Digital Wallets And Fintech Will Drive Global Market Transformation

Key Takeaways

• Expansion in digital wallets and alternative payment methods positions Paysafe to capitalize on global shifts in consumer payments and increased digital commerce adoption.
  
• Strategic enterprise partnerships and improved operating efficiency are expected to drive recurring revenues, support margin expansion, and strengthen Paysafe's position in high-growth verticals.
  
• Declining revenue, high leverage, persistent customer attrition, margin pressure, and intense competition threaten Paysafe's profitability and long-term competitive position outside its core markets.

Catalysts

Provides end-to-end payment solutions in the United States, Germany, the United Kingdom, and internationally.

• Rapid expansion of new products and digital wallet solutions (such as PagoEfectivo in Peru) demonstrates Paysafe's ability to meet localized and evolving consumer payment preferences, positioning the company to capture accelerating digital commerce growth across emerging markets-likely driving higher future revenue and improved transaction volumes.
  
• Rising demand for alternative, integrated payment methods (e.g., eCash, digital wallets, embedded finance with partners like Fiserv and Clover) aligns Paysafe with global shifts in consumer payment behaviors, supporting cross-border expansion and growing the addressable market-expected to positively impact top-line revenue growth.
  
• Deepening enterprise-level partnerships and a healthy pipeline of large deals, especially in high-growth verticals like iGaming, digital assets, and fintech, signal increased long-term, recurring revenues and improved margin quality as these verticals scale and go live-potentially boosting both revenue and net margins.
  
• Technology modernization, marketing automation, and sales team expansion are expected to drive operating leverage and sales efficiency, reducing SG&A over time and supporting margin expansion and EBITDA growth as new channels mature and customer acquisition costs decrease.
  
• Strength in e-commerce (over 30% YoY growth, with diversification beyond gaming into additional verticals and geographies) along with positive momentum in SMB segments, positions Paysafe to benefit from the continued digitization of commerce and payments worldwide-likely leading to sustained, above-market revenue growth.

Paysafe Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Paysafe's revenue will grow by 6.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from -2.9% today to 7.7% in 3 years time.
• Analysts expect earnings to reach $155.3 million (and earnings per share of $1.65) by about August 2028, up from $-49.1 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 8.0x on those 2028 earnings, up from -16.7x today. This future PE is lower than the current PE for the US Diversified Financial industry at 16.4x.
• Analysts expect the number of shares outstanding to decline by 2.33% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 13.28%, as per the Simply Wall St company report.

Paysafe Future Earnings Per Share Growth

Risks

• Paysafe's reported revenue declined by 3% year-over-year, with organic growth offset by divestitures and unfavorable foreign exchange movements, indicating ongoing challenges in sustaining top-line revenue growth.
  
• Net leverage has increased to 5.4x due to a combination of divestiture impacts and foreign exchange fluctuations on debt balances, raising concerns about long-term balance sheet flexibility and the potential for higher interest expense, which could erode net earnings.
  
• Attrition rates remain elevated at 12%, above internal targets, with management acknowledging ongoing efforts to reduce customer churn; persistent attrition could dampen recurring revenue streams and limit overall revenue expansion.
  
• Gross margins have declined 160 basis points (excluding divestitures), driven by business mix (greater ISO channel growth within Merchant Solutions) and lower interest revenue, placing pressure on profitability and threatening sustained margin improvement despite cost control measures.
  
• Competition in key verticals and regions remains fierce, with Paysafe holding only a small market share and citing the need to improve product offerings and execution to compete beyond its strength in iGaming and gambling; heightened industry competition and pricing pressure may compress transaction fees and reduce net margins over the long term.

Valuation

• The analysts have a consensus price target of $15.55 for Paysafe based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $22.0, and the most bearish reporting a price target of just $12.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.0 billion, earnings will come to $155.3 million, and it would be trading on a PE ratio of 8.0x, assuming you use a discount rate of 13.3%.
  
• Given the current share price of $13.8, the analyst price target of $15.55 is 11.3% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.