PAYO - Earnings call transcript Q1 2024

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Operator

Good morning. Thank you for standing by. Welcome to Payoneer's First Quarter 2024 Earnings Conference Call.At this time, all lines have been placed on mute to provide any background noise.

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

As a reminder, this conference call is being recorded.I would now like to turn the call over to Michelle Wang, Payoneer's VP of Investor Relations.

Michelle Wang

operator. you, Thank may today's Caplan; on we Payoneer's Executive uncertainties. today's Chief I'd subject which With risks to Panera's call Chief John and call that you and to Ordonez.Before forward-looking Financial Officer, statements, like are me remind are contain Officer, begin, Bea

speak These For except only we materially Relations statements and posted the the today's payoneer.com. section forward-looking does earnings not by today's press I'd which more found Actual to be make presentation from available that, to on are begin. as on our results year-over-year measures. with please of today, company in intent addition, considered filings non-GAAP not refer noted.With supplement differ otherwise John and or obligation note any GAAP of These measure statements financial alongside our over to website.Additionally, the which available basis, of unless assume in to GAAP be nearest instead on forward-looking release on in call call measures are call today. law.In as any information, is may an measures. may include update our today's SEC, to should the please the some have All addition Reconciliations to can earnings required release, a turn made like press comparisons to investor.payoneer.com. earnings Investor we

John Caplan

who momentum. or our thank profile you QX, ideal everyone, and us customers began by with Good joining fit X%. ICPs, In morning, today.We XXXX we grew for strong customer

take those ICPs in faster even drive rates. growth continue We larger among and regions higher with to

services growth channels.Total in in as growth well merchant in payout marking the BXB marketplace generated years. Our take our revenue as We grew our volume increased grew channel. every enterprise We highest and nearly rate and rate businesses across X higher XX%, by strong XX%.

our revenue earned the non-volume sustained revenues countries stack delivered We for and was financial needs. of AR normalizing their record XXXX, expense QX AP $X.X cross-border up margin million building and strong adjusted XXX-plus in and is of income interest by of is business-grade EBITDA XX%. Payoneer discipline.SMB for fees Excluding fueled XX%, all territories. and in

Over we and growth increasing on the have focused past year, accelerating profitability.

are Our efforts off. paying

We successfully in global of capturing cross-border doubling the market. QX, trillion than volume opportunity achieved BXB growth are XX% the $X the previous more growth XX% quarter. We in

Our the momentum number over a past comes strategic from initiatives of implemented well year.

and have acquisition where service-oriented rates. take our focused have higher BXB on efforts markets market product we on fit We strong

have LATAM and Asia Ukraine, including service-oriented BXB we a support, over new in marketing globally. verticals opened our firms agriculture services from result, volume markets up in APAC, beauty products XX% in grown QX. As and in CEMEA We in

of volume of have over New millions verticals year tens in contributed the launched of already incremental BXB QX. past dollars

We committed building best for are to product deeply the our customers.

features added to BXB global batches the to reduced example; large suppliers feature onboarding such ability accounts, customers our to in scheduled pay payments. or functionality. process automate new our We've it funds payments Payoneer and We delivered contractors. for and have an increase customers for to who their we friction made platform load their important recurring easier into features use convenience, and One as of

BXB help payments of message by the bank also BXB These our from receive Europe. direct retention We customers. in drive recently increased long-term can payments, will including adding customers enhancements

in interest compared expansion. pricing in the We launched QX points, initiatives SMB driven SMB an the XX% rate our customer X% year QX. to growth ARPU and XX% increased higher regions.We excluding businesses acceleration year-over-year and to by X the over We growth continue in increased ARPU take our are and take expanding faster This our by take income. we've rate customer XX% rate drive is past growth basis business. in

We in results. is ahead acquiring Payoneer capturing it expand on power, our to revenue the entire make and platform our Cross-border us. is delivering And is in Payoneer our cased accelerating we creating transformative robust larger ways traditional them the cannot are new middle particularly are advancements, are a the the ICPs.We of customers incredibly remain of growth the our and class are underlying beyond environment, plan which our and business these to pleased to working. significant the fast-growing overstated. delivering markets QX business technological for by and around We reach rise role markets globally.In on this with across platforms that focus be us strongest, increasing landscapes globe.In choosing of changing opportunity shifts, trade evolution, and The consumer where models capitalizing is of consumers dynamic strategy entrepreneurs confidence revenue emerging focused increasing initiatives are their undergoing emerging significant easier working closing, Entrepreneurs, we're both demographic borders. innovation, shopping, as disrupting it do by driving ARPU traditional on purchasing pricing growth geopolitical driving gives are for profitability. that digital and driven

we We're confident As global remain We're enthusiastic in for our our efforts the more value discuss economy opportunity, proud our our are significant our to to paying about to increased Bea now shareholders. in while of embark our team. results momentum QX, guidance laser-focused connect our turn and our it SMB on financial mission delivering detail. off.I'll we're on and digital to

Bea Ordonez

QX. volume of XX%, normalized for by quarter Thank and thank performance straight representing We or XX% XX%, platform grew when for earned XX% you achieved a fees year. XX% margin. fifth a growth. income adjusted strong by grew last delivered ex-interest revenues to revenue accelerating you, John, joining growing everyone record EBITDA non-volume by We in the us.We across We

XX%. on income business, funds, strong million in from was return cash $XX the customer of shareholders, up Growth our customers first continue SMB of take revenues XX% by SMB to XXXX by initiatives our worth growth. Revenue benefit million see within in shares and BXB was during interest positive selling strength. our marketplaces, performance quarter.Turning continue e-com repurchasing ICP results. momentum of We We business. broad-based to to driven reflected growth quarter of $XXX on from rate SMB the Volume XX% consistent our implemented pricing and dynamics grew to

take residual to holiday continue BXB our of grow continued in that large performance Our travel the sell season as the using acquisition marketplace in a the robust Enterprise of growth compared product. growth and checkout of both volume over was ITPs routes SMBs QX, volume our a in sector XXk-plus won payouts marketplaces point, our reflected new ongoing XXX% our XX% of number Services of normalized benefits basis ramp-up basis, X strong and driven X QX the including as acceleration business e-com by retention while XX% QX increased a well We basis sellers. year volume, from delivered take on volume strong we business of growth ago.Our a in on points. in decreased by generated points significant rate XX% to of growth basis XX% growth and Merchant XXXX. rate XXX

initiatives SMB X and basis and our expand increased customer pricing driven which rate, our regions. businesses by points, to rate higher take take faster continue growth in We

as costs increased in from impacted $XX represented account. period. account XX.X% in spend with held and continued as higher prior driven X%, BXB road billion, growth continued currencies AP point line by $XX related year revenue, $X.X and spend cross-border in costs and needs certain Payoneer $XX the of million balances funds single primarily broadly interest and AR and earned by of utility basis ability $X an well of higher to to Our from to marketing multiple income increased or partner the incentives. by increase Payoneer and we million driven costs including to Transaction transaction in expenses that marketing related customers incentive manage a million marketing expense shift XX%, activities card $XXX from these and million mix Customer programs to in X% their balances in their XX and value our operating X%, QX.Total commissions. merchant product increased and were by businesses. cross-sell services provides, investment Sales our the were into volume fast-growing up map hold of Transaction million

efficiency X%, or increased our million our we IT increased by primarily in $X costs million Other was relatively costs. labor-related $X X%, headcount. We year-over-year, driven decreased expense sales continue transactional able volumes larger acquisition higher and year-over-year, even to of drive per operating organization higher increased largely greater costs. G&A offset to or as have relatively and labor reductions flat by from efforts salesperson. while flat within expense with in R&D decreased expense increase number around XXk-plus ICPs and kept added costs we're labor ICPs the markets, key

year-over-year invest headcount our as to mid-single down average platform Average capabilities. digits. was nearly our in continue XX% We even and R&D up headcount total is

Our BXB to and retention. improving greater initiatives are and Approximately capabilities of overall as and This product dedicated offerings to allocated R&D cross-sell drive resources to X/X tied broadly are enhancing resources includes follows: our our UX growth. engagement,

our and $XXX income our of actively compared XX% to the quarter money prior QX. accelerated The compliance capabilities in investments, compared We and of are million. returning tied basic QX in platform in and year of to spend quarter. infrastructure the $XX $XX share to shareholders. This data and have designed the to efficiency capabilities. EBITDA modernization approximately diluted equivalents third $XX We is back our last in and $X.XX.We Today, million XXXX, maintenance the a in been was cash tied Net million to is the was cash year. earnings purchases record movement ongoing X/X per which part in category with share adjusted quarter including EBITDA and in million first over-time.Adjusted reduce in ended this to buying efforts, pace million million was represents margin in period. the enablement shares $X capital of $XX

well Our our cash XXXX guidance. year-to-date.Moving flows conversion business positive our XXX% continues flow to cash is above free and generate to free

by and for to for quarter. million heading momentum raising our into strong are and adjusted $XX million the $XX our We reflect results guidance revenue second by guidance EBITDA

to year, of and for excluding includes $XXX interest and the revenues million be income expect of million to we revenue, year. For full $XXX the between million. $XXX million million $XXX $XXX interest income This

interest basis. excluding growth XX% $XX our income raising the representing guidance, revenue, are on for a million. expectations our year-over-year at growth implies This midpoint XX% by of We normalized

ex guidance versus first revenue quarter second our in higher be strong million by the the and reflects prior $X our updated Our expectations. assumes interest income approximately for performance will quarter

relative expectations prudent. appropriately in We third quarter time to to have not revenue believe February, and fourth remain at we changes modeled our this which

interest our the for $X revenue expectations increasing year. million by are $XXX We income to million

into consistency funds portfolio sensitivity customer As XX, of of we duration extend approximately interest actively of intention drive treasuries. to on March next decline. We over the greater in the to invested interest few intend income US the reducing and million rate as XXXX XXXX rates $XXX more with quarters and our

continue percentage of We a to and will transaction for revenue remains approximately we liquidity expectation as XX.X%. prioritize as do at costs safety so.Our unchanged

expect also lines higher transaction up XXXX, course percentage mix the BXB, shifting cards. and of over take like We business will cost the of business products this but towards ramp higher and Merchant reflecting Services impact rate,

We $XXX approximately to an at guidance XX% $XXX adjusted of margin are increasing EBITDA representing million midpoint. be million, adjusted our the between EBITDA and

may quarter revenue guidance less approximately focus retaining our ICDs, growing increased $XXX Cash OpEx transaction at please unchanged our of demonstrate for adjusted position ARPU and working. anticipated relationship and now are leverage shareholders.We our answer OpEx expand open financial line. less market We cash strategy and optimizing first the believe is and for our cost further ecosystem represents operational Our our us million. stack, that Operator, happy driving questions breadth lasting EBITDA.Our any you unique value our scale delivering share of adoption to and assets, and improving on remains create to our guidance the results for have.

Operator

Will comes Goldman Nance Our of Sachs. Thank question with first you the from line Instructions] [Operator

William Nance

sort it revenue in any more have growth maybe but us just things of color remind for the XQ, quarters and view, growth just place a and guess, driving it slightly expect like the of a you that had acceleration nice here. sort see in the I U-shaped growth ask revenue know sort be of modestly spoken your what's of like I fourth Really cadence? sounds year, now again just might you to the that cadence to about falling expectations. higher wanted around quarter? with sounds And of intra-quarter expectations for middle on I into you to continue kind the lower in lopsided the

Bea Ordonez

about a your really that Look, course as March, growth. as core the XX% question and 'XX. broadly record of trajectory talked delivered normalized it's over happy deliver QX out revenue We results, U-shape speaking, in to we calls

high We expect core a strong single mid-teens QX, roughly normalized. digits

a QX, e-com general, By robust high roughly notes, What question strong on seen we as estimation where a as coming year in look, momentum then, that strong benefiting growth those seeing speaking, mid-teens. that fees of moderating we've sector know, a quarter our in our moderating core and back benefited BXB we marketplaces. QX, non-volume our performance performance grow it marketplace that we've in very into expect, single not going So would digit. growth. strong gave through environment, which is in from your fully And we February called talked rate from into the as out, we We're when will that volumes really QX have the out about. lapped in was But half We're business. QX XX% to from volume recall we're that from marketplace full based robust guidance, high single-digit year. hitting you really run again

strong on we've April. momentum our strong a based BXB and So raised

out expectations frankly think run QX into where guidance back that's Our prudent. keeping rating were our of at. it's half the We year, not the

remains Given macro our fundamentals I the -- And quarter. room context the some signs think really coming think outperform, business John we to is we strong everyone seeing, ultimately, of do consumer distress second into see the that that in obviously, macro there's if and And of stable.

John Caplan

excited BXB the add. just in, is brought year out our Yeah, so we now see What's I said deployments parts of XX% the from strategy for last QX business partners and really X% the our ability a and and about we think benefit and of well. performance in I'll for at at confident performance of execution. we really we Bea QX pace and solid their leaders on the laid product company directly team. seeing of on advancements in accelerating and ago the we're our inside that executing continue on we're strong We're it to we and the control, our growth, exciting delivering executing that year growth new that

deliver in we feel opportunity about a going position and So in front exit us, of QX steady for year we we'll what making big very are we're progress, how confident XXXX. and going strong to the full the into

William Nance

the quarters to Just those X to high level set numbers, next slides? I think the growth singles a relative the underlying said mid-single, the as you XX% for in

Bea Ordonez

Yeah, year. non-volume exiting, of we have round-out exiting high single we fully there's revenue the year, no as last QX, And And still QX, will lapped. more growth back since high have normalized. one said mid-teens mid-teens obviously, the those impact normalized And in Again, fees. we as consistently of core quarter we've half single-digit as digit.

midpoint the normalized on a basis year-over-year. terms is of XX% roughly overall, in growth So core

Operator

Benchmark. Palmer of question next from Mark line comes with the Our

Mark Palmer

various are which operates regional quarter, some as it Greater Looking the in Payoneer seeing the is China your right at significant had there? regions, you now macro strength. and operations extent China to it markets like pertains the impacting during that which looks to What in the

John Caplan

over impact double-digit our in earned the of XXXX. revenue the we higher I of XX% year rate major regions, of generated normalizing last the in QX thing first think So growth fees enterprise for take in each is growth non-volume regions and

and picking our there product customers saw and our stack. largest as commercial great financial strong, in seeing consumers West the China. et world's step eBay, are Amazon, benefiting the China our as up and position we've and merchants growth the cross-selling kept in with relationships the well. we're QX. there business those Etsy, so begun China, there of the full into Walmart, is positive signs and relationships marketplaces, card back early in We the brand power are cetera, BXB We're Specifically, strong to And have team in some buying in our the

proud progress So full that local making, particularly to feel on well the the the good executing our relates guidance across customers, and financial products cross-sell as year, and the our we're we wallet teams our is share in about relationships ground, region it valuable of board increasingly we're the we're and their are with big in I the stack gathering the of the delivering, our customers around Payoneer of and to globe. China seeing

Mark Palmer

M&A regard at during stand now How Just are amount of capital one alternatives you follow-up with deployment You do buybacks balancing thinking priorities? right shares point? quarter. tack-on question. versus bought Where a about and the you back to this healthy other

John Caplan

and one I and will together. Sure. Bea this start answer then sort I'll of

think I we're have we ample generating capital, the is first capital. and thing

So the business one. is a healthy

M&A, products of our services us tack-ons ICP and X for in have to in opportunities over and We million upsell of and customers. and cross-sell front X.X drive million customers lots active AP pursuing of our over tools

financial M&A see extend as pass million that executed Board stock So to we've of at million if program, stack want one that continue as buyback you for Bea, pace.But $XXX area. it the real to we tuck-in will the our QX, $XX add. in opportunity to I'll And you and approved

Bea Ordonez

Yeah.

question, approach. You balanced in noted you covered And it. Mark, a your

last offset approach. going our we're balanced $XX first in the as the obviously year back activity plan stock-based to bought million. than events our more out buyback perspective. dilution and opportunities we that expect We relative to price So year. in share occurring quarter, would year saw We We noted, of from accelerated deploy from other John this as coming a

back have opportunistic buying in as we opportunity. be So year, we but double market ballpark would expect was that see the back last to I be we bought roughly roughly, it we'll to if what

really from look, cash flow free business our a strong benefits As John generating engine. noted,

that we the continue and be shareholders expect be opportunistic year. We we'll able how disciplined expand as and financial and our of look cash at terms to We'll stack, throughout to return opportunities M&A well. in to

Operator

Our next the with question Kennedy Blair. Cris of comes William line from

Cristopher Kennedy

that are about pricing of talk and you some in journey? the you where Can initiatives

Bea Ordonez

also to improve Sure. began that I'll fees. largely what at define take on year fruit much we customer our engine are strategy, thresholds non-ICPs XXXX, product testing minimum that. in of strategy. by minimum this pricing more persona-based pricing we account in Look, capabilities low-hanging it, much XXXX allow noted active strategically as I'll more, been we've and investments certain around a in call fees spent a product executing to more sophisticated waived our segment-based I business would out really we we pricing transactional making making and investments and our in introducing and really team call certain But that us deploy to that and monetization data

to So light to end pricing at we that of workers strategy. which Phase able We were and segment-based and our flows. continuing shortly that from are fees receive that we're use effectively on called account, much the X 'XX, we monetize in only model capabilities, gig bank launched we to year. is broader In the We've and intra-network launching roll-out marketplaces with it segment-based of targeted competitive freelancers broadly flow. half very given XXXX, significant talked environment, of the testing about more and monetize that the of back

So platform, flows many between Payoneer on of account billions that flow. holders our

[indiscernible] the called of we We've $XX the various offerings from to those roughly to expect approach discussed, more initiatives that product cases uplift significant we've with terms In those low-hanging XXXX, or understanding $XX 'XX, changes what launching sophisticated generate segment-specific months much and pricing we to talked fees. In look, a developing from to more for last intra-network we've are monetize frame we've million from those. from use fruit. incremental FX and that additional in million in that an a And generated of to corridor strategy really So spent pricing frame, so use we slow. incremental and numbers. specific revenue monetization case-based the new how test should we pilot several and

ROI that that highlighted customer So and key we're again, monetization a we're really investing offering there's capture at a pricing which here, we've and strategy, strategy of to real pass. that. looking persona-based multiyear And is is that of that this such sort

Operator

from Jefferies. comes Trevor line Our of next with Williams question the

Spencer James

that's the maybe this for Hi, I some I growth share remainder know on Trevor is XXXX. around in you I Williams. given conservative XQ. you've James previously performance of expectations updated back comment wondering the if could XX%, shared more was of BXB you half? Spencer was could strong on thoughts for volume to for anything in wondering on mindful looking if be the

John Caplan

and are and from It's thrilled making, it. accelerating the have, take of with We've the product quarters that of the our in a BXB. exciting X to consecutive response the our part super fit BXB dynamics we're progress we business, network customers we're volume Happy growth the market business. had in

of market of and opportunity see growth, beat confidence of our us so work gives year-over-year on specific hope of course that new we that the behalf a have year-over-year in into XX% quarter customer quarter is see up the quarter APAC, BXB. our including into look of growth regions, what's year-over-year in reflects XXXX, across onboarding all hard we deep we response of XX% this to in can in the of BXB noted, experience. improvements the exciting big we first from up regions, results BXB; continuous trillion We that just throughout third the of That CEMEA, growth continue China. $X improved When cross-functionally. time handily. XX%. strong the The product in that XX% our accelerated was XXXX year, to Fourth volume the X%. customers, we as so of of see acquisition the extraordinary and verticals, we And XXXX global had positive expanded The have was the accelerating series customers we XX%, momentum organization result up entire ICP the and

on focused is team Our well better delivering than that.

Bea Ordonez

new a is There's it yes as That's that, a healthy in, that execution, China not a strong strong fantastic, And we Yeah. to out, We're John February, business the But add thing year-over-year of and The look, hit really growth. and strong acquisition, the thrilled. right? seasonality, really XX% I'd rebound, isn't called really XX% result uncertainty. as business right? all baking going we've the momentum, We're we're to of lines seeing only be in that trajectory. we linear of that baked support. of into that, called our guidance which We the volume we're maintaining QX. was to expectation back sort macro out in it's linear,

that's good the I and room to that we're think if that a prudent volume thing. growth. maintaining That gives stable, around outperformance year-over-year stays expectation but XX% us macro

Spencer James

And was you then adjusted out the the I guide comment might to incrementally? be the year raise full the between if wondering as follow-up, could a to and anywhere EBITDA year the guide, call you investing full on to revenue raise delta

Bea Ordonez

called No. is Cash out that increase. The core the in as OpEx stayed transaction revenue prepared we costs flat delta remarks. really just on

Operator

Sakhrani Sanjay will line KBW. of the next go we question to with The

Sanjay Sakhrani

rate sequentially bit about take take you little talked at outside there improvement the just and a the other rate pricing, higher? SMB I'm pricing that drove of drivers Were in Obviously, looking the business.

Bea Ordonez

to Look, SMB basis business, we're really rate notes. the our expanding within X execute happy your question SMB by continue We business can take as Yeah. to that points. rate in our see take we grew on

the very, robust That very take e-com the but We XX%. is in high-value noted, of the of benefit growth card that cross-selling into really including that hits services. usage FX, volumes our other revenue pricing really at it's We're effective you We also grew generated that stack, rate. growing especially of some BXB. X% a strong roughly sector. card As

than services, really checkout more or that in volume We haven't direct-to-consumer but merchant strong talked particularly growth about XXX% product.

on to BXB all continue take expansion, that growth sort those pricing, we're drive in to products of cross-selling rate [MRS]. firing So cylinders and

John Caplan

think, products direct I'd since from more the we strategy million over business customers, shared that customers, those stack the confidence of directly. financial want growth, are is our of give them, just working. with AP number shareholders million X.X add, us. directly. full They're from SMB ICPs supplement, should with them about We hear relationship map. that to engage them increasing X the products. have We We in SMB a our the I using excited That customers X-plus road inside buy

is we for and team deliver we're can and focused, confident about and do what XXXX beyond. Our

Sanjay Sakhrani

And just a follow-up question.

John, I are you there that more bunch in increase different flywheel. engagement, as of the mentioned other accelerate pipeline sort wallet. a you drive I'm can utility of the mentioned the really think, or things just curious, And just and help the you ways of increase now

John Caplan

Yeah.

We partnerships team to platform the as stack. into are team very corporate our is enhanced as excited work our our organization, our team, deliver development well doing product functionality about the

group earlier bring Some with we're Bea customers come indicates of next the into working for And of small the the of add on the talked Payoneer as to it it of needs. our seeing, really partnership AP years the stack, build on to over then the and we being our product. on Payoneer a relationships products of call capability. own, we products We're And being third-party of for to some we international buy acquisitions to stack Payoneer products all and about our think Payoneer tuck-in increase noted, many that application course the as our I AR results utility that card their commercial to customers. AP powerful extend

this for population entrepreneurs begin frankly, team not recognize a a is. just as recognize, to the potential to think, extraordinary that stack they of will a purpose-built full start of had I solution, global what financial we shareholders have are

Operator

this questions additional time. waiting are no There at

pass to I'll remarks. for back closing conference over the John So Caplan

John Caplan

support all everybody. of We're Thanks, the to So like Payoneer. our our thank continued shareholders. at excited this around our the we team I'd look We're quarter. the about of of and just team end appreciate We the participation the of next say initiatives next you forward our globe, your proud underway questions and discussion hard for work morning. your at to and of

Operator

That you wonderful your concludes Thank you day. a hope today's conference of call. participation. rest for I your have

Payoneer Global (PAYO) 8 May 242024 Q1 Earnings call transcript