Payoneer (PAYO) - 2024 Q3 - Quarterly Results

Payoneer Q3 2024 Financial Results Financial and Operational Highlights Payoneer achieved record revenue and volume, with significant growth in net income and its high-value customer base Q3 2024 Key Financial & Operational Metrics | ($ in mm) | 3Q 2023 | 3Q 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $208.0 | $248.3 | 19% | | Revenue ex. interest income | $147.6 | $183.1 | 24% | | Net income | $12.8 | $41.6 | 224% | | Adjusted EBITDA | $58.2 | $69.3 | 19% | | Volume ($bn) | $16.3 | $20.4 | 25% | | Active Ideal Customer Profiles ('000s) | 502 | 557 | 11% | - The company has achieved four consecutive quarters of accelerating growth in Ideal Customer Profiles (ICPs) and five consecutive quarters of accelerating ARPU excluding interest income, which grew 20%[3] Third Quarter 2024 Business Highlights The company saw strong, broad-based volume growth across key segments, especially in B2B and Merchant Services - B2B volume increased 57% year-over-year to $2.8 billion, driven by strong customer acquisition and larger transaction sizes[4] - Merchant Services (Checkout) volume grew 142% year-over-year to $153 million[4] - Volume from SMBs selling on marketplaces rose 17% YoY to $12 billion, while Enterprise payouts volume increased 29% YoY to $5.5 billion[4] - Spend on Payoneer cards increased by 41% year-over-year to $1.4 billion, indicating higher adoption for global accounts payable[4] - Total customer funds held on the platform grew 13% year-over-year to $6.1 billion as of September 30, 2024[4] 2024 Guidance Payoneer raised its full-year 2024 guidance for revenue and adjusted EBITDA following strong Q3 performance Updated Full-Year 2024 Outlook The company increased its 2024 revenue forecast to $950-$960 million and adjusted EBITDA to $255-$265 million 2024 Full-Year Guidance | Metric | Guidance | | :--- | :--- | | Revenue | $950 million - $960 million | | Transaction costs | ~16.0% of revenue | | Adjusted EBITDA | $255 million to $265 million | - The guidance increase reflects strong Q3 performance and higher expectations for both growth and profitability in the final quarter of the year[5] Consolidated Financial Statements (Unaudited) Consolidated Statements of Comprehensive Income Third-quarter revenue grew to $248.3 million, and net income surged to $41.6 million, driven by revenue growth and a tax benefit Q3 2024 vs Q3 2023 Income Statement Highlights (in thousands) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Revenues | $248,274 | $208,035 | | Operating income | $35,162 | $29,499 | | Net income | $41,574 | $12,825 | | Diluted earnings per share | $0.11 | $0.03 | - The company recorded a tax benefit of $19.5 million in Q3 2024, compared to a tax expense of $10.0 million in Q3 2023, significantly contributing to the net income growth[15] - A loss of $14.7 million was recognized on the repurchase and redemption of warrants during Q3 2024[15] Disaggregation of Revenue Revenue growth was geographically diverse, with Greater China as the largest market and significant income from customer balances Revenue by Primary Regional Market (in thousands) | Region | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Greater China | $85,111 | $72,513 | | Europe | $48,666 | $42,378 | | Asia-Pacific | $37,770 | $29,145 | | North America | $25,162 | $22,358 | | South Asia, Middle East and North Africa | $26,809 | $22,181 | | Latin America | $24,756 | $19,460 | | Total revenues | $248,274 | $208,035 | Revenue by Source (in thousands) | Source | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Revenue from contracts with customers | $180,360 | $145,202 | | Interest income on customer balances | $65,162 | $60,416 | | Other sources | $2,752 | $2,417 | | Total revenues | $248,274 | $208,035 | Consolidated Balance Sheets Total assets stood at $7.05 billion, with shareholders' equity increasing to $727.9 million as of September 30, 2024 Key Balance Sheet Items (in thousands) | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $534,170 | $617,022 | | Customer funds (Assets) | $6,085,767 | $6,390,526 | | Total assets | $7,051,174 | $7,283,119 | | Outstanding operating balances (Liabilities) | $6,085,767 | $6,390,526 | | Total liabilities | $6,323,300 | $6,618,846 | | Total shareholders' equity | $727,874 | $664,273 | Consolidated Statement of Cash Flows Net cash from operations was $131.0 million, while investing and financing activities resulted in significant cash outflows Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $131,039 | $101,328 | | Net cash used in investing activities | ($1,814,106) | ($47,754) | | Net cash used in financing activities | ($436,932) | ($492,732) | Non-GAAP Financial Measures Reconciliation of Net Income to Adjusted EBITDA Adjusted EBITDA increased to $69.3 million, with adjustments for a tax benefit, stock compensation, and warrant-related losses Reconciliation of Net Income to Adjusted EBITDA (in thousands) | | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net income | $41,574 | $12,825 | | Depreciation and amortization | $13,510 | $7,116 | | Tax (benefit) expense on income | ($19,484) | $10,012 | | Stock based compensation expenses | $17,430 | $15,330 | | Loss on Warrant repurchase/redemption | $14,746 | — | | Restructuring charges | — | $4,488 | | Adjusted EBITDA | $69,268 | $58,178 | Capital Allocation Share and Warrant Repurchase The company returned capital via $21 million in share repurchases and a $21 million redemption of all public warrants - The company conducted $21 million of share repurchases at a weighted average price of $5.67 per share during the third quarter[4] - Completed the repurchase and redemption of all 25 million outstanding public warrants for a total of $21 million[5] Company Information and Disclosures About Payoneer Payoneer is a financial technology company empowering global SMBs to transact and grow in the international digital economy - Payoneer's mission is to enable entrepreneurs and businesses anywhere to participate and succeed in the global digital economy[8] Forward-Looking Statements The report contains forward-looking statements subject to risks and uncertainties detailed in the company's SEC filings - Projections of future revenue, transaction cost, and adjusted EBITDA are considered forward-looking statements[9] - Actual results may differ materially due to risks including geopolitical events, changes in laws, and other factors outlined in the company's Form 10-K[9]