Payoneer Global Inc. Q1 FY2026 Earnings Call

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. 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, 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 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 three 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 onto 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 in customer support to reduce the overall volume of tickets 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 three to five 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. Eighty percent 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 is appropriate for them. For example, an IT services customer in Europe that uses our platform to receive six 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 seven 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 five 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 roadmap. 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.

Your first question comes from the line of Nate Svensson of Deutsche Bank. Your next question comes from the line of Aditya Buddhavarapu of Bank of America.

This is Aditya from Bank of America. Just on the full year guidance, could you just maybe 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. Overall, in terms of the macro context, what we're seeing in Q1 is very consistent with broader industry trends. We're seeing stable-to-improving marketplace trends, really robust performance in our B2B business, where we grew volumes by more than 40%, and 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. 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 into the 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, and 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 is probably to come in the mid-20s, with a lower take rate from the business mix in China and EMEA. And in our Checkout business, as I noted, we performed very well migrating that portfolio. We're seeing great customer adoption, including of the underlying features. So we're expecting flat to modest mid-single-digit growth in volume and continuing to scale from there. All of that is against a macro environment that we view as stable through the rest of the year, broadly speaking, and robust in terms of customer spending behavior and B2B behavior. So overall, low double-digit volume performance in the aggregate and revenue growing a shade faster than that, accelerating into the back half of the year, with Q2 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?

Thanks for the question, Chris. We're really pleased with our performance in Q1 because we're achieving it by driving every critical KPI. We're accelerating growth from a top-line perspective, which gives us conviction going into the back half of the year that we can exit core revenue in the mid-teens as we called out in February. We're driving nice margin expansion even as we mix shift into more complex business. We're seeing strong transaction profit margin dynamics within the business, which is dropping to the bottom line. We're investing in our platform and stack, but still operating with discipline, and expect adjusted OpEx overall to be up mid-single digits—about 6% to 7% overall as our guidance calls for. All of that will continue to unlock leverage in the business, including the core business. As John mentioned, as we deploy AI in a use case-specific manner across platform, operations and risk functions, we expect to unlock meaningful leverage going forward. We'll continue executing against that plan and expect the results to show up in the bottom line. We're very happy with the trajectory.

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

From a B2B perspective, we saw robust growth in China and B2B more broadly—44% volume growth and in excess of 20% from a revenue perspective. China is predominantly a goods business, whereas much of our other B2B business is service-oriented and has a lower take rate overall versus the rest of our B2B business. However, as we grow the B2B business faster than the rest of the business, it is still take-rate accretive. Our take rate in the B2B business is roughly 1.5x what it is in the rest of the business, and it is overall accretive to the portfolio. We're growing in that market in a measured way, adding capabilities and features to the product set, and we have a strong brand in China. We believe we can win in this 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 in B2B; it is the engine of our growth for years ahead. We built on the momentum from Q4 and more than doubled the volume sequentially quarter-over-quarter. Larger customers in China are turning to Payoneer as the preferred partner for their global exports. Globally, services businesses and larger services customers are choosing Payoneer as the multicurrency wallet for their cross-border operations as we move upmarket and focus on key geographies and incorporation hubs. We've migrated to the full financial stack of offerings for multinational cross-border SMB firms, and customers are adopting three or more of our products. They're loading more funds onto our platform, as shown by our 15% growth in customer funds. We're seeing very strong usage of our AP products. Our workforce management business continues to exceed expectations as we help global firms hire contractors and employees worldwide. Given these trends, and as Bea 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. B2B is now one-third of total volume for our SMB business. It's a $10 trillion opportunity, and we have slightly less than 1% share; we are intent on winning our fair portion of it.

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

For B2B, every market showed strong results. China is particularly strong; APAC and EMEA are strong as well. We're pleased with progress in Latin America—it's about 10% of our revenue, a smaller portion of the overall business but an important franchise. We're doing better than anticipated in China, and we intend to continue that momentum.

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

Apologies about the technical difficulties earlier. I appreciate you letting 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 I'm trying to double-click in a couple of areas. First, the dynamics in checkout. Numbers were very good. You noted that the migration to Stripe went a lot better than expected. Could you provide more color on what exactly went better than expected? I recall there might have been an intention to not migrate a portion of customers, so I'm wondering how things played out versus your expectation. Now that the migration sounds like it is complete, any color on underlying performance within that business and how you expect that to play out going forward?

Thanks, Nate. In terms of the acceleration more broadly, we feel good about our KPIs. The significant acceleration in our B2B business—more than double in Q1 versus Q4—continued into April. That supports our view of a 30%+ volume number for the back half. The marketplace business is stable to improving, and we launched initiatives to push and inflect that business. The enterprise business has also outperformed expectations and is accelerating; we won new partners last year and those relationships are ramping. Regarding checkout, we discussed the shift to the Stripe solution late last year and planned a migration earlier this year. That migration was operationally complex, and we expected some attrition in the book—some intentional, some anticipated churn. In the end, performance was better than expected. We transitioned more than 90% of the portfolio and did it faster than anticipated. We now have a solid foundation on a solution that works for our customers. The platform has best-in-class features, and we're seeing higher uptake of features such as BNPL within the checkout solution—significantly higher than before. We feel great about the trajectory. We expected a bit of a bump in the road in 2026, but we've performed better than that and remain confident in the opportunity.

I'd add that the checkout migration proves Payoneer's thesis: customers want a multicurrency account where they receive global accounts receivable from marketplaces like Amazon or Walmart, from B2B transactions, and from direct-to-consumer sales, and they want to use a single trusted partner for accounts receivable and accounts payable across sourcing, ad spend, payroll and other needs. That financial stack value proposition is playing out, and the checkout team executed the transition well.

Super helpful and detailed answer. For the follow-up on back-half acceleration: you mentioned easier comps with the tariff dynamics last year, the checkout migration to Stripe, timing of some pricing initiatives, and enterprise wins. On pricing, how long after implementing a pricing increase does it take to flow through the business? Is that part of the back-half acceleration? And on enterprise, are recent wins fully ramped or is there more room to grow with logos you've already won, leaving aside future wins?

Happy to take that. Pricing has been a useful lever and is part of our strategy to align products and pricing to drive share of wallet. The ramp from pricing is a factor but not the primary driver of back-half acceleration. There will be some pricing uplift in the back half, mostly targeting long-tail or nonstrategic routes, and those moves are easier to model and roll out. I wouldn't over-index on pricing; the more important drivers are the performance and momentum across the rest of the business. Regarding enterprise, not all recent wins are fully ramped yet. We expect continued momentum as we ramp additional routes with marquee clients, and those ramps should keep driving 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.