Payoneer Reports Fourth Quarter and Full Year 2023 Financial Results

About this update from Payoneer Global Inc.

Third consecutive year of 30%+ revenue growth since going public in 2021 Significantly expanded profitability in 2023 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 fourth quarter and full year ended December 31, 2023 . Fourth Quarter and Full Year 2023 Financial Highlights ($ in mm) 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 YoY Change 2022 2023 YoY Change Revenue $183.6 $192.0 $206.7 $208.0 $224.3 22% $627.6 $831.1 32% Transaction costs as a % of revenue 16.6% 14.1% 13.8% 14.6% 16.2% (40 bps) 17.6% 14.7% (290 bps) Revenue less transaction costs $153.2 $164.9 $178.2 $177.6 $188.0 23% $517.5 $708.8 37% Net income (loss) (10.2) 7.9 45.5 12.8 27.0 n.m. (12.0) 93.3 n.m. Adjusted EBITDA 10.6 38.8 56.0 58.2 52.2 393% 48.5 205.1 323% Operational Metrics Active Ideal Customer Profiles (ICPs) ('000s)1 488 491 495 502 516 6% 488 516 6% Volume ($bn)2 $16.5 $15.3 $15.3 $16.3 $19.0 16% $59.7 $66.0 11% Revenue as a % of volume ("Take Rate") 112 bps 125 bps 135 bps 127 bps 118 bps 6 bps 105 bps 126 bps 21 bps 1. Active ICPs are defined as customers with a Payoneer Account that have on average over $500 a month in volume and were active over the trailing twelve-month period. 2. For a customer that both receives and later sends payments, we count the volume only once. 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. The updated methodology has no impact on revenue and had, for all periods presented, less than a 3% impact on volume. The update has been applied to all periods reflected in the table above and we have updated the definition of volume accordingly (please see “Financial Information; Non-GAAP Financial Measures” below). “We made meaningful progress in 2023 to expand access for small and medium-sized businesses (SMBs) to the digital, global economy. Payoneer is helping SMBs in over 190 countries and territories sell globally across multiple channels and consolidate their accounts receivable (AR) into their Payoneer Accounts. Our customers are also increasingly using Payoneer’s financial stack to optimize their accounts payable (AP). By capturing their cross-border AR and AP, we become an indispensable, trusted partner to their growth,” said John Caplan , Chief Executive Officer. “Our strategy is working, and we drove 6% year-over-year growth in our ideal customer profiles (ICPs) and 36% ARPU expansion. As we continue to execute our strategy and build on our fourth quarter momentum, I am confident we can deliver more value for our customers, employees, and shareholders in 2024 and beyond.” Full Year 2023 Business Highlights 6% active ICP growth and 36% ARPU expansion. 15% growth in our larger ICPs, or those who have on average over $10,000 per month in volume Strengthened executive team with the addition of Chief People Officer Elana Brickner , Chief Transformation Officer John Davis , Chief Technology Officer Sarit Frumkes , and Chief Product Officer Oren Ryngler Deepened ecosystem of marketplace relationships, including renewing our contract with Airbnb and announcing a new collaboration with Etsy to support its expansion of Etsy Payments into emerging markets Announced an agreement to acquire a licensed China -based payment service provider, which will support Payoneer’s fast-growing China business upon close, and is subject to customary closing conditions and regulatory approvals Acquired Spott, a real-time data platform that will help us drive faster underwriting decisions in our working capital business $57 million of share repurchases in 2023 and on December 7, 2023 , the Board authorized an amendment to the share repurchase program to increase the authorized amount of repurchases to $250 million $6.4 billion of customer funds as of December 31, 2023 , up 9% year-over-year Fourth Quarter 2023 Business Highlights Total B2B volume increased 13% year-over-year, including 27% growth in APAC, SAMEA, and Latin America , where we predominantly serve outsourcing and services businesses who use Payoneer to invoice their customers and make payments to their vendors and suppliers Merchant Services (Checkout) volume increased more than 400% year-over-year and 61% sequentially. Over 600 merchants are using Checkout on their webstores to collect payments from customers around the world, and on average receive more than $60,000 of monthly volume Record $1.1 billion of quarterly usage on Payoneer cards, up 32% year-over-year, reflecting increased customer adoption of our AP solutions to manage their expenses $1.5 million charitable contribution to the Payoneer Foundation to support small business development, female entrepreneurs, young people in business, financial education and entrepreneurship, and humanitarian aid 2024 Guidance “Payoneer began 2023 with a focus on profitable growth, and we have delivered. In 2023, we generated 32% revenue growth, over $90 million of net income, and quadrupled adjusted EBITDA to over $200 million ,” said Bea Ordonez , Chief Financial Officer. “Our 2024 guidance reflects accelerating business momentum over the course of the year as we focus on acquiring and retaining active ICPs, increasing customer adoption of multiple products and services, and driving our two growth engines: B2B and Merchant Services. We intend to continue innovating, improving our customer experience, and strengthening our infrastructure to deliver long-term profitable growth.” 2024 guidance is as follows: Revenue $875 million - $885 million Transaction costs ~17.5% of revenue Adjusted EBITDA (1) $185 million to $195 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, February 28, 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) Payoneer’s estimates of its financial performance; (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: M&A related expense (income), stock-based compensation expenses, restructuring expenses, share in losses (gain) of associated company, 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: 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. The updated methodology has no impact on revenue and had for all periods presented, less than a 3% impact on volume. The update has been applied to all periods reflected in the volume table in this press release and we have updated the definition of volume accordingly. In this earnings release, we also reference ARPU. ARPU (Average Revenue Per User) is defined as the Revenue from Active Customers divided by the number of Active Customers over the period in which the Revenue was earned. Active Customers for these purposes are defined as Payoneer accountholders with at least 1 financial transaction over the period. Revenue from Active Customers represents revenue attributed to Active Customers based on their use of the Payoneer platform, including interest income earned from their balances, and excluding revenues unrelated to their activities. TABLE - 1 PAYONEER GLOBAL INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ( U.S. dollars in thousands, except share and per share data) (Unaudited) Three months ended December 31 , Year ended December 31 , 2023 2022 2023 2022 Revenues $ 224,320 $ 183,558 $ 831,103 $ 627,623 Transaction costs (Exclusive of depreciation and amortization shown separately below and inclusive of $1,781 , $1,491 , and $220 interest expense and fees associated with related party transaction in 2023, 2022, and 2021 respectively) 36,320 30,392 122,291 110,165 Other operating expenses 39,686 41,304 160,609 149,199 Research and development expenses 34,972 32,902 119,197 115,041 Sales and marketing expenses 51,762 52,194 196,654 164,564 General and administrative expenses 27,124 29,997 100,929 90,010 Depreciation and amortization 8,750 5,333 27,814 20,858 Total operating expenses 198,614 192,122 727,494 649,837 Operating income (loss) 25,706 (8,564) 103,609 (22,214) Financial income (expense): Gain from change in fair value of Warrants 11,824 5,031 17,359 33,963 Other financial income (expense), net 3,763 1,005 11,568 (10,131) Financial income, net 15,587 6,036 28,927 23,832 Income (loss) before taxes on income and share in losses of associated company 41,293 (2,528) 132,536 1,618 Taxes on income 14,272 7,610 39,203 13,586 Share in losses of associated company — 13 — 2 Net income (loss) $ 27,021 $ (10,151) $ 93,333 $ (11,970) Other comprehensive income (loss), net of tax Foreign currency translation adjustments — 2,087 — (2,429) Other comprehensive income (loss), net of tax — 2,087 — (2,429) Comprehensive income (loss) $ 27,021 $ (8,064) $ 93,333 $ (14,399) Per Share Data Net income (loss) per share attributable to common stockholders — Basic earnings (loss) per share $ 0.08 $ (0.03) $ 0.26 $ (0.03) — Diluted earnings (loss) per share $ 0.07 $ (0.03) $ 0.24 $ (0.03) Weighted average common shares outstanding — Basic 354,697,812 352,756,697 361,678,893 348,044,831 Weighted average common shares outstanding — Diluted 379,881,231 352,756,697 392,665,718 348,044,831 Disaggregation of revenue The following table presents revenue recognized from contracts with customers as well as revenue from other sources: Three months ended December 31 , Year ended December 31 , 2023 2022 2023 2022 Revenue recognized at a point in time $ 156,114 $ 137,813 $ 573,902 $ 533,213 Revenue recognized over time 660 7,723 16,925 30,354 Revenue from contracts with customers $ 156,774 $ 145,536 $ 590,827 $ 563,567 Interest income on customer balances $ 64,867 $ 35,894 $ 230,634 $ 55,292 Capital advance income 2,679 2,128 9,642 8,764 Revenue from other sources $ 67,546 $ 38,022 $ 240,276 $ 64,056 Total revenues $ 224,320 $ 183,558 $ 831,103 $ 627,623 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 December 31 , Year ended December 31 , 2023 2022 2023 2022 Primary regional markets Greater China (1) $ 80,244 $ 55,675 $ 287,944 $ 195,663 Europe (2) 44,170 38,334 166,868 130,850 Asia-Pacific (2) 32,424 24,060 114,335 84,817 North America (3) 23,499 29,408 97,434 92,045 South Asia , Middle East and North Africa (2) 23,400 19,167 87,237 69,239 Latin America (2) 20,583 16,914 77,285 55,009 Total revenues $ 224,320 $ 183,558 $ 831,103 $ 627,623 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 $22,452 and $28,453 for the three months ended December 31, 2023 and 2022, and $93,371 and $87,438 during the years ended December 31, 2023 and 2022. TABLE - 2 PAYONEER GLOBAL INC. RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA (UNAUDITED) ( U.S. dollars in thousands) Three months ended Year ended December 31 , December 31 , 2023 2022 2023 2022 Net income (loss) $ 27,021 $ (10,151) $ 93,333 $ (11,970) Depreciation and amortization 8,750 5,333 27,814 20,858 Taxes on income 14,272 7,610 39,203 13,586 Other financial (income) expense, net (3,763) (1,005) (11,568) 10,131 EBITDA 46,280 1,787 148,782 32,605 Stock based compensation expenses(1) 17,338 13,827 65,767 52,150 Share in loss of associated company — 13 — 2 M&A related expense (income)(2) 451 — 3,468 (2,323) Gain from change in fair value of Warrants(3) (11,824) (5,031) (17,359) (33,963) Restructuring charges(4) — — 4,488 — Adjusted EBITDA $ 52,245 $ 10,596 $ 205,146 $ 48,471 Three months ended, Dec. 31, 2022 Mar. 31, 2023 June 30, 2023 Sept. 30, 2023 Dec. 31, 2023 Net income (loss) $ (10,151) $ 7,938 $ 45,549 $ 12,825 $ 27,021 Depreciation and amortization 5,333 6,039 5,909 7,116 8,750 Taxes on income 7,610 9,172 5,747 10,012 14,272 Other financial income, net (1,005) (2,350) (4,318) (1,137) (3,763) EBITDA 1,787 20,799 52,887 28,816 46,280 Stock based compensation expenses(1) 13,827 16,927 16,173 15,330 17,338 Share in losses of associated company 13 — — — — M&A related expense(2) — 774 498 1,745 451 Loss (gain) from change in fair value of Warrants(3) (5,031) 252 (13,586) 7,799 (11,824) Restructuring charges(4) — — — 4,488 — Adjusted EBITDA $ 10,596 $ 38,752 $ 55,972 $ 58,178 $ 52,245 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 for 2023 relate to M&A-related third-party fees, including related legal, consulting and other expenditures. Amounts for the year ended December 31, 2022 relate to a non-recurring fair value adjustment of a liability related to our 2020 acquisition of optile. 3. Changes in the estimated fair value of the warrants are recognized as gain or loss on the statements of comprehensive income (loss). 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 year ended December 31, 2023 , and had non-recurring costs related to severance and other employee termination benefits. TABLE - 3 PAYONEER GLOBAL INC. EARNINGS (LOSS) PER SHARE ( U.S. dollars in thousands, except share and per share data) (Unaudited) Three months ended December 31 , Year ended December 31 , 2023 2022 2023 2022 Numerator: Net income (loss) $ 27,021 $ (10,151) $ 93,333 $ (11,970) Denominator: Weighted average common shares outstanding — Basic 354,697,812 352,756,697 361,678,893 348,044,831 Add: Dilutive impact of RSUs, ESPP and options to purchase common stock 24,453,273 — 30,256,559 — Dilutive impact of private Warrants 730,146 — 730,266 — Weighted average common shares — diluted 379,881,231 352,756,697 392,665,718 348,044,831 Net income (loss) per share attributable to common stockholders — Basic earnings (loss) per share $ 0.08 $ (0.03) $ 0.26 $ (0.03) Diluted earnings (loss) per share $ 0.07 $ (0.03) $ 0.24 $ (0.03) TABLE - 4 PAYONEER GLOBAL INC. CONSOLIDATED BALANCE SHEETS ( U.S. dollars in thousands, except share and per share data) December 31 , 2023 2022 Assets: Current assets: Cash and cash equivalents $ 617,022 $ 543,299 Restricted cash 7,030 2,882 Customer funds 6,390,526 5,838,612 Accounts receivable (net of allowance of $385 in 2023 and $246 in 2022) 7,980 12,878 Capital advance receivables (net of allowance of $5,059 in 2023 and $5,311 in 2022) 45,493 37,155 Other current assets 40,672 36,278 Total current assets 7,108,723 6,471,104 Non-current assets: Property, equipment and software, net 15,499 14,392 Goodwill 19,889 19,889 Intangible assets, net 76,266 45,444 Restricted cash 5,780 4,848 Deferred taxes 15,291 4,169 Investment in associated company — 6,429 Severance pay fund 840 1,095 Operating lease right-of-use assets 24,854 15,260 Other assets 15,977 12,021 Total assets $ 7,283,119 $ 6,594,651 Liabilities and shareholders’ equity: Current liabilities: Trade payables $ 33,941 $ 41,566 Outstanding operating balances 6,390,526 5,838,612 Other payables 117,508 97,334 Total current liabilities 6,541,975 5,977,512 Non-current liabilities: Long-term debt from related party 18,411 16,138 Warrant liability 8,555 25,914 Other long-term liabilities 49,905 29,831 Total liabilities 6,618,846 6,049,395 Commitments and contingencies Shareholders’ equity: Preferred stock, $0.01 par value, 380,000,000 shares authorized; no shares were issued and outstanding at December 31, 2023 and December 31, 2022 . — — Common stock, $0.01 par value, 3,800,000,000 and 3,800,000,000 shares authorized; 368,655,185 and 352,842,025 shares issued and 357,590,493 and 352,842,025 shares outstanding at December 31, 2023 and December 31, 2022 , respectively. 3,687 3,528 Treasury stock at cost, 11,064,692 and 0 shares at December 31, 2023 and December 31, 2022 . (56,936) — Additional paid-in capital 732,894 650,433 Accumulated other comprehensive loss (176) (176) Accumulated deficit (15,196) (108,529) Total shareholders’ equity 664,273 545,256 Total liabilities and shareholders’ equity $ 7,283,119 $ 6,594,651 TABLE - 5 PAYONEER GLOBAL INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ( U.S. dollars in thousands) Year ended December 31 2023 2022 Cash Flows from Operating Activities Net income (loss) $ 93,333 $ (11,970) Adjustment to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 27,814 20,858 Deferred taxes (11,122) 731 Stock-based compensation expenses 65,767 52,149 Share in losses of associated company — 2 Gain from change in fair value of Warrants (17,359) (33,963) Transaction costs allocated to Warrants — — Foreign currency re-measurement (income) loss (4,359) 2,752 Changes in operating assets and liabilities, net of the effects of business combinations: Other current assets (4,310) (11,421) Trade payables (8,326) 24,284 Deferred revenue 1,348 224 Accounts receivable, net 4,898 964 Capital advance extended to customers (299,139) (223,819) Capital advance collected from customers 290,801 237,834 Other payables 13,619 16,608 Other long-term liabilities 232 (3,480) Operating lease right-of-use assets 10,248 10,686 Other assets (3,956) 1,521 Net cash provided by operating activities $ 159,489 $ 83,960 Cash Flows from Investing Activities Purchase of property, equipment and software (8,459) (10,504) Capitalization of internal use software (39,333) (18,329) Related party asset acquisition (3,600) — Severance pay fund distributions, net 255 628 Customer funds in transit, net 930 33,939 Net cash inflow from acquisition of remaining interest in joint venture 5,953 — Net cash provided by (used in) investing activities $ (44,254) $ 5,734 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 13,203 21,346 Outstanding operating balances, net 551,914 1,437,358 Borrowings under related party facility 26,855 29,363 Repayments under related party facility (24,582) (26,755) Common stock repurchased (55,436) — Net cash provided by financing activities $ 511,954 $ 1,461,312 Effect of exchange rate changes on cash and cash equivalents $ 4,458 $ (2,719) Net change in cash, cash equivalents, restricted cash and customer funds 631,647 1,548,287 Cash, cash equivalents, restricted cash and customer funds at beginning of year 6,386,720 4,838,433 Cash, cash equivalents, restricted cash and customer funds at end of year $ 7,018,367 $ 6,386,720 Supplemental disclosure of cash flow information: Cash paid for taxes, net of refunds $ 40,910 $ 9,425 Cash interest paid $ 1,767 $ 1,466 Supplemental information of investing and financing activities not involving cash flows: Property, equipment, and software acquired but not paid $ 810 $ 109 Internal use software capitalized but not paid $ 10,159 $ 4,392 Right-of-use assets obtained in exchange for new operating lease liabilities $ 19,842 $ 13,003 Common stock repurchased but not paid $ 1,500 $ — View source version on businesswire.com : https://www.businesswire.com/news/home/20240228385123/en/ Investors: Michelle Wang [email protected] Media: Alison Dahlman [email protected] Source: Payoneer

View stock analysis, news, and events for Payoneer Global Inc.