Payoneer (PAYO) Q3 2025: B2B Revenue Jumps 27% as Upmarket Shift Accelerates Margin Expansion
Payoneer’s Q3 results confirm a decisive pivot to upmarket, with larger B2B customers and expanded AP (Accounts Payable) adoption fueling sustainable margin gains and ARPU growth. Disciplined portfolio curation and strategic hedging of interest income underpin durable profitability, even as macro volatility and China corridor headwinds persist. With buybacks underway and stablecoin rails in development, Payoneer signals both defensive strength and offensive ambition into 2026.
Summary
- B2B Expansion Drives Margin Leverage: Larger, higher-value clients and product cross-sell are reshaping profitability.
- Strategic Hedging Locks in Interest Income: Multi-year interest rate protection secures core earnings amid rate uncertainty.
- Upmarket Focus Sharpens Portfolio Quality: Deliberate customer pruning and AP innovation set the stage for durable growth.
Performance Analysis
Payoneer delivered record Q3 revenue and continued its streak of mid-teens growth ex-interest, underscoring the effectiveness of its upmarket strategy. B2B revenue grew 27% year-over-year and now represents roughly 30% of ex-interest revenue, up from 20% just two years ago. This segment’s expansion is a direct result of targeting higher-complexity, multi-entity customers and tailoring product bundles to their needs.
ARPU (Average Revenue Per User) rose 15% in the quarter and is up 65% since early 2023, reflecting both pricing power and deeper product engagement. Transaction costs, a key profit lever, remained stable as a percent of ex-interest revenue despite a mix shift toward higher-yield, higher-cost products. Notably, customer funds held on the platform grew 17% for the second consecutive quarter, outpacing transaction volume growth and providing a future revenue tailwind via both interest income and AP spend monetization.
- B2B Revenue Mix Shift: B2B now comprises 30% of ex-interest revenue, up 10 points since Q1 2023.
- ARPU and Take Rate Expansion: ARPU up 15% YoY, with SMB take rate rising 12 basis points.
- Customer Funds as Strategic Asset: $7.1 billion in customer balances offer both trust validation and future monetization runway.
Operating leverage is increasingly visible, with six straight quarters of positive adjusted EBITDA ex-interest and robust cash generation supporting $45 million in share repurchases for the quarter. While net income dipped due to prior-year tax benefits, core profitability and cash flow dynamics remain strong and improving.
Executive Commentary
"We are moving from casting a wide net to prioritizing quality. We define quality as larger, more complex customers with scale, ambition, and global reach. And we are focusing on industries and countries where we have the strongest product market fit. We are exiting customers that don't meet our risk tolerance or desired economics."
John Kaplan, Chief Executive Officer
"We are unlocking leverage through growth, managing our transaction costs, and being disciplined with OPEX. We believe we have a significant opportunity to continue to increase the profitability of our business."
Bea Ordonez, Chief Financial Officer
Strategic Positioning
1. Upmarket Customer Focus and Portfolio Curation
Payoneer’s pivot to larger, multi-entity customers is reshaping its revenue and risk profile. Nearly 30% of Q3 ex-interest revenue now comes from customers processing over $250,000 monthly, with these clients growing faster and showing the highest retention and product adoption rates. The company is deliberately pruning smaller, lower-margin customers, resulting in a flat overall ICP (Independent Customer Profile) count but rising ARPU and profitability.
2. B2B and AP Ecosystem Expansion
B2B revenue growth outpaces the rest of the business, driven by complex AR/AP (Accounts Receivable/Payable) needs of global SMBs and enterprises. Over half of B2B revenue comes from high-volume ICPs, while AP product adoption is deepening—more than 50% of spend now comes from customers using three or more AP products. The workforce management acquisition and Stripe partnership are expanding both product scope and operational efficiency.
3. Multi-Year Interest Income Hedging
Interest income, historically volatile, is now partially insulated thanks to hedging on over $3.7 billion of customer funds. This locks in approximately $120 million of 2026 interest income and provides visibility through 2029, reducing near-term rate risk and supporting stable cash flows.
4. Operating Leverage and Cost Discipline
Transaction costs and OPEX are tightly managed, with transaction costs as a percent of ex-interest revenue declining despite higher-value product mix. Automation, AI, and strategic vendor negotiations are expected to further unlock margin, while targeted investments in sales and product support the upmarket push.
5. Innovation in Payment Rails and Stablecoins
Payoneer is positioning itself as a cross-rail orchestrator, piloting Citi’s on-chain money movement and preparing to offer stablecoin wallets in 2026. This innovation aims to enable clients to manage and deploy funds seamlessly across fiat and digital rails, reinforcing Payoneer’s role as a financial operating system for global commerce.
Key Considerations
The quarter underscores Payoneer’s shift from volume to value, with strategic curation of the customer base and investments in product breadth and infrastructure laying the groundwork for sustainable growth and profitability.
Key Considerations:
- Customer Mix Deliberately Upmarket: Portfolio quality improvements drive higher ARPU, retention, and profitability, but may limit headline ICP growth.
- B2B as a Growth Engine: B2B’s share of revenue and growth rate signal a lasting shift in business model and margin structure.
- Interest Income Hedging Reduces Rate Risk: Locked-in returns on customer funds provide a buffer against macro volatility.
- Checkout Growth to Moderate as Stripe Partnership Scales: Top-line growth in checkout will slow, but cost and yield improvements are expected post-migration.
- Stablecoin and Blockchain Integration: Early adoption of new rails could yield differentiation, but timing and regulatory clarity remain evolving factors.
Risks
Payoneer faces ongoing exposure to global trade volatility, especially in China-centric corridors where tariffs and shipping disruptions can impact volumes. While hedging insulates some interest income, macroeconomic shifts and foreign exchange swings still pose risk to unhedged balances. The upmarket focus, while accretive to margin, may slow customer acquisition headline growth. Regulatory developments in stablecoins and cross-border payments could alter the competitive landscape or require further investment.
Forward Outlook
For Q4 2025, Payoneer guided to:
- Marketplace volumes flat to up mid-single digits
- B2B volumes growing mid-teens
For full-year 2025, management raised guidance:
- Total revenue of $1,050–$1,070 million (up $10 million at midpoint)
- Interest income of $235 million
- Adjusted EBITDA of $270–$275 million (26% margin at midpoint)
Management highlighted:
- Continued focus on profitable growth through portfolio curation and operating leverage
- Ongoing investments in product, compliance, and technology to support upmarket expansion
Takeaways
- Upmarket Execution Is Driving Durable Margin Gains: The focus on larger, higher-value customers is transforming both revenue quality and profitability, with B2B and AP adoption setting a higher baseline for future quarters.
- Strategic Hedging and Buybacks Signal Confidence: Locking in multi-year interest income and returning capital through repurchases reflect management’s conviction in the business model’s resilience.
- Watch for Stablecoin and Checkout Evolution: The transition to new payment rails and the Stripe partnership will shape both growth trajectory and cost structure through 2026.
Conclusion
Payoneer’s Q3 marks a clear inflection toward quality over quantity, with upmarket B2B focus, disciplined cost management, and multi-year interest income hedging delivering sustainable profitability. As innovation in payment rails advances and capital returns accelerate, the company is positioned to navigate macro volatility and capture long-term growth in global commerce enablement.
Industry Read-Through
Payoneer’s results highlight a broader payments industry shift toward upmarket client focus, product cross-sell, and margin expansion over raw volume growth. The success of B2B and AP monetization signals opportunity for peers to deepen wallet share and utility with complex SMBs and enterprises. Strategic hedging of interest income, as well as early adoption of blockchain and stablecoin rails, set a template for risk management and future-proofing in a volatile macro and regulatory environment. Incumbents and fintechs alike must prioritize operating leverage, customer quality, and payment rail innovation to sustain growth and defend margins in the evolving cross-border ecosystem.