Paysafe: Advanced Suite of Digital Commerce Solutions
Paysafe:
Non-GAAP Measures and Basis of Presentation
Statement Regarding Non-GAAP Financial Measures
This presentation includes Organic Revenue, Organic Gross Profit/Gross Margin, Organic Adjusted EBITDA, Organic Adjusted EBITDA Margin, Adjusted Operating Expenses,
Adjusted Cash Conversion and Adjusted Cash Conversion Margin, which are supplemental measures that are not required by, or presented in accordance with, accounting principles
generally accepted in the United States ("GAAP").
Organic Revenue is stated on a net basis unless otherwise stated. For all historical periods in this presentation, Organic Revenue is presented on a basis that gives effect to
acquisitions and dispositions that occurred in the relevant period as if such acquisitions and dispositions had occurred at the beginning of the relevant reporting period. Net revenue is
presented net of interchange and card scheme fees for certain payment processing businesses and follows the recognition and measurement principles of applicable accounting
standards, notably ASC 606.
Organic Gross Profit/Organic Gross Margin is defined as Organic Revenue less cost of services.
Organic Adjusted EBITDA is defined as net income/(loss) before the impact of income taxes, interest expense, interest income, depreciation and amortization, impairment expenses,
foreign exchange gains and losses, non-recurring costs, and other income and expenses. These adjustments include non-cash items which by their nature are volatile and vary
significantly based on factors outside Paysafe's control such as the impact of foreign exchange rates. These adjustments also exclude the impact of items that are not reflective of the
underlying performance of the Company and ongoing operating results, such as restructuring and acquisition costs. For all historical periods in this presentation (i.e., 2018, 2019 and
2020E), Organic Adjusted EBITDA is presented on a basis that gives effect to acquisitions and dispositions that occurred in the relevant period as if such acquisitions and dispositions
had occurred at the beginning of the relevant reporting period. Additionally, Organic Adjusted EBITDA does not give effect to certain recurring costs that we expect to incur in periods
after we have become a public company, including additional headcount in finance and accounting, investor relations and legal functions, board fees, D&O insurance, stock exchange
fees and similar costs. We currently estimate that these recurring public company costs will range from approximately $5 million to $6 million annually.
Organic Adjusted EBITDA Margin is calculated as Organic Adjusted EBITDA as a percentage of Revenue.
Adjusted Cash Conversion is defined as Adjusted EBITDA less capital expenditures and increases/(decreases) in working capital. Capital expenditure includes purchases of intangible
assets (excluding merchant portfolios) as well as purchases of property, plant and equipment. Working capital consists of the balance sheet line items Customer accounts and other
restricted cash, Accounts receivable, Settlement receivables, Prepaid expenses and other current assets, Accounts Payable and accrued liabilities, Funds payable and amounts due
to customers.
Adjusted Cash Conversion Margin is calculated as Adjusted Cash Conversion as a percentage of Organic Adjusted EBITDA.
Adjusted operating expenses is equivalent to the Company's Selling, General and Administrative Expenses and is inclusive of credit losses. Adjusted operating expenses is adjusted
where relevant for the items stated above as adjustments to the Company's definition of Organic Adjusted EBITDA. For all historical periods in this presentation (i.e., 2018, 2019 and
2020E), Adjusted operating expenses is presented on a basis that gives effect to acquisitions and dispositions that occurred in the relevant period as if such acquisitions and
dispositions had occurred at the beginning of the relevant reporting period.
Management believes the presentation of these non-GAAP financial measures, when considered together with the Company's results presented in accordance with GAAP, provide
users with useful supplemental information in comparing the operating results across reporting periods by excluding items that are not considered indicative of Paysafe's core
operating performance. In addition, management believes the presentation of these non-GAAP financial measures provides useful supplemental information in assessing the
Company's results on a basis that fosters comparability across periods by excluding the impact on the Company's reported GAAP results of acquisitions and dispositions that have
occurred in such periods.
However, these non-GAAP measures exclude items that are significant in understanding and assessing Paysafe's financial results or position. Therefore, these measures should not
be considered in isolation or as alternatives to revenue, net income, cash flows from operations or other measures of profitability, liquidity or performance under GAAP. You should be
aware that Paysafe's presentation of these measures may not be comparable to similarly titled measures used by other companies. In addition, the forward-looking non-GAAP
financial measures provided herein have not been reconciled to comparable GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are
necessary for such reconciliations.
See the following slide for reconciliations of the historical non-GAAP financial measures presented herein to their most directly comparable GAAP financial measures. A reconciliation
of our forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures cannot be provided without unreasonable effort because of the
inherent difficulty of accurately forecasting the occurrence and financial impact of the adjusting items necessary for such reconciliations that have not yet occurred, are out of our
control, or cannot be reasonably predicted.
Basis of Presentation
Revenue is stated on a net basis unless otherwise stated. Net revenue is presented net of interchange and card scheme fees for certain payment processing businesses and follows
the recognition and measurement principles of applicable accounting standards, notably ASC 606.
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