Greetings, and welcome to the Paysafe Fourth Quarter 2024 Earnings Conference Call. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Kirsten Nielsen, Head of Investor Relations. Please go ahead.

Thank you, and welcome to Paysafe's Earnings Conference Call for the Fourth Quarter and Full Year 2024. Joining me today are Bruce Lowthers, Chief Executive Officer; and John Crawford, Chief Financial Officer. Before we begin, a reminder that this call will contain forward-looking statements and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent SEC reports. These statements reflect management's current assumptions and expectations and are subject to factors that may cause actual results to differ materially from those forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements during this call speak only as of the date of this call, and we undertake no obligation to update them. Today's presentation also contains non-GAAP financial measures. You can find additional information about these measures and reconciliations to the most directly comparable GAAP financial measures in today's press release and in the appendix of this presentation, which are available on the Investor Relations section of our website. With that, I'll turn the call over to Bruce.

Thanks, Kirsten, and thank you all for joining us today. We had a very active quarter and released much of the 2024 results and 2025 guidance last month. So I'll start off with a few simple messages that we'd like for you to take away from the call. In 2024, we delivered 7% organic revenue growth, supported by all key regions and product lines. Last month, we announced the divestiture of our direct marketing payment processing business, which marks the completion of our portfolio rationalization and sharpens our focus on Paysafe's ideal customers and verticals. This represents an important step forward to enhance our financial performance and valuation by eliminating a declining noncore revenue stream and reducing our exposure to higher-risk merchants. We continue to reduce net leverage, which is 4.7x at year-end, down from 5x at the end of 2023. At the same time, we made significant investments while returning more than $40 million to shareholders through our first-ever share repurchase program. We have a few puts and takes across the numbers in Q4, which John will take you through in more detail, but I want to reiterate that we've made incredible progress delivering on our priorities and executing our 3-year growth plan. Turning to Slide 4. Our fourth quarter and full year results are consistent with our press release last month, so I'll keep this brief. Revenue in the fourth quarter increased 1% year-over-year, resulting in full year revenue of $1.7 billion, an increase of 6%. When we look at the organic growth, excluding impacts from disposed business, FX and interest, our revenue growth would have been roughly 6% for the fourth quarter and 7% for the full year. Adjusted EBITDA was $103 million for the fourth quarter, resulting in $452 million for the full year, down 1% compared to last year, largely reflected in the accelerated merchant exits in Q4 related to the direct marketing business as well as the associated increase in credit losses. As a reminder, we also made incremental investments totaling $29 million as part of our 2024 objectives to expand our sales capabilities and optimize the portfolio. With the portfolio repositioning now behind us and given that a large portion of these investment expenses are one-off in nature, we expect to see meaningful improvement in our adjusted EBITDA growth in 2025. We also generated strong unlevered free cash flow of $300 million in 2024, reflecting a 66% conversion of adjusted EBITDA. Lastly, for the first year since going public, we achieved a positive GAAP net income, which was $22 million for the full year of 2024 compared to a net loss of $20 million last year. Turning to Slide 5. I'll double-click on our growth drivers in 2024, aligned with our strategic initiatives. The first bucket that you see here is attrition, which includes our voluntary attrition from relationships we exited in higher-risk sectors such as crypto. This also reflects market attrition within SMB, particularly at the micro level, which typically has higher levels of attrition. The next pillar is growth from our existing clients or same-store sales, which contributed roughly 9% to growth during the year. The last pillar is our growth from new client wins as well as the introduction of new products, which together contributed roughly 11%. When we put all of this together and look at our organic performance, we see 7% growth in 2024, supported by cross-selling and growth with existing clients as well as new logos and new products. Turning to Slide 6. I'll close out the discussion of our 2024 objectives. We successfully expanded our sales capabilities by welcoming 170 new quota-carrying reps to the Paysafe sales team. We continue to see good momentum across our enterprise-level accounts, where revenue was up more than 10% for the year, including double-digit growth from e-commerce on the merchant acquiring side and single-digit growth from digital wallets on the consumer side. The investments in our sales team expansion and portfolio optimization reached $29 million for the year, which generated more than $50 million in in-year revenue, and we expect this contribution to roughly double in 2025. On our consumer acquisition strategy, we made several foundational improvements that have supported stability in our user base. Our classic wallet users surpassed 1 million for the first time in 3 years, driven by the development of better incentives and promotional programs. Across the broader 7 million user base, we've seen favorable trends from new partner integrations such as Revolut and Deutsche Bank as well as new product introductions. For example, revenue from online distribution of our eCash Solutions nearly doubled compared to last year as more users are loading their accounts digitally versus going into a store. We expect consumer acquisition to benefit from continued product initiatives, market expansion, and improved marketing execution in 2025. Finally, while still relatively small numbers, our revenue generated from our product initiatives continue to be up significantly compared to last year and reflects 6% of our total revenue in 2024. We are focused on driving this higher in 2025 with a goal to reach double-digit contribution over the near term. Turning to Slide 7. I'll highlight some of the additional points on the momentum we see across the sales organization. Today, we have a more balanced growth profile, including double-digit growth from our top 20 clients. We also saw a 6% increase in the total number of enterprise-level merchants in 2024. Our growth was relatively broad-based across all key regions, including high single-digit growth from our top 20 countries. When we look at how this compares to the performance of these metrics during the 2 prior years, growth was in the low single digits or even declining. So we've demonstrated a lot of improvement across the board. Turning to bookings. In 2024, approximately 1/3 of our new enterprise deals measured by annual contract value were with existing customers, reflecting both territory expansion and product cross-selling. Additionally, we saw total ACV of bookings expand 40% over last year, including strong growth in Latin America. Our current pipeline has also grown by more than 40%, and we are targeting a 20% increase in our enterprise pipeline for FTE as our sales organization becomes more productive. In 2024, we enhanced our training program for new sellers by launching the Sales Academy. This initiative provides an effective onboarding experience, coupled with continuous learning. Our goal is to empower our sales teams to approach challenges with confidence, enhancing their ability to close deals successfully. Overall, we have a much stronger sales motion in place today, and it boils down to execution in 2025. Moving to Slide 8 for a supplemental view of growth by business line. In 2022, several of our core products were in decline, with growth entirely driven by the SMB business. Over the last 2 years, we've returned to growth across all core products, particularly high-value areas such as e-commerce and wallets, despite a headwind from FX and interest this year. SMB growth remains healthy in the mid-single digits, supported by consumer resilience in the U.S. as well as our initiatives to optimize the portfolio. So again, across a number of views, you can see the quality of our revenue and the overall balance of our growth profile has improved. Turning to Slide 9. When you look at the last 3 years, we've seen an acceleration of organic revenue growth, where we've gone from flat in 2022 to 4% in 2023 and 7% in 2024. We believe this view helps you see the underlying growth when we exclude the inorganic puts and takes moving forward into 2025. This view will exclude the divested business as well. It's also important to highlight that we have delivered this improvement in growth and quality of revenue while investing significantly in the business, rationalizing the portfolio and maintaining solid free cash flow and reducing our leverage. Turning to Slide 10. Our team has a lot to be proud of when we look back at our achievements over the last 3 years. I won't spend much time on this as we've covered most of these topics already, but I'll share a couple of additional highlights. One area that we haven't discussed as much externally are the steps we've taken over the last 2 years to drive cost savings through centralizing our service functions and eliminating business units, which allowed us to self-fund a portion of our investment needs and redeploy resources to revenue-generating functions. We now have the right people in the right positions to be more successful and better aligned with our goals. Continuing with the topic of efficiency, we've also improved deal execution with faster onboarding for enterprise merchants. In 2024, our average contract to launch time frame was about 60% faster than we were delivering in 2022, driven by continued process improvement, system consolidation, and the creation of a focused customer success team. On the consumer side, we've enhanced customer experience by implementing intelligent self-service tools and now 44% of our customer service contacts are resolved through automation. These improvements have resulted in lower friction and improved engagement with our digital wallets, along with a reduction in the total number of customer service cases. Lastly, we've talked about derisking in connection with the disposal of direct marketing, which lowers our revenue volatility and credit loss exposure. But we've also enhanced our profile more broadly to minimize and diversify our exposure across our risk, compliance and regulatory functions. Turning to Slide 11. We view 2024 as the completion of our turnaround, now shifting our focus to the real growth engines of the company. On the product side, we're driving more revenue from new products, advancing our Paysafe Wallet platform across our branded solutions, including market expansion within Latin America as well as unbranded solutions such as our business wallet for SMBs and white label wallets. As our new sales organization continues to ramp up, we will focus on enhancing our sales cycle productivity and revenue conversion. We also see opportunities to bolster both of these areas through partnerships, which will help us reach new merchants and consumers and expand our product and service delivery across our core regions. Lastly, we continue to drive greater scale and interoperability of our products, enabling users to leverage the functionality of the entire Paysafe network and create better experiences for our customers and employees. With that, I'll ask John to review the financial results and outlook.

Thank you, Bruce. Let's move to Slide 13 for a summary of our fourth quarter performance. The financials presented here include the results of the recently divested direct marketing business, which was impacted by accelerated merchant exits and associated credit losses as described in our press release. I'll provide some color on those impacts and what our growth would have looked like excluding this business. Additionally, in the appendix of this presentation, you'll find a quarterly summary of its financial contribution for 2023 and 2024. In Q4, revenue increased 1% to $420.1 million on a reported basis, which included about $16 million of inorganic headwinds from FX, interest, and the disposed business. So when you look at our performance on an organic basis, growth would have been roughly 6% in Q4, driven by strong double-digit growth in e-commerce and low single-digit growth from SMB merchants in the Digital Wallet segment. Adjusted EBITDA declined to $103.3 million compared to $121.7 million in the fourth quarter of last year, reflecting a $15 million increase in credit loss expense largely associated with our portfolio actions in direct marketing. Excluding the impacts of direct marketing, adjusted EBITDA margin would have been 26.9%. We generated $70.5 million in unlevered free cash flow for the quarter with a 68% conversion of adjusted EBITDA. The decline in free cash flow from Q4 of last year mainly reflects the lower adjusted EBITDA as well as increased CapEx. Adjusted net income was $29.6 million or $0.48 per share, down from $0.66 in Q4 of last year, reflecting the adjusted EBITDA performance, partially offset by a reduction in interest expense. Moving to Slide 14 for a quick recap of the full year. For the full year, revenue increased 6% to $1.7 billion in 2024. Excluding impacts from FX, interest in the disposed business, the organic revenue growth would have been 7%. Adjusted EBITDA declined 1% to $452.1 million with the two key drivers being the planned incremental investments totaling $29 million for the year and a $25 million increase in credit losses year-over-year. Without the impacts from direct marketing, adjusted EBITDA margin would have been about 25.6%, down 110 basis points compared to 2023. Recall that the 2023 EBITDA margin benefited from $38 million of growth from interest and FX, while this was a $7 million headwind in 2024. So the underlying margin trajectory remains strong. Given that a large portion of the investment items in 2024 are nonrecurring, we expect to see meaningful improvement in our EBITDA growth as we put this portfolio rationalization behind us. When you couple that with an improvement in the productivity of our sales force, including the annualization of client wins in 2024, we expect to show strong improvement in operating leverage in 2025 and beyond. We generated nearly $300 million in unlevered free cash flow for the full year, reflecting a 66% conversion rate, in line with our expected range of 65% to 70%. Adjusted net income and adjusted EPS declined 8% to $132.5 million or $2.14 per share, reflecting the adjusted EBITDA decline, partially offset by lower interest expense. Let's move to Slide 15 to discuss the Merchant Solutions segment. Revenue in the fourth quarter for Merchant Solutions increased 1% year-over-year to $230.1 million, including a 5 percentage point headwind from direct marketing and full-year revenue increased 9% to $957.6 million, including a 1 percentage point headwind from direct marketing. The underlying performance was led by double-digit growth in e-commerce with continued momentum in North America iGaming and mid-single-digit growth across the SMB space. The disposed direct marketing business and associated credit losses had a significant impact on the results for Merchant Solutions, particularly on adjusted EBITDA, which declined 43% in Q4 and 14% for the full year. Again, the EBITDA and margin performance also reflects the incremental investments in our 2024 initiatives. So looking ahead to 2025, we'll start to see a better margin profile as a larger percentage of these incremental investments will not recur and credit losses return to normal levels, along with better operating leverage as the new sales organization matures. Turning to the Digital Wallet segment on Slide 16. Q4 revenue from digital wallets increased 2% to $194.4 million, or 3% on a constant currency basis, leading to full year revenue growth of 4%. Growth was supported by continued strength from new products, which more than offset lower interest revenue on customer deposits, which was a headwind of $3 million for Q4 and $6 million for the full year. Our 3-month active users were 7.3 million, up modestly from Q3, reflecting seasonality and stable year-over-year, with revenue growth supported by continued improvement in user experience and engagement. In Q4, adjusted EBITDA grew 8% to $89.2 million, or 9% on a constant currency basis, leading to full year adjusted EBITDA of $339 million, with an adjusted EBITDA margin of 44.3%, an increase of 90 basis points, reflecting solid operational execution and expense discipline. Turning to Slide 17 for a summary of debt and leverage. At the end of the year, total debt was under $2.4 billion, reflecting debt repayments and repurchases of more than $100 million during 2024. We ended the year with a net leverage ratio of 4.7x compared to 5x at the end of 2023. We expect to further reduce our net leverage ratio to 4.4x or lower by the end of 2025, and we remain focused on achieving our target of 3.5x by the end of 2026. During the quarter, we repurchased 969,000 shares at an average price of $18.50 per share. For the full year, we repurchased 2.6 million shares at an average price of $16.23. In February, our Board authorized a $70 million increase to our share repurchase program, which brings our remaining authorization to approximately $77 million. Moving to the full year 2025 outlook on Slide 18. We expect reported revenue growth to be between flat and 2% in the range of $1.71 billion to $1.734 billion. Excluding the disposed business in both 2024 and 2025, we expect revenue to grow between 6.5% and 8%. At the segment level, we expect Merchant Solutions to grow in the high single digit to low double digits range, and digital wallets is expected to grow low single digits, including an expected headwind from FX and interest of approximately 3 to 4 points. Additionally, while we haven't typically given quarterly guidance, I'd like to highlight that our expectation is for the second half to be stronger than the first as some of our newer initiatives come online. We expect Q1 to be our softest quarter with organic revenue growth of 3% to 4% and our first half of the year building in the 4% to 6% organic revenue growth range to something more like 8% to 10% in the second half of the year. We expect adjusted EBITDA margin between 27.1% and 27.6% with adjusted EBITDA in the range of $463 million to $478 million. Excluding our business disposal, this represents a 150 to 200 basis point increase in margins, reflecting modest growth of operating expenses in the low single digits, along with lower credit losses and driving EBITDA growth of 13% to 17% versus prior year. Lastly, we are providing adjusted EPS guidance for the first time. We expect adjusted EPS to be in the range of $2.21 per share to $2.51 per share, and we've provided some of our additional assumptions in the appendix to help with modeling. Turning to Slide 19. I'll highlight some of the growth drivers behind our outlook. We expect our existing customers, including the annualization of 2024 bookings, to generate growth in the upper single digits. We also expect the growth contribution around 10% from both product initiatives as well as new client wins as our expanded sales team transitions from the onboarding stage to becoming more productive. When you put that together, these growth pillars more than offset the impact of the attrition and the divestiture, leading to modest low single-digit growth on a reported basis and growth north of 7% on an organic basis. As I touched on earlier, when you think about our margin profile, we have the nonrecurring items from 2024 behind us. Specifically, we have about half of the $29 million investment in portfolio optimization that we will not repeat this year. Additionally, we had an increase of approximately $25 million in credit losses, and now we expect to return to more typical levels, which when combined with tighter management of operating expenses should show the operating leverage in our business model. With that, I'll turn the call back over to Bruce for closing remarks before we take questions.

Thank you, John. To summarize, we see significant potential in Paysafe, having increasingly improved our investment thesis. We have proven our ability to accelerate growth while also making significant investments and completing our portfolio rationalization. With our foundational turnaround now behind us, we are looking forward to our third year of growth, focusing on Paysafe's biggest opportunities in the experienced economy. This is underpinned by the exceptional talent and strong free cash flow, which allows us to continue to deleverage and create equity value for our shareholders. I want to thank all of the Paysafe employees for embracing our need to change. I am more optimistic today than I was when I joined the company almost 3 years ago, and I'm excited to enter this new chapter alongside the Paysafe team. Now let's begin the Q&A session.

Our first question today is from Timothy Chiodo from UBS.

This is Jing on for Tim. I wanted to touch on your SMB channel. On Slide 8, I appreciate the full year growth rate, 6% for 2024 and the updated mix. So for 2025, how should we think about the growth drivers for SMB to potentially see acceleration again in your strategy around your SMB direct channel versus your ISO book?

Yes. So I think as we look at the '25 SMB channel specifically, there's a couple of things that I would point out. We continue to have solid growth, low teens growth with our Clover sales. So we continue to see significant expansion there. One of the things that we focused on was moving upstream within the SMB channel. So getting a little larger SMB client, we've been able to do that. We see revenue per merchant up in the upper single digits going into '25. And then lastly, I would say we've also added quite a bit of sales help in the SMB channel. So we continue to see solid growth in our ISO part of the book. On the direct basis, we're doing really well selling Clover and adding more salespeople, and we've had a lot of success moving upstream within that SMB channel. So overall, we feel very good about our SMB channel as we move into '25.

Got it. I appreciate the clarification. I have a quick follow-up regarding the direct marketing business sale. In the press release, it was mentioned that the consideration for this transaction primarily consists of annual earn-out payments over the next five years. Could you elaborate on the income statement geography and how that's influenced the below-the-line items?

Yes. So as far as the geography, that will be below the line, below EBITDA line as we're moving forward into '25 and beyond. So I think that was the question. I don't know, John or Nicole, if you guys want to.

I think that's fair.

But I hope that answers your question.

Yes, that makes sense. So just confirming that's in the adjusted EPS guide for 2025?

Yes, that would be in the adjusted EPS guide for '25, correct.

It's a minimal number expectation in 2025.

Next question is coming from Andrew Harte from BTIG.

I guess, Bruce, just maybe first one, getting a handful of questions on the comments in the press release about the takeover interest before and after the Bloomberg report. Anything incremental you can share with us on potential profiles of the bidders or any details you can share about those conversations?

Thank you for the question, Andrew. At this point, we are not commenting further. We have received some unsolicited proposals and inquiries, and we are confident in the business and the value we are creating. The Board will fulfill its fiduciary duties and review any opportunities that arise. For now, we are focused on executing at a high level, and we believe these matters will resolve themselves over time. It was expected that as we improved our business, such opportunities would emerge, and we feel very positive about our current position.

That's helpful. And then I guess with the portfolio now cleaned up, can you just talk about some of the target customers and area of focus you want to have in 2025? I think one of the comments you made was the experience economy and this bridge of the '25 outlook drivers is great. There's 10% growth from new customers. So can you share with us kind of who the target customers are for the refocused sales team in '25?

Yes, definitely. You'll notice a few things in the slides this time. First, we are doing a better job highlighting the cross-sell opportunities with our customers. A couple of years ago, there was almost no cross-sell due to the siloed structure of the company. Now, about one-third of our customers are purchasing multiple products from us. This marks a significant change in our sales operations, and we expect this trend to continue as we introduce more products, including local payment methods and others going forward. Additionally, the outlook for 2025, prepared by Kirsten and John, clearly indicates that our performance will be consistent from 2024 to 2025, with similar growth in same-store sales and new customers and product growth at a steady pace. We feel positive about our sales initiatives and the sectors we are targeting, such as SMB and e-commerce. We're also seeing solid growth in Digital Wallet and eCash. Another slide illustrates the growth across our diverse product lines, which aligns with our goal and positions us well as we head into 2025 and 2026.

That's super helpful. And if I can just squeeze one more. John, I appreciate the '25 guidance you gave, the breakout between expectations for revenue on merchant versus Digital Wallet. I guess, can you just expand a bit on the Merchant segment kind of expectations for gross profit growth? And then on the earn-out of the divested business, I guess my question would be as a follow-up to the first one. What is the dollar amount expectation that you could get from the earn-out, both in 2025? And what's the maximum longer term?

I'm going to go in reverse order, sorry. Regarding the divestiture, I expect that the impact in 2025 will be minimal as the buyer works on ramping up that business. Over the next five years, we can potentially earn up to $50 million on our earnout. Now, about your earlier question on gross profit growth for the merchant segment, we anticipate strong growth in that area in 2025. However, as I mentioned during the call, it will likely be somewhat back-end loaded as the merchant business gains momentum throughout the year. Therefore, we expect gross profit growth in the second half of the year to be stronger than in the first half, but overall growth will occur throughout the year.

Next question is coming from Darrin Peller from Wolfe Research.

This is Paul Obrecht on for Darrin. Can you provide some more color on the VAS capabilities you've talked about as part of your 2024 investment strategy? Just curious what the merchant adoption and response has been like to those products? And if there are any other products in the pipeline that maybe merchants seem to be demanding?

Yes, thank you. Regarding our products, we've experienced significant success in 2024 and are building momentum into 2025 with our account and card products, particularly our ePIN products, especially on the Digital Wallet side. These offerings have been very well received. We previously mentioned ePIN, which has transformed the distribution model for our eCash product line. We anticipate continued growth in this area extending into 2025 and 2026. We're also excited about some new products we plan to introduce. A key strategy is leveraging our white-label wallet, allowing us to expand into markets like Peru, where we already have a strong foothold in e-commerce. We recently soft-launched Pago wallet, which will capitalize on our existing market share. Currently, we have significant activity in the pay-in aspect of e-commerce in Peru, supported by a well-known brand, and we'll now integrate payout services to offer a comprehensive solution. We expect this to be a successful product when we fully launch it in Q2. Additionally, we have another product set to launch in March, which has already had a soft launch but will soon be available on a general release basis. This is our lockable card, designed particularly for our large video game customer base, which represents 42% of our eCash users. This card will assist them and streaming clients in managing their subscriptions, and the early feedback has been extremely positive. We're eager to see its broader launch and impact. Moreover, our e-commerce segment is showing strong growth, exceeding 30% year-over-year, and we are optimistic about further expansion in this area. We also have a strong product offering with Clover for small and medium-sized businesses, and we look forward to expanding our partnership with Fiserv, anticipating significant developments as we enhance that collaboration in 2025.

Got it. That's helpful. And then as a follow-up, can you update us where we're at from a sales productivity standpoint? I think in the deck, you said you were targeting a 20% increase in the pipeline per employee. So I'm just curious on the timeline for ramping these hires that you made in 2024.

Yes. So in regard to the sales team, we had everybody hired, as we mentioned in the Q3 call, by the end of Q3. So the team has been ramping up as we're moving into '25. As you saw from some of the metrics that we put out there, really solid growth numbers. When you look at the enterprise sales team, approximately 40% growth on productivity. When you look at the in-year contribution going from '23 to '24, you see over 100% lift in contribution. So we feel very good about the people that we're bringing on board and scaling them up, seeing a lot of growth in LatAm. And so that's been great to see. It will be a double-digit growing business for us in '25. So overall, I think we're very pleased with the sales hires and the progress they're making. And this year in '25, it will really be about continuing to ramp them up, continuing to get the maturity into that organization to drive what we need for '26 and beyond. So overall, so far, it's gone exceptionally well.

Next question is coming from Aditya Buddhavarapu from Bank of America.

A couple for me. Firstly, on Digital Wallets, you said you expect that to grow low single digit this year. Can you just talk about the moving parts there? And how should we think about that business sort of over the midterm? Second, you also spoke about self-funding some of your investments through internal efficiencies. So what's the scope for further efficiencies as you go into '25 and beyond? And John, anything you've noticed, I guess, since you've joined in terms of areas where you can be more efficient from a cost base perspective?

So on the wallet side, we see ongoing growth through transactions. Looking at our transactions per account, there's steady growth expected throughout 2024 in the wallet segment, which continues to drive overall growth. This growth is primarily due to significant improvements we've made in the functionality and usability of our Digital Wallet and eCash products. These enhancements are contributing to an increase in transactions, which is also positively impacting our average revenue per user. Additionally, our classic Digital Wallet surpassed 1 million users in the fourth quarter for the first time in several years, indicating strong momentum in this area. With upcoming product releases like Pago, we anticipate further acceleration in the Digital Wallet business.

Yes. And then to your questions about self-funding investments and efficiency opportunities, I'd say, I think big picture, think about it to some extent as a redeployment or reallocation of spend from the back of the house to the front of the house as we continue to look at driving sales and marketing to grow the business on a go-forward basis. Some of that, I mentioned on the last quarter call in my brief remarks about some systems migration work and that sort of thing, and as those projects continue to deliver over the next few years, we will create additional opportunity that we can then redeploy for growth in the business. So there's not one big thing to your question, but there are a lot of medium-sized small projects.

Next question is coming from Trevor Williams from Jefferies.

This is Spencer James on for Trevor Williams. Maybe just to start, I wanted to ask about your assumption for attrition in FY '25. It was helpful to get the summary of the expected drivers on Slide 19. It looks like you expect an 11% headwind in '25, which is less than the 13% headwind in '24. I was just wondering if you could comment on the strategy for managing that attrition and how the underlying drivers of it may look different this year versus last year.

Yes. I'll start off and John can add color to it. So if you think back and play kind of the earnings calls from 2024, you heard me talk about throughout the year, us trying to derisk the company. So there was a lot of involuntary attrition that we drove in the business, meaning literally, we decided to part ways with customers that did not meet our risk profile as we are going forward on the new strategy that we outlined. We believe that that is 2 to 3 points of attrition that we added to the mix in '24. And so we're expecting attrition to settle back down at kind of a normal rate as we go forward. So that's the gist of it. We intentionally accelerated attrition to rebalance our portfolio. We now believe that that's done, and we feel very good about the attrition assumption that we have.

The only additional point I would make is that some of the voluntary attrition Bruce mentioned came from the wallet side of the business. Therefore, it relates to specific regions or product areas where we are scaling back.

Fair enough. Appreciate it. And then as a follow-up, maybe just on credit losses. Could you give a bit more color on what drove the uptick in Q4 and comment on what gives you confidence that it can normalize this year?

In Q4, the direct marketing business was primarily responsible for this, but we experienced some voluntary attrition and merchant exits during that time, which led to significant disruptions and losses. Historically, our loss rate has been fairly stable as a percentage of volume or revenue, typically running at 2% to 3% on the merchant side, usually closer to 2%. However, we saw a noticeable spike in Q4 last year due to the direct marketing business.

Our final question today is coming from Jamie Friedman from Susquehanna.

Good results here, good year in 2024. Bruce, I wanted to ask about Slide 10. Can you explain which new products are contributing the most now that they represent mid-single digits as a percentage of revenue, compared to 0% in 2022? I have a quick follow-up as well.

Yes, Jamie. That's a great question. I think we can have Matthew follow up with you to provide more detail on that. The biggest impact from a new product perspective has definitely been the accounting card, which expanded across Europe in 2024. Along with ePIN, these are probably our two biggest drivers. We'll be able to share additional information on the product side as well. We continue to expand these products as we move into 2025, and we're expecting that growth to continue into 2025 and 2026.

And then in terms of the white-labeled wallets, that topic, not just for you, but for the industry is kind of evergreen. What's the right to win at Paysafe? How do you see your competitive advantage? What are the conversations like on the client side? How is that going because you sound pretty excited about it, but it's never clear at the industry level who wins and why?

Yes, Jamie, that's a great question. Some of our differentiators stem from our regulatory strength, particularly in anti-money laundering. We are regulated in Europe and excel at addressing AML issues, which provides us with a solid framework for leveraging our white label wallets as we expand into new geographies and create new affiliate wallets. The Pago wallet is a white label solution, and we are very excited to fully launch it in Q2 in Peru. We anticipate seeing positive metrics around the Pago Wallet as we progress through 2025.

We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Yes. I just want to thank everyone. Obviously, the team here for all the preparation that goes into quarterly earnings. I also want to thank the employees for just a tremendous year as we bring a close to the transformation of Paysafe, and we now move forward focused on growth, focused on bringing new product to our customers, and just very excited about the future. So thank you all for joining us today, and we look forward to talking with you again soon.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.