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

- Company: [Payoneer Global Inc.](/companies/payo.md) (CIK 1845815)
- Form: 10-Q
- Filed: 2024-11-05
- Accepted by EDGAR: Nov 5, 2024, 21:05 ET
- Period: 2024-09-30
- Accession: 0001558370-24-014423
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1845815/000155837024014423/payo-20240930x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1845815/000155837024014423/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $180.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $512.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Research and development | 3 months, 2024-07-01 to 2024-09-30 | $34.6m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2024-01-01 to 2024-09-30 | $94.2m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | $35.2m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | $119.8m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | −$19.5m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $10.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | $41.6m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $103.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.11 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.27 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.12 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.29 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 374,303,470 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 379,125,363 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | $131.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $4.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2024-01-01 to 2024-09-30 | $120.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-09-30 | $534.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $6.25bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $7.05bn | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $6.26bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $6.32bn | us-gaap:Liabilities |
| Shareholders' equity | at 2024-09-30 | $727.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 38,875 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, customers and contractors, 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 $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.

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 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.

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.

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.

#### 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 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.

#### 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 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.

#### Mergers & Acquisitions

On August 5, 2024, Payoneer acquired 100% of the outstanding equity of Skuad Pte. Ltd. (or “Skuad”), a global workforce and payroll management company. The acquisition accelerates Payoneer’s strategy to deliver a comprehensive and integrated financial stack for SMBs that operate internationally.

In 2023, we entered into an agreement to acquire a licensed China-based payment service provider to support Payoneer’s China business. We also acquired the assets of a real-time data platform to support underwriting decisions in our working capital business.

We believe there are additional opportunities to leverage our global platform, regulatory and compliance infrastructure, technology, brand and team to deliver additional value to more customers more quickly by supplementing our organic product development with targeted acquisitions that add new capabilities or deeper geographic penetration.

### 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 September 30, 2024 | ​ | ​ ​ 2023 | ​ ​ ​ | ​ ​ ​ ​ Increase/ ​ (Decrease) | ​ ​ Nine months ended September 30, 2024 | ​ | ​ ​ 2023 | ​ ​ ​ | ​ ​ ​ Increase/ (Decrease) ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: | --- | ---: | --- | ---: |
| Revenues | ​ | $248,274 | ​ | $208,035 |  | 19% | $715,977 | ​ | $606,783 |  | 18% |
| Transaction costs | ​ | 38,058 | ​ | 30,393 |  | 25% | 108,985 | ​ | 85,971 |  | 27% |
| Other operating expenses | ​ | 44,892 | ​ | 40,301 |  | 11% | 126,417 | ​ | 120,923 |  | 5% |
| Research and development expenses | ​ | 34,616 | ​ | 26,950 |  | 28% | 94,247 | ​ | 84,225 |  | 12% |
| Sales and marketing expenses | ​ | 52,311 | ​ | 48,664 |  | 7% | 152,815 | ​ | 144,892 |  | 5% |
| General and administrative expenses | ​ | 29,725 | ​ | 25,112 |  | 18% | 80,036 | ​ | 73,805 |  | 8% |
| Depreciation and amortization | ​ | 13,510 | ​ | 7,116 |  | 90% | 33,630 | ​ | 19,064 |  | 76% |
| Total operating expenses | ​ | ​ 213,112 | ​ | ​ 178,536 | ​ | 19% | ​ 596,130 | ​ | ​ 528,880 | ​ | 13% |
| Operating income | ​ | ​ 35,162 | ​ | ​ 29,499 | ​ | 19% | ​ 119,847 | ​ | ​ 77,903 | ​ | 54% |
| Financial income (expense): | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Gain (loss) from change in fair value of Warrants | ​ | ​ — | ​ | ​ (7,799) | ​ | \*\*% | ​ 2,767 | ​ | ​ 5,535 | ​ | (50)% |
| Loss on Warrant repurchase/redemption | ​ | ​ (14,746) | ​ | ​ — | ​ | \*\*% | ​ (14,746) | ​ | ​ — | ​ | \*\*% |
| Other financial income, net | ​ | ​ 1,674 | ​ | ​ 1,137 | ​ | 47% | ​ 5,397 | ​ | ​ 7,805 | ​ | (31)% |
| Financial income (expense), net | ​ | (13,072) | ​ | (6,662) |  | 96% | (6,582) | ​ | 13,340 |  | \*\*% |
| Income before taxes on income | ​ | ​ 22,090 | ​ | ​ 22,837 | ​ | (3)% | ​ 113,265 | ​ | ​ 91,243 | ​ | 24% |
| Tax benefit (expense) on income | ​ | ​ 19,484 | ​ | ​ (10,012) | ​ | \*\*% | ​ (10,292) | ​ | ​ (24,931) | ​ | (59)% |
| Net income | ​ | $41,574 | ​ | $12,825 |  | 224% | $102,973 | ​ | $66,312 |  | 55% |

#### \*\*not meaningful

#### Revenues

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.

#### Transaction costs

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.

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.

#### Other operating expenses

Other operating expenses were $44.9 million for the three months ended September 30, 2024, an increase of $4.6 million, or 11%, compared to the prior-year period, driven by an increase of $4.5 million in information technology expenses and an increase of $1.8 million in ongoing regulatory reserves, partially offset by a decrease of $1.9 million in third-party contractor and consulting expenses.

Other operating expenses were $126.4 million for the nine months ended September 30, 2024, an increase of $5.5 million, or 5%, compared to the prior-year period, driven by an increase of $10.6 million in information technology expenses partially offset by a decrease of $5.0 million in employee compensation, benefits and other employee-related expenses primarily due to a decrease in employee headcount and a decrease of $2.2 million in third-party contractor and consulting expenses.

#### Research and development expenses

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.

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.

#### Sales and marketing expenses

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.

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.

#### General and administrative expenses

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.

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.

#### Depreciation and amortization expenses

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.

#### Financial income and expense, net

Financial expense, net was $13.1 million for the three months ended September 30, 2024, an increase of $6.4 million, or 96%, compared to the prior-year period, primarily driven by a loss on the warrant repurchase/redemption transaction which was $6.9 million higher than the loss recognized on changes in fair value of the warrant liability in the prior year period.

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.

#### Income tax

Income tax benefit was $19.5 million for the three months ended September 30, 2024, a change of $29.5 million compared to the $10.0 million expense recognized in the prior year period. This change was primarily driven by (i) a benefit of $17.6 million in the three months ended September 30, 2024 related to a deduction under U.S. tax law for income earned from foreign customers and share-based compensation, and (ii) a reduction in foreign tax expense of $10.8 million in the three months ended September 30, 2024 related to share-based compensation. The aforementioned $17.6 million of U.S. tax benefits includes $11.8 million of provision to return adjustments, which was driven by a deduction for income earned from foreign customers.

Income tax expense was $10.3 million for the nine months ended September 30, 2024, a decrease of $14.6 million, or 59%, compared to the prior year period. This decrease was primarily driven by (i) a reduction in U.S. tax expense of $4.3 million for the nine months ended September 30, 2024 comprised of $11.8 million benefit from provision to return adjustments as described above, partially offset by increased tax expense due to increased profitability in the U.S., and (ii) a reduction in foreign tax expense of $12.1 million for the nine months ended September 30, 2024 related to share-based compensation.

### 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 September 30, 2024, we had $534.2 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 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.

#### 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 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.

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.

### Cash Flows

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

*(in thousands)*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Nine months ended September 30, 2024 | ​ | ​ ​ 2023 |
| --- | --- | ---: | --- | ---: |
| Net cash provided by operating activities | ​ | $131,039 | ​ | $101,328 |
| Net cash used in investing activities | ​ | (1,814,106) | ​ | (47,754) |
| Net cash used in financing activities | ​ | (436,932) | ​ | (492,732) |
| Effect of exchange rate changes on cash and cash equivalents | ​ | 109 | ​ | (662) |
| Change in cash, cash equivalents, restricted cash and customer funds | ​ | $(2,119,890) | ​ | $(439,820) |

Note that as described in Note 2c to our condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q, during the quarter ended September 30, 2024, the Company identified an error in its condensed consolidated statements of cash flows for the six months ended June 30, 2024. Specifically, the Company incorrectly classified customer funds invested in term deposits in the basis of cash, cash equivalents, restricted deposits, and customer funds on the statement of cash flows, rather than as investing cash flows. In connection with the Company’s evaluation of these errors during the quarter ended September 30, 2024, management, in accordance SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”, determined that these adjustments were not material to the previously issued financial statements. In the condensed consolidated statements of cash flows for the nine months ended September 30, 2024, the Company has correctly presented these investments as investing cash flows. The Company will revise the statements of cash flows for the six months ended June 30, 2024 in the Form 10-Q filed for the quarter ended June 30, 2025.

#### Operating Activities

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.

This increase was driven by an increase in net income of $36.7 million in the nine months ended September 30, 2024 compared to the prior year period, which was primarily a result of $109.2 million of growth in revenue which outpaced $67.3 million of growth in operating expenses, as well as a $14.6 million reduction in tax expense, partially offset by a $19.9 million reduction of other financial income, as discussed in the Results of Operations section above.

The increase in net income period over period also includes non-cash items of income and expense, including higher non-cash addbacks to net income to arrive at operating cash flows compared to prior years consisting primarily of a $14.7 million loss on the Warrant repurchase and redemption noted in financing activities, and a $14.6 million increase in depreciation and amortization expense. Additionally, the non-cash reduction related to deferred tax assets increased by $5.0 million compared to the prior year period, primarily due to share-based compensation temporary differences in the current year period, which exceeded the release of the valuation allowance on deferred tax assets in the United States during the nine months ended September 30, 2023.

During the nine months ended September 30, 2024, Other current assets increased $30.4 million, Trade payables increased $15.9 million, Accounts receivable, net increased $8.2 million, and Other payables decreased $5.7 million, in each case compared to the change in the prior year period, all due to changes in timing of payments relative to period cut-off. Additionally, Interest not paid in cash and amortization of discount on investments of customer funds in debt securities increased $6.4 million compared to the prior year period in which we had not yet made these investments. Note that each of these drivers are net of acquired Skuad assets and liabilities.

#### Investing Activities

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.

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.

#### Financing Activities

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.

### 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 September 30, 2024 | ​ | ​ ​ 2023 | ​ ​ ​ | ​ ​ Nine months ended September 30, 2024 ​ ​ | ​ ​ | ​ ​ 2023 ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Volume | ​ | $20,404 | ​ | $16,335 | ​ | $57,573 | ​ | $46,976 |

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.

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.

#### 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 September 30, 2024 | ​ | ​ ​ 2023 | ​ ​ ​ | ​ ​ Nine months ended September 30, 2024 ​ ​ | ​ ​ | ​ ​ 2023 ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| **Net income** | **​** | **$41,574** | **​** | **$12,825** | **​** | **$102,973** | **​** | **$66,312** |
| Depreciation and amortization | ​ | 13,510 | ​ | 7,116 | ​ | 33,630 | ​ | 19,064 |
| Tax (benefit) expense on income | ​ | (19,484) | ​ | 10,012 | ​ | 10,292 | ​ | 24,931 |
| Other financial income, net | ​ | (1,674) | ​ | (1,137) | ​ | (5,397) | ​ | (7,805) |
| **EBITDA** | **​** | **33,926** | **​** | **28,816** | **​** | **141,498** | **​** | **102,502** |
| Stock based compensation expenses(1) | ​ | 17,430 | ​ | 15,330 | ​ | 46,173 | ​ | 48,429 |
| M&A related expense(2) | ​ | 3,166 | ​ | 1,745 | ​ | 7,632 | ​ | 3,017 |
| (Gain) loss from change in fair value of Warrants(3) | ​ | — | ​ | 7,799 | ​ | (2,767) | ​ | (5,535) |
| Loss on Warrant repurchase/redemption(4) | ​ | ​ 14,746 | ​ | — | ​ | 14,746 | ​ | — |
| Restructuring charges(5) | ​ | ​ — | ​ | ​ 4,488 | ​ | ​ — | ​ | ​ 4,488 |
| **Adjusted EBITDA** | **​** | **$69,268** | **​** | **$58,178** | **​** | **$207,282** | **​** | **$152,901** |

(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. 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.

(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.

(4) Amounts relate to a non-recurring loss on the repurchase and redemption of outstanding public warrants; refer to Note 14 to our condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information.

(5) The Company initiated a plan to reduce its workforce during the three months ending September 30, 2023 and had non-recurring costs related to severance and other employee termination benefits.

### Critical Accounting Policies and Estimates

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. As described in Note 3 to our condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q, the Company recognized a liability related to contingent consideration in connection with the Skuad acquisition during the three months ended September 30, 2024.

The fair value of the contingent consideration at each reporting date is based on estimates of probability of each outcome and the Option Pricing Model (“OPM”). The OPM requires various assumptions and inputs, and our estimates of probability are subjective based on the status of Skuad’s performance and our expectations about future performance. Because of uncertainties related to these matters, the estimate of the contingent liability is based only on the best information available at the time. As additional information becomes available, we reassess the potential liability and may revise our estimates.

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.

### 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 statements included elsewhere within this Quarterly Report on Form 10-Q.

## Market risk

As filed, 2,773 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 September 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 and secured rates. However, a hypothetical 1% increase or decrease in interest rates could have a material effect on our revenues and earnings.

### 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 6 to our condensed consolidated financial statements included elsewhere within 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 September 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 Euro, Japanese Yen, Chinese Yuan, Canadian Dollar, New Zealand Dollar, Thai Baht, New Israeli Shekel, Philippine Peso, Pakistani Rupee, Korean Won, Indian Rupee, Danish Krone, Mexican Peso, Polish Zloty, Turkish Lire, 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, 1,493 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 September 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 Nov 5, 2024.
Source: SEC EDGAR, the filing index for accession 0001558370-24-014423. Last ingested by Listed: Oct 24, 2026, 15:16 ET. No prices; not investment advice.