Payoneer (PAYO) - 2021 Q4 - Annual Report

Part I Business Overview Payoneer operates a global payment and commerce-enabling platform for digital businesses, facilitating cross-border transactions and offering diverse financial services globally - Payoneer, founded in 2005, is a global payment and commerce-enabling platform democratizing access to global commerce for SMBs[17] Fiscal Year 2021 Performance Highlights | Metric | Value | | :--- | :--- | | Revenue | $473.4 million | | Revenue Growth (YoY) | 37% | | Supported Trade Corridors | Over 7,000 | | Countries and Territories Served | Over 190 | | Average New Customer Applications per Month | Over 300,000 | - The company's growth strategy focuses on leveraging marketplace ecosystems and B2B AP/AR, expanding partnerships, extending product offerings, and pursuing strategic M&A[65][68][69] - Payoneer is regulated as a non-bank financial institution in key markets including the United States, Europe, Hong Kong, Japan, Australia, and India[39] - As of December 31, 2021, Payoneer's workforce comprised 1,871 employees across 32 countries and 58 nationalities[91] Risk Factors The company faces significant business, regulatory, operational, and financial risks, including intense competition, customer concentration, evolving global regulations, cybersecurity threats, and a history of net losses - A significant concentration risk exists with Amazon, which generated an estimated 24% of Payoneer's 2021 revenues[125] - The company faces substantial competition from traditional banks, global digital platforms, and merchant service providers[117][119] - Approximately 24% of 2021 revenue was generated from Greater China, exposing the company to local economic, political, and regulatory changes, including ongoing license application processes[210][211] - The business is subject to extensive global regulations, including money transmission, data protection, and anti-money laundering laws, with non-compliance potentially leading to significant fines and penalties[195][216][219] - The company has a history of net losses, including $34.0 million in 2021, $23.7 million in 2020, and $0.6 million in 2019, with anticipated increasing future expenses[126] - Cybersecurity breaches, system failures, and unauthorized data disclosure pose significant risks, potentially leading to liability, reputational damage, and service disruptions[162][164] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[266] Properties Payoneer's principal executive office is in New York City, with all global office spaces leased and deemed adequate for immediate needs - The company's principal executive office is in New York City, with additional leased offices in major global metropolitan areas[267] Legal Proceedings The company is not currently party to any legal proceedings expected to significantly affect its financial position or profitability - Payoneer is not presently party to any legal proceedings expected to significantly impact its financial position or profitability[268] Mine Safety Disclosures This item is not applicable to the company - Not applicable[269] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Payoneer's common stock and warrants trade on Nasdaq, with 353 holders of record as of February 25, 2022, no cash dividends paid, and recent share repurchases for tax liabilities - The company's common stock and warrants trade on The Nasdaq Global Market under symbols "PAYO" and "PAYOW"[272] - As of February 25, 2022, there were 353 holders of record for the company's common stock[273] - The company has not paid any cash dividends on its common stock to date[274] Issuer Purchases of Equity Securities (Q4 2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 2021 | N/A | N/A | | Nov 2021 | N/A | N/A | | Dec 2021 | 279,596 | $6.46 | | Total | 279,596 | $6.46 | Reserved This item is reserved and contains no information Management's Discussion and Analysis of Financial Condition and Results of Operations In 2021, Payoneer's revenue grew 37% to $473.4 million driven by increased transaction volume, though net loss widened to $34.0 million due to higher operating expenses following its June 2021 public listing and reorganization Key Financial Performance (2021 vs. 2020) | Metric (in thousands) | 2021 | 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $473,403 | $345,592 | $127,811 | 37% | | Transaction costs | $101,476 | $97,040 | $4,436 | 5% | | Operating loss | ($30,209) | ($17,295) | ($12,914) | 75% | | Net loss | ($33,987) | ($23,746) | ($10,241) | 43% | Transaction Volume Trend (2019-2021) | Year | Volume (in billions) | YoY Growth | | :--- | :--- | :--- | | 2019 | $28.9 | 35% | | 2020 | $44.4 | 53% | | 2021 | $56.7 | 28% | Adjusted EBITDA Reconciliation (in thousands) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net loss | $(33,987) | $(23,746) | $(625) | | Depreciation and amortization | 17,997 | 17,095 | 10,341 | | Stock based compensation | 37,012 | 10,892 | 9,535 | | Reorganization related expenses | 5,087 | — | — | | Gain from change in fair value of Warrants | (11,824) | — | — | | Other adjustments | (1,684) | (4,161) | 1,179 | | Adjusted EBITDA | $28,166 | $6,388 | $24,615 | - The company completed its reorganization with FTAC Olympus Acquisition Corp. on June 25, 2021, becoming publicly traded and raising $874.5 million in gross proceeds[294][354] - As of December 31, 2021, the company held $465.9 million in cash and cash equivalents, deemed sufficient for at least the next twelve months of operating and capital expenditure requirements[358][359] Quantitative and Qualitative Disclosures About Market Risks Payoneer is exposed to market risks, primarily from interest rate changes affecting borrowings and foreign currency fluctuations impacting global operations and financial results - The company is exposed to interest rate risk, with floating-rate borrowings under its Warehouse Facility, where a hypothetical 1% change could materially affect financial results[416] - Payoneer faces foreign currency risk from global operations, with expenses and balances in various currencies subject to exchange rate fluctuations despite most revenue being in U.S. dollars[417][418] Financial Statements and Supplementary Data This section presents the audited consolidated financial statements for Payoneer Global Inc. for fiscal years 2019-2021, including balance sheets, statements of loss, comprehensive income, shareholders' equity, and cash flows, reflecting the 2021 reverse recapitalization Consolidated Balance Sheet Data (in thousands) | Account | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $4,962,723 | $3,570,459 | | Total Assets | $5,078,752 | $3,669,684 | | Total Current Liabilities | $4,497,828 | $3,440,922 | | Total Liabilities | $4,591,679 | $3,479,850 | | Total Shareholders' Equity | $487,073 | $24,299 | Consolidated Statement of Loss Data (in thousands) | Account | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Revenues | $473,403 | $345,592 | $317,750 | | Operating loss | $(30,209) | $(17,295) | $3,641 | | Net loss | $(33,987) | $(23,746) | $(625) | | Net loss per share (Basic & Diluted) | $(0.33) | $(0.80) | $(0.33) | Consolidated Statement of Cash Flows Data (in thousands) | Account | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $20,015 | $9,526 | $(14,312) | | Net cash from investing activities | $10,156 | $(66,854) | $(20,581) | | Net cash from financing activities | $1,396,195 | $1,673,464 | $353,743 | Revenue by Geographic Market (in thousands) | Region | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Greater China | $160,583 | $127,307 | $103,531 | | United States | $55,941 | $38,729 | $69,016 | | All other countries | $256,879 | $179,556 | $145,203 | | Total revenues | $473,403 | $345,592 | $317,750 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants regarding accounting principles, financial disclosure, or auditing scope - None[702] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of December 31, 2021, with no material changes to internal control over financial reporting, and no management assessment or auditor attestation report is included as permitted for newly public companies - The CEO and CFO concluded the company's disclosure controls and procedures were effective as of December 31, 2021[704] - The annual report does not include a management report or auditor attestation on internal control over financial reporting, as permitted for newly public companies[706] Part III Items 10-14 Information for Items 10 through 14, covering directors, executive officers, corporate governance, compensation, security ownership, and related transactions, is incorporated by reference from the forthcoming 2022 Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the forthcoming 2022 Proxy Statement[711][712][713][714][715] Part IV Exhibits, Financial Statement Schedules This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Form 10-K report, including an exhibit index and noting the omission of certain schedules - This section contains the index to the consolidated financial statements and the list of exhibits filed with the Form 10-K[717][718] Form 10-K Summary The company indicates there is no Form 10-K summary - None[723]