Payoneer Global Inc. (PAYO) Earnings Call Transcript & Summary

So I'm Michelle Wang, Head of Investor Relations for Payoneer, and we're excited today to present you with Payoneer, and we hope you leave with a better understanding of our customers, the challenges that they face as well as why they choose Payoneer. We're going to talk about our business model, including our differentiated assets and infrastructure. And lastly, we're going to talk about our strategy, including how we intend to deliver long-term profitable growth. Our presenters for today are John Caplan, our CEO; Assaf Ronen, our Chief Platform Officer; Adam Cohen, our Chief Growth Officer; and Bea Ordonez, our CFO. So really quickly, here's our agenda for today. We'll kick off with John, who will talk about our business and opportunity. We'll then have a soft come up and talk about our products and technology. We'll take a quick break. We'll come back here at 2, and then Adam will present our go-to-market strategy. We'll then have Bea, talk about our financial outlook. We'll have Q&A at the end of the session. We'll take questions from the room. And if you're joining us via the webcast, we'll take questions directly through the portal or you can e-mail investor@payoneer.com. After the Q&A, John will conclude. And for those of you joining us in the room, we'll have a reception outside. Lastly, really quickly, here's our disclaimers. Please take a moment to review. And if you want more information, you can find that in our SEC filings as well as on our website. So with that, I'd like to welcome John Caplan, our CEO.

Hi, everybody. It is awesome to be here. And my name is John Caplan. I'm Payoneer CEO. I joined Payoneer May of 2022 from Alibaba Group where I helped to lead the transformation of Alibaba's B2B business, alibaba.com, became CEO of Payoneer March 1 of this year. And I can tell you, I've been involved helping to build companies that help small businesses globally for basically all of my professional life. And I have never worked with a team of people more committed, creative, more capable of transforming the lives of entrepreneurs around the globe than the Payoneer team. We're 2,400 people in 50 countries, serving emerging market entrepreneurs, helping them do business, making it easy for them to do business globally from wherever they are around the world. Today, we're going to dig into the business of Payoneer, our assets, our vision, our strategy, our momentum and our team. But more important than the fact that we've had 35% compound annual revenue growth over the last 3 years. More important than the fact that we've had nearly $100 million of adjusted EBITDA in the first half of this year. More important than the fact that our customers trust us so much that they hold $5.5 billion of their most precious resource on the Payoneer platform is this. We have global engaged customers. Our most valuable customers log into their Payoneer application, 365 days a year. We are a vital part of the daily life of business owners around the world, and we built and provide them a solution second to none. So today's presentation will go into the details of what we've created. Assaf will stand up and give you a detailed road map of the products we've currently built, the products we will build to drive engagement and ARPU. Adam will get up and share with you our ICP growth strategy, and just why we're so focused on the high-value ICPs, and our strategy to both acquire them, and the networks they bring on to our platform and the leverage we have with them. Bea, will bring it all home and explain the leverage and power in the Payoneer financial model, which I think, frankly, has largely misunderstood. And after today, our hope is that our shareholders understand the potential and opportunity inside the Payoneer platform. We have a framework for growth. ICPs, ARPU and efficiency built on a global platform with a highly productive and joyful organization, capitalizing on all the assets assembled at Payoneer over the last 18 years. I think we all know how important global trade is to the global economy, right? If you think about it -- and I'll get to the slides in a minute, but why don't we just talk about the business without any slides for a second. Global trade drives the global community. And their technology innovations we've seen over the last thousands of years have really been global trade innovations. The SilkRoad, maritime shipping and the shipping container in the Panama Canal, the printing press and the share of ideas. And then over the last 25 years or so, the power of the Internet to drive communication globally. But you know the one industry that's lagged behind that hasn't modernized hasn't brought creativity and opportunity for the world. It's actually the banking sector. And the banking sector probably because it's the most complex, probably because it's the most regulated, probably because brands matter and doing business globally matters, it's been hard to do. We've done that. We've made it easy for businesses to globalize on the Payoneer platform. And I think -- we think we have decades of opportunity in front of us to capture the full opportunity of the Payoneer platform. And to understand the scale of that opportunity, there are 7.5 billion people on the planet, right? 700 million people globally do work every day involved in global trade, 20% of the global population, $34 trillion of global trade in 2030. The opportunity for Payoneer is unmatched. And our focus is to connect the world's underserved entrepreneurs into that global economy. Look, if you're a big company and you've got a big finance organization and sophisticated treasury and a great CFO like we have, Payoneer maybe isn't the thing you need. But most of the world's businesses don't have those opportunities or assets. They're underserved by global banks. They're underserved by peer-to-peer FinTech companies and local banks don't have the networks technology connectivity that a small business operator needs to export their businesses. And for those of us here in New York, you can feed your family as far as you can drive in a day, right? You can start a business in New York and drive to fill and be home in time for dinner, and there's enough demand. But if you're in Ho Chi Minh City or if you're in Lahore, that's actually not true. You need to connect into the global economy in order to participate and grow your business and lift up your family and your community. Payoneer is a company doing well, and we're doing good. And I'm personally super proud of that. Because ours is a business capitalizing on the trend, the sort of secular massive trend that's driving global growth, which is cross-border trade. And you can see the data. It's too big a number for us, any of us in this room to count. And when you think about small business owners, we did a recent survey of about 4,000 SMBs around the globe. And we asked them how important is cross-border trade to you. 70% of them said, "I see doing business cross-border as key to my success." This is why we exist. 70% of them said they expect their revenue to grow significantly from the cross-border opportunities. But if you're opening a bank account and you're based in Lahore, and you want to open a bank account in New York, what don't you have? You don't have a social security number, sorry. And if you're big enough to hire a bunch of employees and they're local, then you have 40 pages and months of work to go through to get that bank account opened. So just having an account is nearly impossible, expensive, time-consuming, complex. And if you manage to do it, you're one of the lucky few. It should not be. We believe it should not be that the innovators, creators, drivers of the global economy have to compete with one arm tied behind their back. That's just not fair. So getting paid is difficult. Obviously, if you can't get paid, you can't make payments. And certainly, access to capital is an existential challenge for this SMBs in emerging markets. There are about 80 million of them that we estimate. Right now, we have 2 million active customers, 0.5 million ICP customers, we'll talk about that. We estimate 80 million underserved SMBs that are directly, sort of in the bull's eye of what our incredible team has built. And I talked about why the big international banks serve the Fortune 1000, the FinTechs, the Neobanks are local and not connected into the global opportunity. The cross-border remittance companies are largely peer-to-peer and the local banks are essential, every one of our customers. Let's make sure this is perfectly clear. 100% of our customers have a local bank relationship. They need it, but they also need a Payoneer account because they need the full financial stack that we're building and are offering to our customers in order for them to compete and win in this economy. Our application is remarkably simple to use. In the palm of your hand, collect your accounts receivable, whether from a big marketplace like Amazon or Walmart or eBay or Fiverr or Upwork or Mercado Libre or Coupang, you name it. I can't even -- I was run out of breath trying to name all of our marketplace relationships. All the AR into one place. If you're selling wholesale and you send an invoice, all the AR into one place. If you're going direct-to-consumer or checkout product, all the AR are going into one place. Multi-currency application with all of your accounts or international accounts receivable. So you're able to, in fact, manage, optimize your international AP. Whether you're paying your contractors overseas, whether you're paying your employees overseas, whether you're buying, advertising on Facebook and Google. The Payoneer application enables you to do it from the palm of your hand. So our platform is unlike any other. And I'm part of -- as I said, I joined the company 1.5 years ago, became our CEO March 1. I stand on the shoulder of the giants who built this company. The innovators who created the opportunity for -- to make it easy for small business owners anywhere to do business everywhere. And those differentiators are our platform, our stack is global, regulated in all the critical markets around the globe and continuing to add licenses globally. We may, in fact, be the only company on the planet that can successfully seamlessly digitally onboard and KYC applicants -- small business applicants in 190 countries in one application. Over 100 banking relationships to instantly and seamlessly move money around the globe. Assaf likes to say, you can know where your pizza is in 18 minutes when you order online with seamless, but most SMBs are in the dark, not knowing where their money is. Well, not with Payoneer. Transparency and service is a critical part of the Payoneer application. The Payoneer Global financial stack, which makes it easy for businesses to do business is also hyperlocal. And this is a superpower of our team. We have, at most basic, helped our customers so that they can have a local operating account, a local financial account wherever their customers are paying them. I was on the phone yesterday with a customer in Egypt, Wasim. He's featured on some of the videos. And what Wasim said to me, said, John, look, I do business in Egypt, I have customers around the globe, providing them a U.S. dollar account that they're paying into, enhances the credibility and trust they have in my business. Because people know, people with USD accounts are to be trusted. We have local teams across the globe. Our CSMs, our support organization is partnering with our customers to help them and cross-selling our products. Remember the formula or framework for growth, ICPs, ARPU and service cost. Adam is going to take you through the growth we're seeing in ARPU. It's directly related to the trust and relationships we have with our customers. And then obviously, getting your money quick, right? That's probably the most important thing. Be trusting and predicting and knowing that when you log in to your pane or application, the data and information and your money is going to be there. So you can focus on the most important thing which is growing your business, adding customers, taking care of your employees. So our financial stack is also trusted, probably the most important asset we have. Trusted by 2 million active customers, 500,000 ICPs, $5.5 billion of customer balances and our largest customers hold many months of balances on the Payoneer platform. This is generating a significant portion of our revenue because it's core to the value prop we offer to our customers. You may not realize that the way Payoneer works, you collect -- people use Payoneer to collect their AR and use Payoneer to manage their AP, basically both sides of their general ledger. Well, today, the average customer has 4-or-so connections within the platform. We've seen 20% year-over-year growth of in-network payments between Payoneer account holders. Many billions, nearly $10 billion of in-network volume is passing through the Payoneer platform and 11 million monthly global transactions. Our engineering organization, our banking operations organization, our product organization, our relationships are second to none, and they enable us to move money around the globe seamlessly, in a trusted regulated environment at scale. So let's meet some of these incredible customers. So Kevin, was employee #7 at a company based in China that makes 3D printers for the education market, originally selling these products on Amazon, now on Amazon, Walmart and a bunch of other marketplaces. 200 employees today, launching new products for Christmas 2023, is that you're in the market, he told me yesterday that, that was on his list. I should hype up his amazing 3D printers for all the parents in the room. And he's been a customer since 2017. And I think you -- and Adam will talk about the revenue retention in our business, north of 100% revenue retention at Payoneer. It's because customers trust us, they bring us their business. They buy more products and service from us, and they bring their networks onto the platform. Starting with in marketplace payouts now using our checkout solution, an exceptional homegrown innovation that today, we're very excited to share with our shareholders around the globe that we've exceeded $100 million of volume and nearly 1,000% growth of our checkout business. Kevin is a checkout customer and using our AP capability, so he can manage his Amazon FDA payments. He can manage his Facebook advertising and pay DHL and others. Or meet Hannah, a BPO in the Philippines, Hannah has been a customer and her team has been a customer since 2019, 100 employees. This is a real business, an essential part of the Philippine economy and the U.S. economy is Hannah's business and businesses like here. Started using Payoneer to get paid when she was distributing her capability on marketplaces. Then using the Payoneer products to invoice our customers, to send invoices so that they can pay quickly in a trusted way. Now she's paying her employees using the Payoneer application. Paying contractors. So if you think about it, she's brought all of her AR and her AP onto our network. And we have, like I said a moment ago, 500,000 ICP customers, 2 million total customers, each of them are part of their own business network, and we have an opportunity long term to connect those networks to one another. And then the final sort of opportunity with Hannah that we're developing is working capital with perfect insight into her business into the flow of her funds, we know more about her business than her bank does. So we can underwrite her successfully, and we are, and Assaf will take you through the 70% retention we have in our working capital product and the repeat use of that product, we're just getting started with that opportunity. And then finally, Pedro. So we all saw during the pandemic that knowledge work didn't have to be in an office. And Pedro is one of those entrepreneurs who lives in Brazil and understands he can write code from Sao Paulo just like he can from Seattle. And so he now lives in Brazil. He invoices his clients, gets paid by his clients with the Payoneer application and he uses our card when he goes on business trips. So he's up in Seattle or he's sitting on a trip, and he's like, I'm managing all my expenses so I can submit for reimbursement right off the Payoneer card. And when he needs money in Brazil, he clicks a button and it shows up in his local bank. So his local bank is providing the commodity service and Payoneer is providing the exceptional branded service that helps him grow his business. 0.5 million ICP customers. The basic definition, you're an ICP, if you do over $6,000 of trailing 12-month volume. We have 50,000 of our best ICPs. They do over $120,000 of trailing 12-month volume. And Adam and Bea, will take you through the ARPU dynamics of these customers, our acquisition strategy for these customers and the fact that they stay longer, spend more, use more of our products and are helping build the web or network of the Payoneer economy. And in just a few quarters where we've really redirected our focus to high-value ICP acquisition, we've delivered 18% growth in the highest-value ICPs, and those represent 50% of our revenue. They're equally distributed around the globe. So in our 5 key growth regions, we have nearly 100,000 ICPs in each of them. In LatAm, APAC and SAMEA, we've had 45% growth of high-value ICPs. Ours is a global platform with a massive opportunity to continue to penetrate, add new customers, drive ARPU, reduce the cost to serve as we scale helping SMBs do business globally. Those customers unlock a significant financial opportunity for our company. And I think most people know of Payoneer as the marketplace payouts company, which is where we started, which was our wedge to capture and build the platform. Marketplace payouts about $300 billion market. And I'll show you in a minute, we have -- we're the leader with 20% share, a 19% compound annual growth in the marketplace payout space. But that beachhead opened up the door for our checkout business, opened up the door for the needs of our customers who want to invoice, their customers with our B2B products. And when you look at the growth we've had in those 2 opportunities, we're just scratching the surface. We're literally at the beginning of the opportunity, and we're still the largest leading and fastest growing. So let's look at the data, 20% growth in the marketplace payout space. 19% -- 20% share, 19% revenue CAGR over the trailing 3 years, nearly 1,000% growth in the launch of our checkout product. An exceptional new way to help SMBs in Asia today who are trying to sell their products to Europe and the United States, not have 48% acceptance rates, but 98% acceptance rates. As someone who spent the better part of the last 20 years, helping SMB sell their products, you can't buy advertising on Facebook if your return on ad spend will not work, if you're not converting at 98% or 99%. Payoneer is helping global merchants being local where their customers are. In our B2B franchise, 72% compound annual growth in Latin America, APAC and SAMEA. We are the market leader, and we're just getting started serving these customers with the products, features and services that they need and Bea will share with you that the take rate dynamics in our B2B markets are multiples stronger than in our marketplace payout markets. There's nothing more gratifying than building a business that helps other people's business be successful. And our framework for growth, ICP acquisition, more products and ARPU growth, efficient operations, on a global platform and a joyful and productive organization is what is driving Payoneer, and why I believe with such confidence that we are just at the beginning of the Payoneer opportunity. Assaf is going to come up, and he'll take you through the product road map and our features, our capability, our principles for our growth. Adam will share how we're acquiring ICPs, where they are, what our go-to-market strategy is and why it's working. And Bea, will bring us home and wrap it all together for you, so you can see that the financial model at Payoneer, a company with nearly $600 million on our balance sheet, cash -- free cash flow generating, a motivated, experienced, focused management team. We have a real and significant opportunity, I'm proud of what we've accomplished so far and excited for today's discussion with shareholders online and those of you here in the room, I encourage your questions and your observations. We're looking forward to today's discussion. And with that, Assaf.

Okay. So first, I'm really happy being here. And when I was getting here this morning, I was thinking -- I'm a Assaf Ronen, I'm the Chief Platform Officer for Payoneer. This week marks a year for me being here. And I had the privilege before running growth businesses. I was part of establishing Alexa and ran SoFi. And when I was thinking this morning driving here or riding here on an Uber, I actually think that the opportunity here is as big. We have an opportunity here to build something unmatched. And this is what I'm going to go over with you folks in the next few minutes. So John started by talking about the challenges that the international SMBs have. And it's hard to understand that sitting here in New York. It's very easy for my kids today, I have a kid that's 23 to open a bank account. If you live in China, if you live in India, if you live in Mexico, you don't have an SSN. You can't do that. But there are even other things that don't make sense. Why does it take money to get from my payers to me a week. This is digital these days. And not only that it takes a week, on the way, the banking system will take 5%, 7%, 8% of my money just to move it around. It sounds weird, but this is what those customers are dealing with. Why? When I tried to use my credit card or my card to pay back for advertising in U.S. dollars, I need to start changing currencies. And again, every time I do all of those things, what happens? Somebody is taking a cut if I'm an SMB from my revenue, from my profits. And as John mentioned, if I'm trying to sell overseas not in the marketplace but sell in my own site, website, when customers will try to swipe their credit cards, half of them are going to be rejected. So all of those problems are things that are limiting SMBs from around the globe to thrive. And this is what we're doing. We're solving those problems. We're helping them be successful. And for the last year, as we've been building a set of services that provide them with a robust account that solves those problems. It starts with their ability, as we said in checkout to actually have their customers pay them. they're able to invoice their partners, and we know that business is something that involves a network. It allows them to load fund just like any account, add money to their account, sounds basic, but these are things that do not work for those folks. And as we said, we start from marketplace payment. Again, you can get paid by marketplaces and others. And not only that you get all that money and you have now an account, and they trust that account. That account provides them with the ability to manage multiple currencies, to keep their money with us in a trusted place and we see that in the money they keep with us and over time, get working capital advances, which is injections of capital into their business. Also, we're allowing them to use those funds. Because at the end of the business, you want to make money and you want to use that money. So we're allowing them to pay, to have cards that manage their expenses, to move money between banks, to play their global vendors, advertising, moving, shipping all of those things in a fast way, in an easy way, in a trackable way, and this is only the beginning. Now all of those services make sense to an SMB because you're all sitting in one application. If you're thinking about an SMB, they don't have a finance department. They don't have the attention, spend the time to work with 7 different banks or 7 different FinTechs to get all those things done. They want it to just work. And the ability to do that in one application that's there, financial hub is the key to what we do. And the 2 numbers that prove that point are one, more than 0.5 million SMBs globally are starting onboarding with us every month. So more than 0.5 million businesses think that they need that. And the second one, as John said, are super ICPs, the one that are 10,000 and above. They enter our application every day. Every day because this is the lifeline of their business. In the radius of a mile here, I don't know how many bank branches are there. I don't know, 100? How many of them have their customers get into their door and walk in every day. These are our customers, and that gives us the opportunity to help them better and to serve them better. But what makes us so unique? What are the differentiators of Payoneer? So first, we are the only ones that look at those international SMBs as our bull's eye. And John talked about the large banks and the FinTechs and everyone else. Nobody is focused on their needs. So we're building the products that they need and the feature that they need. The one account with multiple currencies. The design for cross-border and making that faster and easier and seamless. The ability to use cards regardless where you are and where you're paying and all of those things in one place. But more than that, we are looking, we're starting, whenever we build something, we're looking at them with the simplicity and with the functionality that they need. And I'll be honest here, nobody else around the globe as far as we know, is doing that with that focus. But not only that we provide them with those features, because they're businesses, we provide them in a business-grade way. They have multiple employees. They have roles within their organization, et cetera. So we provide that ease with taking into account the business needs and business grade of those features. As we said, the second differentiator is the fact that it's an all-in-one account. That all-in-one is critical because SMBs don't want to contact 7, 10, 5 financial institutions. They want to spend their time on running their business. They want to spend 95%, 98%, 100% of their time in growing their business and not needing to manage multiple financial accounts. So this is a second differentiator. We can find features like that in some financial institutions, but then they don't bring that all together. They have one or two of them. Nobody else has everything that we bring into the table. And the third one is the network and engagement that we have. That Daily log-in is a critical asset. That means that, a, our customers finding us very useful, but more than that, them engaging with us allows us to help them more and cross-sell them more into more products and more services, the ones that we have today and the ones that we will have in the future. The network effect that we have with that engagement, again, is an untapped resource. Because businesses work in networks and the ability to grow that network and to have them bring in their business partners, bring in the people that they get money from and pay to, again, is an asset. So all of those things are things that if you look at them together, nobody else has. But all of that activity and customer creates another asset. And an asset that's very relevant and very important to us. And that asset is the ocean of data that we're gathering. We have the information around about millions of SMBs, what they do, where they pay, what they're selling, what they're getting, what are their businesses. This is critical information. We have very, very detailed marketplace information. We know for sellers what products sell better, what products sell worse. Are you a good seller, do people return your merchandise or not? All of that data, again, is extremely valuable. Add to that, the country-specific and quarter specific traffic that we're seeing. And fortunately or unfortunately, we also know who's legit and who is not. So all of that data is an amazing asset that allows us to invest and use both AI and these day generative AI in order to provide more value and to grow more. So first, we're able to use that data to hyper personalize their experiences. To know what they need many times before they know that. And have it interfaces in front of them in the app. This is critical. We're also able to use that data to create generative AI models to interact with them. So they are easily engaging Payoneer and able to talk to us in the way that they want to. We can build predictive models of what they will need next and what should we offer them. What's the next best offer for each and every one customer. We can use that. And I think John mentioned that to build superior underwriting in order to provide them with credit. Let's think about it. Their local bank has no clue about 90% of the things that we know. And we all know that in order to build a great credit or lending business, you need data and you need customers. We have them both. And last but not least, taking all that data and using it in order to understand what should we build next and how we build a road map. So we have built an experience in a platform that's unmatched, that's designed to delight customers, as John mentioned and showed, capture a much larger total addressable market and grow ARPU by cross-selling and higher engagement. Let's touch for a little bit, the 4 growth businesses that we have. So let's start with the B2B payments. This is a fairly simple value that we provide our customers. Every business needs to get paid by their partners and need to pay their employees that are global or their partners. Sounds easy when you do it domestically. When you try to do that with borders in this process, so many things break. And this is where we come to help them. We have been able to do that in the last couple of years. We have focused now on growth in that business. We have focused and Adam will talk about how we focus our go-to-market organization to grow that business, and how today and in '24, we will grow them out of verticals, the amount of industries that we support in order to grow B2B. More than that, we're investing in making their experience better. So it's easy for them. So we're going to have the revamped onboarding for them. We're going to upgrade their functionality from a platform perspective and more than anything else, we'll make it faster and easier for the money to move because that's what they care about. The second one, which is the newest kid on the block is our Checkout business. This is a business that started only about a year ago. And again, you'd ask yourself, just second, the other technology that provide checkout if you want to sell something. But here, again, if you're international, it breaks. And think about what it means for that business. So if I am a goods seller, let's say, a home goods seller from Mexico, and I'm trying to sell in the U.S. So first I need to pay for advertising for people to know that I have that store. Then I need to have the right merchandise, so people in that foreign country will buy. Then I need to have the right pricing, I need to find the right ways to ship, so they'll accept it. I've done all that and people go to the register and try to pay. Today, half of them are being rejected. Half of the customers that was able to obtain are being rejected. This is what Payoneer is doing with our Checkout. We are providing a local acceptance experience to those customers. So instead of half of the customers being kicked out and they'll never return, we're getting the local experience, which is in the high 90s of acceptance rates, which is what every domestic business will be able to get. And this is critical. And we just started this business about a year ago, and we're seeing tremendous traction here. You're seeing the numbers almost 900% growth, but it's unfair. It's -- we're just starting. But in about a year, like $100 million of [ GMP ] working in that system, and we're seeing that growing and growing very fast. What are we working on? We're continuing to improve their international acceptance. This is the key thing here. Nobody else cares about the acceptance of those folks. And the better job we do here, the better the business will grow. We're adding more payment methods, and we're continuing to invest in something that they care about a lot, which is that integration with the Payoneer account. What we're hearing from them is, hey, it's great that your acceptance rate is amazing. But the fact that it goes to my account that sits in the cloud, and is international is another key because then they can use all the other things that we're providing them. Third one, and that's not because I didn't have lunch today, it's the fries or the burger, like every business needs to be able to spend. And the easiest way to spend is to have cards. This is to make it easy to manage expenses everywhere you can use that, et cetera. And we have an opportunity here with our commercial card. There isn't an SMB out there that doesn't need a card. There isn't an SMB out there that doesn't need a card. And we're seeing that with our commercial card, 80% year-over-year growth, but still we need to continue working to make sure that all of them are going to get cards. And what we're going to do in 2024? We're going to increase penetration. We're going to make sure, again, just like when you drive-through in, whether it's McDonald's or Burger King, whatever or good burgers or whatever, everybody asks do you want fries with that. This is what we're going to continue doing. And we're going to continue making those cards better. Better expense management, better cash backs, better everything. And again, this is a great opportunity for us. And last but not least, we talked about, this is our working capital. This is a way to inject credit or capital into those businesses. And I don't know, I've never met a small business that doesn't need more capital injection. They want to grow. They want to be more successful. They want to have more inventory. And the proof that what we've started with is helping them are these numbers. So 70% of all businesses that took a working capital advance with us, came back to take another one. And as we know, in lending, acquisition of customers is probably the second most expensive thing to do. They are coming back. That means that they like the service, they like the pricing, they like the offering. That's critical. We're seeing the last 3 years, almost 50% growth year-over-year. And we're seeing 65% of originations coming from customers that already took a loan with us. That -- these are amazing numbers. But still only a fraction of our customer base is taking those. So we have an amazing opportunity. When I'm saying fraction, think about it, we talk about 20% of marketplace payments going through us, which is about in 2022, we were $64 billion of money coming in and out. And we're extending about $250 million of loans on a quarterly basis -- sorry, net of loans of working capital. We have an amazingly big growth opportunity here, and we will continue doing that by using our data, which nobody else has and with convenience. And I want to touch on convenience for a second. Why do those customers take the working capital advances with us? We are not asking them to apply. We're not telling them like, I don't know, on average, if you open your mailbox, how many loan papers you get on a monthly basis? 10, 20, 30? We're not doing that. We're not telling, hey, apply and you will get up to [ full ]. No, we have their data. We know who they are. So in their account, that thing is waiting and saying, "Hey, customer, there's x amount of dollars that you could press here" it's there. It's in your account. So that ease-of-use is critical for them. And when we think about the stability of that business from a collections perspective, we sit on the flow of funds. So not only that we have the customers, not only that we have the data, our ability to collect is superior because we see their money before they do. So that makes it a great product. But we're not just stopping here. These are things that we have today. I want to share with you how we're thinking about the future. And if we were sitting with my R&D folks here, we would go one by one in each and every one of those features, this is not what we're going to do here. I added this slide because that's our velocity slide. And what we're seeing here is in the last years, we've learned to shift more value to customers faster, which is what we care about. And what we're seeing is that we have been accelerating our ability to add functionality to our customers. And that's what they care about. And if you see here in the blue, which is near and dear to my heart, this is what we're providing to those B2B customers and to those Checkout customers. Why is this important? Because as you can see, we're investing in those businesses, and we're investing more and more to give them more value, and we'll continue doing that. When we're thinking about how we're building the Payoneer platform, there are 4 principles that we care about. The first one is Ease and digital because those are SMBs, because some of them are prosumers, some of them are smaller businesses. It all needs to be easy. Everything from how you onboard to the platform. And this is where we started investing earlier in the year. And I'm happy to share with you that we've made some great strides. We've already added AI models to the top of the funnel, digital experiences, et cetera. And we are seeing good results there with our onboarding efforts, but not only onboarding the experience itself, how easy it is. How you get notifications when money is coming in, how things are going to work for you. So ease is one principle and one area that we're investing in. The second one is All-in-one. This is the financial hub of those businesses, and there are more and more and more services that they need from us, which is great because they trust us, and they want more from us. And all that we need to do over time is provide them with more services. The third is Trust. We're handling their money. So we're in the business of trust. And we're going to continue investing in improving the trust, and we'll see in a minute how we're going to do that. And last but not least, we talked about the network effect. We will continue investing in harvesting that network effect. So let's touch a little bit about those things. And we talked about onboarding. This is near and dear to my heart. I want our customers to feel welcome. John said, we're the only one, to the best of my knowledge that can digitally onboard in 190 countries. This is unheard of. But we're not done with that. We're going to continue and simplify our onboarding, simplify our experience, improve our notifications, improve our engagement with customers. This is critical because the better it is, the more engaged they are, the happier they will be, the more they will be with us. And over time, the more they will use us, and it will help them be more successful. Second one is really add more services. And here, we're going to do that in 2 or 3 ways. First, we're going to continue building things. We are going as we added checkout and we added the ability to add money in. We're going to continue adding invoicing and other things. But it's not just going to be us building here. And we have our great pioneer team here. We're going to continue and partner with others. It should be just services that we are building. Our customers want all of the services from one place. We're going to partner and bring in third-party services in. And in some cases, we're going to use our capital to buy technologies and bring them in because the appetite of our customers to more services is endless. We talked about trust. And in my mind, there are 3 levels of trust. The entire financial system is in Level 1. Level 1 is I give you my money, it's safe. We trust our banks not to use our money. We trust our banks to keep them, and everything is amazing. But I think that we can do better. The second thing is being to know and not need to look for things. All of us, when we see an ad for a financial service, et cetera, I need to see with our eyes, where do they go? You're going to get 10% interest rate. We're going through the Ts and Cs. Visibility and clarity is not there. And as John said, I'd like to talk about the pizza tracker for your money. But actually, it sounds basic, but where do we get that? Think about it, I'm going to get paid from one country to another for a week. My money is not going to be anywhere. It's going to be the heat ether. We're providing today that basic money tracker, and we will continue doing that. So visibility and clarity and communication is the second level of trust. We want to also get to the third level of trust. The third level of trust is we're going to be there and have their backs when they need us. And if you think about it, how many financial institutions you know that you trust them to have your back when you need the most. We're going to be that. And I'll give an example of that. So as we said, we have a lot of Amazon sellers here. And their biggest nightmare, for example, is Amazon don't like their store and tell them, sorry, folks, we're shutting down your store. We're going to use our data to predict that and give them a store closure predictor and warning. So that will never happen to them. That's critical. This is an example of really having their backs. And last but not least, from a network perspective. We're going to continue investing in our own network. And even today, we had the ability for those small businesses to pay and move money between one to another on our network. That is something that we're continuing to grow with. We're going to continue investing in referral on them, then bringing their business partners. But more than that, and that is, I think, one of the highest asked features from us is they're saying, "Hey, can I use the fact that I'm a Payoneer trusted business in order to grow my business? Can you help me find more businesses" and we have millions of them on our network. And we're going to invest in that to help the businesses that are working with Payoneer grow even more. which is critical for them, and it's critical for us. So to summarize, we are customer-obsessed. Nobody else is as obsessed as we are with those international SMBs. Nobody else is waking up every morning thinking about how to make their life easier, thinking about how to grow their businesses. This is why we have a purpose to build set of products and a platform. This is why we have an easy customer experience, so they can run their business easily. And this is why we build that in order to grow engagement and loyalty. And Adam will show us the loyalty numbers in our platform, and they speak for themselves. We built a comprehensive platform, so they don't need to look elsewhere, which is critical for SMBs. And we are working on increasing and cross-selling more products to more customers, which in other words, we're growing ICPs because we're making it easy and more accretive to enter Payoneer. And we're growing ARPU with more products and cross-sell. And the third thing which we talked about multiple times is that connectivity, that network. We have a network of millions of SMBs and that network is growing. And we're going to use that in order to acquire more customers, but also to help those customers grow and grow with us. Thank you, folks. I think that now we're going to have a break. So please take a break. There are some drinks outside, et cetera. We'll be back here with Adam at 2:00 p.m. Thank you, folks. [Break]

Right, let's get settled in again. If there's anyone else outside, can you please make your way in. Welcome back. I'd like to introduce now Adam Cohen, our Chief Growth Officer.

Thank you, Michelle. So I hope everyone enjoyed the very long break that we had. I'm really happy to be here. It's an honor to be here and meet you all. I'm Adam Cohen, I lead our growth organization, and I oversee our 6 incredible regional teams. I have a background in consulting. And I joined Payoneer about 8 years ago. I've had the privilege to fulfill a few key ones. I led our B2B working capital, SMB partnerships and marketplace partnerships businesses. So I got a taste of Payoneer's business in a few different areas. So John talked about who we are and what our vision is. And Assaf talked about our platform and the great many ways that helps us serve our customers. What I'm going to talk about is who our customers are, or assets or the go-to-market flywheel and how we're accelerating the momentum of the ICP growth and ARPU growth. So as John said, we have a massive $6 trillion opportunity. And it is represented by the different customer segments that we have. So we have Pedro, who is a contractor or freelancer from Brazil. We have Kevin and his company, Elegoo from China, who is a consumer goods seller. We have Hannah, who is an owner of Accentline, and she is the service provider. And we also have Serhii, who is a trader of goods out of Ukraine. So these are 4 segments. And because we serve these diverse segments, we also have great opportunity in them. So let me walk you through some of the -- in a bit more detail who the customer segments are. So let's start with freelancers and contractors. So they come from countries such as Brazil or India, UAE and Ukraine and Argentina. They get paid from marketplaces. So these would be your Upwork's and Fiverr's, but they also get paid directly from their own B2B customers using our B2B product. We are a top 3 global player, and we have in this area, and we have much more room to go in that segment. The next segment is consumer goods sellers such as Kevin. These customers get paid from marketplaces such as Amazon, eBay and Walmart. They also now get paid a floor checker product directly from consumers into the web stores. And I'm happy to say that we are the #1 leader in the market-based sales business, which gives us an unfair advantage when we grow into the D2C business. And we're going to touch on that shortly. Then we have the service provider segment. So these would be customers such as Hannah. They come from countries such as India, Brazil, UAE and Argentina. And they run businesses such as IT agencies, consulting services, BPOs, marketing agencies and so on. They get paid typically either from marketplaces, but mostly directly from their B2B customers, leveraging our B2B product. We are at very early stages of penetrating that market. We have less than 1% market share, but we're seeing tremendous traction and tremendous product market fit in that segment. And I'll explain about that a bit more. And then lastly, we have goods traders and manufacturers. Obviously, China is a big market for that segment, but also Vietnam is meaningful, Japan and so on. And we are very early in our journey to serve that customer segment. So let me go a bit more deeply into consumer goods sellers and the opportunity we see there with our checkout products and with service providers and the opportunity we have though with our B2B product. So we're expanding into the $150 billion D2C market through our checkout product. We have very, very small market share today because it's a very nascent product, of course. So we have about 0.3% market share in China and less than that in other parts of the world, but we're seeing really great traction. And again, why is that? Because there is a strong customer need, as Assaf explained. And we have an unfair advantage because of our market base payout business. We already have the customer base to core sell that product into. We have channels and we have our very strong brand. And when I say channels, I mean, for example, our partnerships with logistic providers, system software providers for SMBs and so on. So John has touched before me, Kevin and his company, Elegoo. Companies such as Elegoo gets paid from marketplaces, again, Amazon, eBay, Walmart and so on. With some of these marketplaces, we have either preferred relationships or exclusive relationships. And that gives us financial advantage. They now can use our checkout product to get paid directly from consumers into the web store. They would then use our working capital product to grow the business even further. And they use about 40% of their international AR for our AP products, right? So they would pay their logistic providers, they would pay for advertising and so on, and they would use our card products for that or bank rails to do that. And essentially, what we do, as Assaf mentioned, we provide them with one -- with a single financial partner that they can use instead of using 5 or 6 different banking relationships or FinTech relationships. So let's move on to the service provider segment. So we have a very real near-term opportunity of about $850 billion market with service providers. As I mentioned, we're really early in the process, and we have less than 1% market share. But we have demonstrated the ability to penetrate that market. We have 3% market share in the $40 billion market in Ukraine and Eastern Europe, and we're seeing triple-digit growth in sizable volumes, hundreds of millions of volumes annually in key markets such as the UAE and Argentina. And these customers, again, operates businesses such as IT agencies, marketing agencies, BPOs, consulting services and other business services. And we see tremendous for the market fit with that specific sector. And the way that they use our product, so they would have typically multiple entities in different parts of the world. Why? Because they want to be close to their customers. So they need local bank accounts in key markets such as the U.S., such as Europe and so on. And then they would need to move money between their corporate entities and obviously get paid into those bank accounts. So we provide them with that international accounts receivable capability and with treasury management capability. We'll then also provide working capital so they can grow their business. And they use 70% of the volume that they get in for their AP needs. So they would pay contractors, employees, they would pay for hosting services. They would pay for other business services. And again, 70% of their usage is through our AP product. So we serve both their AR but also their AP, FX management, and so on. We provide them with, through our local teams, with great support. We provide them, in essence, with an enterprise-grade solution that they won't find anywhere else. For these SMBs coming from emerging markets, nobody else will provide them with that level of financial support. And because we serve these diverse customer segments and verticals, we also benefit from diverse geographical presence. So you can see that we have our business split evenly across China, which is a strategic market for us, western markets, including North America and Europe, and high-growth regions such as LatAm, APAC and SAMEA. And we see more than 25% revenue growth across all regions, but we see more than 45% revenue growth in the high-growth regions. Because of that, we grew from -- these markets represented only 24% of our business in 2020, so -- and today they represent 33% of our business. So our business is diversified and becomes even more diversified with time. So I talked about who our customers are and the great opportunity we see specifically with service providers and with consumer goods sellers with B2C, and that is a $1 trillion of very real opportunity that we have within these segments. And I want to talk a bit about how we acquire and engage with these customers. I want to talk about our go-to-market flywheel. So we have 3 main channels: partnerships, sales and marketing, and we benefit from meaningful organic traffic. Partnerships include global marketplace relationships, but also very, very local partnerships with service providers in local ecosystems. We then have our sales and marketing team, which complements our global -- the global reach of our platform, and focuses specifically on the larger ICPs that we serve. And then lastly, we benefit from organic traffic because of the strength of our brand and because our customers love us, so they refer other customers like them to us. Let me go about them one by one. So with partnerships, I mentioned the marketplace partnerships that we have and the fact that we have preferred and exclusive partnerships with some of them. They can be in the e-commerce, so your Walmart and eBay and Amazon, but also in other verticals including service providers and hosting. So that would be Upwork, Fiverr and other marketplaces. We now have partnerships with shopping cards such as Shopify to enable our checkout provider -- our checkout product because some of our customers have built their web store and these shopping carts. So these would be Shopify, but also others such as Shoplazza, some of them are very localized for markets such as China and Vietnam. And again, we're heavily localized, so we have partnerships with them. And then we are, and I'm happy to say, really embedded in the local ecosystems, and we spend a good amount of time and effort to do that. So if you're an Amazon seller, you're going to use logistics provider locally, you're going to use an e-commerce ERP software, right? And you're going to use other services. We are very, very specific for SMBs in those markets, in those verticals. We have financial, technical and commercial relationships with these service providers. So all in all, about 23% of the ICPs that we acquire come from these partnership channels. Sales and marketing. So we have very localized relationships with our customers. We have been building those teams for over 10 years now, and we are present in 14 key markets. So obviously, we have sales activity in different sales motions, and we host many events and participate in many events, and you can see some of those events on these pictures here taken from some of the key markets where we're present. And we meet there face-to-face with thousands of SMBs and entrepreneurs. And for me personally, there's nothing more rewarding and energizing than meeting these customers and our in-market teams face to face. There's nothing more rewarding than helping people in emerging markets, that have the ambition and have the talent, overcome physical and financial and regulatory borders, right? And we do exactly that. As John mentioned, we help businesses everywhere, do business anywhere, right? So no more borders, we help them cross them. And then lastly, we benefit from meaningful organic traffic. So our brand might not be very strong here in the U.S. yet, but it is very strong in the markets and communities that we serve. So you can see a benchmark here that we did, benchmarking Payoneer's brand against the brand of leading fintechs and peer companies. And we ranked #1, 2 or 3 in key markets for us, such as Ukraine, Vietnam, Philippines, China and India. And because of that, because of the strength of our brand, 2/3 of the ICPs that we acquire are acquired organically. They come to -- directly to our website or to our mobile app, or they're being referred to us by other customers. 2/3 of the customers come to us just because of our brand. So I talked about the go-to-market flywheel, the global and local partnerships that we have, our localized sales and marketing teams, and the strength of the Payoneer brand. And I want to talk a bit more about who our customers are, but more specifically about our ICP customers that John mentioned before. So we serve 2 million customers today. We operate at scale. And that number is up 60% from just Q2 2020. That allowed us to learn who are the most valuable customers for us. Where do we have the best product market fit? And who will generate, in the end of the day, more value for Payoneer? And customers are not equally valuable for Payoneer. So as John mentioned, ICPs generate more than $500 in monthly volume, and they represent 25% of our customers, and they generate more than 80% of our revenue. The ICPs that do more than $10,000 in monthly volume, there's 50,000 of them, and they generate more than 50% of our revenue. So obviously, we want to focus on these ICPs and larger ICPs and make sure that we acquire them and serve them well. So why are we so excited about these ICPs? So we have non-ICPs, ICPs and ICPs who do more than $10,000 monthly volume. The 10K-plus ICPs use almost 2x more product than the non-ICP customers. They stay with us more than 4x longer. And their ARPU is nearly 200x the ARPU of non-ICP customers. So obviously, much more valuable for us, which is why we're focusing on them. Once we acquire ICPs, we do a great job retaining them. And I'm happy to say that we have 120% revenue retention globally. It varies between the different regions. But in all regions, revenue retention is higher than 100%. And once we have these relationships, we effectively cross-sell to them. So the go-to-market team focused in the last few months, since the beginning of the year, on cross-selling cards and working capital into the 10K-plus customers that we have. We grew cards revenue within that population by 46% year-on-year and working capital grew by 52% year-on-year. So we can effectively cross-sell to this population. And the more products we have, the more we can cross-sell to them, increase retention and increase ARPU. And we have compelling CAC payback for these customers. So ICP CAC payback is less than 12 months. And the CAC payback for ICPs above 10K is 40% shorter than that. But we believe that we can do much more, right? So we can even shorten CAC payback further for pricing and bundling, through shortening time to revenue, lowering the cost to onboard them, and so on and so on, and Bea will talk about some of the pricing initiatives that we have. So we're not stopping here. And one thing that we did this year is that we brought much more focus and efficiency to our go-to-market organization. So in July, we had a [ rest ], and we now have 18% less head count than in the beginning of the year. But as importantly, we did that very surgically and strategically. So we decided to double down on our strategic markets that we now call Tier 1 and Tier 2 market, and we pulled back from nonstrategic markets. We decided to invest even more in go-to-market of cross-selling the products that I mentioned. And specifically, we decided to focus on B2C and on B2B. So we're bringing much more focus to the organization. We also honed our inbound versus outbound sales motions and made sure that we have a balanced investment in these 2 sales motions. So while we reduced the number of head count that we have, we're able to accelerate the ICP acquisition. And as you can see here on the slide, we accelerated the acquisition of some of our most valuable customers, the B2B ICPs above 10K. So we acquired in 2023 19% more of these customers compared to 2022. And with the even larger bucket of 100,000-plus monthly volume in B2B ICPs, we acquired 17% more of them in 2023 compared to 2022, again, while reducing the head count that we have. And with Checkout, obviously, we started from a much lower baseline, but we're able to grow by, the number of ICPs using our Checkout product, by more than 1,000% year-on-year. And that speaks about the need for that product and the quality of that product, but it also speaks about our ability to cross-sell new products to our existing customer base and the strength of the go-to-market flywheel. Again, we have the customer base, we have the channel specifically in that market, and we have the brand in e-commerce as well. So before I hand over the mic to my colleague, Bea, I just want to wrap up. So we have unique go-to-market assets, right? Our platform is purpose-built for the SMBs that we serve. Our go-to-market strategy is also purpose-built for the SMBs that we acquire and that we serve. We have global and local partnership relationships. We have a hyper localized sales and marketing team. And we have a very strong brand that contributes to organic traction. We operate at scale. We have 2 million customers. And thanks to that, we learn who our most valuable customers are and who our ICP customers are. And we're accelerating through more focus the acquisition of ICPs in B2B and in B2C, and we're accelerating the growth of ARPU by cross-selling additional products to our customers. And again, the more products we have, the more we'll be able to cross-sell to them to increase the ARPU and to increase retention. And then lastly, we have the ambition to do much more. So we're already serving a diverse audience today that represents a $6 trillion opportunity. And we have demonstrated our ability to penetrate the D2C and service provider markets that represent $1 trillion of additional opportunity alone. With that, I want to invite my colleague, Bea, to speak about our long-term profitable growth.

Hi. Good afternoon, everyone. I hope everyone is well. Thank you again for being with us here today. We're really excited to share the story. You've heard now from John Caplan, our CEO. You've heard from Assaf Ronen, our Chief Platform Officer. And you heard just a moment ago from Adam Cohen, our Chief Growth Officer. I'm Bea Ordonez. I'm the CFO. I'm going to walk you through, of course, the financial aspects of the company. I joined Payoneer in March of this year. I'm super excited to be here with you today. And more importantly, I'm really excited to be part of Payoneer, and part of a company that, as you've heard today, we believe is uniquely positioned to capture a $6 trillion market opportunity. So you've heard a little bit about our journey today. From a capital markets perspective, we went public via SPAC transaction in June of 2021. And since then, we've delivered exceptional financial performance. On a 3-year compound basis, we've grown volumes by 17%, revenues by 35% and adjusted EBITDA by 175%. And we've done all of that, as you've heard here today, while investing in our platform, investing in our products, and investing in our go-to-market infrastructure. And we've talked to you today about those unique assets and that unique infrastructure that we think positions us to capture that massive opportunity. You've heard about our scaled platform. It provides a single financial stack that solves for the cross-border needs from AR and AP cross-border needs for the SMBs that we serve. We have an extensive regulatory infrastructure that allows us to onboard SMBs across more than 190 countries and territories. And I think it's fair to say, as you've heard today, that there's not another financial service provider or bank that serves SMBs across such a vast footprint. We've connected a network of more than 100 banks and processes that enable us to move money across borders in more than 7,000 corridors. And as you just heard from Adam, we have coupled all of that with deep local market expertise, on the boot -- boots on the ground expertise, and a localized service and support model that our customers really value and which is really unique in the market. All of this contributes to a strong brand, and as you just heard, exceptional levels of awareness in the markets in which we operate. And we operate at global scale. We've talked about our onboarding capabilities, trailing 12 months, we've done more than $60 billion in volumes. I think it's fair to say, for the SMBs that use our platform, we provide the on-ramp to the global digital economy. So looking ahead, we've talked about that marketplace payouts business, the more mature business in our portfolio. You've heard that we have 20% market share in that business, that's significant, obviously. Near term, for 2024, we expect to grow volumes in that marketplace business in the mid-to-high single digits. We're continuing to add to that ecosystem to expand those relationships with our marketplace partners. We just recently announced that we've extended and expanded our partnership with Airbnb. And they are really, as you've heard, a critical part of the ecosystem and a really valuable acquisition channel for us. As we think about those direct-to-consumer and B2B offerings, they really represent the natural extension of the capabilities that we built to capture that more mature marketplace into other adjacent and addressable markets. Taking our direct-to-consumer business, we launched, as you've heard, in 2022, and it's growing rapidly. And in 2024, we expect to grow volumes from that direct-to-consumer from that Checkout business by more than 50%. Looking at the B2B business, again, we're seeing really solid traction there. And in 2024, we expect to grow volumes from our B2B offerings into the platform by 25%. And as you heard from Adam, today, that business is especially well suited to the services-oriented businesses that we serve across numerous geographies. And we see really powerful secular tailwinds vis-a-vis that business. Remote work is here to stay in a post-pandemic world. Companies are under increasing pressure to reduce labor costs. And we see a shift from individual freelancer models to companies who are looking for more scalable solutions. And in both our direct-to-consumer and our B2B business, what I want to highlight on this slide is the yield, the economics of those business -- or those businesses. The direct-to-consumer offering, our Checkout business benefits from yield that is roughly 5x the yield that we earn in our more mature business; in the B2B space, roughly 1.5x that yield, because in that business we're able to monetize both the inflows and the outflows. And we're already successfully capturing market share. In our B2B business, we've grown volume on a 3-year compound basis by 58%. That now makes up somewhere in the region of 11% or 12% of total volumes into the platform. In our Checkout business, again, we're seeing extraordinary growth there. We've talked today about Elegoo. It's a great example, as Adam spoke about, about our ability to cross-sell into our existing customers. Elegoo was a customer in e-com, is a customer on our platform since 2017. In 2023, they took our Checkout product to power their shop or power their store on Shopify. And it's a great example, as I say, of our cross-selling capabilities. While at the same time, what we see with our Checkout product is that we're able to bring in new customers. Roughly 50% of our Checkout customers are new to Payoneer. Why? Because we offer, we believe, a differentiated value proposition, that localized support model that we've talked about, the integration, as Assaf noted, into a single financial stack that allows those customers to manage the broad range of their financial needs and critically improved acceptance rates, that, of course, will allow those merchants to improve the economics in their own business and to grow. We've talked a lot about trust here today, and I'm going to talk about it as well. Look, trust is critical in the financial industry. The instability in the banking sector that we saw here in the U.S. in the early part of the year really served as another reminder of just how critical trust in our financial institutions is. And today, our customers entrust us with $5.5 billion of funds that sit on our platform. And over time, we have been able to grow funds on our platform by 2.5x the rate of volume growth over the last 3.5 years. And what's interesting is that in that time, we've seen customer behavior evolve. As we've added more utility, as we've added more features to the platform, we've seen that customers keep more funds on our platform, and they keep them there for longer. Some data points that I think are instructive, roughly 1/3 of our customers keep more than 3 months' worth of AP, 3 months of their usage on the platform at any one time. More than 85% of our customers keep more than a month's worth of usage on the platform at any one time. We think that demonstrates the very real utility that our financial stack provides and that these funds are not transitory, and that the significant revenue that we earn on these funds is core to our business. As a significant revenue, of course, we manage this stream very carefully. We leverage our scale with our banking partners to optimize yield. And we intend to manage the interest rate risk by prudently extending the duration of the portfolio over time. Look, one final note, the day after Fed decision day. As we sit here in the U.S., where 85% of our balances are held in an environment that will support, it seems clear, higher rates and for longer, we view the significant revenue stream as both sustainable and enduring. So John talked about our framework for driving long-term profitable growth, and it's this. We're focused on acquiring more ICPs. You heard from Adam, we're focused in those Tier 1 and Tier 2 countries. We're making investments in that go-to-market flywheel that will drive acquisition more efficiently, reduce our CAC payback, drive revenue growth. We're focused on ICP retention. Critical, right? We're looking at our pricing and bundling to ensure that it aligns to drive growth, to drive retention of those customers. As Assaf mentioned, we make investments in that customer experience on our platform. We focus on localized support models that serve the needs of our customers. Finally, we're optimizing ARPU. How? We're driving adoption of those high-value products, our B2B offerings, our Checkout offering. And we're ensuring, again, that our pricing and our bundling in sense customer behavior captures more share of wallet, drives ARPU upwards. Let's double-click just real quickly into some of the elements there. We're targeting our largest ICPs, those who do more than 10,000 in volume per month. Why? You heard why, right? They use more products. They keep higher balances on our platform. They stay for longer. And overall, they just have more complex needs. Over time, that's going to allow us to cross-sell and upsell more products, our existing products, and as Assaf noted, to launch more offerings into those customers to meet those needs. We're focused on high take rate regions. As we talked about, we're diversified by geography, right? But we're seeing really strong growth -- in blue there on the chart, we're seeing really strong growth in some of those service-oriented regions, especially with our B2B offerings. And what that does is it positions us to drive take rate or yield expansion. By way of context, trailing 12-month take rate for LatAm, APAC, SAMEA, roughly 1.6%. Take rate in China over that same period, and I'm talking about ICPs here, less than 70 basis points. So as we continue to drive accelerated volume growth from those higher take rate regions, it positions us to drive yield expansion in our business. And as we've said, our revenue stream is diversified, right? It's diversified based on the verticals that we serve and the kinds of customers that we serve. It's diversified geographically. And as we've noted, it's becoming more diversified with time. But it's also diversified based on the products that we sell to our customers, based on how we generate those revenues. And again, has become more diversified with time as we have pivoted from a business model that was focused on the marketplace payouts business where revenues were predominantly generated by customers withdrawing their funds to their local bank, as we pivoted from that, to a model where we're serving broader needs and broader use cases. And what you see here is the trailing 12-month disaggregation of revenue by product or by usage and the comparable period for 2020. And I think it illustrates how we've diversified the sources of revenue over time. And it's that diversification that has contributed to the 24 basis point expansion in yield that we've seen over that period. How? We've grown our B2B volumes, as we've said, better yield dynamics in that business. We've expanded the suite of AP products that we offer. Commercial card is a great example, again, better yield dynamics. We've grown balances on our platform and monetized them. So how does the product strategy that Assaf has laid out and our focus on ICPs, how does that translate to a customer-specific monetization strategy? So what you're showing -- or what we're showing you here is ARPU by customer size over time. So ARPU average revenue per user. Size, for these purposes, as we've said, is volume into the platform -- into our platform. And over time, what you can see here is that we've been able to grow ARPU across our portfolio over time. And we're taking, as we look to the near and medium term and beyond, we're taking a customer-centric and customer-specific and much more nuanced, frankly, approach to how we monetize each segment. And I'll start at the bottom of the page. In terms of our non-ICP customers, those customers that do less than $500 in volume monthly, the primary level we have there is really pricing and fees. And we've seen some early success there. We launched account fees in Q2 of this year, and they've been very successful in driving up the monetization of this particular cohort. And we've seen very limited attrition in our book as a result. We're testing registration fees, top of funnel. So you heard from Assaf, we have more than 0.5 million SMBs and other customers who complete registration on our funnel each and every month. So we're testing registration fees to, one, intentionally introduce some friction into the process, and potentially restrict the number of unprofitable customers that come through the doors, but also to test our ability to monetize this great utility that we're able to provide. As we look to our medium-sized ICPs, here again, the lever is a much more nuanced approach to pricing and bundling, one that looks to the kind of verticals that we're serving, looks to corridor and route-specific pricing. And then finally, our largest ICPs, those that do 10,000 or more. Here, we're really driving and leading into cross-selling and upselling our existing product. And we're seeing great success. We're seeing great success with our commercial card, especially with these larger customers in China. Again, the yield dynamics there are very attractive, 2.5% yield versus, as we said, in our more mature business corridors, less than 70 basis points. We've talked about our working capital product, again, great cross-sell and upsell opportunity into our e-com merchants, very sticky product, very attractive yield dynamics. And we've talked, of course, about our Checkout product, which, again, 5x the yield that we see on our more mature business. So switching now to operating leverage and our proven track record in improving profitability within our business and driving, improving adjusted EBITDA margins. So first, transaction costs as a percentage of revenue. So those are the bank and processor fees that we pay to support the network that moves value so effectively cross-border. So near term and medium term, we expect transaction costs as a percentage of revenue to be in the mid-to-high teens. We expect to continue to drive efficiency here, as we've done historically, by leveraging our scale. In '23 alone, we will see roughly $5 million in savings, in-year savings, from doing that. While at the same time as we grow our B2B business, as we grow our Checkout business, we expect transaction costs from those businesses to be higher than in our aggregate business as a whole. We've demonstrated our ability to grow adjusted EBITDA and to expand margins. At the midpoint of our guidance, we will deliver 20% adjusted EBITDA margin in 2023 and 3.5x the adjusted EBITDA that we delivered in 2022. But we see significant additional upside that we can unlock as we scale this business. As you can see here, 45% of our costs come from labor, right? The folks that work in our organization, the CWs and others who support our business. As we continue to scale and grow this business, as you heard from Assaf, we're going to make significant investments in our platform and infrastructure. That's going to unlock additional operational efficiency that will allow us to grow without adding additional headcount. What are we going to do? We're going to invest in self-serve capabilities. That adds to the utility of the account. It adds to the transparency that we provide our customers. It also makes us more efficient. So self-serve capabilities and enhanced onboarding experience. We're going to invest in our compliance infrastructure and an automation that allows us to more effectively operate as a highly regulated business. And in 2023, we invested close to $20 million in that. We're investing in generative AI, as you heard. We're testing predictive models top of funnel, that are very successfully helping us identify clients who meet our ideal customer profile and those who may not. And we're going to be investing next year again in AI capabilities within our customer journey function. So in short, we see significant upside, as I said, to unlock additional leverage in our business as we continue to make investments. So another strategic asset of our business, as John mentioned during his prepared remarks, look, it's a cash flow generating business. We generate strong cash flow year-over-year. It's a capital-efficient business. It's an asset-light business. We have close to $600 million in cash on hand and no significant leverage on our balance sheet. That positions us to make the investments that we've talked about in our platform, in our products, and also gives us the ability to unlock value, to unlock the value of our platform, of our brand, of our reach through M&A and through other investments to help sell more products into the customers we serve. So what are our priorities for use of cash? We've talked about our ARPU-based strategy to drive long-term revenue growth. So one of the key priorities for our use of cash is to continue to invest in our product road map. And as you heard from Assaf, we're investing in enhanced capabilities for our B2B customers. We're going to continue to invest in our Checkout capabilities. We see significant untapped potential within our lending business and by providing enhanced FX functionality. As we think about inorganic opportunities, again, here we see an opportunity to accelerate our product road map by looking at inorganic opportunities, best-in-class providers of products that are adjacent, useful and needed by our customers that we can distribute through our platform. We also see an opportunity to accelerate our regulatory road map there. So to the extent that we can accelerate our path to expanding our regulatory moat, and it really does serve as a powerful competitive moat, we'll do that inorganically. And an example of that was the deal that we announced in Q2, the agreement that we announced to purchase a locally licensed payment provider in China. And that deal, subject to regulatory approvals and so on, when and if that deal closes, we would be one of only 2 providers locally that is locally licensed. Finally, look, we have strong cash flow generation capabilities. As I've said, a strong and robust balance sheet. That positions us to both invest and to return capital to investors. We announced a share buyback authorization in May. For 2023, we're targeting $50 million approximately in buybacks, which would offset the dilutive impact of our stock-based comp plan. And we actively evaluate our capital allocation policy and our capital structure more broadly. So to our outlook, our road map to profitable growth. Look, for 2023, we're reiterating our guidance here today. And at the midpoint of our guidance, we will grow revenue by 31% year-over-year, and we will deliver 20% adjusted EBITDA margin. In the medium term, we expect to grow revenue in the mid-teens from, as you've heard today, accelerated ICP acquisition, improving ARPU dynamics within our business and accelerating growth in our B2B business and in our direct-to-consumer business. At the same time, as we've just talked about, we expect to unlock additional leverage in our business from investments in our platform and continued automation in our processes. Longer term, again, we expect to deliver 20% plus revenue growth from improving and accelerating ICP acquisition, from continued growth into these large underpenetrated addressable markets in the B2B space, in the direct-to-consumer space, and from improving ARPU dynamics as we bring more products into our platform and continue to cross-sell and upsell into our customers. Similarly, we expect to continue, as I've just said, to unlock operating leverage as we realize the benefits of investments in our platform and in generative AI capabilities. So to conclude, look, we believe Payoneer is positioned to win. We're almost uniquely positioned to capture a giant $6 trillion opportunity in the market. As we've said, we have unique assets and infrastructure that position us to do that and to capture share in those markets. We have a robust balance sheet that allows us to invest both organically and inorganically. We have an engaged and experienced management team. And we think that all adds up to a compelling growth trajectory and compelling valuation dynamics. So with that, I'd like to thank you all for your time. We're going to open the floor for questions. I do just want to thank the number of people here from Payoneer today. It takes a village, as they say, all the people that have worked so hard to get us ready for today. We really appreciate your time. And we look forward to taking your questions.

Great. So before we begin, I'd like to welcome back our presenters to the stage. I'd also like to highlight that we have our broader management team here in the room, and so they may also join us for Q&A. We'll start here in the room, and then I also have a couple of questions from the video webcast. And please wait for the mic before you start. Why don't we start here? And if you could also announce yourself. Thanks.

Will Nance, Goldman Sachs. Thanks for all the great detail in today's presentation. Wanted to maybe start with some of the financial targets you guys are calling out, 15% medium term, and 20%. Can you unpack maybe kind of the difference in the growth algorithm in that 1- to 3-year target versus the 3-plus year target? And then maybe just to ask a more nitty-gritty question, you talked about 2% to 3% Fed funds longer term, obviously, 5% today. Is there any embedded assumption in that intermediate-term guide around kind of normalization of the rate environment?

Yes. Thanks, Will. Look, at medium term, we expect to hit that mid-teens revenue growth from, as I said, really accelerating growth in that B2B. We called out that we expect to grow volumes in that B2B business by 25% in 2024, more accelerated growth in LatAm, APAC, SAMEA, better yield dynamics, slightly slower growth in China. We've called out accelerating growth in our Checkout business, which we think is a real opportunity, improved retention and driving ARPU. In terms of the components of sort of that framework for growth that we've laid out, look, early days as we lay out the framework and lay out the strategy. But at this time, as we look to ICP growth to continue certainly and hopefully be optimized, as Adam laid out, to continue in that kind of mid-ish single digit, with higher growth from those larger ICPs, as we've said, in the last 2 quarters, we've grown ICPs with more than 10,000 volume by sort of high teens. So we would hope and expect that we can continue to generate strong growth from those ICPs, to continue to drive that revenue growth. To hit that mid-teens, which, look, won't be linear, we obviously see headwinds from interest rates, and I'll come to that in a second. To hit that mid-teens kind of medium-term guidance, that would imply ARPU is rising sort of high single digits to low kind of teens. That we think is very achievable for the reasons that we've talked about with growth in our B2B, Checkout and from other products. To interest rates, look, as you said, we're assuming a normalized interest rate environment in the 2.5% to 3% range. We assume, like everybody else, that interest rates will start coming down in the back half of '24. So near term, that will provide some kind of negative headwind into growth as it stabilizes and flattens out.

Trevor Williams from Jefferies. This is kind of an extension of what Will was asking. But for '24, specifically, the margin target, if you could delineate between maybe the core revenue or core margins ex the interest income, and then how you see the core margins progressing over time as some of the interest income, at least based on the embedded expectations, comes down as rates normalize?

Yes. Thanks for the question. Look, we haven't split out sort of that margin expectation into margin based on core versus margin based on sort of total. As we said in the presentation, we view interest revenue as core to the business model for all the reasons that I gave. We obviously accept and acknowledge that we won't be in a 5.5% interest rate environment forever. So we assume and we run the business with a 2.5-ish normalized rate environment in mind. As I called out, and we did it in Q2 as well during the earnings call, we will -- we are looking at and we intend to manage the interest rate risk by extending the portfolio. Over time, that will provide some sort of support. But look, we've been able to grow balances historically very successfully. We believe we can continue to do that. And that, that revenue stream will continue to be very sustainable over time.

Yes, go ahead.

It's Darrin from Wolfe. Congrats on your first Investor Day here, it's exciting. When we think about your road map ahead, before -- I have a couple of questions, one of them is more financial. But on the financial side, you're starting off this year somewhere in the ballpark of 9% to 10% top line growth, if you back out the B2B side of things and you just look at the core. To bridge us to that mid-teens and then eventually 20%, it sounds like you're expecting -- you're building in assumptions around some of the new products you're excited about, certainly, some of the pricing opportunities and then, obviously, the organic story underneath as it should continue. If you could break down for us how much of that, just compartmentalize that a little bit more, how much pricing is there, how much new product is going to contribute to that revenue number? That would be helpful to really size it.

Yes. Look, as I said, I think the framework that we've developed as we've pivoted from that marketplace payouts business predominantly to one that serves those broader needs of SMB specifically is, as John laid out, ICPs, retention, ARPU. As we think about the ICP trajectory, we feel confident that we can continue to drive growth there. We drove -- or we generated sort of mid- to high single-digit growth in ICPs in the first half of the year, continuing to make investments. And we would look to continue or even accelerate there, particularly with the 10K plus. As I've said, to bridge to that 15%, we're looking at driving ARPU up by sort of high single digits to mid-teens. We do that by accelerating growth in our B2B and Checkout business, by driving outsized growth in LatAm, APAC, SAMEA, as we saw on the slide there, volumes from those markets continue to grow at a more accelerated pace of 13% year-over-year versus 8% in China. As we continue to see that sort of further diversification, if you like, geographically, we will drive yield higher and drive ARPU. And then finally, Darrin, you mentioned pricing. We think it's a real lever and opportunity. We've been very successful monetizing already in certain cohorts. We're continuing to roll out much more nuanced pricing that we think will drive better adoption of products, more share of wallet. We're testing registration fees. We're testing fees for internal flows in our network, right? We talked a lot today about the connectivity of account holders on the platform. Trailing 12 months, we've moved more than $9 billion in volume intra-network. So between accounts on our platform, $9 billion, not included in that $64 billion. Today, we don't monetize that at all. We think there's a real opportunity. I'm not going to size it here for you today, but there's an opportunity. 45% of that flow is cross-border. There's certainly an opportunity there. We're providing real utility. So we see multiple levers in our business, to grow higher yield products, to embed more products that we can sell more successfully, pricing levers. Those are all embedded in our ARPU assumptions.

That's really helpful, Bea. I mean you guys have been testing these monthly and registration fees, I know for a couple of quarters, I think. But it sounds like it's been trending well for you. I mean the reception has been low attrition?

Yes, excuse me, yes, we've had single-digit attrition and it's sort of immaterial to the operations of the business. We're not -- an example is a customer that I met with recently, a guy named Gilad runs a business called VAA Philippines, provides SEM, SEO services for e-commerce sellers. He has 250 customers, he uses Payoneer to invoice, and he has 500 contractors in the Philippines that he uses Payoneer to pay. And we had some internal concern when we added some additional registration fees and account fees with the low dollar, less than $500 a month customers. Would there be attrition dynamics with those people? We have not seen that in any material way. It's the 17-year-old who aspire to one day be an entrepreneur, we may lose. But the real businesses, we're not having an adverse impact.

That's good. Can I ask one quick one just on the overall competitive landscape now? I just want to make sure we understand your barriers to entry, how much disruption risk there could be. And I know you guys do a great job with banks around the world. And so really just understanding that network is helpful a little more and what's different about that, combined with we hear a lot about pricing pressure in e-com now, right, especially enterprise e-com. So maybe just help us understand if there's anything you're seeing that can give us a little pause on that or not.

Thanks for that. And so for that question, I'd actually like to bring up Jody Perla, who runs our network, to speak to the first point, and then John can take the second part of your question. Jody?

Hi, everyone. Hi, Darrin. Thanks for that question. It's right in my wheelhouse. So I think understanding the key value proposition that Payoneer offers, one of the things that I really hope all of you in this room can appreciate is how money moves around the world. So if you don't understand how money moves both domestically and around the world, it's going to be really hard to understand why what we do is so incredible. So the complexities involved in making payments, and I love how you both talked about how easy it is in the U.S. I would say in the past 2 months, just personally, I had an ACH payment that should have gone in 1 day, took 5 days to go. And a wire payment also domestically, which my bank couldn't authenticate me. So I would say, even domestically, there are challenges. But when you look about doing that in a global environment, what we have done is really looked at all of the use cases of all of our customers. Where is the money coming from? Where is the money going to? And that includes is the money coming from an individual? Is it coming from a corporate? What is the purpose of that payment? What is the currency of that payment? Is it for physical goods? We're talking about sellers. Is it for service providers? And every country around the world actually regulates the import of currency, the export of currency in a different way. So what we've done is we've gone country by country, based on where we have needs to accept money or send money, and we've built the infrastructure on the ground to plug into that local network. So you could say in our B2B environment, everyone is moving money from a bank account to a bank account, and that traditionally works. There are correspondents along the way that are taking money. They're also what's like a big game of operator. Every time that transaction is sent to the next player, something gets a little bit lost. So we've built a platform over years and years and years, I've been doing this for over 10 years at Payoneer, basically building a single plug-in, taking the best of breed of cash management and transaction services of banks in key markets and putting it in a single platform that gives a business the chance to pick either on an a la carte basis, which market they want to use us in, which currencies they want to hold balances in, or if they have an entity in one market and they only need us for certain currencies, it's really a single plug-in that has built and consolidated the best of breed from every country. The other thing when I talk about complexity is not only like the regulations with what is the purpose of a payment. It is all the data that needs to be provided along the way with every transaction. And we're seeing this from a regulatory perspective, that trend is increasing and growing. Banks and regulators want to know information on buyers and sellers. And it's not easy to get that. That incredible ability to onboard customers in 190 markets, that is something which really, really is unique. And the KYC, and we have other experts from our risk and compliance team that can talk about that, but that really is part of the secret sauce. We have years of AML policies, compliance policies, documentation that banks -- I would say, getting onboarded with a bank as a resident or as a nonresident can take years. So the early market advantage that Payoneer has, I would say, is really a big impediment to others. And then also, I would say, banks, and we're relying on some of the big global banks and some of the local banks, there is not one single silver bullet. So there is no single bank that actually is local in every market. And if any of you actually know how banks are operating, even some of the banks that have local retail branches on the ground in some countries don't even send payments to beneficiaries at that same bank through their own network. And so I know I'm going on and on, I could give a whole Ted Talk about this. But yes, so I don't know if that gives you a flavor, but it's really, really complicated. It takes a really long time to get onboarded by banks. And the learning that we've done from having a robust compliance infrastructure and millions of transactions, I think, has given us an incredible advantage. And yes.

Yes. I'll just add, Darrin, that the -- we're seeing -- we have 120% revenue retention, we have good ICP acquisition and improving. We have good ARPU dynamics because we're a brand. We're not a commodity. The guys who are seeing take rate compression are the commodity guys. They may have great businesses and they're enterprise-grade business, and those enterprise businesses get squeezed and that we're seeing them get squeezed. And in the Payoneer's, our relationship with customers is trusted and they value what we provide. Frankly, I think we have room to continue to expand our take rate with some of the pricing work that Adam and Bea and Assaf have mentioned that's corridor-specific, which new products we can offer, I think we're just getting started on that journey.