Paysafe Limited PSFE  shares are trading lower on Tuesday after the company after the company agreed on a business disposal and issued fourth-quarter revenue guidance below estimates.

Business Sale: Paysafe agreed to sell substantially all assets of its direct marketing payment processing business, Paysafe Direct LLC, to KORT Payments, for an undisclosed amount.

The deal includes reseller and merchant contracts, technology, and employees, with consideration primarily in the form of annual earnout payments over five years. The transaction will close within 30 days, pending final transition arrangements.

Bruce Lowthers, CEO of Paysafe said, ”This accelerates our transformation by exiting a non-strategic business line, bringing a close to the repositioning of our Merchant Solutions segment.”

Last week, there were reports of takeover interest for the company.

Preliminary Results: Paysafe expects a 2024 net income of $19 million – $25 million, compared to a $20 million net loss in 2023.

The company sees revenue of $1.705 billion, up 6% year-over-year (7% Y/Y excluding disposed business) vs. consensus of $1.722 billion. The company’s prior revenue outlook was for $1.713 billion – $1.729 billion.

Paysafe targets adjusted EBITDA of $452 million, down 2% Y/Y but up 2% Y/Y excluding disposed business, with total credit losses rising to $47 million.  The company’s prior outlook was $471 million – $484 million.

The company invested $29 million in sales expansion and portfolio optimization, while foreign exchange rates and consumer deposit interest impacted revenue and EBITDA by $6 million and $7 million, respectively.

Also, Paysafe expects fourth-quarter net income of $31 million – $37 million and revenue of $420 million (vs. street view of $437.54 million), up 1% Y/Y (4% Y/Y excluding disposed business).

The company sees quarterly adjusted EBITDA of $103 million, down 16% Y/Y but up 1% Y/Y excluding disposed business, with credit losses rising to $23 million.

FX and consumer deposit interest impacted fourth-quarter revenue by $5 million and EBITDA by $4 million, respectively.

John Crawford, CFO of Paysafe, added, “It’s important to highlight that the core businesses performed in line with our expectations for 2024, including 10% revenue growth from our Merchant Solutions segment, excluding the disposed business, and 4% revenue growth from our Digital Wallets segment.”

Buyback: Paysafe’s Board approved a $70 million increase to its share repurchase program, bringing the total available to $77 million.

Read: Paysafe Expands Into Brazil With New Payment License, Eyes $34 Billion iGaming Boom

Outlook: Paysafe expects 2025 revenue growth of 6.5% – 8.0% and adjusted EBITDA margin of 27.1% – 27.6%, with mid-teens adjusted EBITDA growth.

This outlook excludes the disposed business. The company anticipates strong free cash flow and aims to reduce net leverage to 3.5x by the end of 2026.

Paysafe plans to release fourth-quarter earnings results on March 4, 2025. 

Investors can gain exposure to the stock via Gabelli ETFs Trust Gabelli Financial Services Opportunities ETF GABF and SPDR S&P Kensho New Economies Composite ETF KOMP.

Price Action: PSFE shares are down 18.8% at $18.50 at the last check Tuesday.

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