Payoneer’s turnaround story: Stock soars on back of strong earnings and raised outlook
Payoneer’s turnaround story: Stock soars on back of strong earnings and raised outlook
The international fintech player impresses with fifth quarter of growth and resilient performance in a competitive market.
Israeli fintech company Payoneer Global reported strong third-quarter financial results, leading to a 20% increase in its stock on Wall Street. The company is now valued at almost $4 billion.
Payoneer’s third-quarter performance exceeded expectations, allowing it to raise its annual forecast—significant news for investors following a prolonged period of slowdown for the company. Quarterly revenues grew by 19% to $248.3 million, marking the fifth consecutive quarter of growth. This revenue increase also contributed to a higher operating profit of $35.2 million, up from $29.5 million in the same period last year.
Net profit was especially noteworthy, reaching $41.6 million—triple that of the corresponding quarter last year and a 28% increase from the previous quarter. The difference between operating and net profit is due to a tax benefit that positively impacted the bottom line. In light of these strong results, Payoneer now projects that its annual revenue will reach nearly $1 billion, between $950 million and $960 million, up from its previous forecast of $920 million to $930 million.
Along with the updated forecast, management outlined a roadmap for investors. In the medium term, through 2026, Payoneer expects its growth rate to stabilize at 15%-20%, but it anticipates an increase to over 20% in the longer term, while maintaining current profitability levels.
Payoneer, which provides international payment and clearing solutions for small and medium-sized businesses with cross-border operations, is reaping the benefits of a recent efficiency initiative led by CEO John Caplan. Caplan took the helm about a year and a half ago after serving for nine months as co-CEO alongside the now-retired Scott Galit. As part of the leadership transition, a new CFO was appointed, and approximately 200 employees—mostly from the marketing department—were laid off as the company shifted its focus to larger, more profitable customers and launched a credit card in partnership with Mastercard. Payoneer now employs around 2,000 people, half of whom work at its development center in Israel, which was less affected by the layoffs.
In the third quarter, Payoneer’s customers processed $20 billion in payments on its platform, representing a 25% increase, with credit card activity growing even faster at 41% to reach $1.4 billion in volume.
Payoneer operates in a highly competitive, saturated market, facing competition from other Israeli fintech companies such as Rapyd and Tipalti. However, Payoneer is the most established among them, having been founded in 2005, with a wide geographical presence and a significant foothold in China, which accounts for a third of its revenue. The company’s second-largest market is Europe, while the U.S. represents about 10% of its activity. Approximately 25% of Payoneer's revenue is generated from interest on customer deposits, an area growing at a slower, single-digit rate.
Payoneer primarily appeals to companies seeking to save on currency exchange costs or those that avoid holding multiple bank accounts across different countries. This market is estimated at $3 trillion in products and a similar amount in services, such as freelancing.
The recent stock increase brings Payoneer back to its IPO valuation from its 2021 Nasdaq debut, which was achieved through a SPAC merger. Payoneer is now one of the few SPAC-issued companies to regain its IPO value, while most others have yielded negative returns for investors.
