PAYONEER GLEQ.WARRT.EXP(PAYOW) - 2025 Q1 - Quarterly Results

Executive Summary & Q1 2025 Highlights Q1 2025 Financial Performance Overview Payoneer reported strong Q1 2025 results with a 16% YoY growth in revenue excluding interest income, driven by B2B customers and the Card product, while total revenue increased by 8% YoY, net income decreased by 29%, and Adjusted EBITDA remained flat YoY | Metric | 1Q 2024 | 1Q 2025 | YoY Change | | :-------------------------- | :-------- | :-------- | :--------- | | Revenue ex. interest income | $162.9 million | $188.6 million | 16% | | Interest income | $65.3 million | $58.0 million | (11)% | | Revenue | $228.2 million | $246.6 million | 8% | | Net income | $29.0 million | $20.6 million | (29)% | | Adjusted EBITDA | $65.2 million | $65.4 million | 0% | | Volume | $18.5 billion | $19.7 billion | 7% | | Active ICPs | 530 thousand | 556 thousand | 5% | | Revenue as a % of volume ("Take Rate") | 124 basis points | 125 basis points | 1 basis point | | SMB customer take rate | 108 basis points | 119 basis points | 11 basis points | CEO & CFO Commentary CEO John Caplan highlighted strong ARPU growth, increased adoption of high-value products, and the company's new payment service provider license in China, reflecting a commitment to complex markets, while CFO Bea Ordonez reiterated strong Q1 performance but noted the suspension of full-year 2025 guidance due to rapidly evolving and uncertain global macroeconomic and trade environments - Payoneer achieved strong ARPU growth and increased adoption of high-value products, while also securing a payment service provider license in China, demonstrating commitment to high-potential markets[4][5] - The company has suspended its full-year 2025 guidance due to the rapidly evolving and uncertain global macroeconomic and trade environment, acknowledging substantial risks to financial results[7][9] Key Business Highlights Key business highlights include a 16% YoY growth in revenue excluding interest income, driven by 7% volume growth and significant take rate expansion with SMB customers, with ARPU excluding interest income accelerating for the seventh consecutive quarter, growing 22%, and notable growth in B2B SMBs and Merchant Services - Revenue excluding interest income grew 16% YoY, fueled by 7% volume growth and expanded take rates with SMB customers[6] - ARPU excluding interest income increased by 22%, marking its seventh consecutive quarter of acceleration, driven by larger customers, higher take rate B2B, Checkout, and Card franchises, and pricing initiatives[6] SMB Customer Revenue Segment | SMB Customer Revenue Segment | 1Q 2025 Revenue | YoY Growth | | :--------------------------- | :-------------- | :--------- | | Total SMB customer revenue | $170 million | 18% | | SMBs selling on marketplaces | $110 million | 8% | | B2B SMBs | $52 million | 37% | | Merchant Services (Checkout) | $7 million | 96% | - Spend on Payoneer cards reached $1.4 billion, up 29% YoY, with increased usage across all regions[12] - Customer funds totaled $6.6 billion as of March 31, 2025, an 11% increase YoY[12] - Payoneer completed the acquisition of Easylink Payment Co., Ltd. in April 2025, strengthening its regulatory infrastructure in China to better serve local customers exporting globally[12] 2025 Outlook 2025 Outlook Payoneer has suspended its previously issued full-year 2025 guidance due to the current macroeconomic uncertainty and rapidly evolving global trade environment, acknowledging potential negative impacts on cross-border businesses and associated substantial risks to financial results - Payoneer has suspended its full-year 2025 guidance due to current macroeconomic uncertainty and the rapidly evolving global macro and trade environment[7][9] - The company faces substantial risks that could impact financial results, particularly as a supporter of cross-border businesses that may be negatively affected by the dynamic environment[9] About Payoneer About Payoneer Payoneer is a global financial technology company founded in 2005, dedicated to empowering small and medium-sized businesses (SMBs) to transact, conduct business, and grow internationally, with a mission to enable entrepreneurs and businesses worldwide to participate and succeed in the digital global economy - Payoneer is a global financial technology company empowering SMBs to transact, do business, and grow globally[11] - The company's mission is to enable entrepreneurs and businesses worldwide to participate and succeed in the digital global economy by simplifying cross-border commerce[11] Financial Information & Non-GAAP Measures Forward-Looking Statements This section serves as a disclaimer for forward-looking statements, highlighting that actual results may differ materially due to various risks and uncertainties, including changes in laws, geopolitical events, economic factors, and legal proceedings, cautioning readers not to place undue reliance on these statements - Forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from expectations[13] - Key risks include changes in applicable laws/regulations, geopolitical events (e.g., Israel's conflicts), global trade policies (tariffs), changes in financial estimates, and legal/regulatory proceedings[13] Non-GAAP Financial Measures Explanation Payoneer uses non-GAAP measures like Adjusted EBITDA, Volume, and ARPU to assess performance and trends, noting that these are not prepared in accordance with GAAP and may not be comparable to other companies' methods, with specific definitions provided for each metric - Payoneer uses non-GAAP measures (Adjusted EBITDA, Volume, ARPU) for performance comparison and trend analysis, but these are not GAAP-compliant and may not be comparable to other companies[14] - Adjusted EBITDA is defined as net income adjusted for M&A related expenses, stock-based compensation, restructuring charges, warrant fair value changes, other financial expense/income, income taxes, and depreciation/amortization[15] - Volume refers to the total dollar value of transactions successfully completed or enabled by the platform, while ARPU (Average Revenue Per User) is revenue from active customers divided by the number of active customers[17] Consolidated Financial Statements Consolidated Statements of Comprehensive Income For the three months ended March 31, 2025, Payoneer reported total revenues of $246.6 million, an increase from $228.2 million in Q1 2024, but net income decreased to $20.6 million from $29.0 million, and diluted earnings per share fell from $0.08 to $0.05, with operating expenses increasing significantly | Metric (in thousands) | 1Q 2025 | 1Q 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | | Revenues | $246,617 | $228,183 | 8.1% | | Transaction costs | $39,349 | $33,966 | 15.8% | | Total operating expenses | $217,298 | $189,807 | 14.5% | | Operating income | $29,319 | $38,376 | (23.6)% | | Net income | $20,577 | $28,974 | (29.0)% | | Basic EPS | $0.06 | $0.08 | (25.0)% | | Diluted EPS | $0.05 | $0.08 | (37.5)% | Disaggregation of Revenue Revenue from contracts with customers increased to $186.3 million in Q1 2025 from $160.5 million in Q1 2024, primarily recognized at a point in time, while interest income on customer balances decreased by 11.2% to $58.0 million, and Asia-Pacific revenue showed strong growth, increasing by 23.3% YoY Revenue Source | Revenue Source (in thousands) | 1Q 2025 | 1Q 2024 | YoY Change | | :---------------------------- | :------ | :------ | :--------- | | Revenue from contracts with customers | $186,263 | $160,458 | 16.1% | | Interest income on customer balances | $57,972 | $65,268 | (11.2)% | | Capital advance income | $2,382 | $2,457 | (3.1)% | | Total revenues | $246,617 | $228,183 | 8.1% | Primary Regional Market | Primary Regional Market (in thousands) | 1Q 2025 | 1Q 2024 | YoY Change | | :------------------------------------- | :------ | :------ | :--------- | | Greater China | $84,896 | $81,358 | 4.3% | | Europe, Middle East, and Africa | $58,893 | $59,163 | (0.5)% | | Asia-Pacific | $51,260 | $41,582 | 23.3% | | North America | $23,695 | $23,010 | 3.0% | | Latin America | $27,873 | $23,070 | 20.8% | - The company updated its regional market definitions in 2024, reclassifying South Asia into Asia-Pacific and Middle East and North Africa into Europe, Middle East, and Africa[22] Reconciliation of Net Income to Adjusted EBITDA Adjusted EBITDA for Q1 2025 was $65.4 million, a slight increase from $65.2 million in Q1 2024, despite a decrease in net income, with key adjustments including $18.8 million for stock-based compensation expenses and $2.6 million for restructuring charges Reconciliation of Net Income to Adjusted EBITDA | Metric (in thousands) | 1Q 2025 | 1Q 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | | Net income | $20,577 | $28,974 | (29.0)% | | EBITDA | $43,709 | $49,545 | (11.8)% | | Stock based compensation expenses | $18,755 | $15,077 | 24.4% | | M&A related expenses | $337 | $2,375 | (85.8)% | | Restructuring charges | $2,630 | $0 | N/A | | Adjusted EBITDA | $65,431 | $65,236 | 0.3% | Adjusted EBITDA Quarterly Trend | Adjusted EBITDA (in thousands) | Mar. 31, 2024 | Jun. 30, 2024 | Sept. 30, 2024 | Dec. 31, 2024 | Mar. 31, 2025 | | :----------------------------- | :------------ | :------------ | :------------- | :------------ | :------------ | | Adjusted EBITDA | $65,236 | $72,778 | $69,268 | $63,271 | $65,431 | Earnings Per Share Basic earnings per share decreased to $0.06 in Q1 2025 from $0.08 in Q1 2024, while diluted earnings per share also decreased from $0.08 to $0.05, with weighted average common shares outstanding increasing for both calculations Earnings Per Share | Metric | 1Q 2025 | 1Q 2024 | | :------------------------------------ | :------ | :------ | | Net income | $20,577 | $28,974 | | Basic earnings per share | $0.06 | $0.08 | | Diluted earnings per share | $0.05 | $0.08 | | Weighted average common shares (Basic)| 362,979,571 | 359,306,195 | | Weighted average common shares (Diluted)| 382,215,129 | 378,715,301 | Consolidated Balance Sheets As of March 31, 2025, total assets were $7.55 billion, a decrease from $7.93 billion at December 31, 2024, primarily driven by a reduction in customer funds, while total liabilities also decreased, largely due to a decrease in outstanding operating balances, and total shareholders' equity increased Consolidated Balance Sheets | Metric (in thousands) | Mar. 31, 2025 | Dec. 31, 2024 | Change | | :-------------------- | :------------ | :------------ | :----- | | Total assets | $7,550,162 | $7,930,380 | (4.8)% | | Customer funds (current assets) | $6,053,390 | $6,439,153 | (6.0)% | | Total liabilities | $6,799,431 | $7,205,590 | (5.6)% | | Outstanding operating balances | $6,578,390 | $6,964,153 | (5.6)% | | Total shareholders' equity | $750,731 | $724,790 | 3.6% | Consolidated Statements of Cash Flows Net cash provided by operating activities increased significantly to $53.7 million in Q1 2025 from $39.5 million in Q1 2024, despite a decrease in net income, largely due to changes in operating assets and liabilities, while net cash used in investing and financing activities also decreased Cash Flow Activity | Cash Flow Activity (in thousands) | 1Q 2025 | 1Q 2024 | Change | | :-------------------------------- | :------ | :------ | :----- | | Net cash provided by operating activities | $53,716 | $39,510 | 35.9% | | Net cash used in investing activities | $(47,986) | $(114,147) | 57.9% (less outflow) | | Net cash used in financing activities | $(402,446) | $(521,113) | 22.8% (less outflow) | | Net change in cash, cash equivalents, restricted cash and customer funds | $(394,838) | $(597,291) | 33.9% (less decrease) | - Capital advance extended to customers increased to $84.1 million in Q1 2025, while capital advance collected from customers also increased to $95.2 million[32] - Common stock repurchases significantly decreased to $17.8 million in Q1 2025 from $51.0 million in Q1 2024[32] Contact Information Contact Information This section provides the contact details for investor relations and media inquiries - Investor inquiries can be directed to Michelle Wang at investor@payoneer.com[18] - Media inquiries can be directed to Angela Sullivan at PR@payoneer.com[18]