Q2 2025 Payoneer Global Inc Earnings Call

Good morning, thank you for standing by, welcome to Pioneer's second quarter 2025 earnings conference call.

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

Following the speaker's remarks, we will open the lines for your questions. As a reminder, this conference call is being recorded.

I would like to turn the call over to Michelle Wong Pioneers vice president of investor relations. You may begin.

Thank you, operator, with me on today's call are pioneers chief executive officer, John Kaplan, and Pioneers Chief Financial Officer, b or donate. Before we begin, I'd like to remind you that today's call may contain 4 looking statements, which are subject to risks and uncertainties. For more information, please refer to our filings with SEC, which are available in the investor relations section of pioneer.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, to today's call may include non-gaap measures, these measures should be considered in addition to and not instead of gaap financial measures reconciliation to the nearest Gap measure, can be found in today's earnings materials which are available on our website. Additionally, please.

No. You have posted an earnings presentation, supplement alongside our earnings press release on investor calm. All comparisons made on today's call are on a year-over-year basis, unless otherwise noted with that, I'd like to turn the call over to John to begin.

Good morning everyone. Thank you for joining us.

Today, I'll walk you through our strong second quarter results.

We are executing against the significant opportunity in front of us.

And building the financial stack for cross border Commerce. After that, we will take you through the financials and our reinstated full year 2025 guidance.

Let's start with the big picture.

Paneer is the global payment solution for entrepreneurs and smbs who power international Commerce?

These are manufacturers exporters agencies creators and service providers from every corner of the world.

Payments from customers globally, managed. Multiple currencies pay suppliers and employees and Access Capital all while navigating local regulations, and Legacy banking rails.

That's we're paying. Here comes in. We are their trusted partner, delivering Innovation at the intersection of global trade, and digital Finance.

Q2 was another strong quarter for Pioneer. Our strategy is working. We're growing and unlocking meaningful. Operating leverage in Q2, we delivered record. Quarterly Revenue X interest income up 16% year-over-year ahead of our medium-term Target.

We delivered 13,000, net new icps up 2% year-over-year, led by Tier 1 markets which account for over 60% of our Revenue.

We delivered our food expansion of 21% and interest income, our fourth consecutive quarter above 20%, a sign of strong products, adoption of Smart Pricing, and a deliberate move upmarket.

We delivered 66 million dollars of adjusted ibida. A 25% margin.

We delivered over 15 million dollars of adjusted Eva X interest income.

for the first 6 months of 2025, greater than what we delivered for the full year of 2024,

And our latest guidance. At the midpoint implies, we expect to more than triple our adjusted ibida X interest in 2025.

We're strengthening the fundamentals of our business, improving earnings quality and building a platform designed for durable compounding growth.

Global Commerce is resilient.

And it continues to grow and evolve.

Our customers are adapting to shifting trade flows and they're choosing Pioneer to help them grow.

In China, we see long-term, momentum and growth in cross-border Commerce. And we have built a highly differentiated business over 2 decades serving this Market. Our e-com customers are focused on both continuing to serve the us while increasing their investment in new markets in Q2, approximately a third of our China Revenue came from sellers selling to non-us markets.

We are helping customers expand globally through our green Channel product supporting their ad spend with our virtual card and providing access to trusted tax and compliance partners.

We don't just move money; we help our customers scale.

B2B remains 1 of the fastest growing and most exciting parts of our business.

We grew B2B Revenue 37% in Q2 led by our largest customer segments. We continue to shift towards larger, multi-entity customers who have more complex needs in APAC, last time and Amia we delivered mid 20%, volume growth and continued take rate expansion.

We have strong product Market fit in these service oriented markets, and our customers are rewarding us with their loyalty.

At the same time, our China B2B business group mid single digits. In Q2, we continue our methodical approach to unlocking the multi-trillion dollar. China B2B opportunity

We are strengthening our financial stack to better. Serve the needs of our customers and drive, our retention and our proof.

We have expanded our FX capabilities, launch smarter, invoicing and deepened, our Erp and third-party Integrations.

We're delivering more automation, removing friction and increasing product engagement, and adoption.

In Q2.

We lost a strategic partnership with stripe to expand our Global checkout footprint and enhance the product's capabilities.

We are combining their best-in-class technology with our local market, reach, expertise and customer relationships.

This partnership, improves our operating efficiency and lets us stay focused on our customer to provide them with an integrated Financial stack.

I'd like to share an example of a customer that is leveraging Pioneer as their global payment infrastructure to streamline their operations.

Brand 501 is a Korean beauty company with entities across Asia and the US.

They're using Payoneer to consolidate their payments from major marketplaces.

Wholesale B2B sales and Via their own website for direct to Consumer sales, through paying your checkout.

Choosing Pioneer. They're, they're able to eliminate inefficiencies in their operation and are thriving in a competitive fast growing industry. That's the kind of customer Journey. We're enabling every day.

We're excited about the momentum. We're seeing in stablecoin and blockchain enabled payment, Technology Innovation and adoption.

We believe that increased regulatory Clarity including as the result of the enactment of the genius act will unlock opportunity for paying years and provide a framework to drive stablecoin adoption including by global businesses.

Paneer has unique assets that can help position us as a critical part of the infrastructure for this rapidly developing technology.

We have distribution deep customer relationships, and connectivity to Last Mile Bank infrastructure around the globe.

We enable money movement, across 7,000 trade, corridors and allow our Global customers to transact and hold multiple currencies within a single ecosystem.

In pursuit of this opportunity. We're actively exploring enablement of stablecoin functionality for our customers.

For example.

We're exploring allowing our customers who already rely on us for business, grade accounts to send and receive stablecoin along with our full Suite of AP and our products.

We're looking at using our world-class Last Mile infrastructure to help businesses off-ramp stablecoin globally into the local currency that they need for their operations.

We are also investing in scale and talent to drive and accelerate our Innovation serve our customers better and drive greater efficiency. We recently announced that we are opening a new technology Hub in Gorgon. India 1 of the world's fastest growing economies and home to deep engineering expertise.

We're backing our beliefs.

And our momentum with action.

In Q2, we nearly doubled our share repurchases versus q1.

Today, we're announcing a refreshed million dollar buyback. Authorization

This reflects our conviction, in the value of our business and the strength of our financial performance, we're focused.

We're executing, and we're building a more valuable platform for our customers and delivering durable growth and compounding returns for our shareholders.

Let me end with this.

The future of Commerce is cross border and its global

Entrepreneurs, in every part of the world are building great companies.

But they still face Legacy Financial systems when they try to trade internationally.

That's the problem. Paneer is solving and it's a massive opportunity.

I'll now hand it over to B to walk through the results and our reinstated guidance for 2025.

Thank you, John. And thank you to everyone for joining us pay near delivered, a strong second quarter.

Executing with discipline and advancing our profitable growth strategy in a complex global trade environment. We continue to generate revenue and adjusted ibida in line with our medium-term targets and our reinstating. Our full year 2025 guidance, we remain confident in our ability to drive profitable growth and deliver long-term value for our customers employees and shareholders.

now, turning to our second quarter results,

We delivered revenues of $261 million, up 9% year-over-year.

Revenue, excluding interest income reached 202 million, a quarterly record, and was up 16% year-over-year in line with our first quarter results.

Our strong growth was driven by our beta B franchise, increasing adoption of our high value, products, and services, such as checkout and card products, and the ongoing implementation of our pricing and offering strategy.

Total volume was up 11% year-over-year. SMB volume grew 9% year-over-year, with volume from smbs that sell on marketplaces up 6%, volume from B2B smbs up. 19% and check out volumes up 83%.

During the quarter, we saw modest softening in volumes from large Eco e-com marketplaces, likely in response to the global macro and tariff environment.

Enterprise payouts, volume. Increased 15% year-over-year primarily due to a strong demand in key travel routes. We serve

basis points decreased 2 basis points on a year-over-year basis, driven by lower interest income

We continue to drive significant expansion in our SMB, customer take rate which increased 9 basis points over the prior year period and 1 basis point sequentially.

This reflects the ongoing impact of our pricing strategy. Continued growth in our higher, yielding B2B and checkout franchises and ongoing adoption of our card, strong growth in our higher, take rate regions and the impact of our workforce management acquisition

Customer funds held by Pioneer increased 17% year-over-year to 7 billion. Partially offsetting the impact on our interest income revenue of lower rates.

We generated interest income of 58 million in the quarter.

Growth in customer, funds was above our expectations, and inaccess of our volume growth with customer. Usage behavior. Moderating in certain key markets, likely in response to the uncertain macro environment.

This demonstrates, the trust, our customers have in our platform and the value, they place on the utility we provide.

As of June 30th, we had reduced our sensitivity to fluctuations in short-term interest rates in relation to approximately 3.7 billion or roughly 53% of customer funds.

This consists of approximately 1.8 billion of assets. Underlying customer funds that are invested in a portfolio of US Treasury Securities, and term-based deposits as well as interest rate derivatives on approximately 1.9 billion of funds. Underlying customer balances, providing a floor against interest rate, declines below 3%.

We will continue to actively manage our hedging programs. While always prioritizing liquidity and security,

total operating expenses of 231 million increased 19% primarily driven by increases in labor, related, expenses, higher transaction costs consultancy fees as well as the Investments to scale up card product and the effects of recent acquisitions, including our Easy Link acquisition in China and our workforce management acquisition

Transaction costs of 41 million increased 10% broadly in line with volume growth.

transaction costs represented 15.6% of Revenue, an increase of approximately 20 basis points from the prior year period primarily due to lower interest income,

Excluding interest income transaction costs represented 20.1% of Revenue, a decrease of around 120 basis points versus the prior year period.

Despite a mix shift towards a higher take rate, higher transaction costs, and products driven by improvements in our chargebacks and losses, as well as lower costs related to our Capital Advance offering.

Sales and marketing expense was up, 7 million or 13%. Year-over-year driven primarily by higher labor related costs, including from our workforce management, acquisition and buy card related to incentives in support of Chinese and other good sellers.

Other operating expenses were up 1.5 million or 4% primarily due to higher it and communication costs.

R&D expense increased, 10 million, or 36% mainly due to higher labor related costs, including in relation to our workforce management and Easy Link acquisitions.

GNA expense, increased 11 million or 42% primarily due to higher legal and Consulting fees, including in relation to our India. License application as well as higher labor related costs.

Adjusted ibida was 66 million. Representing a 25%, adjusted ibida margin in the quarter. Despite the 7 million headwind, from interest income. This is the fifth consecutive quarter of positive, adjusted ibida, excluding interesting, income.

Net income was 19 million compared to 32 million in the second quarter of last year, basic and diluted earnings per. Share were both 5 cents down from 9 cents in the prior year period.

We ended the quarter with cash and cash equivalents of 497 million delivering continued strong, cash generation.

For profitable growth and return Capital to shareholders.

During the quarter, we repurchased approximately 33 million worth of shares at a weighted average, price of $6.80, nearly double the amount we purchased in the first quarter.

As John mentioned, our board recently authorized an amendment to our share repurchase program, increasing the programs we purchase authority to up to 300 million.

Given our strong performance in the first half of the Year, our visibility into the third quarter, and a less severe, tariff environment, particularly between the US and China. We are reinstating 2025 guidance.

We expect total revenue between 1,040 and 1,060 million above the full year guidance. We issued in February

This includes higher interest income of 225 million, and 815 to 835 million of Revenue, excluding interest income.

We expect our growth rate for revenue, excluding interest income, to be fairly consistent from Q3 to Q4.

The top end of our core Revenue range is in line with our guidance in February despite a more challenging macro environment.

For the second half of 2025. We anticipate high single-digit growth in total volume and expect that our strategic focus on higher. Take, great products and geographies and pricing initiatives will enable us to continue to deliver yield expansion and revenue growth, that outpaces volume growth.

We expect volume from smbs that sell on marketplaces to continue to grow by mid single digits and mid. Teens B2B volume growth in the second half of the year.

We anticipate low, double digit, B2B volume growth in Q3 accelerating to High Teens in Q4 as strong rest of world B2B volume growth is partially offset by slower growth. In our China, B2B franchise.

Given the lower take rate profile in China compared to other regions. We expect B2B Revenue to grow at roughly 25% for the second half of the year.

For the full year. We expect transaction costs as a percentage of Revenue to be approximately 16.5% significantly below our expectations. At the beginning of the year and representing a modest Step Up in transaction costs for the second half of 2025.

This reflects continued business, mix shift towards higher, take rate and offer higher transaction cost products and geographies as well as the impact of lower interest income.

When excluding interest income, transaction costs as a percentage of revenue have been roughly stable over the past few years.

We continue to work to optimize the economics of our business from a transaction cost perspective, by utilizing our scale and leveraging and deepening our strategic relationships.

We are actively working on a number of initiatives that leverage blockchain technology bringing real time treasury management capabilities to our platform. We have rolled out real-time funds transfer capabilities on Jane in specific corridors, enabling us to move funds between Global accounts with greater speed Automation and transparency.

In collaboration with City, we're excited for the opportunity to expand these capabilities to additional markets in the coming quarters.

We also plan to extend these capabilities via other banking Partners further enhancing our treasury management, flows and delivering enhanced capabilities to our customers.

Additionally, we recently signed a new long-term agreement with MasterCard further solidifying, this important strategic relationship. We have seen substantial growth in our card products since beginning, this partnership over 4 years ago, with nearly 6 billion of card usage over the trailing 12 months.

We are further deepening our relationship and in partnership with MasterCard launching an SMB. Growth Hub to better serve customers globally and to drive further Innovation and engagement.

We expect 2025 adjusted Opex which represents our guidance for Revenue less adjusted ebit and transaction costs of approximately 610 million.

In scaling our card product. And in stable, coin focused initiatives.

We are investing to support our long-term growth trajectory while still expecting to exceed our 25%, adjusted ibida margin Target.

Based on our strong performance in the first half of the year, we are raising our guidance for adjusted EBITDA, which we expect to be between $260 million and $275 million.

At the midpoint this represents an adjusted e. Betta margin of approximately 25% for the full year.

Excluding interest income. We expect adjusted ebit of 43 million at the midpoint, over 3 times the amount, we generated in 2024 and in line, with the target, we have communicated at our fourth quarter results in February.

Our 2025 guidance assumes a stable macro environment in the second half of the Year and that Global Paris remained broadly comparable to today's levels.

Our second quarter 2025 results underscore the strength of our execution in a dynamic macro and tariff environment. We grew revenues expanded rsnb. Take rate increased our poo and delivered a justed ibida in line with our communicated targets, we are well, positioned to deliver on our 4-year guidance and remained focused on creating long-term shareholder value.

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

Thank you. We will now begin the question and answer session if you have dialed in and would like to ask a question. Please press star 1 on your telephone keypad to raise your hand and join the queue.

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And our first question comes from the line of Meets Venson with Deutsche Bank. Your line is open.

nice results and great to see the

maybe at the highest level, just giving there are so many headlines still going around on tariffs. What gave you the confidence to reinstate that higher guide and you know, add us slightly higher level than what we saw previously, maybe more explicitly on tariffs. I know be you called out that tariffs. Um, you know the levels. Stay at broadly the same level as what we have today. Any other explicit impact baked in from tariffs. I know previously you had called out that 50 million number as soon as probably lower um, today than it was on the last call.

And then last thing you mentioned slower volume at some large Ecom platforms. Um, anything else that you're explicitly seeing with regards to tariffs in, in 2q, numbers or this quarter today?

Sure, thanks for the question Nate look. So as you noted, we held the top range of our core Revenue, guidance in line, with the full year guidance. We gave, um, back in February, we raised at the midpoint, we raised our adjusted ibida at the midpoint as well, all as we continue to navigate and our customers. Continue to navigate this super Dynamic environment. Um and we reinstated guidance, look to your point where obviously a quarter out from when we reported last which was in in May and barely 3 weeks out from the original 3 to 4 weeks the original tariff announcement we have greater visibility into what the Tariff environment is likely to look like it is obviously much less severe. Certainly as between the China us Corridor. We have some degree of visibility into Q3 and we're beginning to see the outlines of how we might expect the business to perform overall and felt very comfortable in our ability to continue navigating. We have a very resilient business as our guidance.

Understand the environment today.

Yeah, super helpful being. Yeah, obviously. Don't envy your position in given all the the changes that are going on. Um, I do have to ask about stable coins. Um, I think given sort of the merchants you serve and the role you play in the B2B payments ecosystem. I actually think there's there's a real role for stable coins here in helping you serve your end customers and it was great to hear some of the initiatives that you're undertaking on the Pioneer side of things. Um, but I'd be really interested to hear what merchants are telling you with regards to their demand or appetite to adopt stable coins. We, you know, we spend a lot of time debating the topic with investors, but it would be great to hear how real this is for the merchants that you're serving on a day-to-day basis.

Yeah, this is John. Thanks for the question. The um, I think we are in the earliest, earliest days of understanding the, um, both the use cases and the demand among Merchants, right? As we've mentioned on the call, we believe that the we have an exceptional set of assets and relationships with customers and Trust. Um,

With our banks and and our Marketplace Partners globally to help take our deep customer relationships, our global distribution to add new currencies into the experience for our customers, as they seek to use them. And our last mile relationships and enable us to help customers, turn whatever currency, they're they're doing.

Doing business in into the local Fiat that they use domestically. And so we see um, a long-term opportunity, I think a lot of the hype cycle is is exciting but the Practical use case and I think what um hopefully investors have gotten comfortable. Um with the way we run Pioneer today is we are very pragmatic about helping our customers participate in the global economy. And right now, they primarily do that in dollars and we're helping them do that exceptionally well and as they explore, the use of new currencies and new ways of of transacting, we will be there to support them.

Thanks, John. Look forward to tracking the progress there.

Thanks.

Our next question comes from the line of Trevor Williams with Jeffrey's. Your line is open.

Thanks. Good morning guys. Um, I I wanted to ask on China specifically and just how Merchants there have responded to the tariffs and thinking kind of about more distribution and Europe or rest of world and John. I think, in your prepared remarks, I heard you say that now about a third of your China revenue is coming from selling into non-us markets. I'm curious how that number has changed more recently and just bigger picture. If the current environment is going to help accelerate any of your share gains locally in China, to be able to facilitate sales and to kind of more non-us markets. Thanks.

Thanks Trevor. A great question and an important 1 uh We've held 15 events in China for sellers looking to expand across Europe, Latin America and Middle East, really bringing together an ecosystem of Partners to help them. Think about through the logistics, tax legal considerations, when they're expanding. So we are our customers Partners. As they help them explore expanding, they're very focused on expanding particularly in Europe and Latin America and our green Channel program has had I think the best ever demand of that product we've seen as as customers look to explore ways to drive their distribution and improve. Um,

The resilience of their business models, not just selling to the United States but selling globally. A third of our Revenue comes from Chinese. Customers of that. 20% is China, the US and approximately 10% is China to the rest of the world. And we have not seen a significant shift in that composition in Q2. It's really, I think, 2 SE soon to see it, but I do think is really important is how dedicated the China sellers are to their Us distribution and what they see the events of April 2nd as a, a catalyst, a, you know, a springboard to force them into more global distribution, both of which will serve paneer well on the long term.

Okay, I'll just add 1, other note about that is, we saw our China customers holding increased balances on the platform. You saw the balance is grow by 17% in Q2 you, uh, year-over-year that balanced growth is future Revenue growth for us. And I think that's something just important to highlight.

Ious, and we've been talking about it at length, we made strategic shifts over the past year to align our resources focusing on durable and profitable Revenue growth and our ICP portfolio. Really reflects those decisions. If you go back all the way to q1 of 2023, 23% of our total customers or icps in, in Q2 of 2025, it was 28%. So we've, you know, continually driven icps as the percentage of our total portfolio. We're driving faster, B2B customer growth which is very exciting for us. We're targeting larger, multi-entity customers those that bring in quarter of a million dollars a month in volume and greater, um, they use more products. They have more complex needs. They stay longer, our net revenue retention for those, that cohort is exceptionally strong, um and we continue to fine-tune our risk appetite across the portfolio. Generally to make sure that the folks that we add to the platform, reflect our

Focus, um, in the long term. So in Q2 volume growth from 10K plus icps. Um,

We saw uh 20% volume growth really exceptionally and exciting for us in our business. And I'm I'm pleased by the execution of the team and we continue to drive cross-sell and momentum in the portfolio. Um, we I expect the ICP growth to be as I've said in the past. You know, the word we like to use around. Here is Lumpy write some for

It's up some quarters. It's down, some quarters. It's flat. It has to do with the overall portfolio. Mix what we're focused on. Doing to drive ICP growth. We're beginning to work with reseller programs, which is an exciting Innovation. We have more and more deep focus into specific regions, um, and we're driving our funnel conversion for for the over 11 million people who show up at pioneer.com to start, um, creating pain in your accounts, you know, we have an exceptional brand great relationships. Last mile delivery that entrepreneurs around the globe are increasingly coming to us to, to, to, um, be their foreign Bank alternative as they grow their business.

Appreciate it. Thanks guys.

Next question.

Comes from the line.

Will Nance with Goldman Sachs, your line is open.

Hey guys, thanks for taking the questions. And, uh, you know, congrats for, uh, uh, congrats on the great quarter and the reinstatement of guidance, great to see. Um, I wanted to ask on the B2B volume growth came in, at High Teens. I think the guidance was kind of a low double digits and then back to high teens and I, you know, you alluded to some kind of moving pieces and uh, China B2B Corridor. So, I was wondering if you could expand a bit on that, I know that's been kind of an ebb and flow, uh, type of region for you like, would you is, is there something going on there in the market? From a competitive perspective? Would you attribute this more to

The macro environment and some of the things that you know you called out on the SMB e-commerce Corridor and just talked through, I mean, how you view that exit rate uh in the fourth quarter and I think you call that mid 20s X China, uh as kind of like a a run rate as we think about you know, going forward.

Thanks for the question will. Um so yeah. Look at we've talked in the past about our B2B business and and really sort of drawn the distinction between the China business, which is a good business by and large and the rest of world business, which is a Services business and and the relative differences in those 2. Um business lines for us or in those 2 portfolios just to sort of level set. Again our B2B rest of world portfolio is about 80% of total B2B volume and about 90% of the revenue and China makes up the rest, right? Our China portfolio. I like the term you use has seen some es and flows, right? We have a, a relatively speaking tiny, tiny slice of a very big Market. We estimate the market in China, from a good perspective. B2B to be about 2.3 trillion. We have a very tiny slice. These are bigger sellers serving. Uh, B2B good sellers, in China, is more complex because they're bigger sellers is

Fits and starts our rest of world business. Which look at as we say is more than 90% of that B2B uh revenue and it's worth noting. Our B2B Revenue as a whole is about um a third of our total core Revenue today. That Revenue flow is growing uh, very impressively. We're showing, as we said in Q2 22% volume growth in that rest of the world portfolio. And we're growing the revenue, overall 37%. So as we move into the back half of the year, as you call down, um, will would calling for low, uh, low double digit growth in Q3 accelerating to high teams growth as we exit the year higher than that from the rest of world perspective and still feel very confident that we will hit more than 25% Revenue growth overall. So, this remains for us, uh, the real lever and Driver of growth in our business, given its growing importance to the portfolio as a whole

No, that's super helpful and kind of dovetails with my next question, which is uh, the take rate Dynamics here. Obviously you guys have just historically seen stronger growth and higher take rate regions Latin America and APAC. The B2B business is growing faster within the B2B business. You know, you're seeing some mixed out of China. So there's a mixed Dynamic. Uh the e-commerce business. There's a there's an assumption of a little bit lower growth all uh so I guess maybe when you zoom out, you look at all the pricing, uh, Dynam

Dynamics and take great Dynamics. Is there a way that you could kind of bucket? Some of the take rate expansion, you're seeing kind of between mixed related, Dynamics, macro related, Dynamics, uh and and anything else that you would kind of attribute it to on the pricing side? Appreciate it.

Yeah, yeah, of course. Well so look at I think what? What is often sort of not fully appreciated about our business is how consistently we've been able to demonstrate an ability to increase yields in our portfolio, right? We have driven take great expansion in our SMB business for multiple consecutive quarters now including in Q2 where we expanded our take rate by 9 basis points and we saw take great expansion across the portfolio right we grew our Marketplace SMB tape rate by 2 basis points. That's mostly a factor of increased card. Adoption we grew our card portfolio. 25% record usage on our card in the quarter. We grew our B2B take rate by 26 basis point that is as you know well in your question somewhat a factor of geomix strong growth rest of world relatively weaker growth as we just talked about in China pricing power within that book and adopt

Of our card as well, particularly in Latin America where we see really strong growth as well as the acquisition of the workforce management business, right? So, lots of levers that we are deploying within that business to expand our yield to expand our tape rate and similarly within our checkout business, right? We announced our partnership with stripe, um, really excited to see continued tape grade expansion there. So as you said, we have sort of multiple drivers and impacts uh, to that take rate. We don't really kind of look to decouple them and sort of explain each, but we're demonstrating additional utility and it shows up in the take rate that we're able to deliver quarter after quarter.

Yeah no that's great. It sounds like a lot of just organic take rate expansion which is great to see. Appreciate you taking the questions and congrats again.

Thanks a lot.

From the land of Chris Kennedy with William, Blair. Your line is open.

Good morning. Thanks for taking the questions and appreciate all the detail is. You are there any way to think about the ebitda margin profile? Xflow, as you think about the business going forward over the long term?

Fun and I I'll call it up core adjusted. EBA profile. Right? At the midpoint our guidance for adjusted, evida X interest income is roughly 3x. What we delivered last year?

And we expect to continue to accelerate into the back half of the Year, even, as we make investments, and we're continuing to invest with John said, in his prepared remarks. In our licensed infrastructure, that is an important enabler of our business and an important motor around our business. We're continuing to invest in our platform capabilities, and the team that supports it including by expanding, in, in India as we discussed, and we're continuing to make investments in our money market infrastructure. And Last Mile capabilities, which ultimately unlock the additional, uh, opportunities within our ecosystem. So, we feel very comfortable with the trajectory that we're that we're taking their

Understood, thank you for that. As a follow-up, you talked about implementing blockchain to improve your treasury management operations. Can you just talk a little bit more about the benefits that you are seeing from that, or what you can see from that? Thank you.

sure, happy to

you know, as John said in his

1 of the unique assets that we think positions us really well to to drive adoption of stable coins to integrate the important capabilities of stablecoin into our ecosystem is really our Our Last Mile infrastructure, right? In a very real world, we solve for The Last Mile Challenge. Um the Al's adoption in certain use cases around stable coins, right? Ultimately you

Users need to be able to yes, receive stable coin within, uh, their ecosystem, but ultimately to off-ramp it to other use cases within their local jurisdictions or otherwise. So, we have as we've talked in the past in other contexts and extensive bank and PSP Network that allows us to solve for that, uh, challenge. So what we've already done and 1 of the the well-known use cases, as, you know, Chris from a, a stablecoin adoption perspective is internal treasury management capabilities. What we've done is already to integrate via 1 of our, uh, banking Partners City. Uh, their capabilities to move, tokenized funds through their Global Network to integrate those capabilities into our own treasury management capabilities. And what that gives us is an ability to move funds, 24 by 7. So we're not sort of beholden to cut off times. And so, on to get automation of those movements to get programmability of those move,

Movements and overall to really enable better capabilities internally and therefore enable better capabilities within our ecosystem for our customers. That's what we're doing sort of with the broader context. So this is an exciting real world, use case for us and we're continuing to expand and it adds real value to how we manage our ecosystem from a liquidity perspective from a risk perspective from an fx perspective.

Got it. Thanks for all the color.

Next question, comes from the line of Sanjay sakrani with KBW. Your line is open.

Thank you, good morning. Um, I had 1 more on tariffs which was you know as as we've seen the Tariff drama, sort of unfold, I'm just curious if you've

Seen any more resiliency from your customers and sort of how to evolve their business around tariffs. So just as we think about what might be on the come, you know, how different you guys feel about, um their ability to deal with tariffs on a go forward basis and then just 1, 1 related point. I mean, has there been any impact from your customers on this diminish diminish exemption going away? I'm just curious as we think about that. China, to us Corridor. How we see that playing through? Is the full impact in there already, or, or could there be a residual 1? Thank you.

Thanks Andre. There there is no impact from the diminished really of any you know we I think we talked about in the past is single digit low, single digits, and not an impact uh for us.

What I think you what I think it's important to note about our customer book. Is we have 2 million, entrepreneurial creative, hardworking hustling, business, owners and 190 countries, and territories committed to Growing their businesses. So we benefit

We've done in China, the work, our teams are doing, uh, across the globe. I shared in my prepared remarks, the case study of brand 501, which is a business that is using paneer for B2B wholesale.

Activity, using our cards for expenses, using checkout for the direct to Consumer work and selling on marketplaces. Those are the kind of customers we love serving and, and provide them, a full Financial stack solution for their International operations.

Got it. Um, and I guess I got 1 more on stable coins, um, obviously very encouraging that you're incorporating it into into your business. I'm just curious. You know, the 1 question. We just get quite frequently is sort of the disruptive threat. Uh, I'm just curious sort of how you guys think about it being a disruptive threat. I know there's lots of advantages to your model uh but I I'd love to just hear from you in terms of sort of how you you guys think about that. Uh that angle of it. Thanks.

Yeah, look. So thank

Innovation or new technology it can be disruptive, right? It's whether you're well positioned to take advantage of the disruption and and we are confident that we are again. What has been a headwind to adoption uh to stable coin more broadly and it's obviously growing massively in as as John said we welcome the regulatory Clarity that comes with the with the genius act but some of the headwinds to broader adoption have been solving the last

Smile challenge. We can do that. The complexity for end users of managing, multiple wallets and keys and cold storage. And all of that we can integrate. And today, we already provide a single utility if you like that allows users to manage currencies and to hold funds across a complex ecosystem. So we already abstract that complexity today within our ecosystem and we feel we're well positioned to do that, which is why we're focused on looking to add digital wallet capabilities. So again, disruptive any Innovation can be disruptive. We're well, positioned, ultimately for us, we view the value. Um, as being able to seamlessly connect, those modern digital currencies, with all of the value that that comes in terms of programmability and real-time settlement with the Legacy banking infrastructure in rails that we have within our ecosystem, in a way that is user-friendly and enables the ultimate business.

Needs of the customers that you're serving. We're well positioned to do that. We're we're excited. So we we view it as a long-term um opportunity for us.

Thank you.

Next question comes from the line of mayang Tandon with nidam and Company. Your line is open.

Thank you. Uh, good morning, John, or are you able to share any metrics around churn levels, either by segments over the company as a whole? And just curious to see if there's any impact from the higher tariffs, you know, uncertainty and sort of related would be have you had more difficulty onboarding customers because there might be resistance to, you know, working with you just giving some of the uncertainty in the market. So, curious around like churn and potential for onboarding customers because of the uncertainty,

Uh thanks for the question. Um our Revenue retention is continued to improve modestly year-over-year and we see retention as a very exciting opportunity for us. It's 1 of the reasons why we've moved the portfolio towards larger customers and focused on specific geographies and given the profile of our customer base. As you'd expect we see higher volume and revenue retention than we do individual logo retention. That's sort of the nature of the game when you serve uh small businesses. Um our ICP retention is significantly higher than our non ICP retention and retention of our M. Managed icps you know a call out to some of the extraordinary people that work at paying here. We have local teams on the ground serving customers and high in Emerging Markets part of their local.

Local ecosystem speaking. The local language are are managed ICP is those that have the relationships directly with the CSM, perform better than the non-managed, or unmanaged icps. And the, the team is working hard at productizing Management Services for for icps as we scale, and it's the retention. In general, is an increasing Focus for us. And I think the

The work the team has done to put in place tools to help us both track and manage cross-sell is impressive. Our ICPs are working, and we're pleased with our progress there.

Got it? Okay, I'll move to maybe a more. Oh oh you asked the second? Sure.

That said, our customers hesitant to onboard because of tariffs, I think quite to the contrary we saw ICP growth in China at 11%, uh, growth. So we, you know, we are not seeing reticence. I think the opposite people you know, to bees point about stable coins, generally we are trusted and being trusted means that folks are turning to Pioneer to participate in the global economy.

Got it actually sort of you answered my second question. So um, I'll ask something else in which is um you know you mentioned the uh facility in Gorgan. I just want to understand is that going to be, you know, showing up in terms of uh operating uh expenses on the R&D line or what is sort of the motivation behind that. Is that more because it's about able to hire Engineers to do R&D, you know, in a hub like India or uh what are some of the uh main factors behind this uh initiative?

System with a view to, to ensuring resilience recruiting the the best talent and having access to the best talent as we continue to invest um in our in our platform uh more broadly. We have a fantastic team based out of Israel that support our platform. We have folks, all over the world. As you know we are a very global company. Uh we did a a ton of research and India represents a real op.

Opportunity. We already have a foothold there. Um, as part of our workforce management acquisition and in other areas, it represents a real opportunity to tap into 1 of the largest tech Talent hubs in the world. So yes, it will be, um, incremental uh, investment into our platform. It gives us resilience access to a bigger pool of talent that is important. And we will continue to manage to the medium-term adjusted IBA targets that we have talked about and feel very comfortable that that we can do that.

Great, thank you so much for taking my questions.

And our last question, come.

From the line of Daniel B.

With wolf research, your line is open.

Hi, thanks. This is Daniel Crow on for Darren. I just wanted to to follow up on the great. Take great expansion, we've seen. And and how to think about that relative to stable coin integration, any early sense of how you think about the unit economics of the stablecoin, off-ramp versus a traditional payout and it says, presents any sort of headwinds that consistent yield growth over time. Thank you.

No, thanks for the question, okay? I think too early to say right? What we we have laid out. Why we think we can play in this space. We're exploring and making investments in the back half of the year to begin to build out that infrastructure. I think the take rate Dynamics are going to depend very much on the particular use case.

Cases that we enable um, within our ecosystem. I think the overall sort of message that we want to leave you with is obviously sort of what I said to to the other questions that we had demonstrated consistent ability to uh Drive take great expansion because we deliver more utility. And as we deliver more utility whether that's access to more markets, whether that's a card product, whether that's a best-in-class.

Checkout capability. We can command higher yield, um, and that shows up in the take rate. So, stable coin is really just 1 more aspect of that and we feel good that we can continue to drive take rate expansion as we add to the financial stack, as we serve more complex, customers with more complex needs. Um, so what we, again, we feel good about that trajectory and good about sort of how we're performing that.

Great. Thank you. And then maybe as a related follow-up, is there any sense of what percentage of your revenues today are driven by FX conversion fees. And maybe if you could provide a sense of how this directionally has changed over time as you guys have broadened out to the product Suite. Thank you.

um, look, you know, we've talked about it in the context of pricing strategy more generally where we saw an opportunity and we were able to sort of unlock it, we saw an opportunity to more effectively monetize FX within our ecosystem based on enhancements to the products product added

Utility that we provide in FX is 1 component um of that.

We have no further questions and so I'll hand the call back to the management team for any closing remarks.

Thank you everybody, for your questions and your participation. This morning. We really had a great second quarter and and we're confident that our strategy is working. We're excited about the opportunities in front of us and the strength of our platform, the resilience of our customer base and the focus on Innovation that positions us to drive long-term sustainable growth.

I want to particularly thank our team for their Relentless commitment and our shareholders for their continued trust. We're excited about what's next and we're just getting started as we like to say. Thanks everybody.

Thank you, everyone.

This concludes our call, and you may now disconnect your lines.