Payoneer Reports First Quarter 2024 Financial Results

About this update from Payoneer Global Inc.

Record quarterly revenue, up 19% year-over-year, driven by strong growth across the entire platform 21% volume growth, including 33% B2B volume growth NEW YORK --(BUSINESS WIRE)-- Payoneer Global Inc. (“Payoneer” or the “Company”) (NASDAQ: PAYO), the financial technology company empowering the world’s small and medium-sized businesses to transact, do business and grow globally, today reported financial results for its first quarter ended March 31, 2024 . First Quarter 2024 Financial Highlights ($ in mm) 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 YoY Change Revenue ex. interest income $141.9 $151.4 $147.6 $159.4 $162.9 15% Interest income 50.1 55.3 60.4 64.9 65.3 30% Revenue $192.0 $206.7 $208.0 $224.3 $228.2 19% Transaction costs as a % of revenue 14.1% 13.8% 14.6% 16.2% 14.9% 80 bps Net income $7.9 $45.5 $12.8 $27.0 $29.0 265% Adjusted EBITDA 38.8 56.0 58.2 52.2 65.2 68% Operational Metrics Volume ($bn) $15.3 $15.3 $16.3 $19.0 $18.5 21% Active Ideal Customer Profiles (ICPs) ('000s)1 491 495 502 516 530 8% Revenue as a % of volume ("Take Rate") 125 bps 135 bps 127 bps 118 bps 124 bps -1 bps SMB customer take rate2 104 bps 110 bps 107 bps 100 bps 108 bps 4 bps 1. Active ICPs are defined as customers with a Payoneer Account that have on average over $500 per month in volume and were active over the trailing twelve-month period. 2. SMB customer take rate represents revenue from SMBs who sell on marketplaces, B2B SMBs, and Merchant Services, divided by the associated volume from each respective channel. “Payoneer delivered record quarterly revenue and strong profitability in the first quarter, driven by growth across all channels, including faster growth in our higher take rate B2B and Merchant Services businesses,” said John Caplan , Chief Executive Officer. “We grew ICPs by 8% and generated 21% volume growth, our highest growth rate in nearly 3 years. We are making steady progress against our strategic priorities, accelerating underlying revenue growth, and increasing profitability.” First Quarter 2024 Business Highlights 8% active ICP growth, including 13% growth in larger ICPs who have on average over $10,000 per month in volume 21% volume growth year-over-year reflects: B2B volume of $2.2 billion increased 33% year-over-year, driven by strong acquisition, improved ability to support more industries, and continued enhancements to our product features and functionality Merchant Services (Checkout) volume of $92 million increased 217% year-over-year driven by strong acquisition of $10K+ customers Marketplace volume of $11.0 billion increased 13% year-over-year led by continued strength from large ecommerce platforms Enterprise payouts volume of $5.1 billion increased 34% year-over-year, led by the travel vertical where we increased the number of routes we serve compared to a year ago $1.1 billion of spend on Payoneer cards, up 34% year-over-year, as we continue to successfully cross-sell our card product to customers $5.9 billion of customer funds as of March 31, 2024 , up 8% year-over-year $51 million of share repurchases at a weighted average price of $4.84 2024 Guidance “Payoneer’s first quarter results reflect strong growth across our entire platform. We delivered 21% growth in revenue excluding interest income and normalizing for the $7.5 million impact of certain non-volume fees earned in the prior year period, a significant acceleration compared to 8% in 2023,” said Bea Ordonez , Chief Financial Officer. “We are raising our 2024 guidance to reflect both the robust first quarter performance and our momentum heading into the second quarter. We continue to drive acquisition and improve retention of our most valuable customers while we enhance our financial stack and further penetrate the fast-growing B2B market.” 2024 guidance is as follows: Revenue $895 million - $905 million Transaction costs ~17.5% of revenue Adjusted EBITDA (1) $200 million to $210 million (1) Guidance for fiscal year, where adjusted, is provided on a non-GAAP basis, which Payoneer will continue to identify as it reports its future financial results. The Company cannot reconcile its expected adjusted EBITDA to expected net income under “2024 Guidance” without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time, which unavailable information could have a significant impact on the Company’s GAAP financial results. Please refer to “Financial Information; Non-GAAP Financial Measures” below for a description of the calculation of adjusted EBITDA. Webcast Payoneer will host a live webcast of its earnings on a conference call with the investment community beginning at 8:30 a.m. ET today, May 8, 2024 . To access the webcast, go to the investor relations section of the Company’s website at https://investor.payoneer.com . A replay will be available on the investor relations website following the call. About Payoneer Payoneer is the financial technology company empowering the world’s small and medium-sized businesses to transact, do business, and grow globally. Payoneer was founded in 2005 with the belief that talent is equally distributed, but opportunity is not. It is our mission to enable any entrepreneur and business anywhere to participate and succeed in an increasingly digital global economy. Since our founding, we have built a global financial stack that removes barriers and simplifies cross-border commerce. We make it easier for millions of SMBs, particularly in emerging markets, to connect to the global economy, pay and get paid, manage their funds across multiple currencies, and grow their businesses. Forward-Looking Statements This press release includes, and oral statements made from time to time by representatives of Payoneer , may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or Payoneer’s future financial or operating performance. For example, projections of future revenue, transaction cost and adjusted EBITDA are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “plan,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Payoneer and its management, as the case may be, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) changes in applicable laws or regulations; (2) the possibility that Payoneer may be adversely affected by geopolitical events and conflicts, such as the current conflict between Israel and Hamas , and other economic, business and/or competitive factors; (3) changes in the assumptions underlying our financial estimates; (4) the outcome of any known and/or unknown legal or regulatory proceedings; and (5) other risks and uncertainties set forth in Payoneer’s Annual Report on Form 10-K for the period ended December 31, 2023 and future reports that Payoneer may file with the SEC from time to time. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Payoneer does not undertake any duty to update these forward-looking statements. Financial Information; Non-GAAP Financial Measures Some of the financial information and data contained in this press release, such as adjusted EBITDA, have not been prepared in accordance with United States generally accepted accounting principles (“GAAP”). Payoneer uses these non-GAAP measures to compare Payoneer’s performance to that of prior periods for budgeting and planning purposes. Payoneer believes these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Payoneer’s results of operations. Payoneer's method of determining these non-GAAP measures may be different from other companies' methods and, therefore, may not be comparable to those used by other companies and Payoneer does not recommend the sole use of these non-GAAP measures to assess its financial performance. Payoneer management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in Payoneer’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. You should review Payoneer’s financial statements, which are included in Payoneer’s Annual Report on Form 10-K for the year ended December 31, 2023 and its subsequent Quarterly Reports on Form 10-Q, and not rely on any single financial measure to evaluate Payoneer’s business. Non-GAAP measures include the following item: Adjusted EBITDA : We provide adjusted EBITDA, a non-GAAP financial measure that represents our net income (loss) adjusted to exclude, as applicable: M&A related expense (income), stock-based compensation expenses, restructuring charges, share in losses (gain) of associated company, loss (gain) from change in fair value of warrants, other financial expense (income), net, taxes on income, and depreciation and amortization. Other companies may calculate the above measure differently, and therefore Payoneer’s measures may not be directly comparable to similarly titled measures of other companies. In addition, in this earnings release, we reference volume, which is an operational metric. Volume refers to the total dollar value of transactions successfully completed or enabled by our platform, not including orchestration transactions. For a customer that both receives and later sends payments, we count the volume only once. Note: as disclosed in the Company’s Form 10-K filed with the SEC on February 28, 2024 , we have updated our methodology to adjust for previously disclosed limited exceptions where both received and sent payments were counted in volumes, such that we count volume only once for a customer that both receives and later sends payments. TABLE - 1 PAYONEER GLOBAL INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) ( U.S. dollars in thousands, except share and per share data) Three months ended March 31 , 2024 2023 Revenues $ 228,183 $ 192,014 Transaction costs (Exclusive of depreciation and amortization shown separately below and inclusive of $438 and $421 in interest expense and fees associated with related party transactions during the three months ended March 31, 2024 and 2023, respectively) 33,966 27,081 Other operating expenses 40,283 40,095 Research and development expenses 32,051 29,280 Sales and marketing expenses 49,890 47,826 General and administrative expenses 24,209 26,681 Depreciation and amortization 9,408 6,039 Total operating expenses 189,807 177,002 Operating income 38,376 15,012 Financial income (expense): Gain (loss) from change in fair value of Warrants 1,761 (252 ) Other financial income, net 2,747 2,350 Financial income, net 4,508 2,098 Income before taxes on income 42,884 17,110 Taxes on income 13,910 9,172 Net income $ 28,974 $ 7,938 Other comprehensive income (loss) Unrealized loss on available-for-sale debt securities, net (1 ) — Unrealized gain on cash flow hedges, net 34 — Tax expense on unrealized gains on cash flow hedges, net (6 ) — Other comprehensive income, net of tax 27 — Comprehensive income $ 29,001 $ 7,938 Per Share Data Net income per share attributable to common stockholders — Basic earnings per share $ 0.08 $ 0.02 — Diluted earnings per share $ 0.08 $ 0.02 Weighted average common shares outstanding — Basic 359,306,195 360,220,161 Weighted average common shares outstanding — Diluted 378,715,301 388,308,279 Disaggregation of revenue The following table presents revenue recognized from contracts with customers as well as revenue from other sources: Three months ended March 31 , 2024 2023 Revenue recognized at a point in time $ 159,796 $ 131,892 Revenue recognized over time 662 7,844 Revenue from contracts with customers $ 160,458 $ 139,736 Interest income on customer balances $ 65,268 $ 50,058 Capital advance income 2,457 2,220 Revenue from other sources $ 67,725 $ 52,278 Total revenues $ 228,183 $ 192,014 The following table presents the Company’s revenue disaggregated by primary regional market, with revenues being attributed to the country (in the region) in which the billing address of the transacting customer is located, with the exception of global bank transfer revenues, where revenues are disaggregated based on the billing address of the transaction funds source. Three months ended March 31 , 2024 2023 Primary regional markets Greater China (1) $ 81,358 $ 63,960 Europe (2) 43,455 38,621 Asia-Pacific (2) 33,365 25,381 North America (3) 23,010 25,536 South Asia , Middle East and North Africa (2) 23,925 19,945 Latin America (2) 23,070 18,571 Total revenues $ 228,183 $ 192,014 1. Greater China is inclusive of mainland China , Hong Kong , Macao and Taiwan 2. No single country included in any of these regions generated more than 10% of total revenue 3. The United States is the Company’s country of domicile. Of North America revenues, the US represents $21,925 and $24,575 during the three months ended March 31, 2024 and 2023, respectively. TABLE - 2 PAYONEER GLOBAL INC. RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (UNAUDITED) ( U.S. dollars in thousands) Three months ended March 31 , 2024 2023 Net income $ 28,974 $ 7,938 Depreciation and amortization 9,408 6,039 Taxes on income 13,910 9,172 Other financial income, net (2,747 ) (2,350 ) EBITDA 49,545 20,799 Stock based compensation expenses(1) 15,077 16,927 M&A related expense(2) 2,375 774 Loss (gain) from change in fair value of Warrants(3) (1,761 ) 252 Adjusted EBITDA $ 65,236 $ 38,752 Three months ended, Mar. 31, 2023 June 30, 2023 Sept. 30, 2023 Dec. 31, 2023 Mar. 31, 2024 Net income (loss) $ 7,938 $ 45,549 $ 12,825 $ 27,021 $ 28,974 Depreciation and amortization 6,039 5,909 7,116 8,750 9,408 Taxes on income 9,172 5,747 10,012 14,272 13,910 Other financial income, net (2,350 ) (4,318 ) (1,137 ) (3,763 ) (2,747 ) EBITDA 20,799 52,887 28,816 46,280 49,545 Stock based compensation expenses(1) 16,927 16,173 15,330 17,338 15,077 M&A related expense(2) 774 498 1,745 451 2,375 Loss (gain) from change in fair value of Warrants(3) 252 (13,586 ) 7,799 (11,824 ) (1,761 ) Restructuring charges(4) — — 4,488 — — Adjusted EBITDA $ 38,752 $ 55,972 $ 58,178 $ 52,245 $ 65,236 1. Represents non-cash charges associated with stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy. 2. Amounts relate to M&A-related third-party fees, including related legal, consulting and other expenditures. 3. Changes in the estimated fair value of the warrants are recognized as gain or loss on the condensed consolidated statements of comprehensive income. The impact is removed from EBITDA as it represents market conditions that are not in our control. 4. We initiated a plan to reduce our workforce during the three months ended September 30, 2023 , and had non-recurring costs related to severance and other employee termination benefits. TABLE - 3 PAYONEER GLOBAL INC. EARNINGS PER SHARE (UNAUDITED) ( U.S. dollars in thousands, except share and per share data) Three months ended March 31 , 2024 2023 Numerator: Net income $ 28,974 $ 7,938 Denominator: Weighted average common shares outstanding — Basic 359,306,195 360,220,161 Add: Dilutive impact of RSUs, ESPP and options to purchase common stock 18,725,608 27,332,566 Dilutive impact of private Warrants 683,498 755,552 Weighted average common shares — diluted 378,715,301 388,308,279 Net income per share attributable to common stockholders — Basic earnings per share $ 0.08 $ 0.02 Diluted earnings per share $ 0.08 $ 0.02 TABLE - 4 PAYONEER GLOBAL INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) ( U.S. dollars in thousands, except share and per share data) March 31 , December 31 , 2024 2023 Assets: Current assets: Cash and cash equivalents $ 587,180 $ 617,022 Restricted cash 7,907 7,030 Customer funds 5,920,924 6,390,526 Accounts receivable (net of allowance of $360 at March 31, 2024 and $385 at December 31, 2023 ) 7,224 7,980 Capital advance receivables (net of allowance of $5,357 at March 31, 2024 and $5,059 at December 31, 2023 ) 52,133 45,493 Other current assets 40,780 40,672 Total current assets 6,616,148 7,108,723 Non-current assets: Property, equipment and software, net 14,896 15,499 Goodwill 19,889 19,889 Intangible assets, net 82,647 76,266 Restricted cash 6,025 5,780 Deferred taxes 16,688 15,291 Severance pay fund 821 840 Operating lease right-of-use assets 22,567 24,854 Other assets 15,804 15,977 Total assets $ 6,795,485 $ 7,283,119 Liabilities and shareholders’ equity: Current liabilities: Trade payables $ 35,295 $ 33,941 Outstanding operating balances 5,920,924 6,390,526 Other payables 103,927 117,508 Total current liabilities 6,060,146 6,541,975 Non-current liabilities: Long-term debt from related party 14,429 18,411 Warrant liability 6,794 8,555 Other long-term liabilities 52,574 49,905 Total liabilities 6,133,943 6,618,846 Commitments and contingencies Shareholders’ equity: Preferred stock, $0.01 par value, 380,000,000 shares authorized; no shares were issued and outstanding at March 31, 2024 and December 31, 2023 . — — Common stock, $0.01 par value, 3,800,000,000 and 3,800,000,000 shares authorized; 377,294,480 and 368,655,185 shares issued and 355,695,854 and 357,590,493 shares outstanding at March 31, 2024 and December 31, 2023 , respectively. 3,773 3,687 Treasury stock at cost, 21,598,626 and 11,064,692 shares as of March 31, 2024 and December 31, 2023 , respectively. (108,096 ) (56,936 ) Additional paid-in capital 752,236 732,894 Accumulated other comprehensive loss (149 ) (176 ) Retained earnings (accumulated deficit) 13,778 (15,196 ) Total shareholders’ equity 661,542 664,273 Total liabilities and shareholders’ equity $ 6,795,485 $ 7,283,119 TABLE - 5 PAYONEER GLOBAL INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ( U.S. dollars in thousands) Three months ended March 31 , 2024 2023 Cash Flows from Operating Activities Net income $ 28,974 $ 7,938 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,408 6,039 Deferred taxes (1,397 ) 1,806 Stock-based compensation expenses 15,077 16,927 Loss (gain) from change in fair value of Warrants (1,761 ) 252 Foreign currency re-measurement loss (gain) 1,541 (416 ) Changes in operating assets and liabilities: Other current assets (11 ) (8,159 ) Trade payables 1,465 (10,090 ) Deferred revenue (28 ) 323 Accounts receivable, net 756 2,047 Capital advance extended to customers (80,173 ) (71,184 ) Capital advance collected from customers 73,533 66,266 Other payables (12,528 ) (10,414 ) Other long-term liabilities 2,669 (635 ) Operating lease right-of-use assets 2,287 2,335 Interest and amortization of discount on investments (474 ) — Other assets 172 867 Net cash provided by operating activities 39,510 3,902 Cash Flows from Investing Activities Purchase of property, equipment and software (1,616 ) (1,764 ) Capitalization of internal use software (14,055 ) (7,588 ) Severance pay fund distributions, net 19 23 Customer funds in transit, net 154 (53,628 ) Purchases of investments in available-for-sale debt securities (118,649 ) — Maturities and sales of investments in available-for-sale debt securities 20,000 — Net cash inflow from acquisition of remaining interest in joint venture — 5,953 Net cash used in investing activities (114,147 ) (57,004 ) Cash Flows from Financing Activities Proceeds from issuance of common stock in connection with stock-based compensation plan, net of taxes paid related to settlement of equity awards 3,432 5,865 Outstanding operating balances, net (469,602 ) (371,338 ) Borrowings under related party facility 5,378 9,842 Repayments under related party facility (9,360 ) (8,859 ) Common stock repurchased (50,961 ) — Net cash used in financing activities (521,113 ) (364,490 ) Effect of exchange rate changes on cash and cash equivalents (1,541 ) 515 Net change in cash, cash equivalents, restricted cash and customer funds (597,291 ) (417,077 ) Cash, cash equivalents, restricted cash and customer funds at beginning of period 7,018,367 6,386,720 Cash, cash equivalents, restricted cash and customer funds at end of period $ 6,421,076 $ 5,969,643 Supplemental information of investing and financing activities not involving cash flows: Property, equipment, and software acquired but not paid $ 700 $ 400 Internal use software capitalized but not paid $ 5,216 $ 2,609 Common stock repurchased but not paid $ 1,699 $ — Right of use assets obtained in exchange for new operating lease liabilities $ — $ 2,298 View source version on businesswire.com : https://www.businesswire.com/news/home/20240508150929/en/ Investors: Michelle Wang [email protected] Media: Alison Dahlman [email protected] Source: Payoneer

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