Morning, everyone, and thanks for joining us here at the Wolfe FinTech Forum. My name is Paul Obrecht, and I'm on the FinTech team here at Wolfe. Today I'm happy to have Paysafe CEO Bruce Lowthers and CFO John Crawford with us. Bruce and John, thanks for being here. Before we start, there may be some in the room who are not as familiar with the Paysafe story. Just to begin, can you maybe provide a quick overview of the company? Yeah, Paul, thank you, and thanks for having us here again. It's great to be back. Just a brief overview of Paysafe. We're a global payments company. We've been around for over 25 years. It's great to be here with all the other wonderful payment companies here at the conference. Our business is really broken down into two business segments. When you add those together, we're a $1.7 billion company, over $150 billion in volume, and do business in over 100 countries. The two segments themselves are really merchant acquiring and our digital wallet business. Again, been in the business 25 years plus, and looking forward to continuing our growth journey, which really has started in the last couple of years. Delighted to be pushing on our third year of growth. In 2024, I'm sure we'll talk about, it was our first year of profitability. A great year for us in 2024. Got it. That's helpful. Yeah, I'd love to start with 2024. You just reported last week it was, your fiscal 2024 results. Can you just describe what you think the most important takeaways for investors to be aware of are? Yeah, I think when you look at 2024, it was really a great validation year of growth. We had some growth in 2023, but I would describe it as kind of wind aided from macroeconomic benefits. We had FX tailwinds in 2023, and we had rate changes on interest income that really allowed us to accelerate our growth rate in 2023. We did not have those in 2024. From an organic growth perspective, the takeaway was really about continuing to accelerate that organic growth. We had about 4% growth in 2023, up from zero in 2022. We had 7% in 2024. As we guided, or as John guided last week, we expect to continue with a 7% organic growth number for 2025. I think the growth acceleration is one, continued pay down of our debt, which is such an important theme, investor theme for us, moving down to 4.7x which was our goal for the year. We will talk a little bit about 2025 in the future, but those are really the big takeaways. Obviously, as I mentioned, being net income positive for the very first time, it was overall a very good year for us. Got it. In 2024, the company really leaned into investing with expanding sales capabilities, revamping consumer acquisition, and the optimizing of the portfolio. Can you just touch on the progress you made there? As we look ahead to the rest of 2025, what your key priorities are? Yeah, so when we looked at 2024, as you just walked through, we had these four priorities that we said, this is what we're going to go execute on. We talked about spending a little bit of money at the beginning of the year. We talked about spending $25 million to drive really product innovation and sales expansion. We overachieved on those numbers. We hit our 170 additional salespeople, which was fantastic. We really needed scale within the sales organization. When you look at the contributions that we received, we said for that $25 million spend, we would get at least $50 million of return in year in 2024, which we exceeded that number. We felt that that was very good. We also had an emphasis on continuing to evolve our marketing activities on consumer acquisition. As we announced in the call, we had our first quarter back over a million three-month actives. That was really outstanding for us, probably the first time in three or four years where that's happened. Overall, when we look at that and we look at the target of our debt ratio being at 4.7x, it was a clean sweep for us. We hit all the major milestones that we were looking to do in 2024, returning to growth, building up for scale, and really trying to position ourselves to continue that growth in 2025. I want to add anything, sorry, not to. No, that's good. Yep. As we continue to think about 2025, a lot of the transformation stuff is behind us. We now really are just focusing on bringing more product to market, really having that sales organization mature and kind of hit their rhythm and really settle into a nice cadence that allows us to continue growth into 2026. You'll see more partnerships. You'll see us doing some new creative things. We have some new things that we'll expand into different markets for SMB, for example. You'll start hearing more and more of those types of things as we move forward, n ew product, and I'm sure as many people heard on the earnings call. W e're very excited about our new wallet releases and some new products within our Paysafe Card and catalog with our lockable card. We will just continue to drive good sales cadence as we move into 2025. Got it. Before we delve into more specifics and financials, John, you've been at Paysafe since September, I believe. I'm just curious, can you give us a sense of what attracted you to the role in the first place? In your time thus far, what your early learnings have been and any opportunities you see? Sure. Thank you, Paul. First, it was an opportunity to be a public company CFO, and that's an exciting new challenge for me personally, selfishly. The company is also one that I've been following for years. Parts of this business I even worked with as a banker 20 years ago. I appreciate the set of assets and where they are in their markets and just really attractive opportunity to see those continue to come together as I've been watching the transformation that Bruce and a relatively new senior leadership team were putting in place. A lot of my focus was on how I can help. I think taking the company to the next level, driving free cash flow even harder, and trying to narrow what I saw from outside in as a gap between where the company is priced and potential value and how people are seeing the assets, like all of those things added together to be extremely attractive. Right. That's helpful. Speaking of assets, last month you announced the sale of the direct marketing business. Can you just describe the rationale for this and how it better positions the company to succeed moving forward? Sure. I think Bruce has been talking for a while about de-risking the business. Even in the calls earlier in 2024, he was talking about pruning in the portfolio. I think as we got into the fourth quarter, it became clear there was an opportunity to, number one, really accelerate that process and that it was going to be better for the company overall. We realized we might have an opportunity to move the assets. That was really, that was partly driven by the fact that it was a good answer for the employees and the customers versus us just continuing to exit on our own. I think we viewed it as one that really is addition by subtraction, sort of thinking about investing in the terminal value of the company by removing a distraction, for lack of a better word. It was a unique opportunity where we had a counterparty that was very familiar with the business and could move very quickly. It's not often you can do a transaction like that as fast as we got it done. It was sort of critical, as you could imagine, to get it done very quickly for the employees and the customers and the banking partners involved. Got it. That's helpful. I think just to add there too, right, as John talked about, we were very focused on trying to get some of the businesses that did not meet our ideal customer profile out of the business to create value from a long-term perspective. We were growing faster than anticipated as we were coming into the Q3. We took the opportunity to start really accelerating the client removal that we thought were outside of our parameters. At the end of the day, this was a business that historically did not grow. We could not allow it to grow. It was very volatile and it was dilutive to overall multiples on the business. It just really, plus with the regulatory framework changing and really clamping down on these higher risk merchants, it just made sense for us to divest and shut down that business. Right. That makes sense. If we look to 2025, as you alluded to, your guidance is calling for 6.5% to 8% top line organic growth, excluding the disposed business, which implies a slight acceleration from the 7% in 2024. Just curious, what gives you confidence in accelerating revenue growth this year, if we look within merchant solutions and digital wallets, what the building blocks for growth are in each segment? Let me do it. Sure. I'd say first, I think as we were building into that model, we looked at the individual pieces and kind of tested our confidence level in each. I think what you see is a baked-in kind of attrition view that is a modest improvement over 2024. We think that is largely driven by improvements on the wallet side, actually, which I think some people find surprising. There were some regulatory and risk-related or voluntary attrition for us in 2024 on the wallet side. The building blocks from a same-store sales and a new sales perspective are largely in line. We kind of look at it at midpoint of the guide, largely in line with what we achieved in 2024, maybe a little more conservative. That's built up from, on the same-store side, annualization of things that we sold in 2024 that were not achieved in year, as well as the actual, I think, same-store cohort growth. On the new sales piece, it's a combination of new logos, new products, and functionality and those sorts of things. Got it. We did 4.7x, slightly above 7x this year. What do you see as a sustainable top-line growth for this company? I think it's going to be upper single-digit kind of growth profile for the organization. I think we'll see continued double-digit growth in our eComm business. We feel very good about that part of our business. We continue to see that growing in Q1 at that same level, very consistent candidly to January of last year. We look at the SMB business as a mid-single-digit, maybe slightly upper single-digit business on a year-in and year-out basis. We feel very good about the merchant side of the business. When we look at the digital wallet side of the business, again, we think that's probably a mid to upper single-digit growth profile. I think if we can really get some of these products to market, as I mentioned, we're launching our PagoEfectivo wallet in Peru. It's actually already launched, but it'll be launched generally really in Q2. The soft launch that we've done in Q1 is going very well. We're very excited about that, really pouring a lot of energy. If we can get a couple of these to hit, we could see the digital wallet side of the business be a double-digit growing business. Right now, I think upper single digits is probably the right growth profile for the next couple of years as we get everything kind of moving and getting that product function really performing at a high level. Thanks, Bruce. That's helpful. John, if we shift gears back to you for the guide in 2025, the margin guide is calling for 27% to 27.5%, roughly, equating to 150 basis points to 200 basis points of expansion, excluding the disposed business. Just what are the puts and takes here for margin expansion as we look at 2025? Sure. Thank you. I think first of all, from a puts and takes standpoint, think about the shape of the year from our point of view being one where we are building through the first half of the year to that kind of range of where we've guided for the full year in the sense of Q1, we've got a lot of noise from the deal, severance, stranded costs, a number of things that are going to impact Q1 from an EBITDA standpoint, as well as just some noise as you saw us coming out of Q4, gross margin on the merchant side, 42%-ish. We think that margin is going to improve throughout the year, but it's not going to be a step function Q1. We'd expect, even though over the year, 27%-27.5-ish%, Q1 is probably more like a 21% margin, and then building very quickly through Q2 and into the second half with margins that are going to be well above the guided range so that the math kind of works through the year. Driven by multiple factors, not just the noise in Q1, but also think the noise that part of the business sat in our SMB segment, pulling that distraction out, I think we believe is going to help that business perform better going into the year. We've got a number of initiatives, as Bruce just mentioned, Pago wallet, a number of others that are launching now that are going to really, as we think about it, drive more revenue later in the year, even though they're in market today. They're high margin. They're high margin, so they tend to drive, they're going to tend to drive margin acceleration through the year. Right. So it sounds like we'll be exiting the year in the high 20s. Is that right for the margins? I think we'll be exiting in the year potentially higher than that in the second half. Okay. I think the last investor day, the medium-term guide for margins was around that range, kind of high 20s, low 30s. Is that still the right way to think about long-term margin profile? I think it's fair. In fact, we're seeing as we look at our leverage down through the SG&A line, we think we can take margins to that area. That's another piece I should have mentioned in the puts and takes. When I said noise, like some of that, a good deal of that noise, call it $8 million to $10 million-ish, is going to be kind of in the SG&A side, just to be clear as you're thinking about modeling. Got it. Yeah. Keep in mind too, one of the puts and takes was in 2024, I said we were going to invest that $25 million, and that actually ended up being closer to $29 million, $28 million, $29 million. That is not a recurring cost as we are doing those puts and takes as well. Oh, very good point. Maybe just simple blocking math here. Half of that $29 million from 2024 is literally one time. The other, I think of it as one time-ish only because you're not adding 170 salespeople every year. The other piece is the credit losses that we had in 2024. Whether you're looking at an as-reported basis or an ex-divestiture basis, if it's on an as-reported basis, you're going to see acceleration of margin with $25 million of outsized credit losses being removed. Right. Right. That's helpful. Thank you. If we turn to the segment level, within merchant solutions, a core focus over the last year has been really driving growth in the direct SMB book. In fact, I think it was discussed at last year's FinTech Forum. You have certainly seen some progress there throughout the last year. That obviously comes with a healthier margin profile versus the ISO book. Can you just discuss what the company's doing internally to drive this growth, what progress you're seeing, and what the trajectory looks like going forward? Yeah, Paul, great question. If you remember to last year's discussion, we talked about that within the SMB, our sales are predominantly in three states historically, right? We were California, Texas, and Florida. One of the things we were going to try and do, and partly why we were hiring all these extra salespeople, was that we were going to kind of expand our geographic footprint and try to drive into some of the other states. We've obviously done that, hiring people, having success with that. I think the second component was we were really kind of refocusing on the merchants themselves, the size of the merchant, the verticals that we were in. We were really trying to focus on the things that played well with our product stack. Clover plays very well in certain verticals, restaurant and retail. We were trying to adjust the merchants that we were going after and trying to get up. If you look at historically our SMB book, it was almost more of a micro merchant that we were competing with, more competing with Square versus kind of the other players in market. What we have been able to do in 2024 is we have been able to move up a little bit. You saw in our revenue per SMB merchant, upper single-digit growth profile in that revenue per month category. We feel very good about the continued progress. We would expect to see that continue into 2025. There is a lot that goes into that, right? We had to rechange the verticals that we were going after, rechange the marketing structure on how we were sourcing leads and driving leads. I think overall, it's been moving on a very positive trajectory. All right. I think with the positive trajectory in SMB and obviously all the improvements, it's sometimes easy to lose sight of what's going on in enterprise, where the company's seeing very strong trends and meaningfully higher wins relative to years past. I would just ask you what Paysafe's positioning is relative to competitors and what's really driving that go-to-market approach. What I would say is we have really accelerated in the gambling space on the e-comm side, right? When you go back and look at Paysafe, that's the lineage side of our business. It was predominantly European and with our wallet and Paysafe Card. As we built up this eComm functionality in the U.S., it allowed us to go after a market. We got licensed in the respective states or in every state that has a license. That has allowed us to really build a stronghold within that particular vertical. That has grown quite a bit, right? We see really solid growth, 30% for the year growth with our eComm book. What we started doing as we built out our team in 2024, we started kind of going to adjacent verticals. We started hitting some more hospitality and travel and those type of verticals that play very well in what we do. We have a very strong foundation in risk and AML management. We stayed kind of central to what we call the experiential economy. We continue to really focus in on those type of businesses. We're seeing nice growth, better than nice growth, but 30% growth with our eComm book. We expect that to continue as we move into 2025 and 2026. We see a lot of upside with that business. We'll just get better and better at that as we're moving along. That's great to hear. If we look at digital wallets now, obviously it continues to show healthy growth, even when factoring in the lack of float tailwinds that there were the prior year. You can clearly see that engagement is improving with the transactions per active user and the ARPU continuing to see healthy growth. Just what's driving this engagement? What are the key drivers there? If I look at the actual user base, does Paysafe still have a goal of bringing in new users, or is the focus more so on just driving engagement among the existing quite vast user base? Paul, that's a great question and one we don't get a lot of. What I would say is what we tried to do initially as we started going into 2023, as you probably recall, those businesses were declining. They were really kind of struggling coming out of 2022. We had some artificial tailwinds kind of propping up those businesses. What we focused in on was let's just stabilize the users, but really focus in on the experience that the users have. You started to see our transactions per account starting to go up. You can see a nice growth profile over the last couple of years of transactions per user, which is fantastic because the benefit of that, the byproduct of that was that our ARPU started going up. People were using it more. ARPU started clicking up. We really started having positive growth. You can see that returned us to growth as we were going forward. In 2024, though, we also had some great product expansion. We had launched our Account & Card, which was really a graduation program to our Paysafe Card customers, where it gave them access to basically a DDA account that they could do other things with and leverage, in essence, a new wallet for them. That really took off and it was growing very nicely. We added also a bunch of LPMs that allowed us to leverage more cross-border payments, which was fantastic. We also, on the Paysafe Card, as probably everybody knows, most of the way that works is in person. We launched an ePIN product towards the end of 2024 that allowed people to top up their cards online. That was a big hit and we'll continue to see growth expansion from that as we move into 2025 and 2026. We have a series of other products that we are very excited about. I talked about the PagoEfectivo wallet. B riefly, l ockable card is one that will allow video gamers and streamers to navigate and manage their subscription services. This makes it very easy for them to control their budgeting and how they're being billed. We think just in the tests that we've done so far, we've seen really good response from consumers on this. I think we're very optimistic about some of the new product launches that we've had. We've also launched some of our white label wallets. We're starting to see the Xsolla Wallet in market now. We're starting to see we have a scrap metal wallet that we haven't really talked much about, but that's launching and doing very well. What we've done there is really leveraged our AML capabilities and our regulatory capabilities that bring more structure to that industry and really creates a safer environment in that vertical. We feel very good about the products that we're starting to bring to market, and we think those will really drive continued growth. With all that, we have revamped our consumer acquisition model. I think the consumer acquisition model will benefit, one, from the new products and functionality that we're driving to market. We're also changed really the team, and it's led a wonderful lady, Alisa Barber, drives this for us now. I think what we've done to change the way we're going to market is going to be very interesting to watch as we continue to spend more money. We've got a discipline around it. We have a good understanding of what our long-term value is, what our CAC is, our cost of acquisition. We feel very good about the mechanics of the go-to-market motion in that segment. Great. I want to focus in on one of the investment goals for 2024, and that's the vast capabilities, which you obviously added chargeback production, backup terminals, loan offerings for your merchant base. I'm just curious what the adoption has been like over the past, I think, six months or so is probably a good time frame once those are really out in the market. Yeah. I would say mixed bag. What I would say is the chargeback has gone very well. Probably north of 40% of our consumer base or merchant base has adopted that product. That's gone exceptionally well. I think some of the others, like the capital lending, is just really launching now. We've kind of done it in small increments. We're going to continue to offer more and more product to our merchant base. We expect that we'll have some of them hit pretty well and others probably won't get that much lift. It's really about trying to offer more and more services to those merchants to allow them to run their business as effectively as they can. We feel good that we're starting to get that motion, that go-to-market motion, bringing products to market. You'll see a lot more activity in that space. It is not much different really than the way we look at it is revenue per merchant or ARPU, right, on the two different businesses. We are trying to figure out how do we raise that up with each merchant in this case. We feel that there are a lot of good products that we still are yet to offer that our 250,000 merchants to 300,000 merchants in the U.S. alone, we have close to 1 million merchants in Europe. We think there is a big opportunity to leverage that. Great. That's helpful. If we look at the macro, obviously it continues to evolve and be quite volatile. If we think about what you've seen quarter to date, I think what you've heard from other people, other companies presenting at the conferences, despite trends maybe related to weather or leap day comps, there actually have been fairly stable spend trends quarter to date. That includes both general and eComm. Would you say you're seeing fairly similar trends? Do you have any? I think yes. You can occasionally on the gaming side, you can have a big sporting event in a different month or something like that can cause some movements, but it does not tend to be a cyclically macroeconomically driven activity. Our merchant base still is so small relative to the overall economy. That you're still gaining shares this way. Yeah. Yeah. Got it. Got it. John, if we can spend a few minutes discussing capital allocation, I think that'd be helpful. I know the company has the goal to reach 3.5x by the end of 2026, I think 4.4x, I want to say, for this year. Can you just discuss balancing that with perhaps share buybacks this year and any plans for M&A in the future? Thank you. I think I'll address the M&A piece first and say no plans. If something were perfect, Bruce sometimes uses the term unicorn deal so it comes through. Our focus really is, to your point, on de-levering, getting to 3.5x in 2026, getting under 4.4x this year. Not necessarily because we think there's any magic to those leverage levels, but because we just think very simply about converting enterprise value to equity value and giving ourselves more optionality down the road in terms of then pivoting to being able to use some capital for M&A or accelerated investments in marketing, sales, or other areas. With respect to the buybacks, we don't think of them as a traditional return of capital in the sense that we're looking to deploy X dollars every year to get to our shareholders. We are thinking about them opportunistically when the stock is well below what we think of intrinsic value. At those points, we'll lean in even at times probably to the detriment of our near-term acceleration of debt pay down because our debt is trading at yields that are very attractive and close to par in most instances and our equity at times looks relatively cheap to us. Right. I think that makes sense. We're coming up on time. Before we take a question or two from the audience, can we just talk about your key goals for 2025? If we look ahead to the end of the year or maybe next FinTech Forum when we're recapping 2025, what would you say would be the key signs of success that you accomplished what you wanted to this year? You want me to go first? Sure. I think for us, we've put out targets for ourselves. We'd like to see us add that third year of upper single-digit growth and continue the momentum that we're building. That's really important for us. We really feel strongly about really displaying the leverage of the business and seeing double-digit EBITDA growth. That's important. Obviously, the financial metric around the net leverage ratio, we've already kind of cut it to halfway, right? From where we were, we're about halfway to our target. By the end of this year, we'll have a very clear path to three and a half or a little bit better as we go into 2026. Those key milestones will be really important. I think for probably sub-milestones to see really how the wind's blowing, it'll be really around did we get some products launched, a couple of products launched, seeing some value come out of those products and seeing really that organization of 170 people kind of stabilizing and maturing and delivering at a level that we anticipate. I think those will be kind of the sub-components that we look at and say, okay, if we're hitting these financial milestones and our sales team's coming along and we've launched a couple of products. W e call it NPi, but we have goals on the product contribution. Again, the longer-term view on the product is we really want that to be a double-digit contributor to our revenue profile as we're going forward. Products that we've released in the prior three years, we want that to be in the double digits in that 10% to 12% range contribution on an annual basis. We're building to that. We had about 6% in 2024. We'd like to continue to build those metrics and have ourselves in a good position for 2026. Great. John, do you have anything? It's very simply, since we're at time, I'd say proving the operating leverage in our business model this year. Right. Perfect. That is all the time we have today. I want to thank you both for joining us today. This has been really, really helpful and great color on all the questions. Thank you for that. Next up, we have the real-time payments panel in the other room after a short break. Thank you. Thank you, Paul.