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Payoneer Global (PAYO) is not a widely followed name, but its shares have been making a nice move in recent months. This US-based FinTech company provides digital payment services, including online money transfer and it provides customers with working capital if needed. PAYO is focused on a critical and underserved part of the payment ecosystem: SMBs, cross-border trade, B2B transactions and emerging markets.

• The stock jumped in early November following its Q3 report to a new multi-year high. It sent the stock back above $10 for first time since mid-2021. PAYO reported huge Q3 beats for both EPS and revs. Record revenue of $248.3 mln was up 19.4% yr/yr. Growth was driven by accelerating B2B growth, strong marketplace growth, continued adoption of its card product, price increases etc. PAYO is also benefitting from higher interest income, largely due to a 13% increase in customer funds held on its platform.
• In Q3, ICP (Ideal Customer Profile) growth increased for the fourth consecutive quarter, up 11% with strength in APAC, LATAM and China. ICPs are defined as customers with a Payoneer Account that have on average $500+ per month in volume. PAYO is onboarding larger customers, cross-selling products like cards, and optimizing its pricing strategy.
• ARPU, excluding interest income, increased by 20%, marking the fifth straight quarter of accelerating growth. Its B2B business delivered 57% volume growth in Q3, accelerating from 40% growth in Q2. B2B results benefited from an increased focus on larger B2B customers and high potential clients. PAYO is acquiring larger B2B customers at a good pace and is expanding average transaction sizes. B2B represented nearly a quarter of Q3 revenue, excluding interest income.
• In terms of its upcoming Q4 report, PAYO said there has been macro uncertainty, including from the US election as well as broader geopolitical tensions. That could drive some softening in consumer spending in Q4. Also, PAYO will be lapping a pretty strong holiday season in 2023 from an e-commerce perspective. However, interest rates have crept back up in December, which should benefit PAYO's interest income.

Overall, PAYO caught our attention following its robust Q3 report. Management says PAYO has now entered a meaningful second curve of profitable growth, as evidenced by its robust financial performance over the past three quarters. We also see similarities to Remitly Global (RELY), which we have profiled recently and it too recently posted nice upside as well. RELY focuses more on the consumer market while PAYO seems to focus more on SMBs, but both are performing well.