Paysafe Limited Annual Report Summary (for the fiscal year ended December 31, 2025)

This summary offers a concise overview of Paysafe Limited's (NYSE: PSFE) performance and financial position for the fiscal year ended December 31, 2025. Based on its annual report, it highlights key aspects to help stakeholders understand the company's operations, financial results, and strategic direction.

1. Business Overview

Paysafe Limited operates as a leading specialized payments platform. The company provides a comprehensive suite of payment solutions to businesses and consumers across diverse industries. Its offerings typically include digital wallets, online payment processing, prepaid solutions, and other payment services. Paysafe simplifies and secures online transactions, helping businesses accept and consumers make payments seamlessly across various channels and geographies.

2. Financial Performance

Let's examine Paysafe's financial results for 2025 compared to previous years.

• Revenue:

  • Paysafe generated $1.701 billion in revenue in 2025.
  • This represents a slight decrease of 0.2% from $1.705 billion in 2024.
  • However, revenue increased from $1.601 billion in 2023, indicating growth over the past two years before plateauing in 2025.

• Operating Income:

  • Operating income reflects the company's profitability before interest and taxes.
  • In 2025, operating income stood at $71.9 million.
  • This marks a significant 46% decrease from $133.4 million in 2024, signaling a substantial reduction in core business profitability.

• Drivers of the Operating Income Drop:

  • Despite largely flat revenue, increased costs and a shift from other income to expense significantly impacted operating income.
  • Costs of services (direct costs to provide payment services) rose by 3.5% to $741.2 million.
  • Depreciation and Amortization, the accounting cost for asset wear and tear, remained relatively stable at $274.1 million in 2025, a slight increase from $273.4 million in 2024.
  • A major factor was the substantial increase in Restructuring and other costs, which soared almost nine-fold from $5.2 million in 2024 to $48.4 million in 2025. This suggests significant organizational changes or strategic initiatives, such as severance packages, facility closures, or project write-offs, which heavily impacted profitability.
  • Other (expense) / income, net also shifted unfavorably, moving from a positive $21.5 million in income in 2024 to an expense of $7.6 million in 2025. This nearly $29 million swing further reduced operating income.
  • Conversely, Selling, General, and Administrative (SG&A) costs (including marketing, salaries, and office expenses) decreased slightly by 2.1% to $563.6 million, a positive development.
  • Minor impairment expenses (writing down asset values) of $1.4 million and a small loss on disposal of assets of $0.7 million also contributed.

• Net Loss:

  • After accounting for all expenses, including operating costs, interest, and taxes, Paysafe reported a net loss of $182.5 million in 2025.
  • This represents a significant reversal from a net profit of $22.2 million in 2024.
  • The loss also significantly widened from $20.3 million in 2023, making 2025 the most challenging financial year in this three-year period.
  • Per Share Impact: This resulted in a loss of $3.14 per share in 2025, compared to a profit of $0.36 per share in 2024.

• A Closer Look at Taxes:

  • Despite reporting a pre-tax loss of $72.1 million, Paysafe incurred an income tax expense of $110.4 million in 2025. This is unusual, as companies with losses often receive a tax benefit. This substantial tax expense significantly exacerbated the final net loss, contrasting with an $8.1 million income tax benefit in 2024. This can happen due to various reasons, such as non-deductible expenses, taxes incurred in profitable foreign jurisdictions, or changes in valuation allowances on deferred tax assets.

• Beyond Net Income: Total Comprehensive Loss

  • While net income reflects core business profitability, total comprehensive income also accounts for other factors impacting overall value, such as currency fluctuations.
  • In 2025, Paysafe recorded a $24.6 million gain from foreign currency translation, a positive reversal from a $16.7 million loss in 2024. This indicates favorable currency movements.
  • However, even with this gain, the Total Comprehensive Loss for 2025 reached $157.9 million, significantly larger than the $5.4 million total comprehensive income in 2024 and the $5.9 million total comprehensive loss in 2023.

3. Financial Health (Balance Sheet and Cash Flow)

This section examines Paysafe's financial health at the end of 2025 compared to 2024, focusing on its assets, liabilities, and shareholders' equity.

Balance Sheet Snapshot:

Assets (What Paysafe Owns):

• Cash and Cash Equivalents: Increased by 15.5% to $250.2 million in 2025 from $216.7 million in 2024, enhancing financial flexibility.
• Customer Accounts and Other Restricted Cash: (Funds held for customers, such as digital wallet balances or pending settlements) increased slightly by 1.2% to $1.095 billion.
• Accounts Receivable: (Money owed by customers for services) decreased by 12.5% to $138.4 million.
• Settlement Receivables: (Money due from payment processing) increased by 8.8% to $150.7 million.
• Prepaid Expenses: (Payments made in advance for services like insurance or rent) jumped significantly by almost 40% to $113.7 million.
• Total Current Assets: (Easily accessible assets) grew by 4.4% to $1.75 billion.
• Property and Equipment: (Physical assets like computers and office equipment) increased by 16.7% to $28.4 million.
• Intangible Assets: (Such as patents, brand names, or customer lists) decreased by 10.9% to $874.1 million.
• Goodwill: (The premium paid when acquiring other companies, representing reputation and synergy) increased by 5% to $2.076 billion. Auditors noted this as a complex area.
• Total Assets: Remained largely stable, with a minor 0.1% dip to $4.804 billion.

Liabilities (What Paysafe Owes):

• Accounts Payable and Other Liabilities: (Money owed to suppliers and for other short-term obligations) increased by 18.4% to $209.4 million.
• Funds Payable and Amounts Due to Customers: A significant liability for a payment company, decreased slightly by 4.3% to $1.182 billion.
• Total Current Liabilities: (Short-term debts) decreased slightly by 2.2% to $1.414 billion.
• Non-Current Debt: (Long-term loans) increased substantially by 10.7% to $2.605 billion from $2.353 billion last year, indicating increased long-term borrowing.
• Total Liabilities: Increased by 5.6% to $4.149 billion.

Shareholders' Equity (What's Left for Owners):

• Shareholders' equity represents the company's residual value after subtracting liabilities from assets.
• Common Shares: Slightly increased by $14,000 (from $750,000 to $764,000), reflecting new issuances, such as for restricted stock units.
• Additional Paid-in Capital: Which reflects funds received from share sales above par value, increased by $23.9 million to $3.223 billion. This boost primarily stemmed from share-based compensation ($22.0 million, such as employee stock options) and contributions from its parent company, Topco ($2.0 million).
• Share Buybacks in Action: The company repurchased $91.7 million of its own shares during the year. While some shares were reissued (likely for employee compensation), treasury shares (repurchased and held by the company) increased by $90.2 million to $132.8 million. This, combined with new issuances, led to a decrease of over 8 million outstanding shares (from 59.9 million to 51.7 million). This typically benefits existing shareholders by increasing their proportional ownership.
• Accumulated Deficit: (The running total of all losses) grew by $182.5 million in 2025, directly reflecting the net loss reported in financial performance.
• Accumulated Other Comprehensive Loss: Improved, showing a $24.6 million gain in 2025, primarily from favorable foreign currency translation, which helped offset other losses.
• Total Shareholders' Equity: A key indicator, dropped significantly by 25.5% from $879.3 million in 2024 to $655.0 million in 2025.

Cash Flow Statement Highlights:

• Cash from Operating Activities:

  • Paysafe generated $236.2 million in cash from its operations in 2025.
  • This is slightly less than the $253.8 million generated in 2024 but still represents a healthy cash inflow.
  • Despite reporting a significant net loss of $182.5 million, Paysafe generated positive operating cash flow. This occurs because many income statement expenses (e.g., depreciation, amortization, deferred taxes) are non-cash items. Additionally, significant non-cash adjustments like share-based compensation and allowances for credit losses added back to cash. Thus, while accounting profit was negative, core business cash flow remained strong.

• Cash Used for Investing Activities:

  • In 2025, Paysafe used $140.4 million for investing activities, an increase from $108.4 million in 2024.
  • Capital Expenditures: Paysafe spent $94.2 million on other intangible assets (e.g., software development, licenses) and $12.6 million on property, plant & equipment. These capital expenditures (CapEx) totaled $106.8 million, demonstrating continued investment in its technological infrastructure.
  • Customer Base Expansion: The company spent $21.2 million acquiring "merchant portfolios," which are groups of existing customers from other payment processors, directly expanding its business.
  • Merchant Reserves: A net cash outflow of $19.0 million related to merchant reserves (funds held for merchants to cover potential refunds or chargebacks) indicates increased cash allocation to these reserves.

• Cash from Financing Activities:

  • In 2025, Paysafe used $160.8 million in financing activities, similar to the $163.8 million used in 2024.
  • Share Buybacks: Paysafe spent $90.8 million buying back its own shares, aligning with board approval and reducing shares available to investors. It also spent $10.6 million repurchasing shares withheld for taxes (often related to employee stock awards).
  • Debt Management: The company took on $252.0 million in new loans and borrowings while repaying $156.2 million of existing debt, resulting in a net increase in long-term debt. It also actively utilized its line of credit, borrowing $847.0 million and repaying $838.0 million, for a net inflow of $9.0 million.
  • Customer Settlement Funds: A significant item was a net outflow of $160.8 million for "settlement funds - merchants and customers," indicating more payments to merchants and customers than received. This figure can fluctuate with transaction volumes and timing.

Overall Financial Health:

While Paysafe's total assets remained relatively stable, its funding structure shifted. The company took on significantly more long-term debt, and shareholders' equity considerably shrank due to the net loss and share buyback program. This indicates increased reliance on borrowed money over its own capital to fund operations, a trend warranting close observation due to potential higher interest payments and financial risk.

Despite a significant net loss, Paysafe's core operations generated substantial cash. After accounting for capital expenditures, Free Cash Flow (FCF) for 2025 was approximately $129.4 million ($236.2M operating cash flow - $106.8M CapEx). FCF is a crucial metric, representing cash available to pay down debt, fund share buybacks, or pursue acquisitions after covering operational and investment needs.

Paysafe used a substantial portion of this cash, supplemented by new borrowing, to invest in its business (e.g., new technology, customer acquisition) and repurchase its own shares. The net effect was a $33.5 million increase in its cash balance by year-end 2025, reaching $250.2 million. While this demonstrates liquidity management, the increased debt reliance and cash used for share buybacks are important considerations for long-term financial health.

4. Risk Factors

Investing in Paysafe involves various risks, both inherent to the payments industry and specific to the company's operations and structure.

• Cybersecurity Risks:

  • Paysafe handles vast financial transactions and sensitive data, making robust cybersecurity critical. The company maintains a comprehensive cybersecurity program, featuring multi-layered controls, dedicated teams, and regular internal and external audits, including penetration testing.
  • Paysafe reported no material cybersecurity incidents during the 2025 fiscal year, a positive indicator.
  • A dedicated Chief Information Security Officer (CISO) with extensive experience reports regularly to leadership and the Board. Various committees oversee cybersecurity risks, and employees receive mandatory training and phishing simulations.
  • Paysafe is also adapting to new regulations, updating operational resilience processes to align with the Digital Operational Resilience Act (DORA), effective January 2025.
  • The inherent nature of handling sensitive data means that cybersecurity threats, including data breaches, system failures, or other incidents, remain a significant risk that could lead to financial loss, reputational damage, and regulatory penalties.

• Corporate Governance Risks (due to "Foreign Private Issuer" Status):

  • As a Bermuda-based "foreign private issuer" under U.S. laws, Paysafe can follow certain Bermuda corporate governance rules instead of some New York Stock Exchange (NYSE) requirements.
  • Implications for Shareholders:
    • Shareholder Approval for New Shares: Bermuda rules do not require shareholder approval for new share issuances in certain situations (e.g., acquisitions, change of control, employee stock plans, private placements). This could dilute shareholder ownership without a vote.
    • Board Independence: The NYSE typically requires a majority of independent directors. Paysafe's Bermuda rules do not mandate this, and its board currently lacks a majority of independent directors. While the company expects to return to a majority of independent directors, this implies less independent oversight compared to a typical U.S.-listed company. Similarly, its compensation and nominating committees are not required to be entirely independent.
  • This "foreign private issuer" status provides Paysafe with flexibility but also means there may be less independent oversight and shareholder input on certain matters compared to a typical U.S.-listed company, which could impact shareholder rights and protections.

5. Management Discussion and Analysis (MD&A) Highlights

The MD&A section offers management's perspective on the company's financial condition and operational results.

• Share Repurchase Program: In November 2025, Paysafe's Board authorized an additional $70 million in common share repurchases. This authorization, combined with the actual $90.8 million spent on buybacks during the year, signals management's belief in the stock's undervaluation and its commitment to returning value to shareholders, potentially boosting remaining share value. This activity significantly impacted financing cash flow and reduced outstanding shares.
• Strategic Focus and Restructuring: The significant increase in Restructuring and other costs to $48.4 million in 2025 (from $5.2 million in 2024) indicates Paysafe undertook substantial strategic initiatives or reorganizations. These costs likely include expenses for workforce adjustments, operational streamlining, or strategic project write-offs aimed at improving future efficiency or business focus.

Independent Auditor's Report Highlights

An independent expert's review of a company's financial statements provides crucial assurance. Here's what Paysafe's auditors, Deloitte & Touche LLP, reported on its 2025 financial statements:

• A Clean Bill of Health: The auditors issued a "clean opinion" on Paysafe's financial statements, confirming their belief that the numbers presented are fair and accurate according to standard accounting rules. They also provided a clean opinion on the company's internal controls, indicating effective systems for managing and reporting financial information, thereby enhancing the reliability of the reported figures.
• Areas That Needed Extra Scrutiny (Critical Audit Matters): Even with a clean opinion, auditors highlight particularly complex areas or those requiring significant judgment. For Paysafe, two main areas stood out:
  • How Paysafe Counts Revenue:
    • Why it's tricky: Paysafe handles a massive volume of small, highly automated transactions. Ensuring these systems accurately capture every dollar presents a significant, complex task.
    • What the auditors did: Auditors engaged their own IT experts to thoroughly check Paysafe's systems, software, and automated controls. They also tested transaction samples and reviewed revenue figure reconciliations to ensure accuracy and completeness. Additionally, they performed detailed transaction testing for specific revenue streams, verifying source documents and mathematical accuracy.
  • The Value of "Goodwill":
    • Why it's tricky: "Goodwill," an accounting term for intangible assets like brand reputation, customer relationships, or acquisition premiums, involves subjective valuation. Estimating its value and assessing for impairment heavily relies on management's predictions of future earnings, market conditions, and discount rates, which are inherently variable.
    • What the auditors did: Auditors utilized their own valuation specialists to carefully evaluate Paysafe's assumptions regarding future revenues, market values, and discount rates. They performed sensitivity analyses, assessed the accuracy of past predictions, and compared the company's estimates to industry reports and similar companies for reasonableness. They also tested the effectiveness of Paysafe's internal controls over these valuations.

This section provides confidence that the financial information underwent rigorous review, even in its most complex areas.