Paysafe 2025 Q1 Earnings Misses Targets with Net Income Plummeting 737.2%

Paysafe (PSFE) reported its fiscal 2025 Q1 earnings on May 13th, 2025. The company disclosed a disappointing quarter with revenue and adjusted earnings per share missing analyst expectations. Revenue fell 4% year-over-year to $401 million, below the consensus of $404.56 million. The adjusted earnings per share of $0.34 missed the Street view of $0.41. Paysafe reaffirmed its full-year guidance, though it remained below market estimates, projecting adjusted EPS between $2.21 and $2.51, and sales between $1.71 billion and $1.73 billion.

Revenue
Paysafe’s revenue for Q1 2025 amounted to $401 million, marking a 4% decrease from the previous year. The Merchant Solutions segment reported $217.79 million, showing a 6% decline due to business disposal, though it grew 6% organically. The Digital Wallets segment contributed $187.57 million, reflecting a 2% drop due to lower interest revenue and foreign exchange impacts, with a 3% organic growth. Intersegment revenue had a negative impact of $-4.35 million.

Earnings/Net Income
Paysafe experienced a significant downturn, swinging to a net loss of $19.47 million, or $0.33 per share, in Q1 2025, from a net income of $3.06 million, or $0.05 per share, in Q1 2024. This represents a 737.2% deterioration in net income and indicates weak earnings performance.

Price Action
The stock price of Paysafe tumbled by 9.04% during the latest trading day, dropped 7.70% over the most recent full trading week, and edged down 2.82% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing PSFE stock following a revenue miss and holding for 30 days has proven ineffective, resulting in substantial losses. A historical backtest demonstrated a significant loss of 77.06%, with an excess return of -101.13% and a Sharpe ratio of -0.49. These figures highlight high risk and negative returns associated with this approach. The negative outcomes underscore the importance of caution and thorough analysis when investing in response to earnings reports. Investors should consider market conditions and broader trends before engaging in similar strategies, as the historical data suggests that the potential for gains is outweighed by the risks and likelihood of losses.

CEO Commentary
Bruce Lowthers, CEO, conveyed optimism about Paysafe's performance, despite the challenges. He pointed out organic revenue growth of 5%, driven by strong customer growth and new partnerships. He praised the enterprise sales team for signing over 100 contracts across sectors like gaming and e-commerce. Recognizing the difficulties faced in the first half, Lowthers expressed confidence in achieving acceleration in the second half, focusing on delivering contracts and product initiatives. He emphasized the strategic evolution of the Paysafe wallet platform to enhance market positioning and cater to consumer behavior in Latin America.

Guidance
Paysafe anticipates second-quarter organic revenue growth similar to Q1, with adjusted EBITDA margins around 24%. The company expects accelerated organic revenue growth between 8% to 10% in the second half of the year. The fourth quarter is projected to be the strongest in terms of reported growth and margins, supported by improved productivity and operating leverage from existing contracts and new product initiatives.

Additional News
Paysafe recently announced an expanded partnership with Fiserv aimed at strengthening support for small and mid-sized businesses through enhanced payment solutions. Key initiatives include integrating Fiserv’s Clover Capital to improve SMB access to financing, leveraging Data-as-a-Service for enhanced fraud protection, and launching a digital wallet for faster settlements. The collaboration seeks to drive financial efficiency, scalability, and sustainable growth for SMBs. Additionally, Paysafe repurchased 612.6 thousand shares for $10 million during Q1 2025, demonstrating a commitment to returning value to shareholders. The company also published its second annual sustainability report, showcasing advancements in governance and sustainable operations aligned with its Responsible Business Principles.