# Payoneer Global Inc.: Form 10-Q for the period ended Jun 30, 2024

- Company: [Payoneer Global Inc.](/companies/payo.md) (CIK 1845815)
- Form: 10-Q
- Filed: 2024-08-07
- Accepted by EDGAR: Aug 7, 2024, 16:05 ET
- Period: 2024-06-30
- Accession: 0001558370-24-011345
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1845815/000155837024011345/payo-20240630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1845815/000155837024011345/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-01 to 2024-06-30 | $171.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-01-01 to 2024-06-30 | $331.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Research and development | 3 months, 2024-04-01 to 2024-06-30 | $27.6m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2024-01-01 to 2024-06-30 | $59.6m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | $46.3m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-01-01 to 2024-06-30 | $84.7m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | $15.9m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | $29.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | $32.4m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | $61.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | $0.09 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-01-01 to 2024-06-30 | $0.16 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | $0.09 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-01-01 to 2024-06-30 | $0.17 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 373,368,383 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-01-01 to 2024-06-30 | 376,727,575 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | $80.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-01-01 to 2024-06-30 | $2.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months, 2024-01-01 to 2024-06-30 | $98.7m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-06-30 | $575.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $6.73bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $6.92bn | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $6.19bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-06-30 | $6.25bn | us-gaap:Liabilities |
| Shareholders' equity | at 2024-06-30 | $669.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 32,460 characters.

*Throughout this section, unless otherwise noted, “we”, “us”, “our”, “Payoneer”, and the “Company” refer to Payoneer Global Inc.*

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis includes forward-looking statements that involve risks and uncertainties. You should review the sections titled “Cautionary Note on Forward-Looking Statements” and “Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.*

### Overview

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.

We primarily generate revenues when Payoneer customers use the funds in their Payoneer account to make a payment, to make a purchase or to withdraw the funds locally. For our Business to Business (“B2B”) and Direct to Consumer (“DTC”) customers, we also in certain circumstances generate revenue on their AR, such as when they invoice a customer or collect payments via their webstore. Additionally, given the high interest rate environment, interest earned on customer funds held on our platform has been a significant source of revenue. Our long-term strategy is centered on growing the number of customers on our platform who fit our ideal customer profile, namely – those who are customers that have on average over $500 a month in volume and were active over the trailing twelve-month period, and on increasing the revenue we earn from each customer. We believe that successful execution of this strategy will drive revenue growth as (i) adding new customers who meet our ideal customer profile, improving retention, and increasing our product offerings to capture more wallet share will drive greater ad valorem volume of transactions processed through the Payoneer platform; and (ii) introducing new products and services and increasing customer adoption of additional products and services will improve our monetization of customers over time. Volume is one of the primary drivers for our revenue growth. See “Key Metrics and Non-GAAP Financial Measures” for additional information.

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.

Looking forward, we intend to continue to invest actively to enhance our global platform, deliver new products, extend our regulatory footprint, further automate our operations, increase new customer growth and make acquisitions to accelerate our ability to deliver more value to customers around the world.

### Key Developments and Trends

#### Impact of the war in Israel

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.

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.

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.

#### Impact of the war in Ukraine

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.

#### Macroeconomic Conditions

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.

### Results of Operations

The period-to-period comparisons of our results of operations have been prepared using the historical periods in our condensed consolidated financial statements. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related Notes included within this Quarterly Report on Form 10-Q.

*(in thousands except percentages)*

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three months ended June 30, 2024 | ​ | ​ ​ 2023 | ​ ​ ​ | ​ ​ ​ ​ Increase/ ​ (Decrease) | ​ ​ Six months ended June 30, 2024 | ​ | ​ ​ 2023 | ​ ​ ​ | ​ ​ ​ Increase/ (Decrease) ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: | --- | ---: | --- | ---: |
| Revenues | ​ | $239,520 | ​ | $206,734 |  | 16% | $467,703 | ​ | $398,748 |  | 17% |
| Transaction costs | ​ | 36,961 | ​ | 28,497 |  | 30% | 70,927 | ​ | 55,578 |  | 28% |
| Other operating expenses | ​ | 41,242 | ​ | 40,527 |  | 2% | 81,525 | ​ | 80,622 |  | 1% |
| Research and development expenses | ​ | 27,580 | ​ | 27,995 |  | (1)% | 59,631 | ​ | 57,275 |  | 4% |
| Sales and marketing expenses | ​ | 50,614 | ​ | 48,402 |  | 5% | 100,504 | ​ | 96,228 |  | 4% |
| General and administrative expenses | ​ | 26,102 | ​ | 22,012 |  | 19% | 50,311 | ​ | 48,693 |  | 3% |
| Depreciation and amortization | ​ | 10,712 | ​ | 5,909 |  | 81% | 20,120 | ​ | 11,948 |  | 68% |
| Total operating expenses | ​ | ​ 193,211 | ​ | ​ 173,342 | ​ | 11% | ​ 383,018 | ​ | ​ 350,344 | ​ | 9% |
| Operating income | ​ | ​ 46,309 | ​ | ​ 33,392 | ​ | 39% | ​ 84,685 | ​ | ​ 48,404 | ​ | 75% |
| Financial income: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Gain from change in fair value of Warrants | ​ | ​ 1,006 | ​ | ​ 13,586 | ​ | (93)% | ​ 2,767 | ​ | ​ 13,334 | ​ | (79)% |
| Other financial income, net | ​ | ​ 976 | ​ | ​ 4,318 | ​ | (77)% | ​ 3,723 | ​ | ​ 6,668 | ​ | (44)% |
| Financial income, net | ​ | 1,982 | ​ | 17,904 |  | (89)% | 6,490 | ​ | 20,002 |  | (68)% |
| Income before taxes on income | ​ | ​ 48,291 | ​ | ​ 51,296 | ​ | (6)% | ​ 91,175 | ​ | ​ 68,406 | ​ | 33% |
| Taxes on income | ​ | ​ 15,866 | ​ | ​ 5,747 | ​ | 176% | ​ 29,776 | ​ | ​ 14,919 | ​ | 100% |
| Net income | ​ | $32,425 | ​ | $45,549 |  | (29)% | $61,399 | ​ | $53,487 |  | 15% |

#### Revenues

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.

#### Transaction costs

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.

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.

#### Other operating expenses

Other operating expenses were $41.2 million for the three months ended June 30, 2024, an increase of $0.7 million, or 2%, compared to the prior-year period, driven by an increase of $3.4 million in information technology expenses offset by a decrease of $2.7 million in employee compensation, benefits and other employee-related expenses primarily due to a decrease in employee headcount.

Other operating expenses were $81.5 million for the six months ended June 30, 2024, an increase of $0.9 million, or 1%, compared to the prior-year period, driven by an increase of $6.1 million in information technology expenses partially offset by a decrease of $4.6 million in employee compensation, benefits and other employee-related expenses primarily due to a decrease in employee headcount.

#### Research and development expenses

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.

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.

#### Sales and marketing expenses

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.

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.

#### General and administrative expenses

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.

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.

#### Depreciation and amortization expenses

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.

#### Financial income and expense, net

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.

Financial income, net was $6.5 million for the six months ended June 30, 2024, a decrease of $13.5 million, or 68%, compared to the prior-year period, driven by a gain from the change in the fair value of warrants that was $10.6 million lower than the gain recognized in the prior year period, as well as a $6.3 million increase in loss on revaluation of foreign currency balances. These drivers were partially offset by an increase of $3.4 million in interest income on corporate cash balances.

#### Income tax

Income tax expense was $15.9 million for the three months ended June 30, 2024, an increase of $10.1 million, or 176%, compared to the prior year period. This increase was primarily driven by a tax benefit of $10.6 million in the three months ended June 30, 2023, related to the release of the valuation allowance on deferred tax assets in the United States, which did not recur in the current period.

Income tax expense was $29.8 million for the six months ended June 30, 2024, an increase of $14.9 million, or 100%, compared to the prior year period. This increase was primarily driven by a tax benefit of $10.6 million in the six months ended June 30, 2023, related to the release of the valuation allowance on the deferred tax assets in the United States, which did not recur in the current period. Additionally, our US federal and state income tax expense increased by $2.6 million, as compared to the prior-year period. This increase was driven primarily by an increase in non-deductible stock compensation. In addition, foreign income tax expense increased by $1.2 million for the six months ended June 30, 2024, as compared to the prior-year period.

### Liquidity and Capital Resources

The following discussion of our liquidity and capital resources is based on the financial information derived from our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We believe our existing cash and cash equivalents and cash flows from operating activities will be sufficient to meet our operating working capital, share repurchase and capital expenditure requirements for at least the next twelve months. Our future financing requirements will depend on many factors including our growth rate, the timing and extent of spending to support development of our platform and the ongoing expansion needs of sales and marketing activities. We have in the past and may in the future enter into agreements with third parties with respect to investments in, or acquisitions of, businesses or technologies, which could also require us to seek additional equity or debt financing.

### Sources of Liquidity

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

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.

Effective July 1, 2023, the Warehouse Facility interest rate was updated to the sum of the Daily Simple SOFR and 0.26161% plus 9% annually. The Warehouse Facility has a revolving maturity of 36 months from the commencement date with a payback period of an additional 6 months after the revolving maturity date. The initial borrowing commitment is $25 million subject to increases at our request and the lender’s discretion up to $100 million. Additional commitments will carry interest rates ranging from 7% to 7.75% in addition to the benchmark rate. In addition, pursuant to the Warehouse Facility, PEPI entered into an amendment on June 8, 2022, whereby creating a condition that the total interest rate shall not exceed 10.5% per annum for all outstanding balances.

The Warehouse Facility is secured by eligible capital advance receivables at an initial rate of 80% of the total value of the underlying capital advance receivable outstanding. We are subject to financial covenants including minimum tangible equity, solvency and unrestricted cash requirements that are assessed based on our condensed consolidated financial statements.

#### Current and Future Cash Requirements

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.

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.

### Cash Flows

The following table presents a summary of cash flows from operating, investing, and financing activities for the following comparative periods.

*(in thousands)*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Six months ended June 30, 2024 | ​ | ​ ​ 2023 |
| --- | --- | ---: | --- | ---: |
| Net cash provided by operating activities | ​ | $80,914 | ​ | $59,919 |
| Net cash used in investing activities | ​ | (665,298) | ​ | (63,453) |
| Net cash used in financing activities | ​ | (443,475) | ​ | (315,444) |
| Effect of exchange rate changes on cash and cash equivalents | ​ | (2,311) | ​ | 705 |
| Change in cash, cash equivalents, restricted cash and customer funds | ​ | $(1,030,170) | ​ | $(318,273) |

#### Operating Activities

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.

For the six months ended June 30, 2024, we had $61.4 million of net income, which includes non-cash expenses of $28.7 million related to stock-based compensation and $20.1 million related to depreciation and amortization. Net income was also adjusted for changes in current assets and liabilities, including net outflows of $17.7 million related to Other payables and $12.7 million related to Other current assets.

For the six months ended June 30, 2023, we had $53.5 million of net income, which includes non-cash expenses of $33.1 million related to stock-based compensation and $11.9 million related to depreciation and amortization, as well as non-cash gains of $13.3 million related to change in fair value of warrants and non-cash deferred tax benefit of $9.8 million, primarily related to the release of our valuation allowance in the United States. Net income was also adjusted for changes in current assets and liabilities, including outflows of $13.2 million related to Trade payables, $5.3 million related to Other payables, and $3.1 million related to Capital advances. These outflows were offset by inflows of $5.1 million related to operating lease right-of-use assets and $1.0 million related to miscellaneous items.

#### Investing Activities

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.

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.

#### Financing Activities

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.

### Key Metrics and Non-GAAP Financial Measures

Our management uses a variety of financial and operating metrics to evaluate our business, analyze our performance, and make strategic decisions. We believe these metrics and non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as management. However, certain of these measures are not financial measures calculated in accordance with GAAP and should not be considered as substitutes for financial measures that have been calculated in accordance with GAAP. We primarily review the following key performance indicators and non-GAAP measures when assessing our performance:

#### Volume

Volume refers to the total dollar value of transactions successfully completed or enabled by our platform, not including orchestration transactions. For a customer that both receives and later sends payments, we count the volume only once. Volume serves as a key metric for overall business activity, as growing volume is one of the primary drivers for our revenue growth.

*(in millions)*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three months ended June 30, 2024 | ​ | ​ ​ 2023 | ​ ​ ​ | ​ ​ Six months ended June 30, 2024 ​ ​ | ​ ​ | ​ ​ 2023 ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Volume | ​ | $18,713 | ​ | $15,338 | ​ | $37,169 | ​ | $30,641 |

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.

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.

#### Revenue

We generate revenues mainly from transaction fees, which vary based on the type of service the customer utilizes. Transaction fee revenue principally consists of fees for withdrawals and usage. We also earn revenues in certain instances from volumes coming into the platform related to our B2B services and through our Checkout offering. We generate significant revenues from interest earned on customer funds held on our platform. In addition, we generate revenue from non-volume-based products and services which are based on a fixed fee. We believe that Revenue demonstrates our ability to monetize volume activity on our platform. Our revenues can be impacted by the following:

(i) Mix in customer size, products, and services;

(ii) Mix between domestic and cross-border transactions;

(iii) Geographic region or country in which a transaction occurs; and

(iv) Pricing and other market conditions including interest rates.

Management closely monitors volume and revenue to ensure that we continue to grow funds and business activity that enters into the platform, expanding our overall scale and the reach of our business.

#### Adjusted EBITDA

In addition to our financial results determined in accordance with GAAP, we believe Adjusted EBITDA, as a non-GAAP measure, is useful in evaluating our operating performance. We use Adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that this non-GAAP financial measure, when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of Adjusted EBITDA is helpful to our investors as it is a metric used by management in assessing our operating performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measure as a tool for comparison. A reconciliation is provided below for our non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measure and the reconciliation of this non-GAAP financial measure to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

#### Adjusted EBITDA

*(in thousands)*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three months ended June 30, 2024 | ​ | ​ ​ 2023 | ​ ​ ​ | ​ ​ Six months ended June 30, 2024 ​ ​ | ​ ​ | ​ ​ 2023 ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| **Net income** | **​** | **$32,425** | **​** | **$45,549** | **​** | **$61,399** | **​** | **$53,487** |
| Depreciation and amortization | ​ | 10,712 | ​ | 5,909 | ​ | 20,120 | ​ | 11,948 |
| Taxes on income | ​ | 15,866 | ​ | 5,747 | ​ | 29,776 | ​ | 14,919 |
| Other financial income, net | ​ | (976) | ​ | (4,318) | ​ | (3,723) | ​ | (6,668) |
| **EBITDA** | **​** | **58,027** | **​** | **52,887** | **​** | **107,572** | **​** | **73,686** |
| Stock based compensation expenses(1) | ​ | 13,666 | ​ | 16,173 | ​ | 28,742 | ​ | 33,100 |
| M&A related expense(2) | ​ | 2,091 | ​ | 498 | ​ | 4,466 | ​ | 1,272 |
| Gain from change in fair value of Warrants(3) | ​ | (1,006) | ​ | (13,586) | ​ | (2,767) | ​ | (13,334) |
| **Adjusted EBITDA** | **​** | **$72,778** | **​** | **$55,972** | **​** | **$138,013** | **​** | **$94,724** |

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

(3) Changes in the estimated fair value of the warrants are recognized as gain or loss on the condensed consolidated statements of comprehensive income. The impact is removed from EBITDA as it represents market conditions that are not in our control.

### Critical Accounting Policies and Estimates

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.

### Recent Accounting Pronouncements

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.

## Market risk

As filed, 2,990 characters.

We have operations both within the United States and globally, and we are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes and foreign currency fluctuations. Information relating to quantitative and qualitative disclosures about these market risks is described below.

### Interest Rate Sensitivity

Our cash and cash equivalents as well as customer funds as of June 30, 2024, were held in cash deposits, term deposits and money market funds, as well as U.S. Treasury Securities classified as available-for-sale debt securities. The fair value of our cash and cash equivalents as well as assets underlying customer funds would not be significantly affected by either an increase or decrease in interest rates due mainly to the short-term nature of these instruments. However, a hypothetical 1% increase or decrease in interest rates could have a material effect on our revenues and earnings.

Any future borrowings incurred under our Warehouse Facility would accrue interest at a floating rate based on a formula tied to certain market rates at the time of incurrence (as described above), not to exceed 10.5% per annum for all outstanding balances.

### Foreign Currency Risk

While most of our revenue is earned in U.S. dollars, our foreign currency exposure includes currencies of the countries in which our operations are located, including operating expenses denominated in New Israeli Shekels. To reduce that risk, in January 2024, we began investing in foreign currency forward contracts and net purchased options, which are accounted for as cash flow hedges as described in Note 2d and Note 5 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. A hypothetical 10% strengthening or weakening of the U.S. dollar against the New Israeli Shekel would have had a material impact on unrealized gains (losses) recognized in AOCI at June 30, 2024.

Our foreign currency exposure also includes currencies in which our customer funds are held and may be subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Australian Dollar, Euro, Japanese Yen, British Pound, Chinese Yuan, Canadian Dollar, New Zealand Dollar, Thai Baht, New Israeli Shekel, Philippine Peso, Pakistani Rupee, Korean Won, Indian Rupee, Saudi Riyal, and Hong Kong Dollar. A hypothetical 10% increase or decrease in current exchange rates could have a material impact on our financial results.

In addition, some of our services include the opportunity for Payoneer to generate revenues from foreign exchange transactions as part of the payment delivery process. Our ability to generate such revenues is partially dependent on external factors such as market conditions, applicable regulations and our ability to negotiate with third party financial institutions. The impact of these efforts to optimize foreign exchange can be material to revenues and earnings.

## Controls and procedures

As filed, 1,488 characters.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2024. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.

During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 329 characters.

As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K, filed with the SEC on February 28, 2024. However, we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

Filed Aug 7, 2024.
Source: SEC EDGAR, the filing index for accession 0001558370-24-011345. Last ingested by Listed: Nov 5, 2026, 16:50 ET. No prices; not investment advice.