Matthew Inglis

Matthew Inglis from RBC Capital Markets inquired about the cadence and magnitude of cost savings expected in 2026 as Q2 completes its cloud migration and exits data centers.

Answer

CFO Jonathan Price indicated that the 2026 guidance reflects a significant step-up in gross margin, expected to be north of 60%, driven by the completion of cloud migration and the rolling off of data center-related costs. He also noted that further optimization opportunities within the cloud environment are anticipated beyond 2027, contributing to the long-term gross margin target.

Matthew Inglis inquired about the cadence and magnitude of cost savings expected in 2026 due to the completion of Q2's cloud migration and exit from data centers.

Answer

CFO Jonathan Price indicated that significant gross margin improvement is expected in 2026, with gross margins projected to be north of 60%, driven by the completion of cloud migration and the rolling off of data center-related costs. He also noted further optimization opportunities in cloud spend for 2027 and beyond.

Matthew Inglis of RBC Capital Markets asked for an update on the SMB sales expansion into new U.S. states and verticals. He also inquired about the early traction, key use cases, and future strategy for the Pago Efectivo wallet in Peru.

Answer

CEO Bruce Lowthers noted good progress in SMB expansion, with the direct telesales team showing positive year-over-year productivity per rep. Regarding the Pago Efectivo wallet, he described the launch as exceptional, with strong initial sign-ups and a more than doubling of transactions per month for existing customers who adopt the wallet. The strategy is to now drive broader market acceptance beyond gaming.

Matthew Inglis from RBC Capital Markets asked for specific examples that provide conviction for the company's target of 10% growth from new customers and products. He also inquired about the expected timeline and growth contribution from the new PagoEfectivo wallet in Peru and the role of Latin America in the overall growth target.

Answer

CEO Bruce Lowthers cited a strong start to the year in sales, a larger and more productive enterprise sales team, and new product launches like the PagoEfectivo wallet as drivers of his conviction. He stated that Latin America is a bullish market for Paysafe, expecting its growth to expand from mid-to-upper single digits into the low-double-digits to mid-teens range as the year progresses, supported by the new wallet and a recent license in Brazil.

Matthew Inglis of RBC Capital Markets asked if the implementation of AI chat, agent support, and AI-driven claims processing was already a meaningful contributor to the reduction in service costs and if the company could quantify that impact.

Answer

President and CEO Scott Cutler stated that while the company does not break out specific cost savings from AI, the strategy is to bend the service cost curve over time. He highlighted that AI-powered claims have transformed a multi-week process into a real-time, lower-cost experience. The broader goal is to shift member interactions from phone calls to digital self-service, which is expected to drive down costs.