Payoneer Reports First Quarter 2024 Financial Results

Rhea-AI Summary

Payoneer, a financial technology company, reported record quarterly revenue up 19% YoY in Q1 2024. The company saw strong growth across all channels, including 21% volume growth and 33% B2B volume growth. Active ICPs grew by 8% with 13% growth in larger ICPs. Payoneer continues to focus on accelerating revenue growth and increasing profitability.

Positive

• Record quarterly revenue up 19% YoY in Q1 2024.

• 21% volume growth and 33% B2B volume growth.

• 8% growth in active ICPs with 13% growth in larger ICPs.

• Strong acquisition in different channels driving revenue growth.

• Focus on accelerating revenue growth and increasing profitability.

Negative

• Transaction costs as a % of revenue increased to 14.9%.

• Uncertain impact on net income due to certain items out of control.

Insights

Financial Analyst

Payoneer's announcement of 19% year-over-year revenue growth demonstrates a strong financial performance for the first quarter of 2024, particularly in light of the 21% volume growth and significant improvement in net income by 265%.

The growth is spread across all business channels with a notable 33% B2B volume increase. This suggests a strategic expansion in Payoneer's core market segments and may indicate a healthier demand for Payoneer's services within the B2B sphere. The adjusted EBITDA growth also paints a positive picture for operational efficiency. However, the slight decrease in the 'Take Rate' could signal increased competitive pressures or a strategic pricing adjustment to capture more volume.

Regarding the stock, the share repurchase at an average price of $4.84 can be seen as a signal of confidence from management in the stock's value. The raised guidance for 2024 further strengthens investor sentiment, projecting a robust financial outlook.

From a retail investor's perspective, these results and future guidance may provide a sense of optimism regarding Payoneer's growth trajectory and profitability in the near term. However, investors should consider transaction cost projections around 17.5% of revenue, which may affect profit margins moving forward.

Market Research Analyst

The impressive 21% growth in transaction volume underscores Payoneer's growing footprint in the digital payment space, where it competes with other fintech giants. Special attention should be paid to the 34% increase in enterprise payouts volume, particularly in the travel vertical, which suggests effective targeting and penetration of vertical markets.

Furthermore, the increase in active Ideal Customer Profiles (ICPs) and the 34% increase in spend on Payoneer cards highlight a successful strategy to cross-sell and up-sell within their existing customer base. For long-term investors, the company's strategic focus on acquiring and retaining more valuable customers, paired with enhancements to their financial stack, might signal a sustainable competitive advantage in the rapidly evolving fintech industry.

Record quarterly revenue, up 19% year-over-year, driven by strong growth across the entire platform

21% volume growth, including 33% B2B volume growth

NEW YORK--(BUSINESS WIRE)-- Payoneer Global Inc. (“Payoneer” or the “Company”) (NASDAQ: PAYO), the financial technology company empowering the world’s small and medium-sized businesses to transact, do business and grow globally, today reported financial results for its first quarter ended March 31, 2024.

First Quarter 2024 Financial Highlights

($ in mm)		1Q 2023		2Q 2023		3Q 2023		4Q 2023		1Q 2024		YoY Change
Revenue ex. interest income		$141.9		$151.4		$147.6		$159.4		$162.9		15%
Interest income		50.1		55.3		60.4		64.9		65.3		30%
Revenue		$192.0		$206.7		$208.0		$224.3		$228.2		19%
Transaction costs as a % of revenue		14.1%		13.8%		14.6%		16.2%		14.9%		80 bps
Net income		$7.9		$45.5		$12.8		$27.0		$29.0		265%
Adjusted EBITDA		38.8		56.0		58.2		52.2		65.2		68%
Operational Metrics
Volume ($bn)		$15.3		$15.3		$16.3		$19.0		$18.5		21%
Active Ideal Customer Profiles (ICPs) ('000s)1		491		495		502		516		530		8%
Revenue as a % of volume ("Take Rate")		125 bps		135 bps		127 bps		118 bps		124 bps		-1 bps
SMB customer take rate2		104 bps		110 bps		107 bps		100 bps		108 bps		4 bps

1.		Active ICPs are defined as customers with a Payoneer Account that have on average over $500 per month in volume and were active over the trailing twelve-month period.
2.		SMB customer take rate represents revenue from SMBs who sell on marketplaces, B2B SMBs, and Merchant Services, divided by the associated volume from each respective channel.

“Payoneer delivered record quarterly revenue and strong profitability in the first quarter, driven by growth across all channels, including faster growth in our higher take rate B2B and Merchant Services businesses,” said John Caplan, Chief Executive Officer. “We grew ICPs by 8% and generated 21% volume growth, our highest growth rate in nearly 3 years. We are making steady progress against our strategic priorities, accelerating underlying revenue growth, and increasing profitability.”

First Quarter 2024 Business Highlights

• 8% active ICP growth, including 13% growth in larger ICPs who have on average over $10,000 per month in volume
• 21% volume growth year-over-year reflects:
  • B2B volume of $2.2 billion increased 33% year-over-year, driven by strong acquisition, improved ability to support more industries, and continued enhancements to our product features and functionality
  • Merchant Services (Checkout) volume of $92 million increased 217% year-over-year driven by strong acquisition of $10K+ customers
  • Marketplace volume of $11.0 billion increased 13% year-over-year led by continued strength from large ecommerce platforms
  • Enterprise payouts volume of $5.1 billion increased 34% year-over-year, led by the travel vertical where we increased the number of routes we serve compared to a year ago
• $1.1 billion of spend on Payoneer cards, up 34% year-over-year, as we continue to successfully cross-sell our card product to customers
• $5.9 billion of customer funds as of March 31, 2024, up 8% year-over-year
• $51 million of share repurchases at a weighted average price of $4.84

2024 Guidance

“Payoneer’s first quarter results reflect strong growth across our entire platform. We delivered 21% growth in revenue excluding interest income and normalizing for the $7.5 million impact of certain non-volume fees earned in the prior year period, a significant acceleration compared to 8% in 2023,” said Bea Ordonez, Chief Financial Officer. “We are raising our 2024 guidance to reflect both the robust first quarter performance and our momentum heading into the second quarter. We continue to drive acquisition and improve retention of our most valuable customers while we enhance our financial stack and further penetrate the fast-growing B2B market.”

2024 guidance is as follows:

		Revenue	$895 million - $905 million
		Transaction costs	~17.5% of revenue
		Adjusted EBITDA (1)	$200 million to $210 million
(1) Guidance for fiscal year, where adjusted, is provided on a non-GAAP basis, which Payoneer will continue to identify as it reports its future financial results. The Company cannot reconcile its expected adjusted EBITDA to expected net income under “2024 Guidance” without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time, which unavailable information could have a significant impact on the Company’s GAAP financial results. Please refer to “Financial Information; Non-GAAP Financial Measures” below for a description of the calculation of adjusted EBITDA.

Webcast

Payoneer will host a live webcast of its earnings on a conference call with the investment community beginning at 8:30 a.m. ET today, May 8, 2024. To access the webcast, go to the investor relations section of the Company’s website at https://investor.payoneer.com. A replay will be available on the investor relations website following the call.

About Payoneer

Payoneer is the financial technology company empowering the world’s small and medium-sized businesses to transact, do business, and grow globally. Payoneer was founded in 2005 with the belief that talent is equally distributed, but opportunity is not. It is our mission to enable any entrepreneur and business anywhere to participate and succeed in an increasingly digital global economy. Since our founding, we have built a global financial stack that removes barriers and simplifies cross-border commerce. We make it easier for millions of SMBs, particularly in emerging markets, to connect to the global economy, pay and get paid, manage their funds across multiple currencies, and grow their businesses.

Forward-Looking Statements

This press release includes, and oral statements made from time to time by representatives of Payoneer, may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or Payoneer’s future financial or operating performance. For example, projections of future revenue, transaction cost and adjusted EBITDA are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “plan,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Payoneer and its management, as the case may be, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) changes in applicable laws or regulations; (2) the possibility that Payoneer may be adversely affected by geopolitical events and conflicts, such as the current conflict between Israel and Hamas, and other economic, business and/or competitive factors; (3) changes in the assumptions underlying our financial estimates; (4) the outcome of any known and/or unknown legal or regulatory proceedings; and (5) other risks and uncertainties set forth in Payoneer’s Annual Report on Form 10-K for the period ended December 31, 2023 and future reports that Payoneer may file with the SEC from time to time. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Payoneer does not undertake any duty to update these forward-looking statements.

Financial Information; Non-GAAP Financial Measures

Some of the financial information and data contained in this press release, such as adjusted EBITDA, have not been prepared in accordance with United States generally accepted accounting principles (“GAAP”). Payoneer uses these non-GAAP measures to compare Payoneer’s performance to that of prior periods for budgeting and planning purposes. Payoneer believes these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Payoneer’s results of operations. Payoneer's method of determining these non-GAAP measures may be different from other companies' methods and, therefore, may not be comparable to those used by other companies and Payoneer does not recommend the sole use of these non-GAAP measures to assess its financial performance. Payoneer management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in Payoneer’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. You should review Payoneer’s financial statements, which are included in Payoneer’s Annual Report on Form 10-K for the year ended December 31, 2023 and its subsequent Quarterly Reports on Form 10-Q, and not rely on any single financial measure to evaluate Payoneer’s business.

Non-GAAP measures include the following item:

Adjusted EBITDA: We provide adjusted EBITDA, a non-GAAP financial measure that represents our net income (loss) adjusted to exclude, as applicable: M&A related expense (income), stock-based compensation expenses, restructuring charges, share in losses (gain) of associated company, loss (gain) from change in fair value of warrants, other financial expense (income), net, taxes on income, and depreciation and amortization.

Other companies may calculate the above measure differently, and therefore Payoneer’s measures may not be directly comparable to similarly titled measures of other companies.

In addition, in this earnings release, we reference volume, which is an operational metric. Volume refers to the total dollar value of transactions successfully completed or enabled by our platform, not including orchestration transactions. For a customer that both receives and later sends payments, we count the volume only once. Note: as disclosed in the Company’s Form 10-K filed with the SEC on February 28, 2024, we have updated our methodology to adjust for previously disclosed limited exceptions where both received and sent payments were counted in volumes, such that we count volume only once for a customer that both receives and later sends payments.

TABLE - 1
PAYONEER GLOBAL INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(U.S. dollars in thousands, except share and per share data)
		Three months ended March 31,
		2024				2023
Revenues		$	228,183			$	192,014
Transaction costs (Exclusive of depreciation and amortization shown separately below and inclusive of $438 and $421 in interest expense and fees associated with related party transactions during the three months ended March 31, 2024 and 2023, respectively)			33,966				27,081
Other operating expenses			40,283				40,095
Research and development expenses			32,051				29,280
Sales and marketing expenses			49,890				47,826
General and administrative expenses			24,209				26,681
Depreciation and amortization			9,408				6,039
Total operating expenses			189,807				177,002
Operating income			38,376				15,012
Financial income (expense):
Gain (loss) from change in fair value of Warrants			1,761				(252	)
Other financial income, net			2,747				2,350
Financial income, net			4,508				2,098
Income before taxes on income			42,884				17,110
Taxes on income			13,910				9,172
Net income		$	28,974			$	7,938
Other comprehensive income (loss)
Unrealized loss on available-for-sale debt securities, net			(1	)			—
Unrealized gain on cash flow hedges, net			34				—
Tax expense on unrealized gains on cash flow hedges, net			(6	)			—
Other comprehensive income, net of tax			27				—
Comprehensive income		$	29,001			$	7,938
Per Share Data
Net income per share attributable to common stockholders — Basic earnings per share		$	0.08			$	0.02
— Diluted earnings per share		$	0.08			$	0.02
Weighted average common shares outstanding — Basic			359,306,195				360,220,161
Weighted average common shares outstanding — Diluted			378,715,301				388,308,279

Disaggregation of revenue

The following table presents revenue recognized from contracts with customers as well as revenue from other sources:

		Three months ended March 31,
		2024			2023
Revenue recognized at a point in time		$	159,796		$	131,892
Revenue recognized over time			662			7,844
Revenue from contracts with customers		$	160,458		$	139,736
Interest income on customer balances		$	65,268		$	50,058
Capital advance income			2,457			2,220
Revenue from other sources		$	67,725		$	52,278
Total revenues		$	228,183		$	192,014

The following table presents the Company’s revenue disaggregated by primary regional market, with revenues being attributed to the country (in the region) in which the billing address of the transacting customer is located, with the exception of global bank transfer revenues, where revenues are disaggregated based on the billing address of the transaction funds source.

		Three months ended March 31,
		2024			2023
Primary regional markets
Greater China(1)		$	81,358		$	63,960
Europe(2)			43,455			38,621
Asia-Pacific(2)			33,365			25,381
North America(3)			23,010			25,536
South Asia, Middle East and North Africa(2)			23,925			19,945
Latin America(2)			23,070			18,571
Total revenues		$	228,183		$	192,014

1.		Greater China is inclusive of mainland China, Hong Kong, Macao and Taiwan
2.		No single country included in any of these regions generated more than 10% of total revenue
3.		The United States is the Company’s country of domicile. Of North America revenues, the US represents $21,925 and $24,575 during the three months ended March 31, 2024 and 2023, respectively.

TABLE - 2
PAYONEER GLOBAL INC.
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (UNAUDITED)
(U.S. dollars in thousands)
		Three months ended
		March 31,
		2024				2023
Net income		$	28,974			$	7,938
Depreciation and amortization			9,408				6,039
Taxes on income			13,910				9,172
Other financial income, net			(2,747	)			(2,350	)
EBITDA			49,545				20,799
Stock based compensation expenses(1)			15,077				16,927
M&A related expense(2)			2,375				774
Loss (gain) from change in fair value of Warrants(3)			(1,761	)			252
Adjusted EBITDA		$	65,236			$	38,752
		Three months ended,
		Mar. 31, 2023				June 30, 2023				Sept. 30, 2023				Dec. 31, 2023				Mar. 31, 2024
Net income (loss)		$	7,938			$	45,549			$	12,825			$	27,021			$	28,974
Depreciation and amortization			6,039				5,909				7,116				8,750				9,408
Taxes on income			9,172				5,747				10,012				14,272				13,910
Other financial income, net			(2,350	)			(4,318	)			(1,137	)			(3,763	)			(2,747	)
EBITDA			20,799				52,887				28,816				46,280				49,545
Stock based compensation expenses(1)			16,927				16,173				15,330				17,338				15,077
M&A related expense(2)			774				498				1,745				451				2,375
Loss (gain) from change in fair value of Warrants(3)			252				(13,586	)			7,799				(11,824	)			(1,761	)
Restructuring charges(4)			—				—				4,488				—				—
Adjusted EBITDA		$	38,752			$	55,972			$	58,178			$	52,245			$	65,236

1.		Represents non-cash charges associated with stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy.
2.		Amounts relate to M&A-related third-party fees, including related legal, consulting and other expenditures.
3.		Changes in the estimated fair value of the warrants are recognized as gain or loss on the condensed consolidated statements of comprehensive income. The impact is removed from EBITDA as it represents market conditions that are not in our control.
4.		We initiated a plan to reduce our workforce during the three months ended September 30, 2023, and had non-recurring costs related to severance and other employee termination benefits.

TABLE - 3
PAYONEER GLOBAL INC.
EARNINGS PER SHARE (UNAUDITED)
(U.S. dollars in thousands, except share and per share data)
		Three months ended March 31,
		2024			2023
Numerator:
Net income		$	28,974		$	7,938
Denominator:
Weighted average common shares outstanding —
Basic			359,306,195			360,220,161
Add:
Dilutive impact of RSUs, ESPP and options to purchase common stock			18,725,608			27,332,566
Dilutive impact of private Warrants			683,498			755,552
Weighted average common shares — diluted			378,715,301			388,308,279
Net income per share attributable to common stockholders — Basic earnings per share		$	0.08		$	0.02
Diluted earnings per share		$	0.08		$	0.02

TABLE - 4
PAYONEER GLOBAL INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(U.S. dollars in thousands, except share and per share data)
		March 31,				December 31,
		2024				2023
Assets:
Current assets:
Cash and cash equivalents		$	587,180			$	617,022
Restricted cash			7,907				7,030
Customer funds			5,920,924				6,390,526
Accounts receivable (net of allowance of $360 at March 31, 2024 and $385 at December 31, 2023)			7,224				7,980
Capital advance receivables (net of allowance of $5,357 at March 31, 2024 and $5,059 at December 31, 2023)			52,133				45,493
Other current assets			40,780				40,672
Total current assets			6,616,148				7,108,723
Non-current assets:
Property, equipment and software, net			14,896				15,499
Goodwill			19,889				19,889
Intangible assets, net			82,647				76,266
Restricted cash			6,025				5,780
Deferred taxes			16,688				15,291
Severance pay fund			821				840
Operating lease right-of-use assets			22,567				24,854
Other assets			15,804				15,977
Total assets		$	6,795,485			$	7,283,119
Liabilities and shareholders’ equity:
Current liabilities:
Trade payables		$	35,295			$	33,941
Outstanding operating balances			5,920,924				6,390,526
Other payables			103,927				117,508
Total current liabilities			6,060,146				6,541,975
Non-current liabilities:
Long-term debt from related party			14,429				18,411
Warrant liability			6,794				8,555
Other long-term liabilities			52,574				49,905
Total liabilities			6,133,943				6,618,846
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value, 380,000,000 shares authorized; no shares were issued and outstanding at March 31, 2024 and December 31, 2023.			—				—
Common stock, $0.01 par value, 3,800,000,000 and 3,800,000,000 shares authorized; 377,294,480 and 368,655,185 shares issued and 355,695,854 and 357,590,493 shares outstanding at March 31, 2024 and December 31, 2023, respectively.			3,773				3,687
Treasury stock at cost, 21,598,626 and 11,064,692 shares as of March 31, 2024 and December 31, 2023, respectively.			(108,096	)			(56,936	)
Additional paid-in capital			752,236				732,894
Accumulated other comprehensive loss			(149	)			(176	)
Retained earnings (accumulated deficit)			13,778				(15,196	)
Total shareholders’ equity			661,542				664,273
Total liabilities and shareholders’ equity		$	6,795,485			$	7,283,119

TABLE - 5
PAYONEER GLOBAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(U.S. dollars in thousands)
		Three months ended
		March 31,
		2024				2023
Cash Flows from Operating Activities
Net income		$	28,974			$	7,938
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			9,408				6,039
Deferred taxes			(1,397	)			1,806
Stock-based compensation expenses			15,077				16,927
Loss (gain) from change in fair value of Warrants			(1,761	)			252
Foreign currency re-measurement loss (gain)			1,541				(416	)
Changes in operating assets and liabilities:
Other current assets			(11	)			(8,159	)
Trade payables			1,465				(10,090	)
Deferred revenue			(28	)			323
Accounts receivable, net			756				2,047
Capital advance extended to customers			(80,173	)			(71,184	)
Capital advance collected from customers			73,533				66,266
Other payables			(12,528	)			(10,414	)
Other long-term liabilities			2,669				(635	)
Operating lease right-of-use assets			2,287				2,335
Interest and amortization of discount on investments			(474	)			—
Other assets			172				867
Net cash provided by operating activities			39,510				3,902
Cash Flows from Investing Activities
Purchase of property, equipment and software			(1,616	)			(1,764	)
Capitalization of internal use software			(14,055	)			(7,588	)
Severance pay fund distributions, net			19				23
Customer funds in transit, net			154				(53,628	)
Purchases of investments in available-for-sale debt securities			(118,649	)			—
Maturities and sales of investments in available-for-sale debt securities			20,000				—
Net cash inflow from acquisition of remaining interest in joint venture			—				5,953
Net cash used in investing activities			(114,147	)			(57,004	)
Cash Flows from Financing Activities
Proceeds from issuance of common stock in connection with stock-based compensation plan, net of taxes paid related to settlement of equity awards			3,432				5,865
Outstanding operating balances, net			(469,602	)			(371,338	)
Borrowings under related party facility			5,378				9,842
Repayments under related party facility			(9,360	)			(8,859	)
Common stock repurchased			(50,961	)			—
Net cash used in financing activities			(521,113	)			(364,490	)
Effect of exchange rate changes on cash and cash equivalents			(1,541	)			515
Net change in cash, cash equivalents, restricted cash and customer funds			(597,291	)			(417,077	)
Cash, cash equivalents, restricted cash and customer funds at beginning of period			7,018,367				6,386,720
Cash, cash equivalents, restricted cash and customer funds at end of period		$	6,421,076			$	5,969,643
Supplemental information of investing and financing activities not involving cash flows:
Property, equipment, and software acquired but not paid		$	700			$	400
Internal use software capitalized but not paid		$	5,216			$	2,609
Common stock repurchased but not paid		$	1,699			$	—
Right of use assets obtained in exchange for new operating lease liabilities		$	—			$	2,298

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240508150929/en/

Investors:

Michelle Wang

investor@payoneer.com

Media:

Alison Dahlman

PR@payoneer.com

Source: Payoneer

FAQ

What was the revenue growth percentage in Q1 2024 for Payoneer?

Payoneer reported a 19% year-over-year revenue growth in Q1 2024.

How much did the active Ideal Customer Profiles grow by in Q1 2024?

Active Ideal Customer Profiles grew by 8% in Q1 2024.

What was the B2B volume growth percentage in Q1 2024 for Payoneer?

Payoneer saw a 33% B2B volume growth in Q1 2024.

What was the transaction costs as a percentage of revenue in Q1 2024?

Transaction costs as a % of revenue were 14.9% in Q1 2024.

What is Payoneer's 2024 revenue guidance range?

Payoneer's 2024 revenue guidance range is $895 million to $905 million.