Q3 2021 Payoneer Global Inc Earnings Call
On the company's website hosting todays call are Scott Coward tenure, as Chief Executive Officer, and Michael moving tenants Chief Financial Officer.
With that I'd like to turn the call over to Scott to begin.
Thanks, Ignatius good evening and thank you all for joining us today to discuss our third quarter 2021 results.
<unk> had a very strong third quarter, we delivered revenues take rate and adjusted EBITDA well ahead of our expectations as our global team continued to execute well on our strategy to be the world's go to partner for digital Commerce everywhere.
We saw continued momentum globally with small businesses marketplaces and partners, who rely on tenure to provide them with a broad selection of services they need to pay and get paid to grow and to manage their digital businesses. We added a record number of new customers in the quarter as paying your continues to emerge as a leader.
On ramp to the global digital economy for small businesses worldwide. The painter brand is a growing asset we received well over 1 million new customer applications in the quarter and our growth is truly global and diversified we had year over year volume growth of over 50% in regions like Latin America.
In South Asia Middle East North Africa.
We see tremendous untapped potential in emerging markets globally, and we are increasing our go to market investments meaningfully.
Continued strong performance and momentum with customers highlight our unique position in the market offering the most comprehensive solution set for small businesses from around the world looking to engage in commerce anywhere.
We strengthened our position as the global leader in E Commerce marketplace ecosystems, we continued to support the rollout of our partnership with ebay, helping ebay improved payments for small businesses and a number of key markets around the world and we recently announced our partnership with Couponing in South Korea, the world's fourth largest e-commerce.
<unk>.
We are very happy with the momentum we are building with the pay in your partner ecosystem.
One of our key initiatives is growing our bank partnerships globally, as we collaborate with banks and mobile wallets around the world to acquire new customers and to offer our joint customers. Our unique integrated experience. We now have bank partnerships live on four continents, and we had triple digit growth in both volume.
And new customer applications with our partners. We are delighted to launch a new partnership in the third quarter with BMO, a new mobile wallet partner in Vietnam.
As we look to the future. We also continue to explore new and innovative payment models and partnerships. We recently partnered with Citibank and some leading financial institutions from around the world to explore a new concept called the regulated liability network, which is designed to integrate central bank digital currencies and regulated.
Liabilities on a shared a distributed ledger the design for the regulated liability network was introduced in a competition sponsored by the monetary authority of Singapore, and we're excited to be able to partner with other global leaders on such a pioneering effort.
We have also been executing well on our strategy to broaden pioneers portfolio of services and to increase the number of paying your customers. Using these services. These services collectively represent our efforts to become the financial partner of choice for our customers and our expansion beyond marketplace payments, we are building on our Moe.
<unk> as we grow beyond being a marketplace payment provider to being a growth partner for digital businesses globally.
One such service is our global <unk> offering we are still in the very early stages of this multi trillion dollar addressable market opportunity to help small businesses more efficiently transact with their trading partners worldwide.
And our first step to open the painter platform up beyond marketplace ecosystems.
We delivered strong growth in <unk>.
In the third quarter with volumes growing at a CAGR of over 100% for the past few years.
We are increasing our investment in this offering hiring more sales resources and working with our global teams to acquire new customers and upsell EBIT a P. A R. Two existing paying your customers. The majority of our <unk> customers are actually new to pay an ear, which demonstrates the strength of opinion here Brad.
<unk> and our ability to acquire and grow a new complementary business at scale, all while pointing to the significant incremental addressable market opportunity we have in <unk>.
We are seeing strong customer demand for our Mastercard commercial card, which enables our small business customers to use the funds they receive from paying year to pay international suppliers by advertising to acquire new customers and make other purchases to support the growth and management of their business. This is a compelling tool for globe.
Businesses that arent based in the U S, but are selling globally during the third quarter, we ramped up our acquisition of customers and also introduce more customers to our cashback rewards program driving accelerating spend we see commercial cards as a high value service that helps our customers better manage their business.
This and drive growth that saves our customers money and that generates a higher than average take rate for paying here. While we are still in the relatively early stages of growth. We are optimistic about the unique value proposition, we offer and the long runway ahead for this exciting opportunity.
Our working capital offering also continues to be an important driver of value for our customers as we enable them to access the funds they need to invest in their businesses.
We recently introduced Pannier advanced plus at six months duration and offers the longest term of our working capital products to date as well as the ability for our customers to select the terms that best fit their business needs, allowing them to choose between multiple working capital offers which also include paying your X.
<unk>, a one month product and paying your grow of three months products, we had a record new originations in the third quarter across these painting or advanced products as we move into what is traditionally the peak sourcing season, leading up to the holidays.
Our merchant services offering continues to gain traction with larger enterprises around the world that are choosing pioneer to enable them to simplify the complexity of their global consumer payments, we have built a robust pipeline with leading digital businesses in multiple regions and remain enthusiastic about the growing.
Demand among merchants for a strong global company like <unk> to provide them with the great technology and service to solve complex payment problems. We're also very excited that we will be introducing pioneer checkout for small businesses starting in Hong Kong before the end of the year.
Overall these new services are part of our strategy to drive an important evolution in our business paying your customers are increasingly using pain here for a broader set of more sophisticated services.
Many small businesses are using pannier more as their primary global financial partner than as a payment processor.
Our typical use case has historically been enabling a small business to get paid for their international sales on marketplaces.
And then pioneer which settle with local currency into our customers' local bank accounts.
Now paying your customers are increasingly using pioneer to not only get paid by marketplaces, but you get paid by wholesale buyers using <unk>.
Or to pay their suppliers employees and contractors to access much needed working capital to use our cards to buy advertising and pay other expenses in aggregate our customers maintain more than $3 billion of balances on the paying your platform pending their use of one or more of our services.
To help illustrate this I'm going to share the stories of a couple of our amazing and inspiring customers that highlight the exciting opportunity for entrepreneurs around the world and help demonstrate how pioneer is an important partner supporting their growth.
<unk> is an Australia based ecommerce retailer that specializes in toys and homewares. They use pay an ear to receive payments in multiple countries and currencies around the world.
<unk> then uses their pannier foreign currency balances to pay their freelancers and manufacturers that operate in various countries and went off the zone was looking to expand and further grow its business a secured financing through painters working capital program to help them purchase additional inventory to support.
Were at their peak season.
Another example is twin barbarians in apparel and activewear ecommerce business based in Bangkok, Thailand.
Once twin Barbarians has gotten paid through paying ear. They use pay an ear to pay their suppliers, which has allowed them to reduce costs by 30% and speed up supplier access to funds.
<unk> is helping twin barbarians grow over 50% year over year in the third quarter and expand into additional marketplaces around the world.
In both these cases, we are entrepreneurs tapping into the digital economy to grow and pannier is helping them achieve their potential and that's why we are making significant investments in two primary areas of our business.
R&D to broaden our product offering to enable our customers to have more and better tools to help them grow and sales to increase the capacity of our global team to acquire new customers and serve an up sell services to our existing customers.
These investments enable us to deliver more value to our customers to further strengthen our competitive edge and improve our ability to monetize the volume on the painter platform. While also increasing the level of engagement with our customers and we are continuing to explore acquisition opportunities to supplement our organic.
Investments and to accelerate our ability to deliver more value to digital businesses worldwide.
All of this activity translated into strong results for our third quarter, we generated revenues of $123 million, an increase of over 35% compared to prior year results.
Adjusted EBITDA was $6 million, which highlights our operating leverage even while we continue to ramp up investment in the business.
Volume in the quarter grew 16% year over year as consumer behavior changes and supply chain issues continue to impact many of our customers engaged in ecommerce, particularly from China. We had continued positive momentum in our take rate at 90 basis points, which was a meaningful increase from the second quarter and <unk>.
Last year, driven by our increasing geographic diversity growth of higher value services and mix of customers.
This solid performance validates our ability to create strong value and monetization and we remain excited about the long term market opportunity for digital commerce globally.
We are confident in our execution and are increasing our guidance for revenues and EBITDA for the full year.
This is despite the fact that digital commerce continues to face. Some short term challenges we continue to be optimistic based on the acceleration of digitalization trends the tremendous enthusiasm of small businesses around the world to participate in the digital economy and the two year growth rates remain above pre pandemic levels.
In addition, we're in the early stages of penetrating the huge cross border payments market and the opportunity to serve small businesses globally with sophisticated services to help them compete in the digital economy.
Our innovative new solutions and scaling our global team to be the primary beneficiary of this expansion in an already gigantic addressable market as supply chain constraints subside border restrictions ease and E Commerce and travel returned to a more normal growth trajectory <unk> is well positioned to benefit from.
The secular tailwind of digital Commerce and cross border payments.
I would also like to highlight our continued investment to strengthen <unk> leadership team and board Karen Levy will now serve as president with a focus on increasing pain years global market position carrying previously served as the Chief operating officer of Pannier R&R on Kraft joint pain here as our new Chief operating officer and.
It brings global experience at large enterprises, including Microsoft and Sandisk and.
And we also strengthened our board of directors with the addition of Pam pathway through his extensive experience on public company boards and also as a fintech executive at companies like Moneygram first data payment tech and more give.
Given our strong position in momentum I couldnt be more optimistic about our future. We have a highly resilient business model with a differentiated competitive advantage we win in the market because of our global brand, our broad ecosystem of partners and marketplaces diverse product portfolio deep risk management and compliance expertise our.
Amazing team and our scalable business model or.
Our strong execution enormous market opportunity ongoing momentum and accelerating customer demand for our unique offerings position us well to deliver strong revenue growth in 2022 and beyond.
Before I turn the call over to Michael I would like to thank the Tanger team for their great efforts to deliver real value for our customers and to deliver positive financial results I'll now hand, it over to Michael to discuss financial results and forward guidance.
Thank you Scott.
And Scott just shared we were very happy with our performance in the third quarter and we are well on the way to report an excellent year, while also positioning us for additional growth in the future.
Allow me now to walk you through key financial highlights from our Q3 results revenues in the third quarter were $122 $7 million.
Up 35% year over year, driven by growth in customers, new marketplaces, including ebay expansion of offerings, such as <unk> APR and commercial card.
And non volume revenue streams.
<unk> increased 16% year over year to $13 6 billion with a growth rates impacted by supply chain disruptions and slowing e-commerce growth.
When looking at a two year compounded annual growth rate between Q3 2019 in Q3 2021, our volume grew 37% annually.
We continued to build momentum in regions like Eastern Europe, Latin America, South Asia, and the Middle East all of which have volume growth much faster than the business overall.
We also continue to see above average volume growth in <unk>, APR, which has volume growth over 100% compounded over the past two years and now represents approximately 10% of Q3 volume up from approximately 7% in the third quarter of 2020, we.
We also had moderate growth in travel volumes this quarter over last year, but it is mostly in destinations where the payouts are in the same currency and thus with lower take rates.
The blended take rate for the quarter was 90 basis points up from 82 basis points in Q2 of this year and 77 basis points in Q3 of last year.
Our fastest growing regions have a higher mix of services ex borders and smaller customers both of which typically generate higher take rates than the business overall.
The increase in take rate was driven by changes in customer mix geographic density.
Continued above average growth in the higher take rate parts of our business such as <unk>.
Sure.
Our Mastercard commercial card and non volume based contributors such as working capital merchant services and other revenue streams.
Transaction costs were $24 $7 million, representing 21% from revenues a significant improvement compared to last year's third quarter of 2007, 1%, which reflects the companys ability to benefit from improved operating leverage as we scale.
In Q3, we also had a reduction in capital advanced losses.
As a result of our third quarter revenue growth and lower transaction costs.
Revenues less transaction costs improved to $98 million, an increase of 48% year over year, representing 79, 9% of revenues up nearly 700 basis points from the same period one year ago.
Total operating expenses, including transaction costs were $129 2 million up 44% from $89 6 million in the year ago period.
As Scott mentioned, we are making significant investments in R&D and sales growing our teams and investing in our people our platform and services and the success of our customers.
In addition, we incurred the temporarily elevated level of third party labor expense related to the Onboarding and compliance reviews for a record number of new customers.
Stock based compensation in Q3 was $8 6 million, an increase of approximately $5 $5 million over the same period last year.
Net income was <unk> $8 million $0 per share based on weighted average basic shares outstanding on the investors section of our website, we have updated our detailed share count which addresses the current float shares subject to lockup and contingent shares and related restrictions or <unk>.
<unk> prices as the case may be.
Adjusted EBITDA the calculation of which is detailed in table two of our press release was $6 1 million as compared to $2 6 million in the third quarter of last year.
It is important to note that while we continue to accelerate significant investment in our platform and go to market strategy, we were still able to increase adjusted EBITDA. Thanks to the continued topline growth and lower transaction costs.
Turning our attention to the balance sheet.
Cash and cash equivalents were $449 million.
At the end of Q3.
Given our cash position in Q3.
And terminated our credit facility and we also redeemed all of our series one preferred stock, leaving us with a debt free balance sheet as of the end of the third quarter.
Turning now to our guidance.
Given our strong performance through the first three quarters, we are updating our full year 2021 guidance as follows.
We expect 2021 revenue in the range of $458 million to $462 million.
Which reflects continued strong execution of our strategy, increasing customer and geographic diversity and strong growth of high value services like <unk> APR and commercial cards.
This represents year over year growth of 33% to 34%.
Up from our previous guidance of 20% to 30% growth.
The implied year over year growth rate for the fourth quarter is generally consistent with the full year growth rate.
We expect volume in the year to be in the range of 54, 3% to 56 billion.
Our expected year over year growth between 22% to 26%.
As we discussed earlier supply chain issues continue to impact ecommerce and we want to take a conservative view on the upcoming holiday season.
International travel is not expected to accelerate meaningfully so we are not forecasting a significant benefit in Q4.
The targeted take rate for the full year of 2021 is between <unk> 83 to 84 basis points considerably higher than the 76 basis points, we shared on our previous guidance update.
We expect a slightly lower take rate in Q4, as a result of the annual seasonality, which typically shifts in mix towards e-commerce goods and larger customers, both of which have lower take rates than the business overall.
We expect transaction costs to be approximately 22% of revenues an improvement from previous guidance of 25, 3% revenues.
Revenues less transaction costs are expected to be $357 million to $360 million representing year over year growth of approximately 44% to 45%.
This compares to our most recent guidance of 35% and reflects approximately 78% of revenues we.
We projected adjusted EBITDA in the range of $16 million to $18 million up from previous guidance of 1 million to $3 million.
We are very pleased that we've been able to continue to sequentially increase profit guidance, while accelerating investments in our platform.
The more recent initiatives Scott detailed earlier.
We intend to share our 2022 guidance in early March when we issue our full year results.
To summarize echoing Scott's enthusiasm, we know we have a unique opportunity given our global reach and scale broad customer base and ability to help digital businesses around loyalty grow.
Believe we are well positioned to be the worlds go to partner for digital commerce everywhere and.
And grow with the broader digital Commerce Revolution.
Confidence in our ability to continue to execute on our strategy to position <unk> for accelerating growth once we see the easing of supply chain headwinds and normalization of ecommerce growth.
We're now happy to answer any questions you may have.
Operator, please open the line.
Absolutely.
I would like to ask a question. Please please press star followed by one on your telephone keypad if for any reason you'd like to remove that question. Please press star followed by team again to ask a question press Star one.
As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question. We will pause here briefly ask questions are registered.
Our first question comes from <unk> Tandon with Needham and company. Please proceed.
Hey, good evening. This is actually stem cell that's on third line with Tonight.
Thanks for taking the question.
I was wondering if you just start off if you guys could provide some additional commentary around how the rollout of some of these newer products like <unk> commercial cards working capital is going.
Well as you know what the attach rates with these new products are looking like.
Okay.
Great. Thanks, Sam for the question.
So overall, we're really happy with what progress we're seeing with our newer services and these are really important.
Important as we're focusing a lot on these high value services like <unk> and commercial card as we talked about.
<unk>.
As Michael mentioned is now.
Up to 10% of our volume in the third quarter up from 7% at the same time a year earlier.
The two year CAGR there over 100%.
And so this is a really exciting and unique high value service it is growing faster than the business overall.
And we continue to see just tremendous opportunities all over the world. So we are increasing our investments in our go to market activities related to <unk> and also in our product activities commercial card.
Another area that we think there is quite promising.
It's still pretty early but thats something that we just started the introduced earlier this year.
But we're seeing really really positive interest from our customers.
And we're seeing growing momentum as we move through the year. So this is another area, we introduced a little bit earlier this year and we started to rollout our cash back rewards program.
Start on the fencing faster adoption of the product and actually greater usage of the product as well from customers that have signed up for it.
And all of those strategies. So far working so were still were quite a bit earlier and our curve of ramping that up versus the BBVA payout APR offering.
But again, it's a big opportunity.
It's a way to actually generate a higher take rate from existing volume flows as we help our customers now actually do more with the way they spend their money and make purchases and bring more efficiency in utility to their relationship with pioneer.
<unk> services, we're also seeing tremendous opportunities again, we're a little bit earlier in the in the growth curve, there, but we're seeing a lot of excitement and a great pipeline with large enterprises in multiple regions around the world that really are excited to use our technology to help.
Them better manage their payments infrastructure in this quarter, we will begin to introduce.
<unk> check out which is <unk>.
Acceptance solution for small businesses, starting in Hong Kong.
And so again as you might imagine over the next two.
Period of time here, we're going to look for roll that out more broadly around the world, but we're very excited to be able to now support starting this quarter not just larger enterprises, but also small businesses as well and working capital continues to be really really important and valuable service with some of the choppiness. There this year.
<unk> to <unk>.
Supply chains, it's something where we we did dial back a little bit on the.
On the risk appetite and so.
It's something that we continue to carefully manage but it's a high value service with again tremendous opportunities.
And we have a lot of really exciting momentum building there as well I touched on the new offering that we have that gives our customers a lot more flexibility and choice to kind of suit.
The duration of their needs and so again, we've got a lot of additional new services that we're going to rollout here as well. So these are all areas.
That we think are gigantic addressable markets, we're really still relatively early and all of them in the growth curve <unk> being the furthest along.
Our market penetration, but also still.
We're barely scratching the surface of a multi trillion dollar opportunity, so really exciting and great momentum and those are all part of also the growth in the take rate.
That we talked about as well.
Got it that's super helpful. Thanks for the color there.
And then just a quick follow up I was wondering if you guys could elaborate a little bit more on the <unk> partnership and.
And how we should think about that ramp.
The long term potential of that partnership.
Okay.
Yes, thanks for asking I mean coupon, we're really excited about the relationship there South Korea is the fourth largest e-commerce market in the world, which.
Which is pretty remarkable given the size of the country.
And coupon is really.
Tremendous market leader there.
It's great opportunity for us, we're both likeminded and focusing on the opportunity for small businesses around the world to be able to grow and capitalize on the e-commerce opportunity in South Korea, and we're excited to work together with them on payments and also our green channel offering will help introduce small businesses.
Two to couponing platform.
In general we don't talk too specifically about any individual partner that we work with but in general partnerships like this can take some time to roll out.
Often.
We have some time to implement and integrate the relationship and then actually bid.
Begin a rollout and those things can take some time.
Usually these are relationships that will ramp up and become more significant as time passes.
Great. Thanks for the insight.
And congrats on the results.
Yes, thanks, very much for the great questions.
Thank you.
Next question is from Sanjay Zaccone with K B W. Please proceed.
Thanks, Good evening.
Yes, maybe on the volume weakness, obviously, the comp trends have been soft for the supply chain issues.
And I know Michael do you want to talk about next year in March but just at a very high level as we think about that.
Next year, you sort of laid out your long term revenue growth expectations do you need a significant improvement in the supply chain issues to sort of achieve that because it seems like you've got a decent amount of momentum with <unk>.
Newer initiatives.
Great Sanjay great talking to you again so.
So actually I think one of the things that we probably haven't highlighted enough.
It is just how much diversity, we have in our business.
And I think that actually really is highlighted by the strength of this quarter. So.
What you see right now where there is a little bit of softness as it relates to E. Commerce is that we're continuing to see strength not just in the new services, but actually in some of the other vertical markets that we operate in and in practice. We are playing in a number of large markets that are really kind of transformational and the way to <unk>.
World is changing so things like remote work.
We work with social platforms, we're engaged in distance learning and each of these verticals tends to have some different characteristics. So what we saw in the third quarter.
It was really the amplification of some of those areas of strength. So we saw a geographic diversity, where we actually saw faster growth.
Other markets in regions like Latin America, and South Asia, Middle East, North Africa, and Eastern Europe, we saw faster growth.
Some of those other verticals and many of those other verticals.
The payment sizes are smaller the customers are a little bit smaller and the take rates are a bit higher.
We also as we touched on <unk>.
Terrific customer acquisition, our bank partnership strategy is working.
Seeing again, a lot of really exciting opportunities and it's translating into tangible results with meaningful growth in new customer adds and also usage of those bank partner integrations and then as you already touched on those high value services.
That are growing faster and also our higher take rate services. So.
Part of what we're excited about is that we think.
What we saw this quarter is a little bit of the opposite of what we saw last year, which was really fast growth last year in E Commerce, which has a lower average take rate and the business overall.
And this year I mean, I think as you've seen there are certain pockets of the E. Commerce world that are not just not growing fast, but I mean in some cases theyre down and in some cases, even down double digits year over year. So.
We've got really good momentum across a range of vertical markets and geographies and also new services. So we think it sets us up really really well going forward. We are now is e-commerce.
It comes back stronger, which again, we're huge believers in the long term.
Trend towards digital commerce.
We think our supply chain will improve.
It can be debated how fast and we'll all learn together Budd.
And then as travel comes back and we see those as incremental tailwind that can actually accelerate.
Our business, but hopefully we've showed that we have multiple ways of actually delivering growth.
And we're executing well on those.
We're really looking forward to having a really broad based.
Growth of the all of these vertical markets working together to give us just a little bit of an extra tailwind in the future, but we're excited about how we were able to perform and we think it sets us up really well.
I'll just add that we're also seeing geographic diversification as well as Scott mentioned as countries that are growing quite fast and continue to grow.
Proactively.
Invest in the growth of those.
To the point about the record number of customers.
It really goes to show the opportunity too.
The Grove.
<unk> platform as well as two.
Additional services.
Get more value out of those.
Thank you chip.
Absolutely.
Then just second question Scott you talked about M&A potentially maybe you could just talk about.
The pipeline, how something might be in terms of.
It's happening and where exactly you are looking.
Yeah. Thanks, So we are actively exploring opportunities and we do have.
Quite a number of discussions that we're engaged in.
There is nothing imminent.
But we are seeing a number of interesting opportunities across a range of.
Services across a range of geographies.
And we're we're actually excited about.
The breadth and scope of what's out there.
So we are likely I think we're likely to see us focus will continue to be more broadly in the round of digital commerce and commerce enablement.
And we're.
We're still more likely to focus on buying something that is kind of smaller to mid size, where we have an opportunity to take a company that has a great.
That can be complementary for our customers, where we can actually drop it into our global platform and push it out to customers.
Around the world and through our sales teams and our partners around the world as well so that's in general the way, we're we're likely to approach it.
We are building momentum, but nothing imminent at the moment.
Thank you.
Yes.
Thank you Mr SEC Ronnie.
The next question comes from Josh <unk> with Cantor Fitzgerald. Please proceed.
Hi, Good evening. Thanks for taking my question I'd like to dive a little further into the emerging markets expansion. When we think about the key drivers for growth there were a lot of applications coming inorganically, where you're leveraging your go to market strategies.
Any additional color you could provide would be helpful around that.
Yes sure.
Hi, Josh.
So firstly something again, I mean, we probably have.
Under communicated just.
How much like the foundation of the pioneer business historically has really been broad focus on emerging markets and that really is our heritage and our history and how we've grown up and really how we think.
About kind of a unique role that we can play in the world.
And so we have.
Great footprints in really interesting parts of the world in Eastern Europe.
In places like Ukraine, and Serbia.
Sure.
South Asia more broadly in markets, not just India, but places like Bangladesh and Pakistan.
And.
And all over the world So what.
What we've seen is in many cases those parts of the world are seeing the greatest transformation.
Not just in terms of the impact of.
Digitalization on the lives of people locally, but actually enabling really really talented and entrepreneurial people to actually plug into an access opportunities around the world and many of those markets are the markets, where pannier is really.
The most meaningful on ramp to the digital economy, I mean, some of those markets, you'll see where we could even be like a top 100, most trafficked website.
And some of those markets so.
It really is the acquisition momentum that we have I think first and foremost really does highlight just how much excitement enthusiasm and demand there is around the world among entrepreneurs across different verticals across different geographies to participate in.
The digital economy.
And we are seeing really momentum across all of our acquisition channels. So organically.
We get the majority of applications just coming at <unk> Dot com.
These entrepreneurs around the world know that pioneer is the place to go to get started when they are beginning their journey in digital commerce.
We also have growth in our banking partnerships.
We had actually triple digit growth.
And those bank partnership channels in terms of new customer acquisition and also in terms of volume through those partnerships.
That's working well, we get more customers through more marketplace relationships and so that continues to be an important driver and then we've also been actively investing in sales teams and part of what Michael was just touching on is we've been making bigger and in kind of a higher percentage of our investments in.
Our go to market teams are in some of those markets that we think have just huge potential.
But our less developed in less penetrated so we're growing faster in Latin America with our go to market teams and they're doing a terrific job where do growing faster in the middle East.
Our investments there and we opened up a new office in Dubai earlier, this year and we're seeing terrific opportunities in that region Eastern Europe, we continue to broaden and expand not just the geographic footprint, but the size of the team there.
And we've really been seeing great opportunities, so really in a lot of different markets around the world, We're seeing similar momentum excitement enthusiasm in trends among entrepreneurs.
Kind of this remarkable kind of commonality in the way entrepreneurs around the world are are kind of seeing opportunities.
And we are really leaning in to try to be their partner to help them capitalize on all of that opportunity that exists for them.
Got it.
Very helpful and then I would like to touch on the value added services.
So clearly you've been able to successfully cross sell into your customer base. So how are you identifying and reaching these customers and how much untapped opportunity still remains to cross sell in the future.
Yes, I mean, we're we're still pretty early in.
In actually developing and flexing those muscles so.
We have multiple ways.
We actually go to market with those.
And a way to think about it is we've got a chunk of our customer base.
That we would describe is being managed.
We actually have.
People that are assigned to manage those relationships because you might have guessed those would be typically a bit higher larger.
Larger volume higher value customers.
And then we have a large pool of customers that are self serve customers.
And we actually have tools for.
Upselling in both of those.
Arent pockets of our business, though on a self serve platform.
We have ways different parts of the infrastructure, where we can actually present new offers we obviously have a CRM platform, where we have a variety of different ways, those messaging and communicating the host events around the world.
We also will actually share information about new opportunities for our customers.
And kind of larger scale so.
So we continue to see great great opportunities, there and we continue to refine those tools.
But we've already seen a good amount of effectiveness.
We actually deploy those and then with our go to market teams, which are growing again thats a growing part of our sales organization are not just net new sales, but also our customer success teams.
And the teams that are managing our larger enterprise accounts.
And those are areas, where again I think we're still pretty early.
Not just in building out those teams, but actually in.
And not been kind of Upselling, new services to our existing customers. So we've already proven it out that we know how to do it but we also know there is a long way to go.
Not just in improving it but also we have lots and lots of customers that we believe there are more.
High value services that we can bring to them the merchant services I will just give another illustration.
We now have teams in multiple parts of the world that work with our enterprise customers that are actually now been going out and engaging with those customers talking about our payment technology and we're actually seeing.
A lot of good opportunities and already some good wins in a really nice pipeline. That's developed there. So again on some of these especially the kind of longer sales cycles pipelines that can take a little while for that to ramp up.
But it's a muscle that we're actually building and it's going pretty well.
Very helpful. Thank you Scott.
Yes, Thanks, Jeff.
Thank you Mr Seigler.
The next question comes from Bob Napoli with William Blair. Please proceed.
Great. Thank you.
Good afternoon, Scott and Michael and maybe.
Thanks, Nice quarter I guess.
Yeah.
What.
Really solid results and I think the guidance is.
Pretty solid as well.
There were some cautionary tone I think on the last call and I think even some on this call, but it sounds like broadly there's a lot of momentum in the business.
What is.
What is doing better than what you expected when you gave guidance last quarter.
The EBITDA as well just on the profitability side falling through.
Bottom line, so what whats changed versus last quarter that gave you the upside.
Not only in the top line, but also on the bottom line.
Great.
Hi, Bob I'll start and then Michael will chime in.
So first again.
I think in hindsight I think in Q2, almost felt like a little bit and maybe like the Canary in the coal mine about some of what's going on around supply chain.
And I think you know us in general we try to be pretty cautious and moderated in the way we talk about.
Things.
In general I would say.
We're executing well really across a lot of the different things that we're working on I mean <unk> continues to perform.
Perform well.
The customer acquisition continues to go really well.
Still.
On the smaller side, Budd, but we've had really nice.
<unk> pick up with the commercial card.
Through the third quarter, and then those bank partnerships again really.
Turning to kick in and so again all of these areas.
Have have done quite well.
And broadly speaking also as I touched on earlier.
The non e-commerce portion of our business.
And the kind of broad.
Geographically distributed portion of our business also performed well. So overall I think what we're seeing again is kind of.
Some of the fruits of the fees that we've planted.
Over the last couple of years are coming to bear and overall.
We're seeing a lot of good solid execution.
And again in portions of the market cooperating in other parts.
Good.
Certainly we would benefit from a little bit of extra tailwind.
I think what we showed this quarter and what we're excited about looking forward.
Is that that our denim we think provides upside.
To where we are now.
I would just add.
Yes.
We're very experienced in terms of managing risk.
And in terms of where we were we ended the second quarter we were.
Being cautious because we do have a good advantage points and understanding where things are going.
The supply chain challenges.
Understood potential reverberations.
Those challenges is longer.
In terms of.
By chain than we had hoped but we took a conservative view on working capital.
I've mentioned.
We're more cautious I think.
We recognized that we had very good.
Management.
Processes in place and we're able to.
Adjust for that.
One of the things that you will see when we talked about the margin.
Cost for working capital came down adjusted.
Adjusted provision.
The actual.
Risks.
Is that something that.
We hope to continue to accelerate going forward and that we feel more comfortable.
Measures to mitigate.
Thanks, and then just on.
First of all I know you don't comment specifically on individual clients, but I'm wondering if you can give any commentary on how the ebay expansion is is going.
Given that.
They've been moving off Paypal a lot faster.
Hey, Doug.
Over the last couple of quarters.
And then my last question with the geographic market expansion wise.
Where do you see the biggest opportunities I mean, it seems like there is some really strong take rate opportunities in Latin America.
But.
Where do you see the biggest opportunities for yourself you too.
Had a growth geographically.
They and geographic expansion.
Greg So.
Ebay and I think.
They've commented on this so more kind of echoing what I think they've already shared publicly.
I think the communicated.
Made good progress on.
Overall their payments initiative.
It's something that we've been really proud to have the opportunity to work with them on such an important strategic effort as they look to improve.
The way small businesses around the world.
<unk>.
Manage their payments around the EBIT marketplace and so they have made a lot of progress on that.
And I think they've just recently provided some additional disclosure on that so I think they are as you said pretty far along in that and it's something that we've been again really happy to be able to cooperate and collaborate with them on that.
In terms of geographic expansion.
We really are.
There are many many opportunities and we really are.
Working to actually deploy additional sales resources in a number of different places.
I mean, even in markets like Western Europe, and the United States.
Our relatively small for us and as our portfolio of services continues to grow we see big opportunities there, but I would say the biggest opportunities that we really.
Get most excited about are.
As you touched on Latin America.
South Asia, and the Middle East and North Africa Eastern Europe.
Actually there are some amazing pockets in southeast Asia, where just again the activity is extraordinary and markets like Vietnam and Indonesia.
The Philippines and other markets like that so we really are seeing opportunities in a lot of different places.
And I think you can kind of almost follow it as you. If you look around the world, where you know we're reading stories about.
Capital markets activity and venture investments and things like that I mean, all of those become kind of self fulfilling and self reinforcing.
As ecosystems.
Kind of digital entrepreneurship are growing around the world and so we end up really being both a contributor to that and a beneficiary of that.
So those are places that are seeing really the biggest transformation in the greatest kind of leapfrogging.
That we're seeing around the world and as a result again, we think there is kind of opportunities for faster growth.
And also in number of cases opportunity.
To generate a higher take rate than what we would see.
And some of the bigger markets that are out there.
Thank you I appreciate it.
Thanks, Bob.
Thank you Ms Joseph Holley.
The next question comes from Ashwin <unk> with Citi. Please proceed.
Hey.
Good evening.
Thank you for taking my question congratulations on the good quarter.
I guess my first question is with regards to the transaction cost improvement.
Is that sustainable going forward I mean certainty benefits this year, but what should we expect.
Pulling forward.
Yes, I think when you look at revenues minus transaction cost and look at that.
At that level of profitability, which is important to us.
Something thats grown very nicely.
You can see that when you normalize throughout the quarter has actually been a lot of consistency.
Where we've been.
As we continue to grow I think the fundamentals are pretty sound at this point.
Okay.
The underlying factors that led to that is that more of the.
More of a year over year comp issue, because that's what was going on last year things like that.
So.
Should they be.
<unk> continue.
If I can clarify sir yes.
On a year over year basis again, we continue to leverage our scale.
Significant part of how we manage our transaction costs, but we also as part of the deal that we announced with Mastercard.
We're able to structure our COO.
<unk> costs.
On an ongoing basis, we now include our economics.
So that's an ongoing benefit.
You had mentioned before.
To manage.
Our risk management as well.
Done a good job of that this year, so all of those too.
All right.
For the most part.
Relative to steady state.
Got it got it.
And then the other question I had when I look at that.
I mean, obviously U S really started to get out.
Countries in greater China is the one that had the.
The DSO.
To kind of break that out with regards to how much is this.
What's going on inside China.
Yes.
Maybe supply chain prices the factors and I guess the more important question is gili.
You guys are most focused on exports and <unk>.
Exporting more stuff is the way out.
A problem like this.
What does that kind of how does that inform your decision.
Making investments in the region.
Okay.
It does get better faster.
Yes, great question and an important question so.
Actually there really hasnt been any impact that we've seen related to.
Some of the changes domestically within China as you highlighted.
We're focused on exports we work with.
Chinese businesses to help them grow around the world and that continues to be actually an area of great focus there I think what youre seeing there.
It is more some of the less the diversity and the nature of the businesses.
There than what we have in a lot of other parts of the world. So when there are supply chain issues. That's a part of the world that they actually are going to hit quite hard.
When there is a slowdown in the growth of e-commerce goods purchases or in some contacts even.
Year over year decline.
Certain context, again and Thats, a part of the world that can actually that hit a bit harder where in other parts of the world for us you'll see more of a mix of services and goods and you'll see a quite a variety.
Greater variety of different types of activity so in general.
We actually continue to see exciting opportunities, we continue to see really.
Just incredible and dynamic activity there with a lot of focus on exports and a lot of encouragement as it relates to that coming from the.
The government, there and Thats something that we.
We think actually used physicians in general to do well.
But but again thats something that will snap back more.
As digital Commerce actually it comes back so.
So we are investing faster in other parts around the world.
And.
But it.
Certainly it's still a part of the world that we're actually upbeat and optimistic about.
Understood. Thank you for that appreciate it.
You're asking a great question. Thanks, Andrew.
Thank you Mr Chair of the company.
There are no additional questions registered so as a reminder, the star one on your telephone keypad.
There are no additional questions waiting at this time, so I'll pass the conference over to Mr. Colin.
For closing remarks.
Great. Thanks, I'll keep it brief I really thank you everybody for your time and for all the great questions really.
Happy to have the chance to talk with you we think.
Really.
Had a really strong quarter really think has highlighted.
So many of the powerful trends and themes happen.
Happening with digitalization around the world, but maybe more importantly.
Around half of our growth strategy is really positioning us to.
To have a durable and resilient business model are well positioned for growth in the future. So we look forward to talking more and more detail. If you have any questions. Obviously, please don't hesitate to reach out to our IR team and let US know how we can help and thank you again.
That concludes the pay in your third quarter 2021 earnings Conference call. Thank you for your participation you may now disconnect your lines.
Okay.
Yes.