• Total Revenue: $228 million, up 19% year-over-year.

• Adjusted EBITDA Margin: Record 29%.

• Net Income: $29 million, compared to $8 million in the previous year.

• Earnings Per Share (EPS): Basic and diluted EPS at $0.08.

• Volume Growth: 21%, marking a fifth consecutive quarter of acceleration.

• B2B Volume Growth: 33% in Q1, a significant increase from 13% in the previous quarter.

• Free Cash Flow Conversion: Well above 100% year-to-date.

• Share Repurchases: $51 million worth of shares bought back during the quarter.

• Customer Funds Held: Increased by 8% to $5.9 billion.

• Interest Income: $65 million earned from customer funds in Q1.

• 2024 Revenue Guidance: Raised by $20 million, expecting between $895 million and $905 million.

• 2024 Adjusted EBITDA Guidance: Increased by $15 million, to be between $200 million and $210 million.

• Warning! GuruFocus has detected 3 Warning Sign with PAYO.

Release Date: May 08, 2024

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

Positive Points

• Payoneer Global Inc reported a 21% increase in volume, marking the highest growth rate in nearly three years.

• Total revenue grew by 19%, with a notable increase of 21% when normalized for non-volume fees from the previous year.

• Achieved a record 29% adjusted EBITDA margin, demonstrating strong profitability and effective expense management.

• Introduced new verticals and expanded B2B volume from service-oriented markets in APAC, LatAm, and SMEA by over 30%.

• Successfully implemented strategic pricing initiatives, resulting in a four basis point increase in SMB customer take rate and a 31% increase in ARPU.

Negative Points

• Despite overall growth, the company noted a decrease in Q1 take rate by one basis point on a normalized basis.

• Transaction costs increased by 25%, aligning with volume growth but impacting overall expense management.

• Sales and marketing expenses rose by 4%, driven by higher spending on card incentive programs and partner commissions.

• General and Administrative expenses saw a reduction due to headcount cuts, which could impact operational efficiency.

• The company faces ongoing challenges with macroeconomic uncertainty and consumer distress, which could affect future performance.

Q & A Highlights

Q: Can you discuss the expected revenue growth cadence for 2024, especially considering the U-shaped trajectory mentioned earlier? A: (Beatrice Ordonez - CFO) We anticipate a strong Q2 with high single-digit growth, moderating in Q3 to high single digits, and exiting the year with mid-teen core revenue growth. This reflects strong B2B momentum and a robust marketplace environment, despite some macroeconomic uncertainties.

Q: What are the current trends and impacts you're observing in the China market? A: (John Caplan - Board Member) We've seen double-digit growth across major regions, with over 20% revenue growth in higher take-rate regions. In China, our strong brand and relationships with major marketplaces like Amazon and Walmart have driven significant growth, particularly in commercial card products.

Q: How are you balancing capital deployment between share buybacks and M&A activities? A: (John Caplan - Board Member & Beatrice Ordonez - CFO) We're maintaining a balanced approach, with $51 million in share buybacks in Q1 and plans to double that amount this year. We're also exploring M&A opportunities to enhance our financial stack, leveraging our strong free cash flow.

Q: Could you elaborate on the pricing initiatives and their impact on your financial strategy? A: (Beatrice Ordonez - CFO) In 2023, we focused on monetizing non-ICPs and introduced a segment-based pricing strategy. For 2024, we expect an additional $20 million in revenue from new pricing strategies, including sophisticated FX monetization and fees on internal network flows.

Q: What are your expectations for B2B volume growth for the remainder of 2024? A: (John Caplan - Board Member) We're excited about the 33% growth in Q1 and aim to maintain a 25% growth target for the year. This growth is driven by strong execution across all regions, particularly in APAC and SEMEA.

Q: Are there other drivers, besides pricing, that contributed to the increased take rate in the SMB business? A: (Beatrice Ordonez - CFO) The increase is due to effective cross-selling of our financial stack, particularly our card products, and robust growth in B2B and merchant services. This multi-faceted approach helps drive take rate expansion across our SMB customer base.

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

This article first appeared on GuruFocus.