News Summary
Paysafe Limited has agreed to sell its direct marketing payment processing arm, Paysafe Direct, to Kort Payments, led by former CEO Joel Leonoff. This strategic move aims to optimize Paysafe’s portfolio and improve financial performance after a significant revenue decline in that division. The sale is expected to close in 30 days, aligning with Paysafe’s focus on the experience economy and growth in their core sectors. Meanwhile, Kort Payments plans to leverage this acquisition for innovative solutions in the U.S. market.
Paysafe’s Direct Marketing Business Finds New Home with Kort Payments
In a major shake-up for the payments landscape, Paysafe Limited has reached an agreement to sell its direct marketing payment processing arm, known as Paysafe Direct, to Kort Payments. This transition is particularly significant since Kort is notably led by Joel Leonoff, who is not only the founder but also the former CEO of Paysafe itself. It’s like watching a bird return to its nest, but this time, it’s with an entirely new vision!
What Does the Deal Involve?
This transaction encompasses not just the brand name but also includes a variety of essential components. It will involve reseller and merchant contracts, the specialized technology that supports the operations, and the dedicated team of employees that have actively worked in this business segment. That’s a solid deal for Kort Payments, indeed!
The sale is expected to close in about 30 days—that’s just around the corner—which speaks to the urgency and importance of these changes. However, it hinges on wrapping up some transition services to ensure a smooth handover, allowing both companies to focus on their respective new paths.
Paysafe’s Reasons for the Sale
Paysafe’s CEO, Bruce Lowthers, has shared that selling this branch aligns with the company’s strategic vision for portfolio optimization and resource management. In simpler terms, they are aiming to tighten their focus on their ideal customers and the verticals that thrive in the experience economy. It’s like decluttering your closet—sometimes you have to let go of what doesn’t fit anymore to make room for pieces that suit your style better!
The decision to divest came after a thorough review and analysis of different options. Paysafe found that a quick exit from this non-strategic business line would be more beneficial for long-term shareholder value. This decision is not just about selling; it’s about positioning Paysafe for future success.
Kort Payments Steps Up
Meanwhile, for Joel Leonoff and Kort Payments, acquiring Paysafe Direct signals an exciting step in their aggressive growth strategy, especially in the U.S. market. Leonoff is brimming with confidence about the acquisition, emphasizing how well it fits with Kort’s aim of providing innovative solutions across North America. They’re not just expanding—they’re ready to shake things up!
Financial Insights
As financial aspects go, while Paysafe hasn’t publicly disclosed specific figures regarding the deal, it does involve annual earnout payments trickling in over the next five years. That provides both parties with a steady path as they navigate their new chapters.
This decision comes on the heels of some rather sobering statistics: Paysafe noted a 46% decline in revenue from its direct marketing payment processing business in the last quarter. Such a falling trend can be a significant alarm bell. Ultimately, the sale is part of Paysafe’s broader efforts to improve its overall financial performance. By cutting off this declining revenue stream, they aim to better their financial health.
Looking Ahead
Paysafe’s overall total revenue actually increased by 6%, reaching $1.71 billion for the full year ending December 31, 2024, which is impressive. They also anticipate a solid net income between $19 million and $25 million for the fiscal year, bouncing back from a loss in the previous year. Wow, talk about a comeback!
Additionally, Paysafe has announced a hefty $70 million increase to its existing share repurchase program. They are clearly optimistic about their future, projecting revenue growth between 6.5% and 8% for 2025 and an adjusted EBITDA growth likely in the double digits. The clouds are slowly clearing for Paysafe, and they seem ready to embrace better days ahead!
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Additional Resources
- PYMNTS: Paysafe Sells Direct Marketing Payment Processing Business to Kort Payments
- Wikipedia: Paysafe
- Electronic Payments International: Paysafe to Sell Business Line
- Google Search: Paysafe KORT payments
- Gambling Insider: Paysafe FY24 Revenue Up 6%
- Google Scholar: Paysafe Revenue Growth
- Royal Gazette: Paysafe Ltd Sells Business Line
- Encyclopedia Britannica: Paysafe
- Fintech Futures: Merrco Payments Rebrands to Kort Payments
- Google News: Paysafe Direct Marketing
