• Total Revenue: $248 million, up 19% year-over-year.
• Revenue Excluding Interest Income: Grew by 24%.
• Adjusted EBITDA: $69 million with a 28% margin.
• Net Income: $42 million, compared to $13 million in Q3 of last year.
• Volume Growth: Increased by 25%.
• B2B Volume Growth: 57% increase.
• Merchant Services Volume Growth: 142% increase.
• Enterprise Payouts Volume Growth: 29% increase.
• Interest Income: $65 million for Q3.
• Customer Funds Held: Increased 13% to $6.1 billion.
• Cash and Cash Equivalents: $534 million at the end of the quarter.
• Basic Earnings Per Share: $0.12.
• Diluted Earnings Per Share: $0.11.
• Guidance for Full Year Revenue: Between $950 million and $960 million.
• Guidance for Adjusted EBITDA: $255 million to $265 million.

• Warning! GuruFocus has detected 7 Warning Signs with PAYO.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Payoneer Global Inc (NASDAQ:PAYO) delivered a record-breaking quarter in both volume and revenue, with total volume growth accelerating for a seventh consecutive quarter to 25%.
• The company reported a 19% increase in total revenue, with revenue excluding interest income growing by 24%, highlighting accelerating momentum.
• Adjusted EBITDA reached $69 million with a 28% margin, underscoring operational discipline and profitability.
• B2B volume grew by 57% in Q3, contributing significantly to the company's overall growth and representing nearly 1/4 of Q3 revenue.
• Payoneer Global Inc (NASDAQ:PAYO) raised its 2024 guidance for both revenue and adjusted EBITDA by $30 million, reflecting strong third-quarter results and continued momentum.

Negative Points

• The company's Q3 take rate decreased by 5 basis points, primarily due to the impact of slowing interest income growth.
• Total operating expenses increased by 19%, driven by higher transaction costs, R&D, depreciation, amortization, and M&A-related expenses.
• Transaction costs represented 15.3% of revenue, a 70 basis point increase from the prior year period, indicating rising operational costs.
• Interest income is expected to decline year-over-year in 2025 due to anticipated lower average interest rates.
• The company faces macroeconomic uncertainties, including potential impacts from the US election and broader geopolitical tensions, which could affect consumer spending.

Q & A Highlights

Q: The B2B SMB trends continue to show strong growth this year. What surprised you the most to the upside as we progress through the year? A: John Caplan, CEO: We've seen tremendous performance across the company in B2B. The acceleration is grounded in strategic initiatives like targeted acquisition, expansion into new verticals, and improvements in customer experience. We've exceeded our 25% B2B volume growth target, and we're confident that our B2B business will continue to grow faster than the overall business.

Q: You're forecasting a deceleration in Q4 revenues excluding float. Could you talk about those underlying assumptions? A: Beatrice Ordonez, CFO: Our guidance implies a step down in Q4 from roughly 22% core revenue growth year-to-date to mid-teens. This is consistent with our medium-term targets set at Investor Day. We think prudence is appropriate given continued macro uncertainty, including the US election and geopolitical tensions, which could impact consumer spending.

Q: How do you think about the sustainability of market share gains in the marketplace payouts business? A: John Caplan, CEO: We've done an exceptional job globally, winning share in China and expanding our marketplace ecosystem. Our marketplace business will grow as our B2B business continues to grow. We are focused on adding new marketplace relationships and believe we're in a strong position to do so.

Q: Could you speak to your investments in sales and marketing, particularly as you target larger ICPs? A: John Caplan, CEO: We've prioritized specific countries and verticals, incentivizing our sales organization around high-value ICPs. Our headcount in go-to-market has been stable, with additions in high-opportunity areas. We're reducing middle management layers to focus on customer acquisition and cross-sell.

Q: Can you provide an update on the pricing initiatives and their impact on revenue yield? A: Beatrice Ordonez, CFO: We continue to execute on our pricing strategy, focusing on product bundling and improved engagement. We expect to generate roughly $45 million of uplift in 2024 from these initiatives. Our SMB take rate is up 2 basis points year-over-year, driven by pricing impact and mix shift to higher take rate businesses.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.