Q2 2022 Payoneer Global Inc Earnings Call
Both of them to utilize the money they receive wherever their business needs to go in the currency that they desire our most active customers utilize our full platform to get paid manage their finances and pay their suppliers partners and employees.
Given our global reach our scale our tool set we are seeing Panniers network effects as customers benefit from being part of our global ecosystem and all of the connected smbs on our platform.
Our customers are in a wide variety of industries, they are export or selling goods cross border freelancers and business is capitalizing on the digitization of the workplace and remote work service companies exporting their capability to international clients vacation rental hosts reopening after the pandemic and digital <unk>.
<unk> is delivering their content to consumers around the world.
Our geographic reach extends across more than a 190 countries and territories and with our expertise and our technology infrastructure. We have built a financial network for the future of global trade.
We have a deep moat around our business given the operational and regulatory complexity that are required to run a trusted global financial services platform.
The diversity of industries and geographies, we serve means that our business model is resilient to individual market trends or shifts.
The heartbeat of our company as our customers and their engagement with US we continue to see strong customer growth both year over year and sequentially.
Looking ahead in addition to acquiring more and larger customers one of our priorities for our next leg of growth is to upsell and cross sell existing customers more pioneers capabilities. We will also continue to build internally and by companies with innovative products that make our customers' jobs.
Easier from sending and receiving payments to managing their purchases to working capital.
Given the growth opportunities, we see across our global business, we are continuing to invest in our R&D efforts and our go to market capabilities. So we can meet even more of the financial operating needs of our customers. While we continue to invest we plan to continue to deliver positive adjusted EBITDA going forward.
The tailwind we're seeing from a rising interest rate environment are helping us pull forward our path to sustained profitability and we remain committed to our long term target of 20% plus revenue growth and 20% plus adjusted EBITDA margins.
Our team is focused our customers are global and our platform is strong.
Scott and I, each bring our complementary skill sets to partner with the rest of the extraordinary pioneer team together to serve our global customers.
I believe we are just at the beginning of our next leg of growth.
With that I'll turn it over to Scott.
Thank you John and thank you to everyone for joining us today I'm happy to be working alongside John to lead pioneer into its next chapter of growth. We had another quarter of strong results as we continued to drive strong new customer acquisition and increase adoption of our higher value services. We also benefited from better.
Than expected results from Ukraine, and rising interest rate tailwind.
Total revenues grew 34% year over year, and 8% sequentially and we delivered another quarter of positive adjusted EBITDA of $15 million.
Our business has several powerful growth drivers, our regional diversity and a broad set of industries, we serve position us well to navigate the market uncertainty with respect to inflation and the interest rate environment and will enable us to grow in the current macroeconomic landscape.
Our positive cash flow generation and ample cash on our balance sheet enable us to continue investing for long term revenue growth and future profitability.
For example, <unk> continues to be a highlight growing faster than our overall business and at a higher take rate <unk> helps our customers that are trading across borders to invoice get paid and pay their suppliers across currencies without needing to open banking.
Counts around the world or to rely on outdated ways to move money such as wires and checks.
<unk>.
<unk> generated year over year volume growth of 66% re accelerating from the first quarter <unk> now represents 12% of our volume up from 8% a year ago.
Our revenue growth is also being driven by regions like Latin America, and South Asia, Middle East and North Africa, both of which grew faster than the overall business year over year. In addition to the above revenue growth is being driven by increased usage of our virtual pay and your commercial Mastercard and improvement.
And cross border travel, though our travel volumes are more tied to travel in Asia and other emerging markets, which are recovering at a slower pace than Europe .
We remain optimistic about the long term trend of digitalization and the growth drivers of the many industries. We serve our goal is to continue to expand the portfolio of higher value services, we offer to both the Smbs, we serve and the global ecosystem. They are part of our.
Our higher value services include <unk>.
Our virtual pay and near commercial Mastercard supplier payments and more these services enable us to serve more customers across a broader range of their needs. For example, a software development company with over 200 programmers in Ukraine recently became a pioneer customer because we were.
We're able to offer them several products that meet their financial operating needs as well as local customer success managers to help them continue their expansion across borders they already use paying air to get paid by their clients using our <unk> services to pay their programmers in the pay in your network <unk>.
<unk> accounts and can pay other suppliers around the world directly into bank accounts.
We are excited to support and enable their growth for a long time to come.
One of our newest higher value services is paying your checkout, which marks our entry into the market serving smbs that sell directly to consumers around the world. While it's still very early days. We think this is a big long term growth opportunity checkout provides our customers with improved access.
Since rates and integration into their pay on your account. This is an area. We're investing in as we expand the tools, we offer to smbs to get paid and to manage their financial operations.
We also continue to focus on nurturing our ecosystem of partners. For example, we have posted a series of events with Walmart in the UK and India.
This collaboration introduces an onboard its high quality pannier sellers to Walmart's online marketplace, where our customers can reach a growing market of more than 120 million U S consumers each month.
This effort builds on our Green channel solution, which helps onboard paying our customers to new marketplaces.
We launched several new partnerships in the second quarter.
A few highlights included private bank the largest bank in Ukraine, where we are particularly happy that we have had the opportunity to provide more support for Ukrainian businesses. We also launched with Lin works and SMB Tech platform based in the UK <unk> 21 of <unk> wholesale trade marketplace.
Based in Korea, and shop, Liza, a leading e-commerce platform in Asia that is partnering with us to drive distribution of paying your checkout.
And our momentum is continuing since the end of the second quarter last week, we announced that <unk>, one of Asia's largest technology companies and owner of a global net adverse platform with over 320 million registered users chose <unk> to provide payments to their creators worldwide.
We have a robust pipeline of partnership opportunities around the world.
The dedication of all our employees globally and their successful execution translated into strong results for our second quarter and make us optimistic about our future.
I'll now hand, it over to Michael to discuss financial results and forward guidance in more detail. Thank you Scott and thank you to everyone for joining us paint.
<unk> delivered another very strong quarter results once again exceeding our forecast.
Q2 revenue increased 34% year over year to $148 million.
Driven by strong customer acquisition more favorable mix towards higher take rate areas of our business and better than expected results from Ukraine and rising interest rates.
Revenue reflects faster growth in regions, such as Latin America, and South Asia, Middle East and North Africa, as well as continued adoption of our higher value services.
Our Q2 customer cohort was larger than the prior year period as customers continue to adopt our tools and services and leveraged our partnerships to grow and scale their businesses.
We have a global business operating in 190 countries and territories. However over 85% of our Q2 revenue is U S. Dollar denominated. So most of our revenue is not subject to significant foreign currency risk.
The Q2 take rate was 101 basis points up compared to 82 basis points in the second quarter of last year and 94 basis points in Q1, primarily driven by the previously mentioned regional mix and higher value services, along with non volume based services.
And other revenues.
Q2 volume increased 8% year over year to $14 6 billion.
Volume growth benefited from continued strong growth of <unk> as well as growth in customer acquisition, which was fueled in part by growth in the ebay sellers, who are now fully on board compared to the second quarter of last year. When ebay was just being launched.
We are also seeing a gradual rebound in travel as Scott mentioned earlier and stability and freelance vertical these.
These drivers of volume growth are partially offset by a slowdown in certain e-commerce marketplaces, which saw strong growth earlier in the pandemic as demand was pulled forward so year over year comparisons have been more pressured this year.
We remain optimistic about ecommerce growth over the long term.
We.
<unk> volume to grow faster towards the back half of the year as we have typically seen fourth quarter seasonality in our business.
At the same time, we anticipate that our revenue growth rates will exceed that of our volume growth as we expect to have continued mix shift towards a higher take rate regions and products.
Q2 transaction costs were $26 million, representing 17, 7% of revenue an improvement from 25, 7% in the second quarter of last year and 18, 7% in Q1.
Bank and processor fees, the largest component of transaction costs.
Increased 11% year over year, well below Q2 revenue growth driving better margins.
The year over year improvement in transaction cost as a percent of revenue also benefited from lower working capital provisions.
Q2 revenue less transaction costs increased.
Increased 48% year over year to $122 million.
Representing 82, 3% of revenue.
Okay.
Total operating expenses, including transaction costs were $150 million up 16% year over year.
Excluding transaction costs operating expenses increased 23% year over year.
Given our global footprint approximately 60% of our expenses are paid in non USD currencies and we benefited from the strengthening U S dollar.
The biggest component of operating expenses as our labor cost, which includes both cash and equity compensation and represented approximately 60% of our operating expense less transaction costs in Q2.
Our labor expenses increased 28% year over year, reflecting head count growth, primarily in our sales and marketing and R&D teams as well as base salary increases for employees and higher equity compensation.
Labor expenses were relatively flat sequentially, although we met our hiring expectations in Q2.
Therefore, we will see labor expenses increase in the back half of the year as we recognize the full quarter impact of new hires.
We still expect operating expenses to be higher in the second half of the year versus the first half, but given the uncertain global macroeconomic outlook. We are moderating our hiring plans for the remainder of the year relative to our original plans and focusing our talent investments in areas that will deliver the grew.
<unk> returns.
Q2 operating expenses also benefited from timing of certain items, such as marketing initiatives were delayed into the back half of the year.
Operating expenses also reflected continued investments in our global infrastructure to support Onboarding of additional customers enhancing our regulatory compliance capabilities and expanding our transactional capacity.
Other operating expenses are growing at a slower pace than sales and marketing and R&D, which helped drive future growth and we expect that to continue going forward.
We will continue to make capital investments in areas with large addressable market potential and positive rois.
Q2, adjusted EBITDA was $15 million compared to less than $1 million in the second quarter of last year.
Q2, net income was $4 million compared to a net loss of $12 million in the second quarter of last year.
Net income for Q2 benefited from a $13 million gain from the change in fair value of warrants.
Both Q2 basic and diluted earnings per share were <unk>.
Our business continues to generate positive cash flow and we ended the quarter with cash and cash equivalents of $492 million, an increase of $26 million from Q1.
Customer funds grew sequentially by over $510 million to $5 $1 billion.
More than half of the customer funds on the balance sheet, our interest, earning and bear no cost.
Q2 interest income increased by $2 $8 million year.
Year over year to three $5 million.
Turning to our outlook for full year 2022.
We are raising our prior guidance provided in may.
This reflects our latest views on the evolving broader macroeconomic and geopolitical environment, the diversity of geographies and industries that we serve and the strength of our operations.
It also includes our improving outlook on our business in Ukraine, along with the contribution from interest income in a rising rate environment.
We are raising our revenue guidance to be between $580 million to $590 million, reducing transaction costs as a percent of revenue to 19, 5% and increasing our adjusted EBITDA guidance to be between 30 million to 35 million.
Yeah.
We believe our faster growing regions and higher value services, along with interest income will drive revenue growth in the second half of this year.
This will be partially offset by softness we expected e-commerce trends and the lapping of our ebay launch which started in the middle of the second quarter of last year keeping.
Keep in mind, the majority of our revenues come from customers that are not become or sellers of goods.
Regarding the war in Ukraine, while the situation in the region remains fluid our Ukrainian customers have been incredibly resilient.
Q2 revenues from Ukraine remain relatively stable sequentially.
<unk> forward, we assume 75% of our original pre invasion revenue forecast for the region for the second half of 2022.
This represents $21 million of revenues, which is approximately $7 million higher than our previous guidance.
We expect to maintain relatively strong take rate performance in the second half as our fast growing emerging markets and higher value services increase in mix.
We also expect to benefit from increases in interest income.
We expect transaction costs over 2022 to be approximately 19, 5% revenues an improvement from the previous guidance of 21, 5%.
This full year improvement is driven by lower transaction costs as a percentage of revenues year to date as well as reducing charged back in working capital costs going forward.
As customer mix shifts from higher margin e-commerce to other verticals. However, we expect slightly lower overall margins in the second half.
As previously mentioned we are also revising our 2022 adjusted EBITDA guidance to be between 30 million to $35 million. This improved guidance is due to our strong year to date results as well as our confidence in our ability to continue generating positive adjusted EBITDA.
Going forward, while investing in our business to drive additional future growth.
Based on our latest guidance 2022 will mark our 11th consecutive year of positive adjusted EBITDA.
In conclusion, our Q2 success once again demonstrated our ability to deliver strong financial results.
We have built a resilient and profitable business model that benefits from a diverse set of revenue drivers and we see positive trends for our business going forward.
Our ongoing momentum leading into the second half provides us with confidence in our ability to meet our 2022 financial targets, while investing to position pain here for many years of future profitable growth.
On behalf of John Scott and the rest of the senior management team. We thank you for your continued interest and support we are now happy to answer any questions you may have.
Operator, please open the line.
Thank you. Thank you I would like to ask a question. Please press star followed by one on your telephone keypad.
For any reason you would like to remove that question. Please press star followed by Q again to ask a question press Star one.
Reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question.
First question comes from the line of Bob Napoli with William Blair Your.
Your line is now open.
Got it thank you and good afternoon.
Great numbers congratulations.
Nice to see.
So just to.
Take rate I think you are welcome.
Talk to you John Scott and Mike.
The take rate, obviously 102 basis points up significantly sequential quarter and year over year.
What inning are we in.
So much momentum in the growth of that take rate.
I mean, where can we go from here I don't know I mean, it's.
<unk> obviously.
Working capital.
Commercial card driving that and you have a lot of momentum in that business should we see.
<unk> several basis points of expansion quarter to quarter to quarter four.
Foreseeable future.
So Bob Thanks for.
For the question and good to talk to you again, I'll start and I'll give you just kind of some general themes quickly and then I'll ask Michael to talk about the forward guidance.
And how to think about that.
So when it comes to take rate I would say something to have in mind that there are two parts of the take rate. So one is kind of our very intentional and purposeful.
Drive of our higher value services in penetrating our customer base with those and with that we are.
Very much in tenants are continuing to bring.
Higher take rate value propositions to our customers and it will continue to provide opportunities for us to increase take rate as customers adopt things like the commercial card and I have to talk about <unk>. Another part to have in mind is mix.
So as we talked about kind of the relative weakness of ecommerce and relative strength.
Some of these faster growing which also are higher take rate geographies. In addition to some of the higher value services that mix plays a role as well so.
We are very upbeat about how we're executing on higher value services.
But there are multiple components there Michael you want to talk about.
Forward look on yes.
Yes so.
Generally I would say the C is stable.
From this point.
Yes, there is a mix of factors and all in all.
Volume growth.
In the second half.
Volume growth.
Take rate standpoint, we expect to see it.
Okay.
Okay, Yes, the stable seems conservative given the mix items that you talked about going forward, but I just did want to follow up on something.
Something that.
You seem excited about the team seems excited about paying near checkout.
And maybe if you could give us a little more color on the strategy on and how thats playing out so far.
Yes so.
We are excited and we do think that this is.
A large opportunity and something that we're keen to pursue from a long term perspective.
And.
I think some key indicators to look at we talked about launching in Asia, where we see a tremendous amount of.
Excitement entrepreneurship and eagerness to sell globally.
We also announcing our partnership with shop laws.
Again, an indicator of how we see opportunities to collaborate with industry.
Players that are providing services to smbs in particular, those focused on global growth and exports and so we're still very early days.
This is again many of our customers are keen to pursue <unk>.
Direct to consumer sales opportunity is online and.
We also see it as a wedge into new types of customers that we've never had an opportunity to serve before that we think we're very well positioned to serve going forward. So long term excited still very very early.
Great. Thank you.
Thanks, Bob.
Thank you for your question. Our next question comes from the line of well Mann with Goldman Sachs. Your line is now open.
Hey, guys. Good afternoon, very nice results.
Wanted to ask on something you mentioned a handful of times in the prepared remarks around the rising rate environment and what that could mean for your business. I'm wondering if you could kind of quantify what that run rate has been more recently and given the rapid rise in interest rates.
What youre expecting I guess, one of the back half of the year, but more broadly I think you said something like over half of the customer funds are in interest bearing accounts is the idea that just for round numbers and a 3% fed funds environment that should correlate to roughly $1 50.
Interest income off the offer the customer funds on an ongoing basis.
Yes.
It's Michael I can take that one so as far as the way to think about it yes.
Yes.
Easy to model.
Actually more than half keep in mind, though that we don't always get the immediate impact rates when the fed raises rates tightened.
Timing lag.
Also when we look at balances and average balances that can fluctuate.
At quarter.
And then there's also that.
Themselves.
We'll take something out of it in terms of where the rates.
All of that together.
We would expect that.
Again, I think the variable is going to be.
What people do as balances continue to go up not not all of our balances are U S. Dollar.
A portion of our balances are being used operationally others. Our balances are non USD, so thats way.
Not all of that is interest survey, we do focus on trying to optimize you think that it will be meaningful in the second half and continue to decline.
With very strong exit rate.
And I think.
From where we think things would you do the math on current balances you would probably come out yet.
Yes loads.
And the <unk>.
Second half in terms of.
Got it.
Very helpful. I'm guessing that was low to mid twenties on millions of revenue just confirming that and then I'll lump and my second question.
Guidance for the remainder of the year it seems a bit conservative given the results to date implies kind of EBITDA down in the back half.
Much lower than what you've seen in the first half in revenue decelerating.
We've been talking about difficult e-commerce comps for most of the year I kind of thought we might be getting towards a little bit easier comps in the back half. So just can you talk about the layers of conservatism that you guys are layering in just given the uncertainty environment, the environment and particularly around e-commerce.
Whats on your mind in terms of room or reasons, you might be able to outperform that.
Yes.
We are being cautious obviously.
There are uncertainties you mentioned that.
<unk>.
Macro issues in terms of economic growth.
Well actually in terms of rates as a result, so there are a number of variables I would say that we did take a cautious.
Are you on that.
From a EBITDA standpoint.
From an overall economic standpoint, you can see that the implied.
Transaction.
The <unk>.
Variable profitability will continue to increase in the second half.
And then we'll continue to invest or not.
Not investing but we're going to.
Moderate our investment from our original plans given some of the uncertainties.
Got it that's super helpful. I appreciate you, taking the questions and nice results.
Thank you Bill.
Thank you for your question. Our next question comes from the line of Sanjay <unk> with <unk> W. Sanjay Your line is now open.
Thanks, Good morning, good afternoon.
John You mentioned, you want to up sell to existing clients I'm, just curious sort of if we think about.
And what that addressable opportunity is.
Can you help us think about what that might be and how quickly you can come through then to the numbers.
Thanks for the question.
In my first couple of months, so I will defer some specifics as we're putting the plans together.
But I will share. This context, we have an exceptional go to market team with relationships with our customers in the emerging markets around the globe, where they are and we have a diverse portfolio of products.
And how can we think we have the opportunity to increasingly introduce those products to our customer sets.
Across the globe. The team is looking at ways to achieve that and I think in 2023, Youll see that as a focus of the organization.
Okay.
Great and then Michael can you just help us think about the.
The EBIT contribution in the back part of this year like what's incremental in sort of where the run rate.
Going forward.
Yes, so we haven't broken out ebay, specifically and in general we don't breakout specific.
Customers.
What I can tell you to help you more colors that we did start the launch a year ago Q2 last year. So when you start seeing the lapping.
It really started in Q2 over Q2 uncertainty increase as we on boarded.
To the rest of the year so.
What youll see is that we had.
Meaningful benefit.
Hearing year over year in Q1, Q2 is a little mixed because being launched in Q2, and then you start seeing that impact that the lapping in Q3, and four where it's more of a like for like so less of a benefit.
Terms of the growth so when we look at the implied growth in second half.
From the revenue standpoint.
Part of the reason why you would see lower implied growth rate in the second half than the first half is that is that lapping Vijay.
Okay. That's very helpful. Thank you very much.
Thank you for your question. Our next question comes from the line of Josh <unk> with Cantor Fitzgerald, Josh Your line is now open.
Yes, hi, congratulations on the strong results this quarter I appreciate some additional color on the value added services portion of the business.
Typically can you comment on the why will it affect recurring especially at scale. This portion of the Midland.
Great. Thanks, Josh.
Scott So yeah, the exciting part.
A number of these higher value services I'll start with BBVA PR.
Is the kind of the network effects that kick in and actually in some ways growth begets growth. So we very much see that as our teams are able to actually sell.
Two suppliers around the world at those suppliers been essentially kind of introduced us in some ways to buyers who tend to be in developed markets. We often see those buyers start to recognize and understand that they can use and year to pay their suppliers.
Not just the initial one that introduced them to us but others.
And the kind of network effects continue to propagate from there. So it's actually something that's been consistent across our business across different vertical market segments partnerships.
Things like that.
In terms of.
Some of the other higher value services I think the other one that I think is the most consistent theme for us around what would be the card.
And as we're starting to kind of introduce that and grow that.
Again, seeing a lot of excitement or it's a great win win win type of opportunity.
Where we get.
Essentially lower the cost of our customers.
For their entire relationship with in Europe provide them with additional utility and generate a higher take rate for us overall, so all things considered a really really terrific value proposition.
We're excited to continue to introduce that we had good continued performance in the second quarter. There. We think there is still a long way to go but we're excited about where we're headed.
Excellent really appreciate the color there and how are you guys thinking about juniors positioning, especially as we enter an uncertain macro economic landscape or your end customers begins with shifting strategy with our engagement team here in the near future.
Yeah, I think in general.
What we're seeing at this point, let me request from our point of view the way we're approaching it is we're continuing to engage the market largely as rehab as Michael mentioned.
Given the increase in uncertainty where we are.
Are moderating the pace of some of the investments that we've been planning just to make sure we don't own.
Accelerated too far too fast on some things, but but overall the way we engage the market and engage customers we continue to see a.
Lots of demand lots of excitement around the world to participate in the global digital economy.
Again, I think everybody feels some increased uncertainty.
So they are factoring that in but so far it's not changing the way they want to actually engage in some cases, it's increasing the pace of their efforts to diversify and explore other opportunities themselves. So we think we're well positioned with a diversified set of products geographies vertical markets that we serve to help customers around the world.
This uncertain environment.
And so that's how we're approaching it.
Alright, Thank you very much and congratulations again.
Thanks Scott.
Thank you for your question. Our next question comes from the line of Ashwin <unk> with Citi Ashwin. Your line is now open.
Thank you.
Okay.
Great quarter guys.
Congratulations.
I guess so.
I guess I was hoping to get to any sort of disaggregation if you will.
Between the factors that sort of been driving.
Revenue.
We think of growth in number of customers number of markets.
And one man.
So the fee based on non volume kind of services.
Is it.
And any help in terms of disaggregate and what's more or less important the growth as we look at the next six to 12 months.
So ashwin, it's Scott I'll start and Michael out some specific numbers to share.
Ask him to chime in so.
The I'd say a few things one I mean, we've consistently been you've been looking to highlight <unk>.
This quarter, we accelerated from the first quarter and delivered 66%.
Volume growth year over year.
Do you expect that to continue.
Growing at a faster pace than the business overall.
I was just touching on it a minute ago when we can.
Kind of the most consistent theme that we're hearing from our teams around the world right.
Right now.
The excitement around <unk> and the excitement around card and so those are.
Both in a position where they are contributing positively to <unk> to bringing additional customers and additional volume.
And the card essentially enabling our customers to do more and also us to generate a higher take rate from the existing flows that we have.
We are seeing faster growth.
In certain geographies and so we're excited to highlight areas like Latin America.
South Asia Middle East North Africa, both of which are also growing quite a bit faster than the rest of the world overall, and we've been making investments we hired a new.
Regionally in the mill.
At least North Africa.
And our teams there again, it's really big geographies in terms of the population in terms of.
The digital adoption and we're still pretty early days, there and so a lot of room to continue to grow so when we look forward I think.
The growth of the higher growth markets the growth of the higher value services in particular, BBVA PR and card.
We will continue to be the drivers in the next 12 months.
Got it and then.
Based on what you said.
If I said that payback period.
Should continue too.
Inc.
Would you agree with that.
Debt.
I mean.
Is it possible to kind of say.
Is it heading down into the.
A few couple of quarters time zone is as opposed to roughly a year that it used to be because you now have full range of products and faster adoption and so on.
Yeah.
What I would say is we continue to feel good about our in general a low customer acquisition cost based on the strength of our brands and that we have healthy return on the investments that we've made to drive additional customer acquisition.
We're not modeling in anything specific as it relates to the payback period.
Okay got it.
Thank you.
Yeah.
Thank you for your question. Our next question comes from the line of.
<unk> Tandon with Needham <unk> co. Your line is now open.
Hey, guys. This is actually Sam so thats gone from minus today, thanks for taking the questions and congrats on another really strong quarter here.
Really nice growth in the emerging markets segment I was wondering if you guys could unpack some of the drivers behind the strength there in Latin America Middle East.
North Africa et cetera.
And then maybe also how you guys are thinking about growth in these markets through the remainder of 2022.
Even.
The tough macro environment today.
Yes, so just ill briefly give you kind of.
The playbook I mean these are regions that are large they are actually more recent for us in terms of actually putting regional managers on the ground in those areas and starting to build out local teams on the ground.
And so we think we still have a lot of room to go here.
The most consistent themes that we're getting from those regions are the real excitement about customers using our <unk> services and the opportunity.
To capitalize on our ability to help them really grow and accelerate their their business globally. So we would expect that these regions are still in the relatively early stages of growth lots of room to run will continue to grow at a premium to the business overall.
And when do you see things like the continued growth of things like remote work when you see actually there is some interesting trends.
Companies in Asia are looking to diversify and broaden the geographies that they are selling into regions like Latin America are really high on their list actually the middle East as well again big populations.
The rapid acceleration of digital adoption.
And so we really think there is a lot of exciting opportunities.
Got it Super helpful. Thank you for that.
And then just a quick follow up for me most of my questions have been answered but.
Given given the more challenging macro backdrop today.
Are you guys seeing any changes in the pace of adoption.
Specifically within those higher take rate products.
No.
We in general.
See healthy customer acquisition trends.
See how healthy adoption of these higher value services.
So overall, we're continuing to see positive customer demands for growing global businesses after working with easier to do it.
Great.
Thanks, guys Congrats again.
Thank you Tim.
Thank you for your question. Our next question comes from the line of Mike Grondahl with Northland Securities. Mike. Your line is now open.
Hey, Thanks, guys and I'll pass on congratulations too.
Maybe quick questions one in your B to B.
Sure.
Offering roughly how penetrated that is that crossed your customers.
And maybe secondly.
It sounds like travel came back some but we know Asia and emerging markets are a little slow how was travel related revenue, maybe compared to pre pandemic levels overall.
Yeah. So.
First Mike Thanks.
Talk again so.
<unk>.
We are as we touched on 12% now of the volume of the business overall.
And Directionally about a third of that is with customers.
Sure.
Are using us for BBVA, PR and something else, meaning they are selling through some other channel as you enter the year and two thirds are using us really almost exclusively just for the BBVA PR. So.
It is something that we do have a number of customers that are using it and we believe there are many more opportunities for us with existing customers, but actually I would say the bigger opportunity. There overall is expanding the universe of potential customers for us.
And we're seeing more and bigger opportunities around the world for BBVA KAR with larger customers.
On travel.
Overall.
Yes.
I'll start with the kind of general fees, and then micro size.
Got it.
But travel.
It is still down from where we were pre pandemic.
The routes.
That we support and at scale.
Tend to be routes that are kind of more.
Again emerging markets or markets that are a little further afield and those have been recovering more slowly.
And so we are not back to parity versus pre pandemic.
You wanted to talk briefly about the sizing yes.
I would say that it's really more the mix so really it's.
The.
What we saw from the pandemic is that the mix of countries changed and as a result as volumes start to increase we didn't see the same revenue benefit and.
We had a lower take rate that's a great start to come back, but it's lower than the overall.
Great.
Got it Okay, hey, thank you.
Thank you for your question. Our next question is a follow up question from Bob Napoli with William Blair.
Your line is now open.
Thank you.
I think you start with a 5 million Smbs and you had talked about I think Scott last quarter for Michael 200000 apps per month can you give an update on the growth of the Smbs that you said.
And are you still seeing.
The demand as far as apps per month engagement or are you seeing.
I guess related to that I guess.
What percentage of your customers that you're bringing on our self on boarded.
Alright, So I'll go through a couple a couple of questions. One we continue to see very healthy application volume.
So it continues to exceed the three.
<unk> hundred 1000 a month.
We acquired more customers in Q2 than we did in Q1 and so we continue to have.
Positive customer acquisition.
Trends overall.
In terms of.
How they kind of onboard.
Vast majority of those are customers that sign up themselves directly to senior dot com. So.
On average those customers are smaller customers.
The average customer opinion year, when our sales teams around the world.
Go engage.
With with prospects on average those are customers that are quite a bit larger so the way to think about it as kind of a supermajority of the applications are.
Our smaller customers that are self serving and signing up on your platform and the majority of the customers that our sales teams are acquiring which is a smaller percentage of overall, although growing and its importance in our business overall on average are quite a bit larger.
Thank you and.
Just on the merchant services business can you give any update on the growth of that business.
Yes, it's still very very small and early days. So again, we're still earlier on in <unk>.
Excited about long ago.
Thank you appreciate it.
Thanks, Bob.
Our next question is a follow up question from Ashwin <unk> with Citi Ashwin. Your line is now open.
Thank you.
Question is on transaction cost.
So is that kind of if you don't mind going through the dynamic there.
With regards to.
What happened in the quarter with capital in advance.
And collections.
I didn't quite follow that.
Thank you.
Sure.
A year ago in Q2, we had.
Higher.
Some write offs. So really there are two things when you look into the components of transaction costs.
Ashwin as you identify the biggest delta was really looking at the.
Change for our capital advanced costs.
Which came down roughly $5 million.
That's because we had higher.
Write offs last last year.
The market has improved our credit concerns.
The second thing I want to highlight is just that the the biggest component of transaction costs, which are banked and processes.
<unk> continues to grow at a significantly lower rate.
Our revenues.
And this is really reflective of the fact that.
GE to get.
<unk> from our scale and negotiate.
Low rates.
This is Ben.
One of the Big drivers, that's really helped us continue to improve over time.
And to help us.
Manage.
The ability to leverage our scale.
Understood on that.
I guess the second point, you are talking about payment network incentives and stuff like that.
Do you also benefit from and then network sort of increase pricing.
So youre talking about in terms of Mastercard.
Let me say networks, yes, yes, thanks, guys.
Okay.
Yes.
The incentives are.
Part of our relationship related to the Mastercard commercial cards that we offer.
And so that is actually.
Something thats, just a consistent part of the way, we're managing the P&L nothing of any great news there.
Understood got it.
Got it thank you for that benefit patients picked.
Okay.
Thank you for your question.
That concludes today's Q&A session I would like to turn the conference back over to John Catherine to conclude the call.
Thank you everybody for joining us today and for the Great question.
I'm excited about the sizable growth.
Have in front of US we are a diversified cross border business that will continue to benefit from the secular shift towards digitalization and globalization.
Our brand is strong.
Increasingly seeing momentum in our business.
And we are focused on executing so we can continue delivering revenue growth and future profitability I want to thank all of our incredible employees for their dedication and passion every day and their focus on our customers and thank you to all of our shareholders for their support we are looking for.
Word to talking with you again soon.
Concludes today's pay in your Q2 2022 earnings conference call. Thank you for your participation you may now disconnect your line.