Payoneer Global Inc Aktie

Good day, everyone, and thank you for standing by. My name is RJ, and I will be your conference operator today. At this time, I would like to welcome everyone to the Payoneer First Quarter 2026 Earnings Call. [Operator Instructions] I would now like to turn the call over to Michelle Wang, VP of Investor Relations. Please go ahead.

Thank you, operator. With me on today's call are Payoneer's Chief Executive Officer, John Caplan; and Payoneer's Chief Financial Officer, B. 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 the 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, todays 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 and definitions can be found in today's earnings materials, which are available on our website. Additionally, please note we have 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. In Q1, we delivered strong accelerating results across our major KPIs. Revenue ex interest accelerated and B2B volume growth more than doubled sequentially. We delivered another quarter of substantial core profitability expansion. Our results prove our team's dedication to our customers, our shareholders and our strategic transformation.

I will walk you through what we are delivering and why we're confident our momentum will continue. Steve will then go through our financial results and our 2026 guidance.

First, our powerful results to start 2026. Revenue ex interest accelerated with 11% growth year-over-year. We are confident in our ability to exit 2026 at a mid-teens growth rate. Total volume grew 16%, exceeding $22 billion. B2B volume was up 44%. Growth significantly accelerated, more than doubling from 21% in Q4 and ahead of our expectations.

We drove our SMB take rate to 120 basis points as we capture more complex B2B flows. ARPU growth accelerated and ex interest, we delivered our seventh consecutive quarter of 20%-plus growth. Our upmarket strategy is gaining traction, and our customer portfolio is becoming more and more valuable. We hold $7.6 billion of customer funds on our platform, up 15% or over $1 billion year-over-year.

We delivered adjusted EBITDA of $69 million, representing a 27% margin. As a result of our disciplined execution, adjusted EBITDA ex interest grew over 140% to $18 million, our highest result as a public company and demonstrating substantial operating leverage. We are on track to more than double core adjusted EBITDA to $90 million at the midpoint of our 2026 guidance.

This isn't one metric moving in the right direction. It's broad-based and well-executed acceleration across our business. Global B2B payments is a multitrillion-dollar opportunity. Payoneer's core strengths uniquely position us to capture meaningful share in this massive market. We've built powerful infrastructure based on years of investment and innovation. We hold licenses in key jurisdictions, including the U.S., EU, U.K., China, Hong Kong, Australia, Japan and Singapore, with 3 more in progress in India, Israel and Canada.

We maintain nearly 100 direct banking and payment relationships around the world. Our payment network spans 7,000 trade corridors. This didn't happen overnight. It took us more than a decade and significant investment to build. For context, getting a single payment services license in many major markets can take 18 to 24 months.

Second, we now have the scale that creates real network effects. We processed over $22 billion in GMV in Q1 and over $90 billion over the last 12 months. That volume creates liquidity in currency corridors and lets us offer better pricing to customers while maintaining healthy unit economics. And as our volumes grow, particularly those in B2B, these efficiencies compound.

Third, we're essential operating infrastructure for our customers' growth. Our customers use us as a multicurrency wallet for treasury management, accounts receivable management, working capital, accounts payable and workforce management. The majority of our usage now comes from customers using us from three or more products, and that number keeps growing. As we move upmarket and deepen our ability to serve our customers' needs, we see revenue per customer, multiproduct adoption, customer loyalty and funds on platform increase.

This is what makes our business so powerful, a global financial operating account that is essential to the daily needs of our customers. The more they use, the more embedded in their business we become.

Now I'd like to share what's driving our B2B growth because this is the engine for the next phase of our business. We drove 44% volume growth in our B2B business in Q1, more than doubling from 21% in Q4 and ahead of our ambitious expectations. Growth accelerated in every region, driven by strong acquisition and onboarding of high-quality upmarket SMB and SME customers over the past year. We also drove strong growth from customers choosing to load funds from their bank accounts on to Payoneer so they can use our AP capabilities.

In particular, we delivered very strong growth in our China B2B business. China's SME B2B export sector represents a multitrillion-dollar opportunity and is a key strategic pillar of China's economy. We are intently focused on building a scaled compliant platform to serve these customers and capture this opportunity. We have real momentum.

Beyond B2B, we are also driving momentum across regions and use cases. Our revenue from SMB selling on marketplaces continues to grow, driven by accelerating double-digit growth in APAC and EMEA. We have put in place initiatives to accelerate this growth. In Q1, our new marketplace volume acquired in China doubled year-over-year, and we are winning wallet share through product bundling and packages. We expect our initiatives to provide a strong foundation for us and support our mid-teens exit growth rate.

We're taking a disciplined use case-driven approach to implementing agentic AI. I'm encouraged by the initial data and innovation we're seeing. For example, we're piloting agents and customer support to reduce the overall volume of ticket and accelerate customer resolution time. We are leveraging AI-driven insights and lead generation to drive customer growth. And driving widespread adoption of AI tools in our platform organization to accelerate product velocity.

These programs are gaining speed and impact. We are also investing in stablecoin capabilities. These capabilities, we believe, will be important for the future of commerce and money movement for 3 to 5 years from now, not just for next quarter. We launched stablecoin wallet capabilities via Bridge and are live in the market with our initial cohort of customers, understanding demand, and we intend to scale up quickly.

Payoneer has the regulatory maturity that many stablecoin native firms don't, which positions us well as the preferred partner for real-world adoption, particularly by larger businesses and leading global marketplaces. We believe our application to establish an uninsured national trust bank in the United States announced this February will further strengthen our position.

Thousands of businesses have signed up for our waitlist since launch. 80% of them are net new customers to Payoneer, highlighting the TAM expansion potential of this new product. Additionally, a meaningful portion of our business is doing $600,000 or more in annualized commercial stablecoin activity, signaling significant workflows and real-world use cases. We serve businesses, and we will make it easier for them to do business in whatever currency or payment method that's appropriate for them.

For example, an IT services customer in Europe that uses our platform to receive 6 figures of monthly volume is an early adopter of our stablecoin wallet. Their contractors are requesting payment in stablecoin, and this customer wanted to simplify fragmented operations with one trusted partner. Payoneer is doing just that for them. We had a strong Q1 and a strong start to 2026. Payoneer is profitable, scaled. We have broad-based momentum in a massive market.

We have real defensible strategic assets, regulatory and payments infrastructure, scale, brand and distribution that are based on years of innovation and development and that compound over time. Our Q1 results demonstrate that our strategy is working. We're executing with focus and discipline as we continue to drive durable, profitable growth.

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, everyone, for joining us. Payoneer delivered a strong quarter with accelerating growth in revenue, excluding interest income, powered by our B2B franchise and robust adjusted EBITDA performance, including a quarterly record for adjusted EBITDA, excluding interest income.

Our upmarket strategy is delivering strong growth. We are unlocking operating leverage and improving the health and quality of our customer portfolio. Our increased full year 2026 guidance reflects our focused execution and our business momentum.

Now turning to our first quarter results. We delivered revenue of $262 million, up 6% year-over-year. Revenue, excluding interest income reached $210 million, up 11% year-over-year and accelerating 200 basis points sequentially, driven primarily by increasing momentum in our B2B franchise, strong performance in checkout and our ongoing pricing and monetization initiatives. ARPU increased 17% in the quarter and excluding interest income, was up 22%. ARPU, excluding interest income, has now grown at or above 20% for 7 consecutive quarters, demonstrating the success of our upmarket strategy, our cross-sell efforts and our pricing and monetization initiatives as well as the increasing value of our financial stack.

Total volume was up 16% year-over-year. SMB volume grew 11% year-over-year with volume from B2B SMBs up 44%, volume from SMBs that sell on marketplaces up 2% and checkout volume up 53%. B2B volume accelerated across all reported regions, but was especially strong in the China goods sector, both with existing and newly acquired customers. We also delivered strong B2B volume growth in EMEA, driven by robust growth among larger customers in Tier 1 markets as well as in APAC.

We continue to drive strong momentum in our enterprise payouts business with volume up 28% year-over-year as we both increase penetration with existing clients and ramp newly acquired clients. Our Q1 take rate of 115 basis points decreased 10 basis points year-over-year from the impact of lower interest rates on our interest income.

However, we continue to drive expansion in our SMB take rate, which increased 1 basis point year-over-year and 7 points sequentially due primarily to strong growth in our B2B and checkout franchises. Customer funds held by Payoneer increased 15% year-over-year to $7.6 billion, partially offsetting the impact of lower rates on our interest income revenue. We generated interest income of $52 million in the quarter.

Customer funds have grown at a substantially faster rate than SMB volumes for the past 5 quarters. This demonstrates the trust and value customers place in our platform and the utility we provide via our multicurrency account, AR and AP capabilities and in the ability we provide for customers to choose when, how and in which countries and currencies to use their funds. As of March 31, we had hedges in place related to approximately $4 billion or 53% of customer funds through our portfolio of treasury securities and term deposits and through derivative instruments.

Total operating expenses of $232 million increased 7%, primarily driven by increases in labor-related expenses, incentives and other spend designed to drive card adoption and usage and the effect of our EasyLink acquisition in China. Transaction costs of $35 million decreased 11% despite 11% growth in revenue, excluding interest income and represented 13.5% of revenue, down approximately 250 basis points year-over-year.

Excluding interest income, transaction costs declined over 400 basis points to 16.8% of revenue due to the impact of our strategic relationships with Mastercard and Stripe as well as improved operational efficiency. Sales and marketing expense increased $3 million or 6% from increased spend on marketing initiatives, including incentives related to our card offering and higher labor-related costs. G&A expense increased $6 million or 20%, primarily due to higher labor-related costs and higher legal and consulting costs.

R&D expense increased $6 million or 16%, primarily due to higher labor-related costs, while other operating expense decreased by $2 million or 4%, primarily due to lower labor-related costs and lower IT and communication costs.

Adjusted EBITDA was $69 million, representing a 27% adjusted EBITDA margin in the quarter. We generated $18 million of adjusted EBITDA, excluding interest income, our highest ever quarterly performance. We are unlocking leverage in our business by optimizing our transaction cost economics and through disciplined expense management, even as we invest for the long term in our regulatory infrastructure, in stablecoin capabilities, in AI and in our product road map.

We have a substantial long-term opportunity to unlock further core business profitability. Net income was $20 million compared to $21 million in the prior year period. Basic and diluted earnings per share were both $0.06 versus basic earnings of $0.06 and diluted earnings of $0.05 per share in the prior year period.

We ended the quarter with cash and cash equivalents of $339 million. Use of cash is seasonally higher in the first quarter of each year, while we also saw higher CapEx related to our move to new office space in Israel and significantly accelerated the pace of our buybacks. During the quarter, we repurchased approximately $74 million worth of shares at a weighted average price of $5.16 and as of March 31, had approximately $117 million remaining on our current share repurchase authorization.

Turning now to our 2026 guidance. We expect total revenue between $1.1 billion and $1.14 billion, an increase of $10 million at the midpoint relative to the guidance we issued in February. This includes interest income of $200 million and $900 million to $940 million of revenue, excluding interest income.

We are increasing our expectations for interest income by $10 million to reflect robust growth in customer funds and updated expectations related to prevailing interest rates in the U.S. and Europe. We are also increasing our guidance for total adjusted EBITDA to between $285 million and $295 million. There are no changes to our guidance for revenue, excluding interest income, transaction costs, adjusted OpEx, which represent revenue less transaction costs and adjusted EBITDA or core adjusted EBITDA.

We are confident in our ability to accelerate growth to exit the year at a mid-teens rate, unlock leverage and more than double core adjusted EBITDA to $90 million at the midpoint. We are evolving our business to capture a significant growth opportunity. Behind our strong results is a healthier, higher quality and more durable customer portfolio.

We are capturing and growing our business with larger customers, improving our risk profile, unlocking robust operating leverage, making strategic investments, generating substantial cash flow and positioning the company to create long-term shareholder value.

We are now happy to answer any questions you may have. Operator, please open the line.

[Operator Instructions] Your first question comes from the line of Nate Svensson of Deutsche Bank.

Your next question comes from the line of Aditya Buddhavarapu, Bank of America.

This is Aditya from Bank of America. Just on the full year guidance, could you just maybe just talk about how we should think about some of the underlying assumptions in terms of what you're seeing on macro, any sort of sentiment from customers? So if you could just walk us through that.

And second, more specifically on the phasing of growth during the year, if you could provide any color across different segments and how you're thinking about that as well, that would be great.

Sure. Happy to do that. Thank you for the question. So look, overall, in terms of sort of the macro context, what we're seeing in Q1 is very consistent, I think, with what we're seeing more broadly with industry trends. We're seeing improving -- stable to improving marketplace trends, really outsized robust performance in our B2B business, where we grew volumes by more than 40%, improving performance in checkout, where the migration to our new Stripe solution is now complete and has gone much better than we anticipated. So really robust performance across all of the major drivers of volume into our ecosystem.

So as we think of the assumptions that underpin our guidance for 2026, in our marketplace business, we're expecting broadly mid-single-digit volume growth. with revenue broadly in line with those volumes to maybe a little bit higher than that and acceleration to your question around the quarterly cadence, accelerating into that back half of the year as we lap the impact of tariffs. We're seeing really strong growth from our China cohort with some of the initiatives that we launched there last year, strong growth in APAC. So all supportive of that mid-single digits and accelerating in the back half of the year.

In our B2B business, we now expect more than 30% year-over-year volume growth through the rest of the year. So really strong performance there. Revenue probably to come in the mid-20s, lower take rate from really the business mix there in China and EMEA. And in our Checkout business, there, again, as I noted, really strong performance in migrating that portfolio. We're seeing great customer adoption, including some of the underlying features there.

So we're expecting flat to modest mid-single-digit growth in volume and continuing to scale from there on out. So all of that really against a macro environment that we view as stable through the rest of the year, broadly speaking, robust in terms of customer spending behavior, B2B behavior.

So overall, low double-digit volume performance in the aggregate and revenue growing, let's call it, a shade faster than that and accelerating into the back half of the year with Q2, we'll say, broadly stable from a top line revenue growth versus Q1.

Your next question comes from the line of Cristopher Kennedy of William Blair.

It's great to see the $18 million of ex float EBITDA. And B, you mentioned the opportunity to unlock core adjusted EBITDA even more than that. Can you just help frame kind of where you think the margins can go on the core business as the business mix changes?

Yes. Thanks for the question, Chris. Look, we're really, really pleased with our performance in Q1 because we're achieving it by really driving every sort of critical KPI, right?

We're accelerating growth from a top line perspective, gives us conviction going into the back half of the year that we can exit that core revenue in the mid-teens as we called out in February. We're driving really nice margin expansion even as we mix shift into more complex business. So we're seeing really nice transaction profit margin dynamics within the business. We called that out coming into this year and really sort of improved performance versus last year. So that's dropping to the bottom line.

And we're investing in our platform, investing in our stack, but still able to operate with discipline within the business and expect our OpEx overall, our adjusted OpEx to be up sort of mid-single digits. So 6% to 7% overall is what our guidance calls for. All of that is going to continue to unlock leverage in the business, unlock leverage in the core business. And as John said in his prepared remarks, as we continue to deploy AI in a very use case-specific manner within our platform team, within our operations teams and our risk functions, we expect to be able to unlock meaningful leverage going forward.

So we're going to keep executing against that plan. We can expect the results to show up in the bottom line, and we're very happy with the trajectory that we're on.

Okay. And then John highlighted the opportunity in China. Can you just talk about the potential take rate in that market as the business kind of evolves into higher take rate products?

So from a B2B perspective, I think, is what you're getting at, Chris. So look, we saw really robust growth, as we called out in China or in B2B more broadly, 44% from a volume perspective, in excess of 20% from a revenue perspective. And we saw really strong growth in both China and EMEA with larger customers, right?

We've talked before about our China B2B business. It's predominantly a goods business versus the rest of our B2B business being mostly service-oriented, a lower take rate overall versus the rest of our B2B business. But overall, as we grow that B2B business more quickly than the rest of the business, it is still take rate accretive, right? So even with China showing that robust growth, our take rate in the B2B business is, give or take, 1.5x what it is in the rest of the business. And is overall take rate accretive to the overall portfolio.

So we're seeing really nice dynamics there. We've been looking to grow in that market in a measured way, as we've talked about before. We're adding capabilities. We have a strong brand in China, adding features to that product set, and we have every right to win in what is a massive market.

Your next question comes from the line of Mike Grondahl of Northland Capital Markets.

This is Logan on for Mike. First, can you just provide some additional color on what exactly drove the 44% year-over-year growth in B2B volume and also remind us of the opportunity there?

Thanks for the question. We are really excited about the momentum we have in B2B, and it is the engine of our growth going out into years ahead. And we're building on that strong momentum we saw in the fourth quarter, and we doubled the volume sequentially quarter-over-quarter.

I think we highlighted in her previous answer, larger customers in China turning to Payoneer as the preferred partner for their global exports. And then around the globe, services businesses, larger services customers as we move the firm up market, choosing Payoneer as the multicurrency wallet for their cross-border operations as we focus on the key geographies and markets and incorporation hubs around the globe.

We are really pleased with the progress. And I think the key here for us is that we've really migrated to the full financial stack of offerings for multinational cross-border SMB firms, and they're adopting three or more of our products. They're loading more funds onto our platform as demonstrated in our overall balance growth at 15%. We're seeing very strong usage of our AP products. Our workforce management business continues to exceed our expectations and be very strong as we help global firms hire contractors and employees around the globe.

Given the trends we see, and as Be mentioned, we expect B2B volume growth for the rest of the year of at least 30% which is a meaningful increase from our expectations heading into the year. And we are -- I think of our SMB business overall, B2B is now 1/3 of the total volume, and this is a very exciting dynamic for us. It's a $10 trillion opportunity, as you know. And I think we have slightly less than 1% share, and we are health end on getting our fair portion of it.

Appreciate that color. And then one more from us. Can you just walk us through what markets over performed and underperformed in 1Q and if those trends continue so far in the second quarter?

Yes. For B2B, every market sort of blistering results. China is strong, APAC is strong, EMEA is strong. Really pleased at the progress we're seeing there in Latin America, really solid growth of moving upmarket overall. LatAm is 10% of our revenue, small portion of the overall business, but a very important franchise for us. And we're doing better than we had anticipated in China, and we intend to continue to do so.

[Operator Instructions] Your next question comes from the line of Nate Svensson of Deutsche Bank.

Apologies about the technical difficulties earlier. I appreciate you let me hop back in here. I wanted to ask a couple of questions just around the back half acceleration. Your answer to one of the earlier questions was very helpful, but just trying to double-click in a couple of areas.

So the first one is the dynamics in checkout. Numbers were very good. I think you called out that the migration to Stripe went a lot better than expected. So I was just hoping you could provide a little more color and commentary on what exactly went better than expected. If I recall correctly, I think maybe there had been some intention maybe to not migrate a portion of the customers.

So I'm wondering how things played out versus your expectation. And now that the migration sounds like it is complete, any color on sort of underlying performance within that business and kind of how you expect that to play out going forward?

Yes. Thanks for the question, Nate. So look, in terms of the acceleration more broadly, we feel really good about the -- again, the KPIs and how they're performing in our business. So what supports our view on that, the significant acceleration we're seeing in our B2B business, as John said, more than double in Q1 versus what we saw in Q4, continued momentum into April. We feel really good about that 30% plus volume number going into the back half of the year.

The marketplace business, as we said, we're seeing stable to improving trends. We launched a bunch of initiatives to really sort of push and accelerate and inflect that business. And as you called out, and I'll mention this maybe very quickly before I get to checkout, the enterprise business has also outperformed expectations, and we're seeing really nice acceleration in that business as well. We won some nice new partners last year. Those are continuing to ramp.

We won more business from some of our larger marquee partners. Those are continuing to ramp. So we feel really good about that. In terms of checkout, as you know, we talked sort of late last year around the shift of the product to the Stripe solution, and we anticipated doing a migration in the early part of this year. And as part of that, look, we haven't done that kind of migration before. complex from an operational perspective.

We expected some amount of churn in the book, right, some amount of attrition. Some we were intentional about, and we've seen that, that we weren't going to plan to fully migrate. But some we just anticipated some amount of churn. In the end, we performed much better than that. We were able to transition more than 90% of the portfolio. We were able to do it more quickly than I think we anticipated. So we have a really solid foundation going into the rest of the year on a solution that really works for our customers, right?

So it's a massive market. It's a great sort of cross-sell into e-com and other sellers who are really looking to expand their distribution. And we're on a platform now that has best-in-class features, right? So we're seeing or better uptake, if you like, of some of those features within Stripe. I saw just today from the team, the adoption of BNPL features within the checkout solution, significantly higher than we used to see.

So we feel great about the trajectory there. We always did. We've just expected a little bit of a bump in the road in '26. We've actually performed better and feel really good about the overall opportunity.

I'd just add one thing about -- to the context of B's remarks. It proves the thesis of Payoneer, a multicurrency account where you receive all of your global accounts receivable, selling on a marketplace like Amazon or Walmart, selling B2B globally or selling direct to consumers and acquiring customers directly the volumes into your Payoneer account and leveraging our broad accounts payable capabilities to manage with cards, your travel spend or your ad spend, with our sourcing capabilities, managing your raw material sourcing, it really proves the value prop for our customers and that they want a single trusted partner for all of their international accounts receivable and accounts payable.

That is what the financial stack is all about, and it's coming true. And the checkout team, I think, did a great job delivering the transition, and we're seeing the uptick, as Steve mentioned.

Yes. Super helpful and detailed answer. Just I guess for the follow-up on, again, the back half acceleration. So B, I think earlier, you talked about easier comps with the tariff dynamics last year. Just asked about the checkout migration to Stripe. I think the two other factors that I recall are the timing of some pricing initiatives and then those enterprise wins that you were talking about. So maybe on those last two things.

Jeff, on pricing, generally speaking, right, can you just talk through some of like the timing dynamics? So for example, if you had implemented pricing increases in 1Q, how long does it take for that to kind of flow through to the business? And is that part of why we're seeing or expecting some of the acceleration in the back half?

And then the question on enterprise specifically, again, it was great to hear some of the ramp from the recent wins. Are those recent wins in general kind of fully ramped? Or I guess the question is there still more room to continue growing with logos you've already won like leaving aside any potential future wins? So yes, those are the 2 questions, pricing, enterprise.

Yes, happy to take that. Look, pricing has been a good lever for us, right? And we've talked about it as part of our ongoing strategy to really better align our products, our pricing from a sort of bundling and share of wallet sort of gain perspective into how we think about acquiring and serving our customers.

In terms of the ramp, look, it's a factor, but I wouldn't over-index on it, right? Like the other things we've talked about are much more important to that, that there is some pricing uplift that comes in the back half of the year. We're very confident we can deliver it. It's mostly long tail or nonstrategic routes, and that's sort of the kind of pricing moves that we're likely to be making now. Sort of in terms of pure-play pricing moves, we're really impacting sort of the non-true ICPs like the long tail of our portfolio, if you like, and nonstrategic routes.

So we feel very confident that we can roll them out as scheduled and we can model the impact relatively easily. But I wouldn't over-index on that. Much more important is really the performance and the momentum we're seeing across the rest of the business in driving that uplift.

Specifically to the enterprise business, not all fully ramped as of yet. We expect to see continued momentum. We -- as I say, we won additional sort of share of business from some of our marquee clients in that space, and we're ramping up those routes and can continue to see, I think, strong momentum there. And we added a number of nice wins overall that we think can continue to drive volume.

That ends our Q&A session, and we appreciate your participation. I will turn the call back over to John Caplan, CEO, for the closing remarks. Please go ahead.

Thank you, everybody, for your questions and your participation this morning. Our Q1 results demonstrate that our strategy and execution are working, and we're capturing the many opportunities in front of us. We look forward to speaking with you again in August. Thanks, everyone.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Ladies and gentlemen, thank you for standing by. My name is Demi, and I'll be your conference operator today. At this time, I would like to welcome you to the Payoneer Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Thank you.

I would now like to turn the call over to Michelle Wang. Please go ahead.

Thank you, operator. With me on today's call are Payoneer's Chief Executive Officer, John Caplan; 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 the 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 materials, which are available on our website.

Additionally, please note we have 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 is the financial operating system for Global Commerce. We have a 20-year head start building assets, network effects and brand that are highly differentiated and difficult to replicate. We have proven product market fit, deep global distribution and the payment and regulatory infrastructure to support profitable growth at scale. We are capturing share in a large and growing market and continue to strengthen our strategic advantages every quarter.

First, Payoneer has global scale that eliminates the friction of growing cross-border. We processed over $87 billion in volume across 190 countries and territories in 2025. When a manufacturer in Vietnam pays a supplier in Mexico, when a business in India wants to sell on Japan's e-commerce marketplaces, or a software developer in Dubai invoices a client in Germany, we're there. Payoneer supports cross-border commerce across every SMB use case.

Second, trust and safety built over decades. We are regulated in key markets around the world and have built robust compliance infrastructure based on years of experience navigating the challenges associated with cross-border payments, particularly those into and out of emerging markets.

Third, we are driving growing profitability through discipline. We've increased adjusted EBITDA ex-interest from negative $25 million in 2023 to positive $40 million in 2025, while investing in innovation and strengthening our capabilities. We're entering 2026 with conviction around our margin expansion opportunity.

We are orienting Payoneer towards an AI-first strategy, which will reshape our customer experience, operations and cost structure. The impact is tangible across every major function. Engineering is shipping code meaningfully faster. Our go-to-market team is using AI for scoring leads, improving funnel efficiency and increasing ROI.

And in our customer support and compliance teams, AI agents are creating a flywheel effect, better customer outcomes, greater efficiency for our teams and a structurally lower cost base.

Our leading position in cross-border B2B payments uniquely positions us as stablecoins and AI fundamentally reshape global money movement. We are the beneficiaries of this innovation and have the assets, scale and market position to capture outsized value.

Before I dive into our record 2025 results, I'd like to spend a moment on our 2026 outlook. We plan to deliver significant core profitability expansion. We expect to more than double core adjusted EBITDA to $90 million at the midpoint.

Revenue ex-interest of $900 million to $940 million represents 12% growth at the midpoint. This accounts for finishing the work we started in 2025 to optimize our checkout business and our customer portfolio. These actions are expected to reduce our 2026 revenue growth by approximately 300 basis points, but will lead to higher margins and a stronger, healthier customer portfolio. We plan to exit the year with mid-teens growth and mid-teens core margins.

Now turning to our results. 2025 was a pivotal year for Payoneer. We increased the utility we provide to our customers, made deliberate choices about where to focus in a dynamic environment and executed and innovated with discipline. The results, they speak for themselves. We grew revenue ex-interest 14%.

B2B revenue grew twice as fast at 28% as we take share from traditional financial institutions. B2B now represents 30% of our revenue ex-interest, up from 20% in 2023.

We strengthened and expanded our ecosystem of enterprise relationships, including with Airbnb, Upwork, TikTok Live, Alibaba, Mercado Libre and Best Buy. 21% ARPU expansion ex-interest, driven by upmarket momentum and multiproduct adoption, 9 basis points of SMB take rate expansion, $7.9 billion of customer funds held in Payoneer accounts, up 13% year-over-year and outpacing volume growth.

We have hedging strategies in place to reduce interest rate sensitivity. We have locked in a substantial portion of interest income for 2026, 2027 and 2028 regardless of the interest rate environment. We improved our unit economics and are driving meaningful efficiencies in our operations.

Other operating expenses, which include customer onboarding, support and KYC costs were down 3% in 2025. While at the same time, we grew volume and revenue, mix shifted to more complex verticals such as B2B and added to our regulatory licenses.

Total adjusted EBITDA of $272 million, a 26% margin was up year-over-year, as we unlocked substantial operating leverage and powered through a $25 million headwind from declining interest income. We delivered $40 million of adjusted EBITDA ex-interest, nearly triple versus 2024.

We generated significant free cash flow of $146 million, representing nearly 200% free cash flow conversion. These aren't just great numbers. They reflect a healthy, strong business that is positioned for long-term value creation. We believe our current share price does not fully reflect the strength of our balance sheet, the durability of our cash flows, or our long-term growth opportunities, including those from Agentic Commerce and stablecoin. We've continued to align our capital allocation with our conviction in the intrinsic value of our business.

In 2025, we stepped up our buybacks, repurchasing $175 million of shares, including $80 million in Q4 alone. We plan to continue buying our shares at or close to these levels.

Since we began our transformation in 2023, we prioritized unlocking Payoneer's full potential with a sharp focus on profitability. At our inaugural Investor Day, we presented the first phase of our strategy and disclosed metrics that focused on "ideal customer profiles" customers that were profitable based on a simple minimum volume threshold.

In the 2 years since, we have delivered meaningful impact. Today, we're proud to share that all customer cohorts are profitable. We've grown our ICP base by 8% and increased ARPU by more than 50%. We've delivered a 17% CAGR in our revenue ex-interest, and we've significantly expanded core profitability and demonstrated consistent 25% adjusted EBITDA margins in the declining interest rate environment.

We're now entering the next stage of our transformation. We're moving further upmarket to focus on larger, more sophisticated customers. Customers receiving tens of thousands, or even hundreds of thousands of dollars a month on Payoneer's platform are generally scaled, often multi-entity, multi-geography businesses. These businesses have proven business models, complex cross-border needs and potential for significant wallet share expansion.

They also demonstrate significantly higher ARPU, retention and product adoption characteristics. We have strong product market fit and proven ability to serve these businesses.

For example, Customers with $600,000 or more of annual average volume in their Payoneer account now represent 42% of our revenue, and they were our fastest-growing segment in 2025, driving 60% of our overall growth.

The UAE is a great example of a region where our upmarket strategy is taking hold. The city of Dubai is 1 of 5 major global business hubs. Its economy is projected to double over the next decade, driven by service exports and 20,000 foreign-owned companies registered there in 2025 alone. Payoneer is successfully acquiring and serving these cross-border businesses, which is driving our strong results.

Our business from customers in the UAE generated over $1 billion in volume and $15 million of revenue in 2025. Revenue is growing nearly 50% year-over-year, driven by large IT and digital marketing agencies.

To support our upmarket strategy, we are making targeted investments to expand and enhance our value prop. For example, we recently launched expanded capabilities in Mexico and Indonesia. We plan to expand our product offerings in India, the world's fastest-growing large economy, supported by our recent in-principle license authorization.

We recently acquired Boundless, which deepens our workforce management capabilities for global teams. And we're adding more partners to expand working capital and credit solutions, enabling customers to access the capital they need to invest in inventory, marketing and expansion.

We will press our near-term advantages and make bold bets to position ourselves at the center of ongoing innovation in the payment space.

One of these big bets is stablecoin. We believe Payoneer is uniquely positioned to bridge traditional finance and blockchain-based payments. Here's why. We have world-class last mile infrastructure in emerging markets, supported by the robust and complex regulatory framework necessary to operate compliantly at scale.

We have deep compliance expertise to onboard and support customers in markets that are complex to serve. We have long-standing trusted relationships with millions of cross-border SMBs around the world. We are partnering with Bridge, a Stripe company to launch stablecoin capabilities. We launched a wait list a few weeks ago and have brought our first customers live.

What's most exciting about this is that stablecoin is TAM expanding for Payoneer. We are seeing meaningful interest from larger scaled businesses that fit the upmarket profile we're pursuing, and we are seeing new customers come to Payoneer for these features across a diverse set of markets and industries.

As part of our broader stablecoin strategy, we have also just this week applied to establish an uninsured national trust bank in the United States. We expect this will enable Payoneer to seamlessly integrate stablecoin capabilities within our broader ecosystem. We plan to unlock utility for our customers, remove complexity and barriers to entry and open up additional addressable markets for a new breed of digitally native global businesses.

We are on a multiyear journey to position Payoneer as a category-defining company in cross-border commerce. We have demonstrated that we have the right team, a strong position in the market and a track record of successful execution. I'm proud of our team, grateful to our customers and excited for our future. Thank you all for your confidence and support of Payoneer.

I'll now turn it over to Bea to discuss our financial results and 2026 guidance in more detail.

Thank you, John, and thank you all for joining the call today.

Payoneer's full year results, mid-teens growth, 26% adjusted EBITDA margin and significant cash flow generation demonstrate the strength of our business. We are delivering profitable growth, optimizing transaction cost economics, unlocking meaningful leverage and making investments to position our business for sustained long-term growth while returning capital to our shareholders.

Turning to our fourth quarter results. We delivered record quarterly revenue of $275 million, with revenue, excluding interest income, up 9%, driven primarily by strong and accelerating growth in our B2B franchise and the ongoing implementation of our pricing strategy.

ARPU increased 15% in the quarter as we continue to focus our efforts on larger customers and drive increased adoption of higher-yielding products. ARPU, excluding interest income, was up 21%, marking our sixth consecutive quarter of 20% plus expansion.

Total volume grew 10% year-over-year, reflecting strong enterprise payouts volumes with SMB volumes growing by 5%. Volume from SMBs that sell on marketplaces was up 1%. We saw an acceleration in marketplace volumes intra-quarter and mid-single-digit volume growth during the holiday season, in line with broader industry trends.

Fourth quarter B2B volume growth of 21% accelerated significantly sequentially, led by strong acquisition and ramp-up of large customers, especially in China, Asia Pacific and EMEA.

Our B2B franchise accounted for 30% of our revenue, excluding interest income in the fourth quarter, and we are confident that we can continue to deliver strong growth as we penetrate this massive market.

During 2025, we saw strong and accelerating growth in enterprise payout volumes. Full year enterprise payout volumes grew 17% with growth reaching 27% in the fourth quarter. As John noted, this strong growth was driven by both expanding and deepening relationships with existing clients and from onboarding new enterprise clients, including Airbnb, TikTok Live and Best Buy, among others.

Enterprise customers value our global scale and reach, the security of our platform and our extensive payout network. For example, we recently renewed our relationship with Upwork, which has been an important partner for us for over 15 years.

Together, we will continue to support the ambitions of entrepreneurs globally, and we are actively exploring stablecoin payout solutions together, reflecting our commitment to innovation and to investing in the future of money movement.

Given strong momentum in 2025 and our current pipeline, we believe we are well positioned to continue driving strong enterprise payout volume growth in 2026.

Our Q4 SMB take rate of 113 basis points was up approximately 4 basis points year-over-year as we continue to drive faster growth in higher take rate areas of the business and from the ongoing execution of our pricing strategy.

Customer funds increased 13% year-over-year to $7.9 billion, partially offsetting the impact of lower interest rates on our interest income revenue. We generated interest income of $56 million in the quarter.

Customer funds grew at a substantially higher rate than SMB volumes in 2025, a direct reflection of the trust customers place in our platform and of the utility we provide through our multicurrency accounts receivable and accounts payable capabilities. We have developed and implemented a robust interest rate hedging program designed to secure portions of our interest income as interest rates, especially in the U.S., continue to decline.

As of December 31, 2025, we had hedges in place related to approximately $4 billion or 51% of customer funds through our portfolio of treasury securities and term deposits and through derivative instruments.

Through these programs, we have secured over $130 million of interest income in 2026, over $110 million in 2027 and over $90 million in 2028, irrespective of the direction of short-term interest rates. We plan to lock in additional amounts through reinvestment as the portfolio runs off, providing a durable revenue stream.

On a go-forward basis, our expectation remains that balances should broadly grow in line with volumes over time, while balance behavior is, of course, impacted by a range of factors, including customer usage behavior, the global macro environment and prevailing interest and FX rates.

Total operating expenses of $246 million increased 6%, primarily driven by increases in IT and communication expenses and labor-related expenses, including from the impact of our EasyLink acquisition in China.

Transaction costs of $43 million were roughly flat year-over-year despite a 9% growth in revenue, excluding interest income, primarily from greater operational efficiency and from the impact of the new agreement we signed with Mastercard in July.

Transaction costs represented 15.6% of revenue, a decrease of around 90 basis points year-over-year, even with the impact of lower interest income. Excluding interest income, transaction costs represented 19.6% of revenue, a decrease of approximately 180 basis points reflecting the improving profitability and margin characteristics of our portfolio.

Sales and marketing expense increased $5 million or 8%, primarily due to a higher labor-related costs and increased incentives related to our card offering.

G&A expense increased $5 million or 15%, primarily due to higher labor-related costs, including from our EasyLink acquisition, higher facilities costs related to our offices in Israel and higher IT and communication costs.

R&D expense was roughly flat, while other operating expenses decreased by $3 million or 6%, primarily due to lower consulting fees and lower labor and related expenses.

Adjusted EBITDA was $69 million, representing a 25% adjusted EBITDA margin in the quarter. Adjusted EBITDA, excluding interest income, was $13 million, a five-fold increase versus the prior year period. For full year 2025, we generated $40 million in adjusted EBITDA, excluding interest income, nearly 3x the 2024 number.

We are unlocking meaningful leverage through our increased scale, the deepening of key strategic relationships and ongoing efficiency and cost discipline.

Net income was $19 million compared to $18 million in the fourth quarter of last year. Basic and diluted earnings per share were both $0.05, in line with the prior year period.

We ended the quarter with cash and cash equivalents of $416 million. For full year 2025, we generated significant free cash flow of $146 million, nearly 200% of our reported net income, enabling us to both invest in our business and return capital to shareholders.

Additionally, in January 2026, we announced the acquisition of Boundless, an Ireland-based employer of record platform for approximately $13 million plus earn-out provisions amounting to up to $4 million.

During the quarter, we repurchased approximately $80 million of shares at a weighted average price of $5.76, a significant acceleration from the third quarter. And as of December 31, had approximately $192 million remaining on our current share repurchase authorization.

Turning to our 2026 guidance. Our 2026 guidance reflects our confidence in continuing to drive strong growth in our SMB franchise and in our ability to unlock substantial and sustained leverage in our business model.

We expect revenue to be between $1,090 million and $1,130 million with $190 million of interest income and revenue, excluding interest income between $900 million and $940 million. We expect core revenue growth of 12% at the midpoint.

As John highlighted, we are taking deliberate actions in 2026 to move our business upmarket and to deliver sustainable higher-margin growth.

Our core revenue guidance includes an approximately 300 basis point headwind to our growth rate, reflecting anticipated churn related to our transition to Stripe's Checkout solution as well as from changes to our acquisition focus and onboarding flows.

We have been migrating our Checkout offering to the new Stripe solution over the past 6 months and are pleased with our progress and the expanded capabilities our customers can now access. We expect the transition to be accretive to both revenue less transaction costs and adjusted EBITDA in 2026 and that this new partnership construct should continue to deliver more favorable yield and margin dynamics as we scale.

We expect to accelerate our revenue ex interest growth over the course of 2026 as we execute on our upmarket strategy, optimize our portfolio, realize the full quarter impact of pricing initiatives rolling out throughout the year and lap tougher comps, including with respect to the timing of tariff impact. We expect high single-digit growth in the first half of the year, increasing sequentially in the second half to exit the year at a mid-teens growth rate.

We expect to drive significant incremental profitability as we focus on portfolio health, customer mix and expense discipline. We believe this focus, along with the investments we are making to drive long-term profitable growth, position us to deliver mid-teens growth rate in 2027 and beyond and ongoing expansion in our profitability, excluding interest income.

Our 2026 guidance at the midpoint assumes high teens B2B volume growth, mid-single-digit growth in volume from SMBs that sell on marketplaces and mid-teens enterprise payout volume growth.

We expect transaction costs to be approximately 15% of revenue, down 70 basis points year-over-year from the impact of ongoing optimization in our bank and processor network, including our renewed agreement with Mastercard and from the migration of our checkout portfolio to the Stripe solution.

We expect revenue less transaction costs to grow faster than revenues, even including the impact of a $42 million decrease in interest income.

Our guidance for adjusted OpEx, which represents revenue less transaction costs and adjusted EBITDA is approximately $660 million at the midpoint, a 7% increase year-over-year.

At constant currency, we expect adjusted OpEx to grow roughly 4% year-over-year, significantly lower than our growth in revenue, excluding interest income. This reflects our focus on increasing the profitability of our core business from investments in our platform, including in Agentic AI-driven solutions and from further diversifying the distribution of our labor footprint, including by increasing our presence in India.

We are strategically moving the company towards an AI-first strategy in 2026, to drive step function efficiency gains across our entire ecosystem. Agentic models are being deployed to increase product delivery velocity, improve our customer experience, drive go-to-market ROI and reduce resource-heavy workflows, particularly in customer support and compliance.

We opened a new technology hub in Gurgaon, India in 2025, building on our existing presence in the world's fastest-growing major economy and allowing us to access India's deep technology expertise.

We are also expanding our operations and compliance hub in Bangalore, India. Our 2026 OpEx plan also include meaningful investments related to our stablecoin offerings and our bank charter application, which, if approved, we expect further position us for sustained long-term growth.

We expect adjusted EBITDA to be between $275 million and $285 million, an approximately 25% margin and an increase of around $8 million year-over-year despite an estimated headwind of approximately $42 million in interest income.

Excluding interest income, we expect to deliver adjusted EBITDA of between $85 million and $95 million, more than twice the 2025 level and achieving a double-digit margin for the first time as a public company.

Also for the first time as a public company, we expect adjusted EBITDA, excluding interest income to be positive even when fully burdened for stock-based compensation. We expect adjusted EBITDA ex interest income will meaningfully scale over the course of the year as we fully lap the impact of tariff policy changes introduced in the second quarter of 2025 as we continue to scale our B2B franchise and as we lap near-term headwinds from our checkout migration and other portfolio actions. We also expect our overall adjusted EBITDA margin will increase sequentially throughout the year.

Payoneer enables cross-border global commerce at scale, and our business benefits from the ongoing globalization and digitization of commerce. We remain focused on supporting and serving the third-party sellers that are critical to e-commerce marketplaces and on further penetrating the massive cross-border B2B segment.

We are making meaningful investments in our platform, including in our money movement capabilities and in our regulated infrastructure. We are shifting our business towards a higher quality, healthier and more sustainable portfolio and unlocking significant leverage in our core business.

We believe that, our current market valuation represents a significant discount to the intrinsic value of our company. Beginning in the fourth quarter of 2025, we significantly accelerated the pace of our share repurchase program.

In the fourth quarter, we repurchased approximately $80 million worth of shares and assuming fairly comparable stock price levels to today, would expect to use the entirety of our remaining $192 million in repurchase authorization in 2026.

2025 was a record year for Payoneer. We drove strong profitable growth in a dynamic macro environment, unlocked significant leverage in our core business and made important investments to strengthen our franchise.

We are now happy to answer any questions you may have. Operator, please open the line.

[Operator Instructions] Your first question comes from the line of Cris Kennedy with William Blair.

As you move upmarket, what metrics should we follow or what KPIs should we track to see the progress as you make that strategy? Because we know your segment disclosures will be changing.

Yes. Cris, great question. And I think the way I think about it and the team here thinks about it is we have a really strong business upmarket. In Q4 of '25, the customers that did over $50,000 accounted for 42% of our revenue, up 10 percentage points versus the first quarter of 2022.

So we have a very healthy and strong upmarket business, and we see really solid product adoption, more average volume per customer and very strong ARPU. And we will continue to share with our shareholders the ARPU growth, the traction we have, cross-selling products and our volume per customer growth.

Okay. Understood. And then real quickly on the profitability, core profitability, clearly, you're making progress there. Can you talk about the long-term opportunity to expand margins on that metric?

Yes. Thanks for the question, Cris. Yes, look, we're really focused on expanding the ex-interest profitability in the business. Our guidance at the midpoint calls for $90 million of core adjusted EBITDA before interest income, and that's more than 2x what we delivered in the prior year. So significant leverage unlock. We're growing our top line. We're increasing our margins, including the margins we get from our transaction-based business, and we're improving the profitability and long-term health of the portfolio.

All of that is showing up in those metrics, and we feel confident that we can continue to deliver that kind of unlock. We talked a little bit about the AI-first strategy that we're deploying. So as I look out beyond 2026, we feel really good about our ability to continue to unlock leverage in the business.

Your next question comes from the line of Nate Svensson with Deutsche Bank.

Hoping you could talk a little bit more about the trends in the marketplace business. So volume growth did decelerate a bit, but you did call out an acceleration intra-quarter, I think, to mid-single digits. And I know a lot of folks out there try to track some of the larger third-party marketplace data as a proxy for your business here. I know that's an apples-to-oranges comparison. But nonetheless, I would love to hear about trends on what you saw in marketplace and kind of how you expect that to play out in '26 to get to the mid-single-digit volume guide for the year.

Yes. Thanks for the question, Nate. So look, we had called out back in November when we reported Q3 that we were seeing slightly softer October marketplace volume. We indicated thereafter that we were seeing similar trends in November. So what we saw is more or less in line with the expectations.

We actually saw a strong holiday season, right, back end of November and into December, mid-single-digit marketplace volume growth in December, which look, to your point around sort of apples to oranges as we look to the broader holiday spending trends is in line with those broader trends at mid-single digit. And we've seen modest acceleration in that marketplace volume coming into January and February.

So look, again, last year was a pretty dynamic environment. I think we saw the impact in sort of late Q3 and into Q4 of tariffs. We're seeing modest acceleration coming into the year. Our franchise is strong, and we feel good about continuing to accelerate off of this baseline.

That's helpful. And nice to hear the January and February commentary. I guess, just the follow-up question, just more broadly on the 2026 guide. So it's nice to hear that you're expecting to accelerate through the year, exit at mid-teens. I know, you mentioned some of the lapping impacts, the transition from optimizing checkout, customer portfolio, all that stuff.

But I think like the big question that I have, and I'm getting this morning is just on the confidence and visibility in that core trends in the business. Again, you mentioned the lapping impacts and the other initiatives. But really just more color on your confidence visibility into getting us to a mid-teens exit rate as we leave 2026.

Yes. Thanks for the question. So look, we've called for high single-digit core revenue growth in the front half of the year, accelerating to exit in those mid-teens. A few factors give us confidence there and are driving that acceleration. One, and I think maybe foremost, we're seeing significant acceleration in our B2B business. That was -- that grew 21% in volume terms in Q4.

So we're seeing really nice momentum in that business. It grew intra-quarter and good momentum coming into the year from really everything you heard in the prepared remarks, our focus on high-value customers, getting more focused on new and differentiated acquisition motions.

The ongoing acceleration in our enterprise business as we continue to ramp up new partners. We talked about some of those names, some of those logos on the call. That's driving some of that. The benefits in the back half of the year of some of the pricing strategies that we continue to roll out, largely targeted at the long tail. John talked a little bit on the call. around how we look at that portfolio overall.

And then finally, as we noted, really just lapping, if you like, the headwinds and getting to the back half of the year, lapping that tariff impact and some of the headwinds that we talked about in terms of the portfolio actions we're taking, including the transition to Stripe, and that transition is more front-end loaded. So a long list of things, but a carefully sort of worked out view on how we accelerate the business throughout the year.

Next question comes from the line of Sanjay Sakhrani with KBW.

Maybe you guys could talk a little bit about sort of the opportunity for the bank and sort of how you see that unfolding for yourselves and maybe just the time line from here?

Yes. Thanks for that question, Sanjay. Look, we're really excited about the momentum in this space. As we called out, this is a strategic investment, both rolling out capabilities with Bridge in terms of stablecoin capabilities, and our bank charter application. We think that positions us at the center of really ongoing innovation in the payment space. And so we've made those announcements over the last couple of weeks. We've been hard at work across a range of work streams, including launching those capabilities.

In terms of the bank charter, it really allows us to do a few things, right? It allows us to be able to issue and manage reserves in a compliant infrastructure in support of stablecoins. It allows us down the line to custody should we choose to do so. But ultimately, it does what Payoneer does as a part of our core value proposition, right? It brings these digital currencies into a regulated and trusted ecosystem and one where we can seamlessly integrate into the fiat rails and the existing fiat ecosystem that we already operate for our customers.

So think of it as a step within that broader strategy. We're really excited. We're working hard, and we really do think it positions us at the center of innovation in the cross-border payment space.

Okay. Great. And maybe just like a 2-part question on some of the questions that were asked before. But that 300 basis point headwind, sort of is that the final piece? And then we no longer have any sort of impact from transitioning the customer base or any of the services? And then secondly, just as we think about these tariffs and the start and start and changes in policy, I'm curious how you think that affects your business and sort of the marketplaces.

Yes, happy to take the first part. So yes, we called out that headwind to provide that disclosure, and it's really 2 elements. One, it's the transition to the Stripe solution. And we called out high single-digit million headwind to revenue in '26. we're very comfortable with that headwind, right? We've talked about this solution. It delivers best-in-class capabilities to our customers and ultimately, higher-yielding, better margin portfolio dynamics. So that is part of it.

The other actions are really sort of in line with what we've talked about shifting to a healthier portfolio, and we're comfortable that we leave those behind as we exit 2026. Again, moving towards that larger portfolio of customers, lower risk portfolio that really gives us confidence to build sustainably at that mid-teens growth.

And just on the tariffs, I think we are very confident that actually the shifting tariff landscape actually presents a real opportunity for Payoneer. And I think, it's driven by our global presence, a, and our ability to capture those shifting trade flows as Chinese sellers and Chinese merchants globalize their focus on distribution, they're increasingly turning to Payoneer as their financial operating system.

The uncertainty in 2025 with the stop-start nature of the tariffs caused sellers to have to try to stop and start, frankly. But now that we begin to see normalization, obviously, the Supreme Court last week creates a little bit more uncertainty. But I imagine heading into the April meeting that with President Trump and Chairman Xi, we should ultimately see clarity and certainty, which will be a tailwind for Payoneer long term.

And there are no further questions at this time. I will turn the call back over to John Caplan for closing remarks.

Thank you, and thank you, everybody, for joining us today and for your participation this morning. We delivered record results in 2025, and we're excited about the significant opportunities for us in '26 and beyond.

I want to thank our team globally for their hard work, commitment to our customers, to one another, to our shareholders, and we look forward to speaking with you again in May. Thanks, everybody.

This concludes today's call. Thank you all for joining, and you may now disconnect.

All right, everyone. I think we can get started. Good morning, everyone. My name is Jing Zhang. I work at the UBS Payments Equity research team, led by Tim Chiodo. I am thrilled to be here hosting a fireside chat with Payoneer. Allow me to introduce you, Bea Ordonez, Chief Financial Officer at Payoneer. Bea, thank you so much for joining us today.

Thank you for having us here. We're excited to be part of this conference.

Awesome. A lot to unpack for the recent development of Payoneer, but let's kick it off with a quick state of the land update for Q4 intra-quarter trends. Anything in particular you want to cut out related to macro or company specific trends? And then related any call out that's worth highlighting for the holiday shopping season?

Yes, happy to dive into that a little bit. So look, we noted in early November when we reported our Q3 results, that marketplace volume. So those are the volumes that come into our ecosystem marketplaces like Amazon, Walmart, Mercado Libre and so on and that are going to sellers that operate on our platform, our customers, we noted that those marketplace volumes were somewhat soft. We've seen similar-ish trends, I would say, in November. I think it's worth noting for these purposes, given that we're talking about that holiday season that we see marketplace volumes coming into our platform on a lag, right? So the sale takes place on Amazon or eBay or whatever marketplace it is, the seller doesn't get paid for a week or more.

So in November, we've seen sort of volumes more or less in line with October. We don't yet have good visibility into the true holiday spending season. We haven't seen that post Thanksgiving break holiday volumes begin to hit. In terms of the macro, look, we can certainly see, and we talk to our sellers in China and APAC and have a really strong franchise there. We see that they are adapting their behavior to the macro environment, adapting their behavior to the tariff environment. We've seen our sellers really broadening their distribution channels. We hosted just recently an event in Latin America for our China sellers with Mercado Libre, one of the big marketplaces in Latin America. So we see strong interest from those China sellers in looking to sell into markets more broadly and more globally.

We see those same sellers adapting their distribution channels and their logistics and operations, adapting their pricing and also looking at their portfolio of SKUs. So what we see in terms of that macro impact is those sellers really looking to pivot their strategy in various areas. More broadly in Payoneer, look, our B2B franchise, it's about 1/3 of our revenue. We actually saw acceleration in the volumes coming from B2B customers in the last couple of months. We expect the fourth quarter volume performance to be in the high teens. That's coming up from about 11% in Q3. And we also saw really strong travel spend.

Perhaps this is indicative of that K-shaped economy that we're reading so much about. So really strong travel spend coming through, and that's contributing to strong payout volumes in our enterprise business. So look, what I'd say about the holiday period, like I said, we don't have strong visibility into the back half, the true holiday period. We do see diverse performance across the marketplaces in our ecosystem, which I think is kind of interesting, right? So we have everyone from Amazon and Walmart to Etsy and eBay and sort of hundreds, frankly, of marketplace relationships. And we see that they don't all perform similarly in all instances, which I think is probably indicative of shifting consumer spending patterns, shifting seller behavior. So it's interesting to see really that diverse ecosystem in action.

Awesome. We really appreciate the detailed update. Next few questions I want to dive deeper into the cross-border B2B business. As we know, cross-border payments remains a complex space with lots of barriers of doing business, especially for SMBs. Can you walk us through some of the challenges around cross-border payments for cross-border B2B and related or more importantly, how does Payoneer use your financial stack to address these challenges?

No. Happy to do that. So look, as you say in your question, right, cross-border SMBs are remarkably complex. It was actually surprising to me when I joined Payoneer sort of close to 3 years ago. We do a lot of market research in the space. I'll share a couple of stats. Roughly 55% of SMBs that we've surveyed, and these are small SMBs, GMB anywhere from 10,000 a month to as much as 1 million. So that's still a pretty small company overall, 55% have global AR and AP needs, accounts receivable, accounts payable. 2/3 have entities, legal entities outside of their home jurisdictions. What does that mean? It means that relatively small companies are dealing with surprisingly complex treasury operations in effect.

Multiple currencies coming into their company, multiple accounts payable needs in multiple jurisdictions and countries. And the local infrastructure or the legacy financial infrastructure isn't well placed to solve for those. You're dealing with multiple financial institutions, many currencies and you don't have a lot of internal sophisticated systems. You're dealing with a correspondent banking system or rails that are slow, cumbersome, expensive. What does Payoneer do, we deliver a financial stack that allows those SMBs to effectively be paid, hold currencies and pay in multiple currencies across multiple trade routes, and they can do that within a single platform and within a single user interface.

Those are great insights. And you touched on currency management. So when we talk about cross-border payments, we can't skip the FX component. How do you deploy multicurrency management for your customers? What is the underlying strategy paying your utilizes to maximize your currency conversion monetization opportunity?

Yes. Look, 100%. It's one of the very real complexities that our customers are facing. And again, that user interface that we provide that platform of services allows a company, a small company to get paid in many currencies, to hold those currencies for as long as they wish within the platform and to pay their suppliers, their vendors, their employees, their contractors in multiple currencies and in different jurisdictions. And so in effect, the nearly 2 million customers that we serve can be truly local, both to the customers they have and to the suppliers and vendors that support them, and they can utilize local real-time payment rails to get paid and ultimately to pay those vendors.

So I'll give you an example because it's easier, I think, to connect to. So a seller on Amazon or Mercado Libre can get paid by that marketplace in that local market in the local currency. Perhaps that's U.S. dollars. They might incur bills in that same currency. They can hold those dollars and pay on those local rails. They can convert, they can use one of our AP products to do that. And we monetize along the way. It's just one aspect of our monetization strategy. We look to those FX transactions. We look to what currency pairs, the relative liquidity, the kind of product that the customer is using, whether they're using an FX lock contract, for example, or just a spot and we monetize accordingly, and it's really part of that broader monetization strategy.

Right, appreciate the insight. I do want to follow up on this fascinating FX topic and drill down to the product level question for Payoneer. So you recently announced the renewal of your MasterCard agreement to support multicurrency card offerings for cross-border AP needs. Can you break down the mechanics of offering a cross-border card product? And around the FX conversion monetization, how is it different from the current networks handling the FX piece?

Yes, it's a great question. Look, we've seen really strong momentum with our card product as part of that broader AP suite of products. We have about $6 billion in usage on that card product in the last 12 months. And in the third quarter, we grew that volume by 19%. And to your question, look, we have a multi-location, multicurrency issuance model. And that really allows our customers to pick the card and currency combination that best meets their needs, best fits their local needs and their cross-border needs. And in that sense, our card is a much better fit than a locally issued or a bank issued card for those customers because it allows them to avoid unnecessary and expensive FX conversions.

Again, that example I gave you I think is instructive you're a seller in, let's say, Vietnam, you get paid by our Amazon in dollars, you have logistics and advertising costs with Amazon in dollars. Our card allows you to avoid unnecessary friction and FX conversion along the way. While at the same time, and I think this is worth noting, what we see on that card is still a high percentage of cross-border usage, right? So as an example, our U.S. issued card we see between 30% and 40% cross-border usage on that card. That compares to a corporate card issuer in the U.S. who might see less than 10% on the average.

What does that mean for us? It means higher yield, higher interchange, better yield dynamics overall, and it allows us to offer a better value proposition to our customers in the form of rewards and cash back. So it's a powerful part of the model, and it's been a powerful part of how we continue to drive more value and really drive take rate expansion in our business.

Beautiful. I think we covered the cross-border business section quite well. But to sum it up, maybe a quick hitter on the competitive landscape and the differentiation you would like to highlight for Payoneer, whether it's in terms of products or geographic and your infrastructure differentiation that put you into a well-positioned competitive space?

Yes. No, for sure. Look, it's definitely a dynamic competitive landscape, right? In the marketplace business, we see strong competition predominantly out of China, well known names like Airwallex and WorldFirst more broadly in our B2B franchise, we're largely competing against local banks and legacy sort of financial players. And as you think of that competitive landscape, obviously, local banks aren't going to be able to deliver the multicurrency sort of functionality that these cross-border businesses need while global banks really aren't focused on that SMB space.

Similarly, as the payments landscape and the financial landscape evolves, we're seeing strong regional players pop up, neobanks and fintech. So it's a hyperdynamic environment. What do we think are the moats around their business? I think there's several, right? So one, it's our global scale and reach. We have customers in 190 countries and territories. And we service 7,000 trade routes that we can do that based on a really complex infrastructure of payment providers and financial institutions in our network. Over the years, we've built a highly resilient network that allows us to move upwards of $80 billion of volume through our ecosystem. We've built a really broad ecosystem of players in the e-com space and more broadly. So hundreds of marketplace relationships, as I've said. And we continue to add really important marketplace relationships we were just appointed the strategic payout provider or one of them for TikTok. That's an exciting win for us.

We recently added Best Buy as a marketplace that we serve. We've been ramping up with Alibaba, which is a marketplace that we added earlier in the year. We've been ramping up with Etsy, which is a marketplace that we won in early 2024. So a broad ecosystem of marketplaces, and we continue to add and grow that ecosystem. And again, 2 million customers operating on it. And then I would call out the license and the compliance infrastructure moat around the business. So we are licensed in multiple countries that allow us to operate and onboard customers in those countries, and we continue to add licenses to our ecosystem.

We're in the process of adding a license in India, also in Canada, in Israel. So we continue to expand that regulatory moat. And then I think the final point I would call out is, look, we're focused very much on the SMB and on solving those problems for the SMB, an area that is underserved by sort of traditional financial services, and we are local to the customers that we serve. So we have client success managers and support with boots on the ground in 35 countries. And those folks have real deep local market expertise that they use to support the customers in those regions.

Awesome. I appreciate you breaking down the competitive landscape, and we believe there's still a lot of untapped space in cross-border and in B2B for all the major players to continue penetrating.

I think that's right. I think that's right.

Yes. So moving on to a very exciting topic, which is your road map to profitable growth. Your recent performance to be well on track towards your medium-term targets despite a volatile macro. So a 2-part question. Can you expand on the strength of your business that helps you navigate the macro uncertainty? And then looking ahead, when we tie together your medium-term growth algo of mid-teens revenue growth, 25% adjusted EBITDA margin to a revenue growth acceleration to 20% plus beyond 2026. Can you help us unpack the trajectory embedded in these targets?

Yes. For sure. Look, we've been really pleased with how the business has performed with what has been, to your point, a really volatile macro environment overall. The business has performed in line with the medium-term targets that we set in, I think it was September 2023, mid-teens growth, adjusted EBITDA margins above 25%. And so the business, to your point, has been really resilient despite that volatile macro. I think I'd call out a few things. One, it's a diverse business, right? The sellers that we serve are diverse both in terms of the geographies where they sit and also in terms of the mix of goods and services, the mix of discretionary and nondiscretionary spend. So we see a diverse portfolio of business that makes us somewhat more resilient to some of the kind of more volatile aspects of the macro.

It's worth calling out a couple of sort of stats here. 40% of our revenue doesn't touch the U.S. at all, right? So we're in the e-com space. The U.S. is obviously a super important market in terms of an importer. 40% of our revenue doesn't touch the U.S. China has obviously been in the spotlight, given the tariff environment, roughly 30% to 35% of our revenue comes from China. And if we break that down further, roughly 2/3 of that is China to the U.S. and roughly 1/3 of that is China to rest of world. So again, a pretty diverse sort of mix of business there.

Double clicking a little bit more into that marketplace performance over the last kind of couple of quarters. Look, I think it's fair to say that marketplace volumes have likely been supported by some of the stockpiling of inventory or sort of pulling forward of inventory that we've all read about that sellers did in the earlier part of the year and, obviously, also by relatively stable spending behavior, right? So what we've seen to date despite a kind of mixed bag of economic indicators is pretty stable sort of overall spending behavior.

Shifting to just B2B for maybe a quick moment. Look, B2B business, as I've said, is about 1/3 of our core revenue. It's about 80% services, so much less exposed, obviously, to tariff pressures, and really focused on regions like LatAm and APAC that have been our fastest-growing regions for really a couple of years now. As I think of the drivers to revenue acceleration, I think what I would call out first and foremost, is the size of that addressable market, as you've said, in the B2B space, right? So 1/3 of our revenue today, growing more quickly than our marketplace business, our strategy is really to continue to penetrate that massive market. We've sized it as anywhere up to $6 trillion, continue to add customers where we're really sort of well positioned from a product market fit perspective, growing ARPU, which we've done for 5 consecutive quarters.

We've grown ARPU above 20%, cross-selling our value-added services, our checkout product, our workforce management product, our card product, driving better retention and again, really capturing sort of those -- that upmarket cohort where we're growing more quickly. So that's our focus. That's how we unlock growth. Obviously, the macro environment remains dynamic. Obviously, it's fair to say that, that marketplace business is more exposed to weaker U.S. consumer trends, but we're very focused on sort of driving that business forward into the long term.

Awesome. And part of the building blocks of your growth trajectory is your mix shift into upmarket, and you recently highlighted your $10,000-plus ICPs continue to drive volume growth as part of your strategy to mix shift into larger customers. And through that, we see benefits such as larger balances, corresponding to these customers and then, of course, greater adoption of product offerings. So how do these benefits reflect on your key financial metrics related to that more on a qualitative concept when you highlight these upmarket customers are using your platform as a bank replacement? What are the main differentiators that provide this customer stickiness? And is there any product attachment grade that you want to highlight?

Yes. No. I'm happy to touch on a few of those. Look, we highlighted again in November, and I think in various sort of calls along the way that we're continuing to evolve our strategy to move upmarket to larger customers, to customers with multiple entities with more complex needs. We've begun to share some data, so I'll share it here again. So customers who do more than 250,000 of GMV per month on our platform, that's 3 million a year make up roughly 30% of our core revenue. And in our B2B franchise, they make up about 50% of that revenue. And to your question, what we see with that cohort is higher attach rates in terms of the products they use, makes sense, right? They have more complex needs.

And we also see the best logo volume and net revenue retention of sort of our portfolio among that cohort. They're also likely more resilient to sort of those macro environment sort of factors than smaller customers. So all of that informs our strategy to continue to move our upmarket to solve for that complexity. And we're seeing it show up in those financial metrics as data points, as you noted, right, 3 quarters of consistent mid-teens growth, top line growth even against that volatile macro ARPU, as I said, ex float income up 22% in Q3 and up for 5 consecutive quarters by more than 20%, and we see more adoption of our high-value services.

So our workforce management, business. It's a business that we acquired about 1.5 years ago, more or less. We're continuing to cross-sell that into our customers. More adoption of our card products and that's really driving the take rate expansion that we're seeing in our business. Look, at the bank replacement, it's a really interesting sort of part of the value prop, right? And again, it goes to sort of the multicurrency needs of these customers and how underserved they are by sort of more traditional banks. We're seeing sort of more customers using us as a bank, holding funds on our platform for longer. We have $7 billion approximately in customer funds that sit on our funds -- sit on our platform, excuse me. That grew 17% the last 2 quarters. So we see increasingly that customers are using our platform as a pseudo bank, if you like, to really run their cross-border operations.

That's a really detailed answer on upmarket. And I think related to that, we can shift gear a little bit to SMB marketplaces. So I do want to touch on SMB. You highlighted mid-single-digit volume growth in SMB marketplaces in the recent quarters? More of an industry question and then related to Payoneer as a follow-up. So in the e-commerce landscape, we believe there has been a secular shift of SMBs being aggregated to platform marketplaces, a lot of those Payoneer workplace. So can you provide your perspective on the rate of change for individual SMBs being aggregated to the platforms and marketplaces. And for Payoneer specifically, how is the take rate optimization or expansion opportunities looking like going ahead from here with the SMB trends.

Right Yes. No, look, absolutely, it's a super interesting space, right? So I would say in terms of how saturated marketplaces are, it's -- we see differences both at the marketplace level and at the geo level, right? So for marketplaces with really well-established third-party distribution channels, Amazon is the most obvious example of that, right? It's pretty difficult for new SMBs to win the buy box, right, to penetrate into -- so you would say that those kind of marketplaces are pretty saturated. It takes a lot of upfront investment to win that buy box and to win sort of the ability to sell on marketplaces like Amazon. I think equally, though, given the tariff environment, we're likely to see that some of those marketplaces begin to diversify their channels to have less concentration risk frankly, versus more tariff exposed countries and to have a broader mix.

For marketplaces that are maybe earlier in their journey in terms of third-party distribution who are either expanding or deepening that third-party seller base, we do see opportunity for newer SMBs and established SMBs to enter. We saw that with some of the emerging marketplaces in China like Shein and Temu. And really, if I bring it back to sort of Payoneer, again, we're expanding our ecosystem of marketplaces. And one of the value props that we use in order to do that, is our ability to connect marketplaces who want to diversify or enter that third-party seller sort of ecosystem. We connect those marketplaces with high-quality sellers who are already operational and have strong businesses. And that's -- we call it our green channel offering. It represents a real sort of value proposition to both our sellers. We give them sort of access to demand and to marketplaces who want to get access to supply.

So Best Buy is a good recent example where we're serving those needs. So again, as I think of Payoneer and how we're leveraging sort of take rate expansion and geo diversification, we're leveraging both of those things, right? So we've been able to deliver revenue ex float of 15% this year. And we're focusing again on that upmarket segment, those higher GMV producing customers. We're driving strong growth in APAC and LatAm, where our take rate is about 2% to 3% versus the aggregate take rate, which is 1.2%, and we're driving strong adoption of our higher take rate products, right?

So our card product, we talked about it a little bit. It's about a 3% take rate, and we continue to see strong adoption, particularly among that 250-plus -- 250,000 of GMV plus. The adoption rate among those kind of customers is about 50%. So again, using all of those tools to really expand our ecosystem, drive value-added services, grow into higher take rate regions is what has allowed us to continue to drive growth.

Beautiful. Thank you, Bea. So we have a few minutes left and 2 important topics I do want to hit on. One is on your pricing philosophy. Payoneer recently has gone through a pricing philosophy change from a one-size fits model to a more adaptive pricing model, which makes a lot of sense. But can you walk us through the change of strategy? And how do you tie this change into product-specific pricing opportunities from here to drive more monetization opportunities.

Yes, happy to do that. So look, you're absolutely right. We've evolved our pricing strategy a fair bit. I joined coming up on 3 years ago. And really what we saw then within the portfolio with sort of elements of the portfolio with customers that had, frankly, upside-down economics where we really needed to reset how we looked at that portfolio of business. We also became over time, much more nuanced in terms of our by-product by route pricing. It had been to your question, pretty one-size-fits-all, and we really needed to ensure appropriate monetization of FX, more nuanced route-based pricing and so on. As I look out, really sort of '25 and forward and really '24 is when the work begun.

We've developed a much more segment-based pricing approach and one that is, frankly, much more sophisticated and dynamic which seeks to capture share of wallet, really grows with our customers, differentiates and bundle our products in a way that we think can drive more adoption overall. So it's gone from a one-size-fits-all with upside-down economics that really needed to reset to really sort of flexing now into a much more sophisticated and dynamic model that will grow with those larger customers over time. Perfect.

We have about a minute left in what's a better topic to end this fireside chat and talking about stablecoin for cross-border. So our team has done some work on stablecoin, and we believe it is important to have a healthy respect for stablecoin adoption, particularly given the cross-border angle of this payment method compared to other emerging methods that could be more domestic focused, like account-to-account or buy now, pay later. So on stablecoins, can you share Payoneer strategy around adoption and then very excitingly, the upcoming stablecoin wallet functionality in 2026. Maybe tell us more about that.

Yes. Look, we're actually really excited in the stablecoin space. We see it as part of a broader innovation in cross-border payments. You see it in local payment schemes in like Brazil and India that you see the super mobile-first, real-time scheme seeing a ton of adoption and stablecoin is another sort of payment rail and another way of storing value. And we view it in that against that lens, right? So as we look to sort of the ecosystem that we built, it's really all around orchestrating and connecting those different payment schemes, those different stores of values and currencies and doing it in a way that is seamless to the customer and removes triction. So that's where we see the opportunity for Payoneer, right?

We're able to really seamlessly integrate our network of payout providers, our network of money movement rails and provide that seamless integration to stablecoins more broadly. And we're excited to be launching a stablecoin wallet functionality in early 2026, and think that we can really solve for that last mile challenge that exists in really translating the promise of stablecoins, that today is largely within sort of a crypto-native ecosystem into something that has real-world utility by providing the ability for customers who are getting paid in stablecoin to ultimately off-ramp it to their local economies, to their local use cases to whatever payment rail, frankly, they want to utilize to operate their business.

That's awesome. We really, really appreciate all the detailed answers. And then on behalf of the UBS team, Tim, our lead analyst on our team and then the entire UBS Equity Research crew, thank you so much for joining us today.

Thank you. It was really great to talk to you.

Thank you so much.

Thanks.

Ladies and gentlemen, thank you for standing by. My name is Colby, and I will be your conference operator today. At this time, I'd like to welcome you to the Payoneer Third Quarter 2025 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Michelle Wang. Please go ahead.

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Thank you, operator. With me on today's call are Payoneer's Chief Executive Officer, John Caplan; 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 the 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 materials, which are available on our website.

Additionally, please note we have 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.

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Good morning, and welcome to Payoneer's Q3 2025 earnings call. Payoneer is a global payments and financial operating platform, built on durable infrastructure. Together, our technology, strategic relationships, and regulatory framework form the moat we've built over 20 years. Our mission is straightforward. We remove the friction between an entrepreneur's ambition and their achievement by delivering a secure, easy-to-use and trusted financial platform built for global commerce.

Our strong Q3 and year-to-date results reflect consistent execution against our strategic priorities in a massive, fragmented cross-border payments market. Our results give us confidence in our long-term opportunity even as we navigate short-term volatility.

We are evolving our business to be on offense, as global trade evolves, supply chains adapt, and as innovations in money movement continue to gain momentum. I'll share our progress, where we're investing and how we're positioning Payoneer to win. Bea will then walk you through our financials and increase guidance for 2025.

In the first quarter of 2023, when I became sole CEO, and Bea joined as CFO, Payoneer generated mid-single digit revenue growth ex-interest. Adjusted EBITDA ex-interest was negative. Our priority at the time as a new management team was on reigniting growth and resetting the business for durable profitability. 2.5 years later, we have delivered record Q3 results and are raising our 2025 guidance.

Q3 revenue ex-interest was up 15%, and we have delivered 7 consecutive quarters of mid-teens or greater growth, in line with or exceeding our stated targets. We've delivered 6 consecutive quarters of positive adjusted EBITDA ex-interest, including $12 million in Q3.

Our total adjusted EBITDA margin was north of 25% in 2024, as well as in the first 3 quarters of 2025. The strength and consistency of our results in an evolving macro backdrop underscores our successful execution, as we deliver for customers.

So a few highlights. First, improved unit economics and higher quality customer portfolio. We are moving from casting a wide net to prioritizing quality. We define quality as larger, more complex customers with scale, ambition, and global reach. And we are focusing on industries and countries where we have the strongest product market fit.

We are exiting customers that don't meet our risk tolerance or desired economics. We are driving meaningful ARPU growth, as we move upmarket, and as we deliver segment-specific pricing and product bundles.

ARPU has increased 65% since Q1 of 2023 from $286 to over $470. In our long-tail segment, we've raised prices and tightened product access and the cohort is now profitable. We are focusing our acquisition efforts, service model, and product roadmap to capture and serve larger customers, especially multi-entity customers.

ICPs receiving over $250,000 a month in volume, represented nearly 30% of our Q3 revenue ex-interest, and are growing significantly faster than the rest of the customer portfolio. The higher quality of our customer portfolio is evident in our financial results.

You'll note that total ICP counts have been roughly flat year-over-year, while we have delivered consistent mid-teens revenue growth ex-interest. Our focus on larger ICPs has driven higher average volume per ICP. We have improved our transaction costs and profitability dynamics even as our business expands to serve more complex use cases.

Our diversified business mix and B2B expansion continue to drive growth. B2B revenue grew 27% in Q3, and now represents roughly 30% of revenue ex-interest, up from 20% in Q1 2023. Our platform solves for the complex AR and AP needs of global businesses. Our AP capabilities are built on infrastructure, licenses and compliance, trusted by large global enterprise partners, and we are making these capabilities available to global SMBs.

In B2B, we are also focusing our acquisition efforts on larger customers. More than 50% of B2B revenue came from ICPs doing more than $250,000 per month in volume, and the average invoice size in our B2B franchise increased mid-teens percentage year-over-year.

Third, our customers have shown that the ability to hold balances across currencies in their Payoneer account is a core Payoneer value proposition. And as such, the interest we earn on those balances represent a core component of our economics.

Ending Q3, customers held over $7 billion on our platform, up 17% year-over-year for the second straight quarter. This demonstrates both the trust our customers have in our platform, and the accounts payable utilities that we provide. And together, this drives our revenue.

We monetize customer funds through interest income and transaction fees as funds leave the Payoneer account, either when a customer withdraws to their local bank account or spends via Payoneer's AP products. Customer funds have grown in excess of volume year-to-date and represent substantial future revenue as customers deploy their funds. We have protected a substantial portion of our interest income over the next 3 years through hedging programs, which Bea will discuss in more detail.

Our customers turn to Payoneer as they grow their businesses globally, and we are investing in our platform to deliver more value for them. We continue to drive multiproduct adoption as we increase the utility of the Payoneer account and move away from being "a toll booth on the money highway."

Over 50% of Payoneer account spend is now coming from customers who use 3 or more AP products, up 200 basis points year-over-year. Customers are increasingly using Payoneer as their central account to manage their business network payments and shifting to our card to pay for cross-border expenses.

We are expanding the Payoneer account ecosystem and the services we provide to customers through strategic partnerships. Here's one example. We are partnering with a third-party lender to expand access to capital for our customers in a capital-efficient and tech-enabled way.

On stablecoins and blockchain, the rails are evolving, and we are evolving our platform to capture the opportunity. Just as when Payoneer started, global businesses need multicurrency wallets and interoperability between different currencies and stores of value.

Our strategy is to orchestrate across payment schemes and rails, so cross-border businesses can focus on growth, without compromising on safety or convenience. We are making steady progress on these efforts. We are now using Citi's on-chain money movement capabilities to move hundreds of millions of dollars quarterly, allowing us to manage liquidity even more efficiently. For customers, we are working on offering stablecoin wallet functionality in 2026.

In summary, what you can expect from us going forward? One, relentless focus on profitable growth, guided by a refined portfolio segmentation across region, vertical, use case, product and unit economics. We do what's best for the long-term health of the business every single day; Two, expansion of core operating margin as we focus on unlocking the meaningful leverage we see in our business over the long term; Three, prudent capital allocation as we fund innovation, pursue selective M&A and return capital to shareholders via repurchases. We have nearly $500 million of cash and generated roughly $50 million of operating cash flow in Q3.

In July, our Board approved a $300 million buyback, and we are executing with intent. We repurchased $45 million of shares in Q3. I'm proud of the progress the global Payoneer team has made this quarter and year-to-date to deliver for our customers. We remain confident in the secular drivers supporting our long-term opportunity, and believe our platform and competitive moat position us well to generate long-term, durable, profitable growth.

I'll now hand it over to Bea to walk through the numbers and our increased guidance for 2025.

Thank you, John, and thank you to everyone for joining us. Payoneer delivered another strong quarter with record quarterly revenue, 15% revenue growth, excluding interest income, and adjusted EBITDA ahead of our medium-term targets.

In a dynamic global macroenvironment, we grew volumes, expanded ARPU, increased our SMB take rate and improved our core business profitability. We are increasing our full year 2025 guidance and are well positioned to capture the significant long-term opportunity ahead of us.

Now turning to our third quarter results. We delivered revenue of $271 million, up 9% year-over-year and our highest ever quarterly revenue. Revenue excluding interest income reached $211 million, also a quarterly record and up 15% year-over-year.

Our strong growth was driven by our B2B franchise, increasing adoption of our high-value products and services such as Checkout and Card and the ongoing implementation of our strategic pricing and fee initiatives.

ARPU increased 15% in the quarter, and excluding interest income, was up 22%. Since Q1 2023, we had increased total ARPU by 65%. This is a direct result of our multifaceted growth strategy to move upmarket, drive cross-sell of our higher-yielding AP products, prioritize growth in our higher take rate geographies, increase the value of our SMB grade services by expanding our financial stack, and refine our pricing and monetization strategies to capture the value we provide to our customers.

Total volume was up 9% year-over-year. SMB volume grew 6% year-over-year with volume from SMBs that sell on marketplaces up 4%. Volume from B2B SMBs up 11% and Checkout volume up 46%, all consistent with the outlook we provided during our second quarter call in August.

Enterprise payouts volume increased 19% year-over-year, above our expectations, primarily due to a strong demand in key travel routes we serve and the onboarding of a new enterprise customer.

Our Q3 take rate of 121 basis points was roughly flat on a year-over-year basis, despite a $6 million headwind from lower interest income. We continue to drive significant expansion in our SMB customer take rate, which increased 12 basis points over the prior year period, and 1 basis point sequentially.

Customer funds held by Payoneer increased 17% year-over-year to $7.1 billion, partially offsetting the impact of lower rates on our interest income revenue. We generated interest income of $60 million in the quarter.

Customer balances reflect the trust our customers place in our platform and the value they place on the utility we provide. They also represent future revenues that will be realized as customers utilize our AP products.

The Payoneer account gives customers the ability to manage balances in multiple currencies and to choose how, when, and in which currencies to use those balances. These are important aspects of the value we provide to customers and our interest income revenue is a direct outcome of this.

As of September 30, we had reduced our sensitivity to fluctuations in short-term interest rates in relation to approximately $3.7 billion or roughly 52% 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%.

Through these programs, we had secured approximately $120 million of 2026 interest income regardless of moves in short-term interest rates, approximately $80 million to $85 million in 2027 and 2028 and approximately $60 million in 2029. Additional amounts will be locked in based on ongoing reinvestment as the portfolio runs off, and these divisions provide a durable and sustainable revenue stream.

We continue to expect that customer balances should broadly grow in line with volumes overtime and that our unhedged balances will predominantly be subject to prevailing short-term interest rates, mainly in the U.S. We will continue to actively manage our hedging programs, while always prioritizing liquidity and security.

Total operating expenses of $235 million increased 10%, primarily driven by increases in labor-related expenses, higher transaction costs, incentives and other spend designed to drive card adoption and usage and the effect of our Easylink acquisition in China and our workforce management acquisition.

Transaction costs of $42 million increased 12%, the lower growth in revenue, excluding interest income. Transaction costs represented 15.7% of revenue, an increase of approximately 40 basis points from the prior year period, primarily due to lower interest income.

Excluding interest income, transaction costs represented 20.1% of revenue, a decrease of around 70 basis points versus that prior year period, despite mix shift towards higher take rate, higher transaction cost products, driven by improved operational efficiency.

We see transaction costs as a key aspect of our opportunity to continue to unlock operating leverage. When excluding interest income, transaction costs have been roughly stable over the past few years at approximately 20% of revenue, even as we shift towards higher-yielding products.

We are optimizing our transaction cost economics by using our scale to negotiate with our partners by deepening our strategic relationships and partnerships, including those with Stripe and with Mastercard announced in August, by improving the efficiency of our money movement and Treasury operations. And over time, we expect through our ongoing blockchain-related initiatives.

As we continue to grow and scale our business, we are confident that the durable, highly profitable nature of our transaction-based revenues should enable us to continue expanding our core business profitability.

Sales and marketing expense increased $7 million or 14%, primarily due to higher labor-related costs and increased incentives related to our Card offering. G&A expense increased $6 million or 22%, primarily due to higher labor-related costs, including from our workforce management and Easylink acquisition, higher facilities costs related to our offices in Israel and higher legal and consulting fees, including relating to our license application in India.

R&D expense increased $5 million or 15%, primarily due to higher labor-related costs, while other operating expense decreased by $5 million or 10%, primarily due to lower IT and communication costs.

Adjusted EBITDA was $71 million, representing a 26% adjusted EBITDA margin in the quarter. We generated $12 million of adjusted EBITDA, excluding interest income. And year-to-date, we have generated approximately $27 million of adjusted EBITDA, excluding interest income, nearly double the amount we generated on a full year basis for 2024.

We are unlocking leverage through growth, managing our transaction costs and being disciplined with OpEx. We believe we have a significant opportunity to continue to increase the profitability of our business.

Net income was $14 million compared to $42 million in the third quarter of last year. While income before income taxes grew 38% year-over-year, net income in the prior year period included a $19 million income tax benefit, largely derived from a federal tax deduction for 2024 and for the prior year for income earned from foreign customers, and lower foreign tax expense related to stock-based compensation.

Basic and diluted earnings per share were both $0.04, down from basic earnings of $0.12 and diluted earnings of $0.11 per share in the prior year period, largely due to the impact in the prior year period of the discrete income tax benefit just noted.

We ended the quarter with cash and cash equivalents of $479 million. Our operating cash flows continue to significantly exceed net income, allowing us to continue to invest for profitable growth and to return capital to shareholders.

During the quarter, we repurchased approximately 45 million of shares at a weighted average price of $6.73 and as of September 30, had approximately $273 million remaining on our current share repurchase authorization.

Turning now to our increased 2025 guidance. We expect total revenue between $1,050 million and $1,070 million, an increase of $10 million at the midpoint relative to the guidance we issued in August. This includes interest income of $235 million and $815 million to $835 million of revenue, excluding interest income. We are increasing our expectations for interest income by $10 million to reflect robust growth in customer funds.

In 2025, customer funds have grown significantly in excess of volume and above our expectations at 11% year-over-year in Q1 and 17% for both Q2 and Q3, reflecting the trust and value our customers place in our platform and partially offsetting the impact of lower interest rates.

We are reiterating our expectations for revenue, excluding interest income of $815 million to $835 million. This reflects the current macro and trade environment and our view of the range of outcomes that this environment could imply, especially as we enter the holiday spending season.

For the fourth quarter, we expect marketplace volumes to be flat to up mid-single digits and B2B volumes to grow mid-teens. For the full year, we expect transaction costs as a percentage of revenue to be approximately 16%, a 50 basis point reduction compared to our prior guide, and a 200 basis point reduction versus the guidance we provided at the beginning of the year. We expect 2025 adjusted OpEx, which represents our guidance for revenue less adjusted EBITDA and transaction cost of approximately $618 million at the midpoint of our adjusted EBITDA guidance range.

We are raising our expectations for adjusted EBITDA to be between $270 million and $275 million, representing a 26% margin at the midpoint. While we see a broad range of potential outcomes on the top line, we are focused on what we can control. We expect to continue to deliver growing profitability through optimizing our transaction cost economics and managing OpEx. Excluding interest income, we expect adjusted EBITDA of $38 million at the midpoint, almost 3x the amount generated in 2024.

We are making meaningful progress in evolving our business to capture the significant long-term growth opportunity. Behind our strong headline results is a healthier, higher quality and more durable customer portfolio. We are capturing and growing our business with larger customers, improving our risk profile, unlocking robust operating leverage, making strategic investments, generating substantial cash flow and positioning the company to create long-term shareholder value.

We are now happy to answer any questions you may have. Operator, please open the line.

[Operator Instructions] Your first question comes from Mayank Tandon from Needham & Company.

Congrats on the quarter. I know you're not going to probably give guidance for '26. But just as you think about the business momentum, John and Bea, I was curious if you could share any sort of insight into what your expectations might be for the sustainability of some of the key metrics around volume, take rate? And also if you could remind us of any sort of seasonal impact that we should factor in as we lay out our quarters for 2026?

Sure, Mayank. So thanks for the question. Look, I think what we were looking to convey in the prepared remarks is really exactly to your point, the sustainability and the durability of the growth we're creating. The business performed very well in the third quarter, very much in line with the commentary that we provided in August.

Our full year guidance, which we're raising, as we said, we're raising both revenue and adjusted EBITDA guidance is in line with the medium-term targets we communicated back in 2023, even with what I think everyone would acknowledge is a pretty dynamic macro.

So overall, business is performing really well, and performing really well in a sustainable way, right? ARPU has been consistently growing above 20%, for I think, now 5 quarters. We're continuing to deliver SMB take rate expansion from that multifaceted strategy that we outlined. We're really building, in our view, healthier, more durable and sustainable customer portfolio, and it's showing up in the metrics.

So overall, look, to your point, we're not giving guidance out to next year, but we see the business really performing well. We see a resilient business, a healthier business with a lot of momentum and opportunity in front of us.

Yes. I would just add to Bea's remarks that the strength in the portfolio as we move upmarket is evident. Those $250,000 a month customers that are growing exceptionally well, 30% of our Q3 revenue overall, 50% of the B2B revenue and the strength of that portfolio and the opportunity there is really bold. And we're going after it, we're focused on it, we believe we have the product for those customers. And as the shape of the portfolio moves upmarket, the profitability dynamics are unlocked in our business. So we feel really good about where we are.

Got it. That's very helpful. And maybe if I could just follow up with a question, John, around sort of your investments in sales capacity. And I ask that in terms of as you diversify the business overtime from China into other markets, as you grow ICPs, as you look to cross-sell, upsell into your base, how is your go-to-market strategy changing, if at all, if you could share any insights into your investments in sales and your overall approach to attacking the market?

Yes. That's a great question and an exciting part of the evolution of Payoneer. The majority of our customers are acquired organically, as you know, right? They come through the application or through our website. And if we get millions of applications annually, so we sift through those to find lookalikes of our best customers. And then alongside of that, are partnerships we're putting in place with resellers, affiliates and others around the globe in the key hubs of activity for the multi-entity entrepreneurs of the globe. So this is, I think, a very exciting engine of our growth looking forward, because it helps us bring in bigger, higher-quality customers.

And when you look deep into our portfolio, the volume retention, net revenue retention data of our largest customers is the best in the portfolio. And so moving to focus on acquiring those customers in the hubs around the world where they exist, gives us, I think, a leg up in the market. And we have obviously select paid acquisition and lead generation underway, but we are a loved and well-known brand that's trusted by partners. The brand scores we get are exceptionally good.

And when we host events, hundreds or thousands of people come to learn about what Payoneer has to offer and why we're helping people bridge their ambition to their achievement. So we feel good about the go-to-market effort. We're focused on not total number of customers, but the quality of customers.

And we're moving the portfolio deliberately upmarket. You saw in our results the 10,000-plus customers, revenue was up 18%. Volume was up 7% despite the count coming down a bit. And that is deliberate effort on our part as we monetize intra-network volumes. We're $4 million a quarter of monetization there, which is the beginning of something we think very exciting and exit customers that don't fit our profitability and growth targets.

Your next question comes from the line of Sanjay Sakhrani with KBW.

John, Bea you guys talked about a dynamic macro. Maybe you could just drill down a little bit on what you're seeing with the SMBs on your platform? And how they're reacting to all these day-to-day fluctuations in policy?

Yes. Thanks, Sanjay, for the question. Look, I think in terms of the Q3 performance of the business, which as we said, has been robust, it's very much in line not only with the medium-term targets, but with the commentary we shared back in August. Volume consistent with that commentary, revenue performance consistent with that commentary.

It's obviously difficult to quantify sort of what the tariff impact is and all of those moving parts from the volatile nature of the tariffs to how timing around shipping and stocking can impact. But we're likely seeing an impact on marketplace volumes from tariffs. Certainly, our discussions with our customers in China suggests that there's an impact. Obviously, those customers are resilient, as we pointed out in the past, and they're deploying all manner of strategies to really sort of continue to grow their business, whether that's logistic strategies, globalization strategies, pricing and so on. So there are always many factors.

Look, in October, we saw what I would call a modest softening in volumes versus our expectations. Obviously, October is not at all a good proxy for the e-com heavy, China heavy e-com season that's coming in November and December. Golden Week is in October. Obviously, that e-com holiday spending season is both China heavy and goods heavy. So we're seeing those tariff impacts get absorbed through the portfolio. It's in line, as I say, with sort of what we expected in Q3. And the guidance we've laid out for Q4 really sort of incorporates that broad range of outcomes from those potential sort of shifts and dislocations that we're seeing sort of, frankly, across trade routes and supply routes and so on.

Okay. Helpful. And then, John, you talked about stablecoins and its availability on your platform in 2026. I'm just curious, like are your customers asking you for this technology? And maybe you could just talk a little bit about the evolution of your revenue model to the extent there is any if you provide this technology?

Sure. I'll add some dimension and then Bea, please jump in. We see stablecoins as a really interesting long-term opportunity for Payoneer, and we're exploring it with intent. And similar to how we built the financial stack on our network of bank and payment providers over the last 20 years to facilitate the movement of money around the world, we really believe that tokenized assets and the distributed ledger technology could be another component of what we've already put in place and in the market. It's really the core essence of the value prop we provide to those entrepreneurs, is being able to operate in whatever currency they want to use to run their business.

But we all know that you can't buy a hammer in Ho Chi Minh City with an Argentinian peso today. So we need the world -- for the stablecoin technology and those rails to be turned into mainstream B2B use cases, companies like Payoneer are purpose-built to turn tradable assets into commercial assets. And we feel very excited about what our role in that can be. So we expect adoption corridors, use corridors, specific use cases to develop as our customers explore the impact in their own businesses and how it can both remove payment friction and create opportunity for them.

If we look at over 5 years, I'm excited about what that traction can mean and where Payoneer sits. I think people misunderstand how valuable the Payoneer platform is to turning the promise of stablecoins into a reality, and we are in a very disciplined, organized way pursuing it. But Bea, if you'd like to add, go ahead.

Yes. I mean I think yes to all of that, I'd add a couple of sort of additional points. In terms of adoption, use case demand, I think there's sort of multiple lenses. One of them is certainly sort of a regional lens, as we think of regions that have potentially high inflation and stability locally. And who today use Payoneer and other such platforms to basically dollarize, right, to hold dollars as a hedge against local instability. The ability to hold dollars in a different or tokenized asset or in a different store of value is, by definition, valuable to them as well. So I think the stablecoin opportunity dovetails really nicely with the core utility or one of the core utilities that we already provide.

And against the broader payment scheme sort of landscape as we see really more of a fragmented payment scheme, regional players, regional payment schemes coming up, increasingly mobile-first local schemes. Really, the name of the game in the cross-border space is to neatly, cleanly and efficiently orchestrate across all of those payment schemes, and stores of value like stablecoin are one such scheme, right?

So we view it as very sort of tightly coupled to our money movement evolution and strategy overall. And we're seeing sort of use cases develop as customers, to John's point, really are able to explore the real-time benefits and programmability potentially around their own use cases and business in the corridors where it begins to become available.

Your next question comes from the line of Trevor Williams with Jefferies.

This is [ Ryan ] on for Trevor. Just wanted to ask on take rate. It looks like that's been pretty healthy here. Just wanted to see what you guys think about the sustainability of that take rate expansion, kind of break down what the core drivers have been in that strength.

Yes. Thanks for the question, Ryan. Look, we appreciate the call out, right. I think of the many metrics where we're seeing really sustainable performance, it's in the take rate dynamics, right. We've demonstrated the ability to continue to drive that take rate expansion in our SMB business. And excluding interest income, we've grown it by 12 basis points in the quarter, right. And there are numerous levers within that and numerous inputs. One is certainly the growth of our B2B business, which is outpacing the growth of the business as a whole. As John pointed out in his prepared remarks, that B2B revenue is about 1/3 now of our core revenue, and it grew 27%, right. So that's driving some of that uplift.

Beyond that, product adoption, right, as we continue to drive adoption of our Card product, of Checkout, of our invoicing service within B2B of our workforce management product, that's also providing uplift. And then ultimately, also pricing, right, as we continue to refine and optimize our pricing strategy. So we're seeing take rate expansion across our business lines from our marketplace business to our B2B business.

In B2B, look, we'll see some moderating of that increase going into Q4 as we lap workforce management, but still comfortably ahead of that volume across the book and really demonstrating that expanding value that we're providing to our customers and the take rate expansion that goes along with that.

Understood. That all makes sense. And then just as a follow-up on B2B volume. I think the prior expectation had been to get to high teens B2B volume growth by 4Q. Just wanted to see if that was still the expectation. I mean, if so, I guess, what is the level of visibility? And what are the main drivers into that acceleration into 4Q?

Thanks for the question. That is still the expectation. So the B2B business, as I said, performed in line in Q3. We grew volume 11%. We grew revenue 27%. Coming into the back half of the year, we expect that volume to increase mid-teens, and we expect the revenue to increase somewhere between 20% and 25%. So for the full year, the B2B business is going to generate approximately 25% year-over-year revenue growth. That's really robust growth in a sustainable and growing part of our business.

We have good visibility into that business. We obviously are, as John has noted, really moving upmarket and bringing in, acquiring and serving larger customers with more predictable business models. So we feel good about how that business is performing. We're making investments in that business, both in the go-to-market motions that serve it, as John has noted, with partners and affiliates, in the product roadmap that really sort of delivers that SMB-grade experience. And in the service model to make sure that we are driving the improving retention that we're seeing. So we feel really good about that business, it's moving upmarket, it's healthier, it's more profitable, and it's growing really nicely.

Your next question comes from Nate Svensson with Deutsche Bank.

Really nice to see the continued progress here. I guess, first, I wanted to ask on the growth in customer funds. Obviously, been really impressive, 2 quarters of 17% growth. And I think you've been pretty clear that this is a core part of the Payoneer value proposition. It sounded like going forward, you think balances will grow in line with overall volumes, but they've clearly been growing above that recently. So I'm maybe just wondering how much more room we have to run in this environment where maybe balances can continue to grow faster than volumes?

And then qualitatively, I know you talked about things like trust in the platform, but maybe you can talk more specifically about what you're doing to drive or incentivize clients to keep more funds on the platform?

Yes. I appreciate the question, Nate. So look, historically, we've certainly called out that our expectation over sort of a long enough time horizon is that we're able to grow balances in line with volume into the platform. We've seen outperformance this year. There's likely many factors from some of that macro volatility, especially around the China corridors as well as relative weakness and volatility in the dollar that can impact kind of near-term usage behavior. So I think we're seeing sort of some of that in the kind of cyclicality that you see.

Obviously, we love seeing that number grow, right, not only because it demonstrates to your point, the trust, but because it is future revenues in effect when the customers utilize those balances using one of our AP products, that's revenue that comes to us in future periods, future quarters. So we like to see this growth and obviously, we monetize it in the short term.

What are we doing? Look, really, it's very much aligned to some of the themes we've shared. One, as we move upmarket and provide more utility, customers are increasingly using us as their sort of broad-based bank replacement for want of a better word, to hold multiple currencies across the sort of multiple entities to manage that. And they're keeping their funds as we see greater adoption of those sorts of products. They're keeping their funds on the platform for longer, and we will tend to see larger balances, not only corresponding to those larger customers, but as we see greater adoption of those products.

So overall, the inputs to that growing balance in addition to volume are moving upmarket towards those larger customers and adding more utility such that those customers really keep balances in order to utilize the cross-border AP capabilities that we're providing.

Yes, I think Bea absolutely nailed it, but I would just add one point, which is that the perception of Payoneer has been it's an AR company. We're an AR company. And I think that's wrong. We are as much an AP company as we are an AR company today. We've made that transition really effectively.

The Card spend growing so nicely, the AP usage of -- the product attach of multiple AP products with our largest customers. And that pulls through, we see the net revenue retention of those customers really is exceptional.

And we are seeing customers take funds out of their local banks to put them into their Payoneer account, so that they can use our AP products. And that -- as that continues, the correlation between AR volume and total balances become -- spreads even wider. And so we would anticipate overtime that as we continue to drive excellent AP products and great cross-sell of those products, even more balanced activity.

Super detail. I really appreciate that. For the follow-up, I did want to ask about trends in the Checkout business and maybe some future outlook there. Obviously, still growing really nicely in the high 40s, I think was in line with what you told us last quarter.

Obviously, you couldn't sustain the levels of growth you had been seeing indefinitely, but would love to hear about maybe some of the tailwinds or headwinds in that business over the last 90 days. And then I think moving forward, I think historically, that business had maybe been more focused on sellers in particular geographies like Hong Kong. So I was just hoping you could talk about the growth or strategic initiatives you have lined up to expand that business in the future, whether that's internal investments, right partnership, anything else?

Yes. So let's -- first of all, thank you for asking. I think the Checkout team has done an awesome job at Payoneer, and so really proud of their efforts. We think that as Checkout transitions, we announced the Stripe partnership as we transition from our owned and operated solution to the partnership we have with Stripe, it will drive much better cost and yield dynamics in this business.

But at the same time, top line growth will moderate in Q4 and into 2026 as we migrate there. What's most important about the Checkout business is that we provide a comprehensive solution for our customers for all of their GMV that they're doing globally, either with selling on a marketplace, selling B2B or selling direct-to-consumer, they're able to aggregate that AR into their Payoneer account and then obviously use the AP products that we were just sharing and so excited about.

We have some good traction with APAC sellers. particularly in India and South Korea following the migration to Stripe, which really validates the core thesis we have, which was to switch to a great partner with solid technology that lets us globalize this franchise. And as you note, the growth rates year-over-year may be more modest, but the actual dollars in revenue will be more significant as we look out.

Your next question comes from Darrin Peller with Wolfe Research.

This is Daniel Krebs on for Darrin Peller. I wanted to ask about the focus on larger ICPs, and we're seeing ARPU that is rising very nicely. But I'm still struggling a bit to reconcile that goal with the large ICP customer growth numbers in 2025. And maybe a more direct way to ask this is, what percentage of those 47,000 large ICPs are not high quality and a focus for you?

Yes. Great question, and thanks for asking. I think that if you look at the 10,000 plus cohort, let's actually go back. We introduced the ICP framework a couple of years ago, largely to dimensionalize the size of the portfolio at the long tail that was unprofitable. And we are pleased that the long tail of Payoneer is solidly profitable now.

And it was a definition that was, let's call it a broad pain push way of looking at customers, very small, sort of small and bigger. But it is less relevant a way to look at Payoneer overall and certainly how we're operating the business going forward.

We are very focused on retaining, serving, adding high-value customers that are multi-entity that have the profitability and usage dynamics that mirrors our best customers, and that's where we're shifting our focus pretty intently. And we've discussed this a number of times as we've talked about the shape of the portfolio, how valuable it is for us to have product market fit at the top end. Those $250,000 a month customers are 30% of Q3 revenue, 50% of B2B revenue, more volume, more AP usage, and the best net revenue retention we have.

Specifically, I would anticipate that 10,000-plus ICP count continues to decline as we scrub the portfolio, manage the -- who we add and who we retain and monetize the intra-network payments. The $4 million a quarter for those intra-network payments is new disclosure, and I think an exciting statement about how we are really fitting our pricing and our monetization to the needs of our customers and the profitability dynamics that we have. So we will continue to drive our focus upmarket, because that's the best way to deliver the profitable growth we're committed to.

Your next question comes from Pete Christiansen with Citi.

Great to see rising solutions engagement, take rate expansion, and mix shift drive strong incremental margin gains quarter-over-quarter. Nice results there.

I had 2 questions. First, I was wondering if you can give us an update on the Skuad acquisition you did last year and how that -- how you see that scaling over the platform and potentially driving new areas -- new vectors of growth?

And then my second question back on the stablecoin topic, we couldn't agree with you more multicurrency wallet providers are certainly key enablers of stablecoins. Just curious from what you're seeing on the infrastructure side, whether it be perhaps things like the G7 stablecoin that's been proposed, SWIFT potentially working on so I think circles, Arc blockchain development. Just wondering if you're seeing any of these infrastructure developments as key events that could help improve or drive demand for Payoneer's users to increasingly adopt stablecoins?

Sounds good. I'll take the workforce management. Bea will grab the stablecoin. So in workforce management, it's really nice to see that secular tailwind that are driving the employer of record solution growth, right. The more and more companies around the world are recognizing the 7.5 billion people on the planet, let's employ the best at the best price, and use companies like Payoneer to manage the complexity of the compliance heavy HR landscape to handle both managing those people and getting them paid.

So our growth is really solid there. We're pleased with the progress. And obviously, we've seen the news around H-1B visas. And I think that bodes really well as it relates to the -- our EOR solution and what U.S. businesses want to do as they globalize their workforces.

And then when you think about our workforce management business, it really expands our ecosystem of AP capabilities and broadens the core B2B value prop. So it's a small franchise for us, but it's growing really nicely. The contribution is solid. The team is great and full of entrepreneurs that are hell bent on grabbing market share there. So we feel really good about the traction as we continue to step into that space in a deliberate focused way that's delivering take rate expansion in our B2B business, solid retention for us and an additional value prop for us to offer our customers. It's the early days, but these are good days for that business.

Yes. And look, on the stablecoin, look, it's super exciting, right? We see all of the items you mentioned, lots of innovation in the space. I think the regulatory clarity that the GENIUS Act brought was really helpful, obviously, in that sense, has provided real tailwinds to some of this innovation.

And I think we can expect to see a broad range of players in the space, both innovating around the infrastructure and beginning to integrate elements of that infrastructure into legacy financial systems, into other payment schemes, into payment orchestration platforms in ways small and big, right. We've done some of that already today. We've integrated some of Citibank's blockchain-based tokenized deposit technology to really enable some of those treasury management used cases that can benefit a business like ours, right.

So we're going to continue to innovate in that space, as John said in his prepared remarks, really evolving our money movement capabilities to provide that used case or to provide those capabilities to our customers. And ultimately, we see the value that a platform like ours brings to this is really in seamlessly connecting those digital currencies, those stores of value with the legacy payment rails, the legacy fiat rails and allowing customers whatever their used case is to be able to seamlessly move between those stores of value and those local rails to enable what they need in order to grow their business to transact and so on. And we're very well positioned given our best-in-class last mile infrastructure to be a part of solving for that challenge.

So look, in short, we think it's super exciting. We follow the space carefully. We talk to a lot of players in the space, and we see it as an opportunity for continued innovation in our business and in general.

And your last question comes from Mike Grondahl with Northland Securities.

Two questions. One, you guys have done a lot on OpEx and margins. Anything that you're still targeting there for improvement? And then secondly, John, what are your 2 priorities going into year-end in 2026?

Sure. So let me take. And hey Mike how are you doing? Thanks for the question. So yes, look, we're really proud of the progress we have made in unlocking core profitability, right, meaning profitability, excluding interest income. At the midpoint, it will be up 3x versus last year, and we've showed continued progress in unlocking that profitability, obviously, from growing the business organically and otherwise, but also from driving improvements. And we see -- and we called some of that out in the prepared remarks.

We see continued runway both from improving transaction revenue economics in general. We talked at the last call around the pricing power we have, the strategic relationships we have with payment players in the space like Mastercard, like Stripe to continue to evolve the economics and evolve the profit dynamics of that business.

And then on the OpEx line, lots of opportunity in that space to continue to align our service model towards those larger customers that we're serving to drive increased automation, to use AI within our back office, within our operations teams, within our risk management infrastructure to really continue to unlock profitability in that business going forward. So we see a lot of runway in short.

Yes. And Mike, I would just say we are intensely determined to deliver the shareholder value that we are committed to creating. And we think we do that by moving our business upmarket, focusing on those multi-entity customers that are underserved by anybody else on the planet that we have the ability to deliver a high amount of value for. We have a brand that's trusted, the licenses that we need, the innovation happening in our money movement organization and a broad set of AP products that we're cross-selling effectively to those customers.

So the shape of our customer portfolio gets stronger and stronger, which drives the shape of our P&L to be more and more profitable. And doing those 2 things are really what motivates us every day to fight and continue to build what is an exceptional platform, a kickass team and a big opportunity. So we're really -- we're fired up about doing that through the end of the year. But I don't think that changes at year-end. It just motivates us to continue to execute at a really high level.

That concludes our question-and-answer session. I'd like to turn the conference back over to John Caplan, CEO, for closing remarks.

Thanks everybody for your questions and participation today. We delivered record results in the third quarter, and we are executing with the kind of intense focus and discipline that great teams and great management teams come together to do.

I want to thank our team all over the world for their energy, their drive, their commitment to collaboration and delivering for our customers. We're excited about the opportunities ahead, and really look forward to speaking to everyone again in February as we talk about the future.

This concludes today's conference call. You may now disconnect.

Okay. So joining us today and kicking off Day 2 of the conference, we have John Caplan, CEO of Payoneer. Prior to joining Payoneer, John served as President of North America and Europe at Alibaba, the cross-border B2B business at Alibaba to be specific. John, thank you for joining us. We're pleased to have you at the conference once again this year.

It's great to be here. Thanks for having me.

So let's kick it off at a high level. It's been 2.5 years since you took over as CEO. One of the main priorities has been the targeted focus on ideal customer profiles, or ICPs, and the changes to the go-to-market organization. Where do you feel the company is now versus where you started? And what are you most focused on to continue the momentum?

It's good to be here, and thanks for asking the question. It's an important one. As we think about the growth momentum transformation underway at Payoneer, and what we see is lots of opportunity in front of us. So when I arrived at Payoneer, there had been a one-size-fits-all approach to our customers. We do business in 190 countries and territories. We have 3,700 employees and contractors working together to serve the needs of cross-border businesses. But when I arrived, there was not an approach that said, these are our primary customers and these others are nice to have, but not the focus. So we adopted a segment-specific approach. And we identified goods exporters in China as being very important and B2B services companies across the globe, significantly important opportunities for us and larger customers more valuable to Payoneer than smaller.

So since becoming CEO on March 1, 2023, we've had compound annual revenue growth of 16%. Prior to that, it was low single-digit growth at Payoneer. And our revenue per customer is up 50%. So we feel very good that the -- sort of at the most macro view of the business, we are -- we've done what we said we're going to do. We've executed very well, and we've proven we have strong product market fit. At the same time, for folks that are newer to Payoneer story, you see that our customer balances have grown 29% since this transformation of the company began. And that's because not just that folks trust us and feel comfortable holding their funds in their Payoneer account, is they're using Payoneer for their international accounts receivable, selling on a marketplace, selling to other businesses, selling direct to consumers, and now increasingly using our accounts payable tools to manage all of their international expenses.

We've shared at the last earnings that our card is now 10% of all the usage of funds at Payoneer. It was 8% 2 years ago. And what's so exciting about the card is it's not just higher take rate, which it is, and distributed across more companies employees, which it is for travel, et cetera, or putting limits in place for managing employees, it actually demonstrates that Payoneer is not a toll booth on the money highway. People are choosing Payoneer because we can serve and solve complex business problems that they have, managing an international operation as a small business from day 1. Our innovation has substantially accelerated. We announced last quarter the partnership we struck with Stripe for our Checkout business. We took a product market fit that we proved to ourselves that our customers -- goods exporting customers in China, particularly wanted a checkout solution from us. We got to $1 billion in volume, partnered with the best-in-class solution at Stripe. That feels like a big step forward in innovation.

We announced recently the collaboration with Citibank for treasury flows and their blockchain technology. This is us putting our, the rhetoric aside and just looking directly at real-world use cases of blockchain, technology to serve our business. And we have some early progress with AI in our customer support team that's making nice headway. So I would say, on balance, very happy with the progress we've made in our transformation and hungry for more, right? This is a motivated team where we're aligning our resources with our growth. We're building our plans for '26 and beyond, really about focusing on high-value customers in high-value geographies in high-value industries, and, frankly, reducing our emphasis on everywhere for everyone and more about focus on the high value because we promised profitable growth. And you and I have talked about this in the past. In 2024, we generated $14 million of core business EBITDA. That's not including any of the interest revenue we made. In the first half of this year, $16 million of core business EBITDA. So we have grown EBITDA in the first half of this year compared to last year. We are focused delivering optimistic, which would be how I'd say how we feel.

Great. And I also want to give you a chance to comment on the macro environment. I mean, you reported second quarter earnings a few weeks ago. The second quarter felt like one of the longer 3-month periods that I can remember. And I think the highlight of the quarter was Payoneer reinstating guidance amid what's been a volatile trade backdrop. So what is your latest thinking on the trade environment? And what adjustments have you and your customers made to accommodate that?

Yes. So the pulling guidance was the prudent and responsible thing for us to do at the time, reinstating it was equally prudent and responsible. The trade environment is dynamic, as we all know. What's equally dynamic or frankly, even more dynamic is the resilience and entrepreneurship of our customers, right? Our customers are proving again and again how focused they are on their own growth and how valuable Payoneer is to them. So we are seeing our customers expand their distribution, not just China to the U.S., but China to Europe, Latin America to APAC and EMEA. We've seen -- I mentioned this when you and I chatted last about we do events across China, where we help global marketplaces meet the highest quality exporters in China, and we're doing, frankly, around the world, but specifically in China. And we had 15 of those kinds of events oversubscribed in second quarter.

Our customers turn to Payoneer to fast track their access to global demand, and that's, I think, really positive for us as a growth partner to our customers. I just saw in an e-mail this morning before walking in work we're doing with Walmart similarly to help Walmart connect to the high-quality exporters across Europe. We are a business that marketplaces turn to, to get access to high-quality sellers and sellers turn to, to reach global demand. If we think about August, August results were really consistent with our Q2 guidance. I'm pleased with the results we've seen through the third quarter and feel good about reiterating the guidance that we did and feel good about the trajectory of the firm is on right now.

That's great. And then switching over to the top of funnel. Could you talk through the changes you've made so far on go-to-market and what's next? You hit on the focus on ICP over the last couple of years. How are you thinking about the need to add sales and marketing talent versus kind of doing more with what you have, which I think has been the primary approach as you've kind of focused over the last couple of years? And then how do you think about geographies and verticals and where it could make sense to do that over time?

Yes. So let's start my impression when I arrived a couple of years ago, I was not satisfied with Payoneer's go-to-market motion, did not think it was focused enough that the yield per salesperson was strong enough. And we made substantial changes to our go-to-market, as you mentioned. And we focused on high ROI areas where we had unique product market fit, strong brand, the right infrastructure and product market fit and focus. And since then, we've nearly 3x the revenue per salesperson than when I arrived. And I think, before you expand, you got to get good at your basics. And we have gotten really good at the basics, and our cost per salesperson has been flat.

In that context, we now can see what the yield we expect from a salesperson in a geography. And now we're going a step further and looking at specific regions, specific industries and identifying the, let's call it, sub-20 markets around the globe where Payoneer has a right to substantially win. And as we move into the next chapter of our growth, focusing in key geographies with our sales people, we have increased the percentage of our customers that have a named CSM. We have 50,000 or so $10,000-plus customers. They're not all created equal. Some have more complex needs and they need a named account manager who can really help them. And I think that's an important maybe overlooked dynamic of Payoneer's business is how valuable our service offering is and the service, the human service to our tech-enabled product that helps our customers be successful.

So we will continue to invest in our Tier 1 markets. We'll continue to drive our incentives with our card product. The card being so valuable for the goods exporters who are buying advertising is increasingly valuable to the marketing services companies that are buying advertising on behalf of other firms, and the partnership with Stripe is just 1 example where we -- and there'll be more, where we see the opportunity to build an ecosystem around our customer acquisition engine and our value prop to accelerate our growth going forward.

Great. Maybe we can just go through a couple of the major parts of the business. I think it's always helpful to kind of remind people of some of the distinct businesses within Payoneer, and I want to start with the payouts business. Marketplace payouts is the largest and most penetrated, most developed of Payoneer's businesses. You're the market leader. Can you talk about the drivers of growth for that segment? And just what your expectations are going forward?

Yes. So you're right. We are the market leader, and we're proud of that. That is we fought hard to win that, and we continue to hold that share. And we aren't the cheapest provider in the market, but we have the best product market fit and, I think, really strong customer relationships. The first priority in terms of growing the marketplace business is we are focused on larger sellers, not smaller sellers. And I think it's important for people to understand that what matters in the marketplace business is not the number of sellers you have, it's the quality and volume they do. It is very hard to enter a marketplace from scratch and get -- and win the buy box and capture volume. So others may be focused on spreading wide, we are really focused on high quality and volume, and that's our emphasis there.

The second is expanding the ecosystem. We continue to work across social selling, innovative sort of marketplace design to help bring our traditional marketplace sellers into the next phase of marketplace growth. Going forward, we see strong growth, but it will be mid-single-digit-type growth. It won't be much more than that, I don't think, as the consumer in the West sort of navigates the changing tariff landscape, the changing economy, the interest rate environment and all the messaging, but right now, we are benefiting from motivated large sellers focused on selling more globally. And the take rate has been largely flat in our marketplace business over the trailing 3 years. And if you think about other payment companies where they see take rate erosion while they scale, and as you've seen in ours, we are doing just the opposite.

Yes. That makes sense. So the mid-single digits, you think about that as maintaining share within the e-com space. I know a lot of people think about the largest marketplace out there that may grow a little faster, but I know there's a range of marketplaces out there, there's a range of growth rates, some of the services platforms are a little lower, just mid-single digits is kind of what you view the market growth at?

Correct. And we saw it in Q2. Walmart -- excuse me, Wayfair put up a really strong Q2, and we saw that in our Wayfair numbers. But as consumers shift their behavior, they shift across different marketplaces, different price points.

Makes sense. Okay. Then switching gears to the B2B business. I think it's helpful to go over just what separates this area from the core business? What is different about this from the payouts business? What are the problems that you're solving for the customer base there? And then I have a more numerical follow-up.

Yes. So if you think about it in the most basic way, if you're a business process outsourcer in the Philippines, right, and you've got customers in Germany and Canada and the United States, who use your call center for -- to handle customer inquiries, you fly over to the United States, you go meet on your customers and talk to them, convince them that you've got a great product. You use Payoneer's invoice, and that's a process that used to be done by a local bank, but you couldn't hold multicurrencies in your local bank and the cost and time to get paid was substantial. So you get paid into your Payoneer account.

Then, in the Philippines, you have local employees, so you need to withdraw some of those funds into your local bank account in the Philippines to pay your local employees, pay your local rent. We also have contractors across APAC that do overflow work to go on business trips, so use Payoneer's cards to hand to your employees to handle their travel to add new customers and you use Payoneer to pay your contractors. So we really sit as the central nervous system of our customers' cross-border activity. And we're solving something that local banks can't do because they don't offer the multicurrency account, can't do because they don't have the technical capability and don't have the regulatory framework and don't have the speed and cost dynamics.

So we really are a unique provider in the B2B space. It's a $1 trillion TAM, right? You and I have talked about this at length. It is a massive business opportunity. What we identified a couple of years ago was Payoneer has the assets and right to win in this space, and we've done just that. We've seen 37% revenue growth in the first half of this year in our B2B business. It's $11 billion of our trailing 12-month $80 billion or so, and that is 30% of our core revenue. So a business that -- a nascent small business a couple of years ago now is the sort of coal-fired engine of our growth dynamics inside of -- and, I am looking at my notes, it was -- our B2B business was 50% of our Q2 revenue growth, like that is demonstration of both product market fit and a big opportunity.

We are on a long march, though. This isn't a flash in the pan. It's all about quarter after quarter improving the product, which has higher take rates, which is more relevant in high take rate geographies and leveraging bespoke pricing by corridor, cross-selling our workforce management acquisition, adding the capability so 100% of B2B customers' cross-border activity flow through their Payoneer account.

And then I just want to follow up and get in the weeds a little bit more. On the 2Q numbers, B2B volumes were up 19%. Revenues were up 37%. And I know we talked about a little bit of this on the call and afterwards the drivers around the China B2B business versus kind of rest of world. Could you just maybe level set the outlook for both B2B volumes and B2B revenue? And just where you're expecting to see the most growth out of the B2B business?

Yes. So the focus on the B2B business is primarily the rest of the world in the services area. We have the strongest product market fit there, the least sort of complexity as it relates to managing the banks, the regulators and all the sort of onboarding that's required for cross-border B2B flows out of China. We're working hard on those China flows because there's a real opportunity, but we are focused on the rest of world as the primary sort of growth driver. And we will have, and we've shared with folks, 25% revenue growth as really the second half target for our B2B business. It will be a mix of geographies, but we're not overinvesting into China, but we get the product to the place it needs to be. So we're moving upmarket, larger customers.

There's an interesting dynamic that folks in the U.S. might not really understand, but many of our B2B customers are what we call multi-entity. They have a home market, I don't know, Colombia, but also do business in Dubai, they also do business else -- in other markets around the globe, and they end up setting up entities around the world. And those multi-entity customers have the most sophisticated needs, and we have great retention. So we're very focused on identifying larger multi-entity cross-border B2B businesses. And the partnerships we've built with the resellers starting to create some momentum and more effective identification of customers that are coming inbound to drive growth.

So we are super focused on the B2B services arena, see 25% growth is really solid coming off of 2024's exceptional growth, and we'll continue to drive it.

That's great. So maybe we can talk about some of the recent partnerships. You mentioned Stripe for the Checkout business. Maybe just touch on where do you see the most growth in the Checkout business historically? And then how is the Stripe partnership going to kind of help you accelerate that growth?

Yes. So it's really important. If our thesis, and our thesis is that -- and it's validated by the discussions we have with our customers and the net revenue retention of our best customers. The more of their AR they consolidate into 1 Payoneer account, the easier it is for them to run their businesses. And the larger goods exporters, particularly those in China, but across the region, sell on marketplaces, they sell wholesale and they also sell direct. We had, I think, a very solid test effectively with the product we launched. It took us very quickly to $1 billion of volume running through our owned and operated solution. But our ambition is greater than playing catch-up to Stripe, frankly. And so we decided, made the tough decision to sunset our own offering and replace it with the best-in-class offer. And that is good economics for us. It lets us extend that product to more customers, really validates that our account is that valuable to our customers that they want to aggregate all those flows into one place regardless of whether it's Payoneer, Checkout tech or Stripe tech. We own the customer relationship.

So if someone is wondering, "Hey, why would you do that? Can't Stripe take your customers?" Actually, in fact, no. Those are Payoneer customers and well-organized relationship between Payoneer and Stripe. And it's a much better cost and yield dynamics over time for us. And now with this Stripe relationship, we have the potential. We have not said we're ready yet to do it, but we have the potential to roll that out into more geographies. And that would have taken a lot longer with our owned and operated solution. And so on sort of every score better for our customers, better for our P&L, just opportunity in front of us, and so we're going to drive that business forward.

Yes. No, it makes sense. Okay. And then the other major partnership this quarter was the relationship with Citi. The theme of the summer, it's been stablecoin summer. And I know you recently announced the collaboration with Citi to begin integrating blockchain infrastructure. I know it's not technically a stablecoin product, but maybe you could talk about that announcement. What is the brain to the table? What does it help Payoneer do better?

Yes. I think the thing that -- and you've had a chance to meet our -- some of our folks in our treasury team, and we have a really exceptional group of people who are looking at driving the innovation there. And our relationship with Citibank is very solid. By using their blockchain technology, it lets us move money more quickly in more geographies with less sort of concern about daytime or weekend time, right? And sort of all of the sort of practical applications of moving funds around the globe using Citibank's blockchain tools enable -- will enable our treasury department to move even faster, better speed, better automation and more transparency. We're sort of the motivating reason to extend the relationships that way. There's no more cutoff times, which obviously is a benefit. And it lets us optimize our funds in interest-bearing accounts.

And I'm a strong believer that the 17% growth in balances we had in Q2 and the volume of funds our customers hold is misunderstood by investors, right? I think investors don't appreciate the fact that we actually serve a critical function in the life of our customers' sort of financial operating journey And moving their money around the world quickly with Citibank is a benefit and seeing our balances continue to grow is something we're proud of.

So I guess 1 follow-up on the stablecoin topic. There's been a lot of questions around stablecoins and how they could be a disruptive force in cross-border payments for all companies in the ecosystem. You have a very high gross margin on payments-related revenue like most kind of electronic cross-border companies do. So could you talk about the barriers to entry in your business? Where you feel the value add is? And why stablecoins are or aren't a threat to the economics of the business longer term?

Yes, an awesome question. And stablecoin summer was exciting for all of us, right? Because the GENIUS Act now codified something to allow, what was it, a tradable asset and trading is fun to be something where I live, which is in the practical use cases that entrepreneurs around the world need to do business and feed their families and grow their companies. Stablecoin is turbo for Payoneer, right? If you think about -- or the express train, right, because it's a real opportunity. We -- if you think about going from tradable assets to use -- assets that are used, if you're an entrepreneur in Vietnam, you cannot buy a hammer with USDC today, right? Even if someone wants to pay you in USDC, you can't convert it into your local fiat and the hardware store you go into buy a hammer wouldn't accept it if you could use it. So if you think about what we've built, it's a global network of last mile delivery and converting multiple currencies into local fiats so that they can be used. And so we think our unique asset, bank relationships, regulatory relationships, 2 million active customers, Walmart, Amazon, Airbnb, Etsy, Fiver, Upwork, marketplace relationships enables us to actually be a really important part of the infrastructure that helps the stablecoin community turn into the use by the commercial community.

Yes. No, that makes sense. And then I guess when you talk to your marketplace customers, what is their perception of the use of stablecoins? And as we think about the marketplace payouts business, we had SoFi on stage yesterday talking about working with marketplaces to leverage stablecoins and payments context. What's your kind of thought on stablecoin adoption in the payouts business?

Yes. So all of the -- I've had a chance over the summer to have a tour with a number of our -- the payments teams inside America's largest marketplace and sit across the table from them and ask them. And they say, we have no idea. We don't know what this means. We're curious to learn about this. We don't want to be left behind, but we're certainly not -- I was with 1 big marketplace, we'll call it, $100 billion market cap market this summer, and they were bemoaning the size of their payments infrastructure team as single-digit tens of people. And I explained well we spent $600 million a year building payment infrastructure so you don't have to. And they said, right, because I think the potential exists, but the reality is it's going to come through companies like Payoneer for it to actually get really adopted.

Yes. Okay. Another development this year was that Payoneer became one of the handful of Western payments companies with a license to operate in Mainland China. You closed on the acquisition there earlier this year. What do you see as the biggest benefits from that?

Yes, it's awesome. Tsafi Goldman who was just there. She's our General Counsel and leading this activity. We are 1 of 3 Western firms with the license. And this is really important for Payoneer because China is a substantial market for us and a big growth opportunity for us. We shared when the tariff sort of -- which feels like 100 years ago, but we shared when the tariff stuff began that 15% or so of our total revenue is China sellers selling to not to the United States, 20% is China to the U.S., and we continue to see really nice growth of helping Chinese sellers sell all over the world.

So specifically on the acquisition, it expands our TAM. It lets us help bring fund CNY outbound out of China, which is we can all read the same articles in Bloomberg about the renminbi and how important that is to China. I think that's not a today opportunity. It does feel like a good long-term opportunity. And then specific inside of Payoneer P&L in the near term, there's cost synergies through transaction costs, right, where we -- instead of paying a third-party vendor to help us bring fund domestically from Hong Kong into China, we'll be able to use our owned and operated entity. That will not have a big impact in the near term, but over time, as it takes more share, will let us to do that. And so we think this is super strategic for us, expands the TAM, cuts some OpEx and positions us again with the regulatory moat around the business that is, we think, very valuable to shareholders.

Okay. I want to talk about the Payoneer card a little bit. I think I attended a customer conference that you guys hosted a while back and it really struck me how much focus the card got from your customers. And I think a lot of people in the U.S. markets, U.S. investors are so familiar with what have become fairly commonplace card offerings from a lot of fintechs here. I don't think there's a great understanding for how differentiated it is, particularly in the APAC region. So can you talk about what did it take for you to stand that up? What is so differentiated about it? And what's kind of the true -- the problem that, that card solves in -- particularly in the APAC region?

Yes. So the value prop is really straightforward, which is operating in local currency off of your cross-border AR, saving on conversion fees, higher acceptance rates so your card doesn't get declined, which we all know is a nightmare, and linking it directly to your Payoneer balance, which is, again, simplifying activity and providing limits for users. So the CEO of a firm can provide the appropriate limits to their Head of Sales, their -- I think you get the point. In Q2 of 2025, we did $1.5 billion of usage on the card, which is up 25% year-over-year, 2.8% yield and 10%, as I mentioned, a moment ago, of over total usage. And the net revenue retention of our customers who are card-carrying customers is exceptional, and they stay longer, use more products are more valuable and our ARPU for those customers are really strong.

Our biggest users today are China goods exporters by far, but we're seeing very strong growth in Latin America among B2B services firms. We've talked in the past about marketing agencies in the Middle East who are using our virtual cards to consolidate ad spend for their customers. So we're excited about the card, and you'll hear us begin to focus even more on it, right? As we focus on key geographies, I talked about 20 or fewer key geographies, focus on larger customers, so absolute count of customers become less meaningful, right? It's volume per account, ARPU per account, but the absolute count was really useful when I was beginning the remake of Payoneer and less useful today as we've got the machine starting to really hum and cook in the right direction.

Yes. Okay. And then another one -- another acquisition that we haven't talked about today yet is the payroll acquisition. It didn't immediately -- I didn't immediately understand the motivation that I think when you described it about how difficult cross-border payroll is for a lot of your customers, I sort of got it. But maybe you could talk a little bit about the motivation, and just how you're feeling about kind of cross-sell and the progress so far?

At the most basic, Payoneer resolves knowing who people are and paying them. And if you're a business owner, that KYC gave us permission with banks and regulators to go do business and moving money around the world, obviously, critically important. If you look at the P&L of a business owner globally who has employees around the world, the compliance complexity of managing HR is something American firms, I think, don't understand. Because if you have employees in a dozen countries, you have to comply with local employment law all over the world. That is burdensome, taxes are complex. So we acquired the workforce management business a year ago August. It is really strong growth, and we're proud of it. It's small absolute dollars, but strong growth both of new customers and cross-sell. We're selling to a different customer, right? The Payoneer value prop in payment was finance. The value prop in human capital is HR and finance. So we're learning and have been learning the difference in that dynamic.

25% of our won -- new customers left another workforce management platform. And there's a lot of sort of buzz in the U.S. certainly about Deel or others that get a lot of sort of noise, but in sort of on the playing field, Payoneer is doing a very effective job at building this new opportunity, which will be, I think, a building block of the next sort of phase of our growth.

That's great. So maybe we can talk through a little bit more some financial metrics. Payoneer has strong mid-20s margins. There's a degree of sensitivity to interest rates in the model, just given the significance of the interest income you generate from customer funds. How are you thinking about the outlook for margins and the ability to hold margins flat with rate cuts potentially closer than they have?

Yes. I think this is -- again, for the people who are paying attention and scratching into the P&L, you'll see approximately $40 million headwind in interest revenue, all of it made up for in core business EBITDA growth. That's us unlocking leverage in our business. And we are very focused at continuing to drive the core business profitability. And so holding adjusted EBITDA margins flat at 25% when we face that interest rate headroom, we think it should be viewed really positively by the market because it's evidence of the strength and health of our business. And I mentioned a moment ago, in the first half of '25, $16 million of core EBITDA versus a total of $14 million for all of last year. We are focused on profitable growth, not looking for empty calories. You'll see even more focused on the adjusted EBITDA side of the business as we continue to unlock more leverage in the model.

Yes. No, I'd be remiss if I didn't mention all the work Bea has done on the hedging side as well. So you start to limit that as well. Okay. In the last couple of minutes here, I just wanted to hit on capital allocation. Payoneer is highly profitable, highly cash generative. You have been actively repurchasing shares. You've also done some tuck-in M&A. So what's top of mind from the capital allocation front?

Yes. We have really strong cash generation every month. We're -- and envy of others presenting at this conference, if you look at the monthly free cash flow we generate, it's great. We have deployed the excess cash towards inorganic and organic investments. We've done a few acquisitions, over $250 million of buybacks and the warrant redemption since 2023. And we still have $500 million of cash and no debt. So with that balance sheet and that free cash flow we're generating, we authorized -- the Board authorized $300 million of additional buyback, which we continue because we believe there's value in Payoneer's shares. And we are, in fact, looking into the market at consolidation opportunities where we see businesses that either bring us additional verticals to add or capabilities that we can cross-sell to our existing customer base. So we think that the market -- we're in a strong position. We've delivered really nicely. Shareholders can have confidence in our execution, and we're going to be more aggressive.

That's great. Well, John, I think we'll leave it there. But thank you so much for taking the time today. I really appreciate the conversation, and thanks for supporting the Goldman Communacopia Conference.

Thanks for having me. Thanks, everybody.

Good morning. Thank you for standing by. Welcome to Payoneer's Second Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the call over to Michelle Wang, Payoneer's Vice President of Investor Relations. You may begin.

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 the 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 intend 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.

Reconciliations to the nearest GAAP measure can be found in today's earnings materials, which are available on our website. Additionally, please note we have posted an earnings presentation supplement alongside our earnings press release on investor.poneer.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. Thank you for joining us. Today, I'll walk you through our strong second quarter results. We are executing against the significant opportunity in front of us and building the financial stack for cross-border commerce. After that, Be will take you through the financials and our reinstated full year 2025 guidance. Let's start with the big picture. Payoneer is the global payment solution for entrepreneurs and SMBs who power international commerce. These are manufacturers exporters, agencies, creators and service providers from every corner of the world. They need to invoice and collect payments from customers globally, manage multiple currencies, pay suppliers and employees and excess capital, all while navigating local regulations and legacy banking rails. That's where Payoneer comes in. We are their trusted partner, delivering innovation at the intersection of global trade and digital finance. Q2 was another strong quarter for Panier. Our strategy is working. We're growing and unlocking meaningful operating leverage.

In Q2, we delivered record quarterly revenue ex interest income, up 16% year-over-year, ahead of our medium-term target. We delivered 13,000 net new ICPs, up 2% year-over-year, led by Tier 1 markets, which account for over 60% of our revenue. We delivered ARPU expansion of 21% ex interest income, our fourth consecutive quarter above 20%, a sign of strong product adoption, smart pricing and a deliberate move upmarket.

We delivered $66 million of adjusted EBITDA, a 25% margin. We delivered over $15 million of adjusted EBITDA ex interest income for the first 6 months of 2025. We greater than what we delivered for the full year of 2024. And our latest guidance at the midpoint implies we expect to more than triple our adjusted EBITDA ex interest in 2025. We're strengthening the fundamentals of our business, improving earnings quality and building a platform designed for durable compounding growth. Global Commerce is resilient. -- and it continues to grow and evolve. Our customers are adapting to shifting trade flows and they're choosing Payoneer to help them grow.

In China, we see long-term momentum and growth in cross-border commerce, and we have built a highly differentiated business over 2 decades serving this market. Our e-com customers are focused on both continuing to serve the U.S. while increasing their investment in new markets. In Q2, approximately 1/3 of our China revenue came from sellers selling to non-U.S. markets. We are helping customers expand globally through our green channel product, supporting their ad spend with our virtual card and providing access to trusted tax and compliance partners. We don't just move money. We help our customers scale. B2B remains one of the fastest-growing and most exciting parts of our business. We grew B2B revenue 37% in Q2, led by our largest customer segments.

We continue to shift towards larger multi-entity customers who have more complex needs. In APAC, LATAM and EMEA, we delivered mid 20% volume growth and continued take rate expansion. We have strong product market fit in the service-oriented markets and our customers are rewarding us with their loyalty. At the same time, our China B2B business grew mid-single digits in Q2. We continue our methodical approach to unlocking the multitrillion dollar China B2B opportunity. We are strengthening our financial stack to better serve the needs of our customers and drive our retention and ARPU.

We've expanded our FX capabilities, launched smarter invoicing and deepened our ERP and third-party integrations. We're delivering more automation, removing friction and increasing product engagement and adoption. In Q2, we launched a strategic partnership with Stripe to expand our global checkout footprint and enhance the products capabilities. We are combining their best-in-class technology with our local market reach, expertise and customer relationships. This partnership improves our operating efficiency and lets us stay focused on our customer to provide them with an integrated financial stack. I'd like to share an example of a customer that is leveraging Payoneer as their global payment infrastructure to streamline their operations.

Brand 501 is a Korean beauty company with entities across Asia and the U.S. They're using Payoneer to consolidate their payments from major marketplaces, wholesale B2B sales and via their own website for direct-to-consumer sales through Payoneer checkout. They also use our cards for operational expenses such as advertising and subscription services by choosing Payoneer, they're able to eliminate inefficiencies in their operations and are thriving in a competitive, fast-growing industry. That's the kind of customer journey we're enabling every day. We're excited about the momentum we're seeing in stable coin and blockchain-enabled payment technology innovation and adoption. We believe that increased regulatory clarity, including as the result of the enactment of the Genius Act, will unlock opportunity for Payoneer and provide a framework to drive stable coin adoption, including Fit global businesses.

Payoneer has unique assets that can help position us as a critical part of the infrastructure for this rapidly developing technology. We have distribution, deep customer relationships and connectivity to last mile bank infrastructure around the globe. We enable money movement across 7,000 trade corridors and allow our global customers to transact and hold multiple currencies within a single ecosystem. In pursuit of this opportunity, we're actively exploring enablement of stablecoin functionality for our customers.

For example, we're exploring allowing our customers who already rely on us for business-grade accounts to send and receive stablecoin along with our full suite of AP and AR products. We're looking at using our world-class last mile infrastructure to help businesses off-ramp stablecoin globally into the local currency that they need for their operations. We are also investing in scale and talent to drive and accelerate our innovation to serve our customers better and drive greater efficiency. We recently announced that we are opening a new technology hub in Gorgon, India, one of the world's fastest-growing economies and home to deep engineering expertise. We're backing our beliefs and our momentum with action. In Q2, we nearly doubled our share repurchases versus Q1 and Today, we're announcing a refreshed $300 million buyback authorization. This reflects our conviction in the value of our business and the strength of our financial performance. We're focused we're executing, and we're building a more valuable platform for our customers and delivering durable growth and compounding returns for our shareholders. Let me end with this.

The future of commerce is cross-border and it's global. Entrepreneurs in every part of the world are building great companies, but they still face legacy financial systems when they try to trade internationally.

That's the problem Payoneer solving, and it's a massive opportunity.

I'll now hand it over to Bea to walk through the results and our reinstated guidance for 2025.

Thank you, John, and thank you to everyone for joining us. Payoneer delivered a strong second quarter, executing with discipline and advancing our profitable growth strategy. In a complex global trade environment, we continue to generate revenue and adjusted EBITDA in line with our medium-term targets and are reinstating our full year 2025 guidance. We remain confident in our ability to drive profitable growth and deliver long-term value for our customers, employees and shareholders. Now turning to our second quarter results. We delivered revenues of $261 million, up 9% year-over-year. Revenue, excluding interest income reached $202 million, a quarterly record and was up 16% year-over-year, in line with our first quarter results.

Our strong growth was driven by our B2B franchise, increasing adoption of our high-value products and services, such as checkout and card products, and the ongoing implementation of our pricing and offering strategy. Total volume was up 11% year-over-year SMB volume grew 9% year-over-year, with volume from SMBs that sell on marketplaces, up 6%; volume from B2B SMBs up 19% and checkout volumes up 83%. During the quarter, we saw modest softening in volumes from large e-com marketplaces, likely in response to the global macro and tariff environment. Enterprise payout volume increased 15% year-over-year, primarily due to strong demand in key travel routes we serve. Our Q2 take rate of 126 basis points decreased 2 basis points on a year-over-year basis, driven by lower interest income. We continue to drive significant expansion in our SMB customer take rate, which increased 9 basis points over the prior year period and 1 basis point sequentially. This reflects the ongoing impact of our pricing strategy, continued growth in our higher-yielding B2B and checkout franchises and ongoing adoption of our card strong growth in our higher take rate regions and the impact of our workforce management acquisition. Customer funds held by Payoneer increased 17% year-over-year to $7 billion. partially offsetting the impact on our interest income revenue of lower rates.

We generated interest income of $58 million in the quarter. Growth in customer funds was above our expectations and in excess of our volume growth with customer usage behavior moderating in certain key markets, likely in response to the uncertain macro environment. This demonstrates the trust our customers have in our platform and the value they place on the utility we provide. As of June 30, we had reduced our sensitivity to fluctuations in short-term interest rates in relation to approximately $3.7 billion or roughly 53% 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 $231 million, increased 19%, primarily driven by increases in labor-related expenses higher transaction costs, consultancy fees as well as the investments to scale up card product and the effect of recent acquisitions, including our EasyLink acquisition in China, and our workforce management acquisition. Transaction costs of $41 million, increased 10%, broadly in line with volume growth. Transaction costs represented 15.6% of revenue an increase of approximately 20 basis points from the prior year period, primarily due to lower interest income.

Excluding interest income, transaction costs represented 21% of revenue, a decrease of around 120 basis points versus the prior year period, despite mix shift towards higher take rate, higher transaction cost products, and driven by improvements in our chargebacks and losses and lower costs related to our capital advance offering. Sales and marketing expense was up $7 million or 13% year-over-year, driven primarily by higher labor-related costs, including from our workforce management acquisition and by card-related incentives in support of Chinese and other good sellers. Other operating expenses were up $1.5 million or 4%, primarily due to higher IT and communication costs. R&D expense increased $10 million or 36%, mainly due to higher labor-related costs, including in relation to our workforce management and EasyLink acquisitions. G&A expense increased $11 million or 42%, primarily due to higher legal and consulting fees, including in relation to our India license application as well as higher labor-related costs.

Adjusted EBITDA was $66 million, representing a 25% adjusted EBITDA margin in the quarter despite the $7 million headwind from interest income. This is the fifth consecutive quarter of positive adjusted EBITDA, excluding interest income. Net income was $19 million compared to $32 million in the second quarter of last year, Basic and diluted earnings per share were both $0.05, down from $0.09 in the prior year period. We ended the quarter with cash and cash equivalents of $497 million, delivering continued strong cash generation. Over the last 12 months, operating cash flows have significantly exceeded net income providing incremental opportunities to invest for profitable growth and return capital to shareholders.

During the quarter, we repurchased approximately $33 million worth of shares at a weighted average price of $6.80 nearly double the amount we purchased in the first quarter. As John mentioned, our Board recently authorized an amendment to our share repurchase program, increasing the program's repurchase authority to up to $300 million. Given our strong performance in the first half of the year, our visibility into the third quarter and a less severe tariff environment, particularly between the U.S. and China, we are reinstating 2025 guidance. We expect total revenue between $1,040 and $1,060 million above the full year guidance we issued in February. This includes higher interest income of $225 million, and $815 million to $835 million of revenue, excluding interest income. We expect our growth rate for revenue, excluding interest income to be fairly consistent from Q3 to Q4.

The top end of our core revenue range is in line with our guidance in February despite a more challenging macro environment. For the second half of 2025, we anticipate high single-digit growth in total volume and expect that our strategic focus on higher take rate products and geographies and pricing initiatives will enable us to continue to deliver yield expansion and revenue growth that outpaces volume growth. We expect volume from SMBs that sell on marketplaces to continue to grow by mid-single digits and mid-teens B2B volume growth in the second half of the year.

We anticipate low double-digit B2B volume growth in Q3, accelerating to high teens in Q4, a strong rest of world B2B volume growth is partially offset by slower growth in our China B2B franchise. Given the lower take rate profile in China compared to other regions, we expect B2B revenue to grow at roughly 25% for the second half of the year. For the full year, we expect transaction costs as a percentage of revenue to be approximately 16.5% and significantly below our expectations at the beginning of the year and representing a modest step-up in transaction costs for the second half of 2025.

This reflects continued business mix shift towards higher take rate and also higher transaction cost products and geographies as well as the impact of lower interest income. When excluding interest income, transaction cost as a percentage of revenue has been roughly stable over the past 2 years. We continue to work to optimize the economics of our business from a transaction cost perspective by utilizing our scale and leveraging and deepening our strategic relationships. We are actively working on a number of initiatives that leverage blockchain technology bringing real-time treasury management capabilities to our platform. We have rolled out real-time funds transfer capabilities on chain in specific corridors, enabling us to move funds between global accounts with greater speed, automation and transparency. In collaboration with Citi, we're excited for the opportunity to expand these capabilities to additional markets in the coming quarters. We also plan to extend these capabilities via other banking partners, further enhancing our treasury management flows and delivering enhanced capabilities to our customers. Additionally, we recently signed a new long-term agreement with Mastercard further solidifying this important strategic relationship. We have seen substantial growth in our card products since beginning this partnership over 4 years ago. with nearly $6 billion of card usage over the trailing 12 months. We are further deepening our relationship and in partnership with Mastercard, launching an SMB growth hub to better serve customers globally and to drive further innovation and engagement. We expect 2025 adjusted OpEx, which represents our guidance for revenue, less adjusted EBITDA and transaction costs of approximately $610 million.

Our outlook for transaction cost is materially lower than we had anticipated at the start of this year. and this enables us to make incremental investments in our business, including in regulatory licensing efforts in key jurisdictions, in scaling our card product and in stable coin focused initiatives. We are investing to support our long-term growth trajectory while still expecting to exceed our 25% adjusted EBITDA margin target. Based on our strong performance in the first half of the year, we are raising our guidance for adjusted EBITDA, which we expect to be between $260 million and $275 million. At the midpoint, this represents an adjusted EBITDA margin of approximately 25% for the full year. Excluding interest income, we expect adjusted EBITDA of $43 million at the midpoint over 3x the amount we generated in 2024 and in line with the target we have communicated at our fourth quarter results in February. Our 2025 guidance assumes a stable macro environment in the second half of the year and that global tariffs remain broadly comparable to today's levels. Our second quarter 2025 results underscore the strength of our execution.

In a dynamic macro and tariff environment, we grew revenues expanded RSMB take rate, increased ARPU and delivered adjusted EBITDA in line with our communicated targets. We are well positioned to deliver on our full year guidance and remain focused on creating long-term shareholder value. We are now happy to answer any questions you may have.

Operator, please open the line.

[Operator Instructions] And our first question comes from the line of Nate Svenson with Deutsche Bank.

Nice results and great to see the reinstated guide. Maybe at the highest level, just given there are so many headlines still going around on tariffs, what gave you the confidence to at that higher guide and at a slightly higher level than what we saw previously. Maybe more explicitly on tariffs. I know BU called out that tariffs, the levels stay at broadly the same level as what we have today. any other explicit impact baked in from tariffs? I know previously you had called out that $50 million number, I assume it's probably lower today than it was on the last call. And then last thing, you mentioned slower volume at some large e-com platforms. Anything else that you're expose seeing with regards to tariffs in 2Q numbers or this quarter to date?

So thanks for the question, Nate. Look, so as you noted, we held the top range of our core revenue guidance in line with the full year guidance we gave back in February. We raised at the midpoint, we raised our adjusted EBITDA at the midpoint as well. All as we continue to navigate and our customers continue to navigate this super dynamic environment. And we reinstated guidance, look, to your point, we're obviously a quarter out from when we reported last, which was in May and barely 3 weeks out from the original 3 to 4 weeks, the original tariff announcement. We have greater visibility into what the tariff environment is likely to look like. It is obviously much less than this certainly as between the China-U.S. corridor. We have some degree of visibility into Q3, and we're beginning to see the outlines of how we might expect the business to perform overall and felt very comfortable in our ability to continue navigating.

We have a very resilient business as our guidance clearly demonstrates and feel confident about navigating to hit our full year guidance through the end of the year. In terms of marketplace volumes, look, we called out some modest softening in the back half of Q2. It's always difficult to attribute the exact cause, but likely related to some tariff impacts. We had said back in May that tariff impact when we see them would likely be felt in the back half of the year. and our guidance implies some modest softening in marketplace volumes to about the mid-single-digit range in terms of volume growth. So all of that is embedded we don't provide and we're not going to provide an explicit number for tariff headwind. We've embedded assumptions based on how we understand the environment today.

Yes. Super helpful being, obviously, you don't envy your position and given all the changes that are going on. I do have to ask about stable coins. I think given sort of the merchants you serve and the role you play in the B2B payments ecosystem. I actually think there's a real role for stable coins here in helping you serve your end customers. And it was great to hear some of the initiatives that you're undertaking the Payoneer side of things. But I'd be really interested you hear what merchants are telling you with regards to their demand or appetite to adopt stable coins. We spend a lot of time debating the topic with investors, but it would be great to hear how real this is for the merchants that you're serving on a day-to-day basis. .

Yes. This is John. Thanks for the question. I think we are in the earliest, earliest days of understanding both the use cases and the demand among merchants, right? As we've mentioned on the call, we believe that the -- we have an exceptional set of assets and relationships with customers and trust with our banks and our marketplace partners globally to help take our deep customer relationships, our global distribution to add new currencies into the experience for our customers as they seek to use them.

And our last mile relationship enable us to help customers turn whatever currency they're doing business in into the local fee out that they use domestically. And so we see a long-term opportunity. I think a lot of the type cycle is exciting, but the practical use case. And I think what, hopefully, investors have gotten comfortable with the way we run Payoneer year-to-date is we are very pragmatic about helping our customers participate in the global economy. And right now, primarily do that in dollars, and we're helping them do that exceptionally well. And as they explore the use of new currencies and new ways of transacting, we will be there to support them.

Our next question comes from the line of Trevor Williams with Jefferies. .

I wanted to ask on China specifically, just how merchants there have responded to the tariffs I'm thinking kind of about more distribution into Europe or rest of world. John, I think in your prepared remarks, I heard you say that now about 1/3 of your China revenue is coming from selling into non-U.S. markets. I'm curious how that number has changed more recently? And just bigger picture if the current environment has kind of helped accelerate any of your share gains locally in China to be able to facilitate sales into kind of more non-U.S. markets?

Thanks, Trevor. It's a great question and an important one. We've held 15 events in China for sellers looking to expand across Europe, Latin America and Middle East, really bringing together an ecosystem of partners to help them think about through the logistics tax, legal considerations when they're expanding. So we are our customers' partners as they help them explore expanding.

They're very focused on expanding, particularly in Europe and Latin America, and our green channel program has had I think the best ever demand of that product we've seen as customers look to explore ways to drive their distribution and improve the resilience of their business models, not just selling to the United States, but selling globally. 1/3 of our revenue comes from Chinese customers. Of that 20% is China, the U.S. approximately 10% is China to the rest of the world, and we have not seen a significant shift in that composition in Q2.

It's really, I think, too soon to see it. What I do think is really important is how dedicated the China sellers are to their U.S. distribution and what they see the events of April 2 is a springboard to force them into more global distribution, both of which will serve Paine well in the long term. I'll just add one other note about that is we saw our China customers holding increased balances on the platform. You saw the balances grow by 17% in Q2 year-over-year, that balance growth is future revenue growth for us. And I think that's something just important to highlight.

Okay. No, that's helpful. And then just as my follow-up, within the ICP growth, and I know it's imperfect metric, maybe you guys could parse out some of the puts and takes within some of the headline growth rates there, both on kind of the overall and then the 10,000 a month ICP growth would be great.

Yes. I mean we made a very conscious and we've been talking about it at length. We made strategic shifts over the past year to align our resources, focusing on durable and profitable revenue growth. And our ICP portfolio really reflects those decisions. If you go back all the way to Q1 of 2023, 23% of our total customers are ICPs in Q2 of 2025, it was 28%. So we continually driven ICPs as a percentage of our total portfolio. We're driving faster B2B customer growth, which is very exciting for us. We're targeting larger multi-entity customers, those that bring in $0.25 million a month in volume and greater. They use more products, they have more complex needs. They stay longer. Our net revenue retention for those that cohort is exceptionally strong. And we continue to fine-tune our risk appetite across the portfolio generally to make sure that the folks that we add to the platform reflect our focus in the long term.

So in Q2, volume growth from 100K plus ICPs we saw 20% volume growth, really exceptionally and exciting for us in our business. and I'm pleased by the execution of the team, and we continue to drive cross-sell and momentum in the portfolio. I expect the ICP growth to be, as I've said in the past, the word we like to use around here is lumpy, right? Some quarters it's up, some quarters it's down. Some quarters, it's flat. It has to do with the overall portfolio mix. What we're focused on doing to drive ICP growth. We're beginning to work with reseller programs, which is an exciting innovation. We have more and more deep focus into specific regions and we're driving our funnel conversion for the over 11 million people who show up at payoneer.com to start creating paying your accounts. We have an exceptional brand, great relationships, last mile delivery that entrepreneurs around the globe are increasingly coming to us to be their foreign bank alternative as they grow their business.

Next question comes from the line of Will Nance with Goldman Sachs.

Congrats on the great quarter and the reinstatement of guidance. Great to see. I wanted to ask on the B2B volume growth came in at high teens. I think the guidance was kind of low double digits and then back to high teens. And you alluded to some kind of moving pieces in the China B2B corridor. So I was wondering if you could expand a bit on that. I know that's been kind of an ebb and flow type of region for you? Like would you -- is there something going on there in the market from a competitive perspective? Would you attribute this more to just the macro environment and some of the things that you called out on the SME e-commerce corridor? And just talk through, I mean, how you view that exit rate in the fourth quarter? And I think you called out mid-20s ex China as kind of like a run rate as we think about going forward. .

Thanks for the question, Will. So yes, look, we've talked in the past about our B2B business and really sort of draw the distinction between the China business, which is a goods business, by and large, and the Rest of World business, which is a services business and the relative differences in those 2 business lines for us are in those 2 portfolios, just to sort of level set again. Our B2B rest of world portfolio is about 80% of total B2B volume and about 90% of the revenue and China makes up the rest, right? Our China portfolio, I like the term you used, have seen some ebbs and flows, right? We have a relatively speaking, tiny, tiny slice of a very big market. We estimate the market in China from a goods perspective, B2B about $2.3 trillion. We have a very tiny slide.

These are bigger sellers, setting B2B good sellers in China is more complex because they're bigger sellers, it's more volatile portfolio just because the GMV per customer is larger. And so what we see in those heads and flows is a more volatile dynamic that, in effect, distorts the overall volume growth of the B2B portfolio as a whole. So yes, we've had sort of ebbs and flows or fits and starts with that. continuing to invest in finding product market fit in China. We see it as a really exciting adjacent opportunity given our strong brand in China, given our capabilities there, today, it is tiny, and we see sort of these fits and starts. Our Rest of World business, which look as we say, is more than 90% of that B2B revenue. And it's worth noting our B2B revenue as a whole is about 1/3 of our total core revenue today. that revenue flow is growing very impressively. We're showing, as we said in Q2, 22% volume growth in that rest of world portfolio, and we're growing the revenue overall. So as we move into the back half of the year, as you called out, will -- we're calling for low double-digit growth in accelerating to high teens growth as we exit the year higher than that from the rest of world perspective and still very confident that we will hit more than 25% revenue growth overall.

So this remains for us the real lever and driver of growth in our business given its growing importance to the portfolio as a whole.

That's super helpful. And kind of dovetails with my next question, which is the take rate dynamics here. Obviously, you guys have just historically seen stronger growth in higher take rate regions, Latin America and APAC. B2B business is growing faster. Within the B2B business, you're seeing some mix out of China, so there's a mix dynamic the e-commerce business, there's an assumption of a little bit lower growth. So I guess maybe when you zoom out, you look at all the pricing dynamics and take rate dynamics. Is there a way that you could kind of bucket some of the take rate expansion you're seeing kind of between mix-related dynamics, macro-related dynamics and anything else that you would kind of attribute it to on the pricing side? I appreciate it. .

Yes. SP-3 Yes, of course, well. So look, I think what is often sort of not fully appreciated about our business, is how consistently we've been able to demonstrate our ability to increase yields in our portfolio, right? We have driven take rate expansion in our SMB business for multiple consecutive quarters now, including in Q2, where we expanded our take rate by 9 basis points. And we saw take rate expansion across the portfolio, right? We grew marketplace SMB take rate by 2 basis points. That's mostly a factor of increased card adoption. We grew our card portfolio to 25%, record usage on our card in the quarter. We grew our B2B take rate by 26 basis points. That is, as you know, Will, in your question, somewhat a factor of GeoMx, strong growth rest of world, relatively weaker growth as we just talked about in China, pricing power within that book and adoption of our card as well, particularly in Latin America, where we see really strong growth as well as the acquisition of the workforce management business, right?

So lots of levers that we are deploying within that business to expand our yield to expand our take rate. And similarly, within our checkout business, right? We announced our partnership with Stripe. Really excited to see continued take rate expansion there. So as you said, we had sort of multiple fibers and impact to that take rate. We don't really kind of look to decouple them and sort of explain each, but we're demonstrating additional utility and it shows up in the take rate that we're able to deliver quarter after quarter.

No, that's great. It sounds like a lot of just organic take rate expansion, which is great to see, and congrats again. .

Our next question comes from the line of Chris Kennedy with William Blair.

Is there any way to think about the EBITDA margin profile ex float as you think about the business going forward over the long term?

So look, I think the main way to think about it is that we have continued to drive expansion in our, I'll call it, our core adjusted EBITDA profile, right? At the midpoint, our guidance for adjusted EBITDA ex interest income is roughly 3x what we delivered last year, even as the environment is, as we've said, dynamic, right? So we feel confident that even as we mix shift into more complex business lines, even as we make investments, both organic and inorganic, that we continue to hit both our headline, I'll call it, adjusted EBITDA margin target of 25%. But importantly and critically, continue to improve the overall profitability dynamics of the core business, excluding interest income. And you're seeing that show up in the number. In the first half of this year, we've already delivered more core adjusted EBITDA than we did for all of and we expect to continue to accelerate into the back half of the year, even as we make investments, and we're continuing to invest, as John said in his prepared remarks, in our licensed infrastructure, that is an important enabler of our business and an important moat around our business.

We're continuing to invest in our platform capabilities and the team that supports it, including by expanding in India, as we discussed, and we're continuing to make investments in our money market infrastructure and last mile capabilities, which ultimately unlock the additional opportunities within our ecosystem. So we feel very comfortable with the trajectory that we're taking there.

Understood. And then as a follow-up, you talked about implementing blockchain to improve your treasury management operations. Can you just talk a little bit more about kind of the benefits that you are seeing from that or what you can see from that.

Sure, happy to. Look, as John said in his prepared remarks, one of the unique assets that we think positions us really well to drive adoption of stable coin to integrate the important capabilities of stablecoin into our ecosystem is really our last mile infrastructure, right? In a very real world we sold for the last mile challenge. The AL's adoption in certain use cases around stable coins, right? Ultimately, users need to be able to, yes, receive stable coin within their ecosystem, but ultimately to off-ramp it to other use cases within their local jurisdictions or otherwise. So we have, as we've talked in the past, in other contexts, an extensive bank and PSP network that allows us to solve for that challenge. So what we've already done. And one of the well-known use cases, as you know, Chris, from a stable coin adoption perspective is internal treasury management capabilities. What we've done is already to integrate via 1 of our banking partners, Citi, their capabilities to move tokenized funds through their global network to integrate those capabilities into our own treasury management capabilities. And what that gives us is an ability to move funds 24/7.

So we're not sort of beholden to cutoff times and so on. to get automation of those movements to get programmability of those movements and overall to really enable better capabilities internally, and therefore, enable better capabilities within our ecosystem for our customers. That's what we're doing sort of with the broader context. So this is an exciting real-world use case for us, and we're continuing to expand, and it adds real value to how we manage our ecosystem from a liquidity perspective, from a risk perspective from an FX perspective.

Next question comes from the line of Sanjay Sakhrani with KBW.

I have one more on tariffs, which was, as we've seen the tariff drama sort of unfold, I'm just curious if you've seen any more resiliency from your customers and sort of how to evolve their business around tariffs. So just as we think about what might be on the come how different you guys feel about their ability to deal with tariffs on a go-forward basis? And then just One related point, I mean, has there been any impact from your customers on this de minimis exemption going away? I'm just curious as we think about that China to U.S. corridor, how we see that playing through as the full impact in there already? Or could there be a residual one? .

Thanks, Sanjay. There is no impact from the de minimis really of any -- I think we talked about in the past is single digit -- low single digits and not an impact for us. What I think is important to note about our customer book is we have $2 million entrepreneurial creative, hard-working hustling business owners in 190 countries and territories committed to growing their businesses. So we benefit from their grit, frankly. And their grid suggest that they are very focused on globalizing their businesses even more, driving increased distribution cleaning up their portfolios of products to make sure that they're selling the right products in the right markets at the right price. So we haven't seen anything other than impressive entrepreneurship from the entrepreneurs we serve and great effort from the Payoneer team. I mentioned before, the 15 events we've done in China, the work our teams are doing across the globe. I shared in my prepared remarks, the case study of Brand 501, which is a business that is using Payoneer for B2B wholesale activity using our cards for expenses, using checkout for their direct-to-consumer work and selling on marketplaces. Those are the kind of customers we love serving and provide them a full financial stack solution for their international operations.

Got it. And I guess, I got one more on stablecoins. Obviously, very encouraging that you're incorporating it into your business. I'm just curious, the one question we just get quite frequently is sort of the disruptive threat. I'm just curious sort of how you guys think about it being a disruptive threat? I know there's lots of advantages to your model. But I'd love to just hear it from you in terms of sort of how you guys think about that angle of it. .

Yes. Look, thank you for the question. Like any new innovation or new technology, it can be disruptive, right? It's whether you're well positioned to take advantage of the disruption, and we are confident that we are, again, what has been a headwind to adoption to stable coin more broadly, and it's obviously growing massively. And as John said, we welcome the regulatory clarity that comes with the [indiscernible]. But some of the headwinds to broader adoption have been solving the last mile challenge. We can do that. the complexity for end users of managing multiple wallets in keys and cold storage and all of that, we can integrate. And today, we already provide a single utility, if you like, that allows users to manage currencies and to hold funds across a complex ecosystem.

So we already abstract that complexity today within our ecosystem, and we feel we're well positioned to do that, which is why we're focused on looking to add digital wallet capabilities. So again, disruptive any innovation can be disruptive. We're well positioned, ultimately, for us, we view the value as being able to seamlessly connect those modern digital currencies with all of the value that, that comes in terms of programmability, and real-time settlement with the legacy banking infrastructure and wells that we have within our ecosystem in a way that is user friendly and enables the ultimate business needs of the customers that you're serving. We're well positioned to do that. We're excited. So we view it as a long-term opportunity for us.

Next question comes from the line of Mayank Tandon with Needham & Company.

John, are you able to share any metrics around churn levels, either by segment or the company as a whole? I'm just curious to see if there's any impact from the higher tariffs uncertainty and sort of related have you had more difficulty onboarding customers because there might be resistance to working with you just given some of the uncertainty in the market. So curious around like churn and potential for onboarding customers because of the uncertainty? .

Thanks for the question. Our revenue retention has continued to improve modestly year-over-year, and we see retention as a very exciting opportunity for us. It's one of the reasons why we've moved the portfolio towards larger customers and focused on specific geographies. And given the profile of our customer base, as you'd expect, we see higher volume and revenue retention than we do individual logo retention. That's sort of the nature of the game when you serve small businesses. Our ICP retention is significantly higher than our non-ICP retention, and retention of our managed ICPs call out to some of the extraordinary people that work at Payoneer, we have local teams on the ground serving customers in emerging markets part of their local ecosystem speaking the local language, our managed ICPs, those that have the relationships directly with the CSM perform better than the non-managed or unmanaged ICPs. The team is working hard at productizing management services for ICPs as we scale. And the retention in general is an increasing focus for us. And I think the work the team has done to put in place tools to help us both track, manage, cross-sell our ICPs are working, and we're pleased with our progress there.

Sorry,. You asked a second question, which I just revealed my note that said our customers hesitant to onboard because of tariffs. I think Quite to the contrary, we saw ICP growth in China at 11% growth. So we are not seeing reticence, I think, the opposite. People -- to Bea's point about stable coins generally, we are trusted and being trusted means that folks are turning to Payoneer to participate in the global economy.

Got it. Actually, sort of you answered my second question. So I'll ask something else instead, which is you mentioned the facility in Gurgaon. I just want to understand, is that going to be showing up in terms of operating expenses on the R&D line? Or what is sort of the motivation behind that? Is that more because it's about able to hire engineers to do R&D in a hub like India? Or what are some of the main factors behind this initiative?

So happy to take the question. Look, in general, we're looking to operate our ecosystem with a view to ensuring resilience, recruiting the best talent and having us to the best talent as we continue to invest in our platform more broadly. We have a fantastic team based out of Israel that support our platform. We have folks all over the world. As you know, we're a very global company. We did a ton of research and India represents a real opportunity already have a foothold there as part of our workforce management acquisition and in other areas, it represents a real opportunity to tap into one of the largest tech talent hubs in the world. So yes, it will be incremental investment into our platform. It gives us resilience access to a bigger pool of talent that is important, and we will continue to manage to the medium-term adjusted EBITDA targets that we have talked about and feel very comfortable that we can do that.

Our last question comes from the line of Daniel Peller with Wolfe Research.

This is Daniel Greg on for Darren. I just wanted to follow up on the great take rate expansion we've seen and how to think about that relative to stablecoin integration any early sense of how you think about the unit economics of the stable point off ramp versus the traditional payout and this presents any sort of headwind to consistent yield growth over time? .

No, thanks for the question. Look, I think too early to say, right? We have laid out why we think we can play in this space. We're exploring and making investments in the back half of the year. to begin to build out that infrastructure. I think the take rate dynamics are going to depend very much on the particular use cases that we enable within our ecosystem. I think the overall sort of message that we want to leave you with is obviously sort of what I said to the other question that we have demonstrated a consistent ability to drive take rate expansion because we deliver more utility. And as we deliver more utility whether that's access to more markets, whether that's a card product, whether that's a best-in-class checkout capability, we can command higher yield and that shows up in the take rate. So stable coin is really just one more aspect of that. And we feel good that we can continue to drive take rate expansion as we add to the financial stack as we serve more complex customers with more complex needs. So what we -- again, we feel good about that trajectory and good about sort of how we're performing there.

Great. And then maybe as a related follow-up, is there any sense of what percentage of your revenues today are driven by FX conversion fees? And maybe if you could provide a sense of how this directionally has changed over time as you guys have broadened out the product suite.

Look, we've talked about it in the context of pricing strategy more generally, where we saw an opportunity and we were able to sort of unlock it. we saw an opportunity to more effectively monetize FX within our ecosystem based on enhancements to the product adding capabilities and ensuring that we were monetizing those additional capabilities appropriately and also looking at corridor by corridor pricing and so on. So we've been able to optimize over time, and that has shown up in some of the pricing sort of discussions that we've had. We haven't sort of -- we don't disaggregate our revenue based on FX and core and so on. We charge customers fees for the utilities that we provide and FX is one component of that.

We have no further questions, and so I'll hand the call back to the management team for any closing remarks.

Thank you, everybody, for your questions and your participation this morning. We really had a great second quarter, and we're confident that our strategy is working. We're excited about the opportunities in front of us and the strength of our platform, the resilience of our customer base and the focus on innovation that positions us to drive long-term sustainable growth. I want to particularly thank our team for their relentless commitment and our shareholders for their continued trust. We're excited about what's next, and we're just getting started as we like to say. Thanks, everybody.

Thank you, everyone. This concludes our call, and you may now disconnect your lines.