Q3 2024 Paysafe Ltd Earnings Call

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Operator: Ladies and gentlemen, greetings and welcome to the Paysafe 3rd Quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.

Speaker Change: Ladies and gentlemen, greetings and welcome to the <unk> third quarter 2024 earnings Conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: Brief question and answer session will follow the formal presentation.

Operator: If anyone should require operator assistance during the conference, please press star and zero on the telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Speaker Change: As a reminder, this conference is being recorded.

Kirsten Nielsen: I would now like to hand 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 third quarter of 2024. Joining me today are Bruce Lowthers, Chief Executive Officer, John Crawford, Chief Financial Officer, and Alex Gersh.

Speaker Change: I would now like to hand, the call over to question Nielsen head of Investor Relations. Please go ahead.

Speaker Change: Thank you and welcome to stay Safe earnings Conference call for the third quarter of 2020 for joining me today are Bruce <unk>, Chief Executive Officer, John Crawford, Chief Financial Officer, and Alex scarce.

Kirsten Nielsen: 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 report. These 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. do not place undue reliance on these dates.

Speaker Change: Before we begin a reminder, that this call will contain forward looking statements.

Speaker Change: In conjunction with cautionary statements contained in our earnings release and the company's most recent report these statements reflect management's current assumptions and expectations.

Speaker Change: The factors that could cause actual results to differ materially from those forward looking statements.

Speaker Change: You should not place undue reliance on these.

Kirsten Nielsen: for looking statements during this call, speak only as of the date of this call, and we undertake no obligation to... Today's presentation also contains non-GAAP financial measures.

Speaker Change: Forward looking statements during this call speak only as of the date of this call and we undertake no obligation to update them.

Speaker Change: Todays presentation also contains non-GAAP financial measures you can find additional information about these non-GAAP measures and reconciliation to the nice directly comparable GAAP financial measures in today's press release and in the appendix of this presentation, which are available in the Investor Relations section of our website with that I'll turn the call over to Brett.

Kirsten Nielsen: 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 of this presentation, which are available in the Investor Relations section of our website.

Bruce Lowthers: With that, I'll turn the call over to Bruce. Thanks, Kirsten. And thank you all for joining us today.

Brett: Thanks, Kirsten and thank you all for joining us today.

Bruce Lowthers: Before I discuss our fantastic quarter, I want to start by saying that our hearts and thoughts are with our colleagues, customers and partners in Florida and the southeastern US who are impacted by the recent hurricane And I want to especially thank our Business Continuity Team for their efforts to quickly support our employees who live in the affected region. Next, I'm excited to welcome John Crawford, our new CFO. As he read in our press release, John brings with him more than 25 years of financial leadership experience with a strong background in the payments industry. I am confident that John's partnership will be extremely valuable as we move into Paysafe's next phase of growth.

Brett: Before I discuss our fantastic quarter I wanted to start by saying that our hearts and thoughts are with our colleagues customers and partners in Florida in the southeastern U S who are impacted by the recent hurricanes and I want to especially thank our business continuity team for their efforts to quickly support our employees who live in the affected regions.

Brett: Next I'm excited to welcome John Crawford, our new CFO.

Brett: As you read in our press release, John brings with him more than 25 years of financial leadership experience with a strong background in the payments industry.

Brett: I am confident that John's partnership will be extremely valuable as we move into the PC. Its next phase of growth.

Bruce Lowthers: I'll ask John to say hello and share his initial thoughts towards the end of today's call. We sincerely thank Alex for the work he's done over the past two years as CFO. I've really enjoyed working with him and he's been an instrumental partner in stabilizing the business and improving our financial performance. Alex will stay with us through the end of the year, working closely with John to ensure a smooth transition.

Brett: I'll ask John to say, Hello, and share his initial thoughts towards the end of today's call.

Brett: We sincerely thank Alex for the work he has done over the past two years as CFO I've really enjoyed working with him and he's been instrumental partner in stabilizing the business and improving our financial performance.

Brett: Alex will stay with us through the end of the year working closely with John to ensure a smooth transition.

Bruce Lowthers: Now, let's review our Q3 results. We have continued our momentum accelerating our higher quality revenue growth from the prior year with revenue increasing 8% year over year or 7% on a constant currency basis. to $427 million with merchant solutions growing 11% and digital wallets growing 4%, slightly offset by lower interest revenues. Adjusted EBITDA of $117.8 million was up 1% year-over-year, and our adjusted EBITDA margin expanded 70 basis points in the third quarter compared to the first half of 2024, while making planned incremental investments as well as actions to reduce risk in the business. Additionally, we continue to focus on net leverage, reducing 8% from Q3 2023 to 4.7 times at the end of Q3 2024.

Brett: Now, let's review our Q3 results.

Brett: We have continued our momentum accelerating our higher quality revenue growth from the prior year with revenue, increasing 8% year over year or 7% on a constant currency basis to $427 million with merchant solutions growing 11% and digital wallets growing 4%.

Slightly offset by lower interest revenue.

Brett: Adjusted EBITDA of $117 8 million was up 1% year over year and our adjusted EBITDA margin expanded 70 basis points in the third quarter compared to the first half of 2024, while making planned incremental investments as well.

Brett: Well as actions to reduce risk in the business.

Brett: Additionally, we continue to focus on net leverage reducing 8% from Q3 2023 to four seven times at the end of Q3 'twenty 'twenty four.

Bruce Lowthers: Overall, our third quarter and year-to-date results highlight a strong year with our continued execution on our strategic priorities and our focus on delivering higher quality revenue growth, strengthening the business, and progressively reducing net leverage.

Brett: Overall, our third quarter and year to date results highlight a strong year with our continued execution on our strategic priorities and our focus on delivering higher quality revenue growth strengthening in the business and progressively reducing net leverage.

Bruce Lowthers: With that said, we're pleased to reaffirm our full year financial outlook for 2024 with revenue growth in the expected range of 7% to 8% and adjusted EBITDA margin in the range of 27.5% to 28%.

Brett: With that said, we're pleased to reaffirm our full year financial outlook for 2024 with revenue growth in the expected range of 7% to 8% and adjusted EBITDA margin in the range of 27.5% to 28%.

Bruce Lowthers: Let's turn to slide four for an update on our four strategic priorities for 2025. I remain pleased with the progress that we've made this year as all of our initiatives remain on track or ahead of expectation.

Brett: Let's turn to slide four for an update on our four strategic priorities for 2024.

Brett: I remain pleased with the progress that we've made this year as all of our initiatives remain on track we're ahead of expectations.

Bruce Lowthers: Let's start with the expansion of our sales capabilities. During the quarter, we booked 83 enterprise wins, which was up meaningfully from last year, demonstrating our continued momentum in cross-selling and winning new clients. On our hiring initiative year-to-date, we've welcomed 170 new sales reps reaching our target ahead of schedule. As a reminder, this is a critical initiative to expand our reach and sales capabilities across both enterprise merchants and S&B merchants. Second, on our portfolio optimization, we continue to perform better than we expected, supported by our actions to grow the direct sales team and enhance our products with value-added solutions and partnerships.

Brett: Let's start with the expansion of our sales capabilities during the quarter, we booked 83 enterprise wins, which was up meaningfully from last year, demonstrating our continued momentum in cross selling and winning new clients.

Brett: On our hiring initiatives year to date, we've welcomed 117, new sales reps, reaching our target ahead of schedule.

Brett: As a reminder, this is a critical initiative to expand our reach and sales capabilities across both enterprise merchants and SMB merchants.

Brett: Second on our portfolio optimization, we continue to perform better than we expected supported by our actions to grow the direct sales team and enhance our products with value added solutions and partnerships.

Bruce Lowthers: Year-to-date, we've generated over $40 million in revenue related to these initiatives ahead of schedule to reach our target of $50 million for the year. Our investments in these initiatives are tracking to our expectations with some remaining spend expected in Q4.

Brett: Year to date, we've generated over 40 million revenue related to these initiatives ahead of schedule to reach our target of $50 million for the year.

Brett: Our investments in these initiatives are tracking to our expectations with some remaining spend expected in Q4.

Bruce Lowthers: Our third priority for the year was to revamp our consumer acquisition Our marketing team continues to utilize new market testing strategies with the goal of building a scalable blueprint to drive user growth. Beyond our traditional acquisition efforts, we've also expanding our reach to new users through B2B2C partnerships. Last quarter we announced a collaboration with Revolut to bring our e-cash service to Revolut's 10 million UK customers. Through this relationship, we're enabling their customers to deposit and withdraw cash seamlessly to and from their bank accounts at any of our 12,000 point of sale partner locations in the UK.

Brett: Our third priority for the year was to revamp our consumer acquisition efforts.

Brett: Our marketing team continues to utilize new market testing strategies with the goal of building a scalable blueprint to drive user growth.

Brett: Beyond our traditional acquisition efforts. We are also expanding our reach to new users through b to B to C partnerships.

Brett: Last quarter, we announced a collaboration with resolute to bring our E cash service to <unk> 10 million UK customers.

Brett: Through this relationship we're enabling their customers.

Brett: To deposit and withdraw cash seamlessly to and from their bank accounts at any of our 12000 point of sale partner locations in the U K.

Bruce Lowthers: Within the first three months, we've transacted with 28,000 unique Revolut consumers and we expect this to increase over time through further adoption in the UK, along with expansion to other markets.

Within the first three months, we've transacted with 28000 unique revenue with consumers and we expect this to increase over time through further adoption in the U K along with expansion to other markets.

Bruce Lowthers: We look forward to launching a similar collaboration with a Marquis client in the coming months.

Brett: We look forward to launching a similar collaboration with a marquee client in the coming months.

Bruce Lowthers: Finally, while still relatively small numbers, our revenue generated from new product introductions continues to be up significantly compared to last year, reflecting our sharpened focus on innovation and consumer experience.

Brett: Finally, while still relatively small numbers or revenue generated from new product introductions continues to be up significantly compared to last year.

Brett: Reflecting our sharpened focus on innovation and consumer experience.

Bruce Lowthers: Turning to our merchant business on slide five, we saw a solid performance led by double-digit growth in e-commerce, which represents about 15% of our merchant portfolio by revenue. North American iGaming revenue grew over 50% reflecting merchant wins in the prior year and industry growth. We also continue to see strength in our cross-sewing efforts. Out of the 83 enterprise deals booked in Q3, 28% of those were with existing clients and our net revenue retention with enterprise merchants remains above 100%. Fillable mids were down slightly in Q3, mainly reflecting our focus on the ideal customer profiles and de-risking the portfolio.

Brett: Turning to our merchant business on slide five.

Brett: Our solid performance led by double digit growth in E Commerce, which represents about 15% of our merchant portfolio by revenue.

Brett: North American I gaming revenue grew over 50%, reflecting merchant wins in the prior year and industry growth.

Brett: We also continue to see strength in our cross selling efforts or does the 83 enterprise deals booked in Q3, 28% of those war with existing clients and our net revenue retention with enterprise merchants remains above 100%.

Brett: Billable mid were down slightly in Q3, mainly reflecting our focus on the ideal customer profiles and derisking the portfolio.

Bruce Lowthers: Revenue per new merchant was up double digits and the S&B direct book grew 5%, reflecting the benefit of our investments to optimize the portfolio and our focus on driving stickier merchant relationships with greater lifetime value.

Brett: Revenue per new merchant was up double digits in the SMB direct book grew 5%, reflecting the benefit of our investments to optimize the portfolio and our focus on driving stickier merchant relationships with greater lifetime value.

Bruce Lowthers: Turning to digital wallets on slide six. In Q3, we saw transactions per active user grow 16% year over year, with positive trends across all products and average revenue per user grew 5%, supported by product initiatives and the ramp up of merchants onboarded in 2023. This marks the seventh consecutive quarter of year-over-year growth for both metro. We acquired 1.3 million users in the quarter, slightly up from the 1.2 and Q2, and stable year over year. Our active user base was 7 million, and consumer acquisition costs also stable at approximately $17 in Q3. Again, we're seeing stability here with active users along with improvement in the user engagement and experience.

Brett: Turning to digital wallets on slide six.

Brett: In Q3, we saw transactions per active user grew 16% year over year with positive trends across all products and average revenue per user grew 5% supported by product initiatives and the ramp up of merchants onboard in 2023.

Brett: This marks the seventh consecutive quarter of year over year growth for both metrics.

Brett: We acquired one 3 million users in the quarter slightly up from the one two in Q2 and stable year over year.

Brett: Our active user base was $7 million and consumer acquisition costs also stable at approximately $17 in Q3.

Brett: Again, we're seeing stability here with active users along with improvement in the user engagement and experience.

Bruce Lowthers: As I touched on earlier, we continue to improve our consumer acquisition strategies while targeting a broader consumer base and enhancing our wallet platform to offer a scalable model that supports sustainable growth.

Brett: As I touched on earlier, we continue to improve our consumer acquisition strategies, while targeting a broader consumer base and enhancing our wallet platform to offer scalable model that supports sustainable growth.

Alex Gersh: With that, I'll ask Alex to review the Q3 results in more detail.

Alex: With that I'll ask Alex to review the Q3 results in more detail.

Alex Gersh: Thank you, Bruce. Let's move to slide eight for a summary of our third quarter results. Total volume increased 7% year-over-year to $37.5 billion. Total revenue grew 8% to $427.1 million, or 7% on a constant currency basis. Revenue growth reflects strong performance from our 2023 sales cohort, portfolio optimization and product initiative. This was partly upset by a 3 million headwind from intrusion. Adjusted EBITDA was $117.8 million for the quarter, an increase of 1% year-over-year, while Adjusted EBITDA Margin was $27.6 million. a decline of 170 bases. primarily reflecting the incremental investment, as well as certain client exits related to de-risking.

Alex: Thank you Bruce let's move to slide eight for a summary on our third quarter results.

Alex: Total volume increased 7% year over year to $37 5 billion.

Alex: Total revenue grew 8% to $427 1 million or 7% on a constant currency basis.

Alex: Revenue growth reflects strong performance from our 2023 sales cohort portfolio optimization and product initiatives. This was partially offset by a $3 million headwind from interest revenue.

Alex: Adjusted EBITDA was $117 8 million for the quarter, an increase of 1% year over year, while adjusted EBITDA margin was 27, 6% a decline of 170 basis points, primarily reflecting the incremental investment as well as certain client exits related to derisking the portfolio.

Alex Gersh: As Bruce mentioned, our initiatives remain on track and we expect to have a continued investment activity in Tokyo. On an LTM basis, unlevered free cash flow declined 3% to $318.7 million, mainly due to timing and tax-related items, and reflecting a 68% conversion rate, which is in line with our expected conversion rate. Adjusted net income was $31.4 million and adjusted EPS was $0.51 per share, down from $0.57 in the third quarter of last year. This mainly reflects an increase in our adjusted effective tax rate, which was 35% in 2003, primarily due to the recognition of BEAT tax expense in the U.S., totaling $3.5 million, related to growth in the U.S.

Speaker Change: As Bruce mentioned, our initiatives remain on track and we expect to have a continued investment activity into Q4.

Speaker Change: On an LTM basis, Unlevered free cash flow declined 3% to $318 7 million, mainly due to timing and tax related items, and reflecting a 68% conversion rate, which is in line with our expected conversion range.

Speaker Change: Adjusted net income was $31 4 million and adjusted EPS was <unk> 51 per share down from 57.

Speaker Change: In the third quarter of last year.

Speaker Change: This mainly reflects an increase in our adjusted effective tax rate, which was 35% in Q3, primarily due to the recognition of <unk> tax expense in the U S totaling $3 5 million related to growth in the U S and disbursements to non U S entities.

Alex Gersh: and disbursements to non-U.S. entities. This includes roughly 2 million of catch-up attributable to prior periods. Excluding this catch-up, the rate would have been approximately 30%. Going forward, we expect an adjusted ETR in the range of 26% to 30%. These increases were partly offset by lower interest expense, reflecting lower debt and interest rates.

Speaker Change: This includes roughly $2 million of catch up attributable to prior periods.

Speaker Change: Excluding this catch up the rate would have been approximately 30%.

Speaker Change: Going forward, we expect an adjusted ETR in the range of 26% to 30%.

Speaker Change: These increases were partly offset by lower interest expense, reflecting lower debt and interest rates.

Alex Gersh: Let's move to slide nine to discuss the segment. Starting with merchant solutions, volume increased 8% year-over-year to $32 billion, and revenue increased 11% to $241.1 million. Growth was driven by strong double-digit growth within our e-commerce business led by IBM. The remainder of the merchant segment grew 8% year-over-year, reflecting our strategic initiatives to expand our sales capabilities and optimize the portfolio. Just a little bit, I was 52.6 million, a decline of 8%, reflecting continued investment in our 2024 initiatives and our actions to de-risk the portfolio as we have Turning to the digital wallet segment on slide 10, volume increased 5% to $5.9 billion, and revenue increased 4% to $190.9 million, primarily driven by products and sales initiatives, along with the solid growth from merchants onboarded last year, partially offset by lower interest rates.

Speaker Change: Let's move to slide nine to discuss the segment results.

Speaker Change: Starting with merchant solutions volume increased 8% year over year to $32 billion and revenue increased 11% to $241 1 million.

Speaker Change: Growth was driven by strong double digit growth within our E Commerce business led by <unk> gaming.

The remainder of the merchant segment grew 8% year over year, reflecting our strategic initiatives to expand our sales capabilities and optimize the portfolio.

Adjusted EBITDA was $52 6 billion a decline of 8%, reflecting continued investment in our 2024 initiatives and our actions to derisk the portfolio as we have discussed.

Speaker Change: Turning to the digital wallets on slide 10 volume increased 5% to $5 9 billion and revenue increased 4% to $190 9 million, primarily driven by products and sales initiatives along with the solid growth from merchant on boarded last year, partially offset by lower interest revenue.

Alex Gersh: foreign exchange impact or immaterial to the segment growth relate in Q2. Adjusted EBITDA was $84.1 million, an increase of 5%, while Adjusted EBITDA Margin expended 40 days.

Speaker Change: Foreign exchange impact or immaterial to the segment growth in Q3.

Speaker Change: Adjusted EBITDA was $84 1 million, an increase of 5%, while adjusted EBITDA margin expanded 40 basis points.

Alex Gersh: Turning to slide 11, we continue to strengthen our balance sheet and focus on disciplined capital allocation. At the end of the quarter, total debt was $2.4 billion, and net debt decreased by $39 million from the second quarter. Our net leverage ratio further improved to 4.7 times compared to 5.1 times in Q3 of 2020. As a reminder, we have approximately 25 million remaining in our share repurchase program. We remain confident that our solid cash flow generation will enable us to continue investing in the business while also deleveraging and returning capital to the shareholders.

Speaker Change: Turning to slide 11, we continue to strengthen our balance sheet and focus on disciplined capital allocation.

Speaker Change: At the end of the quarter total debt was $2 4 billion and net debt decreased by $39 million from the second quarter.

Speaker Change: Our net leverage ratio further improved to four seven times compared to five one times in Q3 of 2023.

Speaker Change: As a reminder, we have approximately $25 million remaining on our share repurchase program.

Speaker Change: We remain confident that our solid cash flow generation will enable us to continue investing in it as well.

Speaker Change: I'll also deleveraging and returning capital to the shareholders.

Alex Gersh: Moving to full-year outlook on slide 12, based on our strategic progress and results to date, we are maintaining our revenue and adjusted EBITDA guidance for 2024, which we have updated on our last earnings call. Just to reiterate, our guidance reflects full-year reported revenue to be in a range of $1.713 billion to $1.729 billion, which is higher than our initial 2024 guidance provided at the beginning of the year. We continue to expect adjusted EBITDA to come in between $471 million to $484 million, reflecting adjusted EBITDA margins between $27.5 to $28 million. I'll note that the euro to USD exchange rate averaged 1.1 for Q3 and approximately 1.09 quarter to date in Q4 and has recently trended lower.

Speaker Change: Moving to full year outlook on slide 12 based on our strategic progress and results to date, we are maintaining our revenue and adjusted EBITDA guidance for 2020 for which we have updated on our last earnings call.

Speaker Change: Just to reiterate our guidance reflects full year reported revenue to be in a range of $1 $71 3 billion to one 7% to $9 billion, which is higher than our initial 2024 guidance provided at the beginning of the year.

Speaker Change: We continue to expect adjusted EBITDA to come in between 471 million to $484 million, reflecting an adjusted EBITDA margin between 27, 5% to 28%.

Speaker Change: I'll note that the euro to USD exchange rate averaged one one for Q3 and approximately 1.09 quarter to date in Q4 and has recently trended lower as a reminder, given our geographical mix every 1% weakening of the euro versus the U S. Dollar has an unfavorable impact.

Alex Gersh: As a reminder, given our geographical mix, every 1% weakening of the euro versus the US dollar has an unfavorable impact of approximately 6 to 7 million on revenue annually. Lastly, I want to reiterate that we continue to expect our net leverage to be between 4.6 times and 4.7 times at the end of the year. So we've achieved that a quarter ahead of schedule.

Speaker Change: <unk> of approximately $6 million to $7 million on revenue annualized.

Speaker Change: Lastly, I want to reiterate that we continue to expect our net leverage to be between four six times and four seven times at the end of the year.

Speaker Change: So we've achieved that a quarter ahead of schedule.

Alex Gersh: And finally, I want to welcome John and also express my gratitude to my colleagues at Paysafe. Through a collective effort, we were able to improve our financial performance while reducing debt and leverage. I am grateful for the opportunity I've had to contribute to these stronger results and the company's broader transformation.

Speaker Change: And finally I want to welcome John and also express my gratitude to my colleagues at pay safe.

Speaker Change: Through our collective effort, we were able to improve our financial performance, while reducing debt and leverage.

Speaker Change: I am grateful for the opportunity I've had to contribute to the stronger results and the company's broader transformation now I will turn the call over to John to say a few words.

John Crawford: Now I'll turn the call over to John to say a few words. Thank you, Alex, and I'll be brief. Since coming on board, I've had the opportunity to meet our teams across multiple locations, and I'm impressed with their dedication and drive to succeed. I've been following this business from the outside for many years and knew it had very interesting assets combined with attractive end markets. Now I can add in the quality of the people and that's a great formula for success.

John Crawford: Thank you, Alex and I'll be brief.

John Crawford: Since coming on board I've had the opportunity to meet our teams across multiple locations and I'm impressed with their dedication and drive to succeed.

John Crawford: I've been following this business from the outside for many years and knew it had very interesting assets combined with attractive end markets now I can add and the quality of the people and that's a great formula for success.

John Crawford: A few areas of opportunity stand out to me, and these early observations will help shape my priorities as we close out this year and prepare for next year and beyond. First, we've got too many systems, and we have the ability to achieve meaningful efficiency. Second, I believe we can improve internal capital allocation to generate more value for our customers and better returns for Paysafe. Finally, I will focus on cost discipline as we continue to scale and drive margins.

John Crawford: A few areas of opportunity standout to me and these early observations will help shape my priorities as we close out this year and prepare for next year and beyond.

John Crawford: First we've got too many systems and we have the ability to achieve meaningful efficiencies. There second I believe we can improve internal capital allocation to generate more value for our customers and better returns for pay safe.

Finally, I will focus on cost discipline, as we continue to scale and drive margin.

John Crawford: To wrap up, I am thrilled to partner with Bruce and the team to build upon the progress to date and to unlock new opportunities to drive growth and operating leverage.

Speaker Change: To wrap up I am thrilled to partner with Bruce and the team to build upon the progress to date and to unlock new opportunities to drive growth and operating leverage and with that I will turn the call back over to Bruce.

Bruce Lowthers: And with that, I will turn the call back over to Bruce.

Bruce Lowthers: Thank you, John and Alex. Our performance throughout 2024, including 8% revenue growth year-to-date, showcases continued execution on our priorities and our focus on delivering higher quality, sustainable revenue growth. At the same time, we're investing in our future and progressively reducing net leverage. I remain highly confident that we are taking the right actions to drive continued momentum in 2025 and beyond. I want to thank everyone on the Paysafe team for their persistent dedication and hard work throughout this turnaround. While we have more work to do, our progress has been remarkable over the last couple of years, and now, as we continue to focus on getting better each quarter, we have a clear and exciting path to the next chapter of our journey.

Bruce: Thank you John and Alex our performance throughout 2024, including 8% revenue growth year to date showcases continued execution on our priorities and our focus on delivering higher quality sustainable revenue growth at.

Speaker Change: At the same time, we're investing in our future and progressively reducing net leverage.

Speaker Change: I remain highly confident that we are taking the right actions to drive continued momentum in 2025 and beyond.

Speaker Change: I want to thank everyone on the <unk> team for their persistent dedication and hard work throughout this turnaround.

Speaker Change: While we have more work to do our progress has been remarkable over the last couple of years and now as we continue to focus on getting better each quarter, we have an exciting path to the next chapter of our journey.

Bruce Lowthers: We are making our own weather.

Speaker Change: We are making our own weather.

Operator: With that, we will open the line for your questions. Thank you.

Speaker Change: With that we will open the line for your questions.

Speaker Change: Thank you.

Operator: Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on the telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions.

Speaker Change: Ladies and gentlemen, we will now be conducting a question and answer session.

Speaker Change: I would like to ask a question. Please press star and one on the telephone keypad.

Speaker Change: A confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press Star two if you would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the strategies.

Speaker Change: Ladies and gentlemen, we will wait for a moment, while we poll for questions.

Andrew Harte: The first question comes from Andrew Harte with BTIG. Please go ahead. Hey, thanks.

Speaker Change: The first question comes from Andrew Hot with BTG. Please go ahead.

Hey, Thanks, Good morning, and welcome John excited to work with you going forward and good luck Alex Thanks for all the.

Bruce Lowthers: Good morning, and welcome, John. Excited to work with you going forward. And good luck, Alex. Thanks for all the help and support. Bruce, you talked about the portfolio optimization efforts being ahead of schedule, including the $50 million of revenue benefit this year. I know in the past we talked about kind of those same efforts should yield about $100 million benefit in 2025. So is that still the case? How should we be thinking about some of those portfolio optimization efforts and the revenue contribution next year? And kind of what has been the key to be ahead of schedule today?

Speaker Change: Helping support Bruce you talked about the portfolio optimization efforts being ahead of schedule, including the $50 million of revenue benefit this year.

Speaker Change: So in the past, we talked about kind of those same efforts should yield about $100 million benefit in 2025.

Speaker Change: Is that still the case, how should we be thinking about some of those portfolio optimization efforts and the revenue contribution next year.

What has been the key to to be ahead of schedule to date.

Bruce Lowthers: Yeah, Andrew, look, thanks for dialing in and joining us this morning. Look, we feel like we're making great progress against the four initiatives. I think, as we said in the prepared remarks, we're on track or ahead with each of them. Each of those have kind of a little bit different spin on it, but to your question specifically on the $50 million, we're trending a little bit positive there against that number as we outlined. You know, when we calendarized that for next year, we see really solid growth with that. So we have really excellent, as we sit here today, we have excellent visibility into revenue growth and accelerating a bit of margins and reducing our net leverage as we kind of move into 25.

Andrew Hot: Yes, Andrew look.

Speaker Change: Thanks for.

Speaker Change: Dialing in and joining us this morning.

Speaker Change: Look we feel like we're making great progress against the four initiatives I think as we said in the prepared remarks.

Speaker Change: We're on track or ahead with each of them.

Speaker Change: Each of those.

Speaker Change: Have kind of a little bit different spin on it but its easier question specifically.

Speaker Change: On the $50 million.

We're trending a little bit positive there against that number as we outlined.

Speaker Change: When we calendarize that for next year, we see.

Speaker Change: Really solid growth with that so we have really excellent as we sit here today, we have excellent visibility into revenue growth and accelerating EBITDA margins.

Speaker Change: And reducing our net leverage as we kind of move into 25, I don't want to get ahead of ourselves.

Bruce Lowthers: I don't want to get ahead of ourselves. Q4 is usually our next year discussion of kind of where we're going, but now today we have really good visibility unlike years past as to kind of what the outcomes will be. So we feel very good about that.

Q4 is usually our.

Speaker Change: Next year discussion of kind of where we're going but.

Speaker Change: Now today, we have really good visibility.

Speaker Change: Unlike years past as to kind of what the outcomes will be so we feel very good about that I think the other thing that we talk a little bit about is the.

Bruce Lowthers: I think the other thing that we talked a little bit about is the hiring. So we're ahead on the hiring, 170 people. So we're probably. Maybe a little more than a quarter in front of that, from what we originally planned. That probably spins out another couple million dollars of investment this year as we look at it, but it's worth it because the team is performing at a high level. We see really good growth within our sales organization year over year, and we think that that's going to pay off as we move into 2025 and 2026, so these, as we talked about a quarter ago, these are decisions that are driving a longer-term outlook and output, and so we feel very confident about these are on track and the right thing for the company to be doing.

Speaker Change: The hirings, we're ahead on the hiring of 170 people.

Speaker Change: So we're probably.

Speaker Change: Maybe.

Speaker Change: A little more than a quarter in front of that from what we originally planned that's probably spins out another couple of million dollars of investments. This.

Speaker Change: This year as we look at it but it's worth it because the team is performing at a high level, we see really good growth within our sales organization year over year.

Speaker Change: We think that thats going to pay off as we move into 'twenty five 'twenty six.

Speaker Change: As we talked about.

Speaker Change: A quarter ago. These are decisions that are driving our longer term.

Speaker Change: Outlook in output and so we feel very confident about these are on track and.

Speaker Change: The right thing for the company to be doing.

Bruce Lowthers: On the Revolut partnership, you called out the 28,000 transacting users with the eCash partnership and do a base of about 10 million in the UK and I think there's about 4x that globally Revolut users. So I guess, what's your expectation for the ramp with those UK customers and kind of what could the timeline be to expanding into other regions with Revolut as well? Yeah, I think you'll see that continue to expand through 25. It's going to be a nice growth item for us.

Speaker Change: That's helpful. Thanks, and then on the Revolute partnership you called out the 28000 transacting users.

Speaker Change: With the cash partnership into a base of about $10 million and.

Speaker Change: In the UK and I think there is about four acts that globally.

So I guess.

Speaker Change: What's your expectation for the ramp with those U K customers and kind of what could the timeline be to expanding into other regions with revlimid as well.

Speaker Change: Yes, I think youll see that continue to expand through 'twenty five.

Speaker Change: Going to be a nice growth item for us.

Speaker Change: I think you saw it probably as well.

Bruce Lowthers: I think you saw probably as well, we announced the Deutsche Bank partnership as well, prior to the call last week. So we have another similar one with a much larger client base. So this is a kind of new initiative, really leveraging the assets that we have in Europe. Keep in mind, we've got over 600,000 merchants across the European landscape. So this is really a great opportunity for us to do something unique and different than what we've done historically, in essence, allowing for cash deposit and withdrawal at any one of our retailers across Europe. So, yeah, we're very optimistic about how this kind of continues to go.

Speaker Change: <unk> the.

Speaker Change: Deutsche Bank partnership as well.

Speaker Change: Prior to the call last week.

Speaker Change: So we have another similar one with a much.

Larger client base.

Mike: So this is Mike.

Mike: Kind of new initiative.

Mike: Really leveraging the assets that we have in Europe keep in mind, but over 600000 merchants.

Mike: Across the European landscape.

Mike: So this is really a great opportunity for us to do something unique and different than what we've done historically.

Mike: In essence, allowing for cash deposit and withdrawal.

Mike: At any one of our retailers across Europe. So.

Mike: Yes, we're very optimistic about.

Mike: I'll just kind of continues to go and we think there's a lot more room here I think.

Bruce Lowthers: And we think there's a lot more room here. I think we'll look to continue to add and find other institutions to this type of model.

Mike: We will look to continue to add and fine.

Other institutions to this type of model.

Alex Gersh: Thanks.

Mike: Yes.

Alex Gersh: And then this last one for me, Alex, with the higher risk merchants rolling off, did we kind of see that impact in the merchant gross margin this quarter with those higher risk customers rolling off? And then, you know, I guess kind of thinking forward when we're thinking about the merchant gross margin mix, can you just remind us or help us kind of frame it up how we should be thinking about it longer term, especially as it pertains to the direct versus ISO versus EECOM channel mix? Thanks. Yes, sure. On the first question, yes, definitely. We said they were high margin, but they're not sustainable, and so you see it on the EBITDA margin, you see it on gross margin, and you, of course, see it on revenue.

Speaker Change: Thanks for that and then just last one for me Alex.

Speaker Change: With the higher risk merchants rolling off did we kind of see that impact in the merchant gross margin this quarter with those higher risk customers rolling off and then.

Speaker Change: I guess kind of thinking forward when we're thinking about the merchant gross margin mix can you just remind us or help us kind of frame. It up how we should be thinking about it longer term, especially as it pertains to the drag first is overseas.

Speaker Change: Channel mix.

Speaker Change: And of course questions, Yes, definitely we said they were high margin, but they are not sustainable and so youll see it on the EBITDA margin you see it on gross margin.

Of course it on revenue.

Alex Gersh: In terms of overall, in terms of how you should think about gross margin, to be honest with you, the way we think about it, at least the way I think about it, we focus on our revenue and we focus on our EBITDA. And as John said, he's going to continue to focus on efficiency to try to drive that EBITDA margin higher. What's going to happen to the gross margin, it's really hard to predict at this point. I would just add, you know, as we said coming into the year that we would see margin acceleration from the front half to the back half of the year.

Speaker Change: In terms of.

Overall in terms of how you should think about gross.

Speaker Change: Gross margin to be honest with you the way, we think about it that way I think about it we focus on our revenue and we focused on our EBITDA and as John said he is going to continue to focus on efficiency to try to drive that EBITDA margin higher what's going to happen to the gross margin, it's really hard to predict at this point.

Speaker Change: I would just add.

Speaker Change: As we said coming into the year that we would see margin acceleration.

Speaker Change: From the front half to the back half of the year.

Alex Gersh: We talked about that in our prepared remarks as well with 70 basis points expansion from the margin at the front half of the year to the margin at the front half of the year to the back half. We're executing exceptionally well navigating the optimization of some of our portfolios and margin expansion as we said, and we feel like we're in a great position as we said earlier in the year to see margin expansion as we move into 2025. So none of that has changed from our view as we sit here today.

<unk> talked about that in our prepared remarks as well with.

Speaker Change: With 70 basis points expansion from margin in the front half of the year and EBITDA margin in the front half of the year to the back half so.

Speaker Change: We are executing exceptionally well navigating.

Speaker Change: The optimization of some of our portfolios.

And margin expansion as we said.

Speaker Change: And we feel like we're in a great position.

Speaker Change: As we said earlier in the year to see margin expansion and as we move into 'twenty five so none of that has changed from our view.

Speaker Change: As we sit here today.

Alex Gersh: Thanks Dave, nice quarter. Thank you.

Speaker Change: Thanks, Dave nice quarter.

Speaker Change: Thank you.

Spencer James: The next question is from the line of Trevor Williams with Jefferies, please go ahead. Hi, this is Spencer James on for Trevor Williams. Thank you for taking the question. I wanted to ask a bit of a preview of the playbook for FY26, just given a lot of the initiatives and FY25 so far have appeared to really pay off. So curious if next year will look like more of the same or if there if we should expect a bit of a shift in investment priorities? Yeah, great question. I think, you know, when we do our next earnings call and March, we probably will have a cool slide on what we're going to do for 25, but I don't think we'll be sharing necessarily what we'll be doing with 26.

Speaker Change: The next question is from the line of Trevor Williams with Jefferies. Please go ahead.

Speaker Change: Hi, This is spenser James on for Trevor Williams. Thank you for taking the question.

Speaker Change: I wanted to ask a bit of a preview of the playbook for FY 'twenty six just given a lot of the initiatives in FY 'twenty five so far have appeared to really payoff. So curious if next year will look like more of the same or if there. If we should expect a bit of a shift in investment priorities.

Speaker Change: Yeah, Great question I think.

Speaker Change: When we do our next earnings call in.

Speaker Change:

Speaker Change: March we probably will have a cool slide on what we're going to do $4 25, but.

But I don't think we will be sharing necessarily what we'll be doing with 26.

Bruce Lowthers: But I think what you'll see in 25 is we have a clear path, we'll have a similar construct to what we have this year, where we have four or five initiatives that, candidly, the team's already working on for 25 that will set up 26. So I think the playbook is very much established at this point. We're taking on just a few projects, executing well against those projects that will drive particular outcomes. And so we're very focused on getting off to a good start here in 25, and as I said, the projects that are identified, we're already working them and feel pretty good about that.

Speaker Change: But I think what youll see in 'twenty five as we have a clear path.

Speaker Change: Similar construct to what we have this year, where we have four or five initiatives.

Speaker Change: Candidly the team is already working on.

Speaker Change: At $4 25 that will set up 26, so I think the playbook is very much the established at this point.

Speaker Change: We're taking on.

Speaker Change: Just a few projects.

Speaker Change: Executing well against those projects.

Speaker Change: We will drive particular outcomes and so we're very focused on.

Speaker Change: Getting off to a good start here in 'twenty five.

Speaker Change: And as I said.

Speaker Change: <unk> identified were already working them and we.

Speaker Change: We feel pretty good about that so we will 226 is just a little too far out there for for us to start sharing just yet, but we definitely have a view on a path of more ongoing.

Bruce Lowthers: So 26 is just a little too far out there for us to start sharing just yet, but we definitely have a view and a path on where we'll go. Yeah, thank you for that. Apologies. I did mean to say FY25. I'm getting ahead of myself as well.

Speaker Change: Yes, thank you for that apologies.

Speaker Change: Just say FY 'twenty five.

Speaker Change: Getting ahead of myself as well.

Bruce Lowthers: And then maybe just as a follow up, I was wondering if you could provide an update on the health of the pipeline, just in the context of achieving growth targets for next year. And any thoughts on makeshift of opportunities within the pipeline, maybe? Yeah, look, our pipeline is really strong. You know, on the enterprise side, really solid growth, 83 enterprise deals per year. You know, it's basically double what we had a year before. You know, we're seeing really solid growth within those numbers. And so feel very good about what Rob and the sales team are doing.

Speaker Change: Then maybe just as a follow up I was wondering if you could provide an update on the health of the pipeline just in the context of <unk>.

Speaker Change: <unk> growth targets for next year, and any thoughts on mix shift of opportunities within the pipeline maybe.

Speaker Change: Yes look our pipeline is really strong.

Speaker Change: On the enterprise side.

Speaker Change: Really solid growth 83 enterprise deals for the year.

Speaker Change: It's basically double.

Speaker Change: While we had a year before.

Speaker Change: We're seeing really solid growth within those numbers.

Speaker Change: Okay.

Speaker Change: And so feel very good about with Rob and the sales team are doing.

Bruce Lowthers: I think the product organization is starting to come together. We're seeing good initiatives starting to emerge there. So we feel very confident as we sit, looking at our pipeline, looking at the things that are coming for 25. Like I said before, we have, we have pretty good visibility into how 25 is shaping up already. So feel feel confident about Thank you for taking my question. Thank you. Appreciate it. Thank you.

Speaker Change: The product organization is starting to come together, we're seeing a good.

Speaker Change: Good initiatives starting to emerge there.

Speaker Change: So we feel very confident as we sit.

Looking at our pipeline looking at the things that are coming for 'twenty five.

Speaker Change: Like I said before we have we have pretty good visibility into.

Speaker Change: How 25 is shaping up.

Speaker Change: Ready so people feel confident about that.

Speaker Change: Thank you for taking the questions.

Speaker Change: Thank you I appreciate it.

Speaker Change: Thank you.

Paul Obrecht: The next question is from the line of Paul Obrecht with Wolf Research. Please go ahead. Hi, thanks. This is Paul Obrecht on for Barron. It's great to see that you've reached the goal of 170 ads to the sales organization.

Speaker Change: Question is from the line of Paul <unk> with Wolfe Research. Please go ahead.

Speaker Change: Hi, Thanks. This is Paulo, Brett on for Darrin, it's great to see that you've you've reached the goal of a 170 <unk> adds to the sales organization can you just touch on the progress in ramping these new hires and when do you expect them to be fully ramped up kind of a normal run rate of productivity.

Bruce Lowthers: Can you touch on the progress in ramping these new hires and when you expect them to be fully ramped at kind of a normal run rate of productivity? Sure, happy to do that. So, as some of you may recall, what we talked about is our enterprise sales team generally takes about six months to get fully ramped. So, accelerating the hiring really is about driving more opportunity into 25, getting them on board quicker, so that we can really maximize the impact in 25. When you look at our SMB sales organization, they get online a little faster.

Sure happy to happy to do that so.

Speaker Change: As some of you may recall, what we talked about is our enterprise sales team generally takes about six months to get fully ramped so accelerating hiring really is about.

Speaker Change: Driving more opportunity into 'twenty, five getting them onboard quicker. So that we can really maximize the impact in 2005, when you look at our SMB.

Speaker Change: Sales organization, they get on line a little faster so they are getting them online.

Bruce Lowthers: So, they're getting online typically within three, four months, and so a little quicker ramp there. What we can share so far as we look at both the enterprise and the SMB channel, I would say the enterprise team is probably outperforming our expectations slightly, and the SMB is probably right on expectation, you know, and but there's a lot of people for us adding, just to put it in context a little bit, we basically have doubled the size of the sales team in the last few months.

Speaker Change: Typically within three four months.

Speaker Change: So a little quicker ramp there what we can share so far as we look at.

Speaker Change: Both the enterprise and the SMB.

Speaker Change: Channel I would say the enterprise team is probably outperforming our expectations slightly.

Speaker Change: SMB is probably right on expectations.

Speaker Change: And.

Speaker Change: But theres a lot of people for us adding.

Speaker Change: Just to put it in context, a little bit we basically have doubled the size of the sales team in the last few months.

Bruce Lowthers: So, there's a lot that we're absorbing, a lot of processes that had to be worked through on onboarding training and all those things, but overall, I think the team is doing a very good job with that, and we feel like it's progressing on track. Great, thank you.

Speaker Change: So theres a lot that we're absorbing.

Speaker Change: A lot of processes that.

Speaker Change: You've worked through on Onboarding training and all those things, but overall I think the team is doing a very good job with that and we feel.

Speaker Change: It is progressing on track.

Speaker Change: Great. Thank you and then as a follow up it looks like SMB direct decelerated to around 5% from 10% last quarter is that mainly reflective of the decisions to exit risk merchants and can you just provide some color on what youre seeing in this part of the portfolio.

Bruce Lowthers: And then as a follow-up, it looks like S&B Direct decelerated to around 5% from 10% last quarter. Is that mainly reflective of the decisions to exit risky merchants? And can you provide some color on what you're seeing in this part of the portfolio and kind of what your expectations are going forward? Yeah, look, as we talked about, you know, we looked at kind of where the market was going, what we saw kind of emerging from a regulatory standpoint. And we decided to start being proactive, instead of being reactive, as we had been historically as a company.

Speaker Change: What your expectations are going forward.

Speaker Change: Yes look.

Speaker Change: As we talked about.

We looked at kind of where the market was going and what we saw kind of emerging from a regulatory standpoint.

Speaker Change: And we decided to start being proactive instead of being reactive as we had been historically as a company.

Bruce Lowthers: So we decided there were certain merchants that were the highest of risk that we no longer wanted to be associated with. So we started taking advantage of the fact that our growth was significantly ahead of where we thought we would be at this point. And we started laying off some of those merchants from our portfolio. And that's what, you know, is driving the S&B decline. You know, when you look at, you know, internally, as we look at our revenue walk, the same store sales, the new sales, those things are progressing very, very nicely. And it gave us the latitude to prune some of the portfolio.

Speaker Change: So we decided to where certain merchants that were the highest of risk that we no longer wanted to be associated with so we started.

Taking advantage of the fact that our growth was significantly ahead of where we thought we would be at this point.

Speaker Change: And we started laying off some of those merchants.

Speaker Change: Our portfolio and Thats what is driving.

Speaker Change: The.

Speaker Change: The SMB decline when you look at.

Speaker Change: Internally as we look at our revenue walk.

Speaker Change: The same store sales the new sales those things are progressing very very nicely.

Speaker Change: And it gave us the latitude to prune some of the portfolio and still keep in mind, we're still draw.

Bruce Lowthers: And still, maybe keep in mind, we're still driving to a number that is above what the midpoint was at the start of the year. So when we look at the original midpoint of expectation of revenue is around fixed and change, just over 6% growth. We're going to be obviously above that as we've given the guidance for the year. So, you know, it's a great year.

Speaker Change: Driving to a number.

Speaker Change: That is above what the midpoint was at the start of the year. So when we look at the original midpoint of expectation of revenue was around six and change just over 6% growth.

Speaker Change: We're going to be.

Obviously above that as we've given the guidance for the year. So.

Speaker Change: It's a great year, we're making a lot of progress in the transformation.

Bruce Lowthers: We're making a lot of progress in the transformation and setting ourselves up for a good solid 25. Got it. Appreciate the color. Thank you.

Speaker Change: Setting ourselves up for.

Good solid 25.

Speaker Change: Got it I appreciate the color. Thank you.

Speaker Change: Thank you.

Operator: A reminder to all participants, you may press star and one to ask a question.

Speaker Change: A reminder to all participants you May press star one to ask a question.

Timothy Chiodo: The next question is from the line of Timothy Chiodo with UBS, please go ahead. Hi, this is Ching. I'm for Tim. Thank you for taking the question. I wanted to touch on your value-added services opportunities. It's encouraging to see you're ahead of the $15 million 2024 revenue. And last quarter, you highlighted a integrated loan program for short-term working capital support for your partners. And we saw Paysafe being highlighted by JARIS as a commercial lending customer. So, could you expand on this partnership and any unit economics that you can share, impact on take rate, or any other value-added services you could highlight?

Speaker Change: The next question is from the line of Timothy Chiodo with UBS. Please go ahead.

Speaker Change: Hi, This is Kim on for Ken. Thank you for taking the question I wanted to touch on your value added services opportunities. It's encouraging to see you are ahead of the $15 million 2020 forward revenue and.

Speaker Change: Last quarter, you highlighted a integrated long program for short term working capital support for your partners and we saw pacey being highlighted by Paris as a commercial lending customers. So could you expand on this partnership.

Speaker Change: Any unit economics that you can share impact on take rate or any other value added services you could highlight thank you.

Bruce Lowthers: Thank you. Yeah, thank you for the question. Yes, we are a partner of theirs. The loan program is a great program that, you know, as you look at our client base, we've got an aggregate around the world. We've got close to 900,000 merchants. So for us to have a program that offers working capital loans makes a lot of sense. I think you'll see that from our standpoint, this is not something that we underwrite or take any risk on. This is something that we have just a referral arrangement with or origination type of deal with them.

Speaker Change: Yes. Thank you for the question.

Speaker Change: Yes.

Speaker Change: Our partner of theirs.

Speaker Change: The loan program is a great program.

Speaker Change: As you look at our client base, we've got.

Speaker Change: In aggregate around the World, we were close to 900000 merchants. So for us to have a program that offers working capital loans.

Speaker Change: Makes a lot of sense I think youll see that.

Speaker Change: From our standpoint.

Speaker Change: This is not something that we underwrite or take any risk on this is something that we have just a referral arrangement with our origination type of deal with them I think we will add others to that mix as we go forward.

Bruce Lowthers: I think we will add others to that mix as we go forward, respective of the different geographic markets that we're operating in. At the end of the day, what we're trying to do is provide the merchants the opportunity to run their business the best that they can. And that's really what we're trying to do on the merchant acquiring side. And just to add, just to confirm, yes, our take rate, if you look at Q3 of last year in the merchant solution business versus Q3 of this year is up a bit. Awesome, really appreciate the color.

Speaker Change: Respective of different geographic markets that we're operating in I think there is just the beginning I think youll see us offer.

Speaker Change: A large number of other solutions.

Speaker Change: Much like us.

Speaker Change: Probably everyone knows we sell a lot of Clover, one of the largest retailers of over you'll see our programs start to really take on more of that where we're adding more and more.

Speaker Change: Ancillary services to our merchants at the end of the day, what we're trying to do is.

<unk> provides the merchants have the opportunity to run their business.

Speaker Change: Best as they can and that's really what we're trying to do on the merchant acquiring side and just just to add just to confirm yes. Our take rate. If you look at Q3 of last year and the merchant solutions business versus Q3 of this year is up a bit.

Speaker Change: Thank you.

Bruce Lowthers: I also wanted to follow up on Clover, so really glad you mentioned it. So related to your distribution of Clover, how should we think about the potential overlap of value-added services offered by Paysafe and by Clover on the merchant side? Thank you. Yeah, that's a great question. Look, I would say that FiveServe is a great partner of ours. We work with them quite a bit on product innovation and ideas on how to expand distribution of our products and their products to the combined entities, customer base. So, you know, we feel very good about the opportunity to continue to expand, you know, expanding the products that we sell from FiveServe into the market.

Speaker Change: Really appreciate the color I also wanted to follow up on Comverse, they'll really glad you mentioned that so related to your distribution of kohlberg.

Speaker Change: How should we think about the potential overlap with value added services offered by pay safe and by club or on the merchant side. Thank you.

Speaker Change: Yes.

Speaker Change: Great question look I would say that fiserv is a great partner of ours.

Speaker Change: Work with them.

Quite a bit on product innovation and ideas on how to expand.

Speaker Change: Distribution of our products.

And their products to the combined entities.

Speaker Change: Customer base so.

Speaker Change: We feel very good about the opportunity to continue to expand.

Speaker Change: Awesome.

Speaker Change: Expanding the products that we sell from from fiserv into the market and.

Bruce Lowthers: And, you know, we feel very good about the opportunity in front of us. I think something we'll continue to be pushing on here as we move into the fall. Really appreciate the color.

Speaker Change: We feel very good about the opportunity in front of us so.

Speaker Change: Okay.

Speaker Change: I think something will will continue to be pushing on here as we move into 'twenty five.

Speaker Change: Really appreciate the color I'll pass it on thank you.

Bruce Lowthers: I'll pass it on. Thank you.

Speaker Change: Thank you.

Bruce Lowthers: As there are no further questions, I would now like to hand the conference over to Bruce Lowthers, CEO, for closing comments. Well, thank you. Thank you, everyone, for joining us. I want to thank, obviously, everyone here at Paysafe for a great quarter. Again, just a reminder, 8% growth. We saw margin expansion from the front half of the year to Q3, so excited about that. It really needs to be reiterated again. The net leverage ratio coming down to 4.7, as Alex touched on, meeting kind of our full-year obligation already, a full quarter in advance. We're excited about that.

Speaker Change: No further questions I would now like to hand, the conference over to Bruce <unk> CEO for closing comments.

Bruce <unk>: Well, thank you and thank you everyone for joining us.

Bruce <unk>: Obviously, everyone here at PTC for a great quarter.

Bruce <unk>: Again, just a reminder, 8% growth.

Bruce <unk>: We saw margin expansion from the front half of the year to Q3, so excited about that.

Bruce <unk>: It.

Speaker Change: Really needs to be reiterated again, the net leverage ratio coming down to $4 seven as Alex touched on.

Speaker Change: Meeting kind of our full year obligation already.

A full quarter in advance we're excited about that so really a strong quarter for us.

Bruce Lowthers: So really a strong quarter for us with solid top and bottom line and net leverage reduction. So thank you very much. Appreciate everyone dialing in today. Thank you.

Speaker Change: With the solid top and bottom line and net leverage reduction so.

Speaker Change: Thank you very much appreciate everyone dialing in today.

Speaker Change: Thank you.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: [music].