit loss expense was partially due to increased volume of transactions in the Merchant Solutions segment and an increase in aged accounts. Write-offs were $11,189 and $7,314 for the three months ended March 31, 2024 and 2023, respectively. Including recoveries, write offs were comparable period over period. |
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Debt |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | 7. Debt The Company's current facilities include the following: (i) $305,000 senior secured revolving credit facility (the “Revolving Credit Facility”); (ii) $1,018,000 aggregate principal amount senior secured USD first lien term loan facility (the “Term Loan Facility (USD)”)(comprising the original $628,000 and incremental $390,000 facility); (iii) €710,000 aggregate principal amount senior secured EUR first lien term loan facility (the “Term Loan Facility (EUR)”) (comprising the original €435,000 and an incremental €275,000 facility); and (iv) $400,000 aggregate principal amount of USD secured notes and €435,000 aggregate principal amount of EUR secured notes (“Secured Notes”). The Company has made drawdowns and repayments on the Revolving Credit Facility throughout the year. As of March 31, 2024 and December 31, 2023, $54,218 and $35,640, respectively was drawn down on the Revolving Credit Facility. On April 13, 2023, the Company entered into a debt amendment agreement to replace LIBOR with SOFR, following the Financial Conduct Authority's ("FCA") decision to phase out the use of LIBOR by June 30, 2023. The USD Term Loan Facility and USD Revolving Credit Facility previously bore interest at LIBOR plus margin. This contract modification qualified for the relief provided in ASU 2021-01. The Company applied the optional expedient in the standard, accounting for the amendment as if the modification was not substantial and thus a continuation of the existing contract, with the change in rate accounted for prospectively. Line of Credit The Company has a Line of Credit of $75,000 which is restricted for use in funding settlements in the Merchant Solutions business and is secured against known transactions. As of both March 31, 2024 and December 31, 2023, the Company had an outstanding balance of $75,000. The key terms of these facilities were as follows:
(1) For facilities which utilize the EURIBOR and SOFR rates, a rate floor of 0% and 0.5% applies, respectively. (2) The effective interest rate is as of March 31, 2024. (3) Represents Term Loan Facility (USD) and USD Incremental Term Loan as defined under the current facilities. (4) Represents a credit spread adjustment to reflect the historical difference between LIBOR and SOFR. (5) Represent Term Loan Facility (EUR) and EUR Incremental Term Loan as defined under the current facilities. (6) The Term Secured Overnight Financing Rate ("Term SOFR") is the forward-looking term rate based on the SOFR. The Term SOFR is administered by the CME Group Benchmark Association Limited.
For the three months ended March 31, 2024 and 2023, interest expense, including amortization of deferred debt issuance cost, was $34,965 and $37,456, respectively.
Maturity requirements on debt as of March 31, 2024 by year are as follows:
During both the three months ended March 31, 2024 and 2023, the Company made principal payments of $2,547 under its Term Loan Facility. In addition, during the three months ended March 31, 2024 and 2023, the Company repurchased $0 and $10,000, respectively, of Secured Loan Notes and $31,121 and $51,726, respectively, under the Term Loan Facility. This resulted in a gain on repurchase of $576 for the three months ended March 31, 2024, and $4,340 for the three months ended March 31, 2023, recognized within "Other income, net" within the Consolidated Statements of Comprehensive Loss.
As of March 31, 2024, we have committed to future repurchases of debt of $6,381 which have a face value of $6,475.
Compliance with Covenants
The Company’s facilities as described above contain affirmative, restrictive and incurrence-based covenants, including, among others, financial covenants based on the Company’s leverage and Revolving Credit Facility utilization, as defined in the debt agreement. The financial covenants under the facilities require the Company to test its Consolidated First Lien Debt Ratio if the principal amount of the Revolving Credit Facility, less any cash and cash equivalents, at the reporting date exceeds 40% of the total Revolving Credit Facility Commitment. If the Revolving Credit Facility utilization is greater than 40% at the reporting date, there is an additional requirement that the Consolidated First Lien Debt Ratio is not permitted to exceed 7.5 to 1.0. The Consolidated First Lien Debt Ratio is the ratio of (a) consolidated senior secured net debt of the Company and restricted subsidiaries as of the last day of such relevant period to (b) Last Twelve Months ("LTM") EBITDA, as defined in the Senior Credit Facility, of the Company and the restricted subsidiaries for the relevant period. The Company was in compliance with its covenants as of the date of issuance of these unaudited condensed consolidated financial statements. Letters of Credit As of March 31, 2024 and December 31, 2023, the Company had issued approximately $146,006 and $135,413, letters of credit, respectively, for use in the ordinary course of business. |
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Derivative Instruments |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments | 8. Derivative Instruments
The Company’s derivative instruments consist of interest rate swaps, which mitigate the exposure to the variable-rate debt by effectively converting the floating-rate payments to fixed-rate payments. The derivative financial instrument arrangements were entered into to manage its interest rate risk related to its variable rate Term Loan Facility. During the three months ended March 31, 2024, the Company entered into a forward starting interest rate swap. The interest rate swaps are measured at fair value and not designated as a hedge for accounting purposes; as such, any fair value changes are recorded in “Other income, net” in the unaudited condensed consolidated statement of comprehensive loss in the respective period of the change.
The following table summarized the notional amount at inception and fair value of these instruments recognized as "Derivative financial assets" in the unaudited condensed consolidated statements of financial position:
The Company recognized a gain / (loss) for the three months ended March 31, 2024 and 2023 of $3,201 and ($1,208), respectively, of which $670 and ($3,432), respectively, is associated with the gain / (loss) of remeasuring the derivative instrument to fair value at the end of the reporting period. The fair value remeasurement is netted by monthly cash receipts on the interest rate contracts for the three months ended March 31, 2024 and 2023 of $2,531 and $2,224, respectively.
For further information regarding the fair value of the derivative instruments see discussion in Note 12 and 14. |
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Contingent and Deferred Consideration Payable |
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| Contingent And Deferred Consideration Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Contingent and Deferred Consideration Payable | 9. Contingent and deferred consideration payable Contingent and deferred consideration payable is comprised of the following balances:
During the three months ended March 31, 2024, the Company paid $7,755 of the contingent consideration payable, a majority of which related to a prior period acquisition. This contingent and deferred consideration arose as part of the consideration of merchant buyouts, as well as prior year acquisitions, and is payable in cash subject to the future financial performance of the acquisitions. |
Share-based Compensation |
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| Share-based payments | 10. Share-based Compensation
The Company operates two share-based employee compensation plans: the 2018 Pi Jersey Topco Limited Plan ("2018 Plan") for which a majority of the shares vested upon completion of the Transaction (See Note 1) and the 2021 Omnibus Incentive Plan ("2021 Plan"). The 2021 Plan serves as the successor to the 2018 Plan. The 2021 Plan became effective as of March 30, 2021 upon closing of the Transaction. Outstanding awards under the 2018 Plan continue to be subject to the terms and conditions of the 2018 Plan. No additional awards are expected to be granted in the future under the 2018 Plan. Share based compensation expense recognized during the three months ended March 31, 2024 and 2023 under both plans was $9,359 and $7,216. As of March 31, 2024, unrecognized stock-based compensation expense was $36,814.
2021 Omnibus Incentive Plan (“2021 Plan”)
There are 10,580,754 shares authorized for award under the 2021 Plan. Under the 2021 Plan, restricted stock units (“RSUs”) that have a service condition only, generally vest ratably over three years. Performance restricted stock units (“PRSUs”) generally vest at the end of to three years. The number of PRSUs that vest is variable depending upon the probability of achievement of certain internal performance targets and may vest between 0% and 200% of the target share amount.
In prior years, certain PRSUs were granted which were liability-classified share-based payment awards under ASC 718 as the value of the award was fixed and would be settled in a variable number of shares. These awards were settled during the three months ending March 31, 2023 which resulted in conversion of the full liability to additional paid in capital in the unaudited condensed consolidated statement of shareholder's equity. This conversion of $6,276 represents a noncash investing and financing activity within the unaudited condensed consolidated statement of cash flow.
The following table summarizes restricted stock unit activity during the three months ended March 31, 2024.
(1) Represents RSUs and PRSUs granted based on performance target achievement of 100%. (2) Represents the total number of shares vested during the period. Common shares issued, as presented within the unaudited condensed consolidated statement of shareholders' equity, are net of shares withheld for taxes. The total grant date fair value of units vested was $4,413. (3) Represents the adjustment to the number of PRSUs based on actual performance compared to target.
Stock options
There were no stock options granted during the three months ended March 31, 2024 and 2023. There are 166,666 stock options outstanding as of March 31, 2024, of which 55,554 are exercisable. The exercise price of each option is based on either one or two times the fair market value of the Company’s stock at the date of grant. The options have a contractual ten-year life and vest annually in equal increments over three years.
Share based compensation liability (2018 Plan)
Certain employee equity-based awards were modified in conjunction with the Transaction. Their settlement terms changed such that instead of Topco's shares, the awardees received Paysafe Limited common shares as well as Topco’s shares. The modification resulted in a change in the classification of the modified awards, with the Topco shares being accounted for as a liability-classified share-based payment award under ASC 718 as they will be settled in cash. The corresponding liability was measured at fair value at the modification date (i.e. the Transaction date), and subsequently it will be remeasured at fair value at each reporting date, with changes in its value reported as share-based compensation expense. The awards settled in Paysafe Limited common shares continue to be accounted for as equity-based awards.
As of March 31, 2024 and December 31, 2023, the share-based compensation liability was $5,903 and $5,809 which is classified as a current or non-current liability within the unaudited condensed consolidated statements of financial position based on the expected timing of the redemption of shares. During the three months ended March 31, 2024, the liability increased by $94 related to fair value loss.
Employee Share Purchase Plan
Beginning April 1, 2023, employees became eligible to contribute to the Company’s Employee Share Purchase Plan (the “Purchase Plan”). The Purchase Plan is not intended to be an employee benefit plan under the Employee Retirement Income Security Act of 1974, as amended, nor qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. Under the Purchase Plan, eligible employees may designate from one percent to fifteen percent of their compensation to be withheld for the purchase of PSFE shares at the market price of the shares. The Company grants each participating employee one restricted stock unit for each four PSFE shares that are purchased on the last day of the offering period (“Match RSU Award”).
The Match RSU Award cliff vests one year from the last day of the offering period, subject to the employee’s continued employment at the vesting date. The fair value of the Match RSU Award is recognized on a straight-line basis over the vesting period. The maximum number of shares of common stock authorized under this Plan for participant contributions and Match RSU Awards is 2,083,333. Preference Shares We have authorized 233,333,333 shares in the Company that have not yet been issued, the rights and restrictions attached to which are not defined by the Company bylaws. Pursuant to the Company bylaws, preference shares may be issued by the Company from time to time, and the Company Board is authorized (without any requirement for further shareholder action) to determine the rights, preferences, powers, qualifications, limitations and restrictions attached to those shares. |
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Share Repurchase Program |
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Mar. 31, 2024 | |
| Share Repurchase Program Abstract | |
| Share Repurchase Program | 11. Share Repurchase Program
In November 2023, the Board approved a share repurchase program (the “Share Repurchase Program”), authorizing the Company to repurchase up to $50,000 of common shares outstanding. Under the Share Repurchase Program, management is authorized to purchase common shares from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors.
During the three months ended March 31, 2024, we repurchased 989,419 of our common shares for $14,000 at an average price of $14.15 per share, of which $2,000 was unpaid and recognized as a liability within accounts payable and other liabilities. These repurchases are recorded at cost as treasury shares within the unaudited consolidated statements of financial position and unaudited consolidated statements of shareholders' equity. As of March 31, 2024, a total of $36,000 remained available for future repurchases of our common shares under our Share Repurchase Program. |
Fair Value Measurements |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements | 12. Fair Value Measurements
The Company uses the hierarchy prescribed in ASC 820, Fair Value Measurements, for fair value measurements, based on the available inputs to the valuation and the degree to which they are observable or not observable in the market. The three levels of the hierarchy are as follows: • Level 1 Inputs—Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date, • Level 2 Inputs—Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability if it has a specified or contractual term, and • Level 3 Inputs—Unobservable inputs for the asset or liability used to measure fair value allowing for inputs reflecting the Company’s assumptions about what other market participants would use in pricing the asset or liability, including assumptions about risk. The fair value hierarchy of financial instruments measured at fair value as of March 31, 2024 is provided below.
The fair value hierarchy of financial instruments measured at fair value as of December 31, 2023 is provided below.
(1) The Warrants represent the right to purchase one share of the Company’s common shares at a price of $138.00 per share. The Warrants became exercisable on August 21, 2021 and will expire on the fifth anniversary of the Transaction, or upon an earlier redemption. As of March 31, 2024 and December 31, 2023, 53,900,329 warrants were outstanding, all of which were considered public warrants. (2) As of March 31, 2024 and December 31, 2023, the liability for share-based compensation relates to the share-based compensation awards modified in connection with the Transaction as the performance awards were settled (Note 10).
There were no transfers between levels during the three months ended March 31, 2024 and 2023. A reconciliation of the movements in level 3 financial instruments in the period are described in Note 9 and 10.
The valuation techniques and significant unobservable inputs used in determining the fair value measurement of Level 3 financial instruments is set out in the table below. Other than this input, a reasonably possible change in one or more of the unobservable inputs listed below would not materially change the fair value of financial instruments listed below.
The Company considers that the carrying value of cash and cash equivalents, customer accounts and other restricted cash, accounts receivable, settlement receivables, prepaid expenses and other assets, accounts payable and accrued expenses, and liabilities to customers and merchants approximate fair value given the short-term nature of these items. As of March 31, 2024, the carrying amount of our debt approximated fair value (a Level 2 measurement) based on market yields for similar debt facilities and observable trading data related to the Company’s debt securities. |
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Commitments, Contingencies and Guarantees |
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| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments Contingencies and Guarantees | 13. Commitments, Contingencies and Guarantees Litigation provision
Through the normal course of the Company’s business, the Company is subject to a number of litigation proceedings both brought against and brought by the Company. The Company maintains liabilities for losses from legal actions that are recorded when they are determined to be both probable in their occurrence and can be reasonably estimated. On this basis, we have recognized a provision of $553 as of March 31, 2024 and $2,200 as of December 31, 2023 related to certain litigation proceedings. The decrease in the provision is related to a settlement payment during the three months ended March 31, 2024. This amount is presented within “Accounts payable and other liabilities” in the Company’s unaudited condensed consolidated statements of financial position.
On December 10, 2021, a class action complaint, Lisa Wiley v Paysafe Limited was filed, naming among others the Company, our former Chief Executive Officer, and our former Chief Financial Officer, as defendants. The complaint asserts claims, purportedly brought on behalf of a class of shareholders, under Sections 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder, and alleges that the Company and individual defendants made false and misleading statements to the market. In addition, the complaint asserts claims against the individual defendants, under Sections 20(a) of the Exchange Act, alleging that the individual defendants misled the public. On January 21, 2022, a related complaint was brought in the Southern District of New York, which named additional defendants. In May 2022, the securities cases were consolidated into a single matter now captioned In Re: Paysafe Ltd. Securities Litigation.
The complaints seek unspecified damages and an award of costs and expenses, including reasonable attorneys’ fees, on behalf of a purported class of purchasers of our ordinary shares between December 7, 2020, and November 10, 2021. The Company intends to vigorously defend against the foregoing complaints. At this time, the Company is unable to estimate the potential loss or range of loss, if any, associated with these lawsuits, which could be material.
The Company vigorously defends its position on all open cases. While the Company considers a material outflow for any one individual case, unlikely, it is noted that there is uncertainty over the final timing and amount of any potential settlements. Management believes the disposition of all claims currently pending, including potential losses from claims that may exceed the liabilities recorded, and claims for loss contingencies that are considered reasonably possible to occur, will not have a material effect, either individually or in the aggregate, on the Company's consolidated financial condition, results of operations or liquidity.
Financial guarantee contracts
Through services offered in our Merchant Solutions segment, the Company is exposed to potential losses from merchant-related liabilities, including chargebacks. A chargeback occurs when a dispute between a cardholder and a merchant, including a claim for non-delivery of the product or service by the merchant, is not resolved in favor of the merchant and the transaction is charged back to the merchant resulting in a refund of the purchase price to the cardholder. If the Company is unable to collect this chargeback amount from the merchant due to closure, bankruptcy or other reasons, the Company bears the loss for the refund paid to the cardholder. The risk of chargebacks is typically greater for those merchants that promise future delivery of goods and services rather than delivering goods or rendering services at the time of payment. The Company has recorded an accrual for current expected credit losses on financial guarantees as of March 31, 2024 and December 31, 2023 (See Note 6).
As of March 31, 2024 and December 31, 2023, $5,690 and $12,200, respectively, of cash held in reserve at a partner bank for certain merchant chargebacks, fees and other liabilities is presented within "Prepaid expenses and other current assets" in the Consolidated Statements of Financial Position. This reserve is restricted in use until it is replaced with a letter of credit or the related merchant agreement is terminated. During the three months ended March 31, 2024, $6,510 was returned to the Company upon obtaining a letter of credit. These cash flows are presented as an investing activity within the Consolidated Statements of Cash Flows.
Contingencies
Following an internal review of the disclosures in our terms and conditions of foreign exchange rates in our Digital Wallets business for the period January 2018 to August 2022, and pursuant to discussions with our regulator that were initiated by us and concluded in September 2022, we agreed to provide payments to certain customers. The accrual was $2,206 as at December 31, 2023 and was fully settled to customers during the three months ended March 31, 2024. There was no additional provision recorded for three months ended March 31, 2024 and the Company does not expect any additional liability or impact to our ongoing operating results in relation to this matter.
Leases
The Company has operating leases for offices, data centers, and corporate apartments. Leases have remaining lease terms of less than one year to ten years, some of which have the option to extend the lease term for an additional five years. Certain leases also include the option to terminate the lease within one year. We recognize lease extension and termination options that we are reasonably certain to exercise when determining the lease term used to establish our right-of-use assets and lease liabilities.
During the three months ended March 31, 2024, the Company entered into new lease agreements for office space in the United Kingdom and Austria and has recorded right of use assets of $8,513 and associated lease liabilities of $8,404 related to these agreements.
As of March 31, 2024, maturities of lease liabilities on an undiscounted cash flow basis were as follows:
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Other Income, Net |
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| Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Income, Net | 14. Other income, net A summary of the amounts recorded in Other income, net is as follows:
(1) In the three months ended March 31, 2024, the Company entered into an additional derivative financial instrument arrangement to mitigate interest risk on its variable-rate debt (See Note 8). (2) The Company accounts for warrants as derivative liabilities. The warrants were initially recorded at fair value based on the public warrants listed trading price and are subsequently remeasured at the balance sheet date with the changes in fair value recognized in the unaudited condensed consolidated statements of comprehensive loss (See Note 12). (3) Relates to gain on repurchases of the Company's debt (See Note 7). (4) Mainly relates to the release of certain provisions, offset by certain banking fees. |
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Operating Segments |
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Segments | 15. Operating segments
Operating segments are defined as components of an enterprise that engage in business activities and for which discrete financial information is available that is evaluated on a regular basis by the Chief Operating Decision Maker (“CODM”) to make decisions about how to allocate resources and assess performance. Our CODM is defined as our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), and Chief Operating Officer (“COO”). Our operating segments are: Merchant Solutions, which focuses on card not present and card present solutions for small to medium size business merchants; Digital Wallets, which provides wallet based online payment solutions through our Skrill and NETELLER brands; and also enables consumers to use cash to facilitate online purchases through paysafecard prepaid vouchers under the paysafecard and Paysafecash brands. These two operating segments, which are also reportable segments, as they have not been aggregated, are based on how the Company is organized, reflecting the difference in nature of the products and services they each sell. Shared costs are the cost of people and other resources consumed in activities that provide a benefit across more than one segment and are allocated to each segment and Corporate primarily based on applicable drivers including headcount, revenue and Adjusted EBITDA.
The CODM evaluates performance and allocates resources based on Adjusted EBITDA of each operating segment. Adjusted EBITDA of each operating segment includes the revenues of the segment less ordinary operating expenses that are directly related to those revenues and an allocation of shared costs. Corporate overhead costs and Corporate’s allocation of shared costs are included in Corporate in the following table. Corporate overhead costs are costs consumed in the execution of corporate activities that are not directly factored into the production of any service provided by the Company’s segments. The CODM does not receive segment asset data to evaluate performance or allocate resources and therefore such information is not presented.
The information below summarizes revenue and Adjusted EBITDA by segment for the three months ended March 31, 2024:
The information below summarizes revenue and Adjusted EBITDA by segment for the three months ended March 31, 2023:
(1) Corporate consists of corporate overhead and unallocated shared costs of people and other resources consumed in activities that provide a benefit across the Company. (2) Intersegment revenue and related eliminations are primarily for processing of credit card transactions between segments. A reconciliation of total segments Adjusted EBITDA to the Company’s income before taxes is as follows:
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Related Party Transactions |
3 Months Ended |
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Mar. 31, 2024 | |
| Related Party Transactions [Abstract] | |
| Related party transactions | 16. Related party transactions
The Company has provided and purchased services to and from various affiliates of certain directors or entities under common control. The dollar amounts related to these related party activities are not significant to our unaudited condensed consolidated financial statements. Intercompany balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
During 2022, the Company entered into a lease with the affiliate of one of our directors. The balance of the right of use asset and lease liability as of March 31, 2024 was $2,722 and $3,162, respectively. The balance of the right of use asset and lease liability as of December 31, 2023 was $2,867 and $3,327, respectively. We have a ten-year license and risk management agreement to provide data license and risk management solution services with this affiliate.
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Subsequent events |
3 Months Ended |
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Mar. 31, 2024 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | 17. Subsequent events Subsequent to March 31, 2024, the Company repurchased 686,396 common shares for $11,000. |
Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements for the three months ended March 31, 2024 and the comparative financial information for the three months ended March 31, 2023 and for the year ended December 31, 2023 include the accounts of the Company, and its subsidiaries, based upon information of Paysafe Limited. All intercompany transactions have been eliminated in consolidation. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company’s financial position, results of operations and cash flows have been included.
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 on Form 20-F filed on March 20, 2024.
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any other interim period. |
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| Disaggregation of Revenue | Disaggregation of Revenue
The Company provides payment solutions through two primary lines of business: Merchant Solutions and Digital Wallets. For each primary source of revenue within these business lines, the Company’s main performance obligation is to stand ready to provide payment services to merchants and consumers. Due to the concentration of economic factors, products and services in each of the business lines, the Company has presented disaggregated revenue at the segment level (See Note 15).
We do not have any material contract balances associated with our contracts with customers as of March 31, 2024 and December 31, 2023. The Company has elected to exclude disclosing any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. The Company’s most significant performance obligations consist of variable consideration under a stand-ready series of distinct days of service, which typically represent all or almost all of the total transaction price for the related contract. The variable consideration that will be allocated to future days of service is not required to be disclosed as these days of services are wholly unsatisfied at the Company’s reporting date. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material. |
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| Reclassifications | Reclassifications
Certain prior period amounts have been reclassified in order to conform with the current period presentation. These reclassifications have no impact on the Company’s previously reported consolidated net loss.
Changes in presentation
During the fourth quarter of 2023, the Company elected to change its presentation of the cash flows associated with "Settlement receivables, net" and "Funds payable and amounts due to customers" from operating activities, to present them as financing activities within its Consolidated Statements of Cash Flows. Comparative amounts have been recast to conform to current period presentation. These recasts had no impact on the Consolidated Statements of Comprehensive Loss, Consolidated Statements of Financial Position or Consolidated Statements of Shareholders' Equity.
The following tables present the effects of the changes in presentation within the Statements of Cash Flows:
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| Significant accounting policies | Significant accounting policies
There have been no material changes in our significant accounting policies during the three months ended March 31, 2024. A detailed discussion of our significant accounting policies is included within the audited consolidated financial statements for the year ended December 31, 2023 on Form 20-F filed on March 20, 2024. |
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| Recently Adopted Accounting Pronouncements | Accounting Pronouncements not yet Adopted
Segment Reporting
In November 2023, the FASB issued ASU 2023-07, which amends Segment reporting (Topic 280). This update enhances reportable segment disclosure requirements, primarily by requiring disclosure of the significant segment expenses for each reportable segment that are regularly provided to the Chief Operating Decision Maker, and aligning the segment reporting disclosure requirements in interim and annual reporting periods. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company expects to adopt this guidance in our December 31, 2024 annual financial statements and this guidance is not expected to have a material impact on the Company’s consolidated financial statements.
Crypto Assets
In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto assets. This update provides guidance on the accounting for and disclosure of crypto assets by requiring that crypto assets that meet criteria defined by the ASU to 1) be measured at fair value separately from other intangible assets in the statement of financial position, 2) to present remeasurement separately from other changes in other intangible assets in the statement of comprehensive income, and 3) to enhance disclosure requirements related to the crypto assets, including providing roll-forward information of crypto asset holdings. This update is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, with early adoption permitted.
The Company purchases cryptocurrency assets on behalf of its customers. All the risks and rewards associated with those assets are transferred to the customer at the time of purchase and the Company has no ability to control the assets and no requirement to safeguard the assets. As a result, the Company does not recognize either the cryptocurrency asset or liability to the customer on its balance sheet. The Company expects to adopt ASU 2023-08 on January 1, 2025 which is not expected to have a material impact on the Company’s consolidated financial statements.
Income Taxes
In December 2023, the FASB issued ASU 2023-09, which amends Income taxes (Topic 270). This update enhances income tax disclosure requirements, primarily by requiring public companies to provide disclosures regarding the statutory tax rate and effective tax rate in tabular format with specific categories identified, and to provide additional disclosures for reconciling items that meet quantitative thresholds. This update is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company expects to adopt this guidance on January 1, 2025 which is not expected to have a material impact on the Company’s consolidated financial statements. |
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Basis of presentation and summary of significant accounting policies (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of changes in presentation of consolidated statements of cash flows | The following tables present the effects of the changes in presentation within the Statements of Cash Flows:
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Net income / (loss) per share attributable to the Company (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Basic and Diluted Net Loss per Share | For the three months ended March 31, 2024 we excluded all potentially dilutive stock options and warrants in calculating diluted net income per share as the effect was antidilutive (See Note 10 and 12). For the three months ended March 31, 2023, we excluded all potentially dilutive restricted stock units, stock options and warrants in calculating diluted net loss per share as the effect was antidilutive.
(1)
The denominator used in the calculation of diluted net income per share for the three months ended March 31, 2024, includes an additional 328,721 shares representing the dilutive effect of restricted stock units. |
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Goodwill (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Changes in Carrying Amount of Goodwill | Changes in the carrying amount of goodwill are as follows:
(1) Accumulated impairment loss was $1,159,145 as of March 31, 2024 and December 31, 2023 within the Merchant Solutions segment. (2)
Accumulated impairment loss was $723,042 as of March 31, 2024 and December 31, 2023 within the Digital Wallets segment. |
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Intangible Assets (Tables) |
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Intangible Assets | The Company’s intangible assets consisted of the following:
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Allowance for Credit Losses (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Expected Credit Allowance Activity | The following table summarizes the expected credit allowance activity for settlement receivables, net; accounts receivable, net; and financial guarantee contracts and other, for the three months ended March 31, 2024:
(1) Other mainly relates to the impact of foreign exchange. (2)
For the three months ended March 31, 2024 and 2023, recoveries from freestanding credit enhancements related to Settlement receivables, net were $289 and $454, respectively, which are recorded separately from expected credit losses in "Selling, general and administrative" in the unaudited condensed consolidated statement of comprehensive loss. |
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Debt (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long-term Debt Instruments | The key terms of these facilities were as follows:
(1) For facilities which utilize the EURIBOR and SOFR rates, a rate floor of 0% and 0.5% applies, respectively. (2) The effective interest rate is as of March 31, 2024. (3) Represents Term Loan Facility (USD) and USD Incremental Term Loan as defined under the current facilities. (4) Represents a credit spread adjustment to reflect the historical difference between LIBOR and SOFR. (5) Represent Term Loan Facility (EUR) and EUR Incremental Term Loan as defined under the current facilities. (6)
The Term Secured Overnight Financing Rate ("Term SOFR") is the forward-looking term rate based on the SOFR. The Term SOFR is administered by the CME Group Benchmark Association Limited. |
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| Schedule of Long-Term Debt |
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| Schedule of Maturities of Non Current Debt | Maturity requirements on debt as of March 31, 2024 by year are as follows:
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Derivative Instruments (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Financial Assets | The following table summarized the notional amount at inception and fair value of these instruments recognized as "Derivative financial assets" in the unaudited condensed consolidated statements of financial position:
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Contingent and Deferred Consideration Payable (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||
| Contingent And Deferred Consideration Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Schedule of Contingent Consideration Payable | Contingent and deferred consideration payable is comprised of the following balances:
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Share-based Compensation (Tables) |
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| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Restricted Stock Unit Activity | The following table summarizes restricted stock unit activity during the three months ended March 31, 2024.
(1) Represents RSUs and PRSUs granted based on performance target achievement of 100%. (2) Represents the total number of shares vested during the period. Common shares issued, as presented within the unaudited condensed consolidated statement of shareholders' equity, are net of shares withheld for taxes. The total grant date fair value of units vested was $4,413. (3)
Represents the adjustment to the number of PRSUs based on actual performance compared to target. |
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Fair Value Measurements (Tables) |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value Hierarchy of Financial Instruments | The fair value hierarchy of financial instruments measured at fair value as of March 31, 2024 is provided below.
The fair value hierarchy of financial instruments measured at fair value as of December 31, 2023 is provided below.
(1) As of March 31, 2024 and December 31, 2023, the liability for share-based compensation relates to the share-based compensation awards modified in connection with the Transaction as the performance awards were settled (Note 10).
The Warrants represent the right to purchase one share of the Company’s common shares at a price of $138.00 per share. The Warrants became exercisable on August 21, 2021 and will expire on the fifth anniversary of the Transaction, or upon an earlier redemption. As of March 31, 2024 and December 31, 2023, 53,900,329 warrants were outstanding, all of which were considered public warrants. |
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| Schedule of Fair Value Measurement Inputs and Valuation Techniques | The valuation techniques and significant unobservable inputs used in determining the fair value measurement of Level 3 financial instruments is set out in the table below. Other than this input, a reasonably possible change in one or more of the unobservable inputs listed below would not materially change the fair value of financial instruments listed below.
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Commitments, Contingencies and Guarantees (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Maturities of Lease Liabilities | As of March 31, 2024, maturities of lease liabilities on an undiscounted cash flow basis were as follows:
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Other Income, Net (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Summary of Other Income, Net | A summary of the amounts recorded in Other income, net is as follows:
(1) In the three months ended March 31, 2024, the Company entered into an additional derivative financial instrument arrangement to mitigate interest risk on its variable-rate debt (See Note 8). (2) The Company accounts for warrants as derivative liabilities. The warrants were initially recorded at fair value based on the public warrants listed trading price and are subsequently remeasured at the balance sheet date with the changes in fair value recognized in the unaudited condensed consolidated statements of comprehensive loss (See Note 12). (3) Relates to gain on repurchases of the Company's debt (See Note 7). (4)
Mainly relates to the release of certain provisions, offset by certain banking fees. |
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Operating Segments (Tables) |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Segment Reporting Information | The information below summarizes revenue and Adjusted EBITDA by segment for the three months ended March 31, 2024:
The information below summarizes revenue and Adjusted EBITDA by segment for the three months ended March 31, 2023:
(1) Corporate consists of corporate overhead and unallocated shared costs of people and other resources consumed in activities that provide a benefit across the Company. (2)
Intersegment revenue and related eliminations are primarily for processing of credit card transactions between segments. |
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| Reconciliation Of Adjusted EBITDA From Segments | A reconciliation of total segments Adjusted EBITDA to the Company’s income before taxes is as follows:
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Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
May 14, 2024 |
Mar. 31, 2024 |
Dec. 31, 2023 |
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| Accounting Policies [Abstract] | |||
| Entity Incorporation, Date of Incorporation | Nov. 23, 2020 | ||
| Contract balance | $ 0 | $ 0 | |
| Material changes | $ 0 |
Net income / (loss) per share attributable to the Company - Schedule of Basic and Diluted Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
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| Numerator | ||
| Net income / (loss) attributable to the Company - basic | $ 3,056 | $ (3,808) |
| Net income / (loss) attributable to the Company - diluted | $ 3,056 | $ (3,808) |
| Denominator | ||
| Weighted average shares – basic | 61,629,490 | 60,952,372 |
| Weighted average shares – diluted | 61,958,211 | 60,952,372 |
| Net income / (loss) per share attributable to the Company | ||
| Basic | $ 0.05 | $ (0.06) |
| Diluted | $ 0.05 | $ (0.06) |
Net income / (loss) per share - Company s basic and diluted net loss per share attributable to the Company (Parenthetical) (Details) - shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Weighted average shares – diluted | 61,958,211 | 60,952,372 |
| Restricted Stock Units (RSUs) [Member] | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Weighted average shares – diluted | 328,721 | |
Taxation - Additional Information (Details) |
3 Months Ended | ||
|---|---|---|---|
Dec. 12, 2022 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Operating Loss Carryforwards [Line Items] | |||
| Effective tax rate | 70.50% | ||
| United Kingdom | |||
| Operating Loss Carryforwards [Line Items] | |||
| Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-Based Payment Arrangement, Percent | 25.00% | 23.50% | |
| European Union | |||
| Operating Loss Carryforwards [Line Items] | |||
| Global minimum tax rate | 15.00% | ||
Goodwill - Schedule of Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands |
3 Months Ended | |||||
|---|---|---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|||||
| Goodwill [Line Items] | ||||||
| Beginning balance | $ 2,023,402 | $ 1,999,132 | ||||
| Foreign exchange | (16,601) | 9,994 | ||||
| Ending balance | 2,006,801 | 2,009,126 | ||||
| Merchant Solutions [Member] | ||||||
| Goodwill [Line Items] | ||||||
| Beginning balance | [1] | 637,446 | 637,446 | |||
| Foreign exchange | [1] | 0 | 0 | |||
| Ending balance | [1] | 637,446 | 637,446 | |||
| Digital Wallet Segments [Member] | ||||||
| Goodwill [Line Items] | ||||||
| Beginning balance | [2] | 1,385,956 | 1,361,686 | |||
| Foreign exchange | [2] | (16,601) | 9,994 | |||
| Ending balance | [2] | $ 1,369,355 | $ 1,371,680 | |||
| ||||||
Goodwill - Schedule of Changes in Carrying Amount of Goodwill (Parenthetical) (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Merchant Solutions [Member] | ||
| Goodwill [Line Items] | ||
| Goodwill, Impaired, Accumulated Impairment Loss | $ 1,159,145 | $ 1,159,145 |
| Digital Wallet Segments [Member] | ||
| Goodwill [Line Items] | ||
| Goodwill, Impaired, Accumulated Impairment Loss | $ 723,042 | $ 723,042 |
Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Amortization expense on intangible assets | $ 66,379 | $ 62,132 |
| Loss On Intangible Of Impairment | $ 653 | $ 82 |
Allowance for Credit Losses - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Financing Receivable Allowance For Credit Losses [Line Items] | ||
| Credit Loss Write Off | $ 11,189 | $ 7,314 |
| Cumulative Effect, Period of Adoption, Adjustment | ||
| Financing Receivable Allowance For Credit Losses [Line Items] | ||
| Allowance for credit losses increase (decrease) | $ 8,759 | $ 3,469 |
Allowance for Credit Losses - Summary of Expected Credit Allowance Activity (Details) $ in Thousands |
3 Months Ended | |||||
|---|---|---|---|---|---|---|
|
Mar. 31, 2024
USD ($)
| ||||||
| Financing Receivable Allowance For Credit Losses [Line Items] | ||||||
| Beginning balance | $ 22,087 | |||||
| Credit loss expense | 8,759 | |||||
| Recoveries | 2,980 | |||||
| Write-Offs | (11,189) | |||||
| Other | (215) | [1] | ||||
| Ending balance | 22,422 | |||||
| Accounts Receivable, Net | ||||||
| Financing Receivable Allowance For Credit Losses [Line Items] | ||||||
| Beginning balance | 5,240 | |||||
| Credit loss expense | 6,528 | |||||
| Recoveries | 2,848 | |||||
| Write-Offs | (8,292) | |||||
| Other | (2) | [1] | ||||
| Ending balance | 6,322 | |||||
| Settlement Receivables, Net | ||||||
| Financing Receivable Allowance For Credit Losses [Line Items] | ||||||
| Beginning balance | 5,197 | [2] | ||||
| Credit loss expense | 299 | [2] | ||||
| Recoveries | 132 | [2] | ||||
| Write-Offs | (658) | [2] | ||||
| Other | (196) | [1],[2] | ||||
| Ending balance | 4,774 | [2] | ||||
| Financial Guarantee Contracts and Other | ||||||
| Financing Receivable Allowance For Credit Losses [Line Items] | ||||||
| Beginning balance | 11,650 | |||||
| Credit loss expense | 1,932 | |||||
| Write-Offs | (2,239) | |||||
| Other | (17) | [1] | ||||
| Ending balance | $ 11,326 | |||||
| ||||||
Allowance for Credit Losses - Summary of Expected Credit Allowance Activity (Parenthetical) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Credit Loss [Abstract] | ||
| Recoveries (Losses) From Freestanding Credit Enhacements | $ 289 | $ 454 |
Debt - Schedule of Long-term Debt Instruments (Details) € in Thousands, $ in Thousands |
3 Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Mar. 31, 2024
EUR (€)
|
Mar. 31, 2024
USD ($)
|
Dec. 31, 2023
USD ($)
|
|||||||||||||
| Debt Instrument [Line Items] | |||||||||||||||
| Principal Outstanding | $ 2,479,003 | $ 2,519,857 | |||||||||||||
| Term loan facility USD [Member] | USD | Facility maturity date June 28 | |||||||||||||||
| Debt Instrument [Line Items] | |||||||||||||||
| Interest rate (1) | [1],[2],[3] | USD SOFR + 0.11%(4) + 2.75% (0.5% floor) | |||||||||||||
| Effective Interest Rate | [2],[4] | 8.00% | |||||||||||||
| Facility maturity date | [2] | --06-28 | |||||||||||||
| Principal Outstanding | [2] | € 874,841 | 874,841 | ||||||||||||
| Term Loan Facility EUR [Member] | EUR | Facility maturity date June 28 | |||||||||||||||
| Debt Instrument [Line Items] | |||||||||||||||
| Interest rate (1) | [1],[5] | EURIBOR + 3.00% (0% floor) | |||||||||||||
| Effective Interest Rate | [4],[5] | 6.00% | |||||||||||||
| Facility maturity date | [5] | --06-28 | |||||||||||||
| Principal Outstanding | [5] | € 625,106 | 674,623 | ||||||||||||
| Secured Loan Notes E U R | EUR | Facility maturity date June 29 | |||||||||||||||
| Debt Instrument [Line Items] | |||||||||||||||
| Interest rate (1) | [1] | 3.00% | |||||||||||||
| Effective Interest Rate | [4] | 3.20% | |||||||||||||
| Facility maturity date | --06-29 | ||||||||||||||
| Principal Outstanding | € 421,362 | 454,740 | |||||||||||||
| Secured Loan Notes U S D | USD | Facility maturity date June 29 | |||||||||||||||
| Debt Instrument [Line Items] | |||||||||||||||
| Interest rate (1) | [1] | 4.00% | |||||||||||||
| Effective Interest Rate | [4] | 4.20% | |||||||||||||
| Facility maturity date | --06-29 | ||||||||||||||
| Principal Outstanding | € 345,581 | 345,581 | |||||||||||||
| Revolving Credit Facility (USD) [Member] | USD | Facility maturity date December 27 | |||||||||||||||
| Debt Instrument [Line Items] | |||||||||||||||
| Interest rate (1) | [1],[3] | BASE + 0.10%(4) + 2.25% (0% floor) | |||||||||||||
| Effective Interest Rate | [4] | 7.70% | |||||||||||||
| Facility maturity date | --12-27 | ||||||||||||||
| Principal Outstanding | € 24,000 | 24,000 | |||||||||||||
| Revolving Credit Facility (EUR) [Member] | EUR | Facility maturity date December 27 | |||||||||||||||
| Debt Instrument [Line Items] | |||||||||||||||
| Interest rate (1) | [1] | BASE + 2.25% (0% floor) | |||||||||||||
| Effective Interest Rate | [4] | 6.10% | |||||||||||||
| Facility maturity date | --12-27 | ||||||||||||||
| Principal Outstanding | € 28,000 | 30,218 | |||||||||||||
| Line of Credit [Member] | USD | Facility maturity date June 25 | |||||||||||||||
| Debt Instrument [Line Items] | |||||||||||||||
| Interest rate (1) | [1],[6] | Term SOFR (6) + 2.70% | |||||||||||||
| Effective Interest Rate | [4] | 8.10% | |||||||||||||
| Facility maturity date | --06-25 | ||||||||||||||
| Principal Outstanding | € 75,000 | $ 75,000 | |||||||||||||
| |||||||||||||||
Debt - Schedule of Long-term Debt Instruments (Parenthetical) (Details) |
Mar. 31, 2024 |
|---|---|
| Euribor Future | |
| Debt Instrument [Line Items] | |
| Facilities interest rate | 0.00% |
| SOFR [Member] | |
| Debt Instrument [Line Items] | |
| Facilities interest rate | 0.50% |
Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|---|
| Debt Disclosure [Abstract] | |||
| Principal Outstanding | $ 2,479,003 | $ 2,519,857 | |
| Unamortized debt issuance cost | (21,651) | (18,024) | |
| Total | 2,457,352 | 2,501,833 | |
| Short-term debt | 10,190 | 10,190 | $ 10,190 |
| Non-current debt | $ 2,447,162 | $ 2,491,643 |
Debt - Schedule of Maturities of Debt (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Long-Term Debt, Rolling Maturity [Abstract] | ||
| Remainder 2024 | $ 7,642 | |
| 2025 | 85,190 | |
| 2026 | 10,190 | |
| 2027 | 64,408 | |
| 2028 | 1,511,252 | |
| 2029 and thereafter | 800,321 | |
| Total | $ 2,479,003 | $ 2,519,857 |
Derivative Instruments - Schedule of Derivative Financial Assets (Details) - USD-1 month SOFR - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
| Interest Rate Swap | ||
| Derivatives, Fair Value [Line Items] | ||
| Derivative Notional Amount | $ 285,755 | |
| Derivative, Fixed rate | 2.10% | |
| Derivative, Maturity Date | Mar. 31, 2026 | |
| Derivative, Effective date | Mar. 31, 2022 | |
| Derivative, Fair Value | $ 10,823 | $ 10,427 |
| Forward Starting Interest Rate Swap | ||
| Derivatives, Fair Value [Line Items] | ||
| Derivative Notional Amount | $ 110,047 | |
| Derivative, Fixed rate | 3.30% | |
| Derivative, Maturity Date | Dec. 31, 2027 | |
| Derivative, Effective date | Mar. 31, 2026 | |
| Derivative, Fair Value | $ 274 | $ 0 |
Derivative instruments - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
|---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|||
| Derivative Instruments Not Designated as Hedging Instruments [Abstract] | ||||
| Fair value gain (loss) on derivative instruments | $ 670 | $ (3,432) | ||
| Cash Payment Of Fair Value Remeasurement | 2,531 | 2,224 | ||
| Gain (loss) on derivative instruments | [1] | $ 3,201 | $ (1,208) | |
| ||||
Contingent and Deferred Consideration Payable - Schedule of Contingent Consideration Payable (Details) $ in Thousands |
3 Months Ended |
|---|---|
|
Mar. 31, 2024
USD ($)
| |
| Contingent And Deferred Consideration Payable [Abstract] | |
| Beginning balance | $ 18,706 |
| Payments made during the period | (7,755) |
| Additions in The period | 0 |
| Fair value loss and other | (126) |
| Ending balance | 10,825 |
| Current | 10,183 |
| Non-current | $ 642 |
Contingent and Deferred Consideration Payable - Additional Information (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Contingent And Deferred Consideration Payable [Line Items] | ||
| Contingent consideration paid | $ 7,755 | |
| Contingent and deferred consideration payable – non-current | $ 642 | $ 6,878 |
Share-based Compensation - Additional information (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
|
Mar. 31, 2024
USD ($)
Plan
shares
|
Mar. 31, 2023
USD ($)
shares
|
Dec. 31, 2021
shares
|
Dec. 31, 2023
USD ($)
shares
|
|
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
| Number of share-based employee compensation plans | Plan | 2 | |||
| Liability Increased | $ | $ 94 | |||
| Liability for share-based compensation - current | $ | 5,903 | $ 5,809 | ||
| Share-based compensation | $ | 9,359 | $ 7,216 | ||
| Share-based compensation, unrecognized | $ | $ 36,814 | |||
| Common Stock, Shares Authorized | 1,600,000,000 | 1,600,000,000 | ||
| Preferred stock, shares authorized | 233,333,333 | |||
| Stock options | ||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant | 0 | 0 | ||
| 2021 Plan | ||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
| Number of shares authorized | 10,580,754 | |||
| Conversion of liability award to equity | $ | $ 6,276 | |||
| 2021 Plan | Stock options | ||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
| Weighted average period compensation is expected | 3 years | |||
| Contractual Life | 10 years | |||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant | 166,666 | |||
| Shares Exercisable | 55,554 | |||
| Twenty Eighteen And Twenty Twenty One Plan Member | ||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
| Share-based compensation | $ | $ 9,359 | $ 7,216 | ||
| Minimum | 2021 Plan | ||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
| Internal performance targets | 0.00% | |||
| Award Vesting Period | 1 year | |||
| Maximum | 2021 Plan | ||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
| Internal performance targets | 200.00% | |||
| Award Vesting Period | 3 years | |||
| Maximum | Employee Share Purchase Plan [Member] | ||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
| Common Stock, Shares Authorized | 2,083,333 | |||
Share-based Compensation - Summary of Restricted Stock Unit Activity (Details) - 2021 Plan - Restricted Stock Units (RSUs) |
3 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
|
Mar. 31, 2024
$ / shares
shares
| ||||||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
| Ordinary shares, Nonvested Beginning Balance | shares | 2,860,058 | |||||||
| Ordinary shares, Granted | shares | 140,374 | [1] | ||||||
| Ordinary shares, Vested | shares | (152,754) | [2] | ||||||
| Ordinary shares, Forfeited | shares | (141,116) | |||||||
| Restricted Stock Units, Performance adjustments | shares | (11,942) | [3] | ||||||
| Ordinary shares, Nonvested Ending Balance | shares | 2,694,620 | |||||||
| Weighted Average Grant Date Fair Value, Outstanding Beginning Balance | $ / shares | $ 27.43 | |||||||
| Weighted Average Grant Date Fair Value, Granted | $ / shares | 14.01 | [1] | ||||||
| Weighted Average Grant Date Fair Value, Vested | $ / shares | 28.98 | [2] | ||||||
| Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 19.99 | |||||||
| Weighted Average Grant Date Fair Value, Performance adjustment | $ / shares | 0 | [3] | ||||||
| Weighted Average Grant Date Fair Value, Outstanding Ending balance | $ / shares | $ 25.01 | |||||||
| ||||||||
Share-based Compensation - Summary of Restricted Stock Unit Activity ( Parenthetical) (Details) |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
| Performance target achievement percentage | 100.00% |
Share Repurchase Program (Additional Information) (Details) - USD ($) $ / shares in Units, $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
Nov. 30, 2023 |
|---|---|---|---|
| Equity, Class of Treasury Stock [Line Items] | |||
| Repurchase common shares | 989,419 | 0 | |
| Repurchase common share value | $ 14,000 | $ 0 | |
| Share Repurchase Program [Member] | |||
| Equity, Class of Treasury Stock [Line Items] | |||
| Repurchase common shares authorized value | $ 50,000 | ||
| Repurchase common shares | 989,419 | ||
| Repurchase common share value | $ 14,000 | ||
| Average price per shares | $ 14.15 | ||
| Accounts payable and other liabilities | $ 2,000 | ||
| Available for future repurchases value | $ 36,000 |
Fair Value Measurements - Schedule of Fair Value Hierarchy of Financial Instruments (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
||||
|---|---|---|---|---|---|---|
| Level 1 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Total financial assets | $ 0 | $ 0 | ||||
| Financial Liabilities Fair Value Disclosure, Total | 1,698 | 1,423 | ||||
| Level 2 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Total financial assets | 11,097 | 10,427 | ||||
| Financial Liabilities Fair Value Disclosure, Total | 0 | 0 | ||||
| Level 3 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Total financial assets | 0 | 0 | ||||
| Financial Liabilities Fair Value Disclosure, Total | 16,728 | 24,515 | ||||
| Warrant [Member] | Level 1 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Financial Liabilities Fair Value Disclosure, Total | [1] | 1,698 | 1,423 | |||
| Warrant [Member] | Level 2 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Financial Liabilities Fair Value Disclosure, Total | [1] | 0 | 0 | |||
| Warrant [Member] | Level 3 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Financial Liabilities Fair Value Disclosure, Total | [1] | 0 | 0 | |||
| Liability for Share-Based Compensation | Level 1 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Financial Liabilities Fair Value Disclosure, Total | [2] | 0 | 0 | |||
| Liability for Share-Based Compensation | Level 2 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Financial Liabilities Fair Value Disclosure, Total | [2] | 0 | 0 | |||
| Liability for Share-Based Compensation | Level 3 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Financial Liabilities Fair Value Disclosure, Total | [2] | 5,903 | 5,809 | |||
| Derivative Financial Instruments, Assets [Member] | Level 1 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Total financial assets | 0 | 0 | ||||
| Derivative Financial Instruments, Assets [Member] | Level 2 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Total financial assets | 11,097 | 10,427 | ||||
| Derivative Financial Instruments, Assets [Member] | Level 3 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Total financial assets | 0 | 0 | ||||
| Contingent Consideration Payable | Level 1 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Financial Liabilities Fair Value Disclosure, Total | 0 | |||||
| Contingent Consideration Payable | Level 2 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Financial Liabilities Fair Value Disclosure, Total | 0 | 0 | ||||
| Contingent Consideration Payable | Level 3 | ||||||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
| Financial Liabilities Fair Value Disclosure, Total | $ 10,825 | $ 18,706 | ||||
| ||||||
Fair Value Measurements - Schedule of Fair Value Hierarchy of Financial Instruments (Parenthetical) (Details) - $ / shares |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
| Exercise Price of Warrants | $ 138 | |
| Class of Warrant or Right, Outstanding | 53,900,329 | 53,900,329 |
Fair Value Measurements - Schedule of Fair Value Measurement Inputs and Valuation Techniques (Details) - Level 3 - Market and income approach - Measurement Input, Discount Rate |
Mar. 31, 2024 |
|---|---|
| Liability for Share-Based Compensation | |
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
| Liability for share-based compensation | 16.5 |
| Contingent Consideration Payable [Member] | |
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
| Contingent consideration payable | 5 |
Commitment, Contingencies and Guarantees - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
| Loss Contingencies [Line Items] | |||
| Provision for litigation proceedings | $ 553 | $ 2,200 | |
| Cash held in reserve | 5,690 | 12,200 | |
| Additional provision | 0 | 2,206 | |
| Proceeds under line of credit | 225,000 | $ 225,000 | |
| Right of use asset | 28,649 | $ 22,120 | |
| Lease liabilities | 31,598 | ||
| Financial guarantee contracts | |||
| Loss Contingencies [Line Items] | |||
| Proceeds under line of credit | 6,510 | ||
| Lease Agreement [Member] | |||
| Loss Contingencies [Line Items] | |||
| Right of use asset | 8,513 | ||
| Lease liabilities | $ 8,404 | ||
Commitments, Contingencies and Guarantees - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands |
Mar. 31, 2024
USD ($)
|
|---|---|
| Commitments and Contingencies Disclosure [Abstract] | |
| Remainder 2024 | $ 6,383 |
| 2025 | 7,836 |
| 2026 | 6,153 |
| 2027 | 4,830 |
| 2028 | 2,026 |
| 2029 and beyond | 10,921 |
| Total lease payments | 38,149 |
| Less: interest | (6,551) |
| Total lease liability | $ 31,598 |
Other Income, Net - Schedule of Summary of Other Income, Net (Details) - USD ($) $ in Thousands |
3 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|||||||||
| Other Income and Expenses [Abstract] | ||||||||||
| Foreign exchange gain / (loss) | $ 5,193 | $ (642) | ||||||||
| Fair value loss on contingent consideration | (114) | (253) | ||||||||
| Gain / (loss) on derivative instruments | [1] | 3,201 | (1,208) | |||||||
| Fair value loss on warrant liability | [2] | (275) | (1,913) | |||||||
| Gain on debt repurchases | [3] | 576 | 4,340 | |||||||
| Other | [4] | 3,774 | 2,223 | |||||||
| Other income, net | $ 12,355 | $ 2,547 | ||||||||
| ||||||||||
Operating Segments - Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |||||
|---|---|---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|||||
| Segment Reporting Information [Line Items] | ||||||
| Revenue from external customers | $ 408,263 | $ 380,307 | ||||
| Interest revenue | 9,475 | 7,542 | ||||
| Intersegment Revenue | [1],[2] | 0 | 0 | |||
| Total Revenue | 417,738 | 387,849 | ||||
| Adjusted EBITDA | 111,916 | 107,815 | ||||
| Merchant Solutions | ||||||
| Segment Reporting Information [Line Items] | ||||||
| Revenue from external customers | 226,667 | 206,362 | ||||
| Interest revenue | 618 | 39 | ||||
| Intersegment Revenue | [2] | 4,113 | 2,120 | |||
| Total Revenue | 231,398 | 208,521 | ||||
| Adjusted EBITDA | 49,178 | 52,336 | ||||
| Digital Wallet | ||||||
| Segment Reporting Information [Line Items] | ||||||
| Revenue from external customers | 181,596 | 173,945 | ||||
| Interest revenue | 8,857 | 7,503 | ||||
| Intersegment Revenue | [2] | 4 | 0 | |||
| Total Revenue | 190,457 | 181,448 | ||||
| Adjusted EBITDA | 83,274 | 79,209 | ||||
| Corporate Segment | ||||||
| Segment Reporting Information [Line Items] | ||||||
| Revenue from external customers | [1] | 0 | 0 | |||
| Interest revenue | [1] | 0 | 0 | |||
| Total Revenue | [1] | 0 | 0 | |||
| Adjusted EBITDA | [1] | (20,536) | (23,730) | |||
| Intersegment | ||||||
| Segment Reporting Information [Line Items] | ||||||
| Revenue from external customers | 0 | 0 | ||||
| Interest revenue | 0 | 0 | ||||
| Intersegment Revenue | [2] | (4,117) | (2,120) | |||
| Total Revenue | (4,117) | (2,120) | ||||
| Adjusted EBITDA | $ 0 | $ 0 | ||||
| ||||||
Operating Segments - Reconciliation Of Revenue From Segments (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Segment Reporting [Abstract] | ||
| Segments Adjusted EBITDA | $ 132,452 | $ 131,545 |
| Corporate costs | (20,536) | (23,730) |
| Depreciation and amortization | (68,310) | (63,547) |
| Share-based compensation | (9,359) | (7,216) |
| Restructuring and other costs | (452) | (1,990) |
| Impairment expense on goodwill and intangible assets | (653) | (82) |
| Other income, net | 12,355 | 2,547 |
| Loss on disposal of subsidiary and other assets, net | (177) | 0 |
| Interest expense, net | (34,965) | (37,456) |
| Income before taxes | $ 10,355 | $ 71 |
Related Party Transactions - Additional Information (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Related Party Transaction [Line Items] | ||
| Operating lease right-of-use assets | $ 28,649 | $ 22,120 |
| Lease Liability related to Director | 23,357 | 16,963 |
| Directors Member | ||
| Related Party Transaction [Line Items] | ||
| Operating lease right-of-use assets | 2,722 | 2,867 |
| Lease Liability related to Director | $ 3,162 | $ 3,327 |
Subsequent events (Additional Information) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2024 |
|
| Subsequent Event [Line Items] | ||
| Company repurchased, Value | $ 11,000 | $ 14,000 |
| Company repurchased, Share | 686,396 |
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