Payoneer Global (PAYO) Q1 2025 Earnings Call May 07, 2025 08:30 AM ET Company Participants Michelle Wang - Vice President-Investor RelationsJohn Caplan - Chief Executive OfficerBea Ordonez - Chief Financial OfficerDaniel Krebs - Senior AssociateWill Nance - Vice PresidentTrevor Williams - Managing DirectorSanjay Sakhrani - Managing Director Conference Call Participants Cristopher Kennedy - Research Analyst, Financial Services and Technology Operator Morning and thank you for standing by. Welcome to the Payo ...

Core Insights - WEX Inc. reported strong first-quarter 2024 results with adjusted earnings of $3.51 per share, exceeding the Zacks Consensus Estimate by 3.2% and showing a 1.5% increase year-over-year. However, revenues of $636.6 million fell short of the previous year by 2.5% despite beating estimates by 1% [1] - The stock price declined by 5.1% following the results announcement due to weak guidance for 2025 [1] Revenue Guidance - For 2025, WEX expects revenues between $2.57 billion and $2.63 billion, with the midpoint of $2.60 billion being below the current Zacks Consensus Estimate of $2.62 billion. Adjusted net income is projected between $14.72 and $15.32 per share, with the midpoint of $15.02 billion also below the consensus estimate of $15.15 billion [2] Segment Performance - The Mobility segment's revenues decreased by 1.5% year-over-year to $333.8 million, surpassing estimates of $324 million. The Corporate Payments segment saw revenues of $103.5 million, down 15.5% from the previous year, missing estimates of $112.9 million. Conversely, the Benefits segment's revenues increased by 4.2% year-over-year to $199.3 million, beating estimates of $192.5 million [3] Operating Results - Adjusted operating income fell by 4.6% to $157.3 million compared to the previous year, missing estimates of $231 million. The adjusted operating income margin was 36.7%, in line with estimates but down 180 basis points year-over-year [4] Balance Sheet & Cash Flow - WEX ended the quarter with cash and cash equivalents of $610.3 million, up from $595.8 million in the previous quarter. Long-term debt increased by 33% to $4.1 billion. The company reported a cash outflow of $481.6 million from operating activities, with adjusted free cash flow at $16.2 million and capital expenditures totaling $47.1 million [5] Q2 Guidance - For the second quarter of 2025, WEX anticipates revenues between $640 million and $660 million, with the midpoint of $650 million below the current Zacks Consensus Estimate of $652.1 million. Adjusted net income is expected to be between $3.60 and $3.80 per share, which is above the Zacks Consensus Estimate of $3.58 [6]

Core Viewpoint - The article highlights the significant growth in cross-border travel and consumption during the recent "May Day" holiday, driven by favorable policies and increased payment convenience for both outbound Chinese tourists and inbound foreign visitors [1][3]. Group 1: Cross-Border Travel Data - During the "May Day" holiday, a total of 10.89 million people crossed borders, averaging 2.18 million daily, representing a 28.7% increase compared to last year [3]. - The number of inbound foreign visitors reached 1.115 million, marking a 43.1% increase year-on-year [3]. - Inbound tourists' spending via Alipay increased by 180% during the first three days of the holiday [3]. Group 2: Consumption Trends in Key Cities - In Shanghai, foreign visitors spent 455 million yuan from April 30 to May 4, a year-on-year increase of 211.6% [4]. - The implementation of the 240-hour visa-free transit policy and enhanced tax refund policies have facilitated foreign consumption in China [4]. - The total tax refund sales in Shanghai during the holiday increased by 1.2 times, with the refund amount also rising by 1.3 times [4]. Group 3: Outbound Chinese Tourists - During the "May Day" holiday, outbound Chinese tourists' transactions via WeChat Pay increased by 37% [4]. - Alipay reported a 15% year-on-year increase in transaction volume for outbound tourism during the holiday [4]. - The top destinations for Chinese tourists included Hong Kong, Japan, and Macau, with Malaysia seeing a 200% increase in app visits following the visa exemption agreement [5]. Group 4: Payment Methods and Innovations - The article notes the growing popularity of new payment methods, allowing both domestic and foreign tourists to use familiar payment options [7]. - Alipay's "tap to pay" feature gained traction among foreign visitors, with a nearly 50% increase in spending during the holiday [9]. - WeChat Pay has expanded its services to facilitate cross-border transactions, with significant growth in usage among Hong Kong residents visiting mainland China [8].

Core Insights - The recent "May Day" holiday saw a significant increase in cross-border travel, contributing to consumer spending growth in China and attracting foreign tourists [1][2] Group 1: Cross-Border Travel Data - During the "May Day" holiday, a total of 10.896 million people crossed borders, averaging 2.179 million daily, marking a 28.7% increase from the previous year [2] - The number of foreign visitors entering China increased by 43.1% year-on-year, reaching 1.115 million [2] - In major cities like Shanghai, foreign consumer spending surged, with a 211.6% year-on-year increase in spending during the holiday [2][3] Group 2: Consumer Spending Trends - Foreign tourists' spending using Alipay increased by 180% compared to last year, while WeChat Pay showed nearly a twofold increase in both transaction counts and amounts [2][3] - The implementation of the 240-hour visa-free transit policy and optimized tax refund policies significantly facilitated foreign spending in China [3] Group 3: Payment Methods and Innovations - The rise of new payment methods has enhanced convenience for both domestic and foreign tourists, allowing them to use familiar payment options [4][5] - Alipay and WeChat Pay have introduced services that enable foreign visitors to use their home wallets for transactions in China [4] - The "Tap to Pay" feature of Alipay gained popularity among foreign visitors, with a nearly 50% increase in spending through this method during the holiday [5]

5月5日，旅客在山东烟台站下车出站。新华社发（唐克摄） "五一"假期刚刚结束。从微信、支付宝等平台公布的假期相关数据来看，国内游、出入境旅游持续升温，假期消费活力足。 数据显示，"五一"假期微信支付交易笔数同比增长超10%，广州、北京、上海、成都、重庆、深圳、东莞、苏州、杭州、佛山为全国微信支付消费热度前十 名城市。 出行、餐饮依然是假期消费热点。交通运输部、商务部等部门发布的数据显示，今年"五一"假期，全社会跨区域人员流动量超14.65亿人次，全国重点零售 和餐饮企业销售额同比增长6.3%。 微信发布的数据显示，"五一"假期机票、火车票、公共出行、酒店等消费均有明显增长。今年4月，高铁购票交易金额同比涨超10%；假期期间，餐饮行业 交易笔数同比增长达12%。 与此同时，入境游市场也进一步升温，便捷的支付服务，让来华旅行的外籍人士畅游畅买。数据显示，"五一"假期前三天，入境游客用支付宝消费金额同比 增长180%，外籍用户使用微信支付在境内消费笔数、金额同比均增长近2倍。 今年"五一"假期，入境游客最爱去哪玩？支付宝数据显示，跨境消费额前十名的省份包括广东、上海、浙江、新疆、福建、江苏、四川、北京、湖南、山 东 ...

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $275.2 million, an increase of 48.9% year over year, driven by increased clients and transactions [8][17] - Contribution profit was $87.6 million, up 26.3% year over year, with an adjusted EBITDA of $30 million, reflecting a 51.3% increase year over year [8][21] - Adjusted EBITDA margin reached a record 34.2%, with over 50% of year-over-year growth in contribution profit dropping to the bottom line [9][22] - The company ended Q1 with total cash and cash equivalents of $249.6 million, up from $209.4 million at the end of 2024, and generated a record free cash flow of $41.1 million [23][24] Business Line Data and Key Metrics Changes - The company signed clients across various industry verticals including utilities, government agencies, telecommunications, banking, insurance, and education, indicating a diverse client base [11][12] - The onboarding of large enterprise clients has contributed significantly to transaction growth, with a higher level of transactions processed reaching $173.2 million, up 28% year over year [17][18] Market Data and Key Metrics Changes - The company continues to serve essential sectors of the domestic economy, focusing on non-discretionary bills such as utilities and insurance, which are fundamental for households [5][6] - The average revenue per transaction increased to $1.59 from $1.37 in the prior year, attributed to the mix of large enterprise billers [17][18] Company Strategy and Development Direction - The company aims to maintain a compound annual growth rate (CAGR) of 20% for revenue and 20% to 30% for adjusted EBITDA, with a focus on leveraging operating efficiency [9][28] - The management emphasizes the importance of their technology platform and ecosystem, which reduces costs for clients while improving customer experience [7][32] - The company is exploring potential M&A opportunities but remains focused on organic growth, with no immediate need for acquisitions [25][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance despite macroeconomic challenges, citing strong sales momentum and a solid pipeline for future growth [5][31] - The management noted that they are not seeing any changes in sales cycles or implementation speeds, indicating resilience in their business model [44][45] - The company believes it is well-positioned for further growth, with a strong backlog and encouraging trends in consumer and business payment behaviors [29][31] Other Important Information - The company has a strong cash position, allowing for financial flexibility and the potential for strategic investments [25][51] - The management highlighted the importance of their diverse partner ecosystem, which complements their direct go-to-market strategy [12][102] Q&A Session Summary Question: Transaction growth trends and contributions from new vs. existing clients - Management indicated that both new customer implementations and same-store sales are growing, with new implementations currently contributing more significantly [37][38] Question: Dynamics behind gross revenue guidance - Management explained that the guidance reflects caution regarding large enterprise customers, as their growth patterns are still being assessed [39][41] Question: Changes in sales cycles or implementation pace due to macro uncertainty - Management reported no significant changes in sales cycles or implementation speeds, maintaining a strong pipeline [44][45] Question: M&A opportunities and criteria - Management stated that M&A is a secondary objective, with no immediate needs or specific criteria set for potential acquisitions [49][50] Question: Free cash flow conversion and expectations - Management emphasized that while free cash flow can fluctuate, they expect to generate decent cash annually after taxes [56][58] Question: Trends in demand across various verticals - Management noted strong performance across multiple verticals, with a proven platform that meets the needs of diverse clients [90][91] Question: Long-term operating margin expectations - Management refrained from providing specific long-term margin targets but indicated confidence in achieving good operating leverage [93][94]

Core Viewpoint - Shift4 Payments (FOUR) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, suggesting that revisions in earnings estimates can lead to significant price changes [4][6]. - Shift4 Payments is projected to earn $5.46 per share for the fiscal year ending December 2025, reflecting a year-over-year increase of 40.4% [8]. Analyst Sentiment and Market Position - Analysts have raised their earnings estimates for Shift4 Payments, with the Zacks Consensus Estimate increasing by 19.7% over the past three months [8]. - The upgrade to Zacks Rank 2 places Shift4 Payments in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10]. Zacks Rating System Overview - The Zacks Rank system classifies stocks based on earnings estimate revisions, with a proven track record of performance, where Zacks Rank 1 stocks have generated an average annual return of +25% since 1988 [7]. - The system maintains a balanced distribution of ratings, ensuring that only the top 5% of stocks receive a 'Strong Buy' rating, while the next 15% receive a 'Buy' rating [9].

Core Viewpoint - Ant Group plans to separately list its overseas segment, Ant International, registered in Singapore, on the Hong Kong stock exchange, with no current policy obstacles reported in discussions with regulatory authorities [1] Group 1: Company Overview - Ant International's core products include Alipay+, Antom, and WorldFirst, which cover C-end payment, B-end acquiring, and B2B cross-border payment services [1] - Ant International's revenue accounts for approximately 20% of Ant Group's total revenue [1]

Core Insights - Alipay's "Tap" payment feature has surpassed 100 million users within a year, indicating its rapid adoption and success in the market [1][2] - The feature is expanding beyond payment to various scenarios such as hospitals, residential areas, and tourist attractions, enhancing its ecosystem [1][4] - Concerns regarding security and privacy have been raised, but Alipay assures that "Tap" maintains the same level of security as the traditional "Scan" method [1][5] User Adoption and Demographics - "Tap" has been implemented in over 400 cities and integrated with more than 5,000 brands and millions of merchants [2] - Approximately 50% of "Tap" users are under 30 years old, showcasing its appeal to younger demographics [2] Technological Development - A new chip developed by Fudan Microelectronics is set to enhance the "Tap" experience, offering faster response times and compatibility with all smartphones [3] - The chip is designed to function in extreme temperatures and has already secured significant orders from Alipay [3] Expansion of Use Cases - "Tap" is evolving from a payment method to a new service entry point, with over 300 applications including food ordering, access control, and ticket verification [4] - Collaborations with various service providers are facilitating the integration of "Tap" into everyday activities, improving user convenience [4] Security Measures - Alipay has implemented multiple security layers for "Tap," including requiring phone unlock and risk assessment systems during transactions [5] - Specific use cases, such as "Tap to open doors," have been designed with one-time access permissions to ensure safety [5] Future Outlook - The company envisions "Tap" becoming a prevalent method for various transactions, while "Scan" will still be relevant in specific contexts [5]

Financial Data and Key Metrics Changes - Total Block gross profit was $2,290,000,000, up 9% year over year [9] - Adjusted EBITDA was $813,000,000, up 15% year over year [12] - Adjusted operating income was $466,000,000, up 28% year over year [12] - Adjusted free cash flow for the trailing twelve months ending in March was $1,530,000,000 compared to $1,070,000,000 a year ago [13] - The company expects gross profit growth of 12% for 2025, with 9.5% in Q2 and low double digits in Q3 [14] Business Line Data and Key Metrics Changes - Square gross profit grew by 9% year over year, driven by GPV growth of 7.2% [10] - Cash App gross profit was up 10% year over year, with gross profit per monthly transacting active reaching $81 [11] - The company saw a pronounced shift in consumer spending behavior, impacting Cash App inflows [12] Market Data and Key Metrics Changes - Global GPV growth for April was expected to be 9.6% year over year [18] - The company expects high single-digit GPV growth in Q2 [18] Company Strategy and Development Direction - The company is focused on product velocity and go-to-market strategies to gain market share [7] - Plans to expand Cash App's network, particularly targeting teens and families [7] - The company aims to leverage AI automation to enhance seller engagement and product offerings [7][30] - The launch of Cash App Afterpay is expected to drive growth in the second half of the year [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a more dynamic macro environment and reflected a cautious stance in guidance [14] - The company is prepared to navigate potential short-term volatility while focusing on long-term growth [21] - Management expressed confidence in the growth drivers for the second half of the year, including the expansion of Cash App Borrow [15] Other Important Information - The company has repurchased approximately $600,000,000 in stock so far this year [13] - The first product release event is scheduled to showcase over 100 new products and features [10] Q&A Session Questions and Answers Question: Can you provide more insight into the company's outlook given macro uncertainties? - Management highlighted internal changes and improvements in systems that are starting to yield results, particularly in Square [25][26] Question: What changed in consumer behavior during the tax refund season? - Management noted a change in Cash App customer behavior, impacting inflows, and reflected this in their guidance [36] Question: Can you elaborate on the Cash Card Afterpay functionality and its early results? - Management expressed excitement about the integration of Afterpay with Cash App, noting strong early adoption and plans for further rollout [44][46] Question: How does the company plan to expand its Borrow product? - Management indicated that the expansion of Borrow is tied to the capabilities of Square Financial Services, allowing for broader access and improved unit economics [51][88] Question: What are the key drivers behind Square's gross profit acceleration this year? - Management pointed to product innovation and enhancements in go-to-market strategies as key drivers for growth [68][70]