Payoneer Reports Second Quarter 2024 Financial Results

Raises 2024 guidance

22% volume growth accelerates for a sixth consecutive quarter, reflecting consistent execution

40% B2B volume growth driving continued SMB take rate expansion

Expands into global workforce management services for SMBs with the acquisition of Skuad

Payoneer Global Inc. ("Payoneer" or the "Company") (NASDAQ:PAYO), the financial technology company empowering the world's small and medium-sized businesses to transact, do business and grow globally, today reported financial results for its second quarter ended June 30, 2024.

Second Quarter 2024 Financial Highlights

Transaction Details

On August 5, Payoneer acquired Skuad, a global workforce and payroll management company headquartered in Singapore. The acquisition accelerates Payoneer's strategy to deliver a comprehensive and integrated financial stack for SMBs that operate internationally.

Payoneer acquired Skuad for $61 million cash, subject to adjustments and funded with cash on hand, and up to an additional $20 million of future payments in cash and equity that are contingent upon reaching certain performance and tenure milestones.

Second Quarter 2024 Business Highlights

• 10% active ICP growth, including 7% growth in larger ICPs who have on average over $10,000 per month in volume. Both volume and revenue from $10K+ ICPs increased more than 20% year-over-year as we acquire larger customers
• 22% volume growth year-over-year reflects:
  • B2B volume of $2.5 billion increased 40% year-over-year, driven by strong growth of new cohorts added in the past year and continued strong customer acquisition
  • Marketplace volume of $11.4 billion increased 15% year-over-year led by acquisition of large customers in China and continued strength from large ecommerce platforms
  • Merchant Services (Checkout) volume of $119 million increased 192% year-over-year as we doubled the number of $10K+ customers using Checkout from a year ago
  • Enterprise payouts volume of $4.7 billion increased 31% year-over-year, led by the travel vertical where we increased the number of countries we serve compared to a year ago
• $1.2 billion of spend on Payoneer cards, up 33% year-over-year, as we continue to improve our card capabilities. We launched additional integrations with accounting ERP platforms, which enables customers to more easily track their spend on Payoneer cards directly within their preferred accounting solution
• Payoneer continues to expand its ecosystem to enable more interoperability for customers. We are now integrated with Xero, QuickBooks, and Zoho Books, which represent the top global accounting platforms used by SMBs
• $6.0 billion of customer funds as of June 30, 2024, up 9% year-over-year
• $47 million of share repurchases at a weighted average price of $5.33

2024 Guidance

2024 guidance is as follows:

Webcast

Payoneer will host a live webcast of its earnings on a conference call with the investment community beginning at 8:30 a.m. ET today, August 7, 2024. To access the webcast, go to the investor relations section of the Company's website at https://investor.payoneer.com. A replay will be available on the investor relations website following the call.

About Payoneer

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

Forward-Looking Statements

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

Financial Information; Non-GAAP Financial Measures

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

Non-GAAP measures include the following item:

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

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

In addition, in this earnings release, we reference volume, which is an operational metric. Volume refers to the total dollar value of transactions successfully completed or enabled by our platform, not including orchestration transactions. For a customer that both receives and later sends payments, we count the volume only once. We also reference ARPU (Average Revenue Per User), which is defined as the Revenue from Active Customers divided by the number of Active Customers over the period in which the Revenue was earned. Active Customers for these purposes are defined as Payoneer accountholders with at least 1 financial transaction over the period. Revenue from Active Customers represents revenue attributed to Active Customers based on their use of the Payoneer platform, including interest income earned from their balances, and excluding revenues unrelated to their activities.

Disaggregation of revenue

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

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

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