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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2024

(Commission File No. 001-40302)

PAYSAFE LIMITED

(Exact name of registrant as specified in its charter)

 

Not Applicable

(Translation of registrant’s name into English)

Paysafe Limited

2 Gresham Street

London, United Kingdom EC2V 7AD

(Address of Principal Executive Offices) (Zip Code)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F ☒

Form 40-F ☐

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Information Contained in this Form 6-K Report

Financial Statements

This report contains Paysafe Limited’s (“the Company”) Unaudited Condensed Consolidated Financial Statements as of March 31, 2024, including Management’s Discussion and Analysis of Financial Condition and Results of Operations for the period presented therein.

 

Incorporation by Reference

This Report shall be deemed to be incorporated by reference into the registration statement of the Company on Form S-8 (File No. 333-270582) and Form F-3 (File No. 333-263910) and to be a part thereof from the date on which this Report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.

Exhibits

 

Exhibit

 

Description

 

 

101.INS

 

Inline XBRL Instance Document*

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document*

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)*

 

*Filed herewith


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Paysa

 

 

PAYSAFE LIMITED

 

 

 

 

 

 

By:

/s/ Alexander Gersh

 

Name:

Alexander Gersh

 

Title:

Chief Financial Officer

 

Date: May 14, 2024

 

 

 

 


 

 

TABLE OF CONTENTS

 

1.

Condensed Consolidated Interim Financial Statements (Unaudited) – March 31, 2024

 

F-1

 

 

 

 

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

1

 

 

 

 

 

 

 

 

 


 

INDEX TO FINANCIAL STATEMENTS

 

Paysafe Limited

 

Condensed Consolidated Financial Statements (Unaudited)

Page No.

Condensed Consolidated Statement of Comprehensive Loss

F-2

Condensed Consolidated Statement of Financial Position

F-3

Condensed Consolidated Statement of Shareholders’ Equity

F-4

Condensed Consolidated Statement of Cash Flows

F-5

Notes to the Condensed Consolidated Financial Statements

F-7

 

 

 

F-1


 

Paysafe Limited

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

(Unaudited)

(U.S. dollars in thousands, except per share data)

 

 

 

For the three months ended March 31,

 

 

 

2024

 

 

2023

 

Revenue

 

$

417,738

 

 

$

387,849

 

Cost of services (excluding depreciation and amortization)

 

 

170,373

 

 

 

158,939

 

Selling, general and administrative

 

 

144,808

 

 

 

128,311

 

Depreciation and amortization

 

 

68,310

 

 

 

63,547

 

Impairment expense on goodwill and intangible assets

 

 

653

 

 

 

82

 

Restructuring and other costs

 

 

452

 

 

 

1,990

 

Loss on disposal of subsidiaries and other assets, net

 

 

177

 

 

 

 

Operating income

 

 

32,965

 

 

 

34,980

 

Other income, net

 

 

12,355

 

 

 

2,547

 

Interest expense, net

 

 

(34,965

)

 

 

(37,456

)

Income before taxes

 

 

10,355

 

 

 

71

 

Income tax expense

 

 

7,299

 

 

 

3,879

 

Net income / (loss)

 

$

3,056

 

 

$

(3,808

)

 

 

 

 

 

 

Net income / (loss) per share – basic

 

$

0.05

 

 

$

(0.06

)

Net income/(loss) per share – diluted

 

$

0.05

 

 

$

(0.06

)

 

 

 

 

 

 

Net income / (loss)

 

$

3,056

 

 

$

(3,808

)

Other comprehensive (loss) / income, net of tax of $0:

 

 

 

 

 

 

(Loss) / gain on foreign currency translation

 

 

(7,612

)

 

 

2,174

 

Total comprehensive loss

 

$

(4,556

)

 

$

(1,634

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-2


 

Paysafe Limited

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(Unaudited)

(U.S. dollars in thousands, except share data)

 

 

 

March 31, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

202,134

 

 

$

202,322

 

Customer accounts and other restricted cash

 

 

1,172,818

 

 

 

1,295,947

 

Accounts receivable, net of allowance for credit losses of $6,322 and $5,240, respectively

 

 

176,283

 

 

 

162,081

 

Settlement receivables, net of allowance for credit losses of $4,774 and $5,197, respectively

 

 

179,404

 

 

 

171,224

 

Prepaid expenses and other current assets

 

 

61,454

 

 

 

74,919

 

Total current assets

 

 

1,792,093

 

 

 

1,906,493

 

Deferred tax assets

 

 

77,273

 

 

 

77,273

 

Property, plant and equipment, net

 

 

18,925

 

 

 

17,213

 

Operating lease right-of-use assets

 

 

28,649

 

 

 

22,120

 

Derivative financial assets

 

 

11,097

 

 

 

10,427

 

Intangible assets, net

 

 

1,109,934

 

 

 

1,163,935

 

Goodwill

 

 

2,006,801

 

 

 

2,023,402

 

Other assets – non-current

 

 

9,381

 

 

 

6,838

 

Total assets

 

$

5,054,153

 

 

$

5,227,701

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and other liabilities

 

$

206,649

 

 

$

202,699

 

Short-term debt

 

 

10,190

 

 

 

10,190

 

Funds payable and amounts due to customers

 

 

1,357,682

 

 

 

1,477,017

 

Operating lease liabilities – current

 

 

8,241

 

 

 

8,233

 

Contingent and deferred consideration payable – current

 

 

10,183

 

 

 

11,828

 

Liability for share-based compensation – current

 

 

3,105

 

 

 

2,701

 

Total current liabilities

 

 

1,596,050

 

 

 

1,712,668

 

Non-current debt

 

 

2,447,162

 

 

 

2,491,643

 

Operating lease liabilities – non-current

 

 

23,357

 

 

 

16,963

 

Deferred tax liabilities

 

 

108,540

 

 

 

111,705

 

Warrant liabilities

 

 

1,698

 

 

 

1,423

 

Liability for share-based compensation – non-current

 

 

2,798

 

 

 

3,108

 

Contingent and deferred consideration payable – non-current

 

 

642

 

 

 

6,878

 

Total liabilities

 

 

4,180,247

 

 

 

4,344,388

 

Commitments and contingent liabilities

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

Common shares - $0.012 par value; 1,600,000,000 shares authorized; 61,762,538 shares issued and 60,773,119 outstanding as of March 31, 2024 and 61,719,443 shares issued and outstanding as of December 31, 2023

 

 

742

 

 

 

741

 

Additional paid in capital

 

 

3,175,160

 

 

 

3,166,012

 

Accumulated deficit

 

 

(2,256,638

)

 

 

(2,259,694

)

Treasury shares - at cost; 989,419 shares as of March 31, 2024 and 0 shares as of December 31, 2023

 

 

(14,000

)

 

 

 

Accumulated other comprehensive loss

 

 

(31,358

)

 

 

(23,746

)

Total shareholders' equity

 

 

873,906

 

 

 

883,313

 

Total liabilities and shareholders' equity

 

$

5,054,153

 

 

$

5,227,701

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-3


 

Paysafe Limited

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(Unaudited)

(U.S. dollars in thousands)

 

 

 

Common
shares

 

 

Additional paid in capital

 

 

Accumulated
deficit

 

 

Treasury shares

 

 

Accumulated other
comprehensive income / (loss)

 

 

Total
Shareholders'
equity

 

 

January 1, 2024

 

$

741

 

 

$

3,166,012

 

 

$

(2,259,694

)

 

$

 

 

$

(23,746

)

 

$

883,313

 

 

Net income

 

 

-

 

 

 

-

 

 

 

3,056

 

 

 

-

 

 

 

-

 

 

 

3,056

 

 

Loss on foreign currency translation, net of tax of $0

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(7,612

)

 

 

(7,612

)

 

Restricted stock units issued (Note 10)

 

 

1

 

 

 

(1

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

Share-based compensation

 

 

-

 

 

 

9,149

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,149

 

 

Common shares repurchased (Note 11)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(14,000

)

 

 

-

 

 

 

(14,000

)

 

March 31, 2024

 

$

742

 

 

$

3,175,160

 

 

$

(2,256,638

)

 

$

(14,000

)

 

$

(31,358

)

 

$

873,906

 

 

 

 

 

 

Common
shares

 

 

Additional paid in capital

 

 

Accumulated
deficit

 

 

Accumulated other
comprehensive income / (loss)

 

 

Total
Shareholders'
equity

 

January 1, 2023

 

$

730

 

 

$

3,136,426

 

 

$

(2,239,443

)

 

$

(38,076

)

 

$

859,637

 

Net loss

 

 

-

 

 

 

-

 

 

 

(3,808

)

 

 

-

 

 

 

(3,808

)

Gain on foreign currency translation, net of tax of $0

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,174

 

 

 

2,174

 

Restricted stock units issued

 

 

6

 

 

 

(6

)

 

 

-

 

 

 

-

 

 

 

 

Share-based compensation

 

 

-

 

 

 

2,925

 

 

 

-

 

 

 

-

 

 

 

2,925

 

Conversion of liability classified award to equity (Note 10)

 

 

-

 

 

 

6,276

 

 

 

-

 

 

 

-

 

 

 

6,276

 

Capital contribution

 

 

-

 

 

 

3,707

 

 

 

-

 

 

 

-

 

 

 

3,707

 

March 31, 2023

 

$

736

 

 

$

3,149,328

 

 

$

(2,243,251

)

 

$

(35,902

)

 

$

870,911

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-4


 

Paysafe Limited

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(U.S. dollars in thousands)

 

 

 

Three months ended March 31,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities

 

 

 

 

 

 

Net income / (loss)

 

$

3,056

 

 

$

(3,808

)

Adjustments for non-cash items:

 

 

 

 

 

 

Depreciation and amortization

 

 

68,581

 

 

 

63,547

 

Unrealized foreign exchange gain

 

 

(2,519

)

 

 

(5,598

)

Deferred tax (benefit) / expense

 

 

(1,767

)

 

 

7,782

 

Interest expense, net

 

 

3,634

 

 

 

8,563

 

Share-based compensation

 

 

9,359

 

 

 

7,216

 

Other income, net

 

 

(7,162

)

 

 

(3,189

)

Impairment expense on goodwill and intangible assets

 

 

653

 

 

 

82

 

Allowance for credit losses and other

 

 

11,739

 

 

 

3,923

 

Loss on disposal of subsidiary and other assets, net

 

 

177

 

 

 

 

Non-cash lease expense

 

 

2,232

 

 

 

2,243

 

Movements in working capital:

 

 

 

 

 

 

Accounts receivable, net

 

 

(24,222

)

 

 

(12,766

)

Prepaid expenses and other current assets

 

 

(1,788

)

 

 

(11,947

)

Accounts payable and other liabilities

 

 

(3,792

)

 

 

(15,752

)

Income tax receivable / (payable)

 

 

654

 

 

 

(20,282

)

Net cash flows provided by operating activities

 

 

58,835

 

 

 

20,014

 

Cash flows in investing activities

 

 

 

 

 

 

Purchase of property, plant & equipment

 

 

(3,719

)

 

 

(2,732

)

Purchase of merchant portfolios

 

 

 

 

 

(4,399

)

Other intangible asset expenditures

 

 

(20,706

)

 

 

(27,636

)

Cash inflow from merchant reserves

 

 

6,510

 

 

 

 

Receipts under derivative financial instruments

 

 

2,531

 

 

 

2,224

 

Other investing activities

 

 

1,559

 

 

 

 

Net cash flows used in investing activities

 

 

(13,825

)

 

 

(32,543

)

Cash flows from financing activities

 

 

 

 

 

 

Cash settled equity awards

 

 

 

 

 

(484

)

Repurchases of shares withheld for taxes

 

 

(257

)

 

 

(3,690

)

Purchase of treasury shares

 

 

(12,000

)

 

 

 

Settlement funds - merchants and customers, net

 

 

(108,302

)

 

 

(138,975

)

Repurchases of borrowings

 

 

(30,545

)

 

 

(57,386

)

Proceeds from loans and borrowings

 

 

50,242

 

 

 

25,781

 

Repayments of loans and borrowings

 

 

(33,759

)

 

 

(13,329

)

Proceeds under line of credit

 

 

225,000

 

 

 

225,000

 

Repayments under line of credit

 

 

(225,000

)

 

 

(225,000

)

Contingent consideration paid

 

 

(7,755

)

 

 

(6,475

)

Net cash flows used in financing activities

 

 

(142,376

)

 

 

(194,558

)

Effect of foreign exchange rate changes

 

 

(25,951

)

 

 

20,379

 

Decrease in cash and cash equivalents, including customer accounts and other restricted cash during the period

 

$

(123,317

)

 

$

(186,708

)

Cash and cash equivalents, including customer accounts and other restricted cash at beginning of the period

 

 

1,498,269

 

 

 

2,127,195

 

Cash and cash equivalents at end of the period, including customer accounts and other restricted cash

 

$

1,374,952

 

 

$

1,940,487

 

 

 

 

 

Three months ended March 31,

 

 

 

2024

 

 

2023

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

Cash paid for interest

 

$

31,331

 

 

$

28,893

 

Cash paid for income taxes, net

 

$

8,412

 

 

$

16,379

 

 

F-5


 

The table below reconciles cash, cash equivalents, customer accounts and other restricted cash as reported in the unaudited condensed consolidated statement of financial position to the total of the same amounts shown in the unaudited condensed consolidated statement of cash flows:

 

 

 

Three months ended March 31,

 

 

 

2024

 

 

2023

 

Cash and cash equivalents

 

$

202,134

 

 

$

221,687

 

Customer accounts and other restricted cash

 

 

1,172,818

 

 

 

1,718,800

 

Total cash and cash equivalents, including customer accounts and other restricted cash

 

$

1,374,952

 

 

$

1,940,487

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

F-6


 

Paysafe Limited
NOTES TO THE CONDENSED CONSOLIDATED FINAN
CIAL STATEMENTS

(Unaudited)
(U.S. dollars in thousands, except per share data)

1. Basis of presentation and summary of significant accounting policies

Description of the Business

In these unaudited condensed consolidated financial statements and related notes, Paysafe Limited, and its consolidated subsidiaries are referred to collectively as “Paysafe,” “we,” “us,” and “the Company” unless the context requires otherwise. Paysafe is a leading global provider of end-to-end payment solutions. Our core purpose is to enable businesses and consumers to connect and transact seamlessly through our payment platforms.

Paysafe Limited was incorporated as an exempted limited company under the laws of Bermuda on November 23, 2020 for purposes of effectuating the merger (the “Transaction”) with Foley Trasimene Acquisition Corp. II (“FTAC”), a special purpose acquisition company that completed its Initial Public Offering (“IPO”) in August 2020, and Pi Jersey 1.5 Limited (“Legacy Paysafe”).

In connection with the Transaction, which was consummated on March 31, 2021, the Company’s common shares and warrants were listed on the New York Stock Exchange under the symbols PSFE and PSFE.WS, respectively. Subsequent to the Transaction, Pi Jersey Topco Limited (“Topco”), funds advised by affiliates of CVC Capital Partners (such funds collectively, “CVC”) and The Blackstone Group Inc. (“Blackstone”) continue to retain ownership in the Company.

 

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements for the three months ended March 31, 2024 and the comparative financial information for the three months ended March 31, 2023 and for the year ended December 31, 2023 include the accounts of the Company, and its subsidiaries, based upon information of Paysafe Limited.

All intercompany transactions have been eliminated in consolidation. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company’s financial position, results of operations and cash flows have been included.

 

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 on Form 20-F filed on March 20, 2024.

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any other interim period.

Disaggregation of Revenue

 

The Company provides payment solutions through two primary lines of business: Merchant Solutions and Digital Wallets. For each primary source of revenue within these business lines, the Company’s main performance obligation is to stand ready to provide payment services to merchants and consumers. Due to the concentration of economic factors, products and services in each of the business lines, the Company has presented disaggregated revenue at the segment level (See Note 15).

 

We do not have any material contract balances associated with our contracts with customers as of March 31, 2024 and December 31, 2023. The Company has elected to exclude disclosing any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. The Company’s most significant performance obligations consist of variable consideration under a stand-ready series of distinct days of service, which typically represent all or almost all of the total transaction price for the related contract. The variable consideration that will be allocated to future days of service is not required to be disclosed as these days of services are wholly unsatisfied at the Company’s reporting date. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material.

 

F-7


 

Reclassifications

 

Certain prior period amounts have been reclassified in order to conform with the current period presentation. These reclassifications have no impact on the Company’s previously reported consolidated net loss.

 

Changes in presentation

 

During the fourth quarter of 2023, the Company elected to change its presentation of the cash flows associated with "Settlement receivables, net" and "Funds payable and amounts due to customers" from operating activities, to present them as financing activities within its Consolidated Statements of Cash Flows. Comparative amounts have been recast to conform to current period presentation. These recasts had no impact on the Consolidated Statements of Comprehensive Loss, Consolidated Statements of Financial Position or Consolidated Statements of Shareholders' Equity.

 

The following tables present the effects of the changes in presentation within the Statements of Cash Flows:

 

 

 

For the three months ended March 31, 2023

 

 

 

As Previously Reported

 

 

Adjustment

 

 

As Adjusted

 

Consolidated Statement of Cash Flows

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

     Settlement receivables, net

 

$

38,223

 

 

$

(38,223

)

 

 

-

 

     Funds payable and amounts due to customers

 

 

(177,198

)

 

 

177,198

 

 

 

-

 

Net cash provided by operating activities

 

$

(118,961

)

 

$

138,975

 

 

 

20,014

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

     Settlement funds - merchants and customers, net

 

$

-

 

 

$

(138,975

)

 

 

(138,975

)

Net cash provided by financing activities

 

$

(55,583

)

 

$

(138,975

)

 

 

(194,558

)

 

Significant accounting policies

 

There have been no material changes in our significant accounting policies during the three months ended March 31, 2024. A detailed discussion of our significant accounting policies is included within the audited consolidated financial statements for the year ended December 31, 2023 on Form 20-F filed on March 20, 2024.

Accounting Pronouncements not yet Adopted

 

Segment Reporting

 

In November 2023, the FASB issued ASU 2023-07, which amends Segment reporting (Topic 280). This update enhances reportable segment disclosure requirements, primarily by requiring disclosure of the significant segment expenses for each reportable segment that are regularly provided to the Chief Operating Decision Maker, and aligning the segment reporting disclosure requirements in interim and annual reporting periods. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company expects to adopt this guidance in our December 31, 2024 annual financial statements and this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

 

Crypto Assets

 

In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto assets. This update provides guidance on the accounting for and disclosure of crypto assets by requiring that crypto assets that meet criteria defined by the ASU to 1) be measured at fair value separately from other intangible assets in the statement of financial position, 2) to present remeasurement separately from other changes in other intangible assets in the statement of comprehensive income, and 3) to enhance disclosure requirements related to the crypto assets, including providing roll-forward information of crypto asset holdings. This update is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, with early adoption permitted.

 

The Company purchases cryptocurrency assets on behalf of its customers. All the risks and rewards associated with those assets are transferred to the customer at the time of purchase and the Company has no ability to control the assets and no requirement to safeguard the assets. As a result, the Company does not recognize either the cryptocurrency asset or liability to the customer on its balance sheet. The Company expects to adopt ASU 2023-08 on January 1, 2025 which is not expected to have a material impact on the Company’s consolidated financial statements.

 

 

Income Taxes

F-8


 

 

In December 2023, the FASB issued ASU 2023-09, which amends Income taxes (Topic 270). This update enhances income tax disclosure requirements, primarily by requiring public companies to provide disclosures regarding the statutory tax rate and effective tax rate in tabular format with specific categories identified, and to provide additional disclosures for reconciling items that meet quantitative thresholds. This update is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company expects to adopt this guidance on January 1, 2025 which is not expected to have a material impact on the Company’s consolidated financial statements.

 

2. Net income / (loss) per share

 

The following table sets forth the computation of the Company’s basic and diluted net income / (loss) per share attributable to the Company.

 

The Company uses the treasury stock method of calculating diluted net income / (loss) per share. For the three months ended March 31, 2024 we excluded all potentially dilutive stock options and warrants in calculating diluted net income per share as the effect was antidilutive (See Note 10 and 12). For the three months ended March 31, 2023, we excluded all potentially dilutive restricted stock units, stock options and warrants in calculating diluted net loss per share as the effect was antidilutive.

 

 

For the three months ended March 31,

 

 

2024

 

 

2023

 

Numerator

 

 

 

 

 

Net income / (loss) - basic

$

3,056

 

 

$

(3,808

)

Net income / (loss) - diluted

$

3,056

 

 

$

(3,808

)

 

 

 

 

 

 

Denominator

 

 

 

 

 

        Weighted average shares – basic

 

61,629,490

 

 

 

60,952,372

 

        Weighted average shares – diluted (1)

 

61,958,211

 

 

 

60,952,372

 

 

 

 

 

 

 

Net income / (loss) per share

 

 

 

 

 

        Basic

$

0.05

 

 

$

(0.06

)

        Diluted

$

0.05

 

 

$

(0.06

)

 

(1)
The denominator used in the calculation of diluted net income per share for the three months ended March 31, 2024, includes an additional 328,721 shares representing the dilutive effect of restricted stock units.

 

3. Taxation

 

We account for income taxes in interim periods pursuant to the provisions of ASC 740, Income Taxes. Under this method, our provision for or benefit from income taxes is computed by applying an estimated annual effective tax rate to the year to date pre-tax book income and the effects of any discrete income tax items are recognized in the periods in which they occur.

 

Our effective tax rate for the three months ended March 31, 2024 was 70.5%. The difference between our effective tax rate and the U.K. statutory rate of 25% for the three months ended March 31, 2024 was primarily the result of changes to our valuation allowance related to our recoverability of deferred tax assets on restricted interest carryforwards.

 

Our effective tax rate for the three months ended March 31, 2023 was abnormal due to near break-even year-to-date pre-tax income in relation to discrete items. The difference between our effective tax rate and the U.K. statutory rate of 23.5% for the three months ended March 31, 2023 was primarily driven by these discrete items recorded during the quarter, in addition to fair value movements on warrants which are not subject to tax and changes to our valuation allowance related to our recoverability of deferred tax assets on restricted interest carryforwards.

 

On December 12, 2022, the European Union ("EU") Member States agreed in principle on the introduction of a global minimum tax rate of 15%. On December 15, 2022, the written procedure for formal adoption of a directive was signed, and transposed into the national law of EU Member States with effectiveness beginning January 1, 2024. The application of the minimum tax rate did not have a material impact on the Company’s consolidated financial statements.

 

 

 

 

 

F-9


 

4. Goodwill

Changes in the carrying amount of goodwill are as follows:

 

 

 

Merchant Solutions(1)

 

 

Digital Wallets (2)

 

 

Total

 

Balance as of December 31, 2023

 

$

637,446

 

 

$

1,385,956

 

 

$

2,023,402

 

Foreign exchange

 

 

 

 

 

(16,601

)

 

 

(16,601

)

Balance as of March 31, 2024

 

$

637,446

 

 

$

1,369,355

 

 

$

2,006,801

 

 

 

 

Merchant Solutions(1)

 

 

Digital Wallets (2)

 

 

Total

 

Balance as of December 31, 2022

 

$

637,446

 

 

$

1,361,686

 

 

$

1,999,132

 

Foreign exchange

 

 

-

 

 

 

9,994

 

 

 

9,994

 

Balance as of March 31, 2023

 

$

637,446

 

 

$

1,371,680

 

 

$

2,009,126

 

(1)
Accumulated impairment loss was $1,159,145 as of March 31, 2024 and December 31, 2023 within the Merchant Solutions segment.
(2)
Accumulated impairment loss was $723,042 as of March 31, 2024 and December 31, 2023 within the Digital Wallets segment.

 

The Company performs its annual goodwill impairment test for all reporting units as of October 1st, or when events and circumstances have occurred that would indicate the carrying amount of goodwill exceeds its fair value. No such events and circumstances were identified during the three months ended March 31, 2024 or March 31, 2023. However, failure to achieve future cash flows or declines in the stock price may cause a future impairment of goodwill at the reporting unit level.

 

5. Intangible assets

The Company’s intangible assets consisted of the following:

 

 

 

March 31, 2024

 

 

December 31, 2023

 

Brands

 

$

166,394

 

 

$

168,508

 

Software development costs

 

 

888,888

 

 

 

880,764

 

Customer relationships

 

 

1,532,302

 

 

 

1,541,507

 

Computer software

 

 

41,089

 

 

 

39,311

 

Gross carrying value

 

 

2,628,673

 

 

 

2,630,090

 

 

 

 

 

 

 

 

Brands

 

 

103,983

 

 

 

101,197

 

Software development costs

 

 

598,672

 

 

 

578,383

 

Customer relationships

 

 

784,718

 

 

 

756,463

 

Computer software

 

 

31,366

 

 

 

30,112

 

Accumulated amortization

 

 

1,518,739

 

 

 

1,466,155

 

Intangible assets, net

 

$

1,109,934

 

 

$

1,163,935

 

 

 

 

 

 

 

 

 

Amortization expense on intangible assets for the three months ended March 31, 2024 and 2023, was $66,379 and $62,132, respectively. The increase in gross intangible assets during the three months ended March 31, 2024, relates to capitalized development costs.

The Company performs an impairment analysis on intangible assets with finite lives when events and circumstances have occurred that would indicate the carrying amount of intangible assets may not be recoverable. No such events and circumstances were identified during the three months ended March 31, 2024 and 2023. For the three months ended March 31, 2024 and 2023, $653 and $82 of impairment expense was recognized related to software development costs, respectively.

6. Allowance for credit losses

The Company has exposure to credit losses for financial assets, including settlement receivables, accounts receivable, and financial guarantee contracts to the extent that a chargeback claim is made against the Company directly or to the Company’s merchants on card purchases.

 

The following table summarizes the expected credit allowance activity for settlement receivables, net; accounts receivable, net; and financial guarantee contracts and other, for the three months ended March 31, 2024:

 

F-10


 

 

 

Accounts
receivable,
net

 

 

Settlement
receivables,
net
(2)

 

 

Financial
guarantee
contracts
and other

 

 

Total
allowance
for current
expected
credit losses

 

Balance as of December 31, 2023

 

 

5,240

 

 

 

5,197

 

 

 

11,650

 

 

 

22,087

 

Credit loss expense

 

 

6,528

 

 

 

299

 

 

 

1,932

 

 

 

8,759

 

Recoveries

 

 

2,848

 

 

 

132

 

 

 

-

 

 

 

2,980

 

Write-Offs

 

 

(8,292

)

 

 

(658

)

 

 

(2,239

)

 

 

(11,189

)

Other (1)

 

 

(2

)

 

 

(196

)

 

 

(17

)

 

 

(215

)

Balance as of March 31, 2024

 

 

6,322

 

 

 

4,774

 

 

 

11,326

 

 

 

22,422

 

 

(1)
Other mainly relates to the impact of foreign exchange.
(2)
For the three months ended March 31, 2024 and 2023, recoveries from freestanding credit enhancements related to Settlement receivables, net were $289 and $454, respectively, which are recorded separately from expected credit losses in "Selling, general and administrative" in the unaudited condensed consolidated statement of comprehensive loss.

 

Credit loss expense for the three months ended March 31, 2024 and 2023 was $8,759 and $3,469, respectively. The increase in credit loss expense was partially due to increased volume of transactions in the Merchant Solutions segment and an increase in aged accounts. Write-offs were $11,189 and $7,314 for the three months ended March 31, 2024 and 2023, respectively. Including recoveries, write offs were comparable period over period.

 

7. Debt

The Company's current facilities include the following:

(i) $305,000 senior secured revolving credit facility (the “Revolving Credit Facility”);

(ii) $1,018,000 aggregate principal amount senior secured USD first lien term loan facility (the “Term Loan Facility (USD)”)(comprising the original $628,000 and incremental $390,000 facility);

(iii) €710,000 aggregate principal amount senior secured EUR first lien term loan facility (the “Term Loan Facility (EUR)”) (comprising the original €435,000 and an incremental €275,000 facility); and

(iv) $400,000 aggregate principal amount of USD secured notes and €435,000 aggregate principal amount of EUR secured notes (“Secured Notes”).

The Company has made drawdowns and repayments on the Revolving Credit Facility throughout the year. As of March 31, 2024 and December 31, 2023, $54,218 and $35,640, respectively was drawn down on the Revolving Credit Facility.

On April 13, 2023, the Company entered into a debt amendment agreement to replace LIBOR with SOFR, following the Financial Conduct Authority's ("FCA") decision to phase out the use of LIBOR by June 30, 2023. The USD Term Loan Facility and USD Revolving Credit Facility previously bore interest at LIBOR plus margin. This contract modification qualified for the relief provided in ASU 2021-01. The Company applied the optional expedient in the standard, accounting for the amendment as if the modification was not substantial and thus a continuation of the existing contract, with the change in rate accounted for prospectively.

Line of Credit

The Company has a Line of Credit of $75,000 which is restricted for use in funding settlements in the Merchant Solutions business and is secured against known transactions. As of both March 31, 2024 and December 31, 2023, the Company had an outstanding balance of $75,000.

F-11


 

The key terms of these facilities were as follows:

 

Facility

 

Currency

 

Interest Rate (1)

 

Effective Interest Rate (2)

 

Facility
Maturity
Date

 

Principal
Outstanding
as of March 31, 2024 (Local
Currency)

 

 

Principal
Outstanding at
March 31,
2024 (USD)

 

Term Loan Facility (USD) (3)

 

USD

 

USD SOFR + 0.11%(4) + 2.75%
(0.5% floor)

 

8.0%

 

Jun-28

 

$

874,841

 

 

$

874,841

 

Term Loan Facility (EUR) (5)

 

EUR

 

EURIBOR + 3.00% (0% floor)

 

6.0%

 

Jun-28

 

 

625,106

 

 

 

674,623

 

Secured Loan Notes (EUR)

 

EUR

 

3.00%

 

3.2%

 

Jun-29

 

 

421,362

 

 

 

454,740

 

Secured Loan Notes (USD)

 

USD

 

4.00%

 

4.2%

 

Jun-29

 

 

345,581

 

 

 

345,581

 

Revolving Credit Facility (USD)

 

USD

 

BASE + 0.10%(4) + 2.25%
(0% floor)

 

7.7%

 

Dec-27

 

 

24,000

 

 

 

24,000

 

Revolving Credit Facility (EUR)

 

EUR

 

BASE + 2.25% (0% floor)

 

6.1%

 

Dec-27

 

 

28,000

 

 

 

30,218

 

Line of Credit

 

USD

 

Term SOFR (6) + 2.70%

 

8.1%

 

Jun-25

 

 

75,000

 

 

 

75,000

 

Total Principal Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

$

2,479,003

 

 

(1)
For facilities which utilize the EURIBOR and SOFR rates, a rate floor of 0% and 0.5% applies, respectively.
(2)
The effective interest rate is as of March 31, 2024.
(3)
Represents Term Loan Facility (USD) and USD Incremental Term Loan as defined under the current facilities.
(4)
Represents a credit spread adjustment to reflect the historical difference between LIBOR and SOFR.
(5)
Represent Term Loan Facility (EUR) and EUR Incremental Term Loan as defined under the current facilities.
(6)
The Term Secured Overnight Financing Rate ("Term SOFR") is the forward-looking term rate based on the SOFR. The Term SOFR is administered by the CME Group Benchmark Association Limited.

 

 

 

March 31, 2024

 

 

December 31, 2023

 

Principal Outstanding

 

$

2,479,003

 

 

$

2,519,857

 

Unamortized debt issuance cost

 

 

(21,651

)

 

 

(18,024

)

Total

 

 

2,457,352

 

 

 

2,501,833

 

Short-term debt

 

 

10,190

 

 

 

10,190

 

Non-current debt

 

$

2,447,162

 

 

$

2,491,643

 

 

For the three months ended March 31, 2024 and 2023, interest expense, including amortization of deferred debt issuance cost, was $34,965 and $37,456, respectively.

 

Maturity requirements on debt as of March 31, 2024 by year are as follows:

 

Remainder 2024

 

$

7,642

 

2025

 

 

85,190

 

2026

 

 

10,190

 

2027

 

 

64,408

 

2028

 

 

1,511,252

 

2029 and thereafter

 

 

800,321

 

Total

 

$

2,479,003

 

 

During both the three months ended March 31, 2024 and 2023, the Company made principal payments of $2,547 under its Term Loan Facility. In addition, during the three months ended March 31, 2024 and 2023, the Company repurchased $0 and $10,000, respectively, of Secured Loan Notes and $31,121 and $51,726, respectively, under the Term Loan Facility. This resulted in a gain on repurchase of $576 for the three months ended March 31, 2024, and $4,340 for the three months ended March 31, 2023, recognized within "Other income, net" within the Consolidated Statements of Comprehensive Loss.

 

As of March 31, 2024, we have committed to future repurchases of debt of $6,381 which have a face value of $6,475.

 

 

 

 

 

 

 

 

F-12


 

Compliance with Covenants

 

The Company’s facilities as described above contain affirmative, restrictive and incurrence-based covenants, including, among others, financial covenants based on the Company’s leverage and Revolving Credit Facility utilization, as defined in the debt agreement. The financial covenants under the facilities require the Company to test its Consolidated First Lien Debt Ratio if the principal amount of the Revolving Credit Facility, less any cash and cash equivalents, at the reporting date exceeds 40% of the total Revolving Credit Facility Commitment. If the Revolving Credit Facility utilization is greater than 40% at the reporting date, there is an additional requirement that the Consolidated First Lien Debt Ratio is not permitted to exceed 7.5 to 1.0. The Consolidated First Lien Debt Ratio is the ratio of (a) consolidated senior secured net debt of the Company and restricted subsidiaries as of the last day of such relevant period to (b) Last Twelve Months ("LTM") EBITDA, as defined in the Senior Credit Facility, of the Company and the restricted subsidiaries for the relevant period. The Company was in compliance with its covenants as of the date of issuance of these unaudited condensed consolidated financial statements.

Letters of Credit

As of March 31, 2024 and December 31, 2023, the Company had issued approximately $146,006 and $135,413, letters of credit, respectively, for use in the ordinary course of business.

8. Derivative Instruments

 

The Company’s derivative instruments consist of interest rate swaps, which mitigate the exposure to the variable-rate debt by effectively converting the floating-rate payments to fixed-rate payments. The derivative financial instrument arrangements were entered into to manage its interest rate risk related to its variable rate Term Loan Facility. During the three months ended March 31, 2024, the Company entered into a forward starting interest rate swap. The interest rate swaps are measured at fair value and not designated as a hedge for accounting purposes; as such, any fair value changes are recorded in “Other income, net” in the unaudited condensed consolidated statement of comprehensive loss in the respective period of the change.

 

The following table summarized the notional amount at inception and fair value of these instruments recognized as "Derivative financial assets" in the unaudited condensed consolidated statements of financial position:

 

Derivative financial instrument

Fixed rate

Notional amount

 

Index

Effective date

Maturity Date

Fair value as at
March 31, 2024

 

Fair value as at
December 31, 2023

 

Interest rate swap

2.1%

$

285,755

 

USD-1 month SOFR

March 31, 2022

March 31, 2026

$

10,823

 

$

10,427

 

Forward starting interest rate swap

3.3%

$

110,047

 

USD-1 month SOFR

March 31, 2026

December 31, 2027

$

274

 

$

-

 

 

The Company recognized a gain / (loss) for the three months ended March 31, 2024 and 2023 of $3,201 and ($1,208), respectively, of which $670 and ($3,432), respectively, is associated with the gain / (loss) of remeasuring the derivative instrument to fair value at the end of the reporting period. The fair value remeasurement is netted by monthly cash receipts on the interest rate contracts for the three months ended March 31, 2024 and 2023 of $2,531 and $2,224, respectively.

 

For further information regarding the fair value of the derivative instruments see discussion in Note 12 and 14.

9. Contingent and deferred consideration payable

Contingent and deferred consideration payable is comprised of the following balances:

 

Balance as of December 31, 2023

 

$

18,706

 

Payments made during the period

 

 

(7,755

)

Additions in the period

 

 

 

Fair value loss and other

 

 

(