PAYONEER GLEQ.WARRT.EXP(PAYOW) - 2023 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Presents Payoneer Global Inc.'s unaudited condensed consolidated financial statements and related notes for the period ended September 30, 2023 Item 1. Financial Statements (Unaudited) Provides Payoneer Global Inc.'s unaudited condensed consolidated financial statements and comprehensive notes for the period ended September 30, 2023 Condensed Consolidated Balance Sheets (Unaudited) Presents the company's financial position, including assets, liabilities, and equity, as of September 30, 2023 Condensed Consolidated Balance Sheets (Unaudited) - Key Figures (U.S. DOLLARS IN THOUSANDS): | Item | September 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------------- | :------------------- | | Total Assets | $6,217,758 | $6,594,651 | | Total Liabilities | $5,579,792 | $6,049,395 | | Total Shareholders' Equity | $637,966 | $545,256 | - Total assets decreased by $376.9 million from December 31, 2022, to September 30, 2023, primarily due to a decrease in customer funds[15] - Total shareholders' equity increased by $92.7 million, driven by net income and stock-based compensation, partially offset by common stock repurchases[15] Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Details the company's revenues, expenses, and net income (loss) for the three and nine months ended September 30, 2023 Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - Key Figures (U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA): | Item | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenues | $208,035 | $158,917 | $606,783 | $444,065 | | Total operating expenses | $178,536 | $164,020 | $528,880 | $457,715 | | Operating income (loss) | $29,499 | $(5,103) | $77,903 | $(13,650) | | Net income (loss) | $12,825 | $(26,452) | $66,312 | $(1,819) | | Basic earnings (loss) per share | $0.04 | $(0.08) | $0.18 | $(0.01) | | Diluted earnings (loss) per share | $0.03 | $(0.08) | $0.17 | $(0.01) | - Revenues increased significantly by 31% for the three months and 37% for the nine months ended September 30, 2023, compared to the prior-year periods[17] - The company achieved net income of $12.8 million for the three months and $66.3 million for the nine months ended September 30, 2023, a substantial improvement from losses in the prior-year periods[17] Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) Outlines changes in shareholders' equity, including net income, stock-based compensation, and share repurchases Changes in Shareholders' Equity (U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE DATA): | Item | Balance at Dec 31, 2022 | Net Income (9M 2023) | Stock-based Compensation (9M 2023) | Common Stock Repurchased (9M 2023) | Balance at Sep 30, 2023 | | :----------------------------------- | :---------------------- | :------------------- | :--------------------------------- | :--------------------------------- | :---------------------- | | Common Stock (Amount) | $3,528 | - | - | - | $3,659 | | Treasury Stock (Amount) | $0 | - | - | $(34,759) | $(34,759) | | Additional Paid-in Capital | $650,433 | - | $50,611 | - | $711,459 | | Accumulated Deficit | $(108,529) | $66,312 | - | - | $(42,217) | | Total Shareholders' Equity | $545,256 | $66,312 | $50,611 | $(34,759) | $637,966 | - The company repurchased 6,939,117 shares of common stock for $34.759 million during the nine months ended September 30, 2023[22] - Stock-based compensation contributed $50.6 million to additional paid-in capital for the nine months ended September 30, 2023[22] Condensed Consolidated Statements of Cash Flows (Unaudited) Reports cash flows from operating, investing, and financing activities for the nine months ended September 30, 2023 Condensed Consolidated Statements of Cash Flows (Unaudited) - Key Figures (U.S. DOLLARS IN THOUSANDS): | Cash Flow Activity | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $101,328 | $44,326 | | Net cash used in investing activities | $(47,754) | $(13,942) | | Net cash provided by (used in) financing activities | $(492,732) | $655,735 | | Net change in cash, cash equivalents, restricted cash and customer funds | $(439,820) | $682,750 | | Cash, cash equivalents, restricted cash and customer funds at end of period | $5,946,900 | $5,521,183 | - Net cash provided by operating activities increased by $57.0 million to $101.3 million for the nine months ended September 30, 2023, compared to the prior-year period[24][166] - Net cash used in financing activities was $492.7 million for the nine months ended September 30, 2023, a significant change from $655.7 million provided in the prior-year period, primarily due to a decline in customer balances and share repurchases[24][172] Notes to the Condensed Consolidated Financial Statements (Unaudited) Provides detailed explanations of significant accounting policies, financial instruments, and other disclosures supporting the financial statements NOTE 1 – GENERAL OVERVIEW Introduces Payoneer Global Inc. and its core business of providing cross-border payment and commerce-enabling services - Payoneer Global Inc. (incorporated in Delaware) provides a diversified cross-border payments platform, enabling SMBs globally to conduct seamless cross-border payments and access services like Mastercard cards, working capital, and risk management[31] NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Outlines the key accounting principles and methods used in preparing the condensed consolidated financial statements - The financial statements are prepared in accordance with U.S. GAAP and include adjustments deemed necessary by management for fair interim reporting[32][33] - In January 2023, Payoneer acquired all remaining interests in a joint venture in the People's Republic of China, accounting for it as an asset acquisition[36][38] - A foreign subsidiary changed its functional currency to the U.S. dollar as of January 1, 2023, due to a shift in primary revenue streams[42] - The company adopted amended FASB guidance for reference rate reform, replacing LIBOR with SOFR for its Warehouse Facility as of July 1, 2023, with no material impact on financial statements[48] NOTE 3 – CAPITAL ADVANCE ("CA") RECEIVABLES Details the company's Capital Advance program, including receivables, collections, and allowance for losses Capital Advance (CA) Receivables (U.S. DOLLARS IN THOUSANDS): | Item | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :----------------------------- | :----------------------------- | | CA extended to customers | $206,187 | $146,439 | | CA collected from customers | $(191,157) | $(163,395) | | Ending CA receivables, gross | $54,066 | $36,957 | | Allowance for CA losses | $(4,910) | $(3,629) | | CA receivables, net | $49,156 | $33,328 | - Net Capital Advance receivables increased to $49.156 million as of September 30, 2023, from $33.328 million in the prior year, with a corresponding increase in the allowance for CA losses[49] - The company applied loss rates ranging from 1.59% to 1.86% to the CA portfolio for the allowance for CA losses[51] NOTE 4 - OTHER CURRENT ASSETS Presents the composition and changes in other current assets, including prepaid expenses and income receivables Composition of Other Current Assets (U.S. DOLLARS IN THOUSANDS): | Item | September 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------------- | :------------------- | | Prepaid expenses | $18,657 | $12,155 | | Income receivable | $9,852 | $11,162 | | Prepaid income taxes | $10,851 | $7,671 | | Other | $2,893 | $5,290 | | Total other current assets | $42,253 | $36,278 | - Total other current assets increased by $5.975 million to $42.253 million as of September 30, 2023, primarily driven by an increase in prepaid expenses and prepaid income taxes[53] NOTE 5 – PROPERTY, EQUIPMENT AND SOFTWARE Provides details on the company's property, equipment, and software, net of accumulated depreciation Property, Equipment and Software, Net (U.S. DOLLARS IN THOUSANDS): | Item | September 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------------- | :------------------- | | Property, equipment and software (gross) | $51,152 | $48,487 | | Accumulated depreciation | $(37,419) | $(34,095) | | Property, equipment and software, net | $13,733 | $14,392 | - Net property, equipment and software decreased slightly to $13.733 million as of September 30, 2023, from $14.392 million at December 31, 2022[54] - Depreciation expense for the nine months ended September 30, 2023, was $5.960 million[54] NOTE 6 – INTANGIBLE ASSETS Outlines the company's intangible assets, including internal use software and acquired developed technology Intangible Assets, Net (U.S. DOLLARS IN THOUSANDS): | Item | September 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------------- | :------------------- | | Internal use software, net | $60,787 | $36,588 | | Acquired developed technology, net | $10,085 | $8,856 | | Intangible assets, net | $70,872 | $45,444 | - Net intangible assets increased significantly to $70.872 million as of September 30, 2023, from $45.444 million at December 31, 2022, primarily due to increased internal use software and the acquisition of Spott's intellectual property[57] - The company acquired certain assets and intellectual property of Spott Incredibles Technologies Ltd. for $3.6 million in August 2023, which will be amortized over three years[57][58] NOTE 7 - OTHER PAYABLES Details the composition of other payables, including employee compensation, commissions, and accrued expenses Composition of Other Payables (U.S. DOLLARS IN THOUSANDS): | Item | September 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------------- | :------------------- | | Employee related compensation | $56,251 | $64,464 | | Commissions payable | $23,346 | $12,159 | | Accrued expenses | $9,819 | $10,001 | | Lease liability | $7,731 | $8,360 | | Income tax payable | $4,704 | $0 | | Other | $2,908 | $2,350 | | Total other payables | $104,759 | $97,334 | - Total other payables increased to $104.759 million as of September 30, 2023, from $97.334 million at December 31, 2022, mainly due to higher commissions payable and income tax payable, partially offset by lower employee-related compensation[62] NOTE 8 – DEBT Describes the company's Warehouse Facility for Capital Advance financing and its associated terms and outstanding balance - Payoneer has a Warehouse Facility for external financing of Capital Advance activity, with an initial committed amount of $25 million, potentially increasing to $100 million[63][64] - As of July 1, 2023, the Warehouse Facility's interest rate is based on Daily Simple SOFR plus 0.26161% and an additional percentage (e.g., 9.00% for $25M commitment), capped at 10.5% per annum[66][70] - The outstanding balance of the Warehouse Facility was $15.801 million as of September 30, 2023, and the company was in compliance with all covenants[68][69] NOTE 9 – OTHER LONG-TERM LIABILITIES Presents the composition of other long-term liabilities, including reserves for uncertain tax positions and lease liabilities Composition of Other Long-Term Liabilities (U.S. DOLLARS IN THOUSANDS): | Item | September 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------------- | :------------------- | | Reserves for uncertain tax positions | $26,006 | $21,048 | | Long-term lease liabilities | $4,025 | $6,514 | | Severance pay liabilities | $2,751 | $2,252 | | Other | $18 | $17 | | Total other long-term liabilities | $32,800 | $29,831 | - Total other long-term liabilities increased to $32.800 million as of September 30, 2023, from $29.831 million at December 31, 2022, primarily due to an increase in reserves for uncertain tax positions[73] NOTE 10 – RESTRUCTURING CHARGES Details the workforce reduction plan initiated in Q3 2023 and the associated severance and termination benefits incurred - During Q3 2023, Payoneer initiated a plan to reduce its workforce by approximately 9% to enhance productivity and streamline operations[74] - The company incurred $4.488 million in severance and other employee termination benefits for the three and nine months ended September 30, 2023[75] Restructuring Costs by Expense Category (U.S. DOLLARS IN THOUSANDS): | Expense Category | Amount | | :----------------------------------- | :----- | | Other operating expenses | $623 | | Research and development expenses | $1,559 | | Sales and marketing expenses | $2,029 | | General and administrative expenses | $277 | | Total | $4,488 | NOTE 11 – WARRANTS AND SHAREHOLDERS' EQUITY Discusses the company's stock repurchase program and the fair value of warrant liabilities - The Board authorized an $80 million stock repurchase program in May 2023, with $45.379 million remaining available as of September 30, 2023[76][80] - During the nine months ended September 30, 2023, the company repurchased 6,939,117 shares for $34.759 million at a weighted average cost of $4.99 per share[80] Warrant Liability Fair Value (U.S. DOLLARS IN THOUSANDS): | Item | Amount | | :----------------------------------- | :----- | | Fair value as of December 31, 2022 | $25,914 | | Change in fair value | $(5,535) | | Fair value as of September 30, 2023 | $20,379 | NOTE 12 – COMMITMENTS AND CONTINGENCIES Outlines the company's legal proceedings, regulatory exposures, and other significant commitments and contingencies - The company is subject to various laws and regulations, with potential for significant fines, penalties, or legal challenges for noncompliance[83] - Payoneer has reserved $2.250 million for potential losses related to funds held by a Mexican banking entity whose license was revoked, after recovering $140 thousand through deposit insurance[84] - Payoneer Guangzhou entered an agreement to purchase a non-bank payments institution in China, placing approximately $4 million in escrow, with closing subject to governmental approvals[85][87] NOTE 13 – REVENUE Provides a breakdown of revenue by source and primary regional market for the reported periods Revenue by Source (U.S. DOLLARS IN THOUSANDS): | Revenue Type | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue from contracts with customers | $147,619 | $143,871 | $441,016 | $424,667 | | Revenue from other sources (interest income) | $60,416 | $15,046 | $165,767 | $19,398 | | Total revenues | $208,035 | $158,917 | $606,783 | $444,065 | Revenue by Primary Regional Market (U.S. DOLLARS IN THOUSANDS): | Region | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Greater China | $72,513 | $50,162 | $207,700 | $139,988 | | Europe | $42,378 | $33,019 | $122,698 | $92,516 | | Asia-Pacific | $29,145 | $21,570 | $81,911 | $60,757 | | North America | $22,358 | $21,843 | $73,935 | $62,637 | | South Asia, Middle East and North Africa | $22,181 | $17,809 | $63,837 | $50,072 | | Latin America | $19,460 | $14,514 | $56,702 | $38,095 | | Total revenues | $208,035 | $158,917 | $606,783 | $444,065 | - Revenue from other sources (primarily interest income) saw a substantial increase, growing from $15.046 million to $60.416 million for the three months and from $19.398 million to $165.767 million for the nine months ended September 30, 2023[90] NOTE 14 - TRANSACTION COSTS Details the composition of transaction costs, including bank fees, network fees, and capital advance costs Composition of Transaction Costs (U.S. DOLLARS IN THOUSANDS): | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Bank and processor fees | $22,410 | $21,365 | $64,303 | $62,169 | | Network fees | $4,959 | $3,160 | $12,956 | $10,094 | | Chargebacks and operational losses | $550 | $1,624 | $2,300 | $2,906 | | Card costs | $575 | $526 | $1,447 | $1,398 | | Capital advance costs, net of recoveries | $1,826 | $987 | $4,795 | $2,093 | | Other | $73 | $324 | $170 | $1,113 | | Total transaction costs | $30,393 | $27,986 | $85,971 | $79,773 | - Total transaction costs increased by 9% to $30.393 million for the three months and 8% to $85.971 million for the nine months ended September 30, 2023, compared to the prior-year periods[95] - Capital advance costs, net of recoveries, increased significantly to $1.826 million for the three months and $4.795 million for the nine months ended September 30, 2023[95] NOTE 15 – STOCK-BASED COMPENSATION Presents the stock-based compensation expense by category and details RSU grants and outstanding amounts Stock-Based Compensation Expense (U.S. DOLLARS IN THOUSANDS): | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Other operating expenses | $3,368 | $2,626 | $9,410 | $8,289 | | Research and development expenses | $3,053 | $2,779 | $10,034 | $7,380 | | Sales and marketing expenses | $4,163 | $3,656 | $14,712 | $11,062 | | General and administrative expenses | $4,746 | $4,464 | $14,273 | $11,592 | | Total stock-based compensation | $15,330 | $13,525 | $48,429 | $38,323 | - Total stock-based compensation expense increased to $15.330 million for the three months and $48.429 million for the nine months ended September 30, 2023, compared to the prior-year periods[102] - The company granted 16,389,704 RSUs during the nine months ended September 30, 2023, with 32,341,213 RSUs outstanding at period end[99] NOTE 16 - INCOME TAXES Discusses the effective tax rate, deferred tax assets, and factors influencing the company's income tax provision - The effective tax rate for the nine months ended September 30, 2023, was 27.3%, a significant decrease from 144% in the prior-year period[103] - The difference from the U.S. federal statutory rate (21%) was due to foreign income taxed at different rates, uncertain tax positions, non-deductible expenses, and the release of a valuation allowance on U.S. deferred tax assets[103] - A release of $10.553 million in valuation allowance on U.S. deferred tax assets was recorded during the nine months ended September 30, 2023[105] NOTE 17 – NET EARNINGS (LOSS) PER SHARE Provides basic and diluted net earnings (loss) per share calculations and weighted average common shares outstanding Net Earnings (Loss) Per Share (U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA): | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income (loss) | $12,825 | $(26,452) | $66,312 | $(1,819) | | Basic earnings (loss) per share | $0.04 | $(0.08) | $0.18 | $(0.01) | | Diluted earnings (loss) per share | $0.03 | $(0.08) | $0.17 | $(0.01) | | Weighted average common shares outstanding — Basic | 357,429,113 | 349,740,787 | 361,206,439 | 345,359,986 | | Weighted average common shares outstanding — Diluted | 381,845,099 | 349,740,787 | 389,658,789 | 345,359,986 | - Basic EPS improved to $0.04 for the three months and $0.18 for the nine months ended September 30, 2023, from losses in the prior-year periods[108] - Diluted EPS was $0.03 for the three months and $0.17 for the nine months ended September 30, 2023, reflecting the positive net income[108] NOTE 18 – RELATED PARTY TRANSACTIONS Identifies and describes transactions with related parties, including the Warehouse Facility and asset acquisitions - The Warehouse Facility agreement (Note 8) and the Spott asset acquisition (Note 6) are considered related party transactions due to a Board member's indirect interest, but were reviewed and approved as arm's length transactions[111][112] NOTE 19 – SUBSEQUENT EVENTS Discloses significant events occurring after the reporting period, including the impact of the Israel-Hamas war - The ongoing Israel-Hamas war, which began in October 2023, has not materially impacted Payoneer's operations or ability to serve customers to date, despite approximately 50% of its global employee base and 81% of R&D resources being located in Israel[113] - Less than 10% of the Israeli workforce has been called to military reserve duty, with contingencies in place[113] - The situation remains highly uncertain, and further escalation could materially affect the company's operations and financial results[115] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Payoneer's financial condition and results of operations for the period ended September 30, 2023, highlighting key developments, macroeconomic impacts, and detailed analysis of revenue, expenses, liquidity, and non-GAAP financial measures Overview Provides an introduction to Payoneer's business model, platform capabilities, and primary revenue generation strategies - Payoneer's platform empowers SMBs globally with cross-border payments and commerce-enabling services, supporting millions of marketplaces, enterprises, and SMBs across over 190 countries[119][122] - Revenue generation is primarily driven by transaction fees, with growth based on increasing transaction volume and monetization rates through customer acquisition in high-value regions, B2B payment services, and new product offerings like card products[123] - The company processed $16.8 billion in volume for the three months and $48.3 billion for the nine months ended September 30, 2023[124] Key Developments and Trends Highlights significant events and macroeconomic factors influencing the company's operations and financial performance - The Israel-Hamas war, ongoing since October 2023, has not materially impacted operations, but the situation is uncertain and could affect economic activity and revenues from Israeli customers[128][129] - A workforce reduction plan, announced in July 2023, aims to reduce headcount by approximately 9%, incurring $4.5 million in severance costs and expecting an annualized benefit of $20 million to operating expenses[130][131][132] - The company repurchased approximately 6.9 million shares for $34.759 million under its $80 million repurchase program, with $45.379 million remaining available[133] - Macroeconomic conditions, including rising interest rates, have positively impacted interest income but could slow economic growth and transaction volumes[136] Results of Operations Analyzes the company's revenues, operating expenses, and net income (loss) for the reported periods Consolidated Results of Operations (U.S. DOLLARS IN THOUSANDS, EXCEPT PERCENTAGES): | Item | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Increase/ (Decrease) | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | Increase/ (Decrease) | | :----------------------------------- | :------------------------------ | :------------------------------ | :------------------- | :----------------------------- | :----------------------------- | :------------------- | | Revenues | $208,035 | $158,917 | 31 % | $606,783 | $444,065 | 37 % | | Transaction costs | $30,393 | $27,986 | 9 % | $85,971 | $79,773 | 8 % | | Other operating expenses | $40,301 | $37,744 | 7 % | $120,923 | $107,895 | 12 % | | Research and development expenses | $26,950 | $29,617 | (9)% | $84,225 | $82,139 | 3 % | | Sales and marketing expenses | $48,664 | $41,081 | 18 % | $144,892 | $112,370 | 29 % | | General and administrative expenses | $25,112 | $21,693 | 16 % | $73,805 | $60,013 | 23 % | | Depreciation and amortization | $7,116 | $5,899 | 21 % | $19,064 | $15,525 | 23 % | | Total operating expenses | $178,536 | $164,020 | 9 % | $528,880 | $457,715 | 16 % | | Operating income (loss) | $29,499 | $(5,103) | ** % | $77,903 | $(13,650) | ** % | | Financial income (expense), net | $(6,662) | $(18,712) | (64)% | $13,340 | $17,796 | (25)% | | Net income (loss) | $12,825 | $(26,452) | ** % | $66,312 | $(1,819) | ** % | - Revenues increased by 31% (QoQ) and 37% (YoY) primarily due to a significant increase in interest income from customer balances and growth in high-value regions[139] - Operating income improved substantially to $29.5 million (QoQ) and $77.9 million (YoY) from losses in the prior periods[138] - Net income was $12.8 million (QoQ) and $66.3 million (YoY), a significant turnaround from prior-year losses[138] Liquidity and Capital Resources Assesses the company's ability to meet its short-term and long-term financial obligations and manage its capital - The company believes existing cash, cash equivalents, and operating cash flows are sufficient for at least the next twelve months[157] - As of September 30, 2023, Payoneer had $590.6 million in cash and cash equivalents[158] - Net cash provided by operating activities increased to $101.3 million for the nine months ended September 30, 2023, from $44.3 million in the prior year[165][166] - Net cash used in financing activities was $492.7 million for the nine months ended September 30, 2023, primarily due to a decline in customer balances and $34.4 million used for share repurchases[165][172] Key Metrics and Non-GAAP Financial Measures Presents key operational metrics and non-GAAP financial measures used by management to evaluate performance Volume (U.S. DOLLARS IN MILLIONS): | Item | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Volume | $16,753 | $15,131 | $48,277 | $44,387 | - Volume grew 11% for the three months and 9% for the nine months ended September 30, 2023, driven by growth with digital commerce marketplaces, strong travel demand, and customer acquisition[175] Adjusted EBITDA (U.S. DOLLARS IN THOUSANDS): | Item | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income (loss) | $12,825 | $(26,452) | $66,312 | $(1,819) | | EBITDA | $28,816 | $(14,301) | $102,502 | $30,818 | | Adjusted EBITDA | $58,178 | $12,733 | $152,901 | $37,875 | - Adjusted EBITDA increased significantly to $58.178 million for the three months and $152.901 million for the nine months ended September 30, 2023, compared to the prior-year periods[180] Critical Accounting Policies and Estimates Discusses accounting policies and estimates requiring significant judgment and their potential impact on financial reporting - The company released its valuation allowance on deferred tax assets related to U.S. operations during the nine months ended September 30, 2023[184] - Estimates and assumptions are made for financial statements, including allowance for capital advance receivables, income taxes, goodwill, revenue recognition, stock-based compensation, and loss contingencies[34][185] Recent Accounting Pronouncements Summarizes recently issued accounting pronouncements and their potential effects on the company's financial statements - A description of recently issued accounting pronouncements that may potentially impact the company's financial position, results of operations, or cash flows is disclosed in Note 2[188] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details Payoneer's exposure to market risks, specifically interest rate changes and foreign currency fluctuations, and their potential impact on the company's financial performance Interest Rate Sensitivity Analyzes the potential impact of interest rate fluctuations on the company's revenues and earnings - A hypothetical 1% increase or decrease in interest rates could materially affect Payoneer's revenues and earnings, despite the short-term nature of its cash, cash equivalents, and customer funds[190] - Future borrowings under the Warehouse Facility accrue interest at a floating rate tied to market rates, capped at 10.5% per annum[191] Foreign Currency Risk Discusses the company's exposure to foreign currency exchange rate fluctuations and their financial implications - Payoneer is exposed to foreign currency fluctuations, particularly in EUR, JPY, CNY, AUD, CAD, NZD, THB, ILS, PHP, INR, BDT, TRY, PKR, and HKD, which could materially impact financial results[192] - The company generates revenue from foreign exchange transactions, which is dependent on market conditions, regulations, and negotiations with financial institutions[193] Item 4. Controls and Procedures This section confirms the effectiveness of Payoneer's disclosure controls and procedures as of September 30, 2023, and states that there have been no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that Payoneer's disclosure controls and procedures were effective as of September 30, 2023[195] - No material changes to internal control over financial reporting occurred during the most recently completed fiscal quarter[196] PART II - OTHER INFORMATION Provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales Item 1. Legal Proceedings This section refers to Note 12 of the financial statements for details on legal proceedings and commitments, which are incidental to the company's ordinary course of business - The company is a party to various litigation matters incidental to its business, as detailed in Note 12 (Commitments and Contingencies)[198] Item 1A. Risk Factors This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to the risk factors disclosed in the Annual Report on Form 10-K have occurred as of the date of this Quarterly Report[200] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities during the quarter and provides details on the company's common stock repurchase activities under its authorized program Share Repurchase Activities Details the company's common stock repurchase program, including shares purchased and remaining authorization Common Stock Repurchase Activities (Three Months Ended September 30, 2023): | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | | :----------------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------------- | | July 1, 2023 - July 31, 2023 | 1,253,361 | $5.05 | $54,018,490 | | August 1, 2023 - August 31, 2023 | 888,351 | $5.60 | $49,047,412 | | September 1, 2023 - September 30, 2023 | 596,380 | $6.15 | $45,379,068 | | Total | 2,738,092 | | | - During the three months ended September 30, 2023, Payoneer repurchased 2,738,092 shares of common stock through open market transactions[203] - As of September 30, 2023, approximately $45.379 million remained available under the $80 million stock repurchase program authorized in May 2023[203][204] Item 3. Defaults upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[205] Item 4. Mine Safety Disclosures This item is not applicable to Payoneer Global Inc.'s operations - This item is not applicable[206] Item 5. Other Information This section discloses Rule 10b5-1 and Non-Rule 10b5-1 trading arrangements adopted by certain officers and directors during the three months ended September 30, 2023 Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements Reports on trading arrangements adopted by officers and directors for the sale of common stock Officer/Director Trading Arrangements Adopted (Three Months Ended September 30, 2023): | Officer | Action | Date | Rule 10b5-1 | Non-Rule 10b5-1 | Number of Shares to be Sold | Expiration | | :----------------------------------- | :----- | :----------- | :---------- | :-------------- | :-------------------------- | :----------- | | Arnon Kraft, Chief Operating Officer | Adoption | August 10, 2023 | X | | 106,411 | December 13, 2023 | | Itai Perry, Chief Accounting Officer | Adoption | August 23, 2023 | X | | Up to 96,223 + net shares for tax obligations | November 15, 2024 | - Certain officers and directors adopted Rule 10b5-1 trading arrangements for the sale of common stock, with specific share amounts and expiration dates[209] Item 6. Exhibits This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including certifications and XBRL documents - The report includes various exhibits such as Separation Agreement, CEO/CFO Certifications (pursuant to Rules 13a-14, 15d-14, and 18 U.S.C. Section 1350), and XBRL Instance, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, and Label Linkbase Documents[213] Signatures This section contains the required signatures of Payoneer Global Inc.'s Chief Executive Officer and Chief Financial Officer, certifying the report's submission - The report is duly signed on behalf of Payoneer Global Inc. by John Caplan, Chief Executive Officer, and Bea Ordonez, Chief Financial Officer, as of November 8, 2023[218]