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Payoneer Reports Third Quarter 2023 Financial Results

Delivers another quarter of record revenue, up 31% year-over-year

Reiterates 2023 revenue guidance and raises adjusted EBITDA guidance

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 third quarter ended September 30, 2023.

Third Quarter 2023 Financial Highlights

($ in mm)

3Q 2022

4Q 2022

1Q 2023

2Q 2023

3Q 2023

YoY

Change
Revenue

$158.9

$183.6

$192.0

$206.7

$208.0

31%

Transaction costs as a % of revenue

17.6%

16.6%

14.1%

13.8%

14.6%

(300 bps)

Revenue less transaction costs

$130.9

$153.2

$164.9

$178.2

$177.6

36%

Net income (loss)

(26.5)

(10.2)

7.9

45.5

12.8

n.m.

Adjusted EBITDA

12.7

10.6

38.8

56.0

58.2

357%

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

479

488

491

495

502

5%

Volume ($bn)

$15.1

$16.9

$15.7

$15.8

$16.8

11%

Revenue as a % of volume ("Take Rate")

105 bps

 

109 bps

 

122 bps

 

131 bps

 

124 bps

 

19 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’s active ICP and revenue growth year-over-year, along with significantly expanding profitability, underscores our progress and conviction in the strategy we laid out at our investor day in September,” said John Caplan, Chief Executive Officer of Payoneer. “Global small- and medium-sized businesses need a borderless financial stack to grow and scale and Payoneer is making strategic investments in our platform and ecosystem of partnerships to better serve their needs. Our focus remains on our ICPs and adding to our financial stack to drive durable, profitable revenue growth.”

“We are reiterating our full year 2023 revenue guidance,” said Bea Ordonez, Chief Financial Officer. “We are steadily increasing active ICPs, improving monetization of customers, and cross selling our product suite. We are raising our 2023 adjusted EBITDA guidance to $200 million at the midpoint. This implies a 24% adjusted EBITDA margin for 2023 and demonstrates our commitment to driving operating leverage even as we accelerate investments in our product roadmap, customer experience, and global licensing framework.”

Note: The Company cannot reconcile its expected 2023 adjusted EBITDA to expected 2023 net income 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.

Third Quarter 2023 Business Highlights (unless noted otherwise)

  • 5% active ICP growth year-over-year, including 17% growth in our larger ICPs, or those who have on average over $10k a month in volume
  • In October 2023, announced a collaboration with Etsy to support its expansion of Etsy Payments into emerging markets
  • Total B2B volume increased 1% year-over-year; excluding the impact of customers proactively exited in 3Q22, B2B volume increased 6%
    • In APAC, SAMEA, and Latin America, where we predominantly serve outsourcing and services businesses, B2B volume grew 23% year-over-year
  • Launched Shopify native Payoneer Checkout capabilities to improve the consumer shopping experience and Payoneer’s merchant conversion rates
  • Implemented bank feed integration with QuickBooks to increase efficiency and interoperability for customers
  • Launched New Zealand Dollar (NZD) receiving account so Payoneer’s customers can get paid locally from their clients and marketplaces
  • $15 million of share repurchases
  • $5.4 billion of customer funds as of September 30, 2023, up 7% year-over-year

2023 Guidance

2023 guidance is as follows:

 

 

Revenue

$820 million - $830 million

 

 

 

 

Transaction costs

~14.5% of revenue

 

 

 

 

Adjusted EBITDA (1)

$195 million to $205 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 “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. 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, November 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 events and conflicts, such as the current conflict between Israel and Hamas, 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, restructuring 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 (LOSS) (UNAUDITED)
(U.S. dollars in thousands, except share and per share data)
 
Three months ended
September 30,

2023

2022

 
Revenues $

208,035

 

$

158,917

 

 
Transaction costs (Exclusive of depreciation and amortization shown separately below and inclusive of $437 and $384 in interest expense and fees associated with related party transactions during the three months ended September 30, 2023 and 2022, respectively)

30,393

 

27,986

 

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

40,301

 

37,744

 

Research and development expenses

26,950

 

29,617

 

Sales and marketing expenses

48,664

 

41,081

 

General and administrative expenses

25,112

 

21,693

 

Depreciation and amortization

7,116

 

5,899

 

Total operating expenses

178,536

 

164,020

 

 
Operating income (loss)

29,499

 

(5,103

)

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

(7,799

)

(15,095

)

Other financial income (expense), net

1,137

 

(3,617

)

Financial expense, net

(6,662

)

(18,712

)

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

22,837

 

(23,815

)

 
Taxes on income

10,012

 

2,635

 

 
Share in losses of associated company

 

(2

)

 
Net income (loss) $

12,825

 

$

(26,452

)

 
Other comprehensive loss, net of tax
Foreign currency translation adjustments

 

(1,658

)

Other comprehensive loss, net of tax

 

(1,658

)

 
Comprehensive income (loss) $

12,825

 

$

(28,110

)

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

0.04

 

$

(0.08

)

— Diluted earnings (loss) per share $

0.03

 

$

(0.08

)

 
Weighted average common shares outstanding — Basic

357,429,113

 

349,740,787

 

Weighted average common shares outstanding — Diluted

381,845,099

 

349,740,787

 

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
September 30,

2023

2022

Revenue recognized at a point in time $

144,665

$

134,394

Revenue recognized over time

2,954

9,477

Revenue from contracts with customers

147,619

143,871

Revenue from other sources

60,416

15,046

Total revenues $

208,035

$

158,917

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
September 30,

2023

2022

Primary regional markets
Greater China1 $

72,513

$

50,162

Europe2

42,378

33,019

Asia-Pacific2

29,145

21,570

North America3

22,358

21,843

South Asia, Middle East and North Africa2

22,181

17,809

Latin America2

19,460

14,514

Total revenues $

208,035

$

158,917

  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 $21,348 and $20,675 during the three months ended September 30, 2023 and 2022, respectively.
 
TABLE - 2
PAYONEER GLOBAL INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA (UNAUDITED)
(U.S. dollars in thousands)
 
Three months ended
September 30,

2023

2022

Net income (loss) $

12,825

 

$

(26,452

)

Depreciation and amortization

7,116

 

5,899

 

Taxes on income

10,012

 

2,635

 

Other financial (income) expense, net

(1,137

)

3,617

 

EBITDA

28,816

 

(14,301

)

Stock based compensation expenses1

15,330

 

13,525

 

Share in loss of associated company

 

2

 

M&A related expense (income)2

1,745

 

(1,588

)

Loss from change in fair value of Warrants3

7,799

 

15,095

 

Restructuring charges4

4,488

 

 

Adjusted EBITDA $

58,178

 

$

12,733

 

 
Three months ended,

Sept. 30, 2022

 

Dec. 31, 2022

 

Mar. 31, 2023

 

Jun. 30, 2023

 

Sept. 30, 2023

 
Net income (loss) $

(26,452

)

$

(10,151

)

$

7,938

 

$

45,549

 

$

12,825

 

Depreciation & amortization

5,899

 

5,333

 

6,039

 

5,909

 

7,116

 

Taxes on income

2,635

 

7,610

 

9,172

 

5,747

 

10,012

 

Other financial (income) expense, net

3,617

 

(1,005

)

(2,350

)

(4,318

)

(1,137

)

EBITDA

(14,301

)

1,787

 

20,799

 

52,887

 

28,816

 

Stock based compensation expenses1

13,525

 

13,827

 

16,927

 

16,173

 

15,330

 

Share in losses of associated company

2

 

13

 

 

 

 

M&A related expense (income)2

(1,588

)

 

774

 

498

 

1,745

 

Loss (gain) from change in fair value of Warrants3

15,095

 

(5,031

)

252

 

(13,586

)

7,799

 

Restructuring charges4

 

 

 

 

4,488

 

Adjusted EBITDA $

12,733

 

$

10,596

 

$

38,752

 

$

55,972

 

$

58,178

 

  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 periods in 2023 relate to M&A-related third-party fees, including related legal, consulting and other expenditures. Amounts for the three months ended September 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 (loss). The impact is removed from EBITDA as it represents market conditions that are not in our control.
  4. The Company initiated a plan to reduce its workforce during the three months ending September 30, 2023 and had non-recurring costs related to severance and other employee termination benefits. Please refer to Note 10 of the Company’s third quarter 10-Q filing for additional information.
 
TABLE - 3
PAYONEER GLOBAL INC.
EARNINGS (LOSS) PER SHARE (UNAUDITED)
(U.S. dollars in thousands, except share and per share data)
 
Three months ended September 30,

2023

2022

Numerator:
Net income (loss) $

12,825

$

(26,452

)

Denominator:
Weighted average common shares outstanding —
Basic

357,429,113

349,740,787

 

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

23,678,424

-

 

Dilutive impact of private warrants

737,562

-

 

Weighted average common shares – diluted

381,845,099

349,740,787

 

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

0.04

$

(0.08

)

Diluted earnings (loss) per share $

0.03

$

(0.08

)

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

September 30,

 

December 31,

2023

 

2022

 
Assets:
Current assets:
Cash and cash equivalents $

590,565

 

$

543,299

 

Restricted cash

2,872

 

2,882

 

Customer funds

5,370,466

 

5,838,612

 

Accounts receivable (net of allowance of $618 at September 30, 2023 and $246 at December 31, 2022)

5,970

 

12,878

 

Capital advance receivables (net of allowance of $4,910 at September 30, 2023 and $5,311 at December 31, 2022)

49,156

 

37,155

 

Other current assets

42,253

 

36,278

 

Total current assets

6,061,282

 

6,471,104

 

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

13,733

 

14,392

 

Goodwill

19,889

 

19,889

 

Intangible assets, net

70,872

 

45,444

 

Restricted cash

6,518

 

4,848

 

Deferred taxes

16,193

 

4,169

 

Investment in associated company

 

6,429

 

Severance pay fund

944

 

1,095

 

Operating lease right-of-use assets

12,396

 

15,260

 

Other assets

15,931

 

12,021

 

Total assets $

6,217,758

 

$

6,594,651

 

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

35,587

 

$

41,566

 

Outstanding operating balances

5,370,466

 

5,838,612

 

Other payables

104,759

 

97,334

 

Total current liabilities

5,510,812

 

5,977,512

 

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

15,801

 

16,138

 

Warrant liability

20,379

 

25,914

 

Other long-term liabilities

32,800

 

29,831

 

Total liabilities

5,579,792

 

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 September 30, 2023 and December 31, 2022.

 

 

Common stock, $0.01 par value, 3,800,000,000 and 3,800,000,000 shares authorized; 365,953,562 and 352,842,025 shares issued and 359,014,445 and 352,842,025 shares outstanding at September 30, 2023 and December 31, 2022, respectively.

3,659

 

3,528

 

Treasury stock at cost, 6,939,117 and 0 shares as of September 30, 2023 and December 30, 2022, respectively

(34,759

)

Additional paid-in capital

711,459

 

650,433

 

Accumulated other comprehensive income (loss)

(176

)

(176

)

Accumulated deficit

(42,217

)

(108,529

)

Total shareholders’ equity

637,966

 

545,256

 

Total liabilities and shareholders’ equity $

6,217,758

 

$

6,594,651

 

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

2023

2022

Cash Flows from Operating Activities
Net income (loss) $

66,312

 

$

(1,819

)

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

19,064

 

15,525

 

Deferred taxes

(12,024

)

820

 

Stock-based compensation expenses

48,429

 

39,132

 

Share in gains of associated company

 

(11

)

Gain from change in fair value of Warrants

(5,535

)

(28,932

)

Foreign currency re-measurement loss

761

 

3,015

 

Changes in operating assets and liabilities:
Other current assets

(5,891

)

(10,825

)

Trade payables

(6,948

)

8,753

 

Deferred revenue

1,206

 

(30

)

Accounts receivable, net

6,908

 

(7,024

)

Capital advance extended to customers

(207,075

)

(145,424

)

Capital advance collected from customers

195,074

 

163,266

 

Other payables

(880

)

7,047

 

Other long-term liabilities

(1,429

)

(7,250

)

Operating lease right-of-use assets

7,262

 

7,862

 

Other assets

(3,906

)

221

 

Net cash provided by operating activities

101,328

 

44,326

 

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

(4,336

)

(7,132

)

Capitalization of internal use software

(25,322

)

(10,209

)

Related party asset acquisition

(3,600

)

 

Severance pay fund distributions, net

151

 

504

 

Customer funds in transit, net

(20,600

)

2,895

 

Net cash inflow from acquisition of remaining interest in joint venture

5,953

 

 

Net cash used in investing activities

(47,754

)

(13,942

)

 
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

10,159

 

15,283

 

Outstanding operating balances, net

(468,146

)

638,370

 

Borrowings under related party facility

19,309

 

22,464

 

Repayments under related party facility

(19,646

)

(20,382

)

Common stock repurchased

(34,408

)

 

Net cash provided by (used in) financing activities

(492,732

)

655,735

 

 
Effect of exchange rate changes on cash and cash equivalents

(662

)

(3,369

)

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

(439,820

)

682,750

 

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 $

5,946,900

 

$

5,521,183

 

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

1,078

 

$

338

 

Internal use software capitalized but not paid $

12,119

 

$

2,276

 

Common stock repurchased but not paid $

350

 

$

 

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

4,398

 

$

13,415

 

 

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