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spk00: costs were $177 million, up 24% year over year. Excluding transaction costs, operating expenses of $150 million increased 27% year over year. Excluding the $16 million of discretionary investments in the fourth quarter, operating expenses excluding transaction costs were relatively flat sequentially, reflecting a more disciplined approach to spending in our business. Our sales and marketing costs in the first quarter increased 13 million or 39% year-over-year, representing approximately half of the total year-over-year increase in Q1 operating expenses, excluding transaction costs. Higher sales and marketing costs were primarily linked to higher headcount in our go-to-market organization from hiring in 2022 and reflect our ongoing focus on driving acquisition of ICPs and high-value partners. Q1 adjusted EBITDA was $39 million compared to $10 million in the first quarter of last year and $11 million in the fourth quarter. Q1 net income was $8 million compared to net income of $20 million in the first quarter of last year, which included a gain of over $30 million from the change in fair value of warrants. Q1 basic and diluted earnings per share was $0.02. We ended the quarter with cash and cash equivalents of $545 million, a $79 million increase year over year. We continue to actively evaluate and adjust our capital allocation strategy to ensure that we continue to invest to drive organic revenue growth, including in our platform and in executing on our product roadmap. We also remain intently focused on M&A opportunities. In 2022, we saw public company valuations for fintech companies drop significantly, while a similar correction in the private market has lagged the public market. We are, however, beginning to see signs of downward pressure on private company valuations, with the shift accelerating following the collapse of SVB. We have seen an uptick in inbound opportunity and are actively evaluating several potential targets. We are growing our capabilities in this area and further refining our strategy and roadmap. At the same time, and as part of an investor-focused, data-driven, and balanced capital allocation approach, we announced today that our board of directors has approved an $80 million share repurchase authorization. Turning to our outlook, we are raising our guidance for the eighth consecutive quarter since going public. As a reminder, we do not provide quarterly guidance at this time. For Fall year 2023, we expect revenues to be between $810 and $820 million. Transaction costs as a percent of revenue to be approximately 15.5% and adjusted EBITDA to be between $140 and $150 million. We expect revenue growth to be driven by continued ICP acquisition, growth in our B2B business and other high-value services, and from interest earned on our customer balances. Our revenue growth expectations excluding interest income are slightly softer relative to our prior guidance. reflecting a slight deceleration in volume growth in the first four months of the year, and ongoing macro headwinds that could constrain consumer and business spending. We expect interest income to be approximately $200 million for 2023, based on exit balances at the end of the first quarter, moderate balance growth in line with volumes for the remainder of the year, and current anticipated Fed funds interest rate changes. In line with market expectations, we anticipate interest rates will begin to decrease in the back half of the year. Assuming flat balances, we expect this would drive a $20 million revenue headwind in 2024 as compared to 2023. Based on our stated guidance, we expect cash OPEX less transaction costs to be 540 to 550 million for 2023. This is $10 million lower than our prior guidance, reflecting a greater degree of operating discipline and one which we believe is appropriate given the current environment. We believe Payoneer has near and longer-term opportunities to optimize operating efficiency. Work is underway to assess our spending across every function and category, including headcount, third-party vendor costs, and related to our real estate footprint. We continue to evaluate our long term hiring needs, including in the context of the macro climate. And as of May 1st, we have restricted our hiring plans across the organization. We expect this will generate approximately 5 million of savings in 2023. We will continue to ramp up our R&D team to support our ongoing platform transformation. We are also actively evaluating further headcount efficiencies as we look to delay our organization, streamline our operations, and reduce redundant roles. We expect to exit the year with headcount modestly lower versus the prior year. Finally, we continue to localize our operational support with service centers in Latin America, Eastern Europe, and Southeast Asia that will better serve our customers while driving additional operational efficiency. Our latest guidance for 2023 adjusted EBITDA is between 140 and 150 million. This guidance reflects a nearly threefold increase in adjusted EBITDA versus 2022. In conclusion, Payoneer's first quarter results underscore our ability to consistently deliver strong financial results. We have built a broad, diversified, and resilient business, and we continue to see significant customer demand for our financial operating solutions. We have confidence in our ability to meet our updated 2023 financial targets, while we remain focused on investing to position Payoneer for long-term profitable growth. Lastly, I'm excited to announce that Payoneer will be hosting its first Investor Day on September 21st, 2023 in New York City. We look forward to seeing many of you in person in the fall. We are now happy to answer any questions you may have. Operator, please open the line.
spk02: Thank you. As a reminder, please press star 1 on your telephone keypad to register a question or press star 2 to withdraw your question. First question today comes from Darren Pella from Wolf Research. Please go ahead.
spk04: Hey, guys. Good morning. Nice job on these results. Maybe we start off with the focus on ICPs and the growth. And what are your thoughts on the ability to grow that base the way you've been growing it during different macro environments? Just given how many applications you're getting, you obviously have quite a bit of opportunity. It's just more of a decision on risk, I imagine. So help us understand what your goals are around that and what kind of opportunity there. And then I have a more detailed follow up on our potential and pricing, if you don't mind.
spk00: Sure. Thanks for the question, Darren. I'll take the ICP one. So, look, as we discussed last quarter, we've really begun to manage our business based on an approach that is more focused on acquiring and serving those customers who meet that target, or as we're terming it, ideal customer profile. And today we're determining that profile based on the average monthly amount of transaction volume that a particular customer does on our network. and the reason for that is is that you know based on the data analysis that we've done we've found that in general customers who do at least 500 in volume monthly are profitable there are exceptions of course we see customers who do less who can be profitable customers who do more that might not be it very much depends on product usage adoption corridors served and so on but we think it's an important measure and in line with the enhanced disclosure that we've committed to making we're disclosing that metric as an important sort of strategic focus for the company. So we disclosed, you know, when we last reported earnings for Q4, that approximately 25% of our customers drive the vast majority of our volumes, our revenues, and our profitability. And that 25% is really the roughly 500,000 customers that we're talking about today in our release and that we're identifying as ICPs. So, look, again, we're pivoting our approach from an acquisition perspective. We're very much focused from an acquisition perspective across the organization in driving this. We are at the early innings, as John likes to say, and really realizing that. But we're encouraged by that early momentum. We flagged today that we were able year over year to grow ICPs by 9% versus 6% growth in active customers overall year over year. And also, we were able able to grow sort of the larger customers within that overall cohort, those that do more than 10,000 per month, we were able to grow that by 18%. Over time, we're going to drive efficiency in that operating model and be able to generate sort of more of that acquisition and, frankly, push down the ideal customer profile so that we can generate profitability across a broader cohort of customers. But today we're focused with that kind of bar in mind and pivoting the organization. We're encouraged by early momentum, and we're going to start setting those targets as we move through the process.
spk04: All right, that's helpful to you guys. John, just a follow-up and a bit of a follow-up on monetization of different kinds of customers. I mean, you talked a lot about ARPU opportunities on the call. I think pricing on some of the volume intra-network, pay-in-your-to-pay-in-your customers has always been an opportunity we wondered about. But other products, the commercial card you talked about, checkout, can you give us a sense, if you were to sort of give us either a rank order of which are the most exciting opportunities for incremental ARPU or maybe the magnitude and how material these can be relative to how you generate revenues today.
spk07: Hi, Darren. Great question. So we're seeing, I think, positive progress on working across experiments around pricing. We're experimenting with account fees and looking at specific corridors to optimize our pricing, because some corridors we think we have some pretty interesting opportunities there. As I shared on the call, Our B2B business monetizes at 50% greater than the marketplace payouts space. And so we are more mature in our monetization of B2B, of the card, and less mature around working capital and merchant services, which are earlier in their life cycle. As I think about pricing, I think there's a real opportunity for us as we drive more accounts receivable into Payoneer account holders' accounts, and then cross-sell and up-sell the commercial MasterCard, which is under-penetrated from our perspective. We saw 50% growth year over year, and there's deep and intense focus on driving the penetration of that product. And I mentioned just a moment ago the opportunity to drive more monetization around working capital and merchant services. So we believe that You know, with two-thirds of our customers today only getting paid from one source and directly withdrawing their funds, we see a real opportunity to add cross-sell and up-sell, particularly around accounts payable. We have nearly doubled payable product usage in the last two years, and so we continue to see the right momentum there, and we'll focus on that.
spk04: All right. That's great, guys. Thank you.
spk02: Our next question is from Trevor Williams at Jefferies. Please go ahead.
spk09: Thanks. Good morning. John, the shift to focus on ICPs I think makes a lot of sense. I'm just wondering how we should think of that and how it's going to come through in terms of the change in your geographic mix over time. I'm assuming that means the mix tied to China starts to come down even faster, but if we're just thinking about
spk07: next couple of years kind of how we should see that evolution come through in terms of kind of underlying geographic and country mix thanks yeah yeah it's a great question trevor so we're an early mover in the highest growth emerging markets around the globe as we shared on the call you know 25 growth in all of our our regions which i think highlights the diversity of industries we serve size of companies we serve the potential of our global platform I am personally super excited about Latin America to me and a pack- and we are investing heavily to further penetrate these markets you know, 50 percent growth in Vietnam, Argentina, Mexico, Colombia, and UAE speaks to the productivity of our go-to-market organization and the product market fit that we have. There are ICPs in every region of the globe, and it's early days for us thinking about how ICPs translate to specific countries and geographies. But we are very committed to building and expanding the transparency, the focus on ICPs so that our shareholders can understand the breadth and depth of our service and the potential of our business. There are 300 million potential customers globally for Payoneer to serve, and we have just gotten started. As Bea was saying, we are in the earliest of the early innings here, and this kind of focus is extraordinary. And we have our teams around the globe, employees in 28 countries, all focused on ICPs. And I think that's, you know, the magic in that is the 18% year-over-year growth we saw in the largest of those ICPs, those doing over $120,000 a year in trailing 12-month volume. Potential of where we are, and we're just getting started on it.
spk09: Got it. Okay. And then along those lines, are there any geographies in particular that maybe Payoneer hasn't had as big of a presence in historically that maybe now that you've been in the seat that you're about starting to become more aggressive in? I don't know if India is one potentially that comes to mind. I saw Poland was called out in the press release, but anything else to call out in terms of countries that might become more of a focus? Thanks.
spk07: Yeah, so, you know, and I've shared this, I think, with you in the past. You know, where I've visited generally is a pretty good indication of our focus, and I've spent time on the ground in India, time on the ground in Argentina. America, Samia and APAC are getting tremendous focus. That is not to undercut the momentum and power and leadership position we have in the greater China region. It just speaks to the extraordinary opportunity we have globally. But I am very excited about Latin America and the momentum we have there to continue to penetrate that market significantly. Great. Thanks a lot.
spk02: Our next question is from Will Nance at Goldman Sachs. Please go ahead.
spk10: Hey, guys. Good morning. I wanted to maybe double-click on some of the ICP disclosures. I guess when you look at the vertical mix of the ICPs, maybe just using the verticals on slide seven, so e-commerce, freelance, content creation, etc., Are there any of these verticals that are more or less rich and high-value customers that you guys are thinking about emphasizing more going forward after refocusing the business?
spk07: Will, that's a great, great question, and it's too early for us to give sort of additional disclosure on that. I can say for our September 21st Investor Day, we're excited to share more information about both geographies, ICPs, and the business, the industries that our customers serve. We've talked in the past about the good seller in China, the BPO in India, the freelancer in Argentina, the Ukrainian engineer. We serve such a breadth of customers that it's too soon and too early for us to comment more specifically on the mixes, either by geography or size.
spk10: Understood. Makes sense. Look forward to hearing more about that in September. Maybe just a follow-up question, more on the details on the take rate dynamics this quarter. So I think the take rate was down a little bit sequentially if you back out interest income. I usually think about fourth quarter as being kind of seasonally lower given the e-commerce mix, but it does sound like you guys have been growing among larger client cohorts. I'm just wondering if you could kind of unpack a little bit what's going on in the take rate and what drove the take rate down a little bit sequentially.
spk00: Sure. Thanks, Will. So, yeah, the take rate year-over-year is up roughly 28 basis points, and that's largely a factor of interest income driving up on the total revenue. Sequentially, as you noted, our take rate is up about 13 basis points, again, with interest income and a little bit of higher usage, which seasonally we typically expect coming into Q1. We see higher volume coming into the platform in Q4 and proportionately higher usage in Q1, typically speaking, which will drive up revenues. Some of the puts and takes that we generally sort of see around take rates, it's both product mix. Obviously, as we said in the past, as we mix shift into higher take rate products like our B2B business, like our commercial card offering, we see that take rate tick up. As we shift from a geography perspective into different kind of regions with different levels of maturity, we'll see that take rate shift as well. Q1 is an example. A good amount of our volume growth was based or came out of more mature regions like China and larger e-commerce sellers. Those will tend to deliver a lower take rate dynamics. as we see shift into other kind of higher-value regions that we've been focusing on, we'll see that shift. So there's puts and takes related really to the product mix and also to the geomix that will shift over time.
spk10: I'd appreciate you taking my questions, and yeah, I actually do see the core take rate up sequentially, so I apologize for that.
spk02: Our next question comes from Ashwin Shrivaka from Citi. Please go ahead.
spk01: Thank you. And congratulations on the good quarter. Let me start with the question on ICP in terms of just sort of the great idea, but what's the thought process behind the parameters that initially determine who's your ideal customer and what happens to the customers that don't initially meet the criteria, is there a process of, you know, providing them incentives to kind of get into that ICP space, if you will, or will this represent sort of a overtime headwind in terms of account growth and so on?
spk00: Thanks, Ashwin. That's a great question. So look, as we highlighted, the bar that we have set for an ICP today, right, is that they do 500 or more in monthly average volume. Because today, given our current operating environment, that's a pretty decent indicator based on all the sort of unit economics analysis that we've done that a customer will deliver profitability. So we think that's a good bar to measure and as we shift the company's focus to acquiring more of those customers We're using that metric today to really sort of drive that go-to-market motion to incent our sales force and through our other acquisition channels to really focus on that cohort of customers. The reason I'm emphasizing today, and it goes to your question, which is a really good one, is that over time as we look at some of those monetization efforts that John has highlighted, be it pricing, a more nuanced approach in general, sort of specific pricing that's designed to address the long tail of customers, as well as other kind of cross-selling initiatives that will drive up ARPU, we would expect that definition to shift, right? If we drive up ARPU, if we drive up monetization and adoption of our higher take rate products, we'll be able to be profitable at a lower volume level. Similarly, as we drive, we talked a lot during the last call around driving efficiency in our operating model, around investing in our platform to make our operations more scalable, more efficient. We would expect those efforts as they come to fruition from an onboarding perspective, from a cost-to-serve perspective, to allow us to more profitably serve a greater proportion of those customers. So, look, while today we can profitably serve roughly 25%, we think we can meaningfully increase that. We think we can do that through increased monetization and cross-sell. We think we can do it through pricing. And we're doing it through investment in our platform and our capabilities.
spk01: Understood. It's very helpful. And in terms of customer funds, they were, it was down sequentially, roughly 300 million. That seasonality, was there some element of, you know, maybe the bank turmoil driving some of that? Maybe the ICP? I just kind of want to get into the reason for that and what should we expect in the next quarter?
spk00: Sure. It's a good question. Yes, as you called out, we saw a sequential decline. Year over year, we were up significantly, and we've continued to outperform volume growth in terms of the balances on our network. We typically see a seasonal decline in Q1 because we're coming off of very elevated exit balances because of just holiday spending. e-commerce channels. In terms of sort of banking turmoil in general look we monitored very carefully you know in the aftermath of the SVB collapse we were monitoring pretty much in real time for signs of outflow or changes in customer behavior we really didn't see that we proactively communicated with our customers we We've seen no significant change in behavior. And so overall, we're actually really pleased and think that this demonstrates the trust that our customers place with us in an environment of massive volatility and large banks in the U.S. seeing significant outflows. We haven't seen that. We've seen expected outflows. So we're pleased. We think it demonstrates the utility we provide, the trust that customers place in us. and we'll continue to monitor that customer behavior and look to expand the way we monetize those balances and the offerings we provide to customers to be able to grow.
spk01: Thank you. Appreciate it.
spk02: Our next question is from Mayank Tandon from Needham. Please go ahead.
spk03: Thank you. Good morning and congrats on the quarter. John and Bea, guys gave some good information on the cross-sell opportunity, but could you give us a sense of what the customers today are using multiple products, maybe in terms of percentage and where you see that going over time? And then the related question would be, if they're not using your products, these higher value, higher take rate products, what are the alternatives in the market that they could be using instead that you could potentially displace with your own higher value products?
spk07: Good to hear from you and thanks for the question. You know, we shared on the call that a significant number of customers have yet to use multiple Payoneer products, and we view that as an intense focus area for our product organization and our go-to-market organization, both in the products we introduce, the experience and flows our customers feel when they log into their account, and what products they see and are easy to onboard into. Our B2B customers, the customers that are invoicing or using our accounts payable or accounts receivable solutions, are more likely to use more products. But we have low single-digit penetration of our highest value services and are very focused on driving that growth, both because that utility is essential for the success of our customers and the monetization increase is powerful for our P&L. What do we need? We need more accounts receivable solutions and we're working on both homegrown building them as well as buying them. We need improved working capital and lending solutions for folks that need access to capital that otherwise don't have it at the right price to get it quickly. And more accounts payable solutions, our commercial MasterCard, the ability for our customers to pay outside of the Payoneer network with their Payoneer balances. Darren asked earlier about the utility of customers using the network itself to pay other Payoneer customers. We think really across the board, there is a suite of improved services and broader services we can build ourselves, which is underway and or buy. And so I won't name specific companies or products or features that we have our eye on, but rest assured that the team is very focused on expanding the suite of cross-sell products we offer. A dynamic that I think it's important for shareholders to consider, the customer in Argentina she or they may have different needs than our customer in Poland or our customer in Vietnam. And so the solutions, the accounts payable solutions in one market that are purpose-built for a segment or industry may or may not be directly relevant globally. What's powerful about Payoneer is our ability to provide global solutions that then are, how do I say this the right way? purpose built for the industries or geographies that we serve. And I think over the coming five years, this product-led growth and product-led M&A will be a really important dynamic of the expansion of the Payoneer franchise.
spk03: That's very helpful, John. And then just a quick follow-up question. In terms of the trajectory of revenue and just for the year, could you give any color given seasonality and your expectations on the flow through interest income as we move through the year?
spk00: Sure. Look, we expect in general the quarters to perform as they have done historically in terms of seasonality. So generally speaking, higher revenues on the back end of the year from a seasonal perspective and also from our efforts to drive acquisition over the course of the year. As we flagged when we released initial guidance for 2023, we would also expect the operating expenses cash base would increase over the back half of the year as well as we continue to ramp up hiring these are the our platform investment we obviously discussed today on the call that we have paused hiring which is a big driver of at least a portion of that increase you know roughly seventy percent of our of our cash based OPEX is labor related. So we have paused hiring given sort of some of the softness that we highlighted in some of our core revenues. So that should see some benefit in the back half of the year, not a meaningful impact to 2023. We called out the five million, but a more meaningful impact as we sort of some of that spending as we look into the 2024 run rate. So look, overall, we remain confident on delivering the revenue targets that we set out, moderately rising revenues through the back half of the year from seasonal impacts, rising expenses from investments, but looking to evaluate all of those. And look, we're really pleased to be able to continue to deliver a good portion of of the interest income uplift back to investors and to deliver meaningful EBITDA expansion year over year at, you know, more than 3X is what our guidance would imply for 2023 versus last year.
spk03: That's great, Gala. Thank you so much.
spk02: Our next question is from Bob Napoli at William Blair. Please go ahead.
spk06: Hi, thank you, and good morning. Thank you for the additional disclosures. Really helpful. So just, I mean, the regional market disclosure that you gave and the growth rates by market, like super impressive. I mean, are those growth rates generally sustainable? And how should we think about those growth rates relative to the growth of payment volume? I mean, the growth of payment volume seems to be below some of those, you know, well below some of the growth rates by markets. Is that, you know, what is the, Just any color you can give on the growth rates that we saw, the sustainability, and how that translates into the payment volume, and then obviously the revenue.
spk07: Hey, Bob. John here, and I'll start, and B, if there's something you want to add, please do. You know, our quarterly and annual growth rates will fluctuate by country, by region over time. And the focus on ICPs and the renewed focus on penetrating deep into the highest opportunity markets we have, I think we'll see, how would I say it the right way? I think we will see it It grow and change and evolve, and it'll take us a couple of quarters to see how the patterns emerge. We are intensely focused on penetrating Latin America, SEMIA, and APAC, and we are seeing the kind of results that indicate we are just at the beginning of pretty powerful momentum. And so I don't want to call it yet, but it is early innings but lots of momentum.
spk00: Yeah, the only thing I'd add to that, Bob, is look, we grew volumes 8% year over year, and that's a factor of adding customers. We're seeing great early momentum, as we've said, as well as high single-digit growth from our larger e-commerce partners. significant rebound in travel. That doesn't all flow through to revenues in Q1 and partly that's a mixed shift to those larger lower take rate e-commerce players as we called out in response to one of the other questions. The travel volume is great we love to see that rebound but it's relatively lower margin business and we did call out flowing growth in our B2B business right. It's largely a result of the macro environment, we believe. We're seeing great acquisition there. We think we have good product market fit. But we're seeing sort of a decrease in spending on average by roughly 11%, which we think is sort of uncertainty driving growth. driving and depressing that spending in the short term. We did also call out the exit from Russia, which acts as a headwind. We called that out coming into the year and we're seeing the impacts of that. All of which is to say, look, we're pleased with that 8% volume growth. It's in line with peers. It's in line with the trends. We're seeing the revenue didn't quite flow through for the reasons I gave, but we view those as short-term headwinds to our ability to grow revenue. And overall, we're excited, you know, macro uncertainty notwithstanding, we're excited about the long-term trajectory and our ability to deliver volume and revenue growth.
spk06: Thank you. And then the follow-up, you obviously have a very strong balance sheet that's very underleveraged. And you mentioned your focus on M&A and the importance of that. I was wondering if you could give some color on the types of businesses that you feel would add the most value to the Payoneer franchise. So, you know, in a perfect world, what type of businesses would you like to add?
spk07: Yeah, so just quickly on that, Bob, you know, we are actively evaluating M&A opportunities. really through the lens of product extensions where we can leverage our existing reach and customer base. You know, the earlier question about cross-sell and upsell opportunities I think is particularly relevant. Deepen our regional footprint in those higher growth markets, and we talked a lot about that on this call. And then extend our existing licensing framework and the moat around the business, the infrastructure we've built, our brand, our licenses, our relationships with banks, to continue to grow that moat. So those are the three, you know, specific areas we're looking at, and nothing to announce on any deals today, but we are active on all fronts.
spk06: Great. Thank you. Appreciate it.
spk02: The next question is from Sanjay Sukrani from KBW. Please go ahead.
spk05: Thanks. Good morning. I guess many of my questions have been answered, but I wanted to parse apart just the updated guidance because I know there's a lot of things that have changed in some ways, like the slower volumes and such, and also the float income I think has moved up a little bit. Bea, could you just go through sort of what's baked into the guide now and sort of what was fundamentally driven to the upside and what worked against it?
spk00: Yeah, thanks for the question, Sanjay. So, yeah, look, as we sort of flagged in common with our peers and some of the sort of adjacent e-commerce-focused businesses, you can't always get a read-through, right? But there seems to have been a common theme, which was a relatively strong January and February and flattening consumer and business spending trends in March and into April. we've seen similar trends in our business, right? So the slightly softer revenue growth trajectory that we're calling out in our guidance reflects that as we see it today, right? Again, we view those as short-term macro headwinds, but we're reflecting that in the guidance. The uptick in the revenue comes from the flow income where we remain bullish about our ability to grow those customer funds. We think, as I said, that we performed well through some very volatile times in the banking sector. and that we can continue to effectively monetize um monetize those balances so that's that's the revenue we walk down transaction costs our guide in terms of where we think we'll land that's a factor in part of the benefit from float income but also increasing efficiency in our banking infrastructure and then the final element was just a walk down um our operating expenses our cash-based operating expenses which again we we think is a prudent prudent adjustment to the macro climate in which we're operating and where we see short-term and frankly also longer-term um you know profitability or or leverage capability in terms of optimizing how we run the business from short-term sort of impacts as well as longer-term investment investment that will allow us to scale
spk05: Okay, perfect. And then on those long-term extended relationships that you mentioned with Airbnb and Upwork, how should we think about the economics of that? I mean, should we assume that nothing materially changed there? Because you mentioned some of the headwinds from improved pricing. I'm just curious how we should factor that in on a go-forward basis.
spk00: Yeah, so just to put it in its, you know, context, you know, for the majority, we've called this out before, but for the majority of our marketplace relationships, we don't receive revenue directly from that marketplace, right? Our relationship, as we've called out, is with the sellers or the underlying SMBs in global markets. We acquire those SMBs often directly. The marketplaces are helpful channels as well, and we earn revenues from those SMBs directly when they use our services. In certain cases, we do have, as we've called out, contractual arrangements with the marketplace where we provide cross-border payout services. We basically provide them with the cross-border capabilities that allow them to pay the sellers that operate on their platform. And we win this business and have won this business for many years because of the breadth of the countries that we serve and the scale and resilience of our infrastructure that we've proved over many years. So with a very limited number of marketplaces, we earn like non-volume fees for additional services we provide them. Again, we called out one such marketplace in Q2. But as I said, generally speaking, our revenues are not dependent or reliant on a particular contractual relationship. These are the Amazon, for example, you know, we represent one of a number of choices that SMBs have when they sell on that platform. We do, of course, value the partnerships. We called out these new partnerships because we felt it was important to show how we're winning in grabbing this kind of market share. And we view those partnerships really as a critical part of the infrastructure that we have built, a critical way of acquiring customers, and a critical way of growing AR into our platform. So, look, overall, we're excited about the recently announced partnerships. Miracle is a great example of the kind of platform that we can effectively serve, and we're looking to sort of expand that ecosystem to really drive volume growth.
spk02: Thank you. Our last question comes from Josh Siegler from Cancer Fitzgerald. Please go ahead.
spk08: Yes. Hi, good morning. Thanks for taking my question. And congratulations on the strong print. So can you provide us with some color on your investment spend as you continue to upgrade your technology platform? And do you expect a subsequent acceleration in ICP growth as the new onboarding platform is rolled out?
spk00: Yeah, we called this out, and thanks for the question, Josh. We called this out when we reported Q4. We're going to make significant investments, you know, in product innovation, including in our B2B business, where we think we've been able to demonstrate sort of real progress, as well as in our checkout capabilities. We're continuing to invest in our core offering. You know, as an example, in Q1, we launched enhanced role management capabilities. We announced a partnership with with an accounting ERP. These are all sort of step change improvements in the functionality that we can deliver to our clients. And as we discussed in February, we're committed to making meaningful investments in our platform and we're starting with our onboarding capabilities. We think that that's the place to start because it's an important part of the engine that drives our growth. We regularly see up to half a million customers showing up at our door every month, and we incur significant costs onboarding those customers. So we're starting there because we want to give those customers a better customer experience. that should allow us to acquire more effectively. We want to reduce the cost to acquire those customers and bring them through our doors. And we also want to be, frankly, a little more nuanced in how we bring clients through the funnel. So as John called out, we've launched some predictive modeling tools that will allow us to better assess when a target customer hits our funnel and move them through the process more efficiently. Look, again, early innings, we're doing a lot of work here. We're going to make a meaningful investment this year and expect to go live by the end of this year. The impact of these investments will be felt in 2024, but we feel good that they're going to both drive our acquisition capabilities and make us more effective, as well as drive down our costs to acquire and our costs to serve our customers.
spk08: Great, thank you. And then I'm curious about the demographic of the merchants that are most impacted by this curtailed spending and volume due to the uncertain macro environment. Are these merchants most impacted by the macro more constrained to a certain geography or perhaps differentiated by volume cohort?
spk00: Are you referencing the B2B, the call out we made around constrained spending in our B2B business?
spk08: Correct.
spk00: Yeah, look, we really didn't sort of drill in or we're not sort of discussing the drill down in terms of specific customers. What we really wanted to call out is that in common with peers that are in that B2B space, we're seeing, you know, good acquisition metrics, good forward momentum in terms of the clients that we onboard. But in terms of customers on our platform who are super sticky and, as John called out, use a broader range of products, we did see a decline in the amount of spend. We think that that's a macro outlook, you know, issue, and that's depressing spend. So, we'll continue to monitor that, but we felt it was worth calling out.
spk08: Okay. Thank you for taking my question.
spk00: Thanks, Josh.
spk02: This concludes the Q&A session. I will now hand the floor back to John for closing remarks.
spk07: Thank you all for your questions and for joining us this morning. And thank you to my Payoneer colleagues around the globe who are tuning in for your hard work, dedication, and focus on our customers. We are moving forward at pace, and I'm proud of our progress. I'm incredibly excited about Payoneer's growth trajectory and the significant and sizable opportunity we have to help even more of the world's SMBs do business globally. We're just beginning our next leg of our exceptional growth and appreciate our shareholders' continued support. Thank you all.
spk02: This concludes today's conference call. Thank you all very much for joining. You may now disconnect.
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