Financial Data and Key Metrics Changes - Revenue grew 16% year over year excluding interest income, reaching $247 million, with adjusted EBITDA of $65 million and a 27% margin [10][25][32] - Net income was $21 million compared to $29 million in the same quarter last year, with basic and diluted earnings per share at $0.06 and $0.05 respectively [32] - Customer funds held by the company increased 11% year over year to $6.6 billion, contributing to interest income of $58 million despite declining average interest rates [28][29] Business Line Data and Key Metrics Changes - B2B revenue increased 37%, driven by growth in APAC, EMEA, and Latin America [11] - SMB volume grew 7% year over year, with B2B SMB volume up 21% and merchant services volume up 88% [26] - The take rate increased to 1.25%, up one basis point year over year, with SMB customer take rate up 11 basis points [27][28] Market Data and Key Metrics Changes - APAC and Latin America customer regions each grew revenue over 20%, representing about a third of total revenue [17] - Approximately 40% of revenue comes from helping customers sell to non-US markets, indicating a strong global presence [18] Company Strategy and Development Direction - The company aims to become the essential partner for cross-border SMBs, leveraging core assets to navigate the changing trade landscape [6][10] - Focus on quality customers and targeting high-value segments by industry, region, size, and product need [12][33] - Recent acquisition of a licensed China-based payment provider enhances the company's regulatory footprint in key markets [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term opportunities despite current macroeconomic uncertainties and potential impacts from tariffs [33][36] - The company is suspending its previously issued full-year 2025 guidance due to high uncertainty around global trade policies [33][35] - Management noted that SMBs are resilient and adapting to changes, with expectations for continued growth in the second quarter [34][37] Other Important Information - Total operating expenses increased 14% to $217 million, driven by higher transaction costs and labor-related expenses [30][31] - The company is focused on diversifying its business and investing in core capabilities to support customers [36][37] Q&A Session Summary Question: Customer reception to price increases and pricing power - Management stated that the pricing strategy remains customer segment-focused, with no immediate changes despite macro uncertainties [39][41] Question: Trends in customer onboarding and retention - Management highlighted strong net revenue retention among large customers and ongoing efforts to improve retention [42][43] Question: Clarification on the $50 million revenue impact from tariffs - Management explained that the $50 million figure is based on various assumptions regarding customer behavior and market dynamics [46][49] Question: Breakdown of revenue from China to the US - Management indicated that larger sellers in China are expected to be more resilient to tariffs, with a diverse range of sellers supported [60][62] Question: Impact of tariffs on overall margins - Management noted that while there could be impacts from tariffs, they do not anticipate a material effect at lower levels [77][78] Question: Evidence of pull forward in volumes - Management acknowledged the difficulty in determining pull forward effects due to various external factors impacting volume [80][81] Question: Changes in the number of ideal customer profiles (ICPs) - Management clarified that the focus is on maximizing profitable revenue growth rather than the quantity of ICPs, with significant growth in revenue from larger customers [84][86]

Financial Data and Key Metrics Changes - Revenue grew 16% year over year excluding interest income, reaching $247 million, with adjusted EBITDA of $65 million and a 27% margin [22][23][29] - Net income was $21 million compared to $29 million in the same quarter last year, with basic and diluted earnings per share at $0.06 and $0.05 respectively [30] - Customer funds held by Payoneer increased 11% year over year to $6.6 billion, contributing to interest income of $58 million despite declining average interest rates [25][26] Business Line Data and Key Metrics Changes - B2B revenue increased 37%, driven by growth in APAC, EMEA, and Latin America [9] - SMB volume grew 7% year over year, with B2B SMB volume up 21% and merchant services volume up 88% [23] - Average revenue per user (ARPU) growth excluding interest income accelerated to 22% year over year, marking the seventh consecutive quarter of growth [11] Market Data and Key Metrics Changes - APAC and Latin America customer regions each grew revenue over 20%, representing about a third of total revenue [15] - Approximately 40% of revenue comes from helping customers sell to non-US markets, indicating a strong diversification strategy [16] Company Strategy and Development Direction - The company aims to become the essential partner for cross-border SMBs, leveraging its core assets to navigate the changing trade landscape [5][12] - Focus on quality customers and targeting high-value segments by industry, region, size, and product need [10] - Recent acquisition of a licensed China-based payment provider enhances the company's regulatory footprint and market access [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term opportunities despite current macroeconomic uncertainties and potential impacts from tariffs [31][34] - The company is suspending its previously issued full-year 2025 guidance due to high uncertainty around global trade policies [31][34] - Management noted that they have not seen a slowdown in volumes or revenue through early May, expecting growth in Q2 to align with medium-term targets [32] Other Important Information - Total operating expenses increased 14% year over year, primarily due to higher transaction costs and labor-related expenses [27] - The company is actively managing its hedging programs to reduce sensitivity to fluctuations in short-term interest rates [26] Q&A Session Summary Question: Customer reception to price increases and confidence in pricing power - Management stated that their pricing strategy remains customer segment-focused and they have not seen pressure from price increases [38][40] Question: Trends in customer onboarding and retention - Management highlighted strong net revenue retention among larger customers and ongoing focus on improving retention strategies [41][42] Question: Clarification on the $50 million revenue impact from tariffs - Management explained that the $50 million figure is based on various assumptions regarding customer behavior and market dynamics, emphasizing the uncertainty of outcomes [45][49] Question: Breakdown of revenue from China and merchant size - Management indicated that larger sellers in China are expected to be more resilient to tariffs, with a diverse range of sellers supported [60][62] Question: Potential for share gains post-tariff disruptions - Management sees significant long-term opportunities for Chinese sellers to expand into other markets, supported by their established relationships with global marketplaces [68][70] Question: Maintaining momentum in a difficult environment - Management emphasized disciplined operations and the ability to optimize expenses in response to changing market conditions [71][72] Question: Strategy for workforce management - Management expressed excitement about the growth potential in workforce management, aligning with customer needs for global teams [73][74]

Financial Performance & Growth - Payoneer's total revenue for 1Q25 was $247 million, representing an 8% year-over-year growth[109] - Revenue excluding interest income for 1Q25 was $189 million, a 16% year-over-year increase[109] - Adjusted EBITDA for 1Q25 was $65 million, with an adjusted EBITDA margin of 27%[109] - Customer funds grew by 11% year-over-year, reaching $6.6 billion[85] Customer & Regional Growth - Active Ideal Customer Profiles (ICPs) totaled 556,000 as of March 31, 2025, a 5% year-over-year increase[42, 116] - Revenue from the APAC region grew by 23% year-over-year in 1Q25[116] - Revenue from the LATAM region grew by 21% year-over-year in 1Q25[116] Product & Service Expansion - B2B SMBs revenue increased by 37% year-over-year in 1Q25[113] - Merchant services revenue increased by 96% year-over-year in 1Q25[113] - 53% of customers are using 3+ AP products in Q4'24, compared to 40% in Q1'22[32, 64] Strategy & Outlook - The company is suspending its previously issued full-year 2025 guidance due to macroeconomic uncertainty[118] - The company is targeting mid-teens revenue growth and a 25% adjusted EBITDA margin in the medium term (through 2026)[99, 100, 101]

[Payoneer First Quarter 2025 Financial Results](index=1&type=section&id=Payoneer%20First%20Quarter%202025%20Financial%20Results) Payoneer's Q1 2025 results show revenue growth and profitability, with a suspended 2025 outlook [Financial & Business Highlights](index=1&type=section&id=Financial%20%26%20Business%20Highlights) Payoneer's Q1 2025 highlights include 8% revenue growth driven by volume and take rate expansion, and strategic achievements [Q1 2025 Financial Highlights](index=1&type=section&id=Q1%202025%20Financial%20Highlights) Key financial metrics for Q1 2025 show revenue growth excluding interest income, but a decrease in net income Q1 2025 Key Financial Metrics | ($ in millions) | 1Q 2024 | 1Q 2025 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue ex. interest income | $162.9 | $188.6 | 16% | | Interest income | $65.3 | $58.0 | (11)% | | **Revenue** | **$228.2** | **$246.6** | **8%** | | Net income | $29.0 | $20.6 | (29)% | | Adjusted EBITDA | $65.2 | $65.4 | 0% | | Volume ($ in billions) | $18.5 | $19.7 | 7% | | Active ICPs ('000s) | 530 | 556 | 5% | - Revenue excluding interest income grew **16%** year-over-year, while total revenue grew **8%**. Net income decreased by **29%** YoY to **$20.6 million**[1](index=1&type=chunk)[2](index=2&type=chunk) - The take rate for SMB customers increased by **11 bps** YoY to **119 bps**, contributing to stronger revenue performance relative to volume[2](index=2&type=chunk)[3](index=3&type=chunk) [Q1 2025 Business Highlights](index=1&type=section&id=Q1%202025%20Business%20Highlights) Business highlights include strong ARPU growth, increased card usage, and a strategic acquisition in China - Average Revenue Per User (ARPU) excluding interest income grew **22%**, marking the seventh consecutive quarter of acceleration[6](index=6&type=chunk) SMB Customer Revenue Growth (YoY) | SMB Segment | Q1 2025 Revenue | YoY Growth | | :--- | :--- | :--- | | SMBs on marketplaces | $110 million | 8% | | B2B SMBs | $52 million | 37% | | Merchant Services (Checkout) | $7 million | 96% | - Spend on Payoneer cards increased **29%** YoY to **$1.4 billion**[12](index=12&type=chunk) - Customer funds grew **11%** YoY to **$6.6 billion** as of March 31, 2025[12](index=12&type=chunk) - In April 2025, Payoneer completed the acquisition of Easylink Payment Co., Ltd., a licensed China-based payment service provider, to strengthen its regulatory infrastructure and service for Chinese customers[4](index=4&type=chunk)[12](index=12&type=chunk) - The company repurchased **$17 million** of shares at an average price of **$9.04**, a slowdown from the **$51 million** repurchased in the prior year period[12](index=12&type=chunk) [2025 Outlook](index=2&type=section&id=2025%20Outlook) Payoneer suspended its full-year 2025 guidance due to uncertain global macroeconomic and trade conditions - Payoneer has suspended its full-year 2025 guidance due to macroeconomic uncertainty[7](index=7&type=chunk)[9](index=9&type=chunk) - The company faces substantial risks from the uncertain global macro and trade environment, which could negatively impact the cross-border businesses it serves[9](index=9&type=chunk) - Management remains focused on supporting customers and positioning the company to capture new opportunities that may arise from shifts in global trade and supply chains[10](index=10&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements for Q1 2025 detail revenues, net income, balance sheet, and cash flow [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The comprehensive income statement for Q1 2025 details total revenues and net income Consolidated Statements of Comprehensive Income (Unaudited) | (U.S. dollars in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | **Revenues** | **$246,617** | **$228,183** | | Total operating expenses | $217,298 | $189,807 | | **Operating income** | **$29,319** | **$38,376** | | Income before income taxes | $27,769 | $42,884 | | **Net income** | **$20,577** | **$28,974** | | Comprehensive income | $29,327 | $29,001 | - Operating expenses increased to **$217.3 million** from **$189.8 million** YoY, driven by increases across all categories, including R&D, Sales & Marketing, and G&A[20](index=20&type=chunk) [Disaggregation of Revenue](index=6&type=section&id=Disaggregation%20of%20Revenue) Revenue disaggregation details sources from customer contracts, interest income, and regional markets Revenue by Source (Unaudited) | (U.S. dollars in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Revenue from contracts with customers | $186,263 | $160,458 | | Interest income on customer balances | $57,972 | $65,268 | | **Total revenues** | **$246,617** | **$228,183** | Revenue by Primary Regional Market (Unaudited) | (U.S. dollars in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Greater China | $84,896 | $81,358 | | Europe, Middle East, and Africa | $58,893 | $59,163 | | Asia-Pacific | $51,260 | $41,582 | | Latin America | $27,873 | $23,070 | | North America | $23,695 | $23,010 | | **Total revenues** | **$246,617** | **$228,183** | - The Asia-Pacific region showed the strongest YoY revenue growth at **23.3%**, followed by Latin America at **20.8%**[23](index=23&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA](index=7&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) This section reconciles net income to Adjusted EBITDA, detailing various non-GAAP adjustments Reconciliation of Net Income to Adjusted EBITDA (Unaudited) | (U.S. dollars in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | **Net income** | **$20,577** | **$28,974** | | Depreciation and amortization | $14,390 | $9,408 | | Income taxes | $7,192 | $13,910 | | Other financial expense (income), net | $1,550 | $(2,747) | | Stock based compensation expenses | $18,755 | $15,077 | | M&A related expenses | $337 | $2,375 | | Restructuring charges | $2,630 | — | | **Adjusted EBITDA** | **$65,431** | **$65,236** | - Adjusted EBITDA remained flat YoY at approximately **$65.4 million**. Key adjustments from net income included stock-based compensation (**$18.8 million**), depreciation & amortization (**$14.4 million**), and income taxes (**$7.2 million**). A new restructuring charge of **$2.6 million** was recorded in Q1 2025[26](index=26&type=chunk) [Earnings Per Share](index=8&type=section&id=Earnings%20Per%20Share) Earnings per share for Q1 2025 show a decrease in both basic and diluted EPS YoY Earnings Per Share (Unaudited) | | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Basic EPS | $0.06 | $0.08 | | Diluted EPS | $0.05 | $0.08 | - Diluted earnings per share decreased to **$0.05** in Q1 2025 from **$0.08** in Q1 2024[28](index=28&type=chunk) [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet highlights total assets, customer funds, and shareholders' equity as of March 31, 2025 Consolidated Balance Sheet Highlights (Unaudited) | (U.S. dollars in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $524,150 | $497,467 | | Customer funds | $6,578,390 | $6,964,153 | | **Total assets** | **$7,550,162** | **$7,930,380** | | Outstanding operating balances | $6,578,390 | $6,964,153 | | **Total liabilities** | **$6,799,431** | **$7,205,590** | | **Total shareholders' equity** | **$750,731** | **$724,790** | - Total assets decreased from **$7.93 billion** at year-end 2024 to **$7.55 billion** at the end of Q1 2025, primarily due to a decrease in customer funds and outstanding operating balances[30](index=30&type=chunk) - Shareholders' equity increased to **$750.7 million** from **$724.8 million** at the end of 2024, driven by net income and other comprehensive income, partially offset by share repurchases[30](index=30&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flow statements detail operating, investing, and financing activities for the first quarter of 2025 Consolidated Cash Flow Highlights (Unaudited) | (U.S. dollars in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $53,716 | $39,510 | | Net cash used in investing activities | $(47,986) | $(114,147) | | Net cash used in financing activities | $(402,446) | $(521,113) | - Cash flow from operating activities was a net inflow of **$53.7 million**, an improvement from **$39.5 million** in the prior year period[32](index=32&type=chunk) - Net cash used in financing activities was **$402.4 million**, primarily driven by a **$385.8 million** decrease in outstanding operating balances and **$17.8 million** in common stock repurchases[32](index=32&type=chunk) [Other Information](index=2&type=section&id=Other%20Information) This section provides corporate information, forward-looking statements, and non-GAAP financial measure definitions [About Payoneer](index=2&type=section&id=About%20Payoneer) Payoneer's mission is to empower global entrepreneurs and businesses in the digital economy - Payoneer's mission is to enable entrepreneurs and businesses anywhere to participate and succeed in the digital global economy by simplifying cross-border commerce[11](index=11&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section outlines the risks and uncertainties associated with forward-looking statements in the report - The report contains forward-looking statements subject to risks and uncertainties, including geopolitical events, changes in laws or regulations, and shifts in global trade policies[13](index=13&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and explains the use of non-GAAP financial measures like Adjusted EBITDA - The company uses non-GAAP measures like Adjusted EBITDA for performance comparison. These measures are not prepared in accordance with GAAP and may not be comparable to those of other companies[14](index=14&type=chunk) - Adjusted EBITDA is defined as net income adjusted to exclude items such as M&A expenses, stock-based compensation, restructuring charges, certain financial income/expenses, taxes, and depreciation & amortization[15](index=15&type=chunk)

Core Viewpoint - Payoneer (NASDAQ: PAYO) has established a strong competitive advantage through its global payment infrastructure, which smaller players will find difficult to replicate, indicating a positive outlook for the company as long as it maintains effective execution [1]. Company Analysis - Payoneer is viewed as a company with long-term growth potential, supported by a solid foundation in fundamental analysis and a focus on identifying undervalued companies [1]. - The investment strategy emphasizes acquiring quality companies at a discount to their intrinsic value and holding them for long-term earnings and shareholder return compounding [1].

Core Viewpoint - Payoneer Global Inc. (PAYO) experienced an 11.7% increase in share price, closing at $6.59, following a significant trading volume and a recent acquisition [1][2]. Company Developments - The recent rise in Payoneer's share price is linked to the Trump administration's announcement of a 90-day halt on reciprocal tariffs for most countries [2]. - Payoneer completed the acquisition of Easylink Payment Co., Ltd., a licensed payment service provider in China, which is expected to enhance its global regulatory framework and improve service offerings in China [2]. Financial Performance Expectations - Payoneer is projected to report quarterly earnings of $0.07 per share, reflecting a year-over-year decline of 12.5%, with revenues expected to reach $242.49 million, an increase of 6.3% from the previous year [3]. - The consensus EPS estimate for Payoneer has been revised down by 3.3% over the last 30 days, indicating a negative trend in earnings estimate revisions [5]. Industry Context - Payoneer operates within the Zacks Financial Transaction Services industry, which includes other companies like Green Dot (GDOT) [5]. - Green Dot's consensus EPS estimate remains unchanged at $0.70, representing an 18.6% increase compared to the previous year, while it closed the last trading session at $7.72, up 15.2% [6].

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Financial Performance - Payoneer reported a 21% increase in transaction volume to $80.1 billion and an 18% increase in revenue to $977.7 million for the year ended December 31, 2024, compared to 2023[22]. - Revenues typically increase in the fourth quarter due to higher e-commerce sales during the holiday season, indicating seasonal fluctuations in revenue[52]. - The company recorded a net loss of $12.0 million for the year ended December 31, 2022, despite achieving net income in 2023 and 2024[143]. - Approximately 35% of the company's revenue for the year ended December 31, 2024, was generated from customers in Greater China[202]. Market Opportunities - The global e-commerce and service marketplace payouts business represents a $300 billion volume opportunity, while B2B SMBs represent a $6 trillion volume opportunity[37][38]. - The global B2B e-commerce volume is projected to reach $36 trillion by 2026, with significant growth expected in Asia Pacific, Latin America, and the Middle East[24]. - Payoneer is focused on encouraging existing customers to expand their use of its products and services to drive growth[142]. Customer Base and Operations - Payoneer has approximately 2 million active customers, with over 500,000 fitting the ideal customer profile, processing an average of over $500 monthly[49]. - Payoneer operates in over 190 countries, supported by regional sales and customer support hubs to enhance customer relationships[32]. - The company is working to acquire a locally licensed non-bank payments institution in China, with the transaction expected to close in the first half of 2025[56]. Compliance and Regulatory Risks - Payoneer is subject to extensive and complex regulations, including those related to anti-money laundering and customer verification, which may change frequently[56]. - The company has applied for various licenses, including a Payment Aggregator Cross Border license in India and a payment service provider license in Israel, to enhance its regulatory compliance[55]. - Compliance with anti-money laundering and similar regulations is essential, with failure to comply potentially resulting in penalties and increased operational costs[195]. - The company must continually update its compliance program in response to evolving regulations, which may increase costs and operational complexity[196]. Employee and Corporate Culture - The company emphasizes employee wellness and development, offering programs like a Global Employee Assistance Program and a Top Talent leadership development initiative[72][73]. - Payoneer has a total rewards strategy aimed at attracting and retaining talent, focusing on equitable compensation and benefits[74]. - The company has held its third Global Week of Good in 2024, with participation from employees in 18 countries[75]. Risks and Challenges - The company faces substantial competition in the financial services and payments industry, which could adversely affect margins and results[91]. - Cybersecurity vulnerabilities and operational disruptions could result in significant financial losses and damage to the company's reputation[97]. - The company is exposed to risks associated with changes in interest rates, which could negatively impact the market value of time deposits and U.S. Treasury Securities[99]. - The ongoing conflict in Israel, which began on October 7, 2023, could adversely affect the company's operations and revenues, although revenues from Israeli customers were insignificant for the year ended December 31, 2024[105]. Technology and Innovation - The company must continuously innovate and respond to technological changes to remain competitive, with significant investment required for new product development[85]. - The company has invested in improving its platform to offer new features, but the success of these initiatives is uncertain and critical for future growth[142]. Financial Management - The company funds its Working Capital products through balance sheet cash, but faces risks related to the availability of capital for these products[174]. - Future capital needs may require the company to seek additional financing, which may not be secured on favorable terms, potentially limiting growth and operational flexibility[175]. - The company's Working Capital products, primarily merchant capital advances, are subject to collection risk and regulatory risk, with adverse macroeconomic conditions potentially leading to lower receivables and extended repayment periods[172]. Intellectual Property and Data Protection - Payoneer relies on a combination of trade secrets, trademarks, and confidentiality agreements to protect its intellectual property, with no issued patents[76][78]. - The company is subject to evolving regulations regarding privacy and data protection, which may require substantial modifications to data processing practices[210]. - Non-compliance with data protection laws could result in fines up to the greater of €20 million or 4% of total global annual turnover[211]. Economic and Environmental Factors - Inflation has negatively impacted the purchasing power of consumers, potentially affecting the growth of the e-commerce market and the company's earnings[139]. - The company faces risks related to climate change and environmental issues, which could disrupt operations and increase compliance costs[218].

This presentation does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any security. You should not construe the contents of this presentation as legal, tax, accounting or investment advice or a recommendation. Forward-Looking Statements Certain statements in this presentation 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-look ...

Payoneer Global Inc. (NASDAQ:PAYO) Q4 2024 Earnings Conference Call February 27, 2025 8:30 AM ET Company Participants Caius Slater - Director, Investor Relations John Caplan - Chief Executive Officer Bea Ordonez - Chief Financial Officer Conference Call Participants Sanjay Sakhrani - KBW Nate Svensson - Deutsche Bank Will Nance - Goldman Sachs Cris Kennedy - William Blair Spencer James - Jefferies Daniel Krebs - Wolfe Research Operator Good morning. Thank you for standing by. Welcome to Payoneer's Fourth Qu ...