Core Insights - The article discusses Payoneer's "Global Empowerment" initiative aimed at helping Chinese enterprises expand into the U.S. and European markets amidst changing international trade environments [1][3] - The European e-commerce market is projected to exceed $760 billion by 2025 and reach $901 billion by 2028, making it a key target for Chinese businesses [1][3] - Payoneer is addressing the challenges faced by cross-border sellers, such as regulatory diversity and VAT pressures, by providing integrated resources and localized operational support [3][9] Group 1 - Payoneer launched the "Global Empowerment" plan to assist Chinese companies in navigating the U.S. and European markets [1][3] - A recent survey indicated that 88% of cross-border sellers are looking to reduce reliance on the U.S. market, with 63% targeting Europe for expansion [3][5] - The company is collaborating with partners like TikTok Shop and Amazon to share insights and resources for entering the European market [1][5] Group 2 - The European market is characterized by fragmentation, leading to diverse regulations and logistical challenges for businesses [3][7] - Payoneer is enhancing its localized service capabilities and offering a comprehensive financial stack to simplify cross-border transactions [9][10] - The company has established partnerships with over 40 global e-commerce platforms to support sellers in various markets, including North America and Europe [9][10]

Core Insights - Payoneer reported a strong financial performance for Q2 2025, with a transaction volume growth of 11% year-over-year, reaching nearly $21 billion, and revenue of $261 million, up 9% year-over-year [2][3] - The acquisition of a licensed payment institution in China, EasyLink Payment, positions Payoneer as the third foreign payment platform authorized to provide online payment services in the Chinese market [2][4] Financial Performance - Q2 2025 transaction volume reached nearly $21 billion, a year-over-year increase of 11% - Revenue for the quarter was $261 million, reflecting a 9% increase year-over-year - Small and medium-sized enterprise (SME) clients contributed $183 million, an 18% increase year-over-year, with B2C e-commerce revenue at $116 million (up 8%), B2B revenue at $58 million (up 37%), and Checkout revenue at $9 million (up 86%) [2][3] Market Position and Strategy - Payoneer has nearly 2 million active customers, with approximately 560,000 classified as high-value customers, indicating a growing proportion of valuable clients [3] - The company announced a strategic partnership with Stripe, enhancing its global payment service capabilities [3] - Payoneer's revenue from the Greater China region was approximately $86 million, maintaining a leading position among all regional markets [3] Acquisition and Regulatory Compliance - The acquisition of EasyLink Payment allows Payoneer to operate under a licensed framework in China, which is crucial for compliance in the increasingly regulated cross-border payment industry [5][6] - The acquisition is expected to lower operational costs and enhance compliance capabilities, as Payoneer integrates this license into its existing global licensing network [6][7] Industry Context - The cross-border payment industry is undergoing structural changes due to stricter regulations, prompting some smaller payment institutions to sell their licenses as a means of resource consolidation [7] - Payoneer's acquisition reflects a strategic move to build a comprehensive licensing network and compliance infrastructure globally, which is essential for serving its SME clients effectively [6][7]

Core Insights - Payoneer has partnered with Citi to launch real-time, blockchain-enabled treasury transfers, enhancing the speed, automation, and transparency of fund transfers across its global accounts [1][2][3] Group 1: Collaboration and Technology - The collaboration with Citi utilizes blockchain technology to modernize Payoneer's financial operations, reducing reliance on traditional payment methods and minimizing delays caused by banking cut-off times, holidays, and weekends [2][3] - Citi Token Services, launched in 2024, facilitates multimillion-dollar transactions and has processed billions in transaction value, providing 24/7 cross-border liquidity and payments [3] Group 2: Benefits and Efficiency - The new infrastructure is expected to simplify cross-border payments, offering real-time access and significantly improving efficiency for global clients [3] - Payoneer's integration of modern APIs and blockchain protocols allows for easy incorporation with existing treasury and payment systems, streamlining cash management and FX risk mitigation [5]

Core Viewpoint - Payoneer Global Inc. (PAYO) has seen a 2.5% increase in share price over the past four weeks, closing at $6.64, with analysts suggesting a potential upside of 44% based on a mean price target of $9.56 [1][11]. Price Targets and Analyst Estimates - The mean estimate for PAYO comprises nine short-term price targets with a standard deviation of $1.67, indicating variability among analysts [2]. - The lowest price target is $7.00, suggesting a 5.4% increase, while the highest target is $12.00, indicating an 80.7% potential increase [2]. - A low standard deviation signifies strong agreement among analysts regarding the stock's price movement [9]. Earnings Estimates and Analyst Sentiment - Analysts have shown strong agreement in revising earnings per share (EPS) estimates higher, which correlates with potential stock price increases [11]. - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 0.3%, with two estimates moving higher and no negative revisions [12]. - PAYO holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13]. Caution on Price Targets - While price targets are a common metric for investors, relying solely on them may not be prudent due to historical inaccuracies in predicting stock movements [3][7]. - Analysts often set optimistic price targets influenced by business relationships, which can lead to inflated estimates [8][10].

Core Insights - Payoneer reported a robust growth in Q2 2025, with transaction volume increasing by 11% year-over-year to nearly $21 billion [1] - The company's revenue reached $261 million, reflecting a 9% year-over-year growth, driven primarily by small and medium-sized enterprises (SMEs) [1] - Payoneer's CEO highlighted the strong performance of non-interest revenue, which grew by 16% year-over-year, showcasing the effectiveness of the company's business model and execution [1] Financial Performance - Transaction volume increased by 11% year-over-year, reaching nearly $21 billion [1] - Revenue for the quarter was $261 million, up 9% year-over-year [1] - Revenue from SME clients was $183 million, a growth of 18% year-over-year [1] - B2C e-commerce platform revenue was $116 million, an 8% increase year-over-year [1] - B2B business revenue grew by 37% to $58 million [1] - Checkout processing revenue surged by 86% to $9 million [1] Market Strategy - Payoneer launched the "Global Empowerment" market initiative to support Chinese sellers in expanding into the U.S. and other global markets [2] - The company aims to enhance its service offerings and resources to help Chinese enterprises optimize their global supply chain and business operations [2] - Payoneer is celebrating its 20th anniversary in 2025 and plans to strengthen its local services while connecting global trade resources [2] Company Overview - Payoneer is a fintech company founded in 2005, focused on enabling SMEs to conduct transactions and grow in the global market [3] - The company's mission is to allow anyone, anywhere to participate in the global digital economy [3] - Payoneer has established a comprehensive financial platform to facilitate cross-border trade for millions of SMEs, particularly in emerging markets [3]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements detail the company's financial position and performance [Condensed consolidated balance sheets (Unaudited)](index=5&type=section&id=Condensed%20consolidated%20balance%20sheets%20(Unaudited)) The balance sheets detail the company's assets, liabilities, and shareholders' equity at period-end **Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024):** | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $8,110,428 | $7,930,380 | | Total Liabilities | $7,339,523 | $7,205,590 | | Total Shareholders' Equity | $770,905 | $724,790 | | Current Customer Funds | $6,583,839 | $6,439,153 | | Non-Current Intangible Assets, net | $203,940 | $102,390 | | Treasury Stock | $(243,405) | $(193,724) | | Retained Earnings | $146,024 | $105,967 | [Condensed consolidated statements of comprehensive income (Unaudited)](index=6&type=section&id=Condensed%20consolidated%20statements%20of%20comprehensive%20income%20(Unaudited)) These statements detail revenues, expenses, and net income for the three and six-month periods **Comprehensive Income Highlights (Three Months Ended June 30):** | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenues | $260,614 | $239,520 | +$21,094 (+8.8%) | | Total Operating Expenses | $230,537 | $193,211 | +$37,326 (+19.3%) | | Operating Income | $30,077 | $46,309 | -$16,232 (-35.1%) | | Net Income | $19,480 | $32,425 | -$12,945 (-39.9%) | | Basic EPS | $0.05 | $0.09 | -$0.04 | | Diluted EPS | $0.05 | $0.09 | -$0.04 | **Comprehensive Income Highlights (Six Months Ended June 30):** | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenues | $507,231 | $467,703 | +$39,528 (+8.5%) | | Total Operating Expenses | $447,835 | $383,018 | +$64,817 (+16.9%) | | Operating Income | $59,396 | $84,685 | -$25,289 (-29.9%) | | Net Income | $40,057 | $61,399 | -$21,342 (-34.8%) | | Basic EPS | $0.11 | $0.17 | -$0.06 | | Diluted EPS | $0.10 | $0.16 | -$0.06 | [Condensed consolidated statements of changes in shareholders' equity (Unaudited)](index=7&type=section&id=Condensed%20consolidated%20statements%20of%20changes%20in%20shareholders'%20equity%20(Unaudited)) This section details changes in each component of shareholders' equity for various periods **Shareholders' Equity Changes (June 30, 2025 vs. March 31, 2025):** | Metric | March 31, 2025 (in thousands) | June 30, 2025 (in thousands) | | :--- | :--- | :--- | | Total Shareholders' Equity | $750,731 | $770,905 | | Common Stock Shares | 400,261,352 | 404,801,165 | | Treasury Stock Amount | $(210,702) | $(243,405) | | Additional Paid-in Capital | $834,745 | $859,590 | | Retained Earnings | $126,544 | $146,024 | **Shareholders' Equity Changes (June 30, 2025 vs. December 31, 2024):** | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | | :--- | :--- | :--- | | Total Shareholders' Equity | $724,790 | $770,905 | | Common Stock Shares | 395,965,588 | 404,801,165 | | Treasury Stock Amount | $(193,724) | $(243,405) | | Additional Paid-in Capital | $821,196 | $859,590 | | Retained Earnings | $105,967 | $146,024 | [Condensed consolidated statements of cash flows (Unaudited)](index=9&type=section&id=Condensed%20consolidated%20statements%20of%20cash%20flows%20(Unaudited)) This statement outlines cash inflows and outflows from operating, investing, and financing activities **Cash Flow Summary (Six Months Ended June 30):** | Activity | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $124,401 | $80,914 | +$43,487 | | Net cash used in investing activities | $(133,511) | $(965,298) | +$831,787 | | Net cash provided by (used in) financing activities | $2,240 | $(443,475) | +$445,715 | | Net change in cash, cash equivalents, restricted cash and customer funds | $(825) | $(1,330,170) | +$1,329,345 | **Customer Funds Reconciliation (June 30):** | Item | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $497,144 | $575,730 | | Current restricted cash | $8,606 | $10,653 | | Non-current restricted cash | $20,948 | $6,018 | | Current customer funds | $6,583,839 | $5,812,105 | | Non-current customer funds | $450,000 | $225,000 | | Total cash, cash equivalents, restricted cash and customer funds | $5,657,385 | $5,688,197 | [Notes to condensed consolidated financial statements (Unaudited)](index=11&type=section&id=Notes%20to%20condensed%20consolidated%20financial%20statements%20(Unaudited)) This section provides detailed explanations and disclosures for the financial statements [NOTE 1 – GENERAL OVERVIEW](index=11&type=section&id=NOTE%201%20%E2%80%93%20GENERAL%20OVERVIEW) Payoneer provides a cross-border payments platform enabling global commerce for SMBs - Payoneer empowers global commerce for SMBs through its cross-border payments platform[31](index=31&type=chunk) - Offers a global financial stack including AR/AP, funds management, working capital, and multicurrency accounts[31](index=31&type=chunk) - Provides a fully hosted service with various payment options and minimal integration[31](index=31&type=chunk) [NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%202%20%E2%80%93%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the principles of consolidation, basis of presentation, and use of estimates - Financial statements are prepared under **U.S. GAAP**, consolidating Payoneer Global Inc and its wholly-owned subsidiaries[32](index=32&type=chunk) - Management uses estimates for items like capital advance receivables, income taxes, goodwill, revenue recognition, stock-based compensation, and M&A contingent consideration[34](index=34&type=chunk) - Indefinite-lived intangible assets (e.g, payment licenses from acquisitions) are not amortized but tested for impairment annually[39](index=39&type=chunk) - The company corrected a prior-period error in classifying **$225 million** of customer funds as current instead of non-current and **$300 million** of term deposits as cash flow basis instead of investing cash flows, which was deemed immaterial to previously issued statements[41](index=41&type=chunk)[42](index=42&type=chunk) - New FASB guidance (ASU 2023-09 and ASU 2024-03) on income tax and cost disclosures are being evaluated for potential impact[44](index=44&type=chunk)[45](index=45&type=chunk) [NOTE 3 – ACQUISITIONS](index=14&type=section&id=NOTE%203%20%E2%80%93%20ACQUISITIONS) Payoneer completed two acquisitions to strengthen its China payment services and global financial stack - **PayEco Acquisition (April 9, 2025):** - Acquired 100% equity for **$76,074 thousand**[46](index=46&type=chunk) - Consideration included a **$97,357 thousand** license intangible asset and a **$23,783 thousand** deferred tax liability[78](index=78&type=chunk) - Strengthens global regulatory infrastructure and China-based customer services[46](index=46&type=chunk) - **Skuad Acquisition (August 5, 2024):** - Acquired 100% equity for **$69,388 thousand**[47](index=47&type=chunk) - Consideration included **$61,099 thousand** cash and **$6,974 thousand** contingent consideration[50](index=50&type=chunk) - Goodwill of **$57,896 thousand** recognized, primarily for expected synergies[51](index=51&type=chunk) - Accelerates strategy to deliver a comprehensive financial stack for global SMBs[47](index=47&type=chunk) [NOTE 4 – CAPITAL ADVANCE ("CA") RECEIVABLES](index=17&type=section&id=NOTE%204%20%E2%80%93%20CAPITAL%20ADVANCE%20(%22CA%22)%20RECEIVABLES) The company provides capital advances to sellers by purchasing future receivables **Capital Advance Receivables (Six Months Ended June 30):** | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | CA extended to customers | $167,143 | $154,357 | | CA collected from customers | $189,081 | $147,654 | | Charge-offs, net of recoveries | $2,123 | $2,288 | | Ending CA receivables, gross | $36,685 | $54,923 | | Allowance for CA losses | $4,875 | $5,445 | | CA receivables, net | $31,810 | $49,478 | - Loss rates applied to the CA portfolio ranged from **0.87% to 2.02%** as of June 30, 2025, and December 31, 2024[55](index=55&type=chunk) [NOTE 5 – CUSTOMER FUNDS AND INVESTMENTS](index=18&type=section&id=NOTE%205%20%E2%80%93%20CUSTOMER%20FUNDS%20AND%20INVESTMENTS) Payoneer invests customer funds in available-for-sale debt securities and term deposits **Customer Funds and Investments (June 30, 2025 vs. December 31, 2024):** | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $5,229,065 | $5,189,216 | | Available-for-sale debt securities | $1,279,774 | $1,174,937 | | Term deposits (current) | $75,000 | $75,000 | | Term deposits (non-current) | $450,000 | $525,000 | | Total customer funds | $7,033,839 | $6,964,153 | - As of June 30, 2025, available-for-sale debt securities included **$7,362 thousand in unrealized gains** and **$54 thousand in unrealized losses**, net of tax[58](index=58&type=chunk) - **$346,405 thousand** of available-for-sale debt securities mature within one year, and **$933,369 thousand** mature between one and five years[60](index=60&type=chunk) [NOTE 6 – DERIVATIVES AND HEDGING](index=19&type=section&id=NOTE%206%20%E2%80%93%20DERIVATIVES%20AND%20HEDGING) Payoneer uses derivative instruments to hedge against interest rate and foreign currency risks **Derivative Assets (June 30, 2025 vs. December 31, 2024):** | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total current derivative assets | $7,004 | $2,034 | | Non-current interest rate floors | $24,343 | $17,692 | | Total derivative assets | $31,347 | $19,726 | - The company recognized **$9,730 thousand** (six months) in unrealized gains, net of tax, on derivative instruments designated as cash flow hedges in OCI for the period ended June 30, 2025[65](index=65&type=chunk) - Interest rate floors hedge interest income on **$1.9 billion** notional investment of customer funds in floating rate cash equivalent instruments[64](index=64&type=chunk) [NOTE 7 – FAIR VALUE](index=20&type=section&id=NOTE%207%20%E2%80%93%20FAIR%20VALUE) This note details the fair value measurements of financial assets and liabilities **Financial Assets at Fair Value (June 30, 2025):** | Category | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :--- | :--- | :--- | :--- | :--- | | U.S. Treasury Securities | $1,279,774 | $0 | $0 | $1,279,774 | | Current Derivative Assets | $0 | $7,004 | $0 | $7,004 | | Non-Current Derivative Assets | $0 | $24,343 | $0 | $24,343 | | **Total Financial Assets** | **$1,279,774** | **$31,347** | **$0** | **$1,311,121** | **Financial Liabilities at Fair Value (June 30, 2025):** | Category | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Skuad acquisition earnout liability | $0 | $0 | $9,119 | $9,119 | | PayEco deferred payment liability (current) | $0 | $0 | $3,754 | $3,754 | | PayEco deferred payment liability (non-current) | $0 | $0 | $8,256 | $8,256 | | **Total Financial Liabilities** | **$0** | **$0** | **$21,129** | **$21,129** | - The fair values of cash, customer funds, receivables, and payables approximated their carrying values[70](index=70&type=chunk) [NOTE 8 - OTHER CURRENT ASSETS](index=21&type=section&id=NOTE%208%20-%20OTHER%20CURRENT%20ASSETS) Other current assets decreased primarily due to a decrease in prepaid income taxes and income receivable **Other Current Assets (June 30, 2025 vs. December 31, 2024):** | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Prepaid expenses | $30,396 | $21,429 | | Income receivable | $22,952 | $24,654 | | Prepaid income taxes | $11,921 | $33,476 | | Derivative assets | $5,440 | $1,295 | | Total Other current assets | $77,227 | $88,210 | [NOTE 9 – PROPERTY, EQUIPMENT AND SOFTWARE](index=21&type=section&id=NOTE%209%20%E2%80%93%20PROPERTY,%20EQUIPMENT%20AND%20SOFTWARE) Net property, equipment, and software increased, driven by additions to computers and software **Property, Equipment and Software, Net (June 30, 2025 vs. December 31, 2024):** | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Computers, software and peripheral equipment | $48,468 | $43,003 | | Total Property, equipment and software | $64,334 | $58,135 | | Accumulated depreciation | $(46,454) | $(42,082) | | Property, equipment and software, net | $17,880 | $16,053 | - Depreciation expense for the three months ended June 30, 2025, was **$2,559 thousand**, up from **$2,098 thousand** in the prior year[74](index=74&type=chunk) [NOTE 10 –INTANGIBLE ASSETS](index=21&type=section&id=NOTE%2010%20%E2%80%93INTANGIBLE%20ASSETS) Net intangible assets significantly increased due to the acquisition of a license from PayEco **Intangible Assets, Net (June 30, 2025 vs. December 31, 2024):** | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Internal use software, net | $95,599 | $88,816 | | Acquired developed technology, net | $4,889 | $7,158 | | Customer relationships, net | $6,095 | $6,416 | | License (indefinite-lived), net | $97,357 | $0 | | Total Intangible assets, net | $203,940 | $102,390 | - The **$97,357 thousand** license intangible asset from the PayEco acquisition is classified as indefinite-lived and not amortized[78](index=78&type=chunk) - Amortization expense for the three months ended June 30, 2025, was **$12,994 thousand**, up from **$8,614 thousand** in the prior year[79](index=79&type=chunk) - Expected future finite-lived intangible asset amortization is **$88,367 thousand**, with **$24,570 thousand** expected in the remainder of 2025[81](index=81&type=chunk) [NOTE 11 - OTHER PAYABLES](index=23&type=section&id=NOTE%2011%20-%20OTHER%20PAYABLES) Other payables increased due to higher commissions payable and acquisition-related deferred payments **Other Payables (June 30, 2025 vs. December 31, 2024):** | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Employee related compensation | $66,616 | $81,482 | | Commissions payable | $20,882 | $18,057 | | Current portion of Skuad acquisition earnout liability | $9,119 | $723 | | Current portion of PayEco acquisition deferred payment liability | $3,754 | $0 | | Total Other payables | $131,952 | $129,621 | [NOTE 12 – OTHER LONG-TERM LIABILITIES](index=24&type=section&id=NOTE%2012%20%E2%80%93%20OTHER%20LONG-TERM%20LIABILITIES) Other long-term liabilities increased mainly due to reserves for uncertain tax positions and lease liabilities **Other Long-Term Liabilities (June 30, 2025 vs. December 31, 2024):** | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Reserves for uncertain income tax positions | $47,539 | $39,633 | | Long-term lease liabilities | $39,315 | $15,645 | | Non-current portion of PayEco acquisition deferred payment liability | $8,256 | $0 | | Non-current portion of Skuad acquisition earnout liability | $0 | $8,021 | | Total other long-term liabilities | $106,211 | $73,043 | [NOTE 13 – WARRANTS AND SHAREHOLDERS' EQUITY](index=24&type=section&id=NOTE%2013%20%E2%80%93%20WARRANTS%20AND%20SHAREHOLDERS'%20EQUITY) This note details the company's share repurchase program and changes in accumulated other comprehensive income - **Share Repurchase Program:** - Board authorized an increase to the repurchase program to **$300 million**, effective August 6, 2025, expiring December 31, 2027[85](index=85&type=chunk)[170](index=170&type=chunk) - During the six months ended June 30, 2025, the company repurchased **6,692,475 shares for $49,681 thousand** (weighted average cost $7.43/share)[86](index=86&type=chunk) - As of June 30, 2025, **$54,070 thousand** remained available for future repurchases[86](index=86&type=chunk) - **Warrants:** - In September 2024, the company completed a tender offer to repurchase all outstanding warrants at **$0.78 per warrant**[87](index=87&type=chunk) - A total of **24,030,937 warrants** were repurchased for **$18,744 thousand**, resulting in a **$13,217 thousand loss**[88](index=88&type=chunk) **Accumulated Other Comprehensive Income (Loss) (Six Months Ended June 30, 2025):** | Component | Beginning Balance (in thousands) | Net Current Period OCI (in thousands) | Ending Balance (in thousands) | | :--- | :--- | :--- | :--- | | Foreign currency translation adjustments | $(242) | $(103) | $(345) | | Unrealized gains on available-for-sale debt securities | $(322) | $7,630 | $7,308 | | Unrealized gains (losses) on cash flow hedges | $(12,045) | $9,730 | $(2,315) | | **Total** | **$(12,609)** | **$17,257** | **$4,648** | [NOTE 14 – COMMITMENTS AND CONTINGENCIES](index=28&type=section&id=NOTE%2014%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) Payoneer is subject to various legal and regulatory matters in the ordinary course of business - The company is subject to various laws and regulations, and noncompliance could lead to fines, penalties, and reputational harm[95](index=95&type=chunk) - A **$2,250 thousand reserve** has been established for funds unrecoverable from a Mexican banking entity whose license was revoked in 2021[96](index=96&type=chunk) - Ongoing disputes and regulatory inquiries reflect increasing global regulatory focus on the industry[97](index=97&type=chunk)[98](index=98&type=chunk) [NOTE 15 – REVENUE](index=29&type=section&id=NOTE%2015%20%E2%80%93%20REVENUE) Total revenues grew, driven by growth in SMB revenue, partially offset by lower interest income **Revenue Breakdown (Three Months Ended June 30):** | Category | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Revenue from contracts with customers | $200,496 | $171,243 | | Interest income on customer balances | $58,334 | $65,821 | | Capital advance income | $1,784 | $2,456 | | **Total Revenues** | **$260,614** | **$239,520** | **Revenue Breakdown (Six Months Ended June 30):** | Category | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Revenue from contracts with customers | $386,759 | $331,701 | | Interest income on customer balances | $116,306 | $131,089 | | Capital advance income | $4,166 | $4,913 | | **Total Revenues** | **$507,231** | **$467,703** | **Revenue by Primary Regional Market (Six Months Ended June 30, 2025):** | Region | Revenue (in thousands) | | :--- | :--- | | Greater China | $170,809 | | Europe, Middle East, and Africa | $126,289 | | Asia-Pacific | $105,022 | | Latin America | $56,756 | | North America | $48,355 | [NOTE 16 - TRANSACTION COSTS](index=30&type=section&id=NOTE%2016%20-%20TRANSACTION%20COSTS) Transaction costs increased due to higher bank, processor, and network fees **Transaction Costs (Three Months Ended June 30):** | Category | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Bank and processor fees | $30,684 | $25,476 | | Network fees | $7,358 | $5,680 | | Chargebacks and operational losses | $1,076 | $3,689 | | **Total Transaction Costs** | **$40,566** | **$36,961** | **Transaction Costs (Six Months Ended June 30):** | Category | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Bank and processor fees | $59,342 | $49,855 | | Network fees | $13,826 | $10,716 | | Chargebacks and operational losses | $3,450 | $5,576 | | **Total Transaction Costs** | **$79,915** | **$70,927** | - The increase in transaction costs for the six months outpaced total volume growth due to a shift towards products with higher cost per transaction[149](index=149&type=chunk) [NOTE 17 – SEGMENT INFORMATION](index=30&type=section&id=NOTE%2017%20%E2%80%93%20SEGMENT%20INFORMATION) Payoneer operates as a single reportable segment, with performance evaluated based on consolidated net income - The company operates in **one segment** and has one reportable segment[106](index=106&type=chunk) - CODM (CEO and CFO) review consolidated net income for evaluating ongoing operations, internal planning, forecasting, and strategic investment decisions[107](index=107&type=chunk) **Consolidated Net Income (Six Months Ended June 30):** | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Revenue | $507,231 | $467,703 | | Less: Total Operating Expenses (sum of listed items) | $(447,835) | $(383,018) | | Income taxes | $(17,562) | $(29,776) | | Other segment items (Financial income/expense, net) | $(1,777) | $6,490 | | **Net income (loss)** | **$40,057** | **$61,399** | [NOTE 18 – STOCK-BASED COMPENSATION](index=31&type=section&id=NOTE%2018%20%E2%80%93%20STOCK-BASED%20COMPENSATION) This note details stock option, RSU, and PSU activity, including grants, exercises, and forfeitures **Stock Options Activity (Six Months Ended June 30, 2025):** | Metric | Options | | :--- | :--- | | Outstanding at December 31, 2024 | 11,560,158 | | Exercised | (2,267,422) | | Forfeited | (144,900) | | Outstanding at June 30, 2025 | 9,147,836 | | Exercisable at June 30, 2025 | 8,283,157 | **RSU and PSU Activity (Six Months Ended June 30, 2025):** | Metric | Units | | :--- | :--- | | Outstanding December 31, 2024 | 29,163,413 | | Granted | 7,798,271 | | Vested | (5,889,804) | | Forfeited | (1,873,969) | | Outstanding June 30, 2025 | 27,982,965 | - Total stock-based compensation expense for the six months ended June 30, 2025, was **$38,814 thousand**, up from **$28,742 thousand** in the prior year[119](index=119&type=chunk) [NOTE 19 - INCOME TAXES](index=32&type=section&id=NOTE%2019%20-%20INCOME%20TAXES) Income tax expense decreased due to a significant U.S. tax benefit for foreign customer income - **Effective tax rate was 30%** for the six months ended June 30, 2025, compared to 33% in 2024[121](index=121&type=chunk) - The decrease in income tax expense was driven by a **$12.4 million reduction** in U.S. federal current income tax expense due to benefits for foreign customer income and **$3.0 million** in deferred tax benefits[164](index=164&type=chunk) - This was partially offset by a **$4.0 million increase** in the provision for uncertain tax positions[164](index=164&type=chunk) - The company maintains a full valuation allowance on deferred tax assets in Singapore and Germany[122](index=122&type=chunk) - The "One Big Beautiful Bill Act" enacted on July 4, 2025, is not expected to have a material impact for the period ended June 30, 2025[165](index=165&type=chunk) [NOTE 20 – NET EARNINGS PER SHARE](index=33&type=section&id=NOTE%2020%20%E2%80%93%20NET%20EARNINGS%20PER%20SHARE) Basic and diluted net earnings per share decreased, reflecting lower net income **Net Earnings Per Share (Six Months Ended June 30):** | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net income (in thousands) | $40,057 | $61,399 | | Weighted average common shares outstanding — Basic | 368,185,088 | 357,795,857 | | Weighted average common shares outstanding — Diluted | 385,250,558 | 376,727,575 | | Basic earnings per share | $0.11 | $0.17 | | Diluted earnings per share | $0.10 | $0.16 | - Certain RSUs, PSUs, Earn-Out Shares, and options were excluded from diluted EPS calculation as their effect was antidilutive or conditions were not met[125](index=125&type=chunk) [NOTE 21 – SUBSEQUENT EVENTS](index=33&type=section&id=NOTE%2021%20%E2%80%93%20SUBSEQUENT%20EVENTS) The Board of Directors increased the share repurchase authorization to $300 million - Share repurchase authorization increased to **$300 million**, effective August 6, 2025, expiring December 31, 2027[126](index=126&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, results of operations, business drivers, and macroeconomic impacts [Overview](index=34&type=section&id=Overview) Payoneer enables global commerce for SMBs through its cross-border payments platform and financial stack - Payoneer's core value proposition is simplifying cross-border business for SMBs, especially in emerging markets[130](index=130&type=chunk) - Revenues are primarily generated from transaction fees and interest income on customer funds[131](index=131&type=chunk) - Strategy focuses on growing high-value customers, improving retention, and increasing wallet share through new products[131](index=131&type=chunk) - Volume processed on the platform was **$20.7 billion for Q2 2025 (up 11% YoY)** and **$40.4 billion for H1 2025 (up 9% YoY)**[132](index=132&type=chunk)[189](index=189&type=chunk) - Future investments will focus on enhancing the global platform, new products, regulatory footprint, and strategic acquisitions[133](index=133&type=chunk) [Key Developments and Trends](index=36&type=section&id=Key%20Developments%20and%20Trends) This section discusses the impact of macroeconomic conditions and recent strategic acquisitions [Macroeconomic Conditions](index=36&type=section&id=Macroeconomic%20Conditions) Macroeconomic conditions, including interest rate fluctuations, continue to impact Payoneer's business - Macroeconomic conditions (interest rates, trade policies, geopolitical events) impact customer spending and platform volume[135](index=135&type=chunk) - Customer funds on the platform reached **$7.0 billion** as of June 30, 2025[136](index=136&type=chunk) - A **100 basis point cut** in the U.S. Federal Reserve benchmark interest rate in 2024 is expected to negatively impact interest income revenue[136](index=136&type=chunk) - Payoneer invested **$1.8 billion** of customer funds in debt securities and term deposits and purchased interest rate derivative contracts for **$1.9 billion** to hedge against declining interest rates[136](index=136&type=chunk) [Impact of Israel's Conflicts in the Middle East](index=36&type=section&id=Impact%20of%20Israel's%20Conflicts%20in%20the%20Middle%20East) Ongoing conflicts in the Middle East have not materially impacted Payoneer's operations - Ongoing conflicts in the Middle East have not materially impacted business operations or customer support[137](index=137&type=chunk) - Approximately **52% of global employees** and **78% of R&D resources** are located in Israel[137](index=137&type=chunk) - Revenue from Israeli customers was insignificant for the periods ended June 30, 2025[138](index=138&type=chunk) - The company monitors the situation and has business continuity plans and redundant technology infrastructure outside Israel[137](index=137&type=chunk) [Impact of the war in Ukraine](index=38&type=section&id=Impact%20of%20the%20war%20in%20Ukraine) Payoneer ceased services in Russia and limited services to Belarus, with stable revenues from Ukraine - Ceased services in Russia and limited services to Belarus in 2022 due to sanctions[141](index=141&type=chunk) - Ukraine and Belarus combined accounted for **less than 10% of total revenue** for the three and six months ended June 30, 2025[141](index=141&type=chunk) - Revenues in Ukraine have remained relatively stable[141](index=141&type=chunk) [Mergers & Acquisitions](index=38&type=section&id=Mergers%20&%20Acquisitions) Payoneer completed two key acquisitions to enhance China-based services and its global financial stack - Acquired PayEco on April 9, 2025, to strengthen China-based payment services and regulatory infrastructure[142](index=142&type=chunk) - Acquired Skuad on August 5, 2024, to accelerate the delivery of a comprehensive financial stack for global SMBs[143](index=143&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) This section provides a detailed period-to-period comparison of Payoneer's consolidated financial performance **Financial Performance Summary (Three Months Ended June 30):** | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Revenues | $260,614 | $239,520 | | Total operating expenses | $230,537 | $193,211 | | Operating income | $30,077 | $46,309 | | Income before income taxes | $29,850 | $48,291 | | Net income | $19,480 | $32,425 | **Financial Performance Summary (Six Months Ended June 30):** | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Revenues | $507,231 | $467,703 | | Total operating expenses | $447,835 | $383,018 | | Operating income | $59,396 | $84,685 | | Income before income taxes | $57,619 | $91,175 | | Net income | $40,057 | $61,399 | [Revenues](index=40&type=section&id=Revenues) Revenues increased, driven by SMB revenue growth, partially offset by lower interest income - Revenues for Q2 2025 increased by **$21.1 million (9%)** to **$260.6 million** YoY[148](index=148&type=chunk) - Revenues for H1 2025 increased by **$39.5 million (8%)** to **$507.2 million** YoY[148](index=148&type=chunk) - SMB revenue growth was driven by B2B SMBs (+$15.7M Q2, +$29.8M H1), marketplace sellers (+$8.5M Q2, +$16.4M H1), and DTC sellers (+$4.0M Q2, +$7.5M H1)[148](index=148&type=chunk) - Offset by a decrease in interest income on customer balances ($-7.5M Q2, $-14.8M H1) due to modestly lower interest rates[148](index=148&type=chunk) [Transaction costs](index=40&type=section&id=Transaction%20costs) Transaction costs increased due to higher bank, processor, and network fees - Transaction costs for Q2 2025 increased by **$3.6 million (10%)** to **$40.6 million** YoY[148](index=148&type=chunk) - Transaction costs for H1 2025 increased by **$9.0 million (13%)** to **$79.9 million** YoY[149](index=149&type=chunk) - Increases driven by bank and processor fees (+$5.2M Q2, +$9.5M H1) and card network fees (+$1.7M Q2, +$3.1M H1)[148](index=148&type=chunk)[149](index=149&type=chunk) - Offset by decreases in chargebacks and operational losses ($-2.6M Q2, $-2.1M H1)[148](index=148&type=chunk)[149](index=149&type=chunk) - H1 transaction costs outpaced total volume increase due to a shift towards higher cost-per-transaction products[149](index=149&type=chunk) [Other operating expenses](index=40&type=section&id=Other%20operating%20expenses) Other operating expenses increased primarily due to higher information technology expenses - Other operating expenses for Q2 2025 increased by **$1.5 million (4%)** to **$42.7 million** YoY, driven by a **$2.1 million** increase in IT expenses[150](index=150&type=chunk) - Other operating expenses for H1 2025 increased by **$2.8 million (3%)** to **$84.4 million** YoY, driven by a **$3.2 million** increase in IT expenses[151](index=151&type=chunk) - Partially offset by a **$1.5 million** decrease in reserves for regulatory matters (Q2 & H1) and a **$1.3 million** decrease in third-party contractor expenses (H1)[150](index=150&type=chunk)[151](index=151&type=chunk) [Research and development expenses](index=40&type=section&id=Research%20and%20development%20expenses) R&D expenses increased significantly due to higher employee compensation and contractor expenses - R&D expenses for Q2 2025 increased by **$9.8 million (36%)** to **$37.4 million** YoY, driven by employee compensation (+$6.3M), third-party contractors (+$2.4M), and IT expenses (+$1.1M)[152](index=152&type=chunk) - R&D expenses for H1 2025 increased by **$15.0 million (25%)** to **$74.7 million** YoY, driven by employee compensation (+$10.2M), third-party contractors (+$3.1M), and IT expenses (+$1.8M)[153](index=153&type=chunk) - Partially offset by a **$1.2 million** increase in capitalized employee compensation costs for internal use software (H1)[153](index=153&type=chunk) [Sales and marketing expenses](index=40&type=section&id=Sales%20and%20marketing%20expenses) Sales and marketing expenses increased due to higher employee compensation and marketing expenditures - Sales and marketing expenses for Q2 2025 increased by **$6.7 million (13%)** to **$57.3 million** YoY, driven by employee compensation (+$3.0M) and marketing efforts (+$2.8M)[154](index=154&type=chunk) - Sales and marketing expenses for H1 2025 increased by **$11.5 million (11%)** to **$112.0 million** YoY, driven by employee compensation (+$5.5M) and marketing spend (+$5.0M)[155](index=155&type=chunk) [General and administrative expenses](index=42&type=section&id=General%20and%20administrative%20expenses) G&A expenses increased significantly due to higher employee compensation and legal expenses - G&A expenses for Q2 2025 increased by **$10.9 million (42%)** to **$37.0 million** YoY, driven by employee compensation (+$5.4M) and third-party legal expenses (+$1.9M)[158](index=158&type=chunk) - G&A expenses for H1 2025 increased by **$16.6 million (33%)** to **$66.9 million** YoY, driven by employee compensation (+$10.6M) and consulting expenses (+$1.8M)[159](index=159&type=chunk) [Depreciation and amortization expenses](index=42&type=section&id=Depreciation%20and%20amortization%20expenses) Depreciation and amortization expenses increased primarily due to increased amortization of internal use software - Depreciation and amortization expenses for Q2 2025 increased by **$4.8 million (45%)** to **$15.6 million** YoY[160](index=160&type=chunk) - Depreciation and amortization expenses for H1 2025 increased by **$9.8 million (49%)** to **$29.9 million** YoY[160](index=160&type=chunk) - Mainly driven by increased amortization of internal use software[160](index=160&type=chunk) [Financial income and expense, net](index=42&type=section&id=Financial%20income%20and%20expense,%20net) The company shifted to a net financial expense due to reduced corporate interest income - Net financial expense for Q2 2025 was **$(0.2) million**, a decrease of **$2.2 million (111%)** from prior-year income[161](index=161&type=chunk) - Net financial expense for H1 2025 was **$(1.8) million**, a decrease of **$8.3 million (127%)** from prior-year income[162](index=162&type=chunk) - Primarily driven by a reduction in corporate interest income ($-4.1M Q2, $-8.1M H1) and the non-recurrence of warrant fair value gains ($-1.0M Q2, $-2.8M H1)[161](index=161&type=chunk)[162](index=162&type=chunk) - Partially offset by a decrease in exchange rate losses (+$3.6M Q2, +$3.6M H1)[161](index=161&type=chunk)[162](index=162&type=chunk) [Income taxes](index=42&type=section&id=Income%20taxes) Income tax expense decreased due to a significant U.S. tax benefit for foreign customer income - Income tax expense for Q2 2025 decreased by **$5.5 million (35%)** to **$10.4 million** YoY[163](index=163&type=chunk) - Income tax expense for H1 2025 decreased by **$12.2 million (41%)** to **$17.6 million** YoY[164](index=164&type=chunk) - Driven by a decrease in U.S. federal current income tax expense ($-6.7M Q2, $-12.4M H1) due to benefits for foreign customer income[163](index=163&type=chunk)[164](index=164&type=chunk) - Also benefited from deferred tax benefits (+$2.3M Q2, +$3.0M H1) related to stock-based compensation and R&D capitalization[163](index=163&type=chunk)[164](index=164&type=chunk) - Offset by an increase in the provision for uncertain tax positions (+$5.1M Q2, +$4.0M H1)[163](index=163&type=chunk)[164](index=164&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) Existing cash and operating cash flows are sufficient for the next twelve months [Sources of Liquidity](index=44&type=section&id=Sources%20of%20Liquidity) Current cash and operating cash flows will cover working capital and capital expenditures - As of June 30, 2025, cash and cash equivalents totaled **$497.1 million**[169](index=169&type=chunk) - Existing cash and operating cash flows are expected to be sufficient for the next twelve months[168](index=168&type=chunk) [Current and Future Cash Requirements](index=44&type=section&id=Current%20and%20Future%20Cash%20Requirements) The Board increased the share repurchase program authorization to $300 million - Share repurchase program authorized amount increased to **$300 million**, effective August 6, 2025, expiring December 31, 2027[170](index=170&type=chunk) - During H1 2025, **$49.7 million** was used to repurchase **6,692,475 shares**[171](index=171&type=chunk) - **$54.1 million** remained available for future repurchases as of June 30, 2025[171](index=171&type=chunk) [Cash Flows](index=44&type=section&id=Cash%20Flows) Operating cash flow increased, investing cash use decreased, and financing activities shifted to a net provide **Cash Flow Summary (Six Months Ended June 30):** | Activity | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $124,401 | $80,914 | | Net cash used in investing activities | $(133,511) | $(965,298) | | Net cash provided by (used in) financing activities | $2,240 | $(443,475) | | Net change in cash, cash equivalents, restricted cash and customer funds | $(825) | $(1,330,170) | [Operating Activities](index=46&type=section&id=Operating%20Activities) Net cash from operating activities increased, driven by changes in operating assets and liabilities - Net cash provided by operating activities increased by **$43.5 million** to **$124.4 million** for H1 2025[176](index=176&type=chunk) - Changes in operating assets and liabilities contributed a **$53.3 million increase**, mainly from higher capital advance collections (+$28.4M) and a one-time cash tax refund (+$24.2M)[177](index=177&type=chunk)[178](index=178&type=chunk) - Non-cash items increased operating cash flows by **$11.6 million**, primarily due to higher depreciation & amortization (+$9.8M) and stock-based compensation (+$10.1M) addbacks[180](index=180&type=chunk) - Offset by a **$21.3 million decrease** in net income[182](index=182&type=chunk) [Investing Activities](index=46&type=section&id=Investing%20Activities) Net cash used in investing activities decreased significantly due to a shift in investment strategy - Net cash used in investing activities decreased by **$831.8 million** to **$133.5 million** for H1 2025[183](index=183&type=chunk) - Prior year included **$934.2 million** net purchases of U.S. Treasury securities and term deposits, while current period had **$17.5 million** net purchases[184](index=184&type=chunk) - Partially offset by a **$44.6 million** increase in customer funds in-transit and **$33.1 million** cash paid for the PayEco acquisition[184](index=184&type=chunk) [Financing Activities](index=46&type=section&id=Financing%20Activities) Financing activities shifted to a net cash provide, driven by an increase in customer balances - Net cash provided by financing activities was **$2.2 million** for H1 2025, a **$456.6 million increase** from prior year's net cash used[185](index=185&type=chunk) - Reflects a **$47.5 million increase** in customer balances and **$48.9 million lower** share repurchases compared to the prior year[185](index=185&type=chunk) [Key Metrics and Non-GAAP Financial Measures](index=48&type=section&id=Key%20Metrics%20and%20Non-GAAP%20Financial%20Measures) Management uses Volume, Revenue, and non-GAAP Adjusted EBITDA to evaluate business performance [Volume](index=48&type=section&id=Volume) Volume grew, driven by growth in SMBs on marketplaces, B2B SMBs, and enterprise partners **Volume (in millions):** | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three months ended June 30 | $20,688 | $18,713 | | Six months ended June 30 | $40,363 | $37,169 | - Volume grew **11%** for the three months ended June 30, 2025, and **9%** for the six months ended June 30, 2025, compared to the prior-year periods[189](index=189&type=chunk) - Growth driven by SMBs selling on marketplaces, strong growth in B2B SMBs, and volumes processed for enterprise partners, including in the travel segment[189](index=189&type=chunk) [Revenue](index=48&type=section&id=Revenue) Revenue is primarily generated from transaction fees and interest income on customer funds - Revenue is generated mainly from transaction fees (withdrawals, usage, B2B services, Checkout) and interest income on customer funds[190](index=190&type=chunk) - Revenue can be impacted by customer size, product mix, domestic vs cross-border transactions, geographic region, and pricing/interest rates[191](index=191&type=chunk) [Adjusted EBITDA](index=49&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA, a non-GAAP measure, is used by management to evaluate operating performance **Adjusted EBITDA (Three Months Ended June 30):** | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net income | $19,480 | $32,425 | | EBITDA | $45,630 | $58,027 | | Adjusted EBITDA | $66,425 | $72,778 | **Adjusted EBITDA (Six Months Ended June 30):** | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net income | $40,057 | $61,399 | | EBITDA | $89,339 | $107,572 | | Adjusted EBITDA | $131,856 | $138,013 | [Critical Accounting Policies and Estimates](index=49&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section refers to the company's Annual Report on Form 10-K for detailed discussion - For detailed information, refer to the Annual Report on Form 10-K filed on February 27, 2025[197](index=197&type=chunk) [Recent Accounting Pronouncements](index=49&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for a description of recently issued accounting pronouncements - Description of recently issued accounting pronouncements is in Note 2 of the unaudited condensed consolidated financial statements[198](index=198&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Payoneer is exposed to market risks from interest rate changes and foreign currency fluctuations [Interest Rate Sensitivity](index=51&type=section&id=Interest%20Rate%20Sensitivity) The company uses interest rate floor contracts to hedge against declining interest rates - Most cash, cash equivalents, and customer funds are in short-term instruments, limiting fair value sensitivity to interest rates[201](index=201&type=chunk) - **$1.8 billion** in term deposits and U.S. Treasury Securities are sensitive to interest rate changes[201](index=201&type=chunk) - Interest rate floor contracts on **$1.9 billion** of customer funds are used to hedge against declining interest rates[202](index=202&type=chunk) - A hypothetical **1% increase or decrease** in interest rates could materially affect revenues and earnings[202](index=202&type=chunk) [Foreign Currency Risk](index=51&type=section&id=Foreign%20Currency%20Risk) Payoneer is exposed to foreign currency risk from operating expenses and customer funds - Foreign currency exposure includes operating expenses (e.g, New Israeli Shekels) and customer funds in various global currencies (e.g, Euro, JPY, CNY)[203](index=203&type=chunk)[205](index=205&type=chunk) - Foreign currency forward contracts and net purchased options are used as cash flow hedges[203](index=203&type=chunk) - A hypothetical **10% strengthening or weakening** of the U.S. dollar against the New Israeli Shekel could materially impact unrealized gains/losses in AOCI[204](index=204&type=chunk) - A hypothetical **10% change** in current exchange rates could materially impact financial results[205](index=205&type=chunk) - Revenues from foreign exchange transactions are dependent on market conditions and negotiations with third-party financial institutions[206](index=206&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective, with no material changes to internal control - CEO and CFO concluded that disclosure controls and procedures were **effective** as of June 30, 2025[208](index=208&type=chunk) - **No material changes** to internal control over financial reporting occurred during the most recent fiscal quarter[209](index=209&type=chunk) PART II. - OTHER INFORMATION [Item 1. Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) Payoneer is involved in various litigation matters incidental to its business operations - The company is a party to various litigation matters in the ordinary course of business[210](index=210&type=chunk) - Further information on commitments and contingencies is provided in Note 14[210](index=210&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Annual Report - **No material changes** to risk factors since the Annual Report on Form 10-K filed on February 27, 2025[213](index=213&type=chunk) - The company may disclose changes or additional factors in future SEC filings[213](index=213&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the share repurchase activities conducted under the publicly announced program [Share Repurchase Activities](index=53&type=section&id=Share%20Repurchase%20Activities) The company repurchased 4.8 million shares and the Board increased the repurchase authorization **Share Repurchases (Three Months Ended June 30, 2025):** | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares That May Yet Be Purchased | | :--- | :--- | :--- | :--- | | April 1, 2025 - April 30, 2025 | 1,121,787 | $6.55 | $79,426 | | May 1, 2025 - May 31, 2025 | 1,633,848 | $6.98 | $68,017 | | June 1, 2025 - June 30, 2025 | 2,056,531 | $6.78 | $54,070 | | **Total** | **4,812,166** | | | - The Board of Directors amended the repurchase program to increase the authorized amount to **$300 million**, effective August 6, 2025, expiring December 31, 2027[217](index=217&type=chunk) [Item 3. Defaults upon Senior Securities](index=53&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[218](index=218&type=chunk) [Item 4. Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Payoneer Global Inc - Not applicable[219](index=219&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) This section discloses a Rule 10b5-1 trading plan adopted by the Chief Financial Officer [Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements](index=54&type=section&id=Rule%2010b5-1%20and%20Non-Rule%2010b5-1%20Trading%20Arrangements) The Chief Financial Officer adopted a Rule 10b5-1 trading plan for the sale of 100,000 shares - CFO Bea Ordonez adopted a Rule 10b5-1 plan on June 3, 2025[221](index=221&type=chunk) - The plan is for the sale of **100,000 shares** and expires on September 30, 2026[221](index=221&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q - Includes Restated Certificate of Incorporation, Amended and Restated Bylaws, and certifications from CEO and CFO[223](index=223&type=chunk) - XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, and Presentation Linkbase Documents are filed[223](index=223&type=chunk) SIGNATURES [SIGNATURES](index=55&type=section&id=SIGNATURES) This section contains the official signatures certifying the filing of the report - Report signed by John Caplan (CEO) and Bea Ordonez (CFO) on August 6, 2025[227](index=227&type=chunk)

Core Insights - Payoneer Global reported Q2 2025 GAAP revenue of $260.6 million, exceeding analyst estimates of $253.2 million, but missed on GAAP EPS at $0.05 compared to expectations of $0.06 [1][2] - The company reinstated its full-year guidance, indicating confidence despite ongoing global trade risks [1][10] Financial Performance - Revenue increased by 8.8% year-over-year from $239.5 million in Q2 2024 [2] - Adjusted EBITDA decreased by 8.8% year-over-year to $66.4 million [2] - Net income fell by 39.8% year-over-year to $19.5 million [2] - Revenue excluding interest income reached $202.3 million, a 16.4% increase year-over-year [2] Business Model and Market Position - Payoneer serves nearly two million SMBs across over 190 countries, focusing on cross-border payments and value-added services [3] - The company targets entrepreneurs and small business exporters, particularly those engaged in online marketplaces and global B2B trade [3] Growth Drivers - Revenue growth was driven by an 11% increase in transaction volume to $20.7 billion and an 18% increase in SMB segment revenue [5][6] - Notable growth in B2B SMB revenue at 37% year-over-year and Checkout revenue surged by 86% year-over-year [6] - The card business experienced a 25% year-over-year increase in card spend, totaling $1.5 billion [6] Cost Management and Profitability - Total operating expenses rose by 19% year-over-year, with significant increases in research and development (36%) and general and administrative costs (42%) [7] - Adjusted EBITDA declined as costs outpaced revenue growth, highlighting challenges in maintaining profitability [7] Shareholder Returns - The company repurchased $33 million in stock, nearly doubling the previous quarter's buyback, with an expanded buyback authorization of up to $300 million through 2027 [8] Strategic Focus - Payoneer is focusing on operational and geographic diversification, with a modest year-over-year increase in active ideal customer profiles [9] - Management emphasizes quality and value per customer over sheer user growth [9] Future Outlook - Management expects FY2025 total revenue between $1.04–$1.06 billion and non-GAAP adjusted EBITDA of $260–$275 million [10] - Anticipated revenue growth from SMB and B2B customers is projected in the mid-teens [10] - The company faces risks from U.S./China trade tensions, potentially impacting up to $50 million of revenue [10]

Payoneer Global Inc. (PAYO) came out with quarterly earnings of $0.05 per share, missing the Zacks Consensus Estimate of $0.06 per share. This compares to earnings of $0.09 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -16.67%. A quarter ago, it was expected that this company would post earnings of $0.07 per share when it actually produced earnings of $0.05, delivering a surprise of -28.57%. Over the last four quarters, the ...

Financial Data and Key Metrics Changes - Payoneer reported revenues of $261 million, up 9% year over year, with revenue excluding interest income reaching a quarterly record of $200 million, up 16% year over year [25][33] - Adjusted EBITDA was $66 million, representing a 25% margin, with net income of $19 million compared to $32 million in the same quarter last year [31][32] - Customer funds held by Payoneer increased 17% year over year to $7 billion, reflecting customer trust in the platform [27] Business Line Data and Key Metrics Changes - B2B revenue grew 37% in Q2, driven by larger multi-entity customers with complex needs [14] - Checkout volumes surged 83% year over year, indicating strong product adoption [25] - SMB volume grew 9% year over year, with volume from B2B SMBs up 19% [25] Market Data and Key Metrics Changes - Approximately one-third of Payoneer's China revenue came from sellers selling to non-U.S. markets, indicating a shift in market focus [12] - In APAC, LatAm, and EMEA, mid-20% volume growth was achieved, with continued take rate expansion [14] Company Strategy and Development Direction - Payoneer is focused on building a financial stack for cross-border commerce, enhancing its product offerings, and expanding its global reach [7][8] - The company is exploring stablecoin functionality to enhance its service offerings and improve operational efficiency [19][20] - A strategic partnership with Stripe was launched to expand global checkout capabilities [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic macro environment and reinstated full-year 2025 guidance, expecting total revenue between $1.04 billion and $1.06 billion [33][38] - The company anticipates high single-digit growth in total volume and low double-digit B2B volume growth in Q3, accelerating to high teens in Q4 [34][38] Other Important Information - Total operating expenses increased 19% year over year, driven by labor-related expenses and investments in scaling card products [28] - The company announced a refreshed $300 million share buyback authorization, reflecting confidence in its business value [21] Q&A Session Summary Question: What gave you the confidence to reinstate the higher guidance? - Management noted greater visibility into the tariff environment and a resilient business model, allowing for confidence in meeting full-year guidance [42][44] Question: What are merchants saying about their demand for stablecoins? - Management indicated that they are in the early stages of understanding merchant demand for stablecoins, but see long-term opportunities in supporting customers with new currencies [47][49] Question: How have merchants in China responded to tariffs? - Management highlighted that Chinese merchants are focused on expanding globally, with a third of revenue coming from non-U.S. markets [54][58] Question: Can you share metrics around churn levels? - Management reported improved revenue retention year over year, with higher retention among managed ICPs compared to non-managed ones [108][109] Question: How do you view the potential disruptive threat of stablecoins? - Management acknowledged that while stablecoins can be disruptive, Payoneer is well-positioned to integrate these innovations into its ecosystem [101][103]

Financial Data and Key Metrics Changes - Payoneer reported revenues of $261 million, up 9% year over year, with revenue excluding interest income reaching a quarterly record of $200 million, up 16% year over year [24][31] - Adjusted EBITDA was $66 million, representing a 25% margin, with adjusted EBITDA excluding interest income expected to be over three times the amount generated in 2024 [29][36] - Net income was $19 million, down from $32 million in the same quarter last year, with basic and diluted earnings per share at $0.05, down from $0.09 [29][30] Business Line Data and Key Metrics Changes - B2B revenue grew 37% in Q2, with significant growth in multi-entity customers and a focus on larger, more complex needs [12][13] - Checkout volumes increased by 83%, indicating strong adoption of high-value products [24] - Customer funds held by Payoneer increased by 17% year over year to $7 billion, reflecting customer trust in the platform [26] Market Data and Key Metrics Changes - Approximately one-third of Payoneer's revenue from China came from sellers selling to non-U.S. markets, indicating a shift in market focus [11][56] - In APAC, LatAm, and EMEA, volume growth was in the mid-20% range, while the China B2B business grew in the mid-single digits [13][32] Company Strategy and Development Direction - Payoneer is focused on building a financial stack for cross-border commerce, enhancing its product offerings, and expanding its global reach [7][10] - The company is investing in technology and talent, including opening a new technology hub in Gurgaon, India, to tap into local engineering expertise [20][115] - A strategic partnership with Stripe was launched to enhance global checkout capabilities and improve operational efficiency [14][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic macro environment and reinstated full-year 2025 guidance, expecting total revenue between $1.04 billion and $1.06 billion [31][37] - The company anticipates high single-digit growth in total volume and low double-digit B2B volume growth in Q3, accelerating to high teens in Q4 [32][75] - Management highlighted the resilience of global commerce and the ongoing adaptation of customers to shifting trade flows [10][44] Other Important Information - Payoneer is exploring stablecoin functionality for its customers, aiming to integrate this technology into its existing services [19][90] - The company has authorized a $300 million share repurchase program, reflecting confidence in its business value [20][30] Q&A Session Summary Question: What gave you the confidence to reinstate the higher guidance? - Management noted improved visibility into the tariff environment and a resilient business model, allowing for confidence in meeting full-year guidance [41][44] Question: What is the demand for stablecoins among merchants? - Management indicated that they are in the early stages of understanding merchant demand for stablecoins, but see long-term opportunities in supporting customers with new currencies [46][49] Question: How have merchants in China responded to tariffs? - Management reported that Chinese merchants are focused on expanding into non-U.S. markets and have shown resilience in adapting to the tariff environment [53][56] Question: Can you provide metrics on churn levels? - Management stated that revenue retention has improved, with higher retention rates among managed ICPs compared to non-managed ones [107][110] Question: How does the new technology hub in India fit into your strategy? - The hub is aimed at accessing a larger pool of tech talent and enhancing the company's platform capabilities, contributing to long-term growth [115][116]