Payoneer Global Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Payoneer's Third Quarter 2021 Earnings Conference Call. At this time, all lines have been placed on mute to prevent any background noise. Following the speaker's remarks, we will open the lines for your questions. As a reminder, this conference call is being recorded. I'd now like to turn the call over to Ignatius Joku, Vice President of Investor Relations, to begin.

Thank you. Before we begin, I'd like to remind you that today's call may contain forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our filings with the SEC and available in the investor relations section of our website. Actual results may differ materially from any forward-looking statements we make today. These forward-looking statements speak only as of today, and the company does not assume any obligation or intent to update them except as required by law. In addition, today's call may include non-GAAP measures. These measures should be considered as a supplement to and not as a substitute for GAAP financial measures. Reconciliation to the nearest GAAP measure can be found in today's earnings press release, which is available on the company's website. Hosting today's call are Scott Gallant, Payoneer's Chief Executive Officer, and Michael Levine, Payoneer's Chief Financial Officer. With that, I'd like to turn the call over to Scott to begin.

Thanks, Ignatius. Good evening, and thank you all for joining us today to discuss our third quarter 2021 results. Payoneer had a very strong third quarter. We delivered revenues, take rate, and adjusted EBITDA well ahead of our expectations as our global team continued to execute well on our strategy to be the world's go-to partner for digital commerce everywhere. We saw continued momentum globally with small businesses, marketplaces, and partners who rely on Payoneer to provide them with the broad selection of services they need to pay and get paid, to grow, and to manage their digital businesses. We added a record number of new customers in the quarter as Payoneer continues to emerge as a leading on-ramp to the global digital economy for small businesses worldwide. The Payoneer brand is a growing asset. We received well over 1 million new customer applications in the quarter, and our growth is truly global and diversified. We had year-over-year volume growth of over 50% in regions like Latin America and South Asia, Middle East, North Africa. We see tremendous untapped potential in emerging markets globally, and we are increasing our go-to-market investments meaningfully. Our continued strong performance and momentum with customers highlight our unique position in the market, offering the most comprehensive solution set for small businesses from around the world looking to engage in commerce anywhere. We strengthened our position as the global leader in e-commerce marketplace ecosystems, We continue to support the rollout of our partnership with eBay, helping eBay improve payments for small businesses in a number of key markets around the world. And we recently announced our partnership with Coupang in South Korea, the world's fourth largest e-commerce market. We are very happy with the momentum we are building with the Payoneer partner ecosystem. One of our key initiatives is growing our bank partnerships globally as we collaborate with banks and mobile wallets around the world to acquire new customers and to offer our joint customers a unique integrated experience. We now have bank partnerships live on four continents and we had triple digit growth in both volumes and new customer applications with our partners. We are delighted to launch a new partnership in the third quarter with Vimo, a new mobile wallet partner in Vietnam. As we look to the future, we also continue to explore new and innovative payment models and partnerships. We recently partnered with Citibank and some leading financial institutions from around the world to explore a new concept called the Regulated Liability Network. which is designed to integrate central bank digital currencies and regulated liabilities on a shared distributed ledger. The design for the regulated liability network was introduced in a competition sponsored by the Monetary Authority of Singapore, and we're excited to be able to partner with other global leaders on such a pioneering effort. We have also been executing well on our strategy to broaden Payoneer's portfolio of services and to increase the number of Payoneer customers using these services. These services collectively represent our efforts to become the financial partner of choice for our customers and our expansion beyond marketplace payments. We are building on our momentum as we grow beyond being a marketplace payment provider to being a growth partner for digital businesses globally. One such service is our global B2B APAR offering. We are still in the very early stages of this multi-trillion dollar addressable market opportunity to help small businesses more efficiently transact with their trading partners worldwide, and our first step to open the Payoneer platform up beyond marketplace ecosystems. We delivered strong growth in B2B APAR in the third quarter, with volumes growing at a CAGR of over 100% for the past two years. We are increasing our investment in this offering, hiring more sales resources, and working with our global teams to acquire new customers and upsell B2B APAR to existing paying your customers. The majority of our B2B APAR customers are actually new to Payoneer, which demonstrates the strength of the Payoneer brand and our ability to acquire and grow a new complementary business at scale, all while pointing to the significant incremental addressable market opportunity we have in B2B APAR. We are seeing strong customer demand for our MasterCard commercial card. which enables our small business customers to use the funds they receive from Payoneer to pay international suppliers by advertising to acquire new customers and make other purchases to support the growth and management of their business. This is a compelling tool for global businesses that aren't based in the U.S. but are selling globally. During the third quarter, we ramped up our acquisition of customers and also introduced more customers to our cashback rewards program, driving accelerating spend. We see commercial cards as a high-value service that helps our customers better manage their business and drive growth, that saves our customers money, and that generates a higher-than-average take rate for Payoneer. While we are still in the relatively early stages of growth, we are optimistic about the unique value proposition we offer and the long runway ahead for this exciting opportunity. Our working capital offering also continues to be an important driver of value for our customers as we enable them to access the funds they need to invest in their businesses. We recently introduced Payoneer Advance Plus, At six months duration, it offers the longest term of our working capital products to date, as well as the ability for our customers to select the terms that best fit their business needs, allowing them to choose between multiple working capital offers, which also include Payoneer Express, a one-month product, and Payoneer Grow, a three-month product. We had record new originations in the third quarter across these Payoneer advanced products as we move into what is traditionally the peak sourcing season leading up to the holidays. Our merchant services offering continues to gain traction with larger enterprises around the world that are choosing Payoneer to enable them to simplify the complexity of their global consumer payments. We have built a robust pipeline with leading digital businesses in multiple regions, and remain enthusiastic about the growing demand among merchants for a strong global company like Payoneer to provide them with the great technology and service to solve complex payment problems. We're also very excited that we will be introducing Payoneer Checkout for small businesses starting in Hong Kong before the end of the year. Overall, these new services are part of our strategy to drive an important evolution in our business. Payoneer customers are increasingly using Payoneer for a broader set of more sophisticated services. Many small businesses are using Payoneer more as their primary global financial partner than as a payment processor. Our typical use case has historically been enabling a small business to get paid for their international sales on marketplaces, and then Payoneer would settle with local currency into our customer's local bank account. Now, Payoneer customers are increasingly using Payoneer to not only get paid by marketplaces, but to get paid by wholesale buyers using B2B APAR, to pay their suppliers, employees, and contractors, to access much needed working capital, to use our cards to buy advertising and pay other expenses. In aggregate, our customers maintain more than $3 billion of balances on the Payoneer platform, pending their use of one or more of our services. To help illustrate this, I'm going to share the stories of a couple of our amazing and inspiring customers that highlight the exciting opportunity for entrepreneurs around the world and help demonstrate how Payoneer is an important partner supporting their growth. OptiZone is an Australia-based e-commerce retailer that specializes in toys and homewares. They use Payoneer to receive payments in multiple countries, around the world. OptiZone then uses their Payoneer foreign currency balances to pay their freelancers and manufacturers that operate in various countries. And when OptiZone was looking to expand and further grow its business, they secured financing through Payoneer's working capital program to help them purchase additional inventory to support their peak season. Another example is Twin Barbarians. an apparel and active wear e-commerce business based in Bangkok, Thailand. Once Twin Barbarians has gotten paid through Payoneer, they use Payoneer to pay their suppliers, which has allowed them to reduce costs by 30% and speed up supplier access to funds. Payoneer is helping Twin Barbarians grow over 50% year-over-year in the third quarter and expand into additional marketplaces around the world. In both these cases, we have entrepreneurs tapping into the digital economy to grow, and Payoneer is helping them achieve their potential. That's why we are making significant investments in two primary areas of our business. R&D, to broaden our product offering to enable our customers to have more and better tools to help them grow. and sales to increase the capacity of our global team to acquire new customers and serve and upsell services to our existing customers. These investments enable us to deliver more value to our customers to further strengthen our competitive edge and improve our ability to monetize the volume on the Payoneer platform while also increasing the level of engagement with our customers. and we are continuing to explore acquisition opportunities to supplement organic investments and to accelerate our ability to deliver more value to digital businesses worldwide. All of this activity translated into strong results for our third quarter. We generated revenues of $123 million, an increase of over 35% compared to prior year results. Adjusted EBITDA was $6 million, which highlights our operating leverage, even while we continue to ramp up investment in the business. Volume in the quarter grew 16% year over year. As consumer behavior changes and supply chain issues continue to impact, many of our customers engaged in e-commerce, particularly from China. We had continued positive momentum in our take rate at 90 basis points, which was a meaningful increase from the second quarter and the last year, driven by our increasing geographic diversity, growth of higher-value services, and mix of customers. This solid performance validates our ability to create strong value and monetization, and we remain excited about the long-term market opportunity for digital commerce globally. We are confident in our execution and are increasing our guidance for revenues and EBITDA for the full year. This is despite the fact that digital commerce continues to face some short term challenges. We continue to be optimistic based on the acceleration of digitalization trends, the tremendous enthusiasm of small businesses around the world to participate in the digital economy, and the two year growth rates remain above pre-pandemic levels. In addition, we're in the early stages of penetrating the huge cross-border payments market and the opportunity to serve small businesses globally with sophisticated services to help them compete in the digital economy. We are innovating new solutions and scaling our global team to be the primary beneficiary of this expansion in an already gigantic addressable market. As supply chain constraints subside, border restrictions ease, and e-commerce and travel return to a more normal growth trajectory, Payoneer is well positioned to benefit from the secular tailwinds of digital commerce and cross-border payments. I would also like to highlight our continued investment to strengthen the Payoneer leadership team and board. Karen Levy will now serve as president with a focus on increasing Payoneer's global market position. Karen previously served as the Chief Operating Officer of Payoneer. Arnon Kraft joined Payoneer as our new Chief Operating Officer and brings global experience at large enterprises, including Microsoft and SanDisk. And we also strengthened our board of directors with the addition of Pam Patsley, who has extensive experience on public company boards and also as a FinTech executive at companies like MoneyGram, First Data, Paymentech, and more. Given our strong position and momentum, I couldn't be more optimistic about our future. We have a highly resilient business model with a differentiated competitive advantage. We win in the market because of our global brand, our broad ecosystem of partners and marketplaces, diverse product portfolio, deep risk management and compliance expertise, our amazing team, and our scalable business model. Our strong execution, enormous market opportunity, ongoing momentum, and accelerating customer demand for our unique offerings position us well to deliver strong revenue growth in 2022 and beyond. Before I turn the call over to Michael, I would like to thank the Payoneer team for their great efforts to deliver real value for our customers and to deliver positive financial results. I'll now hand it over to Michael to discuss financial results and forward guidance.