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Payoneer Reports Second Quarter 2023 Financial Results

Record quarterly revenue, up 40% year-over-year

Significantly expanding profitability while investing for near- and long-term growth

Announces an agreement to acquire a licensed China-based payment service provider

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 second quarter ended June 30, 2023.

Second Quarter 2023 Financial Highlights

 
($ in mm)

2Q 2022

3Q 2022

4Q 2022

1Q 2023

2Q 2023

YoY

Change
Revenue

$148.2

$158.9

$183.6

$192.0

$206.7

40%

Transaction costs as a % of revenue

17.7%

17.6%

16.6%

14.1%

13.8%

(390 bps)
Revenue less transaction costs

$122.0

$130.9

$153.2

$164.9

$178.2

46%

Net income (loss)

4.4

(26.5)

(10.2)

7.9

45.5

930%

Adjusted EBITDA

14.7

12.7

10.6

38.8

56.0

280%

 
Operational Metrics
Active Ideal Customer Profiles (ICPs) ('000s)1

467

479

488

491

495

6%

Volume ($bn)

$14.6

$15.1

$16.9

$15.7

$15.8

8%

Revenue as a % of volume ("Take Rate") 101 bps 105 bps 109 bps 122 bps 131 bps 30 bps
  1. Active ICPs are defined as customers with a Payoneer Account that have on average over $500 a month in volume and were active over the trailing twelve-month period.

“Payoneer delivers a broad suite of payment and financial services to emerging market SMBs,” said John Caplan, Chief Executive Officer of Payoneer. “Our customers use Payoneer as the easiest, most reliable way to connect into the global economy and manage their international financial activity across currencies, countries, customers, suppliers, and vendors.”

“We are making meaningful progress in growing ICPs and improving our overall customer experience. We increased active ICPs year-over-year by 13% each in APAC, SAMEA, and Latin America, rolled out new product features, and announced agreements to acquire a licensed China-based payment service provider and a real-time data platform. I am confident about our ambitious strategy for delivering durable profitable growth.”

Second Quarter 2023 Business Highlights (unless noted otherwise)

  • 6% active ICP growth year-over-year, including a second consecutive quarter of 18% growth in our larger ICPs, or those who have on average over $10k a month in volume
  • Announced an agreement to acquire a licensed China-based payment service provider on August 8, 2023. This transaction will support Payoneer’s fast-growing China business upon close, and is subject to customary closing conditions and regulatory approvals
  • Total B2B volume decreased 2% year-over-year; excluding the impact of customers proactively exited in 3Q22, B2B volume increased 12%
    • In APAC, SAMEA, and Latin America, where we predominantly serve outsourcing and services businesses, B2B volume grew 29% year-over-year
  • New and foundational product enhancements to serve larger ICPs, including scheduling payments, enabling multi-user access and card spend limits, and real-time availability of funds for US-based B2B payers via open banking integrations
  • On August 2, 2023, acquired Spott, a real-time data platform that will help us drive faster underwriting decisions in our working capital business
  • $20 million of share repurchases in the second quarter
  • $5.5 billion of customer funds as of June 30, 2023, up 8% year-over-year

2023 Guidance

“We continue to steadily acquire ICPs, generate significant revenue growth and margin expansion, and invest for future growth,” said Bea Ordonez, Chief Financial Officer. “Our revenue growth is accelerating as we increase monetization of our customer segments, drive ICP growth, and earn interest income revenue from customer funds held on our platform.”

“We are raising our full year 2023 guidance. We saw improving revenue growth trends in the second quarter and better exit rate dynamics, and we now expect $210 million of interest income revenue for the full year. Our $20 million increase in adjusted EBITDA guidance reflects the in-year benefit of recent headcount reductions, restricted hiring, and cost savings within our transaction expenses. We are improving our operating margin while accelerating our product roadmap, enhancing our customer experience, and expanding our global licensing framework.”

2023 guidance is as follows:

 

 

 

 

 

 

 

Revenue

$820 million - $830 million

 

 

 

 

Transaction costs

~15.5% of revenue

 

 

 

Adjusted EBITDA (1)

$160 million to $170 million

 

 

 

 

 

 

 

 

 

 

(1) Please refer to “Financial Information; Non-GAAP Financial Measures” below.

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 “2023 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.

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, August 8, 2023. 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 anyone anywhere to participate and succeed in the global digital economy. Since our founding, we have built a global financial platform that has already made it easier for millions of SMBs, particularly in emerging markets, to pay and get paid, manage their funds, and grow their business.

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 and other economic, business and/or competitive factors; (3) Payoneer’s estimates of its financial performance; (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, 2022 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, 2022 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: M&A related expense (income), stock-based compensation expenses, reorganization related expenses, share in losses (gain) of associated company, 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.

TABLE - 1
PAYONEER GLOBAL INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(U.S. dollars in thousands, except share and per share data)
 
(Unaudited)
Three months ended
June 30,

2023

2022

 
Revenues $

206,734

$

148,190

 

 
Transaction costs (Exclusive of depreciation and amortization shown separately below and inclusive of $436 and $338 in interest expense and fees associated with related party transactions during the three months ended June 30, 2023 and 2022, and $857 and $658 during the six months ended June 30, 2023 and 2022, respectively)

28,497

26,212

 

Other operating expenses (Exclusive of depreciation and amortization shown separately below)

40,527

35,392

 

Research and development expenses

27,995

26,607

 

Sales and marketing expenses

48,402

36,820

 

General and administrative expenses

22,012

20,192

 

Depreciation and amortization

5,909

5,171

 

Total operating expenses

173,342

150,394

 

 
Operating income (loss)

33,392

(2,204

)

 
Financial income (expense):
Gain from change in fair value of Warrants

13,586

12,831

 

Other financial income (expense), net

4,318

(4,824

)

Financial income, net

17,904

8,007

 

 
Income before taxes on income and share in gains (losses) of associated company

51,296

5,803

 

 
Taxes on income

5,747

1,374

 

 
Share in gains (losses) of associated company

(7

)

 
Net income $

45,549

$

4,422

 

 
Other comprehensive loss, net of tax
Foreign currency translation adjustments

(3,248

)

Other comprehensive loss, net of tax

(3,248

)

 
Comprehensive income $

45,549

$

1,174

 

 
Per Share Data
Net income per share attributable to common stockholders — Basic earnings per share $

0.12

$

0.01

 

— Diluted earnings per share $

0.12

$

0.01

 

 
Weighted average common shares outstanding — Basic

365,000,974

345,522,076

 

Weighted average common shares outstanding — Diluted

387,623,679

366,013,696

 

 

 

 
 

Disaggregation of revenue

 
The following table presents revenue recognized from contracts with customers as well as revenue from other sources, which consists of interest income:
 
Three months ended
June 30,

2023

2022

Revenue recognized at a point in time $

141,231

$

135,063

 

Revenue recognized over time

10,210

9,634

 

Revenue from contracts with customers

151,441

144,697

 

Revenue from other sources

55,293

3,493

 

Total revenues $

206,734

$

148,190

 

 

The following table presents our 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
June 30,

2023

2022

 

Primary regional markets
Greater China1 $

71,227

$

46,785

 

Europe2

41,699

31,035

 

Asia-Pacific2

27,385

20,168

 

North America3

26,041

20,518

 

South Asia, Middle East and North Africa2

21,711

16,851

 

Latin America2

18,671

12,833

 

Total revenues $

206,734

$

148,190

 

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 our country of domicile. Of North America revenues, the US represents $24,995 and $18,528 during the three months ended June 30, 2023 and 2022, respectively.

TABLE - 2
PAYONEER GLOBAL INC.
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (UNAUDITED)
(U.S. dollars in thousands)
 
Three months ended
June 30,

2023

2022

Net income $

45,549

 

$

4,422

 

Depreciation and amortization

5,909

 

5,171

 

Taxes on income

5,747

 

1,374

 

Other financial (income) expense, net

(4,318

)

4,824

 

EBITDA

52,887

 

15,791

 

Stock based compensation expenses1

16,173

 

11,890

 

Share in loss of associated company

 

7

 

M&A related expense (income)2

498

 

(116

)

Gain from change in fair value of Warrants3

(13,586

)

(12,831

)

Adjusted EBITDA $

55,972

 

$

14,741

 

 
Three months ended,
June 30, 2022 Sept. 30, 2022 Dec. 31, 2022 Mar. 31, 2023 June 30, 2023
 
Net income (loss) $

4,422

 

$

(26,452

)

$

(10,151

)

$

7,938

 

$

45,549

 

Depreciation & amortization

5,171

 

5,899

 

5,333

 

6,039

 

5,909

 

Taxes on income

1,374

 

2,635

 

7,610

 

9,172

 

5,747

 

Other financial (income) expense, net

4,824

 

3,617

 

(1,005

)

(2,350

)

(4,318

)

EBITDA

15,791

 

(14,301

)

1,787

 

20,799

 

52,887

 

Stock based compensation expenses1

11,890

 

13,525

 

13,827

 

16,927

 

16,173

 

Share in losses of associated company

7

 

2

 

13

 

 

 

M&A related expense (income)2

(116

)

(1,588

)

 

774

 

498

 

Loss (gain) from change in fair value of Warrants3

(12,831

)

15,095

 

(5,031

)

252

 

(13,586

)

Adjusted EBITDA $

14,741

 

$

12,733

 

$

10,596

 

$

38,752

 

$

55,972

 

 

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 for the three months ended June 30, 2023 relate to M&A-related third-party fees, including related legal, consulting and other expenditures. Amounts for the three months ended June 30, 2022 relate to a non-recurring fair value adjustment of a liability related to our 2020 acquisition of optile.

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 control of the Company.

TABLE - 3
PAYONEER GLOBAL INC.
EARNINGS PER SHARE (UNAUDITED)
(U.S. dollars in thousands, except share and per share data)
 
(Unaudited)
Three months ended June 30,

2023

2022

Numerator:
Net income $

45,549

$

4,422

Denominator:
Weighted average common shares outstanding —
Basic

365,000,974

345,522,076

Add:
Dilutive impact of RSUs and options to purchase common stock

21,928,779

19,844,013

Dilutive impact of private warrants

693,926

647,607

Weighted average common shares – diluted

387,623,679

366,013,696

Net income per share attributable to common stockholders — Basic earnings per share $

0.12

$

0.01

Diluted earnings per share $

0.12

$

0.01

TABLE - 4
PAYONEER GLOBAL INC.
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except share and per share data)
 
June 30, December 31,

2023

2022

(Unaudited)
Assets:
Current assets:
Cash and cash equivalents $

581,053

 

$

543,299

 

Restricted cash

9,710

 

2,882

 

Customer funds

5,528,701

 

5,838,612

 

Accounts receivable (net of allowance of $246 at June 30, 2023 and December 31, 2022)

11,260

 

12,878

 

Capital advance receivables (net of allowance of $4,565 at June 30, 2023 and $5,311 at December 31, 2022)

40,220

 

37,155

 

Other current assets

37,983

 

36,278

 

Total current assets

6,208,927

 

6,471,104

 

Non-current assets:
Property, equipment and software, net

13,599

 

14,392

 

Goodwill

19,889

 

19,889

 

Intangible assets, net

57,919

 

45,444

 

Restricted cash

6,092

 

4,848

 

Deferred taxes

14,002

 

4,169

 

Investment in associated company

 

6,429

 

Severance pay fund

970

 

1,095

 

Operating lease right-of-use assets

12,681

 

15,260

 

Other assets

9,771

 

12,021

 

Total assets $

6,343,850

 

$

6,594,651

 

Liabilities and shareholders’ equity:
Current liabilities:
Trade payables $

29,170

 

$

41,566

 

Outstanding operating balances

5,528,701

 

5,838,612

 

Other payables

100,574

 

97,334

 

Total current liabilities

5,658,445

 

5,977,512

 

Non-current liabilities:
Long-term debt from related party

15,639

 

16,138

 

Warrant liability

12,580

 

25,914

 

Other long-term liabilities

31,239

 

29,831

 

Total liabilities

5,717,903

 

6,049,395

 

Commitments and contingencies
 
Shareholders’ equity:
Preferred stock, $0.01 par value, 380,000,000 shares authorized; no shares were issued and outstanding at June 30, 2023 and December 31, 2022.

 

 

Common stock, $0.01 par value, 3,800,000,000 and 3,800,000,000 shares authorized; 363,252,231 and 352,842,025 shares issued and 359,051,208 and 352,842,025 shares outstanding at June 30, 2023 and December 31, 2022, respectively.

3,632

 

3,528

 

Treasury stock at cost, 4,201,025 and 0 shares as of June 30, 2023 and December 30, 2022, respectively

(19,725

)

Additional paid-in capital

697,258

 

650,433

 

Accumulated other comprehensive income (loss)

(176

)

(176

)

Accumulated deficit

(55,042

)

(108,529

)

Total shareholders’ equity

625,947

 

545,256

 

Total liabilities and shareholders’ equity $

6,343,850

 

$

6,594,651

 

TABLE - 5
PAYONEER GLOBAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(U.S. dollars in thousands)
 
Six months ended
June 30,

2023

2022

Cash Flows from Operating Activities
Net income $

53,487

 

$

24,633

 

Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization

11,948

 

9,626

 

Deferred taxes

(9,833

)

1,066

 

Stock-based compensation expenses

33,100

 

25,275

 

Share in gains of associated company

 

(13

)

Gain from change in fair value of Warrants

(13,334

)

(44,027

)

Foreign currency re-measurement loss (gain)

(606

)

2,491

 

Changes in operating assets and liabilities:
Other current assets

(1,621

)

(6,650

)

Trade payables

(13,157

)

9,538

 

Deferred revenue

407

 

24

 

Accounts receivable, net

1,618

 

(490

)

Capital advance extended to customers

(138,900

)

(109,422

)

Capital advance collected from customers

135,835

 

121,990

 

Other payables

(5,259

)

(6,318

)

Other long-term liabilities

(1,066

)

(3,695

)

Operating lease right-of-use assets

5,053

 

5,134

 

Other assets

2,247

 

(288

)

Net cash provided by operating activities

59,919

 

28,874

 

 
Cash Flows from Investing Activities
Purchase of property, equipment and software

(2,422

)

(5,093

)

Capitalization of internal use software

(12,921

)

(7,772

)

Severance pay fund distributions, net

125

 

481

 

Customer funds in transit, net

(54,188

)

(22,139

)

Net cash inflow from acquisition of remaining interest in joint venture

5,953

 

 

Net cash used in investing activities

(63,453

)

(34,523

)

 
Cash Flows from Financing Activities
Proceeds from issuance of common stock in connection with stock based compensation plan

12,091

 

11,312

 

Outstanding operating balances, net

(309,911

)

739,388

 

Borrowings under related party facility

14,015

 

15,322

 

Repayments under related party facility

(14,514

)

(14,219

)

Common stock repurchased

(17,125

)

 

Net cash provided by (used in) financing activities

(315,444

)

751,803

 

 
Effect of exchange rate changes on cash and cash equivalents

705

 

(2,491

)

 
Net change in cash, cash equivalents, restricted cash and customer funds

(318,273

)

743,663

 

Cash, cash equivalents, restricted cash and customer funds at beginning of period

6,386,720

 

4,838,433

 

Cash, cash equivalents, restricted cash and customer funds at end of period $

6,068,447

 

$

5,582,096

 

Supplemental information of investing and financing activities not involving cash flows:
Property, equipment, and software acquired but not paid $

870

 

$

551

 

Internal use software capitalized but not paid $

8,294

 

$

1,762

 

Common stock repurchased but not paid $

2,600

 

$

 

Right of use assets obtained in exchange for new operating lease liabilities $

2,474

 

$

11,266

 

 

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