Payoneer (PAYO) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA increased by $28 million year-over-year to$39 million, representing a 20% adjusted EBITDA margin [5] - Q1 volume increased by 8% year-over-year to $15.7 billion, driven by a recovery in travel and mid single-digit growth from large e-commerce marketplaces [14] - Customer funds held by Payoneer increased by$837 million, or 18% year-over-year, to $5.5 billion [15] - Q1 net income was$8 million compared to $20 million in the first quarter of last year, which included a gain of over$30 million from the change in fair value of warrants [17] Business Line Data and Key Metrics Changes - B2B AP/AR volumes increased by 23% year-over-year on an apples-to-apples basis, while overall B2B volumes increased by 2% year-over-year [31] - The penetration of the virtual commercial card increased by over 50% and more than doubled year-over-year [9] - The take rate for Q1 was 122 basis points, up from 94 basis points in the prior year period [39] Market Data and Key Metrics Changes - Payoneer experienced over 25% year-over-year revenue growth in each of its six regions, with over 70% growth in Latin America [5] - Key countries such as Vietnam, Argentina, Mexico, Colombia, and UAE saw over 50% year-over-year growth [5] - The company is focusing on emerging markets, particularly in Latin America, CEMEA, and APAC, which are expected to drive future growth [50][74] Company Strategy and Development Direction - The company aims to deliver strong and sustainable revenue growth, focusing on Ideal Customer Profiles (ICPs) and building a next-generation technology platform [28] - Payoneer is actively evaluating product-driven M&A opportunities to enhance its growth strategy and expand its market presence [10][18] - The company is incorporating AI in its onboarding processes to increase efficiency and reduce customer acquisition costs [7] Management's Comments on Operating Environment and Future Outlook - Management noted that while volume growth is below expectations, there is strong customer acquisition momentum [8] - The company anticipates interest rates will begin to decrease in the latter half of the year, which may impact revenue [20] - Management expressed confidence in meeting updated 2023 financial targets despite macroeconomic headwinds [21] Other Important Information - The company has paused hiring plans across the organization to generate savings in 2023 [61] - Payoneer will host its first Investor Day on September 21, 2023, in New York City [62] Q&A Session Summary Question: What are your thoughts on the ability to grow the ICP base during different macro environments? - Management indicated that they are focused on acquiring and serving customers who meet the ICP criteria, with early momentum observed [46][64] Question: Can you provide insights on ARPU opportunities and pricing strategies? - Management is experimenting with pricing strategies, including account fees, and noted that B2B business monetizes at 50% greater than marketplace payouts [48][99] Question: How do you see the geographic mix evolving with the focus on ICPs? - Management expects to see a shift in geographic mix as they penetrate high-growth markets, particularly in Latin America and APAC [49][70] Question: What is the impact of the recent banking turmoil on customer behavior? - Management reported no significant changes in customer behavior despite the banking turmoil, indicating strong trust in Payoneer [85][101] Question: What types of businesses are being considered for M&A? - Management is evaluating M&A opportunities focused on product extensions, regional footprint expansion, and enhancing existing licensing frameworks [128]