Payoneer Global Inc. Price & Performance (PAYO)

Before we begin, I'd like to remind you that today's call may contain forward looking statements. Which are subject to risks and uncertainties. More information, please refer to our filings with the SEC are available in the Investor Relations section of payoneer.com. Actual results may differ materially from any forward looking statements we made today. These forward looking statements speak only as of today, and the company does not assume any obligation or intend to update them, except as required by law. In addition, 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 GAAP measure can be found in today's earnings press release [indiscernible] is available on our website. Additionally, please note we have posted an earnings presentation supplement alongside our earnings press release on investor.payoneer.com. 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. Pioneer had a standout Q4 and a record breaking 2024. We hit new highs in volume, revenue and profitability because we are executing with focus and precision, Our strategy to build a global financial stack for SMBs is working.

Our mission is clear, to connect the world's underserved businesses to a rising global economy. While delivering sustainable profitable growth and shareholder value. At our Investor Day in September 2023, we laid out a simple plan become the leading payments and financial services provider to cross border SMBs. We're doing exactly that leveraging Pioneer's key strengths our strong team broad ecosystem, regulatory infrastructure, trusted brand and a diverse [indiscernible] Customer base. Traditional banks underserve SMBs operating across borders, and we Don't. 2024 was a breakthrough year for Panair. We sharpened our ICP strategy, prioritized our largest customers in AP products, and accelerated both growth and profitability. The results they speak for themselves. Revenue growth excluding interest income accelerated from 5% in 2023 to 20% in 2024, B2B volume grew 42% year over year, far ahead of our initial target of 25% and significantly outpacing our 2023 performance. ARPU excluding interest income, grew 21% year over year marking six consecutive quarters of acceleration. Customer adoption of three or more AP products reached 53% of our total usage in Q4 of twenty twenty four. A 30% increase over Q1 of twenty twenty two. Card usage grew 36% year over year. With broad based growth across all regions. 10 ks plus ICPs, grew volumes 21% year over year.

Key product launches included the Light account, ERP integration and the Green Channel portal in China. To global demand. We expanded our financial stack with the acquisition of Squad positioning us to capture share in global workforce management. We were disciplined about our costs, For example, Pioneer headcount has been largely flat for two years. We delivered three consecutive quarters of positive adjusted EBITDA excluding interest income. We're scaling efficiently and profitably. Our execution is strong, and we've exceeded our September 2023 Investor Day targets. These results demonstrate our scalable increasingly profitable model We are in the early stages of a multiyear value creation journey. The trade, technology, financial landscape is shifting and we are in the prime position to capitalize on it. Here's where we're focused. We intend to deliver sustained growth and profitability further refining our ICP strategy, enhancing acquisition efficiency, increasing cross sell, improving retention, and optimizing pricing. We will continue to implement our platform modernization and We will build buy and partner with an ecosystem of products simplifying our UX, and advancing our regulatory infrastructure. All to provide the financial stack our customers need. We plan to close our acquisition in China We shared a few weeks ago that we have secured the regulatory approvals required to proceed with our acquisition of a licensed payment service provider and are working towards closing in the first half of this year.

We will continue to review and optimize capital allocation. We are balancing growth investments with returns to shareholders, to drive long term [indiscernible] As we look ahead to our twentieth anniversary this April, we are committed to unlocking the multi trillion We are committed to unlocking the multi trillion dollar cross border SMB payments opportunity. The Pioneer brand is strong. Recognized and trusted With our strong team, clear strategy, consistent results, and improving profitability We are taking share in cross border B2B payments and creating value With that, I'll turn it over to Bea, to walk you through the financial details Thank you, John, and thank you to everyone for joining us. Payoneer had a record breaking 2024. We delivered volume growth of 21%, growth in revenue excluding interest income of 20%, and generated $271,000,000 of adjusted EBITDA. Representing a 28% adjusted EBITDA margin for the year. These results are a testament to the unique value proposition we offer to our customers, SMBs and entrepreneurs looking to access the opportunities of an increasingly digital global economy. Now turning to our fourth quarter results. We delivered another quarter of record revenue at $262,000,000 up 17%. Gross was driven by robust performance in our marketplace business, continued strength in our B2B franchise, increased adopt as well as the impact of our pricing and offering strategy.

Volume growth of 18% reflected broad based outperformance across our ecosystem. SMB volumes grew 18% year over year. Volume from SMBs that sell on marketplaces was up 14%. We grew volumes from SMBs that sell B2B by 37% Merchant services volume continued to grow by more than 100%. Year over year.

Our Q4 take rate of 116 basis points decreased two basis points on a year over year basis and six basis points sequentially, primarily driven by lower [indiscernible] On a year over year basis, we were able to drive expansion in our SMB customer take rate reflecting the incremental value we are delivering to our customers. Our SMB customer take rate was up nine basis points year over year and flat sequentially despite a seasonal mix shift towards larger e com sellers. Driven by continued growth in our B2B franchise the ongoing impact of our various pricing initiatives, continued adoption of our high value products especially our card product, as well as the impact of our work Force Management acquisition. Customer funds held by Payoneer increased 9% year over year to 7,000,000,000 Customers value our multi currency capabilities, and the ability to hold balances in stable currencies is a core value proposition. [indiscernible] We continue to steadily grow customer funds and generated interest income of $61,000,000 in Q4 even as average interest rates declined year over year. As described on our third quarter call, in 2024, we implemented a number of actions to reduce our sensitivity to short term interest rate fluctuations.

As of December 31, we had approximately $1,800,000,000 of asset assets underlying customer funds invested in a portfolio of U. S. Treasury securities and term based deposits. The weighted average yield on this portfolio is approximately 4.4%, with a weighted average duration of approximately two years. [indiscernible] We have purchased interest rate derivatives on approximately €1,900,000,000 of funds underlying our customer balances, providing a floor against interest rate declines below 3%. Approximately 50% of the highly liquid and thus subject to floating rates predominantly to short term interest rates in The U. S. We will continue to actively manage our hedging programs.

Total operating expenses of $233,000,000 increased 17%, primarily driven by labor related expenses, higher transaction costs consultancy fees and the impact of seasonal cash back incentive programs designed to drive the dock Total operating expenses in included approximately $70,000,000 of one time and seasonal items. Including adjustments to full year bonus and benefits accruals, in line with our strong 2024 performance one time investments in certain platform and infrastructure initiatives, and a donation to the Payoneer Foundation among other items. Transaction costs of $43,000,000 increased 19%, broadly in line with volume growth of 18%. Even as we saw mix shift into higher transaction cost products and business lines. Including our B2B merchant services and our card product. Transaction costs represented 60.5% of revenue, an increase of 30 basis points from the prior year period. Sales and marketing expense was up $7,000,000 or 14% year over year, driven by higher labor related costs, including from our workforce management acquisition, increased spend on card and incentives, especially in China and higher partner commissions. Other operating expenses were up $3,000,000 or 9%, driven by higher IT and communication costs, and higher consulting fees. R and D expense increased $5,000,000 or 15% reflecting higher labor related costs from higher headcount, which increased approximately 25% year over year including from our workforce management acquisition, as well as higher bonus and employee benefit accruals in line with our 2024 performance.

G and A expense increased $6,000,000 or 23%, again primarily due to higher bonus accruals, as well as certain non recurring consulting fees and the impact of our donation to the Payoneer Foundation. Adjusted EBITDA was $63,000,000 compared to $52,000,000 in the prior year period. This represents a 24% adjusted EBITDA margin in the quarter and is the third consecutive quarter of positive adjusted EBITDA excluding interest income. For the full year, we achieved $14,000,000 of positive adjusted EBITDA excluding interest income versus an adjusted EBITDA loss excluding interest income of $25,000,000 in 2023. Net income was $18,000,000 compared to $27,000,000 in the fourth quarter of last year, Q4 basic and diluted earnings per share was $0.05 We ended the quarter with cash and cash equivalents of $490,000,000. During the quarter, we purchased approximately $18,000,000 worth of shares, and for 2024, we repurchased a total of $137,000,000 worth of shares at a weighted average price of approximately $5.50 and exceeded our target of doubling our share repurchase As discussed on our third quarter call, during 2024, we also repurchased and redeemed all $25,000,000 out outstanding public warrants for $21,000,000 Turning now to our 2025 guidance. For full year 2025, we expect revenues to be between $1.10 $40,000,000 and $1,050,000,000 This includes $215,000,000 of interest income and $825,000,000 to $835,000,000 of revenue excluding interest income.

The midpoint of our guidance implies 15% growth in revenue excluding interest income, in line with medium term targets we shared at our Investor Day in late twenty twenty three. We expect revenue excluding interest income to grow at a fast rate than volume, in line with our stated strategy to expand ARPU from faster growth in our higher yielding B2B business and ongoing penetration of high yield products like our card offering as well as from the continued rollout of our pricing and offering strategy. We expect to generate $215,000,000 of interest income for the year based on probability weighted market interest rate expectations, our expectations for balanced growth and the impact of our investment program. We expect transaction costs as a percentage of revenue to be approximately 18%, up from 15.6% in 2024, from the impact of declining interest rates and in line with ongoing growth in our higher cost B2B, [indiscernible] and card offerings. We expect 2025 adjusted OpEx less transaction costs of approximately $595,000,000 which represents 7% growth over 2024. Adjusted OpEx represents our guidance for revenue less adjusted EBITDA. We expect adjusted EBITDA to be between dollars representing an adjusted EBITDA margin of approximately 25% at the midpoint, again, in line with the medium term targets we set at our twenty twenty three Investor Day.

When excluding interest income, our guidance implies adjusted EBITDA of between $40,000,000 and $50,000,000 over three times higher than in 2024, and showing increasing profitability in our core business. Our 2024 results reflect strong momentum across our business and demonstrate the size of our We delivered meaningful growth in our B2B business demonstrating strong product market fit with service oriented SMBs in emerging markets. We grew ICPs and the volume from our larger ICPs delivered increased ARPU and generated positive adjusted EBITDA excluding interest income. We remain committed to driving innovation and delivering long term value for our customers our shareholders and our employees. 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. Our first question comes from Sanjay Sakhrani with KBW. Please go ahead.

Thank you. Good morning.

Was wondering if we just think about the macro assumptions that underpin your your views. Could you just talk about what you factored in and sort of what sort of the upside downside cases are inside the guide?

Hey, Sanjay. It's Bea. Nice to hear from you. So look, in terms of our guidance philosophy, there's been no change there. Our guidance reflects how we expect the business to perform. The environment in which we operate, models and assumptions that are anchored to those key metrics that we're seeing in our business, as well as how we expect marketplaces and other part of the ecosystem to perform. So we're not looking to be conservative. We feel our guidance is pragmatic, appropriate, consistent. We talked in our prepared remarks around the assumptions there. The main assumptions really are around marketplace volume and B2B volume. As well as take rate dynamics, which we're happy to dive into. But on that marketplace volume, we assume in our guidance that those growth rates normalize to high single digits from the mid teens that we saw in 2024 And we assume that B2B growth continues to come in at about 25%. That stepped down off of the record year in 2024. But is consistent with the dynamics we're seeing in our business right now. And so look, taken together in the aggregate, that all points to volume growth for our SMB business and in general in that low double digit range, And as we said again in our prepared remarks, we expect revenue to grow faster than volume based on take rate dynamics that we are seeing within our business, a modest take rate expansion And that all gets us to that revenue guide, right?

We're coming off of a record year, as we've said. We have really good momentum. We're hitting those medium term targets. That we set in late twenty twenty three, and we feel confident about our guide with all of the assumptions baked in.

Thank you. Thank you, B. I mean, I guess maybe just a quick follow-up on that. Just there's a lot of chatter around tariffs, China, etcetera, on that macro. Point? Anything that you guys have factored in or contemplating as we think about the discussions of tariffs around the world. And then specific, I'll take you up on the take rate, pricing and our is obviously a key strategic point that you guys outlined just as we move forward and we think about ARPU optimization, where are the opportunities and so what inning are we in and just maybe you could talk about the Happy to do that. So look, maybe I'll take the take rate question first.

Look, I think we feel really good about the fact that we demonstrated the ability to grow take rate in our SMB business ex interest income, right? That was something that we tracked and talked about talked about all through 2024. We grew at four base basis points in Q1, one basis point in Q2, two in Q3 and in Q4, we delivered nine basis points of take rate where usually we see that sequential decline. So we're seeing really nice take rate expansion, which to your question is very aligned with our overall sort of growth strategy. And as we look to that guidance in 2025, we expect our SMB customer take rate to continue to modestly expand. That's what we're factoring in. Modessly for us means in that one, two, three basis point range. And the drivers are the drivers that we've been consistently talking through all along. One, we're going to continue to drive accelerated growth in our B2B when compared to our core business, our marketplace business. And reminding that the take rate on that business is roughly 1.5x that marketplace business. We're going to continue to cross sell our higher value products, things like card and checkout, We delivered record performance in our card product, up 36% record spend on our cards, We're going to continue to deliver on the financial stack strategy that we talked about.

So our workforce management acquisition, continuing to sell our checkout capabilities, And then finally, pricing. This has been as you know Sanjay, a journey for us. We're continuing to iterate there. And we see continued value that we're going to unlock with that. So overall, all of those and I could go on, all of those factors give us a high degree of conviction in our strategy overall. And our continued ability to expand take rate as we move through 2025.

I'll take the tariffs as you threw that one in there as well. So look, we talked a little bit about the guidance philosophy and all of the assumptions baked in. I'm not going to share here an explicit assumption modeled in our guidance for trade policy. There's obviously a very broad range of potential outcomes. Obviously, the situation is evolving and evolving quite quickly. I think what we would say is consistent with what we've said historically Our business is really diversified, right? It's diversified across geographies, across trade routes, across goods and services, Look, just as an example, and we've talked about it before, 80% of our B2B business is services. Right? So again, very broad range of outcomes, but our business has proven itself to be resilient. In the face of similar trade policy sort of challenges historically. So we're monitoring closely over the medium to longer term. I think it actually creates an opportunity In the near term, we'll continue to monitor and in most moderate tariff scenarios, which I think is what most observers expect at this point. We don't expect any material impact to our business. While we, of course, acknowledge uncertainty. So that's really how we're thinking about that over the long term.

Thank you. Our next question comes from Nate Spence with Deutsche Bank. Hi, thanks for the question. Wanted to ask about revenue ex interest income. Obviously, exited the year at a really healthy 26% year over year clip and I know you're expecting a bit of a step down in 25% to 15% So if you could talk about some of the drivers of that decel. I know you just talked about marketplace and B2B volumes, but anything [indiscernible] Should it be a steady decel or any sort of step function Yes. Thanks for the question. So look, yes, we're calling at the midpoint for 15% year over year core revenue guidance. That is definitely a step down from '24, which was again a record year for us, right? And we called out throughout 2024, as you know, that a lot of the out performance came from two factors, right? Out than we or frankly anybody anticipated, right? So as I think back to this time a year ago, we baked in high single digit growth in our marketplace business. There was a lot of talk of a recession in 2024 and marketplaces ended up delivering for us 15% give or take.

Mid teens volume growth that drove some of that uplift. While our B2B business, look, we were super happy with how quickly we were able to accelerate growth. As we look into 2025, we're expecting a normalization, right, in those e com marketplace volume behaviors back to that high single digit That's very consistent, frankly, with what we're seeing in the tail end of 2024. And what we're beginning to see in January and February. We're very comfortable at that level. That to me is sort of a reversion to what you would expect longer term trend should be from a growth perspective. And we are confident that we're going to deliver 25% volume growth in our B2B business. So again, a little bit of step down, but with tougher comps and a growing baseline, I think to be expected. So you take those two things combined, again, low double digit volume growth overall, I think that that's a good measure of sort of where we can expect to be for 2025. Accelerated versus that level revenue growth, meaning higher revenue growth versus that volume from all the take rates implications that we just talked about. And in terms of quarterly cadence, look, we're not assuming some sort of big ramp up through the back half of the year.

Mid teens in Q1 and Q2 stepping up modestly. One or two percentage points give or take. It's not we don't need a massive acceleration or ramp up to hit this target. We're very comfortable with how the business is operating mid teens in the first couple of quarters and accelerating modestly and seasonally in the back half. Is how you should think about it.

That's really great detail and I think used the word pragmatic to describe the guide earlier. So it's good to hear that. So for the follow-up, it was nice to see a return to some sequential growth in that cohort of ICPs doing greater than $10,000 per month.

And I know you've been focused more on growing volume per ICP, I think it would be great to hear how you're thinking about about the pace of ICP ads in twenty twenty five, maybe across both the size buckets and by region? And then similarly, how you're thinking about growing that volume per ICP capturing more share of wallet, etcetera? That's a great question and I'll take that one. But first some context, if you think about where the firm was, 2023 we delivered $585,000,000 of revenue on a normalized basis taking out some one time fees, the core business lost approximately $20,000,000 We're guiding for '25 at $830,000,000 of revenue and about $40,000,000 of core EBITDA. When you think about where we were in September of twenty twenty three, coming off 5% growth, delivering the 2024 twenty percent growth think speaks to the extraordinary execution of our team, and the macro factors that propelled the business forward. And our plan for 2025 is to continue to execute and drive the controllable factors of our business and benefit from macro dynamics, as they present tailwinds for us.

When you think about the ICP framework specifically, we introduced ICPs because it was important to clarify internally and frankly for the market our largest customers contribute the most amount of our volume, the most amount of our revenue, need the full financial stack and are asking Payoneer to solve the multi currency multi geography challenges that SMBs face So our formula for growth is ICP times ARPU minus cost to serve. We're obviously unlocking leverage in 2025. With the ForEx growth in our core adjusted EBITDA. We're driving ARPU growth With our large customers and we're acquiring larger and larger ICPs. We have yet to disclose net revenue retention numbers for cohorts of our customers. But if you look at the 10 ks plus ICPs, the largest of those of that segment, of that group, have the strongest logo, volume and revenue retention numbers. So we are allocating our resources to drive profitable growth not ICP metrics.

And that's I think very important for folks to understand that the levers we turn are driving that. So when you think about the components of ARPU growth, be mention some of them. 36% growth in our card products, exceptional results. The strength of our checkout product over 100% growth there. Our B2B growth at 42% when we guided in 2023, we were coming off single digit, low single digit sort of growth and we guided at 25% and our team executed the hell out of it and knocked the cover off the ball and we drove that business and we have the kind of confidence that a growth company at over $1,000,000,000 of revenue has to deliver extraordinary results and profitability So you will see through 2025 us acquire more high value larger ICPs because Adam Cohen and our go to market organizations having extraordinary success doing it. Orin Ringler and our product organization, our platform team is making it easier for us to onboard customers at scale so that we don't need to add incremental headcount or costs to drive the scale of our platform. So on every measure when we look at the business and the arc of the business we're building, we have a strong team exceptional opportunity given the competitive landscape, the proven ability to add ICPs and monetize them.

So across the board, we feel great about where we are will note in the supplement we shared, there's I think it's on Slide I don't know, 10 or so, we share ICPs around the world. And you see the growth in ICPs in our highest K- Great regions. Continues to outpace the rest of the firm.

So we are all of our resources are lined up to drive profitable growth and shareholder value.

John, we appreciate the detailed answers. Thanks. [indiscernible] Your next question comes from Will Nantz with Goldman Sachs. Hey, guys. Good morning. Congrats on finishing the year strong. I wanted to maybe talk through the B2B dynamics I guess both that you guys are seeing in the first quarter and expecting for the full year, I totally hear you the outlook is for the 25%. You guys have been pretty clear on that since the Investor Day that that is the long term expectation. Can you talk about I mean given everything that you have done on the go to market side and I know you guys are proud of the efficiencies and the focus you guys have been able to generate there. What would it take to generate further outperformance over and above that 25% level Do we have seen level of large numbers year? Or do you think there are opportunities to continue that out performance as we go through 2025?

Hey, Will. Great question. Thank you for raising it. Yes, we have we exceeded $10,000,000,000 of B2B volume in 2024. We're is an extraordinary achievement by our team. We're very proud of the momentum and traction that we had And when you think about the percentage of our volume growth coming from B2B, it continues grow. Which is I think very important for the long term for shareholders to consider long term. Because the full financial stack, 100% of the AR, 100% of the AP of our customers makes us a stronger more valuable business for everyone. The B2B opportunity is enormous. It's a large market. Our acquisition in that market has been exceptionally strong. We only know one pace, which is full pace. Our team is focused on acquiring customers serving those customers. So we seek to outperform because that's we're always seeking to out outperform. And our business is so diversified that when you think about the regions of the globe, whether it's in In APAC, Latin America, China or across Europe.

You can see that customers need the multi currency solution that we provide. So I think when we when I look at the growth by region, I'll just share some of the growth by region stats, we saw a lot of our growth in Latin America 80% of it Coming from B2B, in EMEA, 88% and APAC, 37%. So the power of our B2B franchise is penetrating the markets where we do business. And we all know that SMBs are not well served particularly the SMBs that are multi entity are not well served by their local domestic banks and we are by competing with them providing a much superior solution. So I believe there is upside for us to capture And when we look at the financial stack, and the acquisition of our workforce management product, there is some upside potential as we see the cross sell and integration of that of that platform.

Got it. Awesome. That's super helpful. And then just maybe if you could speak a little bit to the process around the acquisition and Mainland China, Could you just give an update or any additional thoughts versus what you shared previously on the opportunities there? I know there's been a lot of share gains even without that acquisition.

In the Chinese corridor.

Just wondering how you view, I guess, one, the competitive dynamic of the Chinese corridor and what sort of unlock that that deal represents? Yes.

I mean, we announced that deal and we shared a few weeks ago or a week ago that we've received all regulatory approvals and now can move towards closing in the first half. The advantages that we anticipate from that transaction are very straightforward.

We have first we're regulated and trusted by governments around the globe and that's essential to provide a global solution for global [indiscernible] We will be one of a very small handful of NASDAQ listed firms with this privilege and we respect it. I'll be in China in a couple of weeks, looking forward to seeing our customers there and working with our customers. First and foremost, it's an opportunity to continue to take share in the China market because our solutions are superior to the local providers, our global network, our green channel initiatives, which enable help us help our customers expand their distributions and reach in regions around the globe and it specifically to the acquisition, there are opportunities for us to explore capabilities to provide outbound money flows, there are opportunities for us to provide on the ground operations with technology and R and D, which will accelerate our development and product roadmap serving those customers. Will certainly improve cost structure. And if you think, Will, you and I talked about this in the past, Yes. And just one note, we've talked about in the past. We continue to prioritize Expanding our regulatory footprint, because that provides an exceptional moat around the Payoneer franchise for our shareholders. [indiscernible] You bet. [indiscernible] Our next question comes from Chris Kennedy with William Blair.

Please go ahead.

Good morning. Thanks for taking the questions. It's good to see the continued progress in core EBITDA. Is there any way to think about the long term margin for that metric?

I think guidance calls for about 5% in 2025 Hey, Chris. Thanks for the question. Hope all is well. Look, we're really proud of the EBITDA increasing profitability in that core business as you said. Look, again, to provide some context as John did, in 2023, the core business lost $25,000,000 And even as interest rates now decline, as we look at that core profitability for 2025, we're going to deliver at the midpoint in excess of $40,000,000 of adjusted EBITDA, right? That's 3x what we did last year. So we and I've made this observation in the past Even as we have mix shifted our business into more geographies, added regulatory and licensed infrastructure, which adds complexity and yes, adds to our moat, added more complicated products and expanded our moat. Even as we've done all of those things, we've been able to do it more efficiently to serve our customers driven we've driven leverage in the business, right, and delivered improving profitability. We think we can continue to do that. We set a target back in 2023 of 25% adjusted EBITDA, and we were agnostic to how interest rates would move, right? So that's 25% adjusted EBITDA inclusive, even as we face some of those headwinds.

We're going to hit that We feel confident that we will hit that in 2025 and we think that that is a good long term target for us as well. And there's upside there, right? Look, as we look to our platform [indiscernible] can come from AI and some of the innovation that we're driving in our platform related to AI capabilities in our customer journey function and in other areas. We think over time we can unlock further leverage. For now 25%, we're very comfortable with that target and was hitting that target in '25 Great.

Thanks for that.

And John, you alluded to it earlier. And I think last quarter, you talked about those ICPs generating over 250,000 of monthly volume. Can you just give any additional color on that cohort and what that looks like?

Yes, they're freaking awesome. And they're happy with our product. And it's exciting to serve them because it when you meet with them, what you see is these are real scale businesses underserved by the traditional bank system. And so as I mentioned, we see great net revenue retention with them, strong logo retention with them, and our go to market team is being very effective at identifying high value customers. So whether it's marketing services companies in Dubai, or business process outsourcers, in The Philippines, or iPhone case exporters and traders coming out of China, it's pretty exciting to see the Payoneer global brand strong regulatory framework serving an upmarket cohort of customers very effectively.

Got it. Thanks for taking the questions.

Our next question comes from Trevor Williams with Jefferies. Please go ahead. Hi, this is Spencer James on for Trevor Williams.

You for taking the question.

I wanted to ask maybe a follow-up to Sanjay's earlier question on tariff risk. To Pioneer Payoneer maybe put a finer point specifically around efforts to close the de minimis loophole for goods shipped to The U. S. Was wondering if you could maybe comment on how you expect the impact of this rule to affect different sellers across your base for it to go into effect?

Look, I mean, that's a super specific question. And I think we can say very confidently that the de minimis rule is not impactful for us, less than 3% of our volume. Is our estimate, right? It's not always straightforward to see But 3% of our volume directionally is coming in under that under that de minimis exception. And so we're very comfortable that we of our China volume, just to be clear, is coming in under that exception. So we're very comfortable that we're not significantly impacted there.

I think the more important point, look, we could sort of iterate through and speculate through many, many sort of policy changes and directions. The important point is really the one that I'll reiterate. In terms of the question that Sanjay asked is that our business is diversified across geographies, goods, services, trade routes, and has proven itself to be resilient, right? And we continue to see that Our sellers are resilient. We have a global network that enables 7,000 trade routes. And so while we're monitoring it closely and there's obviously uncertainty, we feel good that our business is resilient that our customers are resilient, and that we're very comfortable with our overall directionality and the momentum that we have in the business. Ultimately, we're building for long term value creation. [indiscernible] And as a quick follow-up, one quick modeling question Could you add any color on the cadence of adjusted EBITDA throughout the year by quarter?

Yes, for sure. So look, we talked a little bit about the core revenue cadence. In that mid teens and just stepping up very modest [indiscernible] Transaction costs we called out in our guidance we expect them to be at 18% of total revenue, again, stepping up over the course of the year. And again, from mix shift and declining interest rates in the back half of the year, so direct more or less aligned with that Q4 exit rate and stepping up to around that 18% or 19%, that how we see transaction costs behaving over the course of the year. Adjusted OpEx relatively flat for those first February or so, stepping up modestly [indiscernible] But more or less, if you assume a pretty consistent 24%, 25%, adjusted EBITDA margin overall over the course of the four quarters, you're very much aligned with the expectations business.

The next question comes from Daniel Krebs with Wolfe Research. Please go ahead.

Thank you. I wanted to ask again on ICP segmentation. Could you maybe discuss what you view as the max potential size for a customer [indiscernible] the increased focus on the larger ICP, the 250,000 cohort, At what point does a customer become potentially too large in terms of the product market fit Thank you. Hey, Daniel, great question. We actually haven't seen it. We have some very large ICPs in the book that have been loyal multiyear Payoneer customers. So we actually haven't topped out We do have efficiency that's focused and service level that's focused. And unit economic focus. So where we are is continuing to build a platform that enables serving global cross border SMBs in a self serve way that full financial stack as well as the high service on the ground acquisition of ICPs and CSM support of those ICPs, so that we're able to capture all of the cross border volumes that we seek. To add some context, if you think about it, we're building a global financial stack that our customers don't have access to without us.

Right? There isn't a cross border multi currency multi entity, high growth emerging markets, SMB, B2B payments focused platform other than Payoneer. And so when we look at that the complex needs those customers have, and the attach rates of our AP products being the highest with our largest customers, we see real opportunity to continue to serve the fat middle of our customer base, and the high value high volume customers at the top. That's great. Thank you. If I could follow-up on [indiscernible] could you perhaps give us an update on the size of inter network flows in 2024 and any update on the monetization efforts there? Thank you.

Yes, thanks for the question. Look, I'll talk a little more broadly really around our price and offering strategy because I think it's a really important thing for us to sort of talk through. So look, we've talked in the past about our ongoing strategy to really move from a one size fits all approach to pricing to one that's segmented and customer centric. And is anchored not just to pricing, right, but to sort of the bundling and offering strategy goes along with it. So we've spent a lot of time starting really in 2023 defining our customer personas, understanding their use cases and aligning our product bundling and price to those personas, right, very much a shift away from that one size fits all, you withdraw cash in, geography A, you pay, why? So thinking through that journey in 2023, we executed on low hanging fruit largely to improve monetization of non ICPs and we generated $25,000,000 in uplift on a $600,000,000 base. In 2024, we continued to invest in that infrastructure, We continue to roll out our light account. We continued FX optimization measures. We developed and refined our views on a pro and premium offering, for those larger SMBs that John was just talking about.

And yes, we did research on use case cases and testing of intranetwork fees, And in 2024, in addition to the uplift we had from the prior year, we generated about $30,000,000 of uplift on a $721,000,000 we're continuing with that differentiated offering and pricing approach with that segment based lite pro premium approach broader functionality for larger customers, annual fees for some of those larger customers, upgrade fees for some of those products and services, continuing to optimize our FX continues to be an opportunity for us. Rolling out those inter network prices and testing those fees or continuing to roll out those fees And we're expecting and have included in our guidance roughly $30,000,000 in uplift from those initiatives. So again, it's been a multi quarter journey for us. It's a meaningful long term it a whole bunch of things, right, to drive more engagement and cross sell. In how we think about how we bundle, to improve monetization, To add SaaS type or recurring type revenues in terms of those account fees as we sort of flux into those premium and pro products. And to overall reduce the complexity and cost to serve, by really making the offerings that we make available to our customers fit for purpose and fit for size.

So intra network is a big part of that, right, about $11,500,000,000 directionally in 2024 in intra network flows. We think that's a really powerful proof point of the two sided network that we've created and of the value that it has to companies and to individuals and others that are operating in that ecosystem. We've made strides to monetize that and we're continuing to do that as part of that broader pricing and offering strategy.

Thank you. We have no further questions. And so I'll hand the call back to the management team for any closing remarks. Thanks everybody for joining us today.

We have had an extraordinary 2024 a standout Q4 and we're confident in our team, the size of our opportunity the power of our brand, the moat around the firm and the response from our customers. So probably the final thing I want to say is thank you to our shareholders for your support and to our team for their incredible hard work.

Thank you, everyone, for joining us today. This concludes our call and you may now disconnect your lines.