Greetings, and welcome to the Paysafe Third Quarter 2025 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. 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. Kirsten, please go ahead.

Thank you, and welcome to Paysafe's earnings conference call for 2025. 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. Statements reflect management's current assumptions and expectations and are subject to factors that could cause actual results to differ materially from those forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements 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 non-GAAP measures and, where relevant, reconciliations to the most directly comparable GAAP measures in today's press release and in the appendix of this presentation, which are available in the Investor Relations section of our website. Now I'll turn the call over to Bruce.

Good morning, and thank you for joining us today. Paysafe delivered accelerated financial results in the third quarter, including 6% organic revenue growth, 7% adjusted EBITDA growth, and 37% adjusted EPS growth. Growth from our existing customers or same-store sales contributed 5% to growth, while contribution from new sales and product accelerated to double digits. The overall attrition level was stable around 11%. We returned another $20 million to shareholders by repurchasing 1.5 million shares during the third quarter, bringing our year-to-date total to $50 million as our shares remain significantly undervalued, and we remain confident in Paysafe's long-term strategy and growth potential. To that effect, our Board has authorized an additional $70 million to our existing share repurchase program. While we're pleased with our third quarter and year-to-date progress, we continue to see outperformance of our lower-margin product and sales channels. Our updated 2025 outlook reflects our current business dynamics and a longer timeline for the delivery of key product initiatives as we navigate the complex ecosystem required to bring innovative new solutions to the market. We'll discuss both of these areas in more detail throughout the call. So let's start with our regional performance on Slide four. The largest market, North America, grew 8% in the third quarter, excluding the divestiture. This was driven by approximately 50% growth from iGaming, while SMB grew 4%. Europe is our next largest market, which also grew 8% normalizing for FX. Latin America was roughly flat in Q3; this is mainly related to a large customer contract renewal in the prior year. As we lap that impact in Q4, we're seeing a normalized growth rate of 10%. In the non-core rest of world countries, we saw a double-digit decline attributable to our 5% of total revenue three years ago to 3% of revenue today, as a function of both macro dynamics and our own actions to trim this exposure over the years. So this gives you a sense of the puts and takes from a regional perspective, including very strong organic growth from our largest core markets that represent about 90% of our revenue. Turning to Slide five. I'd like to highlight some of our recent client wins starting with iGaming. In the third quarter, we signed an agreement with BetMGM to provide payments for their online players in Ontario, where Paysafe already maintains a strong market presence. They were looking for a new partner who could deliver high approval rates with stronger customer support and reliability. What's great about this deal is that BetMGM is one of the largest merchants in North America that Paysafe did not have integrated, so we're thrilled to partner with them in Ontario. It's also worth highlighting that Paysafe is very well positioned in the up-and-coming predictions market. Paysafe is in active discussions with several key players. As one example, we're expanding our partnership with Underdog to support their growth in the predictions market across 16 states. This win reflects our strong customer relationship and our ability to support our clients' growth aspirations by launching in new jurisdictions at speed. We also signed agreements with new international iGaming operators such as state.com to provide eCash digital wallet solutions and our local APMs across Latin America and Europe for pay-ins and payouts. We're also expanding our relationship with Bitano to offer eCash solutions in support of their recent launch in Belgium. Outside of iGaming, we continue to make progress expanding our pipeline and winning deals in other core verticals. For several years, Paysafe has been a trusted partner of Campminder, a leading ISV whose technology powers thousands of camps and recreational organizations. We are now taking our joint success across borders, expanding with them into Canada. Lastly, in the FinTech space, we signed a new client agreement with PaySagi in Europe. By integrating with Paysafe's acquiring platform, PaySagi can now offer their global online merchants instant access to major payment methods. Collectively, these are great examples of how our operational improvements, sales team investment, and product focus are enabling us to expand our total addressable market and growth opportunities across new and existing clients. Turning to Slide six. Across enterprise-level merchants, our growth in e-commerce continues to be very strong, exceeding 20% in the third quarter, driven by iGaming growth of more than 50%. Total e-commerce growth moderated compared to more than 30% in recent quarters due to softer performance across other verticals concentrated within lower-tier merchants, mainly in non-core areas. Importantly, we booked over 100 enterprise-level deals in Q3, an increase of 25% compared to last year, along with double-digit growth in the annual contract value of those bookings. We also continue to see higher quality deals, which supports continued revenue growth along with the durability and diversity of our merchant base. We believe our e-commerce business remains on track to reach $200 million in revenue this year, reflecting a three-year CAGR of 29%. On the SMB side, after driving 6% new mid-growth in Q2, we accelerated new mid-growth to more than 20% in Q3, led by our direct sales channel along with positive growth in SMB revenue and revenue per merchant. We also saw strong acceleration with our new mid-acquisition for Clover in Q3, up 49% from Q3 2024. A very impressive result with great progress from the team. We're excited to build on this momentum as we look ahead to 2026. Even with the strong execution on the direct side of the business, overall revenue mix has shifted to the lower-margin ISO business as we continue to deliver double-digit revenue growth from this third-party channel in Q3 and year-to-date. We continue to focus on optimizing our SMB portfolio, but given the comparative size and the growth profiles of the portfolios, we expect pressure on the total segment margin as we continue to ramp up our direct efforts. Let's turn to Slide seven. To take this a step further, and discuss our focus areas to optimize the SMB portfolio, as we've shared before, our Merchant Solutions segment today is comprised of three business lines: e-commerce, which serves our larger enterprise merchants, SMB direct sales, and SMB sales through ISOs. When you look at the aggregate of our e-commerce and SMB direct sales, which go to market under the Paysafe brand, compared to the third-party ISO channel, the direct revenue streams are not outpacing the stronger ISO growth, which now represents more than one-third of the Merchant Solutions segment, up five percentage points from two years ago. The ISO book has an EBITDA margin profile in the single digits, while the direct channels across SMB and e-commerce have attractive EBITDA margins in the mid-20s range on average. So while we were focused on the right things to improve our growth profile of the segment, we were frankly too optimistic in our assumption around shifting this mix dynamic in 2025. However, as I mentioned on the prior slide, we drove an acceleration in new SMB mid-growth in Q3, up more than 20% from last year, led by the direct channel. We'll build on this momentum in new merchant acquisition and continue to implement the improvement plans underway, including new SMB leadership and the expansion of our agent programs, where we've seen an increase in demand from single agents who want to sell under the Paysafe brand. Finally, we continue to roll out value-added services with plans to bring several new products throughout 2026. This represents the marketplace that Paysafe will support as part of a fully integrated and streamlined onboarding experience for value adds that help our customers manage their businesses. Shifting gears to digital wallets, on Slide eight. To put it simply, the digital wallets remain a work in progress. Starting with the positives, we're seeing strong consumer engagement related to eCash product initiatives as we continue to cross-sell and shift towards online account-based distribution. In October, our account and card products surpassed 500,000 registrations, a major milestone that reflects the team's drive and stronger consumer engagement. In just over two years since introducing the product, we've reached the scale that took even some of the leading digital banks nearly two years despite their broader offerings and massive marketing budgets. And this was achieved through targeted regions across Europe, so we still see opportunity for further geographic expansion. Next, our digital banking partnerships continue to ramp up and deliver growth across Europe, including our recent launch with BBVA to offer their consumers seamless cash solutions to deposit and withdraw to and from their bank accounts at any of our point-of-sale partners' locations in Germany. Additionally, we see strong demand for Paysafe's suite of local payment solutions in Latin America, including double-digit volume growth from Pago Effectivo and Safety Pay in Q3 and year-to-date. The rollout of our new Pago Effectivo wallet in Peru is progressing very nicely. And in the third quarter, we launched our iOS app along with product enhancements that have helped drive onboarding efficiency and build trust across merchants and consumers. These are the key areas and products collectively driving the strong double-digit revenue growth, while Classic Wallets is not accelerating to the level we have planned for 2025, as weakness in the rest of the world partly offsets strong progress in Europe. At the same time, some of our new product initiatives, such as our business wallet, are taking longer to deliver and gain momentum than we planned. This is a function of a complex ecosystem across the regulatory, risk, and banking needs required to develop innovative new products and supporting infrastructure to bring merchants and consumers together in a seamless experience. The inertia across these legacy systems has resulted in some delay in execution of our product roadmaps. While implementing and integrating these new models is complex, our customer pipeline remains strong, and we identify more and more money movement opportunities where the wallet helps solve the unique challenges and opportunities our clients face. To wrap up, before I hand the call over to John, I want to reiterate that we delivered strong results in Q3, and our sales team is becoming more productive, driving higher bookings and quality of revenue. Through our operational transformation, we now have a strong platform to build upon and launch new products and services. With that, I'll ask John to review the financial results and outlook.

Thank you, Bruce. Let's move to Slide 10 for a summary of our third quarter results. On a reported basis, revenue increased by 2% to $433.8 million. Organic revenue growth was 6% for the quarter, reflecting continued double-digit growth from e-commerce, 4% growth from SMB, and 4% organic growth from digital wallets. This excludes the impacts from the divestiture, foreign exchange, and interest. While this marks an increase in reported inorganic revenue growth from the first half, this was slightly below our expectations in terms of the overall revenue performance as well as business mix. As Bruce mentioned, it reflects some moderation of e-commerce growth and lower than expected growth in the second half from digital wallets. Adjusted EBITDA increased 7% to $126.6 million. Our third quarter results benefited from a licensing deal, which contributed approximately $10 million to revenue and adjusted EBITDA, offsetting the headwind from ongoing business mix and the divestiture, which has less impact in the second half. As a result, adjusted EBITDA margin was 29.2%, up 160 basis points year over year. Given what we're continuing to see at the gross margin level for both segments, we don't expect EBITDA margins to be at this level in Q4. We expect adjusted EBITDA margins closer to 23% in Q4, about 25% for the full year. Turning to cash flow. We generated $83.6 million in unlevered free cash flow in the quarter, with a 66% conversion of adjusted EBITDA. Down from 76% in the prior year, mainly reflecting one-off tax refunds which benefited the prior year and the timing of a large receivable. Normalizing for this, conversion would have been above 70%. On an LTM basis, unlevered free cash flow was $265 million, reflecting 62% conversion. We expect Q4 to be within or slightly above our targeted range of 65% to 70%. Adjusted net income was $40.3 million or $0.70 per share, compared to $0.51 in Q3 of last year, driven by higher adjusted EBITDA, lower interest expense, a lower effective tax rate, and a reduction in share count. Lower than the prior year quarter, the third quarter did include a USB tax expense, which drove the tax rate higher in the third quarter relative to the 27% to 28%. GAAP net loss for the third quarter was $87.7 million, reflecting a charge to income tax expense of $81 million due to the recognition of an additional valuation allowance against the company's U.S. Deferred tax assets. Due to the enactment of the One Big Beautiful Bill Act as previewed last quarter. As a reminder, this is a non-cash expense that does not impact the company's current or future cash tax payments. Turning to slide 11, for a breakdown of our revenue growth drivers year to date. Revenue attrition continues to trend in the 11% to 12% range. The growth contribution from existing customers is now 10% year to date, which includes clients onboarded in 2024, naturally moderates as the year progresses and we annualize the start dates of client onboards. Contribution from new sales and new product initiatives accelerated to double-digit growth in Q3, leading to 7% year to date. Turning to slide 12 to discuss the Merchant segment results. Merchant Solutions volume increased 9% to $34.9 billion, resulting in organic revenue growth of 7% led by double-digit growth from e-commerce, including robust processing volumes with the start of the U.S. Football season. The second biggest growth driver in the quarter was the license deal, and while we're excited to have proven we can monetize data, underlying growth from processing was just around 5% in the quarter, when normalizing for various one-timers in both periods. We expect to see a higher growth rate in Q4 supported by the mid-production over the last several months. Adjusted EBITDA for the Merchant Solutions segment was $47.8 million, with an adjusted EBITDA margin of 20.6%. There continues to be some noise here, but looking past the impact of the benefit from the licensing deal, adjusted EBITDA margin was stable sequentially with Q2. Again, the main driver of this year is the mix dynamic, due to the success within our ISO channel, which continues to outpace the growth of the higher-margin direct channel in Merchant Solutions as Bruce discussed earlier. Turning to the Digital Wallet segment on slide 13. Volume from digital wallets increased 13% to $6.7 billion or 8% on a constant currency basis. Revenue from digital wallets was $205.7 million, an increase of 8% or 4% on an organic basis. Our three-month actives were 7.1 million, stable compared to last year. Organic growth was supported by increasing consumer engagement related to our eCash product initiatives, expansion of Paysafe's digital banking partnerships across Europe, as well as demand for our suite of local payment solutions in Latin America, particularly across iGaming and payment service providers. Adjusted EBITDA for the digital wallet segment was $93.4 million, an increase of 11% compared to last year, reflecting revenue growth and lower SG&A expense. Gross margin for the segment was stable sequentially at roughly 71%, down 120 basis points versus last year due to lower interest revenue accounted for 50 basis points as well as business mix reflected by higher relative growth from eCash products. Turning to slide 14 for an update on leverage and capital allocation. At the end of the quarter, total debt was $2.5 billion and net leverage improved to 5.2 times. Compared to where we started the year, the stronger euro has increased our euro debt balances by more than $140 million when translated back to U.S. Dollars. Divestiture has been the other key driver of this temporary increase in our net leverage, but this is the last quarter that will have that headwind to our LTM adjusted EBITDA metric. Lastly, while we remain keen to delever, share repurchases have remained very attractive. We repurchased 1.5 million shares during the third quarter at an average price of $13.62 per share, bringing our year-to-date total to 3.6 million shares or $50 million. As Bruce noted earlier, our Board has authorized an additional $70 million for share repurchase. Finally, turning to Slide 15. Bruce discussed at the start of the call we're updating our 2025 outlook based on our year-to-date results and our expectations for the remainder of the year. Our reported growth in the second half benefits from the stronger euro and a much smaller impact from the business disposition, we now expect full-year organic growth in the range of 5% to 6%. On the left-hand chart, you can see on a rounded basis, the revenue growth drivers are largely consistent with what we shared for our original guidance. Reflect a slightly lower contribution across existing clients, new sales, and product initiatives. This puts our current expectation of full-year revenue at the low end of our prior range or slightly below based on the updated midpoint. Key areas to point out versus our original expectation are as follows: one, slower growth from the Digital Wallet segment, particularly our Classic Wallet; two, a slower planned rollout of new wallet solutions; and three, lower than expected e-commerce growth, which saw a moderation in growth in Q3 although still very strong at over 20%. As a reminder, these business lines contribute the highest gross margins, so these relatively small top-line changes result in a less favorable business mix across both segments. The final driver is the continued strong performance from our ISO channel in Merchant Solutions, which has the lowest gross margins. Translating this to EBITDA and margin, you can see the impact is largely a gross margin headwind, while operating expenses as a percentage of revenue are lower compared to 2024, as we've continued to aggressively manage our cost base. Overall, this is not where we plan to be from a margin perspective, nor does it reflect the potential of our business model and the operating leverage that we can deliver. You'll see our full-year guidance summarized on slide 16, reflecting 5% to 6% organic growth, adjusted EBITDA growth of 4% to 5% excluding the business disposition, resulting in adjusted EPS in the range of $1.83 to $1.88. Looking ahead to 2026, on a preliminary basis, we expect organic revenue growth to be in the mid to high single digits range and adjusted EBITDA to increase high single digits versus 2025. We'll be finalizing our financial planning process over the next few months to refine this outlook further and discuss it on our year-end earnings call as usual.

Thank you, John. To wrap up, I'd like to reiterate that we are on track to deliver our third consecutive year of organic revenue growth and importantly, with the transformation that we've driven over the last three years, we are seeing real improvements in how we operate. While we're not seeing the EBITDA expansion that we initially planned for the year, we remain focused on driving stronger operating leverage and expect to deliver higher adjusted EBITDA growth in 2026 and beyond. I'm more confident than ever that Paysafe is a more agile and adaptable business today with higher quality revenue streams well-positioned for long-term success. Now, let's begin with the Q&A session.

Thank you. We'll now be conducting a question and answer session. Our first question is coming from Trevor Williams from Jefferies. Your line is now live.

Great. Thanks. Good morning. I just want to go back to some of the dynamics within the SMB book on the direct side. We can see the mid-growth acceleration. It sounds like attrition has been stable. So Bruce, it'd be helpful to hear kind of what else you need for that direct channel growth to get pulled up, whether that's just the time with the mid-growth needing to compound and we'll see that just naturally get pulled up over time or anything else initiatives-wise that you would point us to for kind of what the levers are needed to get that growth rate up? Thanks.

Yes. Good morning, Trevor. Thank you for the question. Look, the SMB, as we've talked about before on the direct side, is just gonna take time. You can see as you just articulated nice acceleration of new mid-acquisition. We've got the attrition stabilizing, but it just will take time to kind of get that to build. It's a big book. So each of these SMB mids are very small in a revenue stream, talking about $200 to $300 a month in revenue stream. So it takes a lot of them, and so it takes some time to build that up. But we feel very good about what we're doing there. We have a nice acceleration of our Clover product that we resell on Fiserv's behalf. So a nice uptick there. And that really opens the door for ancillary services, value-added services that should help improve even further the attrition rate because once an SMB client has not only processing but these other services around it, like lending, like payroll, these things really increase the stickiness of the client. So I think we have what we need. We need to just keep doing what we're doing and keep accelerating the sales team. Productivity per rep. Which I think we've got underway. We've really found a rhythm with the marketing and sales team. And now it's just gonna take a little time to build up those billable mids to get the growth rate back up.

Okay. No, that's helpful. And then just on the e-commerce deceleration, it sounds like it was mostly in non-core verticals, but any more detail there would be helpful. And I don't know if you guys could share how the quarter-to-date trends look relative to the 20% growth from Q3? Thanks.

Yes. So you're absolutely right. So I want to be very clear. The 50% growth rate. It's really the non-core piece. And candidly, coming into even the last day of the quarter, we thought we were rocking along pretty well. We had a last-minute client that had to shut down, which caused several million dollar write-down in Q3. So that business is one that is a little more interesting than the iGaming, the e-commerce core business. So this is for us, we're in kind of a lower-tier market. A lot of kind of travel, or things that are more high things sometimes are a little difficult, higher risk MCC codes. And so those to bank. Even if you have existing clients that are with the bank as they try to expand, sometimes the banks aren't open to the additional risk, and then you've got to find other places for them to bank. And so had a little bit of challenge with that with some of those MCC codes, and we're working our way through that. The nice part is we continue to sell the deals. We've now got to figure out how to keep the deals once they start ramping up.

Okay. No, I appreciate that. Thank you.

Thank you. Our next question is coming from Darrin Peller from Wolfe Research. Your line is now live.

Hi, thanks. This is Paul Obrecht on for Darrin. You talked about the longer timeline for delivery of new products, including the wallet initiatives. Just curious if you could provide a bit more color on really what changed during the quarter relative to your prior expectations?

Yes. So Paul, as we looked at the quarter, coming in, we felt pretty good. We had, as we said in the last call, sold a number of deals. We thought they were progressing. Sometimes just with these deals as we're talking about white-label wallet solutions, we're kind of going into different markets. And sometimes, whereas we're expanding those markets, these are things that are new to us, getting our regulators, getting our banks kind of aligned on these new risk opportunities. Sometimes it takes a little longer. The analogy we have here is the fintech ecosystem is this big boulder, and as we move into some of these newer spaces, pushing that boulder uphill takes a little bit longer than we anticipated. Overall, we have good demand for our solutions. The clients are staying with us, working through these issues. So we feel good that ultimately it will come. It's just coming slower than we anticipated.

Got it. That's helpful. And then John, I know you talked about the stronger euro leading to the increase in the leverage along with the divestiture. I know you're also balancing buybacks, but just curious if you have any updated views on what delevering could look like over the medium to long term?

Yes. I think that over the medium term, we're still focused on getting leverage below four. It's going to take a little longer than we expected, probably obvious based on where we are today. But we expect to finish this year probably around the leverage that we're at today in the low 5s. And then continue to delever through both paying back and growing EBITDA in 2026 and 2027 with the objective to get to 3.5%, but it's probably going to be 2027 to get to that 3.5 level.

That's helpful. Thank you.

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

Thank you. I appreciate everybody dialing in. Again, we felt we had a very good quarter for Q3. Continuing to make progress in our transformation. We really like the growth drivers that are emerging. Obviously, e-commerce continues to be a 20% grower. We continue to see on an enterprise-wide more value-added services, more products starting to come to market, which we're excited about. Still remain very excited about Account and Card and our geo expansion in LatAm. So a lot of good things coming to market. So thank you very much. We appreciate everyone dialing in this morning. And thank you to the team for all the work that you're doing to drive transformation.

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.