Paysafe’s Top Brass Notes Some Improvement But Adds Much Is ‘Yet to Be Done’

Bruce Lowthers has been a man on a mission since taking over as chief executive at a struggling Paysafe Ltd. nearly two years ago, and early on Thursday he laid out an agenda for the work his company has yet to do. While he touted some improvement so far, “there is much to be done” including  “better growth and better execution,” he told equity analysts on a call to discuss his company’s fourth-quarter 2023 and full-year results.

His priorities now are to expand the company’s reach among small merchants (SMBs), particularly via direct sales in addition to sales through independent agents. To that end, Paysafe plans to hire 170 more salespeople this year, he told the analysts.  Other priorities include digital wallets, particularly a new one for those same small merchants the company is targeting. This initiative is “a growing opportunity,” Lowthers said, as it builds on expertise the company has long depended on for its consumer wallet, now referred to as the classic digital wallet.

The big processor has its work cut out as it works on its turnaround. Revenue from direct sales to SMBs, for example, shrank by 2% in 2023, the company disclosed Thursday. That’s where that additional salesforce, as well as a focus on offers of working capital and new point-of-sale devices and other services, will come in, Lowthers said. He also wants to see more cross-selling effort in this area, a move that the new business wallet will depend on.

“One of the things I noted when I came in was we had very little cross-sell because of our silos,” Lowthers noted, referring to parts of the company that did not cross-communicate well. Now, he said, cross-selling related products to the company’s merchant base is a priority.

Paysafe can point to some improvement so far since it embarked on its turnaround in 2022. Revenue growth among SMBs in 2023 registered at 11%, back to where it was in 2021 after dipping to 8% in 2022. Revenue from Paysafe’s e-commerce services and its classic digital wallets returned to positive growth last year, at 29% and 16%, respectively, after declines in 2021 and 2022.

But this is just the start. “What we really need to do is ramp up the SMB channel,” noted Paysafe’s chief financial officer, Alex Gersh, during the call. “We have a lot of work to do there. We will see improvement.” The new merchant wallet will help as it rolls out, he noted.

The challenge is significant. The average merchant in Paysafe’s  “direct book,” said Lowthers, is four times smaller than in the ISO book, and the “churn,” or cancellation rate, is higher. “We need to mitigate churn on the direct side,” he said. At the same time, sales through ISOs involves compensation to the independent agents, which “really affects margins,” he added.

For the quarter, Paysafe recorded $35.8 billion in volume, up 8% year-over-year, while revenue also grew 8% to $414.5 million. Net income improved fully 23%, to $40.9 million. For the full year, volume grew 8% to $140.2 billion, while revenue came in at $1.6 billion, a 7% improvement. Paysafe’s net for the year totaled $143.9 million, a 5% jump from 2022.