Paysafe Ltd (PSFE) Stock Analysis and Metrics

Sector: Technology Industry: Software - Infrastructure CIK: 0001833835

P/B 0.66

P/E -3.79

P/S 0.28

Market Cap 468.59 Mn

ROIC (Qtr) -61.63

Div Yield % 0.00

Rev 1y % (Qtr) 1.57

Total Debt (Qtr) 2.54 Bn

Debt/Equity (Qtr) 3.57

About

Paysafe Ltd (PSFE) is a leading digital commerce company that operates in the global entertainment verticals, such as iGaming, eSports, console games, and multi-player online games. The company's primary business activities involve providing a range of payment solutions, including digital wallets, alternative payment methods, and digital currency transactions, to its clients across various industries. Paysafe's main business activities are focused on providing payment solutions to its clients. The company generates revenue through transaction fees,...

Paysafe Ltd (PSFE) is a leading digital commerce company that operates in the global entertainment verticals, such as iGaming, eSports, console games, and multi-player online games. The company's primary business activities involve providing a range of payment solutions, including digital wallets, alternative payment methods, and digital currency transactions, to its clients across various industries.

Paysafe's main business activities are focused on providing payment solutions to its clients. The company generates revenue through transaction fees, which are calculated as a percentage of the transaction dollar volume, a fixed per transaction fee, or a combination of both. The company's primary products and services include its digital wallet, Skrill, which allows users to load funds onto a stored-value account that can be used to make transactions online, through a mobile device, or inside an integrated app. The company also offers its eCash Network, which enables users to transform cash into a digital currency that can be used for online gaming, video games, mobile commerce, or in-app purchases.

Paysafe operates in a competitive industry, with key competitors including other digital commerce companies such as PayPal and Stripe. The company's competitive advantages include its global digital solutions and reach, differentiated value propositions, and superior client experiences.

The company's customers include a range of businesses and individuals across various industries, including iGaming, eSports, console games, and multi-player online games. Some of its notable clients include Sony PlayStation, Xbox/Microsoft, Google Play, Stadia, Samsung, Huawei, Steam, Wargaming.net, Riot Games, Roblox, Twitch, EPIC Games, Ubisoft, Innogames, Activision Blizzard, and others.

Paysafe's financial performance has been strong, with the company generating $1.6 billion in revenue in 2023 and $1.5 billion in revenue in 2022. The company's net loss was $20 million in 2023 and $1.9 billion in 2022, and its Adjusted EBITDA was $459 million in 2023 and $410 million in 2022.

The company's growth strategies include sales acceleration and focus, product innovation, customer experience, platform optimization, international expansion, increasing share in existing markets, entering new vertical and geographic markets, and pursuing strategic acquisitions. The company has a demonstrated track record of growth through acquisitions, and it believes that there are a large number of potential acquisition opportunities to evaluate and consolidate around the world.

Paysafe has developed a robust global risk and compliance program, which includes the development, deployment, and management of proprietary models to detect and prevent compliance risk, card scheme risk, fraud risk, and credit risk. The company's risk management infrastructure enables it to safely process billions of dollars in payments on a monthly basis.

In terms of distribution and sales, Paysafe reaches 18 million active users in more than 120 countries and over 250,000 merchants across North America, Latin America, and Europe. The company goes to market and reaches its clients through a combination of online and physical channels that it sells into utilizing a range of direct and indirect sales strategies across its two business segments.

Paysafe's customer service and support are designed to address the specific support issues of each of its two business segments. The company provides support through dedicated service centers in the North America and the UK, and its teams are trained and equipped with a broad range of tools, including communication templates and a state-of-the-art knowledge base.

Overall, Paysafe is a leading digital commerce company that operates in the global entertainment verticals, providing a range of payment solutions to its clients across various industries. The company's global reach, advanced technology, and specialized payment services have enabled it to establish a strong position within the industry, and its financial performance has been strong.

Stock Price Chart

Analysis

Pros

Healthy cash reserves of 248.56M provide 12.92x coverage of short-term debt 19.23M, demonstrating strong liquidity position and minimal refinancing risk.
Tangible assets of 1.71B provide robust 112.82x coverage of other current liabilities 15.12M, indicating strong asset backing.
Operating cash flow of 220.14M fully covers other non-current liabilities 89.06M by 2.47x, showing strong long-term stability.
Robust tangible asset base of 1.71B provides 6.84x coverage of working capital 249.26M, indicating strong operational backing.
Strong cash position of 248.56M provides 16.44x coverage of other current liabilities 15.12M, indicating excellent liquidity.

Cons

Operating cash flow of 220.14M barely covers its investment activities of (138.56M), with a coverage ratio of -1.59, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
Cash reserves of 248.56M provide limited coverage of acquisition spending of (8.50M), which is -29.25x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
Operating earnings of 112.35M show weak coverage of depreciation charges of 282.10M, with a 0.40 ratio indicating high capital intensity and potential reinvestment needs.
High depreciation of 282.10M relative to operating cash flow of 220.14M, which is 1.28x suggests significant maintenance capital requirements affecting free cash flow.
Operating cash flow of 220.14M barely covers operating expenses of 302.40M with a 0.73 ratio, suggesting thin operational efficiency margins and limited flexibility.

Peer Comparison

Companies in the Software - Infrastructure

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	MSFT	Microsoft Corp	3,542.10 Bn	33.76	12.06	60.56 Bn
2	ORCL	Oracle Corp	533.93 Bn	34.61	8.75	124.39 Bn
3	PLTR	Palantir Technologies Inc.	437.56 Bn	399.47	112.31	0.24 Bn
4	PANW	Palo Alto Networks Inc	125.16 Bn	112.03	13.10	0.35 Bn
5	CRWD	CrowdStrike Holdings, Inc.	120.85 Bn	-384.67	26.47	0.82 Bn
6	SNPS	Synopsys Inc	71.69 Bn	35.89	11.14	15.14 Bn
7	NET	Cloudflare, Inc.	67.84 Bn	-658.43	33.70	3.50 Bn
8	FTNT	Fortinet, Inc.	63.33 Bn	33.80	9.66	1.00 Bn

Industry Comparisons

Current Valuation

Metric	Value	Industry
EV to Assets	0.60	2.56
EV to Cash from Ops.	12.71	38.32
EV to Debt	1.10	-11.37
EV to EBIT	24.90	-12.79
EV to EBITDA	7.33	7.72
EV to Free Cash Flow [EV/FCF]	26.23	24.22
EV to Market Cap	5.97	0.58
EV to Revenue	1.66	-35.00
Price to Book Value [P/B]	0.66	3.74
Price to Earnings [P/E]	-3.79	-18.61

Dividend Metrics

Metric	Value	Industry
Dividend Coverage Ratio	0.00	-0.30
Dividend Payout Ratio %	0.00	2.69
Dividend per Basic Share	0.00	0.10
FCF Dividend Payout Ratio %	0.00	1.67
Interest Coverage	0.83	-13.15

Growth Metrics

Metric	Value	Industry
Capex Growth (1y) %	-12.92	-404.11
Cash and Equivalents Growth (1y) %	2.97	226.02
Dividend Growth (1y) %	0.00	-0.27
EBIAT Growth (1y) %	-90.80	31.15
EBITDA Growth (1y) %	-12.14	49.02
EBIT Growth (1y) %	-22.85	25.85
EBT Growth (1y) %	-4,322.14	17.82
EPS Growth (1y) %	-465.79	70.69
FCF Growth (1y) %	-31.63	295.45
Gross Profit Growth (1y) %	-4.15	49.96

Liquidity Ratios

Metric	Value	Industry
Asset Utilization Ratio	0.36	0.68
Cash Payout Ratio	0.00	0.02
Cash Ratio	0.18	1.21
Current Ratio	1.18	2.57
Debt to Equity Ratio	3.57	-0.93
Interest Cover Ratio	0.83	-13.15
Times Interest Earned	0.83	-13.15

Profitability

Metric	Value	Industry
EBITDA Margin %	23.40	-544.82
EBIT Margin %	6.68	-197.78
EBT Margin %	-1.38	-602.74
Gross Margin %	56.60	52.06
Net Profit Margin %	-7.40	-605.52

Paysafe Ltd (NYSE: PSFE)