Fintech company Payoneer Global (Nasdaq: PAYO) was supposed to grow by 23% this year, but it will probably have to suffice with much more modest growth, of around 13%, because of the effects of the war in Ukraine.
Payoneer released its 2021 results and its guidance for 2022 after the close in New York on Thursday, and in Friday's session its share price fell 7%, giving it a market cap of $1.35 billion.
This compares with a valuation of $3.3 billion when the company was merged into a SPAC (FTAC Ventures, co-led by banker and businessperson Betsy Cohen) in June 2021, meaning that since the merger, Payoneer's value has dropped by 60%.
Payoneer was founded in 2015 by Yuval Tal and Yaniv Chechik. Among the investors in the company before the merger were Susquehanna Growth Equity, Technology Crossover Management, Wellington Management Group, Viola Ventures, and Temasek. Before the merger, it was reported that Prime Minister Naftali Bennett had invested several hundred thousand dollars in the company when it was in its early stages. Financial institutions such as Fidelity invested in it in the context of the merger.
Fourth quarter revenue up 47%
Payoneer provides a payment platform for suppliers and service providers. Its system is connected directly to banks, and it thus saves commissions to credit card companies. In 2021, its revenue grew 37% to $473 million, of which $139 million were recorded in the fourth quarter, 47% more than in the corresponding quarter of 2020, and higher than the average analysts' estimate. Transaction costs fell from 25% of sales in the fourth quarter of 2020 to 20% in the fourth quarter of 2021, and to 21% for 2021 as a whole, so that revenue net of transaction costs grew 57% for the quarter, to $111 million, and 50% for the year, to $372 million.
Payoneer is not profitable. Its net loss on a GAAP basis widened 69% in the fourth quarter of 2021, to $18.9 million. For the full year 2021, the company's net loss widened by 43%, to $34 million. Adjusted EBITDA was positive, at $13.5 million for the quarter and $28.2 million for the year. For both periods, the figures represent a substantial improvement on 2020.
Cash flow from regular operations also grew last year, more than doubling in comparison with 2020, to $19.6 million. At the end of last year, Payoneer had $466 million cash.
"Payoneer had a very strong fourth quarter, delivering revenue and adjusted EBITDA well ahead of our expectations as we continued to drive operating leverage, strong new customer acquisition and increased adoption of higher value services such as B2B AP/AR, especially in high growth markets around the world," said Payoneer CEO Scott Galit, Chief Executive Officer of Payoneer. "We are excited about the growth potential for our platform and the positive returns we are generating from our investments as we continue to expand our broad range of services which enable businesses around the world to be successful across all digital sales channels."
As mentioned, however, the war in Ukraine has upset the company's growth projections. In its updated guidance for 2022, Payoneer assumed zero contribution from Russia, Ukraine and Belarus until the end of the year. Were it not for the war, the company's revenue guidance would have been $576-586 million, representing growth of 23%, higher than the average analysts' estimate. Transaction costs were projected at 22% of revenue, and adjusted annual EBITDA was expected to be breakeven to slightly positive.
CFO Michael Levine explained, however, that Russia and Belarus accounted for 3% of Payoneer's revenue, and together with Ukraine nearly 10% of revenue in 2021. In the ten months to the end of 2022, Payoneer had expected revenue of $46 million from these countries, and this amount has now been excluded from its guidance. In its activity in the other countries in which it operates, Payoneer sees growth of 22-24%. On the basis of the updated projections, Payoneer's guidance for total revenue in 2022 is now $530-540 million, and negative EBITDA of $25-35 million.
In the conference call with analysts after the results were released, one of the analysts asked whether the company expected money transfers on its platform in Russia, Belarus and Ukraine to continue. Galit responded that Payoneer was acting in accordance with all sanctions imposed on Russia, and that the situation was a rapidly changing one. He said that it was hard to make accurate forecasts, and that the company had decided that it should adopt a conservative approach.
Published by Globes, Israel business news - en.globes.co.il - on March 7, 2022.
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