Press releases

Paysafe Reports First Quarter 2022 Results; Reaffirms Full Year Outlook

May 11, 2022

London, UK – May 11, 2022 – Paysafe Limited (“Paysafe” or the “Company”) (NYSE: PSFE) (PSFE.WS), a leading specialized payments platform, today announced its financial results for the first quarter of 2022.

First Quarter 2022 Financial Highlights

(Metrics compared to first quarter of 2021)

  • Total Payment Volume of $31.2 billion*, increased 13%
  • Revenue of $367.7 million, decreased 3%; Revenue approximately flat on a constant currency basis
  • Net loss attributable to the Company of $1.2 billion, compared to net loss of $60.6 million, and inclusive of a non-cash impairment charge of $1.2 billion
  • Adjusted EBITDA of $104.0 million, decreased 8%

 

Bruce Lowthers, CEO of Paysafe, commented: “I am thrilled to be joining the talented Paysafe team at such a pivotal time. Paysafe has a long track record of being a pioneer in payments and with a lot of potential to grow in verticals with strong tailwinds. I look forward to working with the team to seize the opportunities ahead, drive more innovation in the fintech ecosystem and ultimately generate greater shareholder value.”           

Izzy Dawood, CFO of Paysafe, commented: “Paysafe is off to a good start this year, posting first quarter results ahead of our expectations. We are particularly pleased with the strong performance from our US Acquiring business, which delivered double-digit volume, revenue and adjusted EBITDA growth. We are winning across Digital Commerce and the turnaround of the digital wallet business continues to show progress. Additionally, Paysafe is succeeding in North America iGaming, recently launching in Ontario’s new private market. Despite macro headwinds, we remain confident in our full year outlook supported by continued momentum in US Acquiring and our pipeline across Digital Commerce.”     

Recent Strategic and Operational Highlights

  • Strong growth from US Acquiring – volume increased 21% year-over-year
  • Won ‘Payments Provider’ 2022 eGaming Review North America award
  • Launched with multiple iGaming operators in Ontario’s new private market, providing traditional and alternative payment solutions through Paysafe’s best-in-breed payment gateway
  • Expanded longstanding payments partnership with Betsson Group into the US iGaming market (Colorado)
  • Expanded collaboration with Playtech into the UK and Europe following success across multiple US states
  • Strengthened Paysafe’s New York sports-betting presence with Resorts WorldBET partnership, building on Paysafe’s successful launch into the New York market with multiple brands in January

 

Impairment of Goodwill

Due to a sustained decline in Paysafe’s stock price and market capitalization, as well as current market and macroeconomic conditions, Paysafe recognized a $1.2 billion impairment of goodwill in the first quarter of 2022. The non-cash impairment charge will not have any impact on the Company’s compliance with its debt covenants, cash flows or liquidity. Additional information about the results of the goodwill impairment test and related disclosures will be available in the Company's interim financial report on Form 6-K to be filed with the SEC.

* Volumes exclude embedded finance related volumes of $4.4 billion.

First Quarter 2022 Summary of Consolidated Results

 

 

Three months ended

 

 

 

March 31,

 

($ in thousands) (unaudited)

 

2022

 

 

2021

 

Revenue

 

$

367,668

 

 

$

377,424

 

Gross Profit (excluding depreciation and amortization)

 

$

220,565

 

 

$

226,387

 

Net loss attributable to the Company

 

$

(1,171,183

)

 

$

(60,647

)

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

103,967

 

 

$

113,230

 

Adjusted EBITDA margin

 

 

28.3

%

 

 

30.0

%

 

Total revenue for the first quarter of 2022 was $367.7 million, a decrease of 3%, compared to $377.4 million in the prior year period. Excluding a $11.6 million unfavorable impact from year-over-year changes in foreign exchange rates, revenue was approximately flat compared to the prior year period. Growth from US Acquiring, which increased 10%, was offset by declines in Digital Commerce, which decreased 11%, reflecting unfavorable foreign exchange as well as market headwinds related to gambling regulations in Europe, partially offset by the contribution from acquisitions completed in the last twelve months. Additionally, in the prior year period, Paysafe’s eCash solutions benefited from comparably strong volumes associated with COVID-19 lockdowns in Europe.

Net loss attributable to the Company for the first quarter was $1.2 billion, compared to net loss of $60.6 million in the prior year period, reflecting the aforementioned impairment charge. This was partially offset by a $66.9 million reduction in share-based compensation due to shares vested on completion of the Transaction in the prior year period. Additionally, interest expense of $26.0 million decreased by $36.4 million as a result of the Company’s debt refinancing completed in 2021. 

Adjusted EBITDA for the first quarter was $104.0 million, a decrease of 8%, compared to $113.2 million in the prior year period. Adjusted EBITDA margin decreased to 28.3%, compared to 30.0% in the prior year period, primarily reflecting business mix.

First quarter net cash from operating activities was $503.8 million, compared to $48.7 million in the prior year period. Free cash flow was $59.2 million, compared to $108.5 million in the prior year period.

Summary of Segment Results

 

 

Three months ended

 

 

 

 

 

 

March 31,

 

 

YoY

 

($ in thousands) (unaudited)

 

2022

 

 

2021

 

 

change

 

Revenue:

 

 

 

 

 

 

 

 

 

US Acquiring

 

$

169,144

 

 

$

153,341

 

 

 

10.3

%

Digital Commerce

 

$

198,524

 

 

$

224,083

 

 

 

-11.4

%

Total Revenue

 

$

367,668

 

 

$

377,424

 

 

 

-2.6

%

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

US Acquiring

 

$

47,242

 

 

$

39,257

 

 

 

20.3

%

Digital Commerce

 

$

75,795

 

 

$

91,514

 

 

 

-17.2

%

Unallocated Corporate

 

$

(19,070

)

 

$

(17,541

)

 

 

8.7

%

Total Adjusted EBITDA

 

$

103,967

 

 

$

113,230

 

 

 

-8.2

%

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin:

 

 

 

 

 

 

 

 

 

US Acquiring

 

 

27.9

%

 

 

25.6

%

 

230 bps

 

Digital Commerce

 

 

38.2

%

 

 

40.8

%

 

(270) bps

 

Total Adjusted EBITDA margin

 

 

28.3

%

 

 

30.0

%

 

(170) bps

 

 

Revenue Disaggregation

 

 

Three months ended

 

 

 

 

 

 

March 31,

 

 

YoY

 

($ in thousands) (unaudited)

 

2022

 

 

2021

 

 

change

 

Revenue:

 

 

 

 

 

 

 

 

 

US Acquiring

 

$

169,144

 

 

$

153,341

 

 

 

10.3

%

eCash (1)

 

$

101,112

 

 

$

112,916

 

 

 

-10.5

%

Digital Wallets (1)

 

$

82,187

 

 

$

94,923

 

 

 

-13.4

%

Integrated & Ecommerce Solutions (IES) (1)

 

$

23,201

 

 

$

23,561

 

 

 

-1.5

%

Intracompany (1)

 

$

(7,976

)

 

$

(7,317

)

 

 

9.0

%

Total Revenue

 

$

367,668

 

 

$

377,424

 

 

 

-2.6

%

 

(1) These business lines are part of the Digital Commerce segment.

Financial Guidance

($ in millions)

 

Q2 2022

 

Full Year 2022

 

Revenue

 

$370 – $380

 

$1,530 – $1,580

 

Adjusted EBITDA

 

$100– $110

 

$440 – $460

 

 

Webcast and Conference Call

Paysafe will host a live webcast to discuss the results today at 8:30 a.m. (ET). The webcast and supplemental information can be accessed on the investor relations section of the Paysafe website at ir.paysafe.com. An archive will be available after the conclusion of the live event and will remain available via the same link for one year.

Time

Wednesday, May 11, 2022, at 8:30 a.m. EST

Webcast

Go to the Investor Relations section of the Paysafe website to listen and view slides

Dial in

877-407-3037 (U.S. toll-free); 215-268-9852 (International)

Reorganization and Recapitalization (the “Transaction”)

On March 30, 2021, Paysafe completed the previously announced transaction with FTAC, a special purpose acquisition company, which resulted in Paysafe Limited acquiring, and becoming the successor to, the Accounting Predecessor. Simultaneously, it completed the merger with FTAC with an exchange of the shares and warrants issued by Paysafe Limited for those of FTAC. The acquisition was accounted for as a capital reorganization followed by the merger with FTAC, which was treated as a recapitalization. Following the transaction, both the Accounting Predecessor and FTAC are indirect wholly owned subsidiaries of Paysafe Limited. Upon completion of the Transaction, the common stock and warrants began trading on the New York Stock Exchange under the ticker symbols “PSFE” and “PSFE WS,” respectively, on March 31, 2021.

Basis of Presentation

The financial information for the three months ended March 31, 2021 included in this press release reflect, and is based upon, information of Paysafe Limited after giving effect to the transaction with Foley Trasimene Acquisition Corporation II (“FTAC”) completed on March 30, 2021.

The Company’s financial statements for the three months ended March 31, 2021 have been updated for certain non-cash adjustments to the amounts presented within the Company’s Form 6-K filed on May 11, 2021. These adjustments were not significant and predominately relate to share-based compensation.

About Paysafe

Paysafe Limited (“Paysafe”) (NYSE: PSFE) (PSFE.WS) is a leading specialized payments platform. Its core purpose is to enable businesses and consumers to connect and transact seamlessly through industry-leading capabilities in payment processing, digital wallet, and online cash solutions. With over 20 years of online payment experience, an annualized transactional volume of over US $120 billion in 2021, and approximately 3,500 employees located in 12+ global locations, Paysafe connects businesses and consumers across 100 payment types in over 40 currencies around the world. Delivered through an integrated platform, Paysafe solutions are geared toward mobile-initiated transactions, real-time analytics and the convergence between brick-and-mortar and online payments. Further information is available at www.paysafe.com.

Contacts

Media: Kate Aldridge, Paysafe, kate.aldridge@paysafe.com / +44 750 079 7547

Investors: Kirsten Nielsen, Paysafe, kirsten.nielsen@paysafe.com / +1 (646) 901-3140 

Forward-looking Statements

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Paysafe Limited’s (“Paysafe,” “PSFE” or the “Company”) actual results may differ from their expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “anticipate,” “appear,” “approximate,” “believe,” “budget,” “continue,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “guidance,” “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. These forward-looking statements include, without limitation, Paysafe’s expectations with respect to future performance.

These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially, and potentially adversely, from those expressed or implied in the forward-looking statements. While the Company believes its assumptions concerning future events are reasonable, a number of factors could cause actual results to differ materially from those projected, including, but not limited to: cyberattacks and security vulnerabilities; complying with and changes in money laundering regulations, financial services regulations, cryptocurrency regulations, consumer and business privacy and data use regulations or other regulations in Bermuda, the UK, Ireland, Switzerland, the United States, Canada and elsewhere; geopolitical events, including acts of war and terrorism, including the conflict in Ukraine, the economic and other impacts of such conflict and the responses of governments around the world thereto; changes in our relationships with banks, payment card networks, issuers and financial institutions; risk related to processing online payments for merchants and customers engaged in the online gambling and foreign exchange trading sectors; risks related to our focus on specialized and high-risk verticals; risks related to becoming an unwitting party to fraud or be deemed to be handling proceeds of crimes being committed by customers; risks associated with the integration of acquisitions; the effects of chargebacks, merchant insolvency and consumer deposit settlement risk; changes to our continued financial institution sponsorship; failure to hold, safeguard or account accurately for merchant or customer funds; risks related to the availability, integrity and security of internal and external IT transaction processing systems and services; failure of third parties to comply with contractual obligations; changes and compliance with payment card network operating rules; substantial and increasingly intense competition worldwide in the global payments industry; the COVID-19 pandemic, including the resulting global economic uncertainties; risks associated with interest rate and foreign currency exchange rate fluctuations, including the impact of possible currency devaluations in countries experiencing high inflation rates; risks related to developing and maintaining effective internal controls over financial reporting; managing our growth effectively, including growing our revenue pipeline; any difficulties maintaining a strong and trusted brand; keeping pace with rapid technological developments; risks associated with the significant influence of our principal shareholders; our ability to retain, attract and motivate key personnel; and other factors included in the “Risk Factors” in our Form 20-F and in other filings we make with the SEC, which are available at www.sec.gov. Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in their expectations with respect thereto or any change in events, conditions, or circumstances on which any statement is based, except as required by law.

Paysafe Limited Condensed Consolidated Balance Sheets (unaudited)

($ in thousands)

 

March 31, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

258,046

 

 

$

313,439

 

Customer accounts and other restricted cash, net of allowance for credit losses of $664 and $673, respectively

 

 

1,711,994

 

 

 

1,658,279

 

Accounts receivable, net of allowance for credit losses of $9,288 and $8,642, respectively

 

 

157,033

 

 

 

147,780

 

Settlement receivables, net of allowance for credit losses of $3,668 and $4,049, respectively

 

 

124,397

 

 

 

149,852

 

Prepaid expenses and other current assets

 

 

69,115

 

 

 

64,497

 

Related party receivables – current

 

 

6,236

 

 

 

6,492

 

Contingent consideration receivable – current

 

 

2,767

 

 

 

2,842

 

Total current assets

 

 

2,329,588

 

 

 

2,343,181

 

Deferred tax assets

 

 

21,723

 

 

 

21,926

 

Property, plant and equipment, net

 

 

13,633

 

 

 

14,907

 

Operating lease right-of-use assets

 

 

30,846

 

 

 

33,118

 

Intangible assets, net

 

 

1,390,718

 

 

 

1,202,204

 

Goodwill

 

 

2,712,809

 

 

 

3,650,037

 

Other assets – noncurrent

 

 

1,976

 

 

 

1,856

 

Total non-current assets

 

 

4,171,705

 

 

 

4,924,048

 

Total assets

 

$

6,501,293

 

 

$

7,267,229

 

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and other liabilities

 

$

220,991

 

 

$

211,841

 

Short-term debt

 

 

10,190

 

 

 

10,190

 

Funds payable and amounts due to customers

 

 

1,806,040

 

 

 

1,400,057

 

Operating lease liabilities – current

 

 

8,843

 

 

 

8,845

 

Income taxes payable

 

 

13,317

 

 

 

11,041

 

Contingent and deferred consideration payable – current

 

 

20,520

 

 

 

13,673

 

Liability for share-based compensation – current

 

 

4,308

 

 

 

3,360

 

Total current liabilities

 

 

2,084,209

 

 

 

1,659,007

 

Non-current debt

 

 

2,702,792

 

 

 

2,748,178

 

Operating lease liabilities – non-current

 

 

25,676

 

 

 

28,008

 

Deferred tax liabilities

 

 

76,295

 

 

 

64,886

 

Warrant liabilities

 

 

28,292

 

 

 

35,575

 

Liability for share-based compensation – non-current

 

 

5,764

 

 

 

6,664

 

Contingent and deferred consideration payable – non-current

 

 

15,316

 

 

 

17,142

 

Total non-current liabilities

 

 

2,854,135

 

 

 

2,900,453

 

Total liabilities

 

 

4,938,344

 

 

 

4,559,460

 

Commitments and contingent liabilities

 

 

 

 

 

 

Shareholders' equity in the Company

 

 

1,462,868

 

 

 

2,569,764

 

Non-controlling interest

 

 

100,081

 

 

 

138,005

 

Total shareholders' equity

 

 

1,562,949

 

 

 

2,707,769

 

Total liabilities and shareholders' equity

 

$

6,501,293

 

 

$

7,267,229

 

 

Paysafe Limited Condensed Consolidated Statements of Operations (unaudited)

 

 

Three months ended

 

 

 

March 31,

 

($ in thousands)

 

2022

 

 

2021

 

Revenue

 

$

367,668

 

 

$

377,424

 

Cost of services (excluding depreciation and amortization)

 

 

147,103

 

 

 

151,037

 

Selling, general and administrative

 

 

130,568

 

 

 

193,998

 

Depreciation and amortization

 

 

63,423

 

 

 

65,462

 

Impairment expense on goodwill and intangible assets

 

 

1,205,731

 

 

 

578

 

Restructuring and other costs

 

 

12,591

 

 

 

2,970

 

Operating loss

 

 

(1,191,748

)

 

 

(36,621

)

Other income, net

 

 

3,478

 

 

 

32,525

 

Interest expense, net

 

 

(25,956

)

 

 

(62,369

)

Loss before taxes

 

 

(1,214,226

)

 

 

(66,465

)

Income tax benefit

 

 

(43,414

)

 

 

(5,936

)

Net loss

 

$

(1,170,812

)

 

$

(60,529

)

Less: net income attributable to non-controlling interest

 

 

371

 

 

 

118

 

Net loss attributable to the Company

 

$

(1,171,183

)

 

$

(60,647

)

 

 

 

 

 

 

 

Net loss

 

$

(1,170,812

)

 

$

(60,529

)

Other comprehensive income / (loss), net of tax of $0:

 

 

 

 

 

 

Gain / (loss) on foreign currency translation

 

 

14,396

 

 

 

(8,498

)

Total comprehensive loss

 

$

(1,156,416

)

 

$

(69,027

)

Less: comprehensive income attributable to non-controlling interest

 

 

371

 

 

 

118

 

Total comprehensive loss attributable to the Company

 

$

(1,156,787

)

 

$

(69,145

)

 

Paysafe Limited Condensed Consolidated Statements of Cash Flow (unaudited)

 

 

Three months ended

 

 

 

March 31,

 

($ in thousands)

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(1,170,812

)

 

$

(60,529

)

Adjustments for non-cash items:

 

 

 

 

 

 

Depreciation and amortization

 

 

63,423

 

 

 

65,462

 

Unrealized foreign exchange gain

 

 

2,364

 

 

 

6,438

 

Deferred tax benefit

 

 

(49,601

)

 

 

(3,730

)

Interest expense, net

 

 

11,202

 

 

 

25,516

 

Share based compensation

 

 

13,970

 

 

 

80,841

 

Other income, net

 

 

(1,815

)

 

 

(31,975

)

Impairment expense on goodwill and intangible assets

 

 

1,205,731

 

 

 

578

 

Allowance for credit losses and other

 

 

5,888

 

 

 

5,985

 

Non-cash lease expense

 

 

2,269

 

 

 

2,462

 

Movements in working capital:

 

 

 

 

 

 

Accounts receivable, net

 

 

(14,529

)

 

 

(20,856

)

Prepaid expenses, other current assets, and related party receivables

 

 

(5,151

)

 

 

(3,813

)

Settlement receivables, net

 

 

22,447

 

 

 

14,379

 

Accounts payable, other liabilities, and related party payables

 

 

(1,189

)

 

 

(9,309

)

Funds payable and amounts due to customers

 

 

418,944

 

 

 

(21,272

)

Income tax payable

 

 

707

 

 

 

(1,437

)

Net cash flows from operating activities

 

 

503,848

 

 

 

48,740

 

Cash flows in investing activities

 

 

 

 

 

 

Purchase of property, plant & equipment

 

 

(650

)

 

 

(412

)

Purchase of merchant portfolios

 

 

(10,364

)

 

 

(1,644

)

Purchase of other intangible assets

 

 

(19,989

)

 

 

(14,994

)

Net cash outflow on acquisition of subsidiary

 

 

(424,722

)

 

 

(23,531

)

Net cash flows used in investing activities

 

 

(455,725

)

 

 

(40,581

)

Cash flows from financing activities

 

 

 

 

 

 

Cash settled equity awards

 

 

(154

)

 

 

 

Proceeds from exercise of warrants

 

 

3

 

 

 

 

Net cash inflow from reorganization and recapitalization

 

 

 

 

 

1,167,874

 

Payment of equity issuance costs

 

 

 

 

 

(133,422

)

Proceeds from loans and borrowings

 

 

50,000

 

 

 

 

Repayments of loans and borrowings

 

 

(60,885

)

 

 

(1,155,743

)

Payment of debt issuance costs

 

 

(6,261

)

 

 

 

Payments under derivative financial instruments, net

 

 

 

 

 

(4,693

)

Proceeds under line of credit

 

 

150,000

 

 

 

150,000

 

Repayments under line of credit

 

 

(150,000

)

 

 

(150,000

)

Contingent consideration paid

 

 

(1,436

)

 

 

(970

)

Net cash flows used in financing activities

 

 

(18,733

)

 

 

(126,954

)

Effect of foreign exchange rate changes

 

 

(31,068

)

 

 

(62,402

)

Decrease in cash and cash equivalents, including customer accounts and other restricted cash during the period

 

$

(1,678

)

 

$

(181,197

)

Cash and cash equivalents, including customer accounts and other restricted cash at beginning of the period

 

 

1,971,718

 

 

 

1,763,852

 

Cash and cash equivalents at end of the period, including customer accounts and other restricted cash

 

$

1,970,040

 

 

$

1,582,655

 

 

 

 

Three months ended

 

 

 

March 31,
2020

 

 

 

2022

 

 

2021

 

Cash and cash equivalents

 

$

258,046

 

 

$

274,438

 

Customer accounts and other restricted cash, net

 

 

1,711,994

 

 

 

1,308,217

 

Total cash and cash equivalents, including customer accounts and other restricted cash, net

 

$

1,970,040

 

 

$

1,582,655

 

 

Non-GAAP Financial Measures

To supplement the Company’s condensed consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP, the company uses non-GAAP measures of certain components of financial performance. This includes Gross Profit (excluding depreciation and amortization), Gross Profit Margin (excluding depreciation and amortization), Adjusted EBITDA, Adjusted EBITDA margin, Free cash flow and Free cash flow conversion, which are supplemental measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States (“U.S. GAAP”).

Gross Profit (excluding depreciation and amortization) is defined as revenue less cost of services (excluding depreciation and amortization). Gross Profit Margin (excluding depreciation and amortization) is defined as Gross Profit (excluding depreciation and amortization) as a percentage of revenue. Management believes Gross Profit to be a useful profitability measure to assess the performance of our businesses and ability to manage cost.

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 a subsidiaries and other assets, net, and other income/(expense), net. These adjustments also include certain costs and transaction items that are not reflective of the underlying operating performance of the Company. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of Revenue. Management believes Adjusted EBITDA to be a useful profitability measure to assess the performance of our businesses and improves the comparability of operating results across reporting periods.

Free cash flow is defined as net cash flows provided by/used in operating activities, adjusted for the impact of capital expenditure, payments relating to restructuring and other costs, cash paid for interest and movements in customer accounts and other restricted cash. Capital expenditure includes purchases of property plant & equipment and purchases of other intangible assets, including software development costs. Capital expenditure does not include purchases of merchant portfolios. Free cash flow conversion is defined as free cash flow as a percentage of Adjusted EBITDA. Management believes free cash flow to be a liquidity measure that provides useful information about the amount of cash generated by the business.

Management believes the presentation of these non-GAAP financial measures, including Gross Profit, Gross Profit Margin, Adjusted EBITDA and Adjusted EBITDA margin, when considered together with the Company’s results presented in accordance with GAAP, provide users with useful supplemental information in comparing the operating results across reporting periods by excluding items that are not considered indicative of Paysafe’s core operating performance.  In addition, management believes the presentation of these non-GAAP financial measures provides useful supplemental information in assessing the Company’s results on a basis that fosters comparability across periods by excluding the impact on the Company’s reported GAAP results of acquisitions and dispositions that have occurred in such periods. However, these non-GAAP measures exclude items that are significant in understanding and assessing Paysafe’s financial results or position. Therefore, these measures should not be considered in isolation or as alternatives to revenue, net income, cash flows from operations or other measures of profitability, liquidity or performance under GAAP.

You should be aware that Paysafe’s presentation of these measures may not be comparable to similarly titled measures used by other companies. In addition, the forward-looking non-GAAP financial measures of Adjusted EBITDA and Gross Profit provided herein have not been reconciled to comparable GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.  We have reconciled the historical non-GAAP financial measures presented herein to their most directly comparable GAAP financial measures. A reconciliation of our forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the adjusting items necessary for such reconciliations that have not yet occurred, are out of our control, or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.

Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDA

 

 

Three months ended

 

 

 

March 31,

 

($ in thousands)

 

2022

 

 

2021

 

Net Loss

 

$

(1,170,812

)

 

$

(60,529

)

Income tax benefit

 

 

(43,414

)

 

 

(5,936

)

Interest expense, net

 

 

25,956

 

 

 

62,369

 

Depreciation and amortization

 

 

63,423

 

 

 

65,462

 

Share based compensation expense

 

 

13,970

 

 

 

80,841

 

Impairment expense on goodwill and intangible assets

 

 

1,205,731

 

 

 

578

 

Restructuring and other costs

 

 

12,591

 

 

 

2,970

 

Other income, net

 

 

(3,478

)

 

 

(32,525

)

Adjusted EBITDA

 

$

103,967

 

 

$

113,230

 

Adjusted EBITDA Margin

 

 

28.3

%

 

 

30.0

%

 

Reconciliation of Operating Cash Flow to Non-GAAP Free Cash Flow

 

 

Three months ended

 

 

 

March 31,

 

($ in thousands)

 

2022

 

 

2021

 

Net cash inflows from operating activities

 

$

503,848

 

 

$

48,740

 

Capital Expenditure

 

 

(20,639

)

 

 

(15,406

)

Cash paid for interest

 

 

14,754

 

 

 

36,853

 

Payments relating to Restructuring and other costs

 

 

12,141

 

 

 

3,455

 

Movement in Customer Accounts and other restricted cash

 

 

(450,882

)

 

 

34,886

 

Free Cash Flow

 

$

59,222

 

 

$

108,528

 

Adjusted EBITDA

 

 

103,967

 

 

 

113,230

 

Free Cash Flow Conversion

 

 

57

%

 

 

96

%

 

Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit (excluding depreciation and amortization)

 

 

Three months ended

 

 

 

March 31,

 

($ in thousands)

 

2022

 

 

2021

 

Revenue

 

$

367,668

 

 

$

377,424

 

Cost of services (excluding depreciation and amortization)

 

 

147,103

 

 

 

151,037

 

Depreciation and amortization

 

 

63,423

 

  

 

65,462

 

Gross Profit (1)

 

$

157,142

 

  

$

160,925

 

Depreciation and amortization

 

 

63,423

 

  

 

65,462

 

Gross Profit (excluding depreciation and amortization)

 

$

220,565

 

  

$

226,387

 

  1. Gross Profit has been calculated as revenue, less cost of services and depreciation and amortization. Gross profit is not presented within the Company's consolidated financial statements.