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Bruce Lowthers took over a stumbling Paysafe Ltd. back in May, and now with three months evaluating the company behind him, the new chief executive early Wednesday offered encouragement mixed with some tough talk.
Speaking particularly about product innovation, Lowthers lowered the boom, citing what he sees as an imbalance that has led to too much emphasis on innovation for merchants and too little on new products and services for consumers, such as improvements in digital wallets. “Bluntly, we have lost our way here,” he told equity analysts on a call to discuss the company’s second-quarter results.
Indeed, Lowthers’s indictment went deeper as he cited faults such as an organizational “silo structure” that has led to needless overlap. “There are a few areas that frankly are not working well today,” he said. “The organization is still too complex.”
All in all, he summed up his recovery plan in just a few words: “It’s past time to return to our early entrepreneurial days and help merchants to grow.”
Lowthers, who arrived at Paysafe after more than 14 years of management experience at the giant processor FIS Inc., has had to contend with other issues that continue to haunt the company, including weakness in its European i-gaming business brought on by regulatory changes in Germany and the Netherlands. European i-gaming accounts for most of Paysafe’s digital-product revenue.
Offsetting this development, though, are encouraging results in its U.S. i-gaming market, where the company is processing bets in 22 states. “We continue to roll out user-experience improvements in our wallet,” Lowthers noted. “We continue to see improvement in U.S. i-gaming. It’s a priority for us. We expect to lead the U.S. market in i-gaming.”
Paysafe offers two digital-wallet products, Skrill and Neteller, but Lowthers told the analysts the company is setting up what he called a “wallets division” to bring its products under one roof within the company’s structure.
Besides emphasizing a return to growth, Lowthers outlined a few other steps in his early strategy for the company, including recruiting new talent to help drive product innovation. “Coming in, I had a pretty good bead on what I was stepping into,” he said. “We had some issues around product innovation and sales that we can address. We’ve got a good brand to build off of. I’m confident that the changes we make in the next few months will set us up for growth in 2023.”
For the quarter, payments volume grew 3% to $33.4 billion, led by activity within U.S. small businesses and i-gaming. But revenue dipped 3% on a constant-currency basis to $378.9 billion, leading to a 9% margin drop to $103 million.
