Q1 2022 Paysafe Ltd Earnings Call
Greetings and welcome to the Pes Safe Q1, 2022 earnings conference call.
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A question and answer session will follow the formal presentation.
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I'll now turn the conference over to your host Kirsten Nielsen head of Investor Relations you may begin.
Thank you and good morning all.
Under <unk> first quarter 2022 earnings conference call before we begin a friendly 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 periodic SEC report.
These statements reflect management's current beliefs assumptions and expectations and as such.
The 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. During this call speak only as of the data of this call and we undertake no obligation to update that today's presentation. Also contains information that will constitute non-GAAP financial measures under SEC rules.
You can find additional information about these non-GAAP measures and reconciliations to the most directly comparable GAAP financial measures in today's press release and in the appendix to this presentation, which are available on the Investor Relations section of our website.
With me today are Bruce mothers, who joined <unk> as CEO on May 1st and has he got white our CFO .
Any of you are already familiar with brands from a 15 year tenure at Fas I'm delighted to have him with us on the call today to introduce himself to you directly following a few remarks from brands and he will discuss our strategic highlights and financial results in more detail.
That I will turn the call over to Brad.
Thanks, Kristen good morning, everyone and thank you for joining us today before I jump into the quarter I want to acknowledge the ongoing tragic events in Europe . Following Russia's invasion of Ukraine in February .
It is helping our European teammates through this tragedy.
Is he will discuss the impact of the war is having on our results a little later.
Having started last week and visiting our major European offices I appreciate the warm welcome from the pace of team and for the Trust. The Board has placed in me to lead P. C. If it's such a pivotal time.
I also want to thank Philip for his leadership over the past few years during this time.
He not only took P. C public he also navigated the company through the pandemic and laid important foundations for us to build upon.
Having been in this role for 10 days now I'm, mostly in listen mode today, but I'm happy to share a few observations and background on why I joined the company.
Coming to pay safe was a compelling next step in my career and a great fit personally.
Most of you already know I've spent the last 15 years at Fas Most recently as president.
I'm grateful for not only my time, there, but the wonderful teammates I had the opportunity to work with.
While there I was focused on accelerating growth and modernizing the company to drive the efficiency needed for us to compete in today's marketplace.
I've always had a strong focus on client experience innovative products technology and sales.
ESG is also very important to me and something that will remain at the forefront for us.
Earlier in my career I was involved in a number of startups and consider myself an entrepreneur at heart I see pay safe is a pioneer and innovator at the forefront of enabling improved payment experiences for both businesses and consumers around the world with a lot of growth potential to unleash.
I was very attracted to this fast paced entrepreneurial spirit and I believe my experience, leading both a fortune 50 company in the payment space as well as co funding startups positions me to Reaccelerate growth in passive.
I am already enjoying the early days of working with the talented and passionate please save team discussing the opportunities ahead.
Before I turn the call over to Izzy I'll touch on a few highlights for the quarter.
First quarter revenue was $368 million and adjusted EBITDA was 104 million both exceeding the high end of <unk> guidance range for the quarter.
Including strong performance from the U S acquiring segment, which grew revenue and adjusted EBITDA by 10% and 20% respectively.
The turnaround of the digital wallet business continues to show early progress, while absorbing impacts from FX as well as market pressures in Europe .
More broadly across digital commerce passive continues to demonstrate leadership in North America, I gaming, including a successful launch and Ontario's new private market with multiple leading operators.
I've been impressed with the overall pipeline as merchants come to pay saved to access full end to end payment solutions.
Additionally, pay saves expansion into embedded finance is progressing well and we recently went live with <unk>, another leading crypto exchange.
I look forward to meeting with team members partners clients and shareholders over the coming months.
And providing a more detailed perspective of the business on our next earnings call.
But for now I'd like to turn the call over to Izzy to share an update on our business and review of our results for the quarter.
<unk>.
Thanks, Bruce before we go through the financial results I will provide a few updates on our strategic priorities starting on slide four.
We continue to see a lot of traction across our key digital commerce verticals, where merchants trust pay safe to help them navigate payments and support growth in complex verticals delivering a broad set of global payment options of Cogs Cross card processing real time banking digital wallets and online cash solutions.
And crypto activity remains very strong, including our recent go live with bad panned out for card processing.
Additionally, we are now partnering with hefty acts to optimize infant payment for crypto purchases for customers in the European economic area.
<unk> open banking based payments as well as separate payment transfers.
This is another exciting win as part of our embedded finance pipeline, where in addition to recent wins with F. T X and by that we continue to see strong interest from cryptocurrency exchanges as well as large e-commerce organizations.
We also continue to see a lot of demand across the financial services vertical our <unk> business has become a meaningful player supporting new airbags and is now partnering with a large back and Tomorrow bank.
Additionally, we are driving incremental growth with several of our parks trading merchants, having recently expanded our service offering beyond digital wallet.
Lastly, we're seeing good progress and I gaming outside of North America. As one example, we're extending our collaboration with Playtech into the U K and Europe . Following our successful integration across multiple U S States.
Through a single global streamlined integration with pace API operators in UK and Europe will now also be able to leverage playtex platform to access a range of pay fixed payment solutions, starting with payment acquiring a card processing, but pay safe digital wallet services set to follow.
And Latin America, we continue to be pleased with the traction of our recent acquisition and I will also touch more on that later in the presentation.
Now turning to slide five for an update on North America, I gaming, starting with Canada, We successfully launched in Ontario on April 4th which opened its long awaited I gave me a market for private operators.
Terry is estimated to be the fifth largest north American jurisdiction I reached $4 4 billion in gross gaming revenue at market maturity.
We are alive with multiple operators, which builds on 10 years of market leadership with the provincial lotteries delivering the full stack of processing in local a PFS.
We're supporting exciting brands, including points that the score back Bad River Caesars that 365, amongst others, providing traditional and alternative payments through pace Apus gateway, including card processing electronic funds transfer visa direct E catch and interact E transfer, which is a popular and widely accepted payment method used.
By Canadian consumers.
Turning to the U S. We are now live in 22 legal jurisdictions that allows some form of live gaming, having recently added Arkansas and we're preparing to go live in the coming months and an additional four jurisdictions, where legislation has recently passed including Ohio, Maryland, Puerto Rico and Washington.
We're also seeing continued strong results out of our <unk> digital wallet, including volumes up more than doubled sequentially and strong growth in new user sign ups as we shared with you on our last call. We are preparing to launch our media campaign with Barstool sports in Q2 to promote the squirrel brand in the U S.
Utilizing a variety of Barstools popular media assets importantly, we are thrilled to be integrating scrilla with Penn National's Barstool Sports book, App, which is scripts first tier one operator in North America, and a key milestone for the team.
Lastly, we've had a number of recent wins across the U S, including our expansion into Colorado would benefit our long standing partner across Europe .
Overall, we are seeing very strong momentum in 2022, expanding our presence with both new and existing clients.
Volumes have grown over 40% year over year, and we expect our revenues to be up over 30% year over year for 2022.
Yeah.
Now turning to digital wallet on slide six on our last earnings call. We discussed our initial progress in the digital wallet business as a result of the actions we are taking to improve competitiveness in European market refocus the organization and deliver on our long term growth opportunities.
What we're seeing today, it's continued signs of progress our actions to optimize pricing continue to show positive data points in regions, where we have implemented changes.
Across a 19 targeted countries in Europe , we continue to see steady improvement in deposits.
Bank deposits up more than 80% and total deposits up 14% from September to March.
As a result, we are now rolling out these changes to additional European markets.
We're also seeing positive trends in funnel optimization and improvement in the conversion of sign ups to first deposit.
Additionally, our initiatives to reduce friction and improve the checkout experience have resulted in a 5% increase in conversion rate at merchant checkout from Q4 to Q1.
Since we have already discussed our progress on longer term growth drivers such as our embedded finance wins and progress at scale in the U S. The last piece I would mention is a continued investment in key talent.
We recently welcomed elbrus yield loss with Jordan joins us from <unk> and brings deep experience in all things script up we're excited to have him onboard to drive our crypto strategy.
We also welcome Megan Oxman, who joins us from Amazon's payments teams to drive new product development for digital wallets, including our embedded for Nab solution.
To summarize excluding impact of FX and market challenges in Europe , including Russia, and Ukraine. The underlying digital wallet business is improving and we are seeing the proof points in key metrics such as deposits conversion rates and the stabilization of one month actives, we expect 2022 to be a transitional year building momentum in the.
Second half and with the actions, we're taking now enabling us to absorb market risks in Europe .
Turning to slide seven.
We're also executing against our cost program targeting an additional $20 million in 2022, and we've delivered $5 million towards it in Q1 already.
On our banking partnerships you have added a new relationship with citizens as a new tier one sponsor bag, which enhances our banking portfolio, including expansion of processing capacity.
The recent acquisition the team continues to deliver on our integration plans and synergy target.
We're live with more than 20, E-cash merchants would probably affect tivo and we're expanding to additional countries in Latin America through safety pay we've completed the integration to load safety pay and probably attract people into our digital wallets currently live in six countries, which enables consumers to deposit money into the scrilla net tell her wallet and then try to Jack from there.
Our overall.
Overall performance is exceeding our expectations and we are uniquely positioned for growth and cross selling opportunities with online merchants are looking to expand into new markets.
Moving to slide eight for snapshot of our performance versus our guidance revenue and adjusted EBITDA came in higher than our guidance range, mainly due to somewhat stronger than expected performance from years, acquiring and continued cost management discipline.
Digital Commerce performance also slightly better than expected, but it was impacted by the FX rate.
Moving to slide nine for a summary of our Q1 results.
Volume was $31 2 billion, an increase of 13% year on year, driven by 21% growth from U S acquiring.
I'll point out that the volume does not include our embedded <unk> solution as a significant portion of the volume starts to change or PTP, which are not revenue drivers for us. Therefore, we've excluded it as not to skew the overall take rate.
Total revenue for the first quarter was $368 million down 3% compared to Q1 of last year.
Excluding the unfavorable impact from year over year changes in foreign exchange rates, which partly offset the organic benefit from the recent acquisitions revenue was approximately flat compared to Q1 of last year as growth from U S. Acquiring was offset by digital commerce.
Adjusted EBITDA for the quarter was $104 million, resulting in adjusted EBITDA margin of 28, 3%, which was stable sequentially, but down compared to adjusted EBITDA margin of 30% in Q1 of last year that change primarily reflects business mix and an increase in SG&A related to the recent acquisitions.
Lastly, free cash flow can fluctuate meaningfully at quarter end and as I mentioned on our last call. It is best evaluated for pay safe on the trailing 12 months basis.
Conversion on a 12 months basis was 55%, reflecting an increase in working capital related growth in years acquiring volumes as well as cash taxes paid including a withholding tax payment in Q3 of 2021 expected to be recovered in the second half of this year.
This really the prior year benefited from utilization of bank guarantees.
Consistent with our last call, we expect the full year free cash flow conversion between 60% to 70% in.
In Q2, we expect free cash flow conversion closer to 50% before recovering in Q3 and Q4 on a trailing 12 months basis.
Turning to slide 10, I'll briefly touch on a net loss of $1 $2 billion. This was driven by an impairment of goodwill due to the sustained decline in our stock price and market capitalization as well as current market and macroeconomic conditions. This is a noncash charge, which has no impact on cash flow liquidity or our debt covenants.
Our tax rate for the quarter was three 2%, which was lower than our effective tax rate of eight 9% at Q1 of last year, primarily as a result of the discrete deferred tax impact on the goodwill impairment.
Lowering discreet items and gains and losses on warrants, we estimate our effective tax rate will range between 23 and 26%.
Moving to slide 11 for a summary of the take rate trend as you can see from the graph PE face total take rate is stable sequentially and down year over year and this is predominantly mix driven as a U S acquiring business, which has a lower take rate has become a larger portion of our volume mix increasing from 60% in Q1 of last year to six.
4% this period.
The digital commerce take rate has decreased sequentially, largely reflecting mix within the segment while U S. Acquiring has improved sequentially as I mentioned earlier total volume does not include the volumes from embedded finance.
Moving to slide 12 for a discussion on the segment results starting with digital commerce.
Volumes were up $11 3 billion and up 2% year over year revenue was $198 5 million, a decrease of 11% compared to prior year, reflecting unfavorable FX and business mix, including the impact of regulatory headwinds in Europe .
What you've also seen in the results from European operators are reporting double digit declines in the region for Q1.
Additionally, the cash business faced a tougher growth comparable to the prior year, which benefited from Covid related Lockdowns in Europe .
Excluding the unfavorable impact of FX, which partly offset the inorganic benefit from the recent acquisitions revenue was down 6%.
Adjusted EBITDA was $75 8 million in the first quarter and down 17%, reflecting lower revenue and additional SG&A from the acquisitions as we discussed earlier the turnaround of our digital wallets business continues to show progress and improvement in deposits conversion rates and other metrics.
Overall the results in digital Commerce are slightly ahead of expectations, excluding excluding the FX impact.
Moving to slide 13 for the U S acquiring segment.
Volume in us acquiring increased 21% year on year to $19 8 billion in the first quarter.
Revenue for the first quarter was $169 million, an increase of 10% compared to the prior year.
Take rate was lower year over year, primarily reflecting volume and channel mix within U S acquired <unk>.
Adjusted EBITDA increased 20% to $47 2 million and adjusted EBITDA margin increased more than 200 basis points to 27, 9% compared to the prior year.
Lastly, our direct marketing vertical within the U S. Acquiring segment is recovering on track that's our growth year over year as expected and is beginning to contribute to margin expansion as well.
Turning to slide 14 to look at our balance sheet and liquidity cash and cash equivalents were 258 million at quarter end net debt was $2 4 billion and our net debt to LTM adjusted EBITDA ratio was five six times, reflecting the safety pay acquisition, we closed on January 31.
Our primary use of excess cash to pay down our debt and started moving towards our target of three five times adjusted EBITDA.
Let's now move to slide 15 to discuss our guidance.
Since our last call. We have continued to see unfavorable movement in the USD Euro exchange rate and macroeconomic uncertainty. However, we remain confident in maintaining our full year outlook based on the continued momentum we're seeing in U S. Acquiring strong performance of our recent acquisition and our pipeline across digital commerce and labeling.
Absorb and mitigate those headwinds based on what we are seeing today.
On a full year on a reported basis, we expect revenue between 153 and $1 five $8 billion.
U S acquired revenue is expected to grow high single digits to low double digits and digital commerce revenue is expected to be flat to up low single digits.
Total company adjusted EBITDA is expected to be between $440 million at $460 million.
Since our call in November 11th when the outlook was first provided the U S. Dollar had strep at approximately 10% against the Europe , which negatively impacts revenue by $70 million and adjusted EBITDA by $20 million on an annual basis.
Additionally, we're also assuming no revenue for the remainder of the year from Russia, Belarus and factor in parts of Ukraine.
These areas contributed approximately $20 million in revenue and $12 million adjusted EBITDA on a full year basis in 2021.
For Q2, we expect revenue in the range of $370 million to $380 million and adjusted EBITDA in the range of $100 million to $110 million, which reflects adverse movement in exchange rates and assumes the USD euro rate stays at one point O eight for the remainder of Q2 consistent with what we saw in April .
We expect high single digit growth in years, acquiring offset by decline in digital commerce, driven by year over year adverse FX movements and the ongoing impact of gambling regulations in Europe as expected in addition to Russia, Ukraine impacts.
Looking at the second half of the year.
Specter of exit the year at a double digit growth rate in Q4, as you will see the growing impact of our acquisition synergies and embedded finance growth.
To summarize pay favorite is off to a good start this year posting first quarter results ahead of our expectations. Despite macro headwinds we remain optimistic in our full year outlook driven by good momentum in U S acquiring and our pipeline across digital commerce we.
We expect growth and margin to improve in the second half of the year as we start to lap the impact of some of the regular changes in Europe and continue to see the progress in digital wallet.
With that let's open the call up for questions.
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One moment, please while we poll for questions.
Our first question is from Georgia Mahalo with Cowen. Please proceed with your question.
Great. Good morning, everyone and thanks for taking my Yeah My questions Bruce welcome aboard looking forward to working with you.
Thank you George.
Yeah, maybe a bit premature, but just wanted to ask again early days at <unk> at <unk> at page eight where we're sort of the initial priorities that you're sort of focused on whether that'd be from a from a vertical perspective from a uh huh.
On a product perspective, just just you know sort of where are you focused now.
And you're right in your early days here.
Yeah, George Thanks for the question.
As we look here.
First week behind me getting the opportunity to go around and meet some of the organization still have a fair amount of that in front of me.
I think it's pretty obvious we've got to get focused on how do we grow this business again.
We have a lot of great tools, we have a lot of great strengths.
The technology organization.
Really has done a nice job over the last couple of years, you see a lot of.
Great technology cloud based for the vast majority of what we do.
Really a lot of emphasis around the single API.
Focus on new innovative technologies like RTP.
Great advances in automation around risk compliance.
Obviously a great.
Base of licenses and on a on a global basis, So a lot of great.
Assets to work with and now its really about just kind of pulling them together and really driving.
Our growth culture and that I think we can do.
Perfect I appreciate the color and then is it quickly the U S acquiring that that outperformed as you mentioned that that sort of grew double digit.
Curious if you can kind of call out where the upside came from what surprised you.
To the upside and maybe trends through April if if you're willing to share with that thanks again guys.
Yes short, Georgia out thanks for the question on the U S acquiring really after like a soft start.
In January post Omicron, we just saw retail hospitality really take off.
Contributing to this trend on top of that actually has been doing a great job on the overall margin improvement as well. So you saw the 10% revenue increased 20% EBITDA margin increase so continue to find areas of synergies in the in the businesses that have been acquired over the years and April is right now coming in as expectations remains strong.
Like you've probably seen in our other acquirers as well.
Great. Thank you.
Our next question is from Dan Perlin with RBC capital markets. Please proceed with your question.
Yeah.
Thanks, Good morning.
I just wanted to go back to some of the final comments you were making your absorbing absorbed a lot of FX headwinds and obviously.
In Ukraine so.
In taking all that into consideration in thinking about the second half ramp that's implied can you just.
Can you just walk us through again, maybe in a little more detail. What gives you so much confidence I mean, you called out acquisitions and synergies.
Synergies embedded finance, but maybe if you could go a little deeper on how that maps out and and why you feel so confident in secondhand cannot meet these levels of expectations.
Sure.
Maybe I got it thanks for the question, maybe I could take it back to kind of how we develop the guidance right.
When we when we develop it we did take a more risk based approach to you know, there's many things going right as many things could go wrong throughout the year. So that is giving us the capacity to absorb some of these.
Unfortunately and headwinds the second thing we did was just.
Took a view that our ramp up on our pipeline, especially for embedded buying out some of the larger enterprise sales would take a little longer.
Now they are coming through are we feel pretty good about that but specifically if we get to the second half a couple things. One is as you know for them better financed restarted by that in January slowly and that's ramping up as we add additional payment methods into the embedded <unk> solution, we signed MTX and went live with them very recent.
<unk> actually in April so that starts ramping up the second half of the year.
We have our North America I gaming really excited about the integration to Barstool I Think's grill start, making a contribution plus just a wrapping up the state wrapping up with the states.
Other integrations that we've been talking about announcing so that adds up to a second half relative to first half run rate.
Finally, we also have the of the World Cup that I should help in Q4 as well. So there are a couple of building blocks that kind of build up to that second half kind of wrap up from where we are from Q1.
Okay.
Hi.
Yeah, No I think that's a great that's a great roadmap for you guys.
Just a follow up real quick talked about average ticket, they're taking U S acquiring as being a reason for some outperformance I think on one of the slides I'm just wondering what that.
Is that your callout for inflation or are you seeing like an underlying mix shift.
So we have done so.
So I'll break into two things on our and our general retail hospitality and hospitality have seen average ticket go up about 4% year on year.
Alright, so may.
It's inflation, maybe it's not but it's a it's an increase year on year and average ticket.
In our Petro services, we've actually seen something higher closer to 18%. So we're really seeing the political of higher gas prices kind of show up in the average ticket that we're seeing against the smaller part of or else, you're just acquiring but where we're seeing that little bit impacting overall volumes for the business. So not a big call out of inflation, but just something that you know.
It's more that we've probably seen in prior years in terms of your year on year increases.
Yeah, we'll take it it's awesome. Thank you both.
Thank you.
Okay.
Our next question is from Jason Kupferberg with Bank of America. Please proceed with your question.
Hey, guys.
Good morning, I, just wanted to start picking up or.
We're down left off on U S. Acquiring can you just elaborate a little bit on the mix factors that drove the take rate there are up a little bit quarter over quarter, but down year over year and then can you just tell us what your revenue mixes and U S. Acquiring between volume based revenue per transaction revenue.
Alright, two things right, Jason so the acquiring side the increase in take rate.
Is predominantly driven by.
We're just seeing a greater uptick in some of our retail and hospitality volume, which we had dropped to a flyer slightly higher take rates and.
And by the way, it's a 10 basis point increase had a chart, but it's more of a rounding thing.
But smaller increase so we're seeing it more stable and not being impacted like got impacted year over year.
That's our view on the take rates.
And then second question I guess, Jason just remind me.
Yes.
Yeah, we are probably about 70%, 70%, 75% more volume driven than what they call a transaction driven and our.
Okay.
That's helpful. And then just to follow up on some of the comments you made around the balance sheet leverage I think I think last quarter. You had said you expect it to be in the low fives by the end of this year.
That still the case and any sort of kind of roadmap you'd want to share on that.
Potential pace of deleveraging beyond beyond this year. Thank you yeah, we are expecting a low fives potentially hitting 5% or maybe just below by the end of the year, where we're actively using our excess cash every quarter to either buyback or debt pay down some of our loans. So that focus on delevering is it's pretty a pretty important for us.
Thank you.
Yeah.
Okay.
Our next question is from David <unk> with Evercore ISI. Please proceed with your question.
Thank you and congratulations Bruce.
Thank you good morning, David.
On a on slide five you called that squirrel, winning its first tier one operator, which is very encouraging can you speak to why that operator chose grill and comment on the pipeline for other tier one operators, adding scale in the near future.
Sure.
Yeah, Barstool and also I would say we have to do a lot of credits exact every brought onboard last summer. He has built a really strong relationship with.
The barstool team I in terms of you know our capabilities, what we can do with them.
It's really kind of using not just their sports books are really their overall media prowess across up across all social media channels, and really building that brand a squirrel brands through them and then integrating it obviously into their into their payment platform as well so pretty excited about the old whole relationship all kudos goes exactly the team dry.
Giving it up and yes, we are actually talked to a couple of other operators that we just got announced it yet but.
But no as grilled takes a school has a lot of momentum we've seen some great proof points out volumes doubled sequentially.
Ill turn next year on year, it's still small but growing at a really good rate as the enhancements we've made.
The VIP and high dollar amounts that we are allowing some of the VIP customers to go through scale USA, So all of that momentum.
Helping us with our conversations with tier one operators I think of as Barstool Cafe starts in Q2.
Everything sign and hope.
Hopefully in the coming quarters, we are able to talk about other tier one operators.
I appreciate that just as a follow up what was your organic growth in the quarter and is your expectation for fiscal 'twenty, two still to see 4% organic revenue growth and five points of organic adjusted EBITDA growth.
And then maybe inorganic David just to be clear you mean around either the acquisitions.
Yes, so ex acquisitions, what was the organic revenue and EBITDA growth in the quarter and what's your expectation for the year as a whole organic ex acquisition.
Sure so for effectively our organic growth are.
The FX impact year on year was offset by the M&A. So you can probably calculate roughly 3% overall growth for the for the quarter was M&A driven and like we said in the past that were pretty consistent with it.
We expect pre synergies about $60 million in revenue contribution in 2000.
$20 million in EBITDA contribution from the three deals we've done that's.
That's the contribution in 2022, so we're still on track for that.
Got it thank you very much.
Thank you.
Our next question is from Scott Wurtzel with Wolfe Research. Please proceed with your question.
Yeah.
Hey, Good morning, guys. This is Scott on for Darren I, just wanted to touch on the digital wallet segment for a second I mean, it was good to see some of the progress that you've made on deposit pricing and increased conversions, but I just wanted to touch on the user growth. We noticed it continue to decline sequentially during the quarter and thinking about the potential for an inflection in user growth just wanted to get your thought.
So on what the what the drivers of that potential inflection would be yeah.
Yeah sure Scott Good question and one of the things we're seeing across.
Gaming in Europe , which were digital wallets, and acas, primarily operate and you've seen from other operators as well.
Germany, and Netherlands regulations that are driving year on year decreases obviously, our wallet reset also impacted.
Impact of that going into 2022, so we have seen their 12 month active decline, we will expect that to decline.
Through Q2 with a challenging comps.
And we're really targeting Q4 kind of where that stabilizes that being said on the one month's active so for the last two or three months, we have seen that relatively stable. So that gives us a little bit of comfort that you know.
Again, it's stabilizing we're not declaring victory on a an inflection point and rise up just yet sure argument team are doing the right things to get the business, where it is where some of the core metrics are stabilizing.
Stabilizing and slightly improving.
I would just add just initially initial view on it.
Really like the team building that trucks do any Israeli hiring some great talent and I think youre going to see some.
Outcomes of that pretty quickly.
Great. Thanks, and then just as a follow up on going back to guidance here outside of the FX headwinds and the impacts from Russia, Belarus, and Ukraine can you maybe just talk about some of your higher level macro assumptions that are embedded in the guidance.
Yeah, I think the probably the largest macro assumption right now to probably two macro assumption that there isn't an unknown.
A regulatory change in Europe that impacted right now, we don't see anything happening in Q2 or even for the balance of the rest of the year is out we see imminent and the other macro wise is any recessionary impact either in Europe or in the U S that would impact volumes those are probably the two right now we're not planning.
Based on what we see today any of that impacting our guide, but those will be the two items that we keep an eye on.
Great. Thanks, guys.
Thank you.
Our next question is from Jamie Friedman with Susquehanna. Please proceed with your question.
Hi, let me echo the greeting spruce.
Good morning.
Thank you.
So.
I think in your prepared remarks, you did disclose the gross.
In the.
North American gaming segment, but you were going kind of quick there.
And if you did not say it I apologize, but if you could or if you have that that'd be great yeah.
Had 40% year over year volume growth in the North America gaming segment are pretty happy with that and again expecting a 30% plus.
<unk> revenue growth for all of 2022, hopefully we outperformed that based on what we're seeing.
Yeah.
And the last question in terms of the monthly actives.
See I don't see that in the appendix or maybe I'm just missing it but did you disclose what the wallet monthly actives were yeah in the appendix Jamie there was a 12 month active.
For cash and for digital wallets that we've shared with you that every quarter. So yeah. It was I mean, how is it okay. So that $2 8 million I found it is.
Hi, guys. So that's.
That's down.
Well why is that a constant currency number though.
I know, it's not the active users is all the way to the right that's a metric.
The constant currency revenue.
Got it okay. So how would that have compared to the previous period.
It's down I believe for this period was about $3, one correct Yep Yep $3 1 million okay.
And then Bruce.
Bruce I was just wondering at a high level what kind of.
Measurement.
You're going to run the company on you said in your prepared remarks that.
That growth is a priority.
And we saw you deliver that at your prior shop, but.
But how are you thinking about you know what what to focus on here.
Yeah look I think it's a great question.
Obviously a weekend.
Not not prepared.
Kind of change the metrics as the company has been presenting but.
We will work on that this quarter, we will come back and be very transparent as how we look at the business. So that everybody can kind of follow along and see.
Points that we have is we're making progress.
Two our pivot to growth so.
I want to come here, probably in the next 90 days I would expect youre going to see some.
More disclosures in the second quarter about how we are looking at the business, how we're measuring the business and how we're going to be able to demonstrate.
We're growing the business.
Got it thanks again, guys I'll jump back in the queue.
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Our next question is from Timothy <unk> with Credit Suisse. Please proceed with your question.
Great. Thank you and good morning, I wanted to also talk about U S. Acquiring so specifically the volumes they were really strong at about 21% I know that previously we had talked about for the full year volumes in that segment being up in the 4% to 7% range I just wanted to see if that number has changed much and what changed since you last.
That was a really big beat on volumes, specifically related to that what does this imply for an exit rate heading into 2023 in terms of the volumes again for U S acquiring.
Short term about a couple of questions. There. So no we're still thinking it will be for.
For the full year, we're looking at.
Mid to high single digits in terms of volume growth the year over year compare for Q1 was a little easier comp this up and really solid growth. So that's one.
The other the other aspect in terms of.
The exit rate for 2023, it's still early.
Inflation, a recessionary talk I think right now we're seeing the momentum on volume side.
That <unk> and the team are pretty excited about where we're growing our our stick count we're growing our revenue per merchant through our servicing and our offering so right now again, we look pretty good about it for the rest of the year.
And then.
We will talk about 2023, as we get closer to Q3 Q4.
Okay, Great and then you also made the comment on there was a question earlier around April and you mentioned that the trends were consistent in terms of us acquiring did.
Did you mean that the trends were consistent in terms of.
Roughly 20% volume growth or.
Now relative to our internal expectations. However, we're probably expecting year on year volume growth in the high single digits, maybe low double digits for acquiring for $2000 for Q2.
Alright, Okay, alright, glad we clarified that great and then the last one is around you had mentioned on prior calls around Netherland, just some of the regulatory changes around gaming is there is there any update to mention there is that sort of status quo.
Yeah, Kevin Great question, Yes, we did.
The decree was reversed where.
Operators could accept payments from E money license all providers.
The next step is for these operators to actually go through an application process back with the licensing agency to get approved in many of the operators are going through that.
I Should've mentioned that I think with your earlier question. That's another element that we expect in Q4 to start contributing to our run rate and.
And Thats why we applied for it to the operator to get are going through the licensing to be able to accept E money license providers E cash being the big one for us.
And we should see that hopefully starting in late Q3 into Q4 as the operators get approved.
Okay, great. Thank you for taking all of those I appreciate it.
Yeah.
Our next question is from Andrew Hummel with West Park Capital. Please proceed with your question.
Yeah.
Hey, guys. Thanks for taking my question.
I just wanted to.
So to double back on the embedded finance opportunity.
And.
I mean, you talked about.
You're not putting the volume.
So just wanted to.
How you guys are thinking.
Monetizing those transactions.
Or how you're expecting that to ramp.
Through the year and particularly into the back half.
Sure.
Just to give you a flavor of a couple of things are out there. So we had $4 billion in volume and iron better finance relationship that's a lot in Q1.
But how we effectively are working with our better finance partners are we are getting we get compensated on money in and money out not a PTP or they in wallet transactions that occur now the great News is for every one transaction we process from external to internal theres about fixed transactions into.
So the ecosystem of.
<unk> partners is very strong right, we're enabling more activity for them, which get together better engagement from their consumers, which drive their revenue.
So as a result that the reason that the the volumes did not include it because it's not a fair reflection of kind of how the revenues driven now were started with <unk>.
Ah Backtrack first rapid transfer into the wallet app.
As the year goes on our plans are to include other payment options into the wallet.
And better finance wallet, which would be our <unk> solution as well as card processing, but again that slowly country by country to make sure that we have our <unk> our risk parameters. All set you'll also notice at least a biomass recently them being accepted as a.
As a.
To provide a regulated asset provider, France, theyre, taking the compliance piece very seriously as well. So all things are pointing to you know we're going to continue to grow with our with our better finance partners as the as the quarters go along.
Yeah.
Does that help answer that.
Does that give you.
Sure.
Yes, that's really helpful.
Got it.
Uh huh.
We have reached the end of the question and answer session and I will now turn the call over to Bruce for closing remarks.
Yeah. Thank you look thank you everyone for joining us this morning.
I want to also thank my team for such a great warm welcome it.
It was fantastic to visit everybody in in Europe and get to meet.
So many people in the last week I remain very excited about the opportunity here at <unk>.
As I mentioned earlier, we have a tremendous amount of strengths that we will be able to build on and really get laser focused on growth I think we have some great foundational items to build off of.
We will drive product innovation and client experience.
Really get after are creating a strong sales culture.
We have a lot of opportunities around geographic.
Expansion.
And also moving into adjacent markets with strong Tam expansion.
So.
I appreciate everybody joining us today and to our team if youre listening listening whats recommit to our values.
Courageously work as one team to get this.
Our growth engine back on track. Thank you.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
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