Q3 2023 Payoneer Global Inc Earnings Call

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Good morning, Thank you for standing by welcome to Pan is third quarter 'twenty 'twenty Free earnings Conference call.

Speaker 1: Good morning, thank you for standing by. Welcome to Pay&Is third quarter 2023 earnings conference call. At this time, all lines have been placed on mute to prevent any background noise.

At this time all lines have been placed on mute to prevent any background noise.

Speaker 1: Following the speakers remarks, we'll open the lines for your questions. As reminded this conference call is being recorded.

The Speakers' remarks, we'll open the lines for your questions. As a reminder, this conference call is being recorded.

Speaker 1: I'd now like to turn this call over to Michelle Wang, P&A's VP of Investor Relations.

I'd now like to turn this call over to Michelle Wang who is VP of Investor Relations.

Speaker 2: Thank you, Operator. With me on today's call are Payoneer's Chief Executive Officer, John Kaplan, and Payoneer's Chief Financial Officer, B. Wood.

Thank you operator with me on today's call are <unk>, Chief Executive Officer, John Kathryn <unk>, Chief Financial Officer, Pete We don't yet before we.

Speaker 2: Before we begin, I'd like to remind you that today's call may contain forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those that support in our filings with the SEC, which are available in the Investor Relations section of payoneer.com. Actual results may differ materially from any forward-looking statements we make today. These forward-looking statements speak only as of today, and the company does not assume any obligation or intent to update them except as a priori.

Again, I'd like to remind you that today's call may contain forward looking statements. These forward looking statements are subject to risks and uncertainties, including those set forth in our filings with the SEC, which are available in the Investor Relations section of pay in your Dot com actual results may differ materially from any forward looking statements. We make today. These forward looking.

Statements speak only as of today and the company does not assume any obligation or intent to update them, except as required by law. In addition, todays call may include non-GAAP measures. These measures should be considered in addition to and not instead of financial measures.

Speaker 2: In addition, today's call may include non-GAAP measures. These measures should be considered in addition to and not instead of GAAP financials.

Speaker 2: Our conciliations of the nearest GAT measure can be found in today's Erning Press release, which is available on our list.

Filiation to the nearest GAAP measure can be found in today's earnings press release, which is available on our website. Additionally, please note we have posted an earnings presentation supplement side, our earnings press release on Investor Dot P and your thoughts on that I'd like to turn the call over to John <unk>.

Speaker 2: Additionally, please note we have posted an earnings presentation supplement alongside our earnings press release on investors.pioneers.com. With that, I'd like to

Speaker 3: Good morning, everybody, and thank you for joining us today. Before we begin, I just want to say how deeply saddened we all are about the terrorist attacks in Israel last month and the ongoing war. The violence and loss of innocent lives has been shocking and heartbreaking. Our thoughts go out to all.

Good morning, everybody and thank you for joining us today before we begin I just wanted to say how deeply saddened. We all are about the terrorist attacks in Israel last month and the ongoing war.

Viola and loss of innocent lives has been shocking and heartbreaking.

Thoughts go out to all who are suffering.

Speaker 3: We continue to monitor the situation and are focused on supporting our colleagues and the Pioneer community in the region. We have donated $1 million via the Pioneer Foundation to support humanitarian relief efforts.

Continue to monitor the situation and are focused on supporting our colleagues and the payer community in the region.

Donated $1 million this via the pay in your foundation to support humanitarian relief efforts.

Speaker 3: He will provide a more detailed update on our business operations during her remarks.

I will provide a more detailed update on our business operations during her remarks.

Speaker 3: But I would be remiss if I didn't express how deeply and immensely proud I am of the determination and resilience our team has displayed in light of the current circumstances.

I would be remiss, if I didn't express how deep.

Equally an immensely proud I am of the determination and resilience our team has displayed in light of the current circumstances.

No.

Speaker 3: Turning to our third quarter earnings, Payoneer delivered 31% revenue growth year-over-year and at 28% adjusted EBITDA margin.

Turning to our third quarter earnings Pannier delivered 31% revenue growth year over year and at 28% adjusted EBITDA margin.

Speaker 3: We are making progress executing our strategy and are confident about the pace of our effort.

We are making progress executing our strategy and are confident about the pace of our efforts.

Speaker 3: We are diversifying toward higher take rate geography, acquiring more high-value ideal customer profiles, or ICPs, and enhancing our financial stack.

We are diversifying toward higher take rate geography, acquiring more high value ideal customer profile or ICP and enhancing our financial stack.

Speaker 3: As we shared in our inaugural Investor Day in September .

As we shared at our inaugural Investor Day in September.

Speaker 3: Payoneer makes it easy for small and medium-sized businesses to access the global economy by providing them with the financial tools to compete and win in the markets they want to do business in.

Or makes it easy for small and medium sized businesses to access the global economy by providing them with the financial tools to compete and win in the markets. They want to do business in.

We are positioned to capture this six trillion dollar opportunity and are laying the foundation for durable profitable growth. We are focusing on our ICP building more products to cross sell into our base of 2 million customers and leveraging our scale technology and <unk>.

Speaker 3: We are positioned to capture this $6 trillion opportunity and are laying the foundation for durable, profitable growth. We are focusing on our ICPs, building more products to cross sell into our base of 2 million customers, and leveraging our scale, technology, and data to operate even more efficiently.

Better to operate even more efficiently.

Speaker 3: Our comprehensive financial stack is a core driver of the opportunity ahead for banks.

Our comprehensive financial stack is a core driver of the opportunity ahead for pain here.

We are penetrating the <unk> and checkout markets and cross selling our car as.

Speaker 3: We are penetrating the B2B in checkout markets and cross selling our car. As we highlighted at investor day.

As we highlighted at Investor day.

Speaker 3: We remain confident about the long-term potential of our B2B business and continue to gain traction in our prioritized service-oriented market.

We remain confident about the long term potential of our <unk> business and continue to gain traction in our prioritized service oriented market.

Speaker 3: third quarter total B2B volume growth accelerated versus the second quarter and increased one percent year over year or six percent excluding the impact of the customer terminations we made a year ago.

Third quarter total <unk> volume growth accelerated versus the second quarter and increased 1% year over year or 6%, excluding the impact of the customer terminations, we made a year ago.

Speaker 3: We delivered improving B2B volume growth trends throughout the third quarter and most recently generated 17% year-over-year volume growth in October .

We delivered improving <unk> volume growth trends throughout the third quarter and most recently generated 17% year over year volume growth in <unk>.

October.

Speaker 3: By region, in our priority service-oriented markets, we continue to see strong traction. APEC, SEMEA, Latin America B2B volume grew 23% year over year and have an overall blended take rate of over 2%. In SEMEA, we've delivered year over year B2B volume growth of approximately 40% or greater each quarter of this year.

By region, and our priority service oriented markets, we continue to see strong traction APAC EMEA and Latin America, BW volume grew 23% year over year and have an overall blended take rate of over 2% in semi we have.

Delivered year over year, BTB volume growth of approximately 40% or greater each quarter of this year.

Speaker 3: we are penetrating the large programming, tech support, and consulting industries in the region. For example, we recently hosted a series of events in India with over 1,000 attendees to discuss the next decade of export growth and how our customers can build a brand as an entrepreneur looking to capture this full opportunity.

We are penetrating the large programming tech support and consulting industry in the region.

For example, we recently hosted a series of events in India with over 1000 attendees to discuss the next decade of export growth and how our customers can build a brand as an entrepreneur looking to capture this full opportunity.

Speaker 3: In checkout, we grew volume by 50% quarter over quarter. Checkout is emerging as a part of our value proposition to increase ARPU, grow ICPs, and enable our customers to scale. As of the end of September , checkout was generating over one million dollars in daily volume.

In checkout, we grew volume by 50% quarter over quarter checkout is emerging as a part of our value proposition to increase ARPA grew ICP and enable our customers to scale.

As of the end of September checkout was generating over $1 million in daily volume.

Speaker 3: Respect further momentum as we continue to enhance check out features and capabilities.

We expect further momentum as we continue to enhanced checkout features and capabilities for.

Speaker 3: For example, we launched our Shopify native capabilities for checkout, which should improve customers' payment conversion rates by providing a more seamless consumer shopping experience.

For example, we launched our shopify native capabilities for checkout, which should improve customers' payment conversion rate by providing a more seamless consumer shopping experience.

We are also cross selling our products stack to our existing customer base.

Speaker 3: We are also cross-selling our product stack to our existing customer base.

Our customers are using paying your cards to manage their accounts payable.

Speaker 3: Our customers are using pay-in-year cards to manage their accounts payable. Card usage was nearly $1 billion in the third quarter, up 31% year over year. This represented 6% of total usage, and we believe there is significant room to grow that further. Let's-

Usage was nearly $1 billion in the third quarter up 31% year over year.

This represented 6% of total usage and we believe there is significant room to grow that further.

Let's turn now to our ICP is.

Speaker 3: Payoneer group total active ICPs by 5% year over year in the third quarter.

<unk> grew total active ICP by 5% year over year in the third quarter.

Speaker 3: By region, we saw double digit growth in our higher take rate rates.

By region, we saw double digit growth in our higher take rate region.

Speaker 3: 13% ICP growth in APEC, 11% in Simea, and 10% in Latin America.

13% ICP growth in APAC, 11% in EMEA and 10% in Latin America.

Speaker 3: We grew our largest ICPs, or those who do more than $10,000 a month on average in volume, by 17% year over year. This segment represents approximately 10% of our overall ICPs, yet it contributes to over 50% of total pay and ear revenue.

We grew our largest ICP or those who do more than $10000 a month on average in volume.

17% year over year.

This segment represents approximately 10% of our overall ICP data.

Contributes to over 50% of total <unk> revenues.

We continue to add new marketplace relationships to grow our ICP.

Speaker 3: We continue to add new marketplace relationships to grow our ICPs.

Speaker 3: I'm excited to announce that we recently partnered with Etsy to service sellers in emerging markets. Our marketplace relationships are a key differentiator for pay and ear and contribute to the significant scale we built in our banking infrastructure.

I'm excited to announce that we recently partnered with Etsy to service sellers in emerging markets. Our marketplace relationships are a key differentiator for pioneer and contribute to the significant scale, we built in our banking infrastructure.

The customers, we acquire for marketplaces frequently expand to use our full financial stack underscoring the significant value behind our focus on ICP.

Speaker 3: The customers we acquire from marketplaces frequently expand to use our full financial stack, underscoring the significant value behind our focus on ICP.

We continue to invest in our platform and product capabilities to drive greater.

Speaker 3: We continue to invest in our platform and product capabilities to drive greater ease, trust and convenience for all of our customers. I'd like to highlight just a few of the new features we've launched recently.

Trust and convenience for all of our customers I'd like to highlight just a few of the new features we launched recently, which we believe will drive greater retention volume and AP usage.

Speaker 3: which we believe will drive greater retention, volume, and AP usage.

Speaker 3: We expanded the ecosystem of integrations of our financial stack and launched bank feed integrations with QuickBooks. This will reduce manual processes and improve AR collection efforts for our customers.

We expanded the ecosystem of integrations of our financial stack and launched bank feed integrations with Quickbooks.

This will reduce manual processes and improve our collection efforts for our customers.

We now enable customers to receive funds locally in New Zealand.

Speaker 3: We now enable customers to receive funds locally in New Zealand. We offer 10 local collection accounts for our customers, which helps remove the borders and complexities of doing business globally.

For 10 local collection accounts for our customers, which helps remove the borders and complexities of doing business globally.

Speaker 3: We are integrating generative AI into our operations to improve our customers' experience and increase efficiency.

We are integrating generative AI into our operations to improve our customers' experience and increase efficiency.

To accelerate our <unk> growth, we are enhancing our AP tools to better meet the needs of large service customers.

Speaker 3: To accelerate our B2B growth, we are enhancing our AP tools to better meet the needs of large service.

Speaker 3: Our customers can now add funds from their bank to their Payoneer account.

Our customers can now add funds from their bank to they're paying their account this significant enhancement positions us to drive growth in our accounts payable tool independent of our customers' airflow.

Speaker 3: This significant enhancement positions us to drive growth in our accounts payable tools independent of a customer's AR flow. We believe this is an important value proposition for customers with global business expenses and payroll.

We believe this is an important value proposition for customers, who have global business expenses and payroll.

Speaker 3: We also enhance functionality around scheduling recurring payments and sending large groups of batches.

We also enhanced functionality around scheduling recurring payments and sending large groups of batch payments.

Speaker 3: These are features our largest, most sophisticated customers ask for and we're pleased that they can now make their workflows even more efficient leveraging the Payoneer stack.

These are features our largest most sophisticated customers ask for and we're pleased that they can now make their workflows, even more efficient leveraging the pay in your stack.

Speaker 3: I'm also happy to announce that we have begun the rollout of a panier life account for customers who have simple AP and AR needs. For example, those who use panier only for receiving funds from a marketplace and withdrawing those funds to their local bank.

I'm also happy to announce that we have begun the rollout of a pannier lite account for customers, who have simple AAP and <unk> for example.

Who use painter only for receiving funds from a marketplace and withdrawing those funds to their local bank account by limiting their eligibility for our full stack.

Speaker 3: By limiting their eligibility for our full stack, we can reduce our cost to serve and work towards our long-term ambition of profitably serving every entrepreneur and business seeking to tap into the global economy.

Reduce our cost to serve and work towards our long term ambition, a profitably serving every entrepreneur and business seeking to tap into the global economy.

This is a part of our phased approach to implementing our customer segment specific service and pricing strategy that we have spoken frequently about.

Speaker 3: This is a part of our phased approach to implementing our customer segment specific service and pricing strategy that we've spoken frequently about.

In closing.

Speaker 3: We are executing against the strategic priorities that we articulated at the beginning of the year and at our recent investor day. We are enhancing our customer's value proposition.

We are executing against the strategic priorities that we articulated at the beginning of the year and at our recent Investor day, we.

We are enhancing our customer value proposition.

Speaker 3: delivering strong growth and significant profitability, all investing in strategic long-term initiatives.

Delivering strong growth.

And significant profitability.

All investing in strategic long term initiatives.

Our strong results are a testament to our global team and their tireless efforts and dedication to our customers and our mission.

Speaker 3: Our strong results are a testament to our global team and their tireless effort and dedication to our customers and our mission.

Speaker 3: They inspire me every day. And I'm proud of what Paynear has achieved so far this year and excited.

They inspire me every day.

And I'm proud of what <unk> has achieved so far this year and excited about what's ahead.

Speaker 3: I'll now hand it over to Bea to discuss financial results and forward guidance in more detail. Thank you, John , and thank you.

I'll now hand, it over to be to discuss financial results and forward guidance in more detail.

Thank you John and thank you everyone for joining us.

Speaker 4: First I want to echo John's opening remarks. We are all deeply saddened by the ongoing conflict in Israel and Gaza and by the tremendous loss of life.

First I wanted to Echo John's opening remarks, we are all deeply saddened by the ongoing conflict in Israel in Gaza and by the tremendous loss of life.

Speaker 4: I'll fall to with our colleagues in Israel and with everyone affected during this extraordinarily challenging time. I'd like to know.

Our thoughts are with our colleagues in Israel and with everyone affected during this extraordinarily challenging time.

I'd like now to turn the discussion to our third quarter results.

Speaker 4: or comparisons are on a year over year basis unless otherwise.

All comparisons are on a year over year basis, unless otherwise noted.

We continue to execute on our strategy. We grew ICP is five 5% generated 31% revenue growth and delivered a 28% adjusted EBITDA margin.

Speaker 4: We continue to execute on our strategy. We grew ICTs by 5%, generated 31% revenue growth, and delivered a 28% adjusted EBIT amount.

Speaker 4: That's called a revenue of $208 million with up 31%.

Third quarter revenue of $208 million was up 31%.

Speaker 4: driven by interest income earned on customer funds, accelerating growth in our B2B and checkout businesses, higher card usage, and improved monetization from ongoing pricing and other.

Given by interest income earned on customer funds.

Accelerated growth may not be to be in checkout businesses higher card usage and improved monetization from ongoing pricing and other initiatives.

Speaker 4: Q3 revenue growth also included the impact of a $7.5 million decline in revenues earned from the provision of onboarding services to an enterprise client. Something we announced when we provided 20-

Q3 revenue growth also included the impact of the $75 million decline in revenues.

The provision of Onboarding services to enterprise clients, something we announce when we provided 2023 guidance.

Speaker 4: With a more customer-centric approach to monetization that we talked about at our investor day, we continue to implement changes to our product bundling and pricing strategies. We are expanding the rollout of initiatives.

Your line is a more customer centric approach to monetization that we talked about at our Investor day, we continue to implement changes to our product bundling and pricing strategy.

We're expanding the rollout of initiatives we began testing.

Speaker 4: For example, we recently introduced additional fees for small transactions.

Yes.

For example, we recently introduced additional fee to small transaction sizes.

Speaker 4: We are also expanding our testing of account registration fees, as well as potential strategies to monetize our significant cross-border in-network payment bonds.

Also expanding our testing of account registration fees.

Well its a potential strategies to monetize a significant cross border in network payment bonds.

So far we have not seen any unexpected or unintended changes to customer behavior retention.

Speaker 4: So far, we have not seen any unexpected or unintended changes to customer behavior or retention.

Speaker 4: We believe there is significant opportunity to drive improved acquisition and retention as well as share of wallet gains from a more nuanced approach to our pricing, bundling, and service model. One that is better aligned to our diversified customer base.

We believe there is significant opportunity to drive improved acquisition and retention as well as share of wallet gains from a more nuanced approach to our pricing bundling and service model one that is better aligned to our diversified customer base.

Plenty of increased 11% to $16 eight.

Speaker 4: Volume increased 11% to $16.8 billion, reflecting strong year-over-year volume trends with our large e-commerce marketplaces, continued strength in travel span, and growth in B2B volume.

Reflecting strong year over year volume trends with a large E. Commerce marketplaces continued strengths in travel spend and growth in b to b bonds.

Speaker 4: These are the volume growth of 1% accelerated throughout the third quarter, with volumes in September .

It would be volume growth of 1% accelerated throughout the third quarter with volumes in September 2023.

Speaker 4: up 5% versus the prior year period.

5% versus the prior year period.

Speaker 4: Growth was driven by the services-oriented economy that John spoke about earlier, for our volume per customer has also remained stable year over year.

Growth was driven by the services oriented economies that John spoke about earlier.

Volume per customer has also remained stable year over year.

Speaker 4: We are seeing positive momentum with new industry verticals launched earlier.

Positive momentum with new industry verticals launched earlier this year.

Our Q3 take rate of 124 basis points increased 19 basis points expansion was driven by higher levels of interest income and the benefits about various pricing initiatives.

Speaker 4: Accused with take rate of 124 basis points increased 19 basis points.

Speaker 4: The expansion was driven by higher levels of interest income and the benefits of our various prices.

Speaker 4: Customer funds held by Payoneer increased 7% to $5.4 billion, and we earned $60 million in interest income from these balances in the third quarter. Our financial stack delivers

Customer funds held by <unk> increased 7% to $5 4 billion and we have.

$60 million in interest income from these balances in the third quarter.

All financial stack deliver real utility to our customers.

Speaker 4: the ability to hold balances in multiple currencies and to manage their cross-border AR and AP needs from a single account.

<unk> to hold balances in multiple currencies and to manage that cross border MVP needs from a single account.

The balance is our customers hold with us demonstrate the utility we deliver and the trust our customers have been.

Speaker 4: The balances our customers hold with us demonstrate the utility we deliver and the trust our customers have in us.

Over the past several years, we have seen robust growth in customer funds.

Speaker 4: Over the past several years, we have seen robust growth in customer

Speaker 4: We believe that as volumes into our platform grow and as we add more utility and features to the platform, we should see customer balances grow.

He believes it is volumes into our platform grows and as we add all utility and features to the plant.

We should see customer balances grow.

Speaker 4: We continue to expect long-term balance growth to be broadly in line with volume, while seasonality and macro factors can influence short-term balance performance.

Continue to expect long term balanced growth to be broadly in line with volume, while seasonality and macro factors can influence short time balanced performance.

All 2023, we expect approximately 25% of interest income and <unk>.

We used to fund investments in our platform and infrastructure, including in our compliance infrastructure.

Speaker 4: We also expect to utilize approximately 25% of revenues generated from interest income to return capital to shareholders via our stock repair.

So I expect to utilize approximately 25% of revenues generated from interest income to return capital to shareholders via a stock repurchase plan, which is designed to substantially offset dilution from our stock based equity compensation program.

Speaker 4: which is designed to substantially offset dilution from a stock-based equity compensation.

Speaker 4: Total operating expenses of $179 million were up 9% or $15 million.

Total operating expenses of $179 million were up 9% or 15 men.

Speaker 4: ISL's and marketing expenses represented approximate behalf of the increase, retire GNA, transaction costs and other operating expenses.

Higher sales and marketing expenses represented approximately half of the increase is higher G&A transaction costs and other operating expenses driving the balance.

Speaker 4: Transaction cost was $30 million and increased 9%.

Transaction talks with $30 million and increased 9%.

Transaction costs represented 14, 6% of revenue a 300 basis point improvement from the prior year period.

Speaker 4: Transaction costs represented 14.6% of revenue, a 300 basis point improvement.

Speaker 4: The decrease is driven by higher interest income, cost savings impacting our bank and processor fees, and mid-shift towards lower cost markets.

The decrease was driven by higher interest income cost savings impacting a banking crisis efficacy and mix shift towards lower cost market.

This was partially offset by increases tied to usage and growth in our <unk> and checkout businesses.

Speaker 4: This is partially offset by increasing card usage and growth in our B2B and check out this video.

Speaker 4: all of which drive relatively higher transaction costs as B2B checkout and card volumes grow faster than our aggregate business.

All of which drive relatively high transaction costs as BBB checkout in card volumes grow faster than our aggregate business.

Speaker 4: We would expect some upward pressure on transaction costs going forward.

Expect some upward pressure on transaction costs going forward.

Speaker 4: Sales and marketing expense increased $8 million, reflecting higher commissions paid to certain enterprise partners.

Sales and marketing expense increased $8 million, reflecting higher commissions paid to certain enterprise.

Speaker 4: Excluding those partner commissions, sales and marketing expense was broadly flat year over year and declined modestly sequentially, a result of our previously announced workforce reductions and in line with continued efforts to streamline our go-to-market organization.

Excluding those partner Commission sales and marketing expenses broadly flat year over year and declined modestly sequentially.

All of our previously announced workforce reduction and in line with continued efforts to streamline our go to market organization.

Speaker 4: G&A expenses increased three million, primarily driven by M&A and lead.

G&A expenses increased $3 million, primarily driven by M&A and legal expenses.

Speaker 4: Other operating expenses were up $3 million, primarily driven by an increase in third-party consulting expenses related to our ongoing spend to enhance our regulatory and compliance capability.

Other operating expenses were up $3 million, primarily driven by an increase in third party consulting expenses related to our ongoing spend to enhance our regulatory and compliance capability.

Speaker 4: These increases were partially offset by the impact earlier this year of various initiatives designed to streamline, regionalize, and outsource aspects of our operations.

These increases were partially offset by the impact earlier this year with various initiatives designed to streamline regionalize and outsource aspects of our operations function.

Speaker 4: These efforts have allowed us to reduce our labor-related operations expense by 5% year over year and to meaningfully drive down our cost to serve. For example, we have reduced the average cost of a customer service ticket by 25% since the end of 2022 by optimizing workflows so we can resolve more tickets in a single interaction, by automating processes, and by implementing certain generative AI-based

These efforts have allowed us to reduce our labor related operations expense by 5% year over year and to meaningfully drive down our cost itself.

For example, we have reduced the average cost of a customer service tickets by 25% since the end of 2022.

Optimizing what floods. So we can resolve more tickets and a single interaction by automating processes and by implementing certain generative AI based tools.

Speaker 4: R&D expense declined $3 million as a result of an increase in capitalization due to shifting of resources towards new investments in our platform, partially offset by additional hiring in our platform organization.

R&D expense declined $3 million as a result of an increase in capitalization due to shifting of resources towards the investments in our platform, partially offset by additional hiring in our platform organization.

Speaker 4: We continue to take a disciplined approach to operating our business in order to drive greater efficiency while ensuring we invest to drive long-term and sustainable revenue.

We continue to take a disciplined approach to operating our business in order to drive greater efficiency, while ensuring we invest to drive long term sustainable revenue growth.

Adjusted EBITDA was 58 million compared to roughly $17 million in the third quarter of last year and 56 million in the second quarter of this year.

Speaker 4: Adjusted EBITDA was $58 million compared to roughly $13 million in the third quarter of last year and $56 million in the second quarter of this year.

Speaker 4: This represents the 28% adjusted EBITDA

This represents a 28% adjusted EBITDA margin.

Net income was 13 million compared to a net loss of $26 million in the third quarter of last year.

Speaker 4: That income was $13 million compared to a net loss of $26 million in the third quarter of last year.

Speaker 4: Give three basic earnings per share with four cents and diluted earnings per share with three.

Q3 basic earnings per share was four cents in diluted earnings per share with <unk>.

Speaker 4: We ended the quarter with cash and cash equivalents of $591 million, up $83 million or 16% year-over-year.

We ended the quarter with cash and cash equivalents of $591 million up $83 million or 16% year over year.

Speaker 4: Our business continues to generate positive free cash flows and our free cash flow conversion rate is well above 100% year-to-date.

Our business continues to generate positive free cash flows and our free cash flow conversion rate is well above 100% yet today.

We have been actively returning capital to shareholders since the inception of our share buyback program in May we have repurchased approximately 75 million of panic shows including $15 million in the third quarter.

Speaker 4: We have been actively returning capital to shareholders since the inception of our shared buyback program in May. We have repurchased approximately 35 million of pay and end shares, including 15 million in the third quarter. We expect to repurchase approximately 55 million of shares for the full year.

Expect to repurchase approximately 55 million of shares for the full year.

Turning to our outlook, we are reiterating our 2023 revenue guidance and raising our 2023 adjusted EBITDA guidance.

Speaker 4: We are reiterating our 2023 revenue guidance and raising our 2020

Speaker 4: For the full year, we expect revenues to be between $820 million and $830 million. Transaction costs as a percentage of revenue to be approximately 14.5 percent. And adjusted EBITDA to be between $195 million and $205 million.

For the full year, we expect revenues to be between 820 and $830 million transaction cost as a percentage of revenue to be approximately 14, 5% and adjusted EBITDA to be between 195 and 205 million.

Speaker 4: Before I dive into the drivers of our updated guidance, I'd like to note that our critical business operations have not been impacted by the ongoing war in Israel. And based on the current situation, we don't anticipate any material impact or disruption to our operations.

Before I dive into the drivers of our updated guidance I'd like to note that our critical business operations have not been impacted by the ongoing war in Israel.

Based on the current situation, we don't anticipate any material impact or disruption to our operations of business.

Speaker 4: This is a testament to the resilience of both our infrastructure and platform and to our incredible teams on the ground.

This is a testament to the resilience of both our infrastructure and platform and so our incredible teams on the ground.

Speaker 4: We continue to prioritize the safety, health, and well-being of our employees while ensuring that we continue to serve our customers.

We continue to prioritize the safety health and wellbeing of our employees, while ensuring that we continue to serve our customers.

Speaker 4: Our latest guidance includes approximately 3 million in one time expenses in the fourth quarter, related to our response to the ongoing conflict in issues.

Our latest guidance includes approximately $3 million in one time expenses in the fourth quarter related to our response to the ongoing conflict in Israel, including relocation costs financial assistance.

Speaker 4: including relocation costs, financial assistance, and programs to support mental and physical well-being.

Programs to support mental and physical well being.

Approximately 50% of our employees are based in Israel, while the majority approximately 81% above research and development teams the base there.

Speaker 4: Approximately 50% of our employees are based in Israel while a majority approximately 81% of our research and development teams are based.

Good day less than 10% of our Israeli employees have been called into military reserve beauty and we have contingencies in place to cover impacted roles and responsibility.

Speaker 4: Today, less than 10% of our Israeli employees have been called into military reserve beauty and we have contingencies in place to cover impacted roles and responsibilities.

Speaker 4: A broad geographic footprint and outsourced operations model enable us to continue operating our business and serving our customers.

Our broad geographic footprint and outsourced operations model enable us to continue operating our business and serving our customers.

Speaker 4: As we have noted, we are reiterating our revenue guidance at this time. We continue to have conviction in our long-term strategy and key growth opportunities. We are generating strong growth in our checkout business and driving increased adoption and usage of our commercial car product.

As we have noted we are reiterating our revenue guidance at this time.

We continue to have.

Fiction in our long term strategy and key growth opportunities. They are generating strong growth in our checkout business and driving increased adoption and usage of our commercial card products.

Speaker 4: We see improving trends in our B2B business, where volume growth was 17% in October . And we expect to see the ongoing benefit of our customer-focused monetization strategy.

We see improving trends and not b to B business, where volume growth was 17% in October.

We expect to see the ongoing benefit of our customer focus monetization strategy.

We are increasing our guidance for interest income by $10 million, reflecting current consensus rate forecast.

Speaker 4: We are increasing our guidance for interest income by 10 million, reflecting current consensus rate forecasts and balanced performance.

<unk> performance.

Speaker 4: We now expect interest income to be $220 million for the full year.

We now expect interest income to be $220 million for the full year.

We expect this increase in interest income to be offset by near term headwinds from increasing macroeconomic and geopolitical uncertainty impacting our business as we begin the fourth quarter.

Speaker 4: We expect this increase in interest income to be offset by near-term headwinds from increasing macroeconomic and geopolitical uncertainty impacting our business as we begin the fourth quarter.

As a result, we are reducing our revenue ex interest income guide by 10 million.

Speaker 4: As a result, we are reducing our Revenue X Interest Income Guide by $10 million.

This assumes softer revenues from our customers in Israel, where we anticipate economic activity will be impacted in the near term.

Speaker 4: This assumes softer revenues from our customers in Israel where we anticipate economic activity will be impacted in the near term.

Speaker 4: Revenues from our customers in Israel represent approximately 3% of our total revenue.

Revenues from our customers in Israel represent approximately 3% of our total revenue.

Speaker 4: Additionally, in the immediate aftermath of the conflict, we proactively delayed the implementation of certain monetization initiatives. But we're scheduled for early October that launched in early November .

Additionally, in the immediate aftermath of the conflict, we proactively delayed the implementation of certain monetization initiatives.

Scheduled for early October that launched in early November and stuff.

And lastly in the broader environment, we see increasing macro uncertainty around consumer and business spending from elevated inflation and higher for longer interest and long term borrowing rate.

Speaker 4: And lastly, in the broader environment, we see increasing macro uncertainty around consumer and business spending, from elevated inflation and higher for longer interest in long-term borrowing.

Speaker 4: We expect 2023 cash off its less transaction cost to be approximately 505 million. Cash off its represents our guidance for revenues less adjusted.

We expect 2020 free cash opex less transaction costs to be approximately $505 million.

Cash Opex represents our guidance for revenue less adjusted EBITDA.

We continue to focus on operating efficiency in order to maximize resources available for high growth areas of our business and for opportunities to deepen our competitive moat.

Speaker 4: It continued to focus on operating efficiency in order to maximize resources available for high growth areas of our business and for opportunities to deepen our competitiveness.

Speaker 4: We are on track to deliver on our commitment of ending the year with lower head count than where we started.

We are on track to deliver on our commitment of ending the year with lower head count than where we started.

We expect fourth quarter operating expense to be higher than in the third quarter, primarily reflecting higher R&D spend seasonal expenses, including seasonally higher marketing spend as well as the impact of the previously mentioned spend related to our response to the conflicts in Israel.

Speaker 4: We expect fourth quarter operating expense to be higher than in the third quarter, primarily reflecting higher R&D spend, seasonal expenses, including seasonally higher marketing spend, as well as the impact of the previously mentioned spend related to our response to the conflict.

Speaker 4: We are raising our guidance for 2023 adjusted EBITDA to be between $195,000 and $205,000.

We are raising our guidance for 2023, adjusted EBITDA to be between 195 and $205 million.

Speaker 4: This guidance reflects a full-fold increase in adjusted EBITDA versus 2022, and a 24% adjusted EBITDA margin.

This guidance reflects a four fold increase in adjusted EBITDA versus 2022, and 24% adjusted EBITDA margin for 2020.

In September we hosted our first Investor day, where we have the opportunity to reintroduce payment to the investor community.

Speaker 4: In September , we hosted our first investor day, where we had the opportunity to reintroduce pain near to the investor community. Since it's going public in 2021, we've delivered exceptional financial performance and we plan to continue expanding our product offerings, growing in high growth and high-seek rate regions, and increasing the number of ICTs on our platform.

Going public in 2021, we've delivered exceptional financial performance and we plan to continue expanding our product offerings growing in high growth and high secret region and increasing the number of ICP is on our platform.

Our third quarter results underscore our consistent execution against the strategic priorities and our unique value proposition to customers.

Speaker 4: Our third quarter results underscore our consistent.

Speaker 4: against these strategic priorities and our unique value proposition.

Speaker 4: We're pleased to see that our focus on operating efficiency is driving lower costs and higher adjusted EBITDA margins.

We're pleased to see that I'll focus on operating efficiency is driving lower costs and higher adjusted EBITDA margin.

Speaker 4: We are well positioned to capture additional market share and to generate long-term value for our share.

We are well positioned to capture additional market share and to generate long term value for our shareholders.

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

Speaker 4: They are now happy to answer any questions you may have. Operator, please open.

Thank you as a reminder, if you'd like to register a question. Please press star followed by one on North telephone keypad. If you change your mind. Please press star followed by two am. Please ensure you should when speaking.

Speaker 1: Thank you, as a reminder, if you'd like to register a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. And please ensure you're unmuted when speaking. We do also ask participants to limit themselves to one question with an additional follow-up.

We do source participants to limit themselves to one question with an additional follow up.

Our first question comes from Sanjay <unk> of K B W.

Speaker 1: Our first question comes from Sanjay Sakrani of KBW. Sanjay, please go ahead.

Please go ahead.

Thank you and good morning, and good quarter I'm, just trying to think about.

Speaker 5: Thank you. Good morning and good quarter. I'm just trying to think about, you know, the acceleration that happened across the different segments that you've highlighted. Can you just walk us through, you know, what the trends were there across those different segments?

Celebration and that happened across the different segments that you highlighted can you just walk us through.

What the trends were there across those different segments.

Yeah.

Speaker 4: Hi Sanjay, thanks for the question. Yeah, look, like you noted, we've seen acceleration both sequentially versus Q2 as well as within Q3. And as we've seen the fundamentals of the business remain in line to the strategy that we've been executing.

Hi, Sanjay Thanks for the question Yeah look like he noted we've seen acceleration both sequentially versus Q2 as well as within Q3.

As we've seen the fundamentals of the business remain in line to the strategy that we've been executing we're seeing that we're driving ICP acquisition, we're seeing adoption of our card and we're seeing really strong acceleration with it up within a b to b business.

Speaker 4: We're seeing that we're driving ICP acquisition. We're seeing adoption of our card and we're seeing really strong acceleration within our beta B business.

Speaker 4: You know, John highlighted some of those stats, but as you know, we saw in Q2 that we saw some deceleration and volumes. We've reversed that trend.

John highlighted some of those stats, but as you know we saw in Q2 that we saw some deceleration in volumes, we have robust trend.

Trend in Q3, where we saw 1% growth and in October, which we highlighted month to date, we've actually seen 17% in volumes, so what's being nice.

Speaker 4: in Q3 where we saw 1% growth and in October , which we highlighted months to date, we've actually seen 17% in volume. So we're seeing nice.

Speaker 4: trends and pick up in that B2B growth, and excluding China, we've been disaggregating some of those trends, we're continuing to see really strong growth in those B2B volumes.

Trends in pickup and that be to be growth and excluding China, we've been disaggregated and some of those trends were continuing to see really strong growth in most <unk> volumes to look at overall the fundamentals as I say are performing pretty much in line E. Com volumes are in line to maybe even slightly better than we saw high single.

Speaker 4: So look at overall, the fundamentals, as I say, are performing pretty much in line. E-commerce volumes are in line to maybe even slightly better than we thought. High single digits to low double digit, travel continues to outperform. We talked about that being lower yields business, but we're seeing really nice volume performance.

Digit to low double digit travel continues to outperform we talked about that being lower yields business, but we're seeing really nice volume performance <unk>, we've talked about accelerating and we reached a really important milestone without checkout business, where we hit a million dollars a day in transaction volume. So we're seeing really strong.

Speaker 6: B2B we've talked about accelerating and we reached that really important milestone with our checkout business where we hit a million dollars a day in Transaction volumes so we're seeing really strong trends

<unk> trends from a volume perspective, as I said throughout the quarter and into the fourth quarter.

Speaker 6: from a volume perspective, as I said, throughout the quarter and into the fourth quarter.

Okay, Great and then just a follow up on like take rates slowed those declined both on a year over year basis on a quarter over quarter, what were the drivers of that pay for it and how should we think about that on a go forward basis.

Speaker 5: Okay, great. And then just to follow up on like take rates x float, those declined both on a year over year basis and a quarter over quarter. What were the drivers of that take rate and how should we think about that on a go forward basis?

Speaker 6: Yeah, absolutely. Look, top line inclusive of float, we obviously grew take rate by about 19 basis points.

Yeah, absolutely look topline inclusive of float we obviously grew take rates by about 19 basis points. That's interest income driven but also acceleration as we've noted in b to b and cart and checkout, partially offset by mix shift and some of that volume to those larger e-commerce bucket.

Speaker 6: That's interesting come driven, but also acceleration as we've noted in B2B and card and checkout partially offset by mixture in some of that volume to those larger e-commerce buckets that come with lower yield.

With lower yield as we disaggregate that interests that are that look we talked at investor day about roughly 80% above revenues being attributable to customers that are active on our platform and that generally speaking have an account on that platform.

Speaker 6: As we disagree, I'd regate that interest out of there. Look, you know, we talked about investor day about roughly 80% of our revenues being attributable to customers that are active on our platform and that generally speaking, having a count on that platform. And on an Apple's to Apple's basis, if I look at that 80%,

Apples to apples basis, if I look at the 80%.

Speaker 6: The tape rate on that business year over year expanded, structurally, but expanded X-interest interest, interest income, sorry, by a boudre basis point.

The take rate on that business year over year expand its fractionally, but expanded ex interest penetrate interest income sorry by about a basis point.

Speaker 6: The balance of that 20% revenue that we talked about at Investor Day, it includes some account fees for inactive customers.

So that 20% revenue that we talked about.

That's today it includes some.

Fees for inactive customers, but mostly it relates to services that we provide to enterprises, who use our payment rails to facilitate transfers to pay two do not have an account.

Speaker 6: But mostly it relates to services that we provide to enterprises who use our payment rails to facilitate transfers.

Speaker 6: to pay who do not have an account on our platform. So we're not cross-selling into those payees and the yield on that business is.

Our platform. So we're not cross selling into those pay ease and the yield on that business is understandably much much slower right. So a lot of that travel volume that we've highlighted that has outperformed and grown very meaningfully is that kind of volume where those enterprises are using our payment rails and so the.

Speaker 6: understandably much, much lower, right? So a lot of that travel volume that we've highlighted, that has outperformed and grown very meaningfully, it's that kind of volume where those enterprises are using our payment rails.

Speaker 6: And so the disproportionate growth in that travel volume has really had sort of a negative impact in the aggregate take rate overall. But I think the main message we're driving out here is that core customer led business, our take rate is expanding, that other business that is important to us, yes, but a smaller part of our overall revenue, there was seeing sort of a disproportionate growth which is impacting the aggregate.

<unk> gross in that travel volume has really had sort of a negative impact on the aggregate take rate overall, but I think the main message. We're driving out here is that core customer led business uptake rate is expanding that other business, but it is important to us, yes, but a smaller part of our overall revenue that we're seeing.

Sort of a disproportionate growth, which is impacting the aggregates.

Okay very helpful. Thank you.

Our next question comes from <unk> Tandon of Needham <unk> co. Please.

Speaker 1: Our next question comes from Mayank Tandon of Nita Minko. Mayank, please go ahead.

Please go ahead.

Speaker 7: Thanks. Hey guys, this is Sam on from my today. Thanks for taking the questions here. And nice result this quarter. I wanted to start off on revenue in North America, which came in pretty soft in this quarter. Can you guys just talk a bit more about what you're seeing here and what's different than the rest of the markets that you're seeing?

Thanks, Hey, guys. This is Sam on for Mark today.

For taking the questions here.

Nice results this quarter.

Wanted to start off on the revenue in North America, which came in pretty soft this quarter could you guys just talk a bit more about what youre seeing here.

What's different than the rest of the markets that you're seeing.

Yeah look the main impact there is what we highlighted coming into 2023 and our full year guide the beginning in the third quarter, we had that hence headwind from non volume finish the visa fees that we historically from an enterprise clients a certain onboarding services.

Speaker 6: Yeah, look, the main impact there is what we highlighted coming into 2023 in our four-year guide. But beginning in the third quarter, we had that headwind from non-volume fees.

Speaker 6: that we earned historically from an enterprise client for certain onboarding services.

Speaker 6: And that those fees about seven and a half million dollars in a quarter, those came out in in Q3, effective Q3. So it's really just.

Those fees about $75 million in the quarter. Those came out in Q3 affected Q3. So it's really just disproportionately skewing that North America performance, where they were booked.

Speaker 6: This proportionate be skewing that North America performance where they were booked.

Speaker 7: Got it. Okay, yeah, that's helpful. Sorry about that, I missed that. And then just for a quick follow up, I wanted to see if there was any update on the recent acquisition of Spot and any, you know, kind of new development since you guys announced that.

Got it.

Yeah, that's helpful sorry about that I misspoke.

And then just a quick follow up I wanted to see if there was any update on the recent acquisition of sport and any kind of new developments since since you guys announced.

Speaker 6: Now that we closed it, as we said on the last call, we're really sort of happy to be integrating that great team. As we said, when we announced the deal, they bring real sort of data expertise that's gonna help us really enhance our underwriting, enhance our risk framework, and that's gonna allow us to originate more because we'll have a better handle sort of on that overall underwriting and to just better manage that book of business. But I think it's part of the broader strategy to really sort of integrate real-time data capability.

No look that we closed as we said on the last call, we're really sort of happy to be integrating that great team as we said when we announced the deal they bring real sort of data expertise, that's going to help us really enhance our underwriting and does that enhance our risk framework.

And that's going to allow us to originate more because we will have a better handle sort of on the overall underwriting and to better manage that book of business, but I think it's part of the broader strategy to really sort of integrate real time data capability and real time data insights into how we manage and grow the business.

Speaker 6: and real-time data insights into how we manage and grow the business.

Okay. Thanks.

Our next question comes from Trevor Williams of Jefferies Trebled the line is yours.

Speaker 1: Next question comes from Trevor Williams of Jeffries Trevor the Linus yours.

Speaker 8: Great. Thanks a lot. Good morning. I want to go back to B2B for a second. If you could walk us through some of the moving pieces within the volume mix there, the chart, I think it's on slide 18. That's helpful. And you guys have hit on some of this in both your prepared remarks. But if you could unpack some of those diverging growth rates you're seeing across the two buckets of geographies that you've laid out and how that ultimately feeds into the medium-term volume growth expectations and take great trajectory potential for B2B. Thanks.

Great. Thanks, a lot good morning, I wanted to go back to <unk> for a second if you could walk us through some of the moving pieces within the volume mix. There. The chart I think it's on slide 18, that's helpful. And you guys have hit on some of this in both your prepared remarks, but if you could unpack some of those diverging growth rates you are seeing across the two buckets.

Geographies that you've laid out and how that ultimately feeds into the medium term volume growth expectations and kind of take great trajectory potential for <unk>. Thanks.

Speaker 6: Thank you Trevor. Yeah, look at as we highlighted it, I think we're very pleased with the overall acceleration in this business, which is something we've been talking about heading into the back of a year. We're seeing that acceleration from really strong acquisition metrics.

Hello. Thank you Trevor Yes look as we've highlighted I think look we're very pleased with the overall acceleration in this business, which is something we've been talking about heading into the back half of the year, we're seeing acceleration from really strong acquisition metrics from as John noted stable spend per customer in those services.

Speaker 6: From a strong noted, stable spend per customer in those service oriented economies and from the impact of the lasting of the terminations that we talked about in Q3 of 2022. Overall, to sort of level set in the aggregate in Q2, we saw contraction in volume. In this quarter, we saw 1% volume growth.

Oriented economies from the impact of the lapping of the terminations that we talked about in Q3 of 2022 overall to sort of level set in the aggregate in Q2, we saw a contraction in volume in this quarter, we saw 1% volume growth, 6% ex termination on <unk>.

Speaker 6: 6% exterminations and accelerated that volume growth throughout the quarter and saw really strong performance in October again up 17% to your point Trevor was seeing sort of

Celebrated that volume growth throughout the quarter and so really strong performance in October again up 17% to your point Trevor we're seeing sort of it.

Speaker 6: If we look at the disaggregation by market, we see very different trajectories and we've talked about that volume as sort of X, China, and China. China now makes up in the third quarter less than of the total volume. It's about 17%.

If we look at the disaggregation by market, we see very different trajectory and we've talked about that volume it sort of ex China and China, China now makes up in the third quarter less than 20% of the total volume, it's about 17%, but we're seeing really strong we've been deemphasizing them, we've talked about that's for sure.

Speaker 6: But we're seeing really strong, we've been de-enticizing them. We've talked about that through other calls. We do view it as a long-term opportunity from a B to B perspective.

Kohl's, we do view it as a long term opportunity from a <unk> perspective, but from a acquisition perspective in the current year, we've been deemphasizing our efforts and.

Speaker 6: but promote acquisition perspective. In the current year, we've been de-emphasizing our efforts and really focusing our efforts on those service-oriented economies.

And really focusing our efforts on those service oriented economies that John talked about and that we're seeing really strong growth. They may talk now close to half of our total <unk> volume and we grew that volume in the quarter by about 23%.

Speaker 6: that John talked about. And there we're seeing really strong growth. They make up now close to half of our total B2B volume. And we grew that volume in the quarter by about 23%. And again, as we've highlighted in the past, compared to that China book of business.

Again, as we've highlighted in the past compared to that China book of business. The take rate dynamics are really favorable so a blended take rate in those markets Latam APAC EMEA higher than 2%, but as in the China book of business in all in or around 50 basis points. So to your question is we.

Speaker 6: the take rate dynamics are really favorable. So a blended take rate in those markets, lamp ham, apex, samir, higher than 2%, versus in the China Book of Business, in or around 50 basis points.

Speaker 6: So to your question, as we accelerate growth in those other regions, we're going to see positive take rate dynamics entail wins to revenue.

The rate growth in those other regions, we're going to see positive take rate dynamics and tailwind to revenue China as I say long term, it's going to be a good opportunity short term not a not a significant driver in <unk> 2004 suddenly it's not going to be a drag to growth in terms of that beta be revenue. So we remain.

Speaker 6: China, as I say, long term is going to be a good opportunity. Short term, not a sickness of contriver, and in 24, certainly, it's not going to be a drag to growth in terms of that B2B revenue.

Speaker 6: So we remain super focused on those service oriented economies, driving ICP acquisitions, really good and demonstrated product market set and great, great dynamics. So we're excited to be able to continue to grow this book of business. And as we said at Investidae, we feel good that we can grow this volume next year by 25% or more.

Super focused on that satisfy oriented economy, driving ICP acquisitions, really diligent and demonstrated product market fit and great take rate dynamics. So we're excited to be able to continue to grow this book of business and as we said at Investor Day, we feel good that we can grow this volume next year by 25.

Percent or more.

That's great. Thanks, and then.

Speaker 8: That's great, thanks. And then any more detail you can give on how volume growth has trended throughout Q3 and then what you're seeing in October , month today. And I'm just trying to square it. It sounds like B2B, you're seeing nice acceleration, Q4 versus.

Any more detail you can give on how volume growth as trend how it trended throughout Q3, and then what Youre seeing in October month to date I'm, just trying to square I mean, it sounds like <unk>, you're seeing nice acceleration Q4 versus Q3, but you are taking down kind of the implied Q4 ex interest income.

Speaker 8: Q3, but you're taking down kind of the implied Q4 ex-interest income revenue. So I'm curious if you're seeing any pockets of.

So im curious if youre seeing any pockets of sequential weakness in volume so each quarter to date, that's kind of driving the more cautious outlook for the fourth quarter. Thanks, So much.

Speaker 8: sequential weakness in volumes, at least quarter to date, that's kind of driving the more cautious outlook for the fourth quarter. Thanks so much.

Speaker 6: Now, look at, as you've noted, we're seeing accelerating trends. We saw that throughout the third quarter and into October . So again, third quarter volumes are up 11%. That's accelerating sequentially from the 8% volume growth we saw in Q2. We've highlighted those B2B numbers in October . In the aggregate volumes in October are rough about 20%. So we're seeing nice growth. Again, the main drivers have continued to be a really strong performance from the travel sector as well as large e-com performance.

No look it.

He has noted we're seeing accelerating trends, we saw that throughout the third quarter and into October So again third quarter volume through up 11%, that's accelerating sequentially from the 8% volume growth. We saw in Q2, we highlighted those <unk> numbers in October in the aggregate volumes in October are up about <unk> <unk>.

20%. So we're seeing nice growth again, the main drivers of continued to be a really strong performance from the travel sector.

As well as large E com performance.

Speaker 6: To sort of that useful kind of softness that we're talking about, we're really talking about exogenous factors that we highlighted in our prepared remarks.

But Q4 kind of softness that were talking about.

We're really talking about exogenous factors that we highlighted in our prepared remarks. So we're factoring in some softness from revenues from customers in Israel, It's not a big part of our revenue pie, but in the near term we do expect some softness from those revenues in Q4, we factored in sort of the delays.

Speaker 6: So we're factoring in some softness from revenues from customers in Israel, not a big part of our revenue pie. But in the near term, we do expect some softness from those revenues in Q4. We factored in sort of the delays. And again, we did this very proactively in the immediate aftermath.

And again, we did this very proactively in the immediate aftermath of the crisis in Israel, We paused all code releases, while we frankly got a measure of the situation and that pushed some of that monetization further out into the future. So we factored that in and look we factored in and come on with many of our peers, just a little more macro cell.

Speaker 6: Of the crisis in Israel, we paused all code releases while we frankly got a measure of the situation and that pushed some of that monetization further out into the future. So we factored that in and look we factored in common with many of our peers, just a little more macro softness than perhaps we had in our outlook as we head into Q4, as we continue to see pressures sort of emerging in the broader economy and in the geopolitical landscape around consumer and business spending. ??? Cypher qe??

And perhaps we have in our outlook as we head into Q4, as we continue to see pressures sort of emerging in the broader economy and in the geopolitical landscape around consumer and business spending.

Okay. That's helpful. Thank you guys.

Our next question comes from Chris Kennedy of William Blair, Chris. Please go ahead.

Speaker 1: Our next question comes from Chris Kennedy of William Blair. Chris, please go ahead.

Great. Thanks for taking the questions just going back to the Investor Day, you talked about I believe you talked about.

Speaker 9: Thanks for taking the questions. Just going back to the investor day, I believe you talked about.

Speaker 9: targeting mid-teens revenue growth for 2024. Can you just talk about the expectation for that given some of the macro uncertain?

Targeting mid teens revenue growth for 2024 can you just talk about your expectation for that given some of the macro uncertainties.

Yeah sure I'll look at it.

Speaker 6: Yeah, sure. Look at, you know, we'll obviously give for more 24 guidance in February , which would be consistent with prior years. But as you notice, we sat at our investor day in September , medium turn targets for revenue growth in the new teams, and medium turn targets for adjusted EBITDA margin at around 25%. Look, our latest guidance, we have great conviction that our strategy is working and that we're executing on it. And our 23 guidance.

Thanks, Good full more full guidance in February which would be consistent with prior years, but as you notice we set at our Investor day in September.

Medium term targets for revenue growth in the mid teens.

Our medium term targets for adjusted EBITDA margin at around 25% look our latest guidance, we have great conviction.

Our strategy is working and that we're executing on that and our 23 guidance calls for a significant acceleration, which is in line with what we've seen through the third quarter and into October we would exit Q4 based on the implied guidance.

Speaker 6: calls for a significant acceleration, which is in line with what we've seen through the third quarter and into October . We would exit Q4 based on that implied guidance.

Speaker 6: at roughly 19 percent of organic, I'll say, X interest income revenue growth.

<unk>, 19% of organic I'll say ex interest income revenue growth when you take it apples to apples right. So excluding those non volume fees, excluding Russia, and it's worth noting look we lapped the impact of our exit from Russia at the end of this year, we will fully lap those non volume.

Speaker 6: when you take it apples to apples, right? So excluding those non-volume seeds, excluding Russia, and it's worth noting, look, we lapped the impact of our exit from Russia at the end of this year. We will fully lapped those non-volume seeds again, seven and a half million per quarter at the end of the first half of 24.

<unk> again, $7 5 million per quarter at the end of the first half of 2004, so with all of that in mind that acceleration through Q3 and into Q4 with the lapping of the significant headwinds that we've highlighted accelerating volumes may not be to be in our checkout business. We're very confident over the medium term that were going on.

Speaker 6: So with all of that in mind, that acceleration through Q3 and into Q4, the lapping of those significant headwinds that we've highlighted, accelerating volumes in our B2B and our checkout business, we're very confident over the medium term that we're going to hit those revenue growth targets.

Hit those revenue growth targets.

Great. Thank you and then on the prepared remarks, John talked about the Pan Europe White accounts is there any way you can frame the potential yield associated with that product. Thanks for taking the questions.

Speaker 9: Thank you. And then on the prepared remarks, John talked about the pay in your life account. Is there any way you can frame the potential yield associated with that product? Thanks for taking the question.

Sure.

Speaker 10: Sure, when you paint your light, it's early a stage of rollout and I'm thrilled with the work.

Your line is in its earliest stage of rollout and I'm thrilled with the work.

Speaker 10: Our go-to-market teams, our product teams, our R&D teams, our business analytics teams have put in place. We haven't yet sized that broadly for folks because it is a, it's in its earliest stages, but you could expect that it's

Our go to market teams, our product teams, our R&D teams our business analytics teams have put in place we haven't yet sized that broadly for folks because it is a.

It's in its early stages, but you can expect that.

Speaker 10: a higher take rate product for in higher take rate geographies for smallest our smallest customers and it has the benefit of higher take rate customers in higher take rate geographies and reducing our cost to serve and be highlighted the 25 percent reduction in our cost.

Higher take rate product before in higher take rate geographies for smallest our smallest customers and it has the benefit of higher take rate customers and higher take rate geographies and reducing our cost to serve and be highlighted the 25% reduction in our cost per ticket that we've seen.

Year to date, we are very focused on our formula around ICP growth driving our cross sell.

<unk> increased our approved and reducing our cost to serve every entrepreneur on the planet.

Speaker 10: that is doing business cross-border of which we have two million customers today. We want them to use and love and enjoy the Paynear account. And Paynear Light is a step towards a product portfolio that enables us to efficiently capture those. As you and I have talked about in the past.

That is doing business cross border of which we have 2 million customers today, we want them to use and love and enjoy the pay in your account and paying your light as a step towards a product portfolio that enables us to efficiently capture those as you and I've talked about in the past, we get 6 million applications a year.

Speaker 10: We get 6 million applications a year of people who want to use Payoneer. We are organizing ourselves to make it.

<unk>.

People, who want to use pain here and we are organizing ourselves to make it such that we can serve them profitably.

Speaker 10: such that we can serve them profitably, and we're on the path to do so.

We're on the path to do so.

Thanks for taking my questions.

Speaker 1: Our next question comes from Mike Grondahl of Northland Securities. Mike, please go ahead.

Our next question comes from Mike Grondahl of Northland Securities.

Please go ahead.

Speaker 11: Hey guys, thanks. I wanted to ask about the pricing increases and initiatives that you've been

Hey, guys. Thanks.

I wanted to ask about the pricing increases and initiatives that you've been doing.

Speaker 11: Does the third quarter represent sort of a full quarter of those price increases?

Does does the third quarter represent sort of a full quarter of those price increases.

And is there any way you can kind of break that out and see what that contributed to revenue and do you expect further benefit in future quarters.

Speaker 11: And is there any way you can kind of break that out and say what that contributed to revenue? And do you expect further benefit in future?

Speaker 6: Thanks for the question, mate. Look, we're not really sort of viewing it as sizing a particular in-quarter impact or not. Certainly the third quarter is impacted the fourth quarter too, but as long as sort of getting out, we do our pricing strategy and our progress towards that is really a multi-phase rollout of just a much more customer centric and segmented approach, right? And it has a number of problems, one is,

Thanks for the question, Mike look I, we're not really sort of viewing it as sizing of particulate in quarter impact, though not sent me. The the third quarter has impacted the fourth quarter, two but it's strong with sort of getting at we do our pricing strategy and our progress towards that it's really a multi phased rollout.

It's just a much more customer centric and segmented approach and it has a number of problems one at around sort of bundling products that better serve me which has.

Speaker 6: around sort of bundling products that better serve needs, which has sort of

The benefit of driving kind of share of wallet gains and adoption, while also potentially reducing our cost to serve because we're not offering customers products say, they don't need the potentially have higher costs associated with them.

Speaker 6: The benefit of driving kind of shared wallet gains and adoption, while also potentially reducing our cost to serve, because we're not offering customers products they don't need, that potentially have higher costs.

Speaker 6: associated with them. It's around kind of driving adoption of some of the higher value products that we've talked about by bundling and taking a more nuanced approach.

And kind of driving adoption of some of those higher value products that we've talked about by bundling and taking a more nuanced approach to pricing. So overall, we view this as a multi phased rollout frankly over many quarters we've.

Speaker 6: So overall we do this is a multi-phase rollout frankly over many quarters We've seen tremendous success. I think already we launched as we talked about in Q2 Account fees that we wait at certain volume levels and they've been very successful in monetizing some of those smaller or long-tailed customers and as we said we really haven't seen meaningful term there We've launched in Q3 is done noted in his prepared remark

We've seen tremendous success I think already we launched as we talked about in Q2 account fees that we waived certain volume levels and they've been very successful in monetizing some of those smaller long tail customers and as we said, we really haven't seen meaningful churn the.

We've launched in Q3 as John noted in his prepared remarks.

Speaker 6: fees for small transactions, which have also been very effective. We're looking at RFS pricing. As an example, we talked a little bit about that customer-specific light account offering. So it's part, as I say, of a kind of multi-step approach.

<unk> the small transactions, which have also been very effective we're looking at our FX pricing as an example, we talked a little bit about that customer specific light account offering.

It's part of as I say about kind of multiyear multi step approach and we're going to continue to kind of roll out and test sort of different pricing models and bundling models to ensure that what we're doing makes sense for the business that we don't see any I mean that unintended.

Speaker 6: And we're going to continue to kind of roll out and test for the different pricing models and bundling models.

Speaker 6: to ensure that what we're doing makes sense for the business that we don't see any unincended.

Speaker 6: frictional or impact a customer behavior. So that includes registration fees, which we've been testing. That includes C for the in-network volumes that we see in our platform. We talked that yesterday about the almost $10 billion of intranetwork flow that we see coming through our platform and that close to half of that is cross-order. Today we don't monetize that. So we're looking at all sorts of aspects.

Frictional or impact the customer behavior. So that includes registration fees, which we've been testing that includes fees for the in network volumes that we see in our platform, we talked at Investor day about the almost $10 billion of intra network. So that we see coming through our platform and that close to half of that is.

Cross border today, we don't monetize that so we're looking at all sorts of aspects and really ensuring that we do that with the customer segment and then needs in mind.

Speaker 6: And we're really ensuring that we do that with the customer segment and their needs in mind.

Okay. That's helpful. Thank you.

Our final question comes from Josh Siegel of Cantor Fitzgerald jokes. The line is yours.

Speaker 1: Our final question comes from Josh Seager of Cantor Fitzgerald. Josh the line is yours.

Yeah, Hi, guys. Good morning, Thanks for taking my questions today.

Speaker 12: Yeah, hi guys, good morning. Nice to be taking my questions today. First and foremost, with the increased free cash flow flowing into the business, I was wondering if there's any updates to how you're thinking about capital allocation moving forward.

First and foremost.

With the increased free cash flow flowing into the business I was wondering if there's any update to how you're thinking about capital allocation moving forward.

Speaker 6: Sure. Look, I mean, we see a tremendous opportunity in front of us, as we outlined at Invest Today, to capture and grow in a very significant market opportunity that serves SMBs in the markets in which we operate. So first and foremost, we're going to continue to invest in that opportunity in our go-to-market apparatus.

Sure look I mean, we see a tremendous opportunity in front of us as we outlined on Investor day to capture and grow in a very significant market opportunity that says smbs in the markets in which we operate so first and foremost we're going to continue to invest in that opportune.

And I'll go to market apparatus in our platform to position us to best capture that organic opportunity, we've talked about M&A and that's certainly part of the long term trajectory, we think given our distribution given our unique assets.

Speaker 6: in our platform to position of the best capture, that organic opportunity. We talked about M&A, and that's certainly part of the long-term trajectory. We think given our distribution, given our unique assets.

Speaker 6: given our brand and our positioning in these local markets that there are more services and more products that we can integrate into our financial stack to drive R2, to drive revenue overall. And then of course, we've allocated 25% this year of our overall interest income the cost of $55.60 million.

Given our brand and our positioning in these local markets that there are more services and more products that we can integrate into our financial stack to drive off too to drive revenue overall, and then of course.

We've allocated 25% this year of our overall interest income so close to $55 $60 million.

Speaker 6: to returning capital to investors. That's our target for this year. And I think it's fair to say that over the long term, we would look to add a minimum offset dilution from our stock-based comp.

Returning capital to investors that put target for this year and I think it's fair to say that over the long term, we would look to at a minimum offset dilution from our stock based comp.

Speaker 6: planned by using that show by that plan. But overall look, we're really excited this is a

Planned by using that share buyback plan, but overall look we're really excited this is a strong cash flow generating business, we see tremendous opportunity.

Speaker 6: strong cashflow generating business, we see tremendous opportunity both to grow organically, drive more leverage, drive more efficiency, and capture more opportunity while being balanced and returning capital to investors as well.

Both to grow organically drive more leverage to drive more efficiency and capture more opportunity, while being balanced and returning capital to investors as well.

Speaker 9: Great, that's very helpful. And then B, I think you mentioned that e-commerce volumes perform better than expectations. I was wondering if that tailwind might continue into 4Q, especially given this collaboration with SC going live.

Great. That's very helpful. And then B I think you mentioned that E. Commerce volumes performed better than expectations. I was wondering if that tailwind might continue into <unk>, especially given this collaboration with etsy going live.

Speaker 6: So just, you know, specific to Etsy, we're very excited to have that deal sort of signed and we're looking to onboard in this, that there's no material, volume or revenue anticipated from Etsy. It takes a while to ramp up these relationships for 23. That's a 24 event. From an overall e-commerce perspective, look, we came into this here thinking high single digits was a good number. We've seen e-commerce in a good, you would agree as well, we are out-for-formed that sort of overall and I think so far October is in line with that and we're seeing out-for-formance in that e-com bucket. So at this point, I don't see any reason to expect that that wouldn't continue. We are those seeing that makes shift into those larger sellers.

So just you know specific to Etsy, we're very excited to have that deals that are signed and were looking to onboard the myth that there's no material volume or revenue anticipated from that see it takes a while to ramp up these relationships with 23, that's the 24 event for them.

And overall E. Comm perspective look we came into this year thinking high single digits with a good number we've seen E. Comm I think you would agree as well outperform that.

Overall I think so far October is in line with that and we're seeing outperformance in my E. Comm bucket. So at this point I don't see any reason to expect that that Wouldnt continue we are seeing a mix shift into those larger sellers and something that I think Amazon kind of talked about in some of that remark for Q&A.

Speaker 6: I think Amazon talked about in some of their remarkable Q&A around consumers becoming more price conscious and moving their buying preferences to those larger sellers. So we are seeing that next shift as well. So the pull-through to revenue isn't as strong as the volume performance overall but we're excited to see that volume come into the platform.

Around consumers, becoming more price conscious and moving that.

That buying preferences to those larger sellers. So we are seeing that mix shift as well so the pull through to revenue isn't as strong as the volume performance overall, but we're excited to see that volume come into the platform.

Great. That's very helpful. Thanks, again, and congratulations on the execution this quarter.

Speaker 12: That's very helpful. Thanks again and congratulations on the execution this quarter.

Speaker 1: With that, I'll hand back to John Kaplan, Chief Executive Officer for Closing Remarts.

With that I'll hand back to Jordan Kaplan, Chief Executive Officer for closing remarks.

Speaker 10: Thank you, everybody, for your questions and for joining us this morning. I'm confident about Payoneer's opportunity, and we appreciate our shareholders continued support. We look forward to speaking with all of you again next quarter. And with that, thank you.

Thank you everybody for your questions and for joining us this morning.

I'm confident about <unk> opportunity and we appreciate our shareholders continued support we look forward to speaking with all of you again next quarter and with that thank you.

Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.

Speaker 1: Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your line.

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Speaker 13: You