Shares of Paysafe Ltd. plunged more than 40% in heavy trading Thursday after the financial-technology company delivered a weak outlook driven by pressures to its digital-wallet business.

The stock was the most actively traded on major exchanges Thursday.

Paysafe
PSFE,
-41.68%

saw its third-quarter revenue dip to $353.6 million from $355.5 million a year prior, while analysts tracked by FactSet had been expecting $370 million.

The company posted a net loss of $147.2 million, which included a non-cash impairment charge of $322.2 million that reduces the carrying value of intangible assets in Paysafe’s digital-wallet business. Paysafe had recorded a $38.1 million net loss in the year-earlier quarter.

The company also reported $106.4 million in adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda), which is a non-GAAP metric. That was down slightly from $107.3 million a year earlier but ahead of the FactSet consensus, which called for $104.7 million.

Paysafe suffered “both market and performance challenges within the digital wallet business,” Chief Executive Philip McHugh said in the company’s earnings release.

The digital wallet lets users “upload, store, withdraw & pay funds and [alternate payment methods] from a virtual account,” Paysafe said in an investor presentation earlier this year.

The company’s outlook also disappointed. For the fourth quarter, Paysafe expects $355 million to $365 million in revenue and $90 million to $100 million in adjusted Ebitda. Analysts tracked by FactSet had been modeling $418 million in revenue and $148 million in adjusted Ebitda.

Looking ahead to 2022, the company offered some “preliminary expectations” on its earnings call, suggesting the company’s challenges will persist beyond this year. Paysafe is looking for $1.53 billion to $1.58 billion in 2022 revenue and $440 million to $460 million in adjusted Ebitda, while analysts were projecting $1.75 billion and $586 million, respectively.

“Overall, there is no sugar coating that our financial results are disappointing and not up to our expectations,” Chief Financial Officer Izzy Dawood said on the earnings call. “We have a strong plan to get Digital Wallet back to double-digit growth, while we have to go through the necessary transition in 2022.”

The view for next year “reflects a challenging environment with forecasts well below consensus expectations and targeted long-term double-digit growth,” Cowen & Co. analyst George Mihalos wrote in a note to clients.

The executives faced questions on the call regarding their confidence in the ability to ultimately turn around the digital-wallet business. McHugh noted that the company made “management changes” as well as tweaks to “pricing and tiering campaigns that haven’t worked as effectively.”

He acknowledged that the company has “lost some mild share” due to both “external” and “internal” pressures.

In terms of external pressures, “the biggest driver is going to be real-time banking or the open-banking network,” which “is creating an attractive option where the digital wallet used to fill that more disproportionately for some of our operators,” he continued, noting this dynamic particularly has led to pressure in Europe.

As for internal changes, McHugh believes the company needs to be “much more engaged with our clients, working more closely with them on campaigns.”

Shares are off 72% on a year-to-date basis, as the S&P 500
SPX,
+0.06%

has risen 24%.

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