Paysafe Stock Falls After Acquiring SafetyPay For $441M; Q2 Results

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Payments platform Paysafe Ltd PSFE reported second-quarter FY21 revenue growth of 13% year-on-year to $384.3 million, beating the analyst consensus of $378.45 million.
Segments: Integrated Processing revenue grew 7.2% Y/Y to $191.2 million driven by the U.S. Acquiring business, which continued to gain from the macroeconomic recovery, and growth across integrated eCommerce, including iGaming and other specialized eCommerce verticals.
Digital Wallet revenue rose 6.8% Y/Y to $97.3 million driven by favorable foreign currency movement, a higher level of sporting events, and crypto and trading activity.
eCash Solutions revenue increased 36.7% Y/Y to $103.9 million, supported by extended lockdowns in Europe and a corresponding increase in online consumer spending.
Margin: The adjusted EBITDA margin contracted 150 bps to 30.9%, reflecting business mix, including the headwind from the high margin direct marketing vertical.
Digital Wallet and eCash Solutions' Adjusted EBITDA margins grew while Integrated Processing's margins fell.
Paysafe held $247.8 million in cash and equivalents and used $7.7 million in operating cash flow.
Outlook: Paysafe sees Q3 revenue of $360 million – $375 million, below the analyst consensus of $389.1 million.
The company reiterated FY21 revenue of $1.53 billion - $1.55 billion against the analyst consensus of $1.55 billion.
Acquisition: Additionally, Paysafe agreed to acquire SafetyPay for $441 million in an all-cash transaction.
SafetyPay is a payments platform that enables eCommerce transactions open banking and eCash solutions, operating primarily in Latin America.
The arrangement strengthens Paysafe's strategic foothold in Latin America, building on its recently announced acquisition agreement with Peruvian payments platform, PagoEfectivo.
The transaction is likely to close in Q4 of 2021.
Price Action: PSFE shares traded lower by 2.94% at $9.90 in the premarket session on the last check Monday.