Unaudited Interim Results for the 6 months ended 30 June 2016

Exceptional first-half results, further upgrades to FY 2016 revenue and adjusted EBITDA guidance

LONDON (10 August 2016) – Paysafe Group plc (LSE:PAYS, “Paysafe” or the “Group”), a leading global provider of payment solutions, today reports strong growth in the six months ended 30 June 2016.

Financial highlights

$m

H1 2016

H1 2015

Revenue

486.7

223.0

Pro-forma constant currency year-on-year revenue growth1

20%

12%

Adjusted EBITDA2

144.2

49.9

Adjusted EBITDA margin

29.6%

22.4%

Adjusted profit after tax3

101.4

37.3

Statutory profit after tax

64.5

2.4

Adjusted fully diluted EPS ($)3

0.20

0.11

Statutory fully diluted EPS ($)

0.13

0.01

 

30 Jun 2016

31 Dec  2015

Reported net debt4

385.9

431.3

Net debt / pro-forma last twelve month EBITDA4

1.5x

2.1x

·         Reported H1 2016 revenue increased 118% to $487m (H1 2015: $223m); pro-forma constant currency revenue growth was 20%, up from 14% growth in H2 2015 and 12% in H1 2015.

·         Adjusted H1 2016 EBITDA increased 189% to $144m (H1 2015: $50m), reflecting the acquisition of Skrill and increasing profitability.

·         Adjusted H1 2016 EBITDA margin was 29.6% (H1 2015: 22.4%).

·         The Group generated $79m free cash flow before payments working capital in H1 20165  (H1 2015: $34m).

·         The integration of Skrill is complete. Over FY 2016, the Group expects to recognise in excess of the $40m synergies envisaged at the time of the transaction.

·         Group net debt to last twelve month pro-forma EBITDA ratio decreased to 1.5x from more than 3x at the time the Group announced its debt fund raise and acquisition of Skrill in March 2015.

Operational highlights

·         New partner collaborations, payment product enhancements and markets entered during H1 2016 across Payment Processing, Digital Wallets and Prepaid.

·         Headcount increased to 1,828 employees at the end of H1 2016 from 1,578 at the start of the year, reflecting the enlarged revenue-generating lines of the Group and ongoing targeted investment in compliance and risk management.

·         MeritCard, the Dallas-based merchant acquiring business, was acquired on 16 February 2016, integrated into the Group’s payment processing division and continues to operate with its MeritCard brand. Paysafe continues to assess further acquisition opportunities in the payments sector.

·         Development of a next-generation global data platform to deliver enhanced real-time insights and analytics and a global merchant onboarding capability have commenced earlier than previously anticipated following the integration of Skrill into the Group ahead of schedule.

·         Leveraging the Group’s FANS Entertainment technology, the soft launch of a new white-label mobile ordering technology for major merchants and companies and a new branded mobile ordering platform for small to medium-sized enterprises is scheduled for the second half of the year.

Current trading and outlook

·         The positive momentum in the business has continued during July 2016.

·         As a result of the exceptional half, the Group announces a further revenue upgrade for FY 2016 over that given on 25 May 2016.  Full year revenue is expected to be in the range of $970m to $990m, against current internally compiled consensus of $960m*.

·         Notwithstanding continued success-based re-investment in the business, the EBITDA margin in the first half was 29.6%. The Group expects to maintain this margin in the second half.  As such, adjusted EBITDA for FY 2016 is expected to be between $287m and $293m.

Commenting on the results, Paysafe President and Chief Executive Officer Joel Leonoff said:

“I am delighted with the Group’s first half results. We have again delivered very strong growth as our increasingly diversified payments business expands further across pay-before, pay-now and pay-later products and services.

I am particularly pleased with the level of cash generated during the first half.  Additionally, by completing the integration of Skrill more rapidly than we initially expected, we have been able to start work on developing our next-generation data platform and global merchant onboarding capabilities earlier than anticipated.

With the exceptional performance delivered in the first half, as well as continued strong trading in the early part of the second half, management and the Board are confident in the Group’s prospects for the full year.”

* Company compiled consensus, including nine analysts as at 5 August 2016.

1 Pro-forma constant currency growth definition: in the full year 2015 financial results which included the material acquisition of Skrill Group, the Group included unaudited pro-forma constant currency revenue growth by half-year over 2013-2015 as if Skrill and other acquisitions in the period (Ukash, Meritus, GMA, and FANS) had all been owned over the period, and eliminating the impact of changing foreign exchange rates by applying prior period exchange rates to current period amounts. From 1 January 2016 the Group is reverting to the more usual definition of pro-forma  organic constant currency growth by showing growth as if companies acquired on or after 1 January 2016 had been owned in the comparative period, and using the same foreign exchange adjustment. This means that all Group pre-2016 published pro-forma growth rates remain the same.

2 Adjusted EBITDA is defined as results of operating activities before depreciation and amortisation and adjusted for exceptional non-recurring items which are defined as items of income and expense of such size, nature or incidence that, in the view of management, should be disclosed to explain the performance of the Group. A reconciliation of Results from operating activities to Adjusted EBITDA can be found in the Group adjusted EBITDA section of the Financial review below.

3 Unaudited adjusted profit after tax and fully diluted earnings per share exclude the impact of foreign exchange losses and gains, acquisition, restructuring and other exceptional costs, share option expenses, fair value gains and losses on share consideration payable and amortisation of acquired intangibles.

4 Reported net debt includes short and long term debt (excluding deferred finance costs), finance leases, deferred cash consideration payable and contingent cash consideration payable offset by cash and cash equivalents. In accordance with IFRS, basic and diluted earnings per share for the comparative period have been re-presented to reflect the impact of the rights issue in May 2015. For the purposes of net debt/last twelve month pro-forma EBITDA calculations, MeritCard’s contribution to last twelve month EBITDA has been included at 30 June 2016, following its acquisition on 16 February 2016.

5 Free cash generated before payments working capital.  Free cash flow is a non IFRS figure defined as operating cash flow after operating working capital movements, interest, tax and capital expenditure.  It excludes payments working capital, being cash flows that are not revenue or costs to the Group, constituted by movements in restricted cash balances, cash held as reserves, settlement assets and merchant processing liabilities.  A reconciliation from profit after tax to free cash flow can be found in the cash flow and cash position section of the Financial review below.

Read a PDF with the full financial results.

Presentation to analysts and investors

President & Chief Executive Officer Joel Leonoff and Chief Financial Officer Brian McArthur-Muscroft will host an audiocast and conference call for analysts and investors at 2.00 pm BST today (9.00am EDT). Please dial in 5-10 minutes prior to the start time using the numbers and conference ID below.  The presentation will be available at www.paysafe.com shortly after the release of this announcement.

Webcast link:                         http://edge.media-server.com/m/p/taooi7p9

Dial-in numbers:                   UK Toll Number: +44(0)20 3364 5381

UK Toll-Free Number:  0800 279 4841

US Toll Number: +1 646 254 3367

US Toll-Free Number:  +1877 280 2342

Conference ID number:        3656284

A replay facility for the call will be available via the Investor Relations section of www.paysafe.com.

About Paysafe

Paysafe provides digital payments and transaction-related solutions to businesses and consumers around the world. Paysafe makes transactions easy by enabling fast, convenient and secure ways to pay-before, pay-now and pay-later through its digital wallets, prepaid solution, payment processing and card issuing & acquiring products and services. We believe that every point of every payment should be relevant, simple and secure. With nearly two decades of experience, Paysafe is trusted by merchants, and by consumers in more than 200 countries and territories, to move and manage money via more than 100 payment types and 40 currencies. Paysafe offers multi-platform products with an emphasis on emerging payment technologies including mobile. Paysafe’s brand portfolio includes NETELLER® and Skrill®, MeritCard, paysafecard®, payolution® and FANS Entertainment. Paysafe Group plc shares trade on the London Stock Exchange under the symbol (PAYS.L). For more information, visit: www.paysafe.com

For further information, contact:

Paysafe Group plc

Michelle Singleton, VP Investor Relations

+44 (0) 20 3826 9800 / investorrelations@paysafe.com

Gavin Haycock, SVP Corporate Communications

+44 (0) 20 3826 9767 / gavin.haycock@paysafe.com

Tavistock (Financial PR)

Simon Hudson / Mike Bartlett / Andrew Dunn

+44 (0) 20 7920 3150 / paysafe@tavistock.co.uk