Paysafe Cuts Profit Outlook as EBITDA Margin Drops Five Points

Paysafe lowered its full-year earnings outlook after third-quarter revenue growth failed to translate into stronger profitability. The adjusted EBITDA margin fell by roughly five percentage points, while operating cash flow more than halved.

The revised forecast cuts expected adjusted EBITDA by about 8% and adjusted earnings per share by 24%, measured at the midpoints of the previous and new ranges.

The company attributed the EBITDA decline to business mix, continued investment and severance costs. Its Digital Wallets business also faced market softness and regulatory pressure in areas including cryptocurrency and financial trading.

Goodwill Write-Down Deepens Loss

The company reported a net loss of $247.5 million, including a $203.3 million non-cash goodwill impairment. The write-down widened the accounting loss but did not consume cash and was excluded from adjusted EBITDA.

The cash-flow deterioration was caused by lower adjusted EBITDA, refinancing fees and working-capital outflows linked to the timing of receivables, according to the results.

Refinancing Extends Maturities at Higher Cost

Paysafe's August refinancing gave it more time to repay part of its borrowings. Replacement dollar and euro term loans mature in June 2030, while the new revolving credit facility runs to August 2031.

At the time, management described the transaction as extending debt maturities and supporting investment and deleveraging. However, higher effective rates following the transaction increased third-quarter interest expense by $7.5 million year on year, adding pressure on adjusted earnings.

The previous EPS forecast already incorporated the refinancing's effect on interest expense. November's reduction therefore represents a further downgrade to an earnings outlook that had already been revised for the higher financing cost.