Earnings call transcript Q1 2023

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Operator

Good morning. Thank you for standing by. Welcome to Payoneer’s First Quarter 2023 Earnings Conference Call. At this time, all lines have been placed on mute to prevent any background noise.

Following the speakers' remarks, we will open the line for your questions.

conference being this reminder, a call recorded. is As

turn over Investor to would now Wang, call to like of I Michelle the Payoneer's Relations. VP

Michelle Wang

Payoneer's Caplan operator. today's Officer, you, me Chief are Executive Thank Bea Ordonez. Officer, Payoneer's and With John Chief Financial call on

statements. I'd risks forward-looking in and our those forth forward-looking we uncertainties, may any begin, that filings call subject section we of results Relations forward-looking Actual materially in SEC, Investor available to including the like Before statements which with you are remind today. today's website. contain statements These numerous are make differ the to set our may from

as only any required These speak as forward-looking assume today does obligation and statements to the intent not except by company or law. of them, update

non-GAAP nearest call GAAP These be measure as as today's be considered and include company's the the supplement for found a is today's substitute press addition, website. to should GAAP may a Reconciliation release, measures to which not earnings available can on in measures. measures. financial In

line with our note on understanding please release business, a earnings in have our enhancing to posted alongside our earnings we of new investor.payoneer.com. investors' press presentation commitment supplement Additionally,

John I'd turn call that, to the With begin. over to to like

John Caplan

a XXXX will for February. and results guidance update Good today's in quarter provide first XXXX to on business increased call, our outlined joining morning, results. cover detail. the we Bea I you progress in and discuss quarter thank all our and momentum On today priorities us our first then will more financial discuss

to get businesses. scale enable economy. funds their countries compete in paid in Payoneer XXX and markets their global pay, emerging manage territories over in SMBs to is helping and customers We the fastest-growing and the

to global hundreds of globally Our opportunity market best them modern financial businesses, and platform, and of millions who infrastructure. with operations network scalable significant. positioned trusted partner, Payoneer company a the serve our need There is financial emerging is are

priorities. Ideal model ICP strategic three, revenue our Profiles and three Number service sustainable one, focus deliver articulated product growth; build technology we on core or two, Customer platform. and February, In acquisition, map next-generation strong our and road

is together, growth function Taken years. positioning for work step in our company this future

is team pace. a at progress good making Our strong

with and the started quarter, new our generated network. customer driven from take rate XX% interest year-over-year Payoneer adoption high-value toward income held balances financial results. growth increasing business strong revenue services, higher We first acquisition, XXXX of and our geographies in customer diversification by on

of million, XX% countries, growth Adjusted than key EBITDA EBITDA revenue increased $XX Latin $XX regions, year-over-year diverse XX% XX% including Payoneer’s America. over growth margin. is XX% year-over-year revenue before. to ever in UAE. year-over-year our each adjusted representing Mexico, Argentina, in a Colombia more drove and generated growth six over geographically million We Vietnam, over We including in

diversification. on continue for revenue focused in this providing We reporting. revenue are foundation our growth. to the our line and by geography with drive we In Payoneer that strategy, to will lay now continues multiyear quarterly are

expanded the continue to extended Airbnb towards work. global and expect of to that and benefit We years three another There like number are specific extended highlights and our share. from I'd global our a our three Upwork that serve. partnership for outsourced relationship shift to routes the business we with for with We another years few remote

Zoho platform. and SMBs their now the to working in Zealand, leverage customers New integrated payment China. customers Philippines. globe, the provide to Miracle collaboration with Payoneer via We freelancers UK, globally Australia, [ph] UK, including the added a and the an in [ph] to invoice new launched across and in solution in PKay relationships marketplace OnBuy We Fare are solutions able India, to the US, Zoho

Poland new will over this go-to-market underscored and We large a AR high-growth, and to for penetrate. ground established our in us AP expect, volumes. market potential the both increase time, team We on

lastly, we processes. onboarding our AI incorporating in are And

We will taking marketing lower to a onboard approach it CAC to evaluating rigorous our resource sales ROI. newly data-driven a increased ICPs. towards takes are the Led our Growth time reduce and hired allocation drive growth efficiency, and view we and optimizing Chief expect with Officer, this for by our

customer We acquisition customers how are to assessing actively adjusting that that not emerging markets the channels allocate profiles. determined do evaluating to related This and resources deliver our serve. have our we includes meet across we spend we ideal certain

can share Additionally, wallet of further we suite to services increase we to ARPU. of bundle our retention most importantly, are assessing grow drive how and

customers opportunity. withdraw our to Today, to cross-sell our scale into of utilize source bank like accounts dimensionalize receivable, their from only they our of nearly paid feature. one two-thirds I'd get only the of and account Payoneer

will most size. While and AR incent the immediate, our of we market the think and bundles depending more multiple be to adoption working are introduced geography products to of adoption how not customer's that each account our pricing importantly, capital increase impact commercial frameworks industry, solutions, products we price We we into drive of simplify sell MasterCard. and upon the

XX% the Overall, important size down of QX that volumes generate effective impact to of versus rate of X% reflecting non-BXB is likely our take adjusts BXB XX% products, of customers customers. customer BXB BXB It's a increased receivable an in note external apples-to-apples basis, a average which customer our for XX% the multiple approximately portfolio for greater on that volumes factors. higher We're macroeconomic strongly BXB terminations encouraged year-over-year AP/AR the year-over-year. use percentage and increased they XXXX.

and It While below business with time long-term requires BXB expectations, acquisition our competitive momentum drive a line and $X to investments will BXB strong, serve is quarter BXB and build a the volume in trillion growth as AP/AR, demonstrated growth processes we new we our in exited we for over market. strong scalable believe business, the have focus customer advantage these momentum. cross-border

customers deliver digits, increase the our highlighting strong We checkout see ARPU. products. again, single commercial is opportunity for our The adoption low to of continue each to our for and value card and the penetration in enhanced

our of runway and increased we Commercial by ahead. and see year-over-year, more usage than card, growth penetration over XX% exciting doubled For a and we virtual lot

by our only is our customers. Today, used of card X.X%

to We product. this enhance continue

For card their Payoneer example, our via Payoneer on self-serve received enable and will usage enable increase interest customers to to enabled and maximize monthly account. This retention. board to we acquisition cashback recently rewards program customer and

merchants Payoneer results generate the we of and Checkout continues positive to over number XX% Checkout early quarter-over-quarter. have by increased using

of closely services. and We continue and merchant about long-term our traction to the potential monitor optimistic remain progress

evaluate and M&A meaningful will moat role our opportunities. in grow revenue a that We around strategy our core and Lastly, us markets actively M&A growth infrastructure. play help and our believe are we continue to continued growth the are product-driven opportunities deliver strategy to will evaluating emerging

way we forward as focus our ICPs, volume shifting disclosure, a a acquire shared February, this ICP. engage And we new progress. That beginning and and actively are in in we generate of As are approximately XXX,XXX that business revenue. we and in useful the of cohort. Today, on believe active approximately sharing these most have we we measuring to fit this number our will manage Profile customers of XXXX, our metric going our the our a is of customers Ideal or quarter why Customer be

with active than trailing am growth. grew of of we than overall ICPs largest XX-month the number I that XX% ICPs, greater encouraged by customer quarter, $XXX,XXX these the first the of X% those In year-over-year, high faster regions. the year-over-year and the we quarter, year-over-year of XX% at reflecting number potential our in fast investment by as continued twice In grew EMEA. active approximately first Latin America activity ICPs and in XX% grew active

early focus towards on step shift profitable and is investors growth understand that to it ICP organization, important for And strategic new. our note, for One is global as an Payoneer. a this is driving

increased adjust, with variables improve As we will and monetization as we our and constitutes definition ICP of scale drive our an with evolve considered efficiency, time many what business.

focusing specific to including are account with ICPs, our to actively also on effectively addition of work all pricing experimenting customer cohorts In cohorts. monetize for as annual fees more we strategies, we

As that we the To prospective shareholders drive SMBs remind more reduce every get capture Payoneer be we pricing for XXX,XXX will monetization we month. that interest the and I extraordinary our improved customers February, efficiently from multi-quarter opportunity shared over CAC. a account will from in transformation inbound apply believe

When machine this potential out, learning operations. We scalable efficient and rolling models profitability. rolled fully to more are out have enable new these begun will predict registering

and will We applications, the value customers identify potential to highest filter cost our process. to reduce quickly able be

Chief We continue by Officer. to make our progress Platform led on our platform multiyear transformation

are focusing on platform. scaled, XXXX onboarding in a We building cloud-based

launch countries globally We roll in select expect our fully to out expectation of new our with platform towards original the XXXX. onboarding in to and line XXXX, in best-in-class end

brand believe we are in global potential. full infrastructure, innings sum scale, regulatory and aligned We team we and have up, to the our strong and of execute. unlocking bank To the trusted successfully early

authorization, in conviction revenue reflecting our strategy, approved ability Directors which our about discuss and confident profitability share a are shortly. to long-term Board we our recently our future repurchase will growth drive ongoing We of

results discuss now I'll in hand financial more detail. and to over forward it to her guidance

Bea Ordonez

Thank John, with thank expansion. and another us. revenue of for top you to joining results Payoneer EBITDA continued margin everyone quarter and delivered growth strong significant you, line

public, EBITDA consecutive guidance. raising and going eighth since the revenue For quarter again are we our

commitment investors' data quarter. the disclosure we updates business in going measuring have believe several in We Additionally, line this made of to with points our will incremental enhancing provided our momentum understanding useful be business, forward. our

and accelerating growth balances. the revenue driven interest of customer high-value from growing and markets closure from acquisition, key the year-over-year customer interest by XXXX. in offset in that rates a growth the by million, into case Note net revenue Russia partially end increased services, XX% to $XXX and payments of of rising fund impact income QX certain were growth ICP each X% at

increased mid was recovery from X% by travel volume year-over-year growth driven billion. Volume e-commerce and growth large marketplaces. a in QX to $XX.X single-digit year-over-year

has as related quarter average macro in in the pullback As last invoice QX sites as spending. to volume of to customer concerns BXB well driving terminations prior slowed likely APAR the discussed, a versus year growth John due impact declines of year in

shift revenue to BXB higher and into growth geographies. outpace mix rate continues by significantly types that volume customer take With said, growth driven

compared basis Our QX. income was points the well BXB expansion to XXX QX year-over-year quarter as up interest from basis primarily business. higher take benefited from in The of rate from up XXX our first in XX last sequentially and versus rate points take rate expansion basis points, take year as

the U.S. elevated million, the on normalization we at the in by something operating utility of highlights we $XXX to stability increased XX% seasonally to customers underscores have our the network held fundamental declined backdrop deliver customer levels called call. February held reflecting in year-end, customer and our extreme offering. volatility which funds funds in X% account the the our sector, trust and our a customers banking via our out Payoneer from billion. or funds year-over-year Sequentially, Against Payoneer Customer during $X.X

of Most our our grown of funds than to banks the $XX fund at $XX interest-bearing income customer rate in accounts. fourth have up balances important platform volume XXXX. million of million customer XX% are the funds fund period in held less over customer twice systemically earned over We of the years. We quarter, and nearly first of past million prior the and global customer the on quarter from be continue at $X year in in interest from balances three

to monetize ability to interest continue held We reduce explore sensitivity platform. to our changes rates our in to our on to customer and funds opportunities optimize

QX transaction an driving scale as period, represented efficiencies in million improved to the as interest fees, our operational processor year geographies focus ongoing revenue, rate and was partners. drive higher XX.X% year-over-year. improvement and services X% our higher XX.X% of and increased associated our $XX with This costs into leverage year-over-year costs income This benefiting with lower Bank to ability on high-value partially the were take that costs. from our costs of component pricing well prior X% by the shift increase. mix and driving increased largest transaction transaction of with down impact from offset

QX less QX $XXX transaction total to increased year-over-year transaction including expenses, costs costs year-over-year. up million, XX% XX% were million. $XXX revenue operating

Excluding year-over-year. transaction of $XXX XX% expenses operating million costs, increased

flat approach Excluding reflecting disciplined the to business. discretionary million in transaction the operating a more quarter, in spending of costs fourth sequentially, $XX relatively our investments were expenses, excluding

driving in or million ongoing operating in expenses, partners. half Our costs. of total in marketing first $XX organization high-value were hiring QX Higher on marketing excluding linked our to of costs and approximately headcount year-over-year primarily and costs focus from increase our and ICPs go-to-market reflects quarter year-over-year, in representing transaction sales sales XX% and XXXX acquisition higher the increased the

$XX $XX included million million year, EBITDA adjusted to in which from of last of quarter to over fourth $XX of quarter. was compared $XX million $X of million first QX the value of million net first gain a and the in compared the income net last income in was year warrants. fair million the in $XX quarter QX change

with of and was cash $XXX basic the a and We million equivalents $XX ended quarter year-over-year. QX million, per increase cash $X.XX. share earnings diluted

that continue organic invest our We including evaluate and to on capital we strategy revenue product our continue to adjust allocation in growth in ensure map. and our to actively platform executing drive to road

on valuations has company opportunities. We M&A correction XXXX, for market a while dropped lagged significantly, fintech saw In companies public market. intently focused remain also private public the the we in similar

are, see to of company pressure shifts the however, signs beginning downward private with collapse on of following the We accelerating SVB. valuations

targets. We an in are have actively potential uptick and seen opportunity evaluating inbound several

Board million Directors growing $XX repurchase area balanced time further same part data-driven of allocation and as we At the share and our approved strategy an refining and capital are capabilities today and this our authorization. an road focused in has We approach, investor that of announced our map.

our Turning to outlook.

for eighth since guidance consecutive quarter our public. raising going are the We

As this time. guidance provide a reminder, we at quarterly do not

full and revenues to expect million $XXX be $XXX XXXX, we between For year million.

a as to between XX.X% of adjusted $XXX revenue be be to costs million. and percent approximately and Transaction $XXX EBITDA million

We continued from and services ICP customer interest growth our earned expect growth other balances. our by driven BXB and revenue business in high-value acquisition, be on to

deceleration macro are Our first and softer reflecting headwinds the months constrain guidance, excluding ongoing to year could slight relative prior the spending. in of that our slightly interest revenue volume growth consumer income, four business growth and a expectations, in

the line the be moderate of interest volumes based in the changes. for million Fed funds balances quarter, expect current XXXX end the at on year anticipated for We exit remainder and to with growth interest rate income $XXX approximately balance of first

line market year. we decrease the to expectations, interest will In begin with anticipate half back the rates of in

be and reflecting headwind million a as is XXXX. Assuming compared appropriate flat operating XXXX, This longer-term balances, one XXXX. $XX to OpEx, on than our efficiency. optimize and including million our cash degree stated and believe of is current discipline to costs $XX our lower the believe We revenue a costs environment. $XXX operating greater our in function to we assess headcount, spending to real related we every expect million given to this category, near third-party across guidance, transaction is vendor which estate less expect Payoneer would has drive to Work guidance, we opportunities underway million in $XXX for Based prior footprint.

May hiring long-term And across climate. continue of plans in restricted organization. to We X, our including macro have we the our the hiring context evaluate needs, the as of

We expect in generate million will approximately $X this savings of XXXX.

to to ongoing continue will our We support ramp up our R&D team platform transformation.

headcount delayer efficiencies, also operations are further streamline to roles. redundant organization, We evaluating reduce as we our actively our look and

expect prior headcount modestly with the versus year lower exit year. We the to

efficiency. while to Latin Southeast continue operational Asia and centers support will operational that our additional driving service we serve in Europe Finally, Eastern with our customers localize better America,

increase Our million. latest guidance adjusted for nearly $XXX a is in EBITDA reflects XXXX versus $XXX threefold million adjusted between EBITDA XXXX. and guidance This

results. deliver ability financial strong In our conclusion, consistently results underscore first quarter Payoneer to

broad, solution. a to customer demand and for we operating significant see our built continue diversified and financial have We resilient business

our profitable confidence meet ability while position on we have targets, our in XXXX Payoneer updated We growth. focused for financial to investing remain long-term to

announce fall. Day of I'm XXXX, that the to We person will hosting first Investor Payoneer you Lastly, on September New York be look in many in excited XX, forward its seeing to in City.

line. the questions We open any please Operator, you are have. happy now answer may to

Operator

Research. [Operator Please you. from today Thank from Instructions] go question The Darrin comes Peller first Wolfe ahead.

Darrin Peller

with the macro are to Nice on ICPs focus results. that Hey, the guys. and bit opportunity. given the we of on job more your decision on thoughts how ability just obviously Good you start grow growth. a what these way it have you're different imagine. of And base, growing a applications just many risk, morning. -- Maybe on It's quite getting, you've off environments, I the been during

mind. if are goals have you follow-up kind pricing, So then help us and I don't of opportunity and understand more there? your what on that potential And what ARPU a around detailed

Bea Ordonez

thanks I'll the So ICP question, take for the one. Darrin.

quarter, that on meet profile. as business who an that to as serving on ideal look, really last or and is customers target we've acquiring manage discussed terming our an more begun we're So based customer those we focused approach

less profile And found, does exceptions, that average that customer that amount customers data the for determining profitable, a It see of for be an in and on the enhanced we're disclosure focus the do we are is depends in do on an do it's least on. But $XXX of with committed that customers we we of important that can that found strategic on not making, product as reason on usage, adoption, based monthly we've disclosing course, at the might particular the profitable. monthly our and customers very to who think line sort network. important today, volume analysis There more based served who metric who corridors, so we're And that, general, that in much transaction we've measure company. who that are be. volume

we XX% that as of for And revenues So customers XXX,XXX ICPs. today in XX% approximately profitability. of majority about really when volumes, and identifying disclosed release roughly that last the our earnings our is reported vast the that QX customers our talking we're we're that and our we drive our

look, perspective focused much organization perspective. from We're acquisition So an our very across from we're an in pivoting approach acquisition the driving again, this.

John encouraged by as say, But innings, that likes really realizing that. early the momentum. at early are We to and we're

to the model X% that drive do overall larger time, able that per able efficiency the that XX%. also, to active that And by grow sort were in We more going were those to than today and within overall operating XX,XXX that were month. ICPs of cohort, we're customers Over we by in grow year-over-year. year-over-year flagged gross able We and versus we with we're early kind the by X% customers so grow generate to frankly, profile targets that broader as customer of today, of momentum, going be and we bar of focused of that to We're mind able cohort down more and we to that pivoting a through push But generate encouraged in ideal we're profitability those move across and setting acquisition process. the sort organization. start can customers.

Darrin Peller

helpful. right. talked about a customers, a and mean, call. just on the you, lot of Thank of opportunities kinds follow-up different follow-up monetization guys. All I ARPU you John, a on of bit a That's

sort wondered talked been I think give volume Payoneer to pricing the which has to sense of these you us on were checkout. Can either incremental how maybe exciting you about, commercial rank always customers you products, you of us we opportunities for some order or a card the give magnitude network of can But to be a the are and intra opportunity how other ARPU today? an Payoneer most generate revenues relative the about. if material

John Caplan

great Darrin, question. Hi,

So our across experiments interesting pretty some positive I at some on we're progress account working with around optimize looking pricing corridors fees We're there. have seeing, opportunities pricing. we think we corridors, specific to because think, and experimenting

our As marketplace I shared the space. on XX% than at the payouts business BXB monetizes greater call,

mature merchant BXB and are our less so which services, the working more capital we mature around in of And and of in cycle. their life card monetization are earlier

mentioned there's which into of account the and underpenetrated and more capital us a MasterCard, We then the upsell the opportunity As drive moment that our product. growth on is as accounts for to Payoneer on receivable I I holders accounts saw merchant there's working think services. think about and commercial and driving intense ago, just opportunity monetization drive pricing, And penetration from year-over-year, real and perspective. focus I we more deep cross-sell XX%

getting funds, see around that source customers add to particularly believe cross-sell opportunity withdrawing our directly So upsell, their from and one two-third only real we today and accounts paid payable. we with a of

the doubled in last nearly product two have We usage payable years.

see we we'll on momentum so the right that. focus continue there, And to and

Darrin Peller

All great, Thank right. that’s guys. you

Operator

is ahead. next at from question Trevor Jefferies. Our Williams Please go

Trevor Williams

couple sense. your geographic the how John, shift through faster. come I'm of how if should we that in to and starts thinking morning. and Thanks. kind of how in come to going wondering think, ICPs, I'm that evolution But think means of terms it's geographic I even in focus we're come Good of the on the assuming Thanks. just that years, time? about country kind to to should mix. mix down the a tied makes just mix of of terms through next change China underlying of we over lot see

John Caplan

a question, it's Yes, Yes. great Trevor.

investing highest markets on go-to-market and diversity to call, So growth excited serve, shared of early our markets Latin CEMEA are companies in APAC, of to think the highlights we our market as platform. penetrate have. growth XX% we we our growth the around UAE regions, emerging further we're and which these the that an potential we the I and mover serve, in the Colombia of heavily Argentina, America, all I of we global the industries size XX% the globe, about personally in speaks productivity am Vietnam, super Mexico, and product fit organization of

transparency, so is can of But potential There And and it's depth service have our breadth There the potential gotten understand to the Payoneer are ICPs that very our we geographies. of specific to our the are for million just globe. serve and globally early of region the customers in building shareholders to and about XXX started. and business. how ICP the on committed countries and every thinking days expanding translate we focus ICPs us for are

I potential that started the it. doing in those XX-month volume growth where those a -- over are, and saying, just focus that's magic extraordinary, kind getting we early we and we here, globe, in innings largest were $XXX,XXX think XX% in of of year have teams are of year-over-year all XX in of focused we on As around we the ICP. and earliest our in And employees the the is on the the saw countries, we're ICPs, is this trailing

Trevor Williams

it. Got

of in seat more that along to presence been Okay. particular any become that as the Poland call aggressive to maybe a else historically starting of out geographies but a maybe that in of more anything countries is know mind in are was big hasn't don't now I had in Warsaw those lines, there called [ph] in terms the might then talking And you're in? out Payoneer focus? you've become potentially about to one India Thanks. that that press comes if

John Caplan

Yes.

-- extraordinary this, think, shared the our and to spent excited pretty and I've CEMEA in focus, momentum that in visited is ground and leadership generally indication just have with in APAC [ph] are ground there America That undercut China in we past, region, opportunity on I where is to the the good to on the Latin getting and penetrate have -- you India, globally. and Argentina speaks not the not power we significantly. we I I So a to the position time focus. does and tremendous of it have Greater But market momentum very the about I and continue am time

Trevor Williams

Thanks lot. a Great.

Operator

next question Nance Sachs. Will Goldman is ahead. go Our at from Please

Will Nance

I verticals thinking e-commerce, of freelance so its that more rich forward are verticals et slide to any using of maybe on high-value that guess some when guys cetera. kind and the maybe customers are of just kind the creation, and more content refocusing good going you ICPs, the morning. I hope business? disclosures. just the Hey on of these after you mix about ICP wanted emphasizing seven, at Are guys, I of the morning. double-click there of look kind less vertical or

John Caplan

serve. share give our the early information more on for that ICPs us say Investor sort and that's the it's both a for to of business customers can industries that. excited geographies, Day, Will, about great I disclosure question, to -- September and we're additional too great, XXst

-- BPO the the it's specifically the us too either that to We've about in early the seller China, past a too serve or Freelancer breadth geography are soon talked by Argentina, India, the more good size? in by we we the mixes Ukrainian customers and engineer, for on of comment in in such

Will Nance

forward Maybe makes on follow-up a quarter. details Look It on that just in about Understood. rate question, sense. to the this more more hearing dynamics take the September.

down I little bit rate So, interest income. out think back was a take sequentially you if the

but e-commerce like lower have among I'm seasonally given fourth as guys mix, think just of -- being I the client about sound it larger kind does quarter been usually cohorts. you growing

the little of if and in a a bit drove what's sequentially? unpack bit what down going on the wondering So, just you kind could take rate rate little take

Bea Ordonez

Will. Thanks Sure.

yes, a you and income income seasonally up see the up So, largely and volume up coming typically the rate a speaking, take little interest driving and revenues. the of up in coming basis typically points, higher usage drive in noted, we QX. expect with bit roughly again, rate on factor our proportionately, will higher into revenue. about take points, that's of QX, which usage, total Sequentially, XX year-over-year XX basis into is higher interest is platform which as We QX,

a see mix Some up of of product kind the we into both we'll past, of as we as different higher into of mix. It's pick the that see well. take that around we rate geography perspective business, commercial shift different puts we like and in takes rates. regions see tape take from shift shift we levels offering, as card that generally as take like sort Obviously, said products with rate maturity, our our rate BXB

Those came out and of shift. of that larger e-commerce shift focusing more take China rate an a as is based regions our was other into tend good sellers. or we've deliver like we'll regions mature dynamics will lower a growth see QX kind been we volume see that on, example, of amount higher-value to

really to and takes product and mix also related that time. over the will there's the shift geo So, mix puts to

Will Nance

I my so that. taking apologize sequentially, take the appreciate see up for rate questions. actually I core do I

Operator

Shirvaikar go comes Please question from Our ahead. Citi. Ashwin from next

Ashwin Shirvaikar

congratulations parameters what but what's in process -- sort the just who the me Have idea, is on terms you good Thank determine a quarter. initially thought of -- of that let ideal customer? start it's and -- on a ICP the with question your the behind great the

into them the so of Is providing that space, and get of the will, represent what meet to you there if on? that initially And of a, ICP in account to happens overtime will or don't terms incentives a growth process headwind customers of criteria? this kind sort

Bea Ordonez

That's Ashwin. question. a Thanks, No. great

ICP today, that an bar do right, we current done unit based XXX operating pretty all economics more environment, today, average as our that on profitability. or in we for of look, highlighted, because is analysis given volume deliver set sort So that will they the that's customer the indicator a we've a monthly have decent that

that that's those really think good today more the that our company's acquisition and force customers, shift sales to cohort And we focus incent motion, as acquiring measure. to drive through metric a of really sort So on other to we're to channels go-to-market using that bottom we of our of focus customers.

which goes a overtime, today, at nuanced that question, The monetization is to of that approach tail look other sort shift, good kind ARPU, of has it to specific of reason I'm cross-selling as of emphasizing address really long more highlighted, as pricing, albeit pricing will one, is efforts that those some a your customers John we and right? drive to in would designed we as definition well that expect that's up general, initiatives the

Similarly, of customers. a we platform profitably our would from to from in allow efforts we a profitable If more serve our serve volume the to greater they efficiency up drive an to we'll investing rate around monetization proportion operations fruition expect we lot as scalable, lower to ARPU, more -- to able higher we those if to be drive level. and driving drive perspective, a during more talked as be efficient come call operating products, in a around those onboarding make our we up model, adoption at of our take last cost perspective us

investment We our that. today, So do but platform roughly doing it while can And we can it that increased capabilities. think, pricing. We can and XX%, through think, we're think, we profitably monetization we serve do through we and in our can meaningfully through increase we cross-sell. look,

Ashwin Shirvaikar

helpful. sequentially, roughly expect customer they Was the -- were it quarter? Understood. just in bank I for million. maybe funds, down that there It's turmoil And to terms And that, the seasonality? was in element very into of ICP? kind what of we next reason some that? $XXX the get maybe some want of Is of driving the should

Bea Ordonez

QX, on growth volume significantly. of called see balances exit because in it's We a sequential off a the we're And spending you channels. elevated terms decline Look, of on out, were as we to we've continued decline, saw very good no, in seasonal So outperform holiday of we yes, typically e-commerce our just question. because coming Year-over-year, up our network. a balances

monitored time In terms We We of didn't we carefully outflow in monitoring really much the turmoil behavior. that. of aftermath see general, SVB pretty look, in in of real collapse. in sort customer changes banking of were or the signs very for

no We with proactively our behavior. change customers. seen in We've significant communicated

massive think the large overall, customers really and that the banks our place outflows. this significant environment in of actually and so an with seeing we're And us pleased U.S. volatility in trust that demonstrates

We've We seen outflows. expected haven't that. seen

continue pleased, the we're So those monitor the to look balances behavior way that we grow. trust the customer we in to offerings to and demonstrates utility that think provide expand the we'll it us. be we monetize to And customers place customers provide, to able we and

Ashwin Shirvaikar

Appreciate you. Thank it.

Operator

question is from Tandon next from Mayank Our go Please Needham. ahead.

Mayank Tandon

information a good guys could what time? using and you of us in congrats today But terms Thank good the on of morning you see and gave maybe products, where quarter. some percentage going that multiple the cross-sell you and are over customers on opportunity. sense you give the John and

And using potentially higher-value your higher-value with you take your then higher the these that alternatives could displace would said products? are be, products, the own if the not using in they market could rate they're and related What products. question that be

John Caplan

log customers, they Payoneer we and introduced, for that products multiple receivable our our and a in organization products. to product number for And shared intense customers our to have accounts they the on products. you into onboard account what and Good see or when thanks significant view use both for are organization their Sure. go-to-market the easy accounts and the focus and products are to using into call the flows our the BXB more as yet use question. or our the we are solutions experience feel likely area hear an that payable more that of customers We flows, customers to invoicing

But that the single-digit success essential both and low services our increase penetration powerful do utility growth, P&L. we for have focused We our need? very on our otherwise we to quickly. and both need driving working because capital them it for as of need are we're and We lending customers the of is monetization more What that is highest-value and need buying right at well working price to homegrown the have building for get improved don't that solutions, as capital folks access receivable accounts on it them. solutions that are

more we of Darren build pay network suite underway And pay about balances. network by. is earlier think asked commercial the our the and itself pay your customers. or Payoneer payable MasterCard the outside of paying accounts is there solutions, the really your using which customers for a improved of services services broader utility in board, can ability with customers We and/or our ourselves, they're across other to the

we won't cross-sell or on, offer. assured the I is team specific have expanding products very eye that name so products our focused that or of on rest suite but features And companies we the

different shareholders our customer dynamic A to in or customer I Argentina, in may consider. is or she Vietnam. think than our The needs that for have customer important they Poland in

for over franchise. built or say, tray, in Payoneer solutions, I not M&A solutions expansion global the to then globally. powerful this one or market relevant it the coming that really ability think segment do our the how are And of -- or accounts the so industry years, about that serve. the and provide industries may directly geographies is dynamic a important are of growth purposeful may the we a be that paying be purpose solutions five product-led product-led will here payable And What's for I

Mayank Tandon

give very helpful, EBITDA and move could trajectory given flow-through you seasonality on the adjusted a quick of of in your just the And the for revenue That's question. of through year, expectations interest we John. as Bea, any the then a year? and income follow-up terms color

Bea Ordonez

to Look, expect, perform seasonality. general, as in the quarters done terms of Sure. in we they have historically

the over of So the generally perspective from a year. also drive end year revenues to from back our seasonal of the course the speaking, acquisition and higher efforts on

the as continue the our increase year over expect the we would initial we as for ramp also up we would well released As XXXX, vis-à-vis guidance hiring back we to investment. platform when flagged, operating half expenses of cash the base

that portion of that OpEx is least obviously, hiring, our which have at roughly a is labor we of today increase, a paused big cash-based related. call on the XX% We, discussed driver of

of in sort some given some hiring softness the we paused have of core that highlighted of we our revenues. So

see the the XXXX. spending So we some to as benefit impact run some look as we not that out of a a meaningful $X sort back in that the constrain meaningful called We rate. but should million, XXXX half into of impact of more the year,

expenses overall, but a we able remain meaningful delivering investors moderately our year-over-year look, the that And out, rising evaluate of be XXXX really uplift interest of pleased to back of those. half confident for EBITDA year. looking to So, the we on to seasonal what the to look, imply rising more targets continue all to income impact revenue back set would investments, deliver the from Xx to from portion through revenues we're last expansion is guidance than good versus deliver year and

Mayank Tandon

That's a you great much. so color. Thank

Operator

Please Bob from William Blair. is question of go Napoli ahead. next Our

Bob Napoli

really morning. helpful. good and the you you Thank additional Thank for disclosures,

super growth that we should the So payment rates to sustainable? like mean, about regional I how well, volume? growth then just impressive. on -- volume any below payment some sustainability the the payment and is the I rates mean, of just those mean -- are I the the how by can revenue. some color give and is obviously, that markets, saw, we of -- they’re to relative growth seems is, for rates rates -- mean be you how into -- volume growth generally growth think And market rates growth you by market, growth of should I those gave disclosure the the that of the what those and translates that the

John Caplan

here to do. Bob. want Hey you add, something Bea and there's I'll if please then start, and John

annual and would And country, on it the focus quarterly over time. into say Our the by opportunity markets on see rates ICPs have, -- way. we'll highest renewed fluctuate and the how think right by focus I we will the growth deep region penetrating I

a I emerge. see take grow think what and the evolve, to and quarters change it of it, patterns and will -- we couple it us pattern the will how see

we we are America, Latin of CEMEA at focused on penetrating kind just the intensely and and are beginning APAC, are results seeing that powerful momentum. the We indicate pretty of

don't And lots want innings, but it yet, early so, it is to but of momentum. call I

Bea Ordonez

said, is, to take a factor seeing those travel. our that's And only all through early and as I'd The well customers. mix grew we revenues high lower from in Yes. doesn't to growth a we've that, in significant look, to a of partners rate. that's rebound e-commerce volumes partly, adding add as as Bob single-digit thing That shift larger year-over-year, and flow great We're larger X% momentum QX.

sort of short we great good uncertainty is driving that by a We lower largely acquisition we the out players, and the to see seeing rebound, we're environment, of macro we there. E-commerce right? call that to depressing did response travel as But We It's business, called one think result XX%, in is other relatively in which roughly we believe. a on markets our of think growth questions, seeing of BXB term. we And volume in the but great. the there. decrease We're product average have in slowing sort margin spending love business. it's out spending

seeing call out We that coming also headwind. from acts which as did that. Russia, impact We a the the out of into year, the we're exit called and

volume is we're with which I in say, of growth. look, uncertainty, X% our to We're excited to those quite macro gave, revenue and we It's excited volume And line didn't about for in with and All revenue short-term overall, we're It's through pleased to we're ability our trends seeing. as to the revenue. The that peers. notwithstanding. ability growth. reasons long-term deliver grow with the but the view flow headwinds trajectory line

Bob Napoli

you. Thank a And then follow-up.

a the businesses perfect and add leveraged that's you like value importance types that the you would mentioned a the franchise, you feel give was the so under you have what Pioneer what you balance M&A of -- of to wondering most businesses type world, I in would color to do add? very on some that. and strong of very obviously sheet could focus on your You if

John Caplan

Yeah.

earlier and moat a our the markets, this we the banks licensing framework evaluating lot M&A relevant to brand, really we opportunities, the about around with question think, of deepen actively we are opportunities business, continue and to product mode. Bob, So about our can licenses, that particularly extend growth on customer higher through grow upsell base. infrastructure and then on we've where and lens existing those I our built, talked extensions that, existing that relationships regional reach the is our and just our cross-sell footprint leverage our The quickly in call

So any those deals on active are the three all nothing announce and specific areas we fronts. we're today, but are at on looking to

Bob Napoli

Appreciate you. Thank it. Great.

Operator

The Please Sakhrani from Sanjay ahead. next KBW. go is from question

Sanjay Sakhrani

drove what driven the against I little of now? a fundamentally has what what think, you go moved through Good and but sort in I Thanks. to upside? morning. into my volumes answered, income, the of to been parse many there's the I also things guide of bit. up And float the and I Bea, wanted could to know it? was ways updated such some have what's guess that changed like And baked lot sort apart have questions just a sort Thanks. because slower of worked the what guidance of --

Bea Ordonez

the Sanjay. Yeah. question, Thanks for

in which to look, very flagged of and as similar trajectory right? and banking income, the float into grow we We've was view there guidance reflecting guidance. those common sector uptick our customer some can the comes we and seems of business, but some ability theme, our consumer we're revenue softer as you trends that in in sort we relatively to e-commerce-focused Again, bullish yeah, remain funds. right? today, times as that in think sort the that April. seen revenue in in So and I business January So can't March always common strong macro have the businesses, to trends been from through, short-term slightly calling as the monetize through The peers that about But read flattening that and in headwinds, get balances. those with growth where February, it continue adjacent our we and we're see a well out we effectively reflects a said, of spending volatile a our we performed We right? the those

revenue. So the that's

in to well scale. down of terms banking of our adjustment guide then profitability our costs, factor where again, prudent from the operating think infrastructure. as the our short-term income, macro and float also expenses, our in also we're of which in walked of expenses, climate to operating. sort just a or leverage the terms business the we'll And benefit final walk We we impacts part a cash-based we land. efficiency That's is a was down in element increasing transaction which but capability longer-term frankly, think allow from as in we we And term short where optimizing us longer-term run investment see will how that operating

Sanjay Sakhrani

about assume extended mean, should pricing. how the Okay. improved some from nothing that? mentioned that we should and curious, with economics mentioned just there, of I'm basis? a headwinds because think Airbnb changed should the that you then of on go-forward I on Upwork, relationships how that long-term we you Perfect. we those factor And materially like

Bea Ordonez

Yes.

we marketplace the directly from relationships, marketplace, revenues they often out SMBs sellers Our services. context, don't relationship, acquired in those are the the but directly. out the it We in is put SMBs from to and underlying well its The global those earn with we we've when our as revenue or before, marketplaces channels directly our markets. helpful just use So SMBs this for receive we right? as for called majority of majority, pulled that

and we marketplace, where that And serve we've and this breadth on cross-border proved and certain with we've provide business services. this our basically them that we for because countries provide of to cases, platform. the capabilities scale years. cross-border the do them win that years, the the have with sellers contractual resilience pay In We business we won infrastructure allow payout called many over we of many out their the the of have, that operate arrangements as

marketplaces, way of on a earn of number non-volume QX. Again, it for we share. this growing critical out them. called these limited view of partnerships -- a very critical additional provide out how speaking, really that platform. have marketplace, marketplace of represent Amazon, we But I we on value market of services example, for or winning we when new our as infrastructure into sell a our customers we AR like felt relationship we we vis-à-vis or show of course, have particular number We are SMBs because And platform. we're dependent that that a a to partnerships. choices We important fees with reliant said, a acquiring we one in critical So and as the do, of not one called revenues they such generally part contractual was way those grabbing the partnerships built, -- kind of in

about that excited partnerships. announced platform serve really great the example we're effectively of we're we that growth. and recently expand So is ecosystem look, a kind the Miracle can of to looking of to overall, sort drive volume

Sanjay Sakhrani

Thank you.

Operator

Josh Fitzgerald. Our Please last question comes Cantor from go Siegler from ahead.

Josh Siegler

Yes, the my and morning. questions hi, Thanks for taking congratulations trend. good on strong

And some us color platform? spend subsequent is on provide growth you rolled you the acceleration your platform technology can as ICP onboarding do investment continue your in upgrade as So out? you a new expect with to

Bea Ordonez

demonstrate in Josh. significant product as in our to for called of Again, business, reported and BXB We when question, we out this think we innovation, we well going as thanks able progress out We're this where capabilities. investments our checkout the been sort make real QX. called including -- in we've to

offering. core announced invest in partnership capabilities. million our up growth. meaningful example, QX, the month, start functionality change see the to to showing platform ERP. And with and These those we We up And improvements because every clients. customers engine with we're regularly our customers. significant starting our We door launched place drives that step are all think the investments management to onboarding it's accounting of costs an we that's incur that, to onboarding committed part in continuing discussed at important can of making X.X our and as in as in an capabilities. We're deliver role to in we're a we an We our enhanced we that sort February, our

customer more should a to nuanced So there those those want that tours. cost funnel. frankly, and to bring customers more And them through the bring experience also little give acquire to we better reduce be, we're want a acquire we allow to our to customers starting effectively. through We clients because us in how we want the

So as assess some them to that will more allow when through efficiently. target launched our predictive the John out, a hits modeling customer called better funnel and move process tools us we've

by XXXX, Look, the and to end go again, We're early a innings, of a investment will investments of we're lot doing be expect of these The this this here. work going impact year. make to meaningful our good year live down capabilities serve our and feel acquire both in as our we our felt that going more make drive they're and to acquisition costs well to us cost effective but customers. drive to as

Josh Siegler

most Are environment. that then spending and macro differentiated curious these this about impacted Thank the due the to more are merchants uncertain by most cohort? the volume current Great. curtailed And you. the perhaps by geography of I'm on by constraints or demographic impacted merchants macro, volume

Bea Ordonez

Are spending callout constrained the you BXB, referencing made BXB business? around the we our in

Josh Siegler

Correct.

Bea Ordonez

down What acquisition of customers. terms really of, common that of seeing in out BXB good Look, good or metrics, that momentum sort onboard. didn't, are we really to sort call not discussing that terms clients we're drill with peers Yes. that we're space, the specific in forward the in of in is wanted we in we drill

are amount of that's did outlook John We our as out, spend. of in super spend. and who depressing sticky But see use a products on platform that the we range and customers macro that's a called of in terms decline broader a issue think

we calling to was felt but we'll out. monitor So continue that, it worth

Josh Siegler

Okay. for questions. Thank the taking you

Michelle Wang

Josh. Thanks,

Operator

hand This to Q&A for back floor the remarks. I concludes session. closing will the now John

John Caplan

who for all and you my for to your and hard and work, your dedication our Payoneer tuning you in the are for customers. focus Thank questions morning, this around on colleagues joining globe us thank

and our We proud are progress. moving I'm forward of pace at

world's all help to We're growth support. Payoneer’s just incredibly sizable our the have trajectory of shareholders' you even exceptional more beginning the growth and next of about continued appreciate Thank leg excited globally. we business our do our and and SMBs significant opportunity I'm

Operator

Thank today's conference concludes joining. for This call. very much you

You may now disconnect.

Payoneer Global (PAYO) 9 May 232023 Q1 Earnings call transcript