Payoneer Reports Third Quarter 2023 Financial Results

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

Reiterates 2023 revenue guidance and raises adjusted EBITDA guidance

Payoneer Global Inc. ("Payoneer" or the "Company") (NASDAQ:PAYO), the financial technology company empowering the world's small and medium sized businesses to transact, do business and grow globally, today reported financial results for its third quarter ended September 30, 2023.

Third Quarter 2023 Financial Highlights

1. Active ICPs are defined as customers with a Payoneer Account that have on average over $500 a month in volume and were active over the trailing twelve-month period.

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

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

Third Quarter 2023 Business Highlights (unless noted otherwise)

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

2023 Guidance

2023 guidance is as follows:

Webcast

Payoneer will host a live webcast of its earnings on a conference call with the investment community beginning at 8:30 a.m. ET today, November 8, 2023. To access the webcast, go to the investor relations section of the Company's website at https://investor.payoneer.com. A replay will be available on the investor relations website following the call.

About Payoneer

Payoneer is the financial technology company empowering the world's small and medium-sized businesses to transact, do business and grow globally. Payoneer was founded in 2005 with the belief that talent is equally distributed, but opportunity is not. It is our mission to enable anyone anywhere to participate and succeed in the global digital economy. Since our founding, we have built a global financial platform that has already made it easier for millions of SMBs, particularly in emerging markets, to pay and get paid, manage their funds, and grow their business.

Forward-Looking Statements

This press release includes, and oral statements made from time to time by representatives of Payoneer, may be considered "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or Payoneer's future financial or operating performance. For example, projections of future revenue, transaction cost and adjusted EBITDA are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expect," "intend," "plan," "will," "estimate," "anticipate," "believe," "predict," "potential" or "continue," or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Payoneer and its management, as the case may be, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) changes in applicable laws or regulations; (2) the possibility that Payoneer may be adversely affected by geopolitical events and conflicts, such as the current conflict between Israel and Hamas, and other economic, business and/or competitive factors; (3) Payoneer's estimates of its financial performance; (4) the outcome of any known and/or unknown legal or regulatory proceedings; and (5) other risks and uncertainties set forth in Payoneer's Annual Report on Form 10-K for the period ended December 31, 2022 and future reports that Payoneer may file with the SEC from time to time. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Payoneer does not undertake any duty to update these forward-looking statements.

Financial Information; Non-GAAP Financial Measures

Some of the financial information and data contained in this press release, such as adjusted EBITDA, have not been prepared in accordance with United States generally accepted accounting principles ("GAAP"). Payoneer uses these non-GAAP measures to compare Payoneer's performance to that of prior periods for budgeting and planning purposes. Payoneer believes these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Payoneer's results of operations. Payoneer's method of determining these non-GAAP measures may be different from other companies' methods and, therefore, may not be comparable to those used by other companies and Payoneer does not recommend the sole use of these non-GAAP measures to assess its financial performance. Payoneer management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in Payoneer's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. You should review Payoneer's financial statements, which are included in Payoneer's Annual Report on Form 10-K for the year ended December 31, 2022 and its subsequent Quarterly Reports on Form 10-Q, and not rely on any single financial measure to evaluate Payoneer's business.

Non-GAAP measures include the following item:

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

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

Disaggregation of revenue

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

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

1. Greater China is inclusive of mainland China, Hong Kong, Macao and Taiwan
2. No single country included in any of these regions generated more than 10% of total revenue
3. The United States is our country of domicile. Of North America revenues, the US represents $21,348 and $20,675 during the three months ended September 30, 2023 and 2022, respectively.

1. Represents non-cash charges associated with stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy.
2. Amounts for the periods in 2023 relate to M&A-related third-party fees, including related legal, consulting and other expenditures. Amounts for the three months ended September 30, 2022 relate to a non-recurring fair value adjustment of a liability related to our 2020 acquisition of optile.
3. Changes in the estimated fair value of the warrants are recognized as gain or loss on the condensed consolidated statements of comprehensive income (loss). The impact is removed from EBITDA as it represents market conditions that are not in our control.
4. The Company initiated a plan to reduce its workforce during the three months ending September 30, 2023 and had non-recurring costs related to severance and other employee termination benefits. Please refer to Note 10 of the Company's third quarter 10-Q filing for additional information.

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