Thank you all for joining us today for a fireside chat with Payoneer CFO, Bea Ordonez. My name is Cris Kennedy. I'm a Fintech analyst at William Blair. For a full list of research disclosures, please visit our website at williamblair.com. Payoneer does a lot of things, but at the core, it provides tools that help its customers grow. We launched coverage of Payoneer in August 2021. At that time, we penciled in about $36 million of EBITDA for this year, while the current guidance calls for about $200 million of EBITDA. So the financials have been much better than expected. Clearly, higher interest rates and float has been a key component of that, but you also have a largely new executive team, including Bea, who joined in January of this year. So we're excited for this conversation. I've got several questions, so why don't we dive into it? Let's go back to your Investor Day, which was hosted in September. During that day, you laid out your strategy around growing the number of users and growing revenue per user. Talk about the opportunities to drive each of these. I'm sure you'll get into the concept behind ideal customer profiles. So sure. Thanks for hosting us, Cris. Excited to be here with you and the team at William Blair. So just to provide really the briefest of backgrounds, as you know, Payoneer was founded roughly 18 years ago and was an early innovator in enabling SMBs from around the world to connect to marketplaces and to tap into the aggregated consumer demand that those marketplace platforms helped to unlock. So we're a market leader in that space, in that $300 billion marketplace payouts business, with an approximately 20% market share. And this has allowed us to build unique assets that enable us to unlock opportunity beyond marketplace sellers and to grow in the much larger B2B and direct-to-consumer segments. By some estimates, this represents a $6 trillion opportunity. So to your question, look, starting in 2023, we refocused the organization on adding customers who fit our ideal customer profile, on driving ARPU or Average Revenue Per User, and on reducing our cost to serve. Taking each of those elements in turn, starting first with ICP growth. Again, as a reminder, we have roughly 2 million total active customers today, including roughly 500,000 who fit our ideal customer profile. As we laid out at Investor Day, we're prioritizing those go-to-market motions that serve that customer base and prioritizing key markets and countries where we see real market opportunity and have a proven product market fit. We're also continuing to leverage those global marketplace relationships and other strategic relationships that help us drive ICP acquisition. As we laid out, those relationships, built over many years, represent a real strategic advantage to the company and a powerful acquisition tool. They include preferred and sometimes exclusive relationships with large marketplace platforms, partnerships and integrations with shopping carts, as well as relationships within the local ecosystem, which is really critical with logistic companies, advertising agencies, SaaS providers, and so on. And we've made significant changes to how our sales teams are organized to help us better capture our opportunity, to how we incent our sales organization, and to how we think about and structure our partner and referral arrangements. And so, as you noted in your question, we're really intently focused on more efficient go-to-market motions and on targeting those largest ICPs, the ones who generate more than $10,000 a month in volume on average. Why? Because our data shows that these customers use more of our products, keep higher balances, are stickier, they stay with us longer, and provide us with more opportunities to cross-sell and to drive ARPU. And look, really, we're really excited. Our strategy's working. We're steadily growing total ICPs, and we're driving high teens growth among that 10K+ segment, which accounts for more than 50% of our total revenue. In the third quarter, we grew total ICPs by 5% year-over-year and saw 17% year-over-year growth in that 10K+ segment. We also saw double-digit ICP growth in those higher take rate regions that we've talked about, so APAC, EMEA, and LATAM, including strong ICP growth in that B2B segment. So switching gears a little bit, and as we think about ARPU, again here, we're focusing on cross-sell efforts, and we're seeing increasing adoption of our full financial stack. Card usage, for example, is up 31% year-over-year. We're also growing the number of merchants who use our Checkout product. It's a direct-to-consumer offering, with more than 250 such customers doing more than 10,000 per month in GMV. And that's up from roughly 150 merchants back in September, when we talked about that metric at Investor Day. We're driving accelerating growth in our B2B business, which benefits from higher yields. And as we've noted in previous sort of conversations, we're in the early stages of rolling out a more nuanced and segment-specific pricing strategy. And we think that's going to improve monetization and also drive share of wallet gains. And then finally, look, we're aligning our product roadmap and our corporate development strategy to align to the needs of those larger customers we've talked about, who have more complex needs and who sit in those faster-growing markets and segments. Here, again, our strategy is working. We're seeing ARPU increasing across each of our customer size segments, with total ARPU up 13% year-over-year, broadly in line with overall revenue growth. We also saw sequential increases in ARPU. We increased ARPU 8% from the second quarter, from accelerating growth in high take rate regions and from growth that's accelerating in our higher-yielding business segments. So we're confident in our strategy to drive long-term ARPU growth and take rate expansion in our business. We expect ARPU uplift from all of these initiatives, even as we expect to see some cyclical headwinds as interest rates begin to decline to more normalized levels. And we're executing this plan, and really in short, as I say, we're excited about where we are. Great. Thank you for that. We'll unpack some of those drivers later in the conversation. At that event, you also introduced medium-term financial targets, which call for mid-teens revenue growth and about 25% adjusted EBITDA margins. These targets imply steady growth of non-interest revenue. Walk us through some of the drivers of that over the near term and long term. Yeah, of course. Look, as we outlined at Investor Day, over the medium term, which we defined then as the next three years, we expect revenue growth in the mid-teens. From, as we've talked about, accelerating ICP acquisition, especially in that 10K+ cohort, from improving ARPU dynamics within our business, from accelerating growth in our B2B and in our direct-to-consumer business, as well as from M&A, where we can use M&A and inorganic opportunities to extend our financial stack and our geographic penetration. And we continue to have confidence in the strategy we laid out and in those targets. At the same time, we face some cyclical headwinds as interest rates again begin to decline to more normalized levels, and obviously, the expectations as to the speed of those declines have fluctuated materially in recent months, as we all know. So as we think about those medium-term targets, we don't expect a flat 15% revenue growth rate for each of the next three years. Rather, what we expect for 2024 total revenue growth to be in the lower than that mid-teens target, with acceleration throughout the year, throughout 2024, as we lap the impact of headwinds related to certain non-volume fees, which happens by the end of Q2 of next year. As we outlined, we also expect growth over the next three years to accelerate as we execute on our strategy, increasing our ICPs and driving ARPU and capturing market share in, again, those higher-yielding and faster-growing B2B and direct-to-consumer segments. So to your question, how does that look in the near term? Our full year 2023 normalized revenue growth is expected to be roughly 10%. That's excluding interest income and excludes the impact of our exit from Russia and those headwinds we've talked about from the loss of non-volume-based fees. On an apples-to-apples basis, versus that 10% growth number in 2023, we expect 2024 revenue growth to be in the low double-digit range, accelerating from 10% this year and crucially accelerating throughout 2024, with an exit growth rate in the low to mid-teens at the end of 2024, as we fully lap the loss of those non-volume fees. We also expect, and we're factoring into those near-term targets, some near-term headwinds from weaker consumer demand and normalization of travel spend. As you saw and as you know, in 2023, year-over-year growth benefited from post-COVID surges in travel activity. Overall, we would expect aggregate volume growth in 2024 to be in the low double-digit range, with faster growth outside of China and accelerating volume growth in our B2B segment, building on those strong exit dynamics that we highlighted at Q3 and continued growth in our Checkout product. So as we think about those changing business mix dynamics, we expect strong growth in B2B and Checkout, moderating growth, obviously in float income as interest rates decline. And this business mix shift will drive a 200-300 basis point increase in our transaction cost as a percentage of revenue, and all of this is in 2024. So really, again, to summarize in terms of those near-term sort of targets, we're looking to low double, double-digit normalized growth in 2024, with accelerated revenue growth throughout 2024 and exiting at a low to mid-teens growth rate in Q4 of 2024, as we continue to penetrate the very large B2B and direct-to-consumer segments. Great. So let's move to more recent results. First, let's talk about float revenue. It's about 30% of total revenue. It's primarily driven by the $5 billion+ of customer funds that reside on your balance sheet. Guidance calls for about $220 million of float revenue this year. That implies Payoneer gets about a 4% yield on those deposits. Now, this is real money in the door. You're allocating 25% towards share buybacks. Another 25% is being reinvested back into the business. Talk about those reinvestments back into the business. How should investors track those returns on those investments? It's a great question, and as you saw this morning, and we'll talk, I'm sure, later, we did announce a larger buyback authorization. But looking really, you know, to your question on sort of internal and organic investments, we're continuing to invest in our platform and our infrastructure with really a focus on areas that can help us do a few things, right? Acquire customers and especially ICPs more efficiently, improve our customer experience to drive greater stickiness and share of wallet gains, expanding our suite of products to increase ARPU, and driving ultimately greater operating leverage through greater automation and process improvements. We're really, as we highlighted at Investor Day, we are accelerating the pace at which we release new product features and functionality, and we're focusing on those areas of our business where we expect to deliver faster growth, our B2B and our direct-to-consumer segments. This includes investing in our infrastructure so that we can deliver faster payments and greater transparency, and enhance SMB-grade features, especially in our B2B business. We're also continuing to add payment methods and shopping cart integrations within our direct-to-consumer business. We expect all of these enhancements to drive improved retention metrics, faster activation from onboard to first transaction, and increasing share of wallet dynamics within our business. You know, talking on that point, we're actively evaluating our share of wallet performance for high-value customers within our B2B business, most especially, and we think in key regions, those that we've highlighted, like LATAM, APAC, and EMEA, we have significant upside. Today, our data suggests that we capture roughly 50%-65% of share of wallet, and that represents real upside as we scale and expand our offerings. We've also talked about investments in our infrastructure to allow for segment-based pricing and bundling, and we expect that those will drive both top-line revenue uplift, something we already saw in 2023, from improved monetization, and also critically, will allow us to reduce our cost to serve. Why? Because by bundling products, we can tailor our operational processes to better align to the needs and risk profiles of the segments and product bundles that we deliver. Then finally, in terms of our investment, and to your question in our compliance infrastructure, look, as we noted at Investor Day, Payoneer is uniquely differentiated among financial service firms, enabled in being able to onboard and serve customers in more than 190 countries and territories. And ongoing investments in that compliance infrastructure really do serve to strengthen our moat, and as we extend that regulatory perimeter, can open up new markets and new cross-sell opportunities. So finally, and it's the final sort of area that we briefly touched on, ongoing investment is also going to help us unlock operating leverage from automation and machine learning that can drive more efficient and more scalable compliance and operational processes in our business. So as I said, look, we're really excited to continue this journey and to make these investments. We think that there's a lot of value that can be unlocked. Great overview. Let's spend the next rest of the time on the other 70% of revenue, non-float revenue, which grew north of 20% in 2022. It's up 4% on a reported basis in the first nine months of 2023, or as you alluded to, 10% adjusting for certain items. In the most recent quarter, you did reduce your guidance of these revenues by $10 million, which was surprising. So we have a few questions around this. Talk about the various one-time items that are impacting reported growth within the non-interest revenue, and then talk about management's confidence in the ability to accelerate this growth going forward. No, happy to do so, Cris. So look, during our Q3 earnings call, we outlined a number of exogenous factors which we expected to impact near-term guidance and specifically our Q4 results. And just to recap that, in the aftermath of the attack on Israel in early October and the ensuing conflict, we expected softer revenues from Israel. And just to frame that, revenues from Israel for us account for roughly 3% of our total. And in fact, we have seen moderately softer revenues in the near term. We also factored in the impact of the delayed implementation of a number of monetization initiatives, where we proactively held back code releases to better manage risk. We since rolled those out, as we said at that earnings call, but we factored in the impact of those to that near-term guidance. And then finally, we factored in increasing macroeconomic and geopolitical uncertainty, which we expected to impact consumer and business spending. Now that we're almost two and a half months into the quarter, volume performance has been broadly in line with the expectations that we laid out. We highlighted strong October numbers in Q3, and we've seen that continue in November. So we've seen strong volume growth, especially from the e-com sector, and that's driving strong overall volume performance in both October and now November, with volumes up 20% in October and 15% in November. Within that e-com sector, we are seeing mix shift to larger sellers. Maybe that's indicative of a more price-sensitive consumer, and this will put downward pressure on our Q4 reported take rates. In terms of some of the other drivers of our quarter-to-date performance, we've continued to see strong growth in travel-related volumes, which, as we highlighted on our Q3 call, are, generally speaking, lower yield, and we've continued to see and generate low- to mid-single-digit growth from our freelancer platforms. So at a high level, to your question on conviction, I think the key to conviction in the ongoing acceleration in top-line revenues is that accelerating growth that we're seeing in our business outside of China and in our B2B business. To be real specific on B2B volume trends month-over-month, because I think it's helpful to frame that, volumes were down roughly 7% in June of this year, down 3% in July, up 3% in August, up 5% in September, up 17% in October, and now up 17% in November. So you see the trajectory there. As we have lapped the end or we've lapped the impact of terminations of customers in 2022, and as we've importantly continued to drive strong ICP acquisition, especially in those service-oriented regions that we've talked about in the past, so LATAM, APAC, and EMEA. And we're also lapping, to an extent, the impact of headwinds from the Ukraine conflict. So overall, look, we're seeing continued execution against the priorities we laid out, growth in ICPs, as we might outline, especially in that 10K+ segment, where in Q3 we delivered 17% growth, and critically accelerating growth in our high-yielding B2B segment, where in the quarter to date, we've seen roughly 16% volume growth, with stronger growth continuing outside of China. So in short, we have a high degree of conviction. We're seeing really good fundamental trends in our business, and we're confident that we can deliver accelerating growth in our revenues ex float as we head into 2024. Great. Appreciate that. Let's talk about take rate. It is complicated because of the higher interest rate environment and float revenue, but on a reported basis, it was about 93 basis points in 2020. It's over 1.2% this year. Even adjusting for float, take rate has been increasing over the years. Part of this is driven by business mix, geography, new services, pricing. So let's break these different drivers down. Let's start first on geographies. You've talked about how LATAM, Asia Pacific, and EMEA can generate roughly a 2% take rate, while China can be 60 basis points. So talk about the key drivers of the variance between the different regions, customer mix, services, and what's the range by different geography? Sure. As you say, Cris, it's complicated. So taking a step back, I think, you know, let's start that a core part of our long-term thesis is that we're seeing, as you know, and continue to expect to see aggregate take rates to increase over the longer term from further diversification in our revenues geographically and from faster growth in those higher-yielding business lines. As we think about that aggregate take rate in our business, it's important to keep in mind that roughly 80% of our revenues are generated from active customers, who in most instances, have an account on the Payoneer platform. While the balance, the 20% of revenues, are primarily generated from the provision of services to enterprise customers, where we use our payment rails to enable payments from those enterprises to payees with whom we don't have a relationship. The take rate dynamics on those different flows are very, very different, and we talked about this in Q3. Customer take rate ex-interest income is roughly 109 basis points in the third quarter, and that's up modestly, as you know, versus the prior year quarter. Take rates on our enterprise partner flow are roughly 50 basis points, and those have compressed over time as we've reset the economics on relationships and as those services have become more commoditized. So as we think about the take rate dynamics on that customer business, that flow where customers have an account on our platform, at a regional level, we have a number of levers and dynamics in our business that we believe will drive take rate expansion. One, we expect to drive faster growth in higher take rate regions like LATAM, EMEA, and APAC. They tend to be less mature and less competitive markets. Also in general, as we've noted, we're taking a much more nuanced approach to pricing across a number of dimensions, and that includes at the corridor or geographic level. We're adjusting our pricing to align to the local market competitive dynamics, to the underlying costs, and frankly, to the risk profile of the corridors we serve. Let's move on to products and services. The largest revenue, as you alluded to, is when customers move money out of the Payoneer system. However, you've been adding a lot of new services that generate higher yields, such as cards, which can be a 3% yield, B2B, maybe a 1.5%, Checkout, 4%, working capital, 3.5%. The list goes on and on. Just talk about that strategy and kinda where we are in that journey. Yeah, for sure. Look, as you know, Cris, the other driver of take rate expansion in our business is really for us to expand the range of products and services we provide. As we laid out at Investor Day, SMBs with cross-border needs are underserved by the current ecosystem and the current financial system. And so we're continuing to build our financial stack to allow us to serve more of those needs. So as you've noticed, through our B2B business, we're expanding our services. We provide SMBs with billing and other services that allow them to manage multiple sources of AR, so multiple sources of volume into the platform. And that's important because we're able to monetize those inflows. We're earning revenues both on the inflows and on the usage. We're also providing a more complete suite of AP services to those same businesses. So again, using B2B service providers as an example, many of them use our rails today and our AP products to pay their domestic and overseas contractors and employees. And we actually see this as a real opportunity and are looking at a number of potential acquisitions and commercial arrangements in that contractor management space... where we think we can offer those services into our existing and fast-growing B2B services vertical. That would make our product more sticky, of course, and add a SaaS-based revenue stream, driving up ARPU. Our Checkout business is another example of where we've broadened the range of AR offerings, and allow us to both cross-sell into existing merchants and to capture new merchants. And here again, we're able to monetize both the inflows and the eventual usage of those funds when they exit the platform. And we're growing really nicely there. We highlighted that at Investor Day. We recently, on Cyber Monday, generated a record $3 million in GMV, which was up versus a daily run rate now of roughly $1 million, and we're seeing more than 500 active merchants using those capabilities daily, including, as I've noted, 250 merchants who process more than $10,000 in GMV monthly. And again, as your question notes, the yield on that business is much higher than our core business, roughly 4% versus roughly 90 basis points on the core business ex-interest. Our offering you also mentioned is another great example. It represents a broadening of our AP offering, and we've seen great adoption here and are looking to expand the feature set to capture more opportunity. So again, I think the key here is that we're broadening our products to serve both the AR, the cross-border AR and AP needs, and that's key to driving take rate expansion in our business and accelerating revenue growth, and we're seeing great trends there. Great. You talked about pricing. I know it's a new initiative for you, and we've been excited about this opportunity. It's essentially using pricing as a tool, you know, to influence customer behavior and ultimately drive revenue. Provide an update on some of the pricing initiatives that you have in place. For sure. We're excited, too. We think that there's a real unlock here. So we're making good progress on really a multi-phased rollout of that broader pricing strategy, one that's better aligned to the customer segments we serve and is focused on the bundling of services, improved monetization, and share of wallet gains. So we're seeing meaningful opportunities, and we're continuing to execute. Some examples, look, in Q2, we introduced annual account fees that we waive when certain volume thresholds are met, and that drove a meaningful improvement in monetization in our non-ICP segment. And to date, we haven't seen any meaningful churn. In Q3, we introduced minimum fees at the transaction level for certain volumes, and again, to date, we've seen no real impact to customer behavior. We've made adjustments to FX spreads to better align to local market dynamics. We've launched pricing specific to after-hours trading in the FX market, which again, better monetizes the valuable service that we provide there. So strategically, as you said, we're focused on customer segments, pricing. We launched, as another example, our so-called Light Account in November, in early November, and that's an offering that targets freelancers and gig workers who use our platform to receive funds from marketplaces and to withdraw those funds to a local bank. And through that offering, we've been able to both improve monetization in certain corridors, where for that specific customer segment, our pricing was not aligned to local competitive dynamics, and we've also been able to bundle our products in such a way that we can reduce our cost to serve. Final example that I'd give you... That I'll give you, and I think it's key to sort of the share of wallet perspective here, is that we've seen early success with bundling and pricing models that are designed to drive additional AR, additional volume into our platform. So we've bundled, as an example, balance reward-type offerings with pricing strategies related to volume inflows, and we found through a number of pilots that we've seen both volumes into the platform and balances held increase. So all of the above, I think, is really critical to that long-term ARPU growth strategy. Great. Let's talk about intra-network flows. Payoneer disclosed there's about $9 billion of intra-network flows that are not being monetized today. Talk about that strategy and what's the opportunity there. Yeah, 100%. Look, as we said at Investor Day, over the trailing 12 months, more than $9 billion in intra-network flows, so flows of money between customers who have accounts on the platform. And it really does demonstrate the power of the network that we've built over time. Today, we don't monetize that flow at all. So we've been, over the past several months, testing fees for that for the cross-border flow that is in-network. That accounts for close to half of that $9 billion, and we're testing different pricing constructs. And so far, we haven't seen changes in customer behavior. So we're going to continue to test to really think about what the right way of unlocking that value is, the right way of serving customers with those intra-network, cross-border needs, and we view this as a real opportunity. Great. Now, it's been over a month since you last reported third quarter results. You've mentioned some intra-quarter trends, which we greatly appreciate, but just talk about some of the acceleration of the business that you referred to on the last quarter earnings call, and how have those trends gone in November? Of course. So look, as we noted, we're seeing strong and accelerating October and November volume performance. Strong performance from the e-com sector, as we've discussed, and strong growth in our B2B business as we lap the impact of those terminations we've talked about and continue to drive acquisitions in key service-oriented regions. So to provide specifics, quarter to date through November, volumes are up roughly 18% versus the prior year period. While within our B2B business, volumes have grown 16% year-over-year, again, through November. As we've noted, some of this volume growth has been coming from those lower take rate areas of our business like e-com, and we're seeing continued price competition vis-a-vis those larger e-com sellers who operate, as you know, Cris, in highly mature, highly competitive markets and face, frankly, compressing margins in their own business in that marketplace-based business. So given those dynamics in the current quarter, we expect take rate, excluding interest income, to be roughly 80 basis points. That's down a couple of basis points versus the prior year quarter, and it's really a result of stronger relative e-com performance in this quarter to date versus the prior year period. And as such, we expect to close out the fourth quarter at or around the lower end of our core revenue guidance, while strong growth in customer balances and therefore stronger performance from interest income is gonna drive a modest top line beat versus our guidance. As we've noted, look, in the end, volume and revenue growth overall are accelerating through the quarter, and we do expect to exit the quarter with year-over-year normalized revenue growth in that mid-teens range that we outlined. Great. Lastly, let's touch on capital allocation. Today, you announced a $250 million share repurchase program. You have a great cash balance. The balance sheet is very strong. What's your priorities and use of cash going forward? Sure. As we outlined at Investor Day, we have a really strong balance sheet. We generate significant free cash flow. And our view historically has been, and remains, that our capital can generate better long-term returns for our shareholders if we deploy it to accelerate top line growth. And to that end, as we've discussed today, we've made and we're continuing to make organic investments in our go-to-market infrastructure, in our platform, and in scaling our compliance infrastructure and broadening that suite of AR and AP products. We've also noted that we expect M&A to be a critical part of our strategy, and we're actively evaluating opportunities. We've announced two acquisitions so far this year, and we're actively evaluating other opportunities, including, as we discussed here today, in adjacent SaaS-based segments that we can sell into our fast-growing B2B services vertical. At the same time, as you know, we announced that buyback authorization today. We see relative valuation opportunities in our stock. We announced this morning that our board approved a new $250 million share. We purchased authorization to run over the next two years or so, and this represents roughly 15% of our current market cap. Of course, that demonstrates our conviction in that long-term execution strategy and our confidence that we can deliver durable, profitable growth and long-term value for shareholders. So look, in short, we're excited about the opportunity for Payoneer. We appreciate the chance to talk to you and the team here today, and thanks again for your time. Great! Well, we appreciate your time. Thank you for joining us today, Bea and everyone online. Have a great holiday season, and we'll continue the conversation. Thank you.