Payoneer Global Inc

Previous wording

Payoneer is a financial technology company purpose-built to enable the world’s small and medium-sized businesses (“SMB(s)”) to grow and operate their businesses around the world by reliably and securely connecting them to the global digital economy. Payoneer’s financial stack makes it easier for millions of SMBs, particularly in emerging markets, to access global demand and supply, pay and get paid, and manage their cross border and other needs from a single platform. Our financial stack provides a full suite of cross-border accounts receivable (AR) and accounts payable (AP) capabilities, and includes services such as working capital and the provision of data-driven insights. Payoneer’s core value proposition is that we remove the complexity and barriers of doing business across borders for our customers. With a multi-currency Payoneer Account, businesses around the world can serve and transact with their overseas customers, suppliers, vendors, and partners as if they were local.

Current wording

Payoneer is a financial technology company purpose-built to enable the world’s small and medium-sized businesses (“SMB(s)”) to grow and operate their businesses around the world by reliably and securely connecting them to the global digital economy. Payoneer’s financial stack makes it easier for millions of SMBs, particularly in emerging markets, to access global demand and supply, pay and get paid, and manage their cross border and other needs from a single platform. Our financial stack provides a full suite of cross-border accounts receivable (AR) and accounts payable (AP) capabilities, and includes services such as working capital and the provision of data-driven insights. Payoneer’s core value proposition is that we remove the complexity and barriers of doing business across borders for our customers. With a multi-currency Payoneer Account, businesses around the world can serve and transact with their overseas customers, suppliers, vendors, customers and contractors, and partners as if they were local.

Previous wording

Our customers have trusted the Payoneer platform to process $18.7 billion and $15.3 billion in volume in the three months ended June 30, 2024 and 2023, respectively, and $37.2 billion and $30.6 billion in volume in the six months ended June 30, 2024 and 2023, respectively.

Current wording

Our customers have trusted the Payoneer platform to process $20.4 billion and $16.3 billion in volume in the three months ended September 30, 2024 and 2023, respectively, and $57.6 billion and $47.0 billion in volume in the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

In October 2023, in response to Hamas’ attack on Israel from the Gaza Strip, Israel declared war on Hamas. Concurrently, hostilities between Israel and Hezbollah ensued at the Israeli northern border. Despite the ongoing war, we have continued to operate our business and serve our customers around the world and, to date, our ability to support customers has not been materially impacted. We are monitoring the situation closely and benefit from our broad geographic footprint, partially outsourced operations model, and a robust business continuity plan. Additionally, our technology infrastructure has redundancy in place outside of Israel. Approximately 60% of our global employee base is located in Israel, including approximately 85% of our research and development resources. At this time, an insignificant portion of our Israeli workforce have been called to military reserve duty and we have contingencies in place to cover impacted roles and responsibilities.

Current wording

In October 2023, in response to Hamas’ attack on Israel from the Gaza Strip, Israel declared war on Hamas. Concurrently, hostilities between Israel and Hezbollah ensued at the Israeli northern border and have intensified over the past few months. Israel recently launched a limited ground operation in southern Lebanon in response to the ongoing hostilities, and the geopolitical instability in the region continued to escalate with direct attacks involving the Islamic Republic of Iran and its proxies in the region. Despite the ongoing war, we have continued to operate our business and serve our customers around the world and, to date, our ability to support customers has not been materially impacted. We are monitoring the situation closely and benefit from our broad geographic footprint, partially outsourced operations model, and a robust business continuity plan. Additionally, our technology infrastructure has redundancy in place outside of Israel. Approximately 55% of our global employee base is located in Israel, including approximately 78% of our research and development resources. At this time, an insignificant portion of our Israeli workforce have been called to military reserve duty and we have contingencies in place to cover impacted roles and responsibilities.

Previous wording

The evolving conflict is likely to continue to impact economic activity in the region and could impact revenues from customers located in Israel. Our revenue derived from customers based in Israel was insignificant for the three and six months ended June 30, 2024 and is included within revenues from Europe in Note 15 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

The evolving conflict is likely to continue to impact economic activity in the region and could impact revenues from customers located in Israel. Our revenue derived from customers based in Israel was insignificant for the three and nine months ended September 30, 2024 and is included within revenues from Europe in Note 16 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

The situation in the region remains highly uncertain and there is the possibility that the conflict could worsen or expand which could, in turn, further impact economic conditions in Israel and in the broader region. At this time, it is difficult to assess the impact the war may have on our future results of operations. Any further escalation, expansion, or prolonged continuation of the ongoing conflict has the potential to impact our operations locally as well as to negatively impact the broader global economy and may have a material effect on our results of operations.

Current wording

The situation in the region remains highly uncertain and there is the possibility that the conflict could worsen or expand which could, in turn, further impact economic conditions in Israel and in the broader region. At this time, it is difficult to assess the impact the war may have on our future results of operations. Any further escalation, expansion, or prolonged continuation of the ongoing conflict has the potential to impact our operations as well as to negatively impact the broader global economy and may have a material effect on our results of operations.

Previous wording

During 2022, a geopolitical and armed conflict between Ukraine and Russia, which developed into an ongoing war, resulted in economic sanctions on Russia, Belarus, and certain territories in Ukraine. We provide services to customers in Ukraine and in jurisdictions that are or may be impacted by these economic sanctions. We have developed and implemented a robust transaction monitoring program designed to comply with imposed sanctions and to monitor the impact the conflict may have on our results of operations. During 2022, we ceased to provide services to customers in Russia and have limited our payment services to Belarus customers, while at the same time revenues in Ukraine have remained relatively stable. For the three and six months ended June 30, 2024, Ukraine and Belarus, combined, accounted for less than 10% of our revenue, of which Belarus accounted for less than 1% of our revenue. Further escalation of the conflict may have a material effect on our results of operations.

Current wording

During 2022, a geopolitical and armed conflict between Ukraine and Russia, which developed into an ongoing war, resulted in economic sanctions on Russia, Belarus, and certain territories in Ukraine. We provide services to customers in Ukraine and in jurisdictions that are or may be impacted by these economic sanctions. We have developed and implemented a robust transaction monitoring program designed to comply with imposed sanctions and to monitor the impact the conflict may have on our results of operations. During 2022, we ceased to provide services to customers in Russia and have limited our payment services to Belarus customers, while at the same time revenues in Ukraine have remained relatively stable. For the three and nine months ended September 30, 2024, Ukraine and Belarus, combined, accounted for less than 10% of our revenue, of which Belarus accounted for less than 1% of our revenue. Further escalation of the conflict may have a material effect on our results of operations.

Previous wording

Macroeconomic conditions, including geopolitical and other global events, that impact consumer and business spending and behavior, such as, but not limited to, the interest rate environment, inflation, local political instability, global health crises, supply chain dislocations, regional and other conflicts, including the ongoing war in Ukraine and the Israel-Hamas war and disruptions and instability in the banking sector, may impact our customers, providers, banking partners and ultimately the amount of volume processed on our platform which may affect our results of operations. In 2023, we saw a significant increase in the interest income revenue we earn on our customer funds as the U.S. Federal Reserve raised the benchmark interest rate by 525 basis points since 2022. While there remains a great deal of uncertainty around the future timing and magnitude of interest rate cuts, we do expect to see a negative impact from declining interest rates over the medium-term.

Current wording

Macroeconomic conditions, including geopolitical and other global events, that impact consumer and business spending and behavior, such as, but not limited to, the interest rate environment, inflation, local political instability, global health crises, supply chain dislocations, regional and other conflicts, including the ongoing war in Ukraine and the current conflicts between Israel and Hamas, Hezbollah, the Islamic Republic of Iran and its other proxies in the region, and disruptions and instability in the banking sector, may impact our customers, providers, banking partners and ultimately the amount of volume processed on our platform which may affect our results of operations. In 2023, we saw a significant increase in the interest income revenue we earn on our customer funds as the U.S. Federal Reserve raised the target benchmark interest rate by 525 basis points to a high of 525 to 550 basis points by August 2023. On September 18, 2024, the U.S. Federal Reserve cut the benchmark interest rate by 50 basis points to a target range of 475 to 500 basis points, and while there remains uncertainty as to the timing and magnitude of future interest rate changes, we do expect to see a negative impact on our revenue from declining interest rates over the medium-term. In response to this expectation, as of September 30, 2024, we have invested a total of $1,661 million of our customer funds in both available-for-sale debt securities and term deposits to reduce our sensitivity to declines in short term interest rates.

Previous wording

Revenues were $239.5 million and $467.7 million for the three and six months ended June 30, 2024, an increase of $32.8 million and $69.0 million, or 16% and 17%, respectively, compared to the prior-year period, driven mainly by an increase of $10.5 million and $25.7 million, respectively, in interest income earned on customer balances resulting from rising interest rates and an increase in customer balances held on our platform compared to the prior-year period. The remaining increase was driven by a combination of continued adoption of our high value services, certain monetization initiatives, ongoing growth in high value regions, and growth in the number of customers on our platform.

Current wording

Revenues were $248.3 million and $716.0 million for the three and nine months ended September 30, 2024, an increase of $40.2 million and $109.2 million, or 19% and 18%, respectively, compared to the prior-year period, driven by continued adoption of our high value services, certain monetization initiatives, ongoing growth in high value regions, and growth in the number of customers on our platform. The remaining increase was driven by an increase of $4.7 million and $30.4 million, for the three and nine months ended September 30, 2024 respectively, in interest income earned on customer balances resulting from modestly higher interest rates and an increase in customer balances held on our platform compared to the prior-year periods.

Previous wording

Transaction costs were $37.0 million for the three months ended June 30, 2024, an increase of $8.5 million, or 30%, compared to the prior-year period, partially due to an increase in chargebacks and other operational losses of $3.0 million. Excluding the impact of these non-volume related costs, transaction costs increased by $5.5m or 20%, while volume increased by 22% compared to the prior year period. Transaction costs grew at a lower rate than volume due to improved commercial terms, internal platform optimizations, and the scale benefits of increased transaction volumes.

Current wording

Transaction costs were $38.1 million for the three months ended September 30, 2024, an increase of $7.7 million, or 25%, compared to the prior-year period, partially due to an increase in chargebacks and other operational losses of $2.4 million. Excluding the impact of these non-volume related costs, transaction costs increased by $5.3 million or 18%, while volume increased by 25% compared to the prior year period. Transaction costs grew at a lower rate than volume due to improved commercial terms with our network partners, internal platform optimizations, and the scale benefits of increased transaction volumes.

Previous wording

Transaction costs were $70.9 million for the six months ended June 30, 2024, an increase of $15.3 million, or 28%, compared to the prior-year period, partially due to an increase in chargebacks and other operational losses of $3.8 million. Excluding the impact of these non-volume related costs, the increase in transaction costs is broadly in line with the 21% increase in volume.

Current wording

Transaction costs were $109.0 million for the nine months ended September 30, 2024, an increase of $23.0 million, or 27%, compared to the prior-year period, partially due to an increase in chargebacks and other operational losses of $6.3 million. Excluding the impact of these non-volume related costs, transaction costs increased by $16.7 million or 21%, while volume increased by 23% compared to the prior year period. Transaction costs grew at a lower rate than volume due to improved commercial terms with our banking partners, internal platform optimizations, and the scale benefits of increased transaction volumes.

Previous wording

Research and development expenses were $27.6 million for the three months ended June 30, 2024, a decrease of $0.4 million, or 1%, compared to the prior-year period, driven by an increase of $2.8 million in employee compensation costs capitalized as internal use software in connection with ongoing investments in our platform infrastructure, partially offset by an increase of $1.5 million in employee compensation, benefits and other employee-related expenses in line with an increase in employee headcount and an increase of $1.0 million in information technology expenses.

Current wording

Research and development expenses were $34.6* million for the three months ended September 30, 2024, an increase of $7.7 million, or 28%, compared to the prior-year period, driven by an increase of $5.6 million in employee compensation, benefits and other employee-related expenses in line with an increase in employee headcount and an increase of $0.9 *million in information technology expenses.

Previous wording

Research and development expenses were $59.6 million for the six months ended June 30, 2024, an increase of $2.4 million, or 4%, compared to the prior-year period, driven by an increase of $7.9 million in employee compensation, benefits and other employee-related expenses in line with an increase in employee headcount and an increase of $2.5 million in information technology expenses, partially offset by an increase of $7.6 million in employee compensation costs capitalized as internal use software in connection with ongoing investments in our platform infrastructure.

Current wording

Research and development expenses were $94.2 million for the nine months ended September 30, 2024, an increase of $10.0* million, or 12%, compared to the prior-year period, driven by an increase of $13.5 million in employee compensation, benefits and other employee-related expenses in line with an increase in employee headcount and an increase of $3.4 million in information technology expenses, partially offset by an increase of $6.9 *million in employee compensation costs capitalized as internal use software in connection with ongoing investments in our platform infrastructure.

Previous wording

Sales and marketing expenses were $100.5 million for the six months ended June 30, 2024, an increase of $4.3 million, or 4%, compared to the prior-year period, driven by an increase of $5.1 million in spend on certain direct marketing efforts, $1.8 million in marketplace partner commissions and an increase of $1.0 million in information technology expenses, offset by a decrease of $4.0 million in employee compensation, benefits and other employee-related expenses primarily due to a decrease in employee headcount.

Current wording

Sales and marketing expenses were $52.3 million for the three months ended September 30, 2024, an increase of $3.6* million, or 7%, compared to the prior-year period, driven by an increase of $4.1 million in expenditures on certain direct marketing efforts, partially offset by a decrease of $1.0 *million in marketplace partner commissions.

Previous wording

Sales and marketing expenses were $50.6 million for the three months ended June 30, 2024, an increase of $2.2 million, or 5%, compared to the prior-year period, driven by an increase of $2.5 million in spend on certain direct marketing efforts and an increase of $1.0 million in information technology expenses, offset by a decrease of $1.1 million in third-party contractor and consulting expenses.

Current wording

Sales and marketing expenses were $152.8 million for the nine months ended September 30, 2024, an increase of $7.9 million, or 5%, compared to the prior-year period, driven by an increase of $9.2 million in expenditures on certain direct marketing efforts and an increase of $1.2 million in information technology expenses, partially offset by a decrease of $3.5 million in employee compensation, benefits and other employee-related expenses primarily due to a decrease in employee headcount.

Previous wording

General and administrative expenses were $50.3 million for the six months ended June 30, 2024, an increase of $1.6 million, or 3%, compared to the prior-year period, driven by an increase of $3.4 million in M&A related expenses and an increase of $1.7 million in third-party contractor and consulting expenses, offset by a decrease of $3.5 million in employee compensation, benefits and other employee-related expenses in line with a decrease in employee headcount.

Current wording

General and administrative expenses were $29.7 million for the three months ended September 30, 2024, an increase of $4.6 million, or 18%, compared to the prior-year period, driven by an increase of $2.9 million in employee compensation, benefits and other employee-related expenses primarily due to an increase in employee headcount and an increase of $1.5 million in M&A related expenses.

Previous wording

General and administrative expenses were $26.1 million for the three months ended June 30, 2024, an increase of $4.1 million, or 19%, compared to the prior-year period, driven by an increase of $1.8 million in M&A related expenses and an increase of $1.6 million in third-party contractor and consulting expenses.

Current wording

General and administrative expenses were $80.0 million for the nine months ended September 30, 2024, an increase of $6.2 million, or 8%, compared to the prior-year period, driven by an increase of $4.5 million in M&A related expenses and an increase of $2.6 million in third-party contractor and consulting expenses.

Previous wording

Depreciation and amortization expenses were $10.7 million and $20.1 million for the three and six months ended June 30, 2024, an increase of $4.8 million and $8.2 million, or 81% and 68%, respectively, compared to the prior-year period, mainly driven by an increase in amortization of internal use of software.

Current wording

Depreciation and amortization expenses were $13.5 million and $33.6 million for the three and nine months ended September 30, 2024, an increase of $6.4 million and $14.6 million, or 90% and 76%, respectively, compared to the prior-year period, mainly driven by an increase in amortization of internal use of software, as well as $1.4 million of impairment related to abandoned internal use software assets in the three months ended September 30, 2024 which did not occur in the prior year period.

Previous wording

Financial income, net was $2.0 million for the three months ended June 30, 2024, a decrease of $15.9 million, or 89%, compared to the prior-year period, driven by a gain from the change in the fair value of warrants that was $12.6 million lower than the gain recognized in the prior year period, as well as a $5.1 million increase in loss on revaluation of foreign currency balances. These drivers were partially offset by an increase of $1.8 million in interest income on corporate cash balances.

Current wording

Financial expense, net was $6.6 million for the nine months ended September 30, 2024, an increase of $19.9 million, or 149%, compared to the $13.3 million in income recognized in the prior-year period, primarily driven by a loss from the warrant repurchase and redemption transaction that was $17.5 million higher than the gain recognized in the prior year period related to the change in the fair value of warrants, as well as a $7.0 million increase in loss on revaluation of foreign currency balances. These drivers were partially offset by an increase of $4.2 million in interest income on corporate cash balances.

Previous wording

As of June 30, 2024, we had $575.7 million of cash and cash equivalents.

Current wording

As of September 30, 2024, we had $534.2* *million of cash and cash equivalents.

Previous wording

On October 28, 2021, Payoneer Early Payments Inc. (“PEPI”), our wholly-owned second tier subsidiary and its subsidiary (the “Borrower”) entered into a multi-party Receivables Loan and Security Agreement (the “Warehouse Facility”) with, inter alia, affiliates of Viola Ventures. The objective was to provide access to external financing for our capital advance activity. See Note 11 and Note 20 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

Current wording

On October 28, 2021, Payoneer Early Payments Inc. (“PEPI”), our wholly-owned second tier subsidiary and its subsidiary (the “Borrower”) entered into a multi-party Receivables Loan and Security Agreement (the “Warehouse Facility”) with, inter alia, affiliates of Viola Ventures. The objective was to provide access to external financing for our capital advance activity. See Note 12 and Note 21 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information. As disclosed in Note 12 and Note 21, the Warehouse Facility reached its scheduled revolving period termination date on October 28, 2024, and the Company will repay all outstanding borrowings in accordance with the Warehouse Facility by the Facility Maturity Date of April 28, 2024. After the expiration of the Warehouse Facility, the Company intends to finance capital advance activity internally.

Previous wording

On May 7, 2023, our Board of Directors authorized a stock repurchase program that provides for the repurchase of up to $80.0 million of our common stock, including any applicable excise tax. On December 7, 2023, the Board authorized an amendment to the program to increase the authorized amount of repurchases to an aggregate amount not to exceed $250.0 million, including the amount that remained available as of December 7, 2023 to repurchase common stock under, but not any prior repurchases effected pursuant to, the previous authorization, and any applicable excise tax. The amended authorization expires December 31, 2025.

Current wording

On May 7, 2023, our Board of Directors authorized a stock repurchase program that provides for the repurchase of up to $80.0 million of our common stock, including any applicable excise tax. On December 7, 2023, the Board of Directors authorized an amendment to the program to increase the authorized amount of repurchases to an aggregate amount not to exceed $250.0 million, including the amount that remained available as of December 7, 2023 to repurchase common stock under, but not any prior repurchases effected pursuant to, the previous authorization, and any applicable excise tax. The amended authorization expires on December 31, 2025.

Previous wording

During the six months ended June 30, 2024, we repurchased 19,244,897 shares of our common stock for approximately $97.8 million, of which $0.6 million was not yet settled at period end. As of June 30, 2024, a total of approximately $142.8 million remained available for future repurchases of our common stock under the program.

Current wording

During the nine months ended September 30, 2024, we repurchased 22,993,198* shares of our common stock for approximately $119.1 million, of which $0.15 million was not yet settled at period end. As of September 30, 2024, a total of approximately $121.5 *million remained available for future repurchases of our common stock under the program.

Previous wording

Net cash provided by operating activities was $80.9 million for the six months ended June 30, 2024, an increase of $21.0 million compared to $59.9 million for the six months ended June 30, 2023.

Current wording

Net cash provided by operating activities was $131.0* million for the nine months ended September 30, 2024, an increase of $29.7 *million compared to $101.3 million for the nine months ended September 30, 2023.

Previous wording

Net cash used in investing activities was $665.3 million for the six months ended June 30, 2024, an increase of $601.8 million compared to net cash used in investing activities of $63.5 million for the six months ended June 30, 2023.

Current wording

Net cash used in investing activities was $1,814.1 million for the nine months ended September 30, 2024, an increase of $1,766.4 million compared to net cash used in investing activities of $47.8 million for the nine months ended September 30, 2023.

Previous wording

This change was predominantly related to the net purchase of $634.2 million in investments of customer balances held on our platform in U.S. Treasury Securities.

Current wording

This change was predominantly related to the net purchase of $1,041.7 million in investments of customer balances held on our platform in U.S. Treasury Securities and $600.0 million in term deposits, as well as $48.2 million in cash paid for the acquisition of Skuad, net of cash acquired.

Previous wording

Net cash used in financing activities was $443.5 million for the six months ended June 30, 2024, an increase of $128.0 million compared to net cash used in financing activities of $315.4 million for the six months ended June 30, 2023. Current period cash used in financing activities reflects the $353.4 million decline in customer balances since the beginning of the period which was $43.5 million higher than the $309.9 million decline in the prior year period. Additionally, share repurchases were $81.5 million higher than in the prior year period.

Current wording

Net cash used in financing activities was $436.9 million for the nine months ended September 30, 2024, a decrease of $55.8 million compared to net cash used in financing activities of $492.7 million for the nine months ended September 30, 2023. Current period cash used in financing activities reflects the $314.8 million decline in customer balances since the beginning of the period which was $153.4 million lower than the $468.1 million decline in the prior year period. This $153.4 million decrease was partially offset by share repurchases, which were $86.0 million higher than in the prior year period, as well as $19.5 million paid for Warrant repurchase and redemption.

Previous wording

Note: as disclosed in the Company’s Form 10-K filed with the SEC on February 28, 2024, we have updated our methodology to adjust for previously disclosed limited exceptions where both received and sent payments were counted in volumes, such that we count volume only once for a customer that both receives and later sends payments.

Current wording

As disclosed in our Form 10-K filed with the SEC on February 28, 2024, we have updated our methodology to adjust for previously disclosed limited exceptions where both received and sent payments were counted in volumes, such that we count volume only once for a customer that both receives and later sends payments.

Previous wording

Volume grew 22% and 21% for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, respectively, driven by a combination of continued growth in volumes from our largest digital commerce marketplaces, strong growth in B2B volumes, strong travel demand, and continued customer acquisition.

Current wording

Volume grew 25% and 23% for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively, driven by a combination of continued growth in volumes from our largest digital commerce marketplaces, strong growth in B2B volumes, strong travel demand, and continued customer acquisition.

Previous wording

(2)Amounts relate to M&A-related third-party fees, including related legal, consulting and other expenditures.

Current wording

(2)Amounts relate to M&A-related third-party fees, including related legal, consulting and other expenditures. Additionally, amounts for the three months ended September 30, 2024 include $0.2 million in non-recurring fair value adjustment of the Skuad contingent consideration liability discussed in Note 3 to our condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q.

Previous wording

For more information, see “Payoneer Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Form 10-K filed with the SEC on February 28, 2024.

Current wording

With the exception of the updates previously described, there have been no updates to our critical accounting policies and estimates in the nine months ended September 30, 2024. For more information, see “Payoneer Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Form 10-K filed with the SEC on February 28, 2024.

Previous wording

A description of recently issued accounting pronouncements that may potentially impact our financial position, result of operations or cash flows is disclosed in Note 2 to our unaudited condensed consolidated financial statement included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

A description of recently issued accounting pronouncements that may potentially impact our financial position, result of operations or cash flows is disclosed in Note 2 to our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q.