Webster Financial Corporation

Good morning and thank you for standing by. Welcome to the Payoneer's first quarter 2025 earnings conference call. At this time, all lines have been placed on mute to prevent any background noise. Following the speaker's remarks, there will be a question and answers that will open your line for questions. As a reminder, this conference call is being recorded. I would now like to turn the call over to Michelle Wang, Payoneer's VP of Investor Relations.

Thank you, Operator. With me on today's call are Payoneer's Chief Executive Officer, John Kaplan, and Payoneer's Chief Financial Officer, Bea Ordonez. Before we begin, I'd like to remind you that today's call may contain forward-looking statements, which are subject to risks and uncertainties. For more information, please refer to our filings with SEC, which are available in the Investor Relations section of Payoneer.com. 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 in addition to and not instead of GAAP financial measures. Reconciliation to the nearest GAAP measure can be found in today's earnings press release, which is available on our website. Additionally, please note that we've posted an earnings presentation supplement alongside our earnings press release on investor.payoneer.com. All comparisons made on today's call are on a year-over-year basis, unless otherwise noted. With that, I'd like to turn the call over to John to begin.

Good morning, everyone, and thank you for joining us. Payoneer has a long-term opportunity to become the essential partner for cross-border SMBs to help connect them to the global economy. Today, I'll share how we're leveraging our core assets to build momentum and navigate the rapidly changing trade landscape. We will then walk through our first quarter financial results and provide context on our 2025 outlook. We serve nearly 2 million entrepreneurs in SMBs, including over a half a million who fit our ideal customer profile. Our customers are engaged in cross-border trade, operating in more than 190 countries and territories, and selling to a wide range of end markets. They provide marketing, IT, customer support, and other services to a diverse set of global industries and countries. They also sell a broad set of goods wholesale through marketplaces and direct to everyday consumers around the world. Through their multi-currency Payoneer account, our customers manage their cross-border accounts receivable and accounts payable, including using our card and workforce management products. We call this the Payoneer Financial Stack. Around that stack, we have built a significant moat over the past 20 years. Licenses across key markets from China to Europe to the U.S. We have expertise in local markets and robust infrastructure aligned with local regulatory needs. Enduring partnerships with leading freelance, travel, content, and e-commerce goods marketplaces. a robust and resilient infrastructure of global bank and PSP relationships that enable connectivity across 7,000 payment corridors, employees on the ground in over 35 countries, and a scalable support model that serves our nearly 2 million customers. 2024 was a record year for Payoneer, and we've carried that strength into our Q1 2025 results. Revenue grew 16% year over year, excluding interest income, ahead of our stated medium-term targets. Our B2B business continues to grow significantly. B2B revenue increased 37%, driven by growth in APAC, EMEA, and Latin America. We see strong demand and product market fit in these service-focused markets. Adjusted EBITDA was $65 million, with a 27% margin. Excluding interest income, Q1 was our highest adjusted EBITDA quarter in nearly three years and was the fourth consecutive quarter of profitability net of interest. We continue to focus our efforts on quality customers. We've been actively shifting our customer portfolio and targeting the highest value segments by industry, region, size, and product need. At the same time, We are cross-selling more of our products and expanding our relationships with our customers. Our results reflect our strategy. We're growing volume and revenue with our 10K plus ICPs. 10K plus ICP volume was up 8% in Q1, while revenue was up 18%. Our ARPU growth, excluding interest income, accelerated for the seventh straight quarter, reaching 22% growth year over year. This is the direct result of our customer mix shift and successful cross-sell of more products and services. Our results reflect the value we're delivering to our customers as they continue to scale and grow their cross-border businesses. Global trade is being reshaped. For businesses around the world, this is a challenging and clarifying moment. like the first few months of COVID were five years ago. We spent the past few weeks listening to our customers. Our conversations give us more conviction about what we're building and how we're building it here at Payoneer. One customer said to me, the changing macro environment fuels innovation and reinvention, and I'm glad I have Payoneer supporting me as I expand my business to more countries. Our customers are nimble and rapidly adapting to change. Last month at Payoneer's 20th anniversary, we brought together 20 customers from around the world. Here's what they told us. They're increasingly diversifying both where they sell and how they source materials and talent. Many are more focused on Europe, Southeast Asia, Latin America, and Australia as they pivot the Payoneer account becomes even more useful. They're building distributed teams around the world in order to benefit from global talent capabilities. As they do, they're turning to Payoneer's account payable capabilities, including our workforce management product. Payoneer is built to support them. We see this current disruption as a meaningful long-term opportunity, Because Payoneer isn't just built for the old model of trade, we're positioned for the new one. And as value chains diversify, we are positioned to benefit. First, we combine local presence with global scale. Our teams are on the ground in the world's most entrepreneurial regions. In Q1, our APAC and Latin America customer regions each grew revenue over 20%. Together, they represent about a third of our firm's total revenue, with an average take rate of approximately 2% to 3%. These are regions where we expect continued tailwinds as trade routes shift and businesses expand their global footprints. We have over a half a million ICPs that are roughly evenly distributed across our five regions. Approximately 40% of our revenue comes from helping customers sell to non-U.S. markets. We are well positioned to grow with our customers as they diversify the regions they sell to. Second, our global regulatory footprint. We have recently closed our acquisition of a licensed China-based payment provider, becoming only the third foreign player licensed in China. China is an important market for us. About a third of our revenue comes from China-based exporters, while only 20% of our overall annual revenue is tied directly to the U.S. to China trade corridor. China exports to over 120 countries, and as our Chinese customers drive their goods distribution to more markets around the world, including Europe, Latin America, Southeast Asia, we will help them diversify, and we will grow with them. We also applied for a cross-border payment aggregator license in India, the fastest growing top five economy in the world. They are a country that stands to benefit from this new trade landscape. We are also actively pursuing licenses in Canada, Israel, and beyond. We're investing in the future of trade, global, regulated, diverse, and powered by entrepreneurs and cross-border S&Ps. Third, trade is increasingly services-based. Our customers include service providers such as BPOs, software developers, marketing firms, and remote workers on marketplaces. Outsourcing and remote work will continue, especially in uncertain times, as companies look to grow and to optimize their own P&Ls. We are well positioned, including our new workforce management solution, to help customers capitalizing on this trend. Payoneer has weathered uncertainty before, and we've come out stronger. This is another moment to turn change and disruption into opportunity. We're staying close to our customers, we're staying disciplined in our execution, and we're moving fast to seize new opportunities in emerging markets. By doing just that, we believe we can create long-term value for shareholders. and we continue to play a vital role in the global economy. With that, I'll turn it over to Bea to take you through the numbers and our outlook for the year.

Thank you, John, and thank you to everyone for joining us. Payoneer delivered another strong quarter with revenue and profitability ahead of our medium-term targets. We achieved growth in revenue excluding interest income of 16% and generated $65 million in adjusted EBITDA, representing a 27% adjusted EBITDA margin. These results demonstrate the value we offer to our customers and the strength of our execution. Now turning to our first quarter results. We delivered revenue of $247 million, up 8% year-over-year. Revenue excluding interest income grew 16% year over year, driven by strong growth in our B2B franchise, increasing adoption of our high-value products and services, including our checkout and card products, and the impact of our monetization initiatives. Volume was up 7% with growth rates normalizing consistent with the trends we described when we reported our fourth quarter results in February. SMB volume grew 7% year over year, with volume from SMBs that sell on marketplaces up 3%. Volume from B2B SMBs up 21%, and merchant services volume up 88%. Volume from SMBs that sell on marketplaces were impacted by a number of factors, including marketplace-driven changes in the timing of certain large holiday volume payouts, including from Amazon, as well as other marketplaces. For the 2024 holiday season, these payout volumes occurred in late December 2024 compared to early January typically. Adjusting for this effect, we estimate that in the first quarter of 2025, volume from SMBs that sell on marketplaces would have grown roughly 10% year-over-year. Our Q1 take rate of 125 basis points increased one basis point on a year-over-year basis, and nine basis points sequentially driven by take rate expansion in all of our SMB customer segments and outrunning the impact of lower interest income. On a year-over-year basis, we drove significant expansion in our SMB customer take rate in line with our stated strategy and reflecting the value we offer to our customers. Our SMB customer take rate was up 11 basis points year over year and 10 basis points sequentially, driven by continued growth in our higher-yielding B2B franchise, continued adoption of our high-value products, especially our card product, the ongoing impact of our various pricing initiatives, as well as the impact of our workforce management acquisitions. Customer funds held by Payoneer increased 11% year-over-year to $6.6 billion, which helped partially offset the impact of lower rates on our interest income revenue. Customers value our multi-currency capabilities, and the ability to hold balances in the currencies in which they do business and in stable currencies is a core value proposition. We offer customers the ability to do business in a range of currencies and jurisdictions, and we are well positioned to help customers as they adapt and shift their businesses towards new trade corridors. We continue to steadily grow customer funds and generated interest income of $58 million in Q1, even as average interest rates declined year over year. As of March 31st, we had reduced our sensitivity to fluctuations in short-term interest rates in relation to approximately $3.7 billion or roughly 56% of customer funds. This consists of approximately $1.8 billion of assets underlying customer funds that are invested in a portfolio of U.S. Treasury securities and term-based deposits, as well as interest rate derivatives on approximately $1.9 billion of funds underlying customer balances, providing a floor against interest rate declines below 3%. We will continue to actively manage our hedging programs while always prioritizing liquidity and security. Total operating expenses of $217 million increased 14%, primarily driven by higher transaction costs, labor-related expenses, consultancy fees, and the impact of cashback incentive programs designed to drive adoption of our card product. Transaction costs of $39 million increased 16%, driven by growth in higher transaction cost products and business lines, including B2B, merchant services, and our card product. Transaction costs represented 16% of revenues. an increase of approximately 110 basis points from the prior year period, primarily due to lower interest income. Excluding interest income, transaction costs represented 20.9% of revenue, consistent with the prior year period. Sales and marketing expense was up 5 million or 10% year-over-year, driven primarily by higher labor-related costs, including from our workforce management acquisition and increased spend on card incentives. Other operating expenses were up 1.4 million or 3%, primarily due to higher IT and communication costs. R&D expense increased 5 million or 16%, mainly due to higher labor-related costs primarily related to our workforce management acquisition as well as consulting expenses and several one-time items. G&A expense increased 6 million or 24% primarily due to higher labor-related costs and higher consulting fees related to several discrete projects. Adjusted EBITDA was 65 million, consistent with the prior year period. This represents a 27% adjusted EBITDA margin in the quarter despite a decline of $7 million in our interest income and is the fourth consecutive quarter of positive adjusted EBITDA excluding interest income. Net income was $21 million compared to $29 million in the first quarter of last year. Q1 basic and diluted earnings per share were $0.06 and $0.05 respectively. We ended the quarter with cash and cash equivalents of 524 million. During the quarter, we repurchased approximately 17 million of shares with approximately 87 million remaining on our current repurchase authorization. As John discussed, our long-term thesis has not changed. We continue to believe that over the long-term, the digitization of commerce globalization of the services economy, and the growth and diversification of global trade will continue. SMBs are by nature resilient and continue to adapt and thrive. We are proactively positioning ourselves to help our customers navigate the current environment by connecting them to new markets, working to expand our regulatory infrastructure and our marketplace ecosystem and local capabilities, and by continuing to invest and expanding our financial stack to better serve their needs. That said, recent developments related to tariffs and global trade have shifted the immediate landscape, and near term there is a high degree of uncertainty around the global macroeconomic and trade policy environment, which is dynamic and evolving. As a result, we are suspending our previously issued full year 2025 guidance. We expect that if the existing global tariff regime remains in place, there will be a potentially significant negative impact on our future financial performance. Through early May, we have not seen a slowdown in volumes or revenue. Given our April performance and our understanding of customer inventories that are already in the U.S., we expect growth in the second quarter to be broadly in line with our stated medium-term targets. Therefore, we expect any potential impact from tariffs to be primarily in the second half of the year. To provide further color, our business is highly diverse across geographies and customers. Our over half a million ICPs are roughly evenly distributed across our five regions and sell a diverse range of products and services to businesses and consumers all around the world. In 2024, customers in China represented roughly a third of our revenue. However, only 60% of our China revenue, or roughly 20% of our total revenue, came from Chinese customers selling to the US. The balance of our China revenue was generated from Chinese customers selling into non-US markets, including in Europe, the UK, Australia, and Japan. As noted, given the wide range of potential economic and trade policy scenarios, we do not believe we can reliably forecast our full year 25 performance at this time. There is a lot we don't know about how the environment will evolve, and there is a very broad range of potential outcomes. With that said, based on what we know today, assuming the existing tariff regime remains in place and making broad assumptions related to potential impacts and customer, business, and consumer behavior, our current estimate is that we could see a headwind to our full year 2020 revenue in the region of $50 million. Again, the environment is, to say the least, dynamic and evolving, and our estimation is based on a broad set of assumptions related to how our customers might be impacted, how consumer and business behavior might evolve, as well as other factors that could impact our business more generally. Despite this potential for volatility in the near term, we remain focused on our long-term opportunity. We will be disciplined operators. continue to monitor the macro and trade policy environment as it evolves, work to support our customers as they pivot and expand, and appropriately align our investment and costs to the size of the business opportunity. Our first quarter results reflect strong execution of our strategy and continued discipline. During this period of heightened economic uncertainty, our focus is on supporting our customers further diversifying our business, and investing in our core capabilities. We remain confident in our long-term opportunity and our ability to capture it and deliver value for our shareholders, customers, and employees. We are now happy to answer any questions you may have.

Operator, please open the line. Our first question comes from Darren Heller from Wolf Research. Please go ahead. Hi, thanks.

This is Daniel Krebs on for Darren. I was wondering if you could speak to the customer reception to various price increases we noticed in March and wondering how confident you feel in your pricing power at this time. If you could maybe talk to, you know, your previous guidance around $30 million in pricing up with in 2025. Thank you.

Hey, Daniel, thanks for the question. I mean, look, our pricing strategy at this time hasn't changed. We've talked about it historically as being more customer segment focused, really looking at bundling the value we offer our customers, adjusting our pricing to the competitive environment. We're going to continue to do that. We're not making any changes today. We're really focused in the current environment, obviously given the macro uncertainty that we talked about in our prepared remarks, on serving our customers and on aligning the value that we give them to our pricing and to our overall strategy, and on supporting those customers. We're not seeing any particular pressure. The $30 million we outlined was obviously sort of in that pre-tariff environment, but we haven't changed how we're looking at pricing as of now.

Okay, great. Thank you. And if I can follow up, if we can maybe zoom out a bit, if you can put a finer point, you know, now having been in business for over 20 years, how have customer onboardings and retention trended over past cycles throughout your history? Thank you.

Thanks for the question. It's an important area for us, which is focusing our customers. customer support organization, our go-to-market organization, and our cross-sell efforts on providing a full suite of financial products for our large ICP customers. And what we see in our data is that our net revenue retention is strongest among our largest customers and continues to be. And retention is an increasing focus for our global organization. We put in place a series of tools to help us both better measure retention and increase programs locally to drive improved retention. We've seen successful results driving retention with our B2B customers, cross-selling card products globally to them, cross-selling our workforce management products. And while we think we're early in the overall retention journey for Payoneer, the indication of our progress is strong.

Our next question comes from Will Nance from Goldman Sachs.

Please go ahead.

Hey, guys. Appreciate you taking all the questions and appreciate all the helpful disclosures and trying to size up the impact of the trade environment. I wanted to maybe come back to the $50 million number. I thought that was very helpful. If I'm doing the math right, it seems like it equates to roughly a kind of 10% run rate revenue impact if we just look at this half a year's revenue roughly. So I guess just any color on kind of how you arrived at that figure just to kind of help people kind of dimensionalize some of the moving pieces that you guys are thinking about. And then as it relates to pulling the guide, if you could just maybe talk through some of the considerations around pulling the guidance versus maybe just flowing through the $50 million into guidance. into the guide. How are you thinking about some of the range of outcomes here and maybe what should we be looking at externally to measure the health of the e-comm corridor? Would that be something like port shipments into the US? I know there's a lot there, but thanks for taking the question.

appreciate the thoughtful question. Look at we worked really hard to provide that incremental disclosure we felt it was important to provide additional color. To really allow investment- investors in the sell side to model the potential- exposure and the impact right. we shouldn't like we shouldn't view it or you shouldn't view it as implicit guidance right to your question around what was our philosophy around the guidance sizing that exposure don't view that as implicit guidance guidance as we said on the call obviously there's a lot of uncertainty and obviously there's a very broad range of outcomes here. So we based our sizing of that exposure on a lot of assumptions and I can run through some of them. And a lot of second and third order impacts that are frankly very hard to quantify, right? It goes without saying that supply chains are super interconnected. So there could be downside to that 50 million number. There could also be upside, right? Again, very broad range of outcomes. And obviously the environment is super dynamic. But to share really just some of the assumptions and how we thought about it. Look, we looked at how we think CN, our China sellers will respond to this, right? We talked to a lot of those sellers and we made assumption as to whether some of those sellers may exit, may pivot their business to other market. We looked at how we think marketplace volumes might be impacted from higher prices, and we baked in assumptions there. We looked at how we thought services businesses might be impacted, how that volume might be impacted by softer business spending. We thought about how we might see card usage impact from lower ad spend, right? So that's just a flavor of the analysis. super evolving situation. We're not assuming, you know, to the other number we put out there in terms of sort of framing our business, that 20% total revenue number that is directly tied to the China-U.S. corridor. We don't assume that that goes to zero. That's not what we hear from our customers. So we baked in a lot of sort of assumptions into that. We, again, think there's a broad range of outcomes and wanted to share that additional color.

No, it's great. I appreciate all the disclosures this morning. And then maybe if I can just sneak in another question here. Well, actually, just to clarify, does the 20% number include float revenues? And then I actually had a different question on just the take rate expansion that we saw across the business this morning. If you could dimensionalize or maybe provide some color on just the breakdown between sort of pricing actions that you guys have taken versus the mixed dynamics and some of the higher take rate corridors that John alluded to in the script, that would be helpful too. Appreciate it. Thanks for the questions today.

No problem, Will. Yes, the 20 percent that we size does include float revenue. On the take rate question, look, we're really happy that we've been able to consistently grow SMB take rates. We've seen that for multiple consecutive quarters now. And we're doing that by increasing the value that we provide to our SMBs, by activating them more quickly, by cross-selling more effectively, by growing our B2B franchise, by really driving adoption of our card product, yes, from pricing initiatives, from our workforce management acquisition. So it's what you're really seeing in that number is kind of the fruits of that strategy of really expanding the value and the utility that we provide to our customers. To give you sort of a little more visibility on that, look from a marketplace perspective. So SMB selling on marketplaces, We saw that take rate expand by four basis points year over year. That's a mixture of both geomix shifts. to higher take rate regions as well as pricing but probably the biggest driver there is continued card adoption. In that B2B franchise we saw really really strong take rate expansion twenty two basis points year over year partly a factor of slower growth in China and therefore mixed shift into those higher growth higher take rate regions like LATAM and also pricing actions as we've really sort of figured the right product market fit pricing dynamics in those markets. So, again, really consistent take rate expansion. And we expect to continue to drive modest, you know, to the question we had at the top of the hour, modest take rate expansion, and that revenue should outpace volumes over time.

Very helpful. Appreciate you taking the questions. Our next question comes from Trevor Williams from Jefferies.

Please go ahead.

Hey, good morning, guys. If I could ask another on the China exposure, so the 20% of revenue you're calling out China into the U.S., can you give us a sense for what the underlying mix looks like there by merchant size, type, category? I mean, I think in the past you guys have talked about the average merchant in China being bigger than the average overall pay in your merchant, but any more detail just on an underlying merchant mix within that number would be helpful. Thanks.

Yeah, happy to take the question. So look, I think you've called out some of the answer in your question. It's a very broad community there, so we support a very broad and diverse range of sellers in China that are selling both a diverse set of goods across multiple platforms and also are diverse in terms of their size. And in talking to our customers and really looking at that underlying data as well, we do expect that those larger sellers will tend to be more tariff resilient, for want of a better word. They will tend to have more branded goods in their inventory, have more pricing power more broadly. So we do expect that those merchants will be more resilient and be able to really sort of pass some of those pricing changes through and be able to continue to sell actively into that U.S. market, while smaller sellers might be expected to exit. And to your point, we think our portfolio is more weighted towards those larger sellers overall. But again, diverse set of sellers that will not be universally impacted and a diverse set of goods and SKUs, if you like, that are being sold that, again, will not be universally impacted.

Yeah, and I just want to add that to amplify Bea's point about how well positioned the China sellers can be, and particularly the larger sellers, They have integrated business models where they both design and manufacture products and strong competitive moats in their businesses. And they've invested heavily in winning the buy box and building relationships with their distribution in the U.S. and in our economy. qualitative conversations with them. You hear them refer to how important it is to maintain their distribution into the U.S. as an important key distribution channel for them. Additionally at Payoneer, we're working hard with our customers to help them expand their distribution around the globe, into Europe, into other regions of the world, where this forcing function of the current tariff environment is driving innovation and increased distribution for our customers into other markets around the world. And I believe long term we will see More corridors, more distribution for Chinese sellers across the globe. Eighty-five percent of China's exports go to markets other than the United States. And the forcing function of the tariff environment, I believe, will drive increased distribution. Thanks for the question, Trevor.

No, that's super helpful. And then my follow-up is kind of along those lines. So once we get through kind of the near-term disruption from all of this, I mean, how do you guys – How are you guys viewing this as a potential accelerant for share gains where merchants that are going to need to explore selling more into other corridors and just how well you think you guys are to kind of accumulate share gains with merchant ads kind of once we get through the near-term disruption? Thanks.

Yes. Yeah. So, I mean, if you think about how dynamic the environment is, what sellers are doing is depending on their size, scale, product category they're in, and where they currently sell to. So what sellers are focused on is optimizing their supply chains, adjusting their logistics infrastructure, addressing pricing as we just referred to, thinking about what their product mix should be and what the return on ad spend is for when they're buying volume or buying traffic. But particularly as it relates to expanding to other markets, we see them focus on Europe, Australia, Canada, and Latin America. And we have a program called the green channel program in China which helps introduce high quality high volume. Branded sellers to the world's marketplaces and sellers are excited by that program as our marketplaces around the globe. And we can help them do that so China to the rest of the world is a significant opportunity and at twenty years of building relationships with global marketplaces. Our reputation and relationships with the world's marketplaces is strong and getting stronger. And now that we have completed the acquisition of our license in China, we've spoken frequently about how important that is. Being regulated in China, trusted in China to help Chinese merchants sell to the world is a significant long-term opportunity for us.

Our next question comes from Chris Kennedy from William Blair. Please go ahead.

Good morning. Thanks for all the detail and thanks for taking the question. The ex-float EBITDA, you continue to make good progress on that. Can you just talk about the levers that you have to maintain the recent momentum in a potentially more difficult environment?

Yeah, thanks for the question, Chris. So look, yes, I think we're obviously very pleased that we've been able to increase profitability of the core business over the last several quarters. And we continue to have. We look at the business in the aggregate. will continue to be disciplined operators and really very carefully scrutinize the expense base and ongoing investments that we're making. To John's point, we view a really strong long-term opportunity here. And we also have levers over discretionary spend and indeed over variable spend that really tracks closer to transaction volumes more generally. So we do expect that we have levers in terms of really optimizing as we see the situation develop As we see what the impact might be in the back half of the year, we believe and we know that we have levers to really optimize appropriately in terms of maintaining sort of good operating margin overall as we continue through the cycle.

Okay, understood. Thank you. And then, John, you talked about the opportunity in workforce management. Can you just kind of talk about kind of what your strategy is there and what the opportunity is for Payoneer?

Yeah, I'm really pleased about the progress the team's making globally on workforce management. You know, we are hearing from our customers that they are increasingly focused on having global teams support their global sales and global sourcing. So driven by our customer need and the dynamic, I think, macro environment, there's more momentum towards global workforces than ever before. We've now rebranded Squad to Payoneer Workforce Management. It expands our ecosystem, the potential for partnerships, and broadens our B2B offering, I think, significantly. We're seeing strong growth. We're able to leverage our U.S. distribution and U.S. relationships to successfully sell the products. passing the $1 million of new incremental AAR from newly signed deals, which is a nice milestone the U.S. team has achieved. And we remain very excited about the long-term opportunity for our workforce management initiatives. And I think it validates the financial stack fully. As a global brand regulated, trusted by entrepreneurs around the world, helping them manage their global workforces is just another notch on our belt in our expansion of our strategy globally.

Our next question comes from Sanjay Sakrani from KBW. Please go ahead.

Thank you. Good morning. Um, I had one question on tariffs and one on another topic just on tariffs. Thank you so much for all the detail. I know there's so many balls in the air here, but just to clarify, um, you know, there's obviously lots of, um, geographies where there's tariffs being discussed. Um, and just on the, on the margin, it seems like there might be an increase across the board. I'm just curious, in that situation where maybe there's this 10% increase across the board, do you feel like there's any significant impact there? Or is it just more of the more onerous scenarios specific to China?

Yeah, thanks for the question, Sanjay. Look, the impact of the quote-unquote exposure we cite is really based on the current tariff regime, so the very heavy tariffs on China and the existing tariffs, rest of world. And, you know, I talked through some of the assumptions there. As John has indicated, some merchants will benefit, but for sure there will be impacts elsewhere. And they're very hard to predict. And to your question, there's a very broad range of outcomes. you know at a very low level do i would i anticipate that those sorts of tariffs have a material impact no um we've commonly talked about how tariffs at that level get absorbed in the supply chain and are not impactful overall but again i think we're going to need to see how this all plays out um and really continue to sort of model and scenario plan as we've been doing course correct we remain super focused on the long-term opportunity super focused on on supporting our sellers and really see that that we can add value and grow into this into this changing environment got it um just one more on tariffs one other question I'm sorry did you guys see any evidence of pull forward in in the in the months leading up to May

And then just on ICPs, that number actually declined sequentially. So I'm just curious, is there anything there that surprised you in terms of your penetration or anything changed? Thanks.

Yeah, thanks. Look, it's hard to say. We've read a lot of the same sort of reporting that you have around pull forward. Q1 from a volume perspective, especially marketplace volume, was kind of noisy, as we called out in the prepared remarks in terms of changes to payout cycles. There were also implicit impacts from the wildfires in LA and other noise, right, that I think makes it hard to tease out whether there was a pull forward or not. So unsatisfying answer, but I think the answer is Hard to say, perhaps, right? As we look into Q2, certainly we've seen no impact to date from volume. April has shown stable trends in what we're seeing across the portfolio and into, I guess, we're almost halfway into May now. And so as we called out in our prepared remarks, at this point, we expect Q2 to be broadly in line with our stated medium-term targets. And we'll continue to monitor and update.

And quickly on the ICPs, you know the ICP definition when we introduced it and volume as sort of the governor is a blunt force instrument but it's not actually how we're managing the business today. We're very focused on managing the business to maximize profitable revenue growth as opposed to quantity of individual ICPs. And I've shared I think a number of times our focus on moving towards larger and larger customers and that shows up in the numbers. Volume growth from 10K plus ICPs was 8%. Revenue growth from that cohort as we've driven pricing and cross-sell of products was up 18%. And we continue to focus on quality customers globally and defining quality as geographic, industry, product mix, and product adoption is enabling us to focus our go-to-market efforts, our product team's efforts on adding the right customers into the mix to help us continue to drive our growth.

I believe that's the last question.

So thank you, everybody, for your questions today and for your participation this morning. As Bea and I shared, we are confident in the long-term opportunity for our company and focused on delivering value for our customers and our shareholders.

We look forward to our next discussion next quarter. Thanks, everyone. Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.