Past Its SPAC, Paysafe Logs First-Quarter Gains While Seeking to Expand in U.S. iGaming

Paysafe Group Holdings Ltd. has had an eventful six months, and on Tuesday the big processor indicated it’s going to be busy cultivating its stakes in U.S. online gambling and other specialized markets. “Our goal is to be the leading specialized payments platform,” declared chief executive Philip McHugh during a conference call to discuss the company’s first-quarter results.

In that plan, McHugh left no doubt iGaming in North America, as Paysafe calls it, looms large for the London-based company. Paysafe is processing bets in 15 states and holds a “dominant position” in the market in Canada, he told analysts on the call. “You could have 25 of the 50 states opening up iGaming,” McHugh said. “That’s a nice tailwind.” A related market, sports betting, is also developing in the United States, with 21 states at last count having legalized the activity in one form or another.

Paysafe products, such as its Neteller payments gateway and its closed loop Paysafecard, play a key role in this market, but McHugh sees a broader opportunity. Paysafe’s Skrill wallet and Neteller “point us to win beyond iGaming, including physical goods,” he said. But he said a digital wallet specialized for gaming “is a need in the market.” All told, Paysafe saw a 66% increase year-over-year in its North American iGaming revenue, though the company did not release absolute figures.

Another near-term opportunity lies in cryptocurrency, where Paysafe is “making good strides” through a link forged in March with the Coinbase cryptocurrency platform, McHugh said. “We’re building a [digital] wallet that can expand in crypto trading,” McHugh said. “We have a roadmap where we can be a player not only in gaming but in trading.”

The company’s mainline acquiring business, too, is rebounding as the U.S. economy recovers from lockdowns and other Covid-related restrictions. “Across the board, the U.S. [small-business] recovery is a nice tailwind for us,” McHugh said, adding that he sees the travel segment as “an emerging tailwind.”

The company, which in March completed a merger with a special purpose acquisition company (SPAC) to go public, reported in December, when the merger was announced, that traditional processing accounts for 72% of its business, with digital wallets taking a 24% share and so-called e-cash accounting for the remainder.

On Tuesday, Paysafe reported $27.7 billion in first-quarter payments volume, up 8% from the same period last year. Revenue totaled $377.4 million, a 5% increase. The company’s biggest unit, Integrated Processing, saw gains in Europe and the United States, recording a 17% jump in volume to $21.6 billion. But revenue fell 5% to $176.9 million. The Digital Wallet segment saw volume drop 25% to $4.6 billion, with a 13% fall in revenue to $94.9 million. Paysafe’s eCash operation notched a volume rise of 61%, to $1.5 billion, while revenue rose 63% to $112.9 million.