Payments company Paysafe share price drops despite nearly doubling profits

Imran Khan
Payments technologies are increasing rapidly in popularity (Source: Getty)

The figures

Payments processing company, Paysafe, saw its share price plummet 6 per cent lower this morning despite delivering a strong set of results and nearly doubling profits compared to last year.

The company reported in its 2016 financial results today that it has nearly doubled adjusted proļ¬ts after tax, achieving $213m (£174.6m) for the period, compared to $108.7m in 2015.

The group, which was promoted to the FTSE 250 index last year, exceeded $1bn in revenues for the first time while delivering adjusted earnings of $301m and statutory operating profit of $194m.

Operating profit margins jumped to 19.4 per cent, compared to 4.3 per cent last year.

The company has also nearly halved its net debt to $279.8m from $431.3m in 2015.

Paysafe’s share price dropped as much as 6 per cent this morning but nearly regained half of the fall by 11.00 am.

Paysafe share price

Why it’s interesting

The company has seen its share price increase by more than five times in as many years and operates in a fast growing segment of the economy, facilitating a shift from traditional payment formats to digital, technology-driven platforms. Consumers and retailers are increasingly demanding easier, faster and safer ways to pay and transfer money.

In a note to investors, analysts at Barclays said:

“We estimate organic growth of 22 per cent for the second half and the company disclosed 21 per cent for the full year, considerably ahead of the low double-digit expectation with which the market started the year.

“On our estimates, the stock delivers sector-beating earnings growth and trades at a more than 50 per cent discount to peers.”

What Paysafe said

Paysafe President and Chief Executive Officer Joel Leonoff said:

We have delivered strongly against our financial and strategic targets, passing $1bn in revenue for the first time and reporting adjusted EBITDA of $301m.

I am confident in the Group's ability to retain this positive momentum into 2017 and we are passionate about delivering the products and services to support the changing payment needs of consumers and merchants in an evolving digital economy.

In short

The company is rapidly growing and management expects to achieve low double-digit organic revenue growth in 2017.

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