Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Payoneer’s fourth quarter 2021 earnings conference call. At this time, all lines have been placed on mute to prevent any background noise. Following the speaker’s remarks, we will open the lines for your questions. As a reminder, this conference call is being recorded. Before we begin, I’d like to remind you that today’s call may contain forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our filings with the SEC, and are available in the Investor Relations section in our website. Actual results may differ materially from any forward-looking statements we make today. These forward-looking statements speak only as of today, and the company does not assume any obligation or intent to update them except as required by law. In addition, today’s call may include Non-GAAP measures.
These measures should be considered as a supplement to, and not a substitute for, GAAP financial measures. Reconciliation to the nearest GAAP measure can be found in today's earnings press release, which is available on the company's website. Hosting today's call are Scott Galit, Payoneer's Chief Executive Officer, and Michael Levine, Payoneer's Chief Financial Officer. With that, I'd like to turn the call over to Scott to begin.
Good afternoon, and thank you all for joining us today to discuss our fourth quarter 2021 results. Payoneer had a very strong fourth quarter. We delivered revenues and Adjusted EBITDA well ahead of our expectations as we continued to drive strong new customer acquisition and increasing adoption of higher value services, especially in faster-growing markets around the world. We are building exciting momentum with small businesses, marketplaces, and partners globally who rely on Payoneer to provide them with the growing suite of services they need to pay and get paid, to grow and to manage their digital businesses. The Payoneer brand is an important and growing asset as we see increasing demand among small businesses to participate in the digital economy across a diverse range of vertical markets, including e-commerce, freelancing, social platforms, digital marketing, remote work, travel, and distance learning.
Payoneer has emerged as a leading on-ramp to the global digital economy for small businesses worldwide, reinforcing our growing role as the world's go-to partner for digital commerce everywhere. Our growth is truly global and diversified. We had year-over-year growth of over 50% in regions like Latin America, Southeast Asia and South Asia, the Middle East and North Africa. We see tremendous untapped potential in developing markets globally, and our go-to-market investments in these exciting markets are delivering strong results as we continue to have a new customer payback period globally of > 12 months. We also continue to build momentum with the Payoneer partner ecosystem. One of our key initiatives is growing our bank partnerships as we collaborate with banks and digital wallets around the world to acquire new customers and to offer our joint customers a unique integrated experience.
We have bank partnerships live on four continents, and in the fourth quarter we once again had triple-digit growth with these partners. We have a strong pipeline of additional partner opportunities, and we expect partnerships to be an important contributor to our future growth. We are particularly excited by the progress we're making executing on our strategy to broaden Payoneer's portfolio of higher value services and to increase the number of Payoneer customers using these services. These higher value services collectively represent our efforts to become the financial partner of choice for our customers and to generate higher take rates from our customer relationships. Once again, our global B2B AP/AR offering was a key contributor to our growth in the fourth quarter. B2B AP/AR volumes grew over 75% year-over-year, accelerating sequentially from the third quarter.
B2B AP/AR represented 11% of our volume, up from 7% a year ago. We are still in the very early stages of this multi-trillion dollar addressable market opportunity to help small businesses more efficiently transact with their trading partners worldwide. We are increasing our investment in B2B AP/AR, hiring more sales resources, and working with our global teams to acquire new customers and upsell B2B AP/AR to existing Payoneer customers. The majority of our B2B AP/AR customers are new to Payoneer, which demonstrates the strength of the Payoneer brand and our ability to acquire and grow a new complementary business at scale, all while also pointing to the significant incremental addressable market opportunity we have in B2B AP/AR.
We are also seeing strong customer demand for our Payoneer Commercial Mastercard, which enables our small business customers to use their Payoneer global multicurrency account to pay international suppliers, buy advertising, and make other purchases to support the growth and management of their business. This is a compelling tool for businesses that aren't based in the U.S., but are selling globally. During the fourth quarter, we ramped up our acquisition of customers for our commercial card and also introduced more customers to our cashback rewards programs, together resulting in customer spend more than doubling from the third quarter. The Payoneer Commercial Card is a higher value service that helps our customers better manage their business and drive their growth, that saves our customers money, and then generates a higher than average take rate for Payoneer.
While we are still in the relatively early stages of growth for our commercial card, we are optimistic about the unique value proposition we offer and the long runway ahead for this exciting opportunity. Working Capital is another important driver of value for our customers and partners. In the fourth quarter, we announced our partnership with Walmart, collaborating to provide Walmart sellers with easier access to the funds they need to grow their businesses. Merchant Services. This is one of the largest market opportunities in digital commerce. We continue to gain traction with businesses of all sizes around the world that are choosing Payoneer technology to simplify the complexity of their global consumer payments. This is a great opportunity to upsell existing customers and acquire new customers. We're especially excited about Payoneer Checkout, our offering for small businesses.
While it is still very early in our gradual rollout of Payoneer Checkout, we are getting positive customer feedback, and we are building momentum for what we expect will be an important growth driver for many years to come. Overall, these new services are core to our strategy to drive an important evolution in our business as Payoneer customers are increasingly using our platform for a broader set of more sophisticated and higher value services. Many small businesses are using Payoneer more as their primary global financial partner than as a payment processor. In aggregate, as of December 31, 2021, our customers maintained more than $4 billion of balances on the Payoneer platform pending their use of one or more of our services.
To help illustrate our customer relationships, I'm gonna share a couple of stories of some of our inspiring customers that highlight the exciting opportunity for entrepreneurs around the world and help demonstrate how Payoneer is an important partner supporting and enabling their growth. AutoDS, a dropshipping platform headquartered in Israel, helps over 10,000 merchants throughout the U.S. and Europe to automate their online sales processes. AutoDS relies on Payoneer's B2B AP/AR services to get paid by its clients while integrating with our API to enable other Payoneer customers to pay AutoDS with their Payoneer account balances. Another example is TruSoothe from Australia, a brand created by women for women delivering breast pain relief products. They use Payoneer to get paid for their sales on e-commerce marketplaces in the U.S., as well as using B2B AP/AR to get paid for their B2B transactions with international wholesalers.
They use the funds in their Payoneer multicurrency account to pay their suppliers and use the Payoneer Commercial Mastercard to pay for online business expenses. In these examples, we have entrepreneurs tapping into the digital economy to grow, and Payoneer is helping them achieve their potential. That's why we are making significant investments in two primary areas of our business. First, R&D, to broaden our product offering to enable our customers to have more and better tools to help them grow. Second, sales, to increase the capacity of our local teams around the world to acquire new customers and serve and upsell services to our existing customers as we have demonstrated that such investments have a positive ROI.
These investments enable us to deliver more value to our customers, to further strengthen our competitive edge, and to improve our ability to monetize the volume on the Payoneer platform, while also increasing the level of engagement with our customers. All of this momentum translated into strong results for our fourth quarter. We generated revenues of $139 million, an increase of over 47% compared to prior year results. Adjusted EBITDA was $13.5 million, which highlights the operating leverage in our business model even while we continue to ramp up investment in the business. As a result of our positive momentum in an increasingly diverse set of geographies and vertical markets, as well as the growth of higher value services, our take rate increased meaningfully to 86 basis points from 68 basis points in the prior year.
Our continued solid financial performance reaffirms our ability to create strong value and monetization, and we remain excited about the long-term market opportunity for digital commerce globally and confident in our multiyear strategy to be the world's go-to partner for digital commerce everywhere. Now let's take a look ahead at 2022. When we went public, we shared that we see a big opportunity to support many more digital businesses around the world, that we are committed to delivering sustainable shareholder value creation over the long term. We laid out our multiyear strategy to drive revenue growth in the short term and sustained 20%+ revenue growth and 20%+ EBITDA margins over the long term.
The strategy called for us to put significant resources with increased investments in developing markets like Latin America, Central and Eastern Europe, and South Asia, the Middle East and North Africa, to also expand our services to support customers across all digital sales channels and to increase the number of higher value services we bring to our customers through their Payoneer global account. When we went public, we set expectations that we would deliver 25% revenue growth and have negative Adjusted EBITDA in 2021 and 2022 while we ramp up investments. I'm thrilled that in 2021, we executed ahead of our expectations on almost all dimensions of our strategy, well exceeding our revenue growth and Adjusted EBITDA targets, and actually delivering positive Adjusted EBITDA even while we have been increasing our investments as planned.
In short, we executed very well in 2021 and reinforced our conviction that our multi-year strategy is on target and that we are generating positive returns from our investments. We are really excited for 2022, and we will continue to increase our investments consistent with our multi-year plan. We see great opportunities to invest in several important areas that we expect will drive sustained long-term revenue growth and profitability, including more sales resources, especially in developing markets, increased investment in B2B AP/AR with more go-to-market and R&D resources, significant investments in R&D overall to expand our platform and develop additional services for customers, especially in Merchant Services, and continued investments in compliance and risk management advantage.
Given our strong position, brand, momentum, and large market opportunity in our future, we are building on a solid foundation and really just beginning to explore our potential, enabling businesses to succeed across all digital sales channels and with the broad range of services that they need. We have a highly resilient business competitive advantage. We win in the market because of our global brand, our strength in developing markets, our strong ecosystem of partners and marketplaces, the breadth of our offering for our customers, the deep risk management and compliance expertise, our amazing team. I would like to thank the Payoneer team for their great efforts to deliver real value for our customers, to deliver positive financial results, and to set us up for sustainable long-term success. Our team really is the key to our success, so in employee compensation, employee experience, and employee development.
People really are at the heart of everything. We are particularly focused right now on the safety and well-being of our employees and customers in Ukraine, and our thoughts are with them. The current conflict will likely have some impact on our 2022 business. Russia and Belarus together represent less than 3% of our revenues, and combined with Ukraine, 10% of our revenues. Altogether, we hit revenues of approximately $46 million during the year. As the situation in Ukraine is quite new and evolving very quickly, we are analyzing a variety of scenarios, and we have not yet updated any of our plans for the year. We remain both concerned for our colleagues and customers in Ukraine and committed to deliver growth in 2022 and beyond. I'll now hand it over to Michael to discuss financial results and forward guidance in more detail.
To share more detail on Q4. That helped us achieve a great overall year in 2021, and more importantly, has positioned us well for 2022 and beyond. In the fourth quarter, revenue increased 47% year-over-year to $139 million. As Scott mentioned, the strong Q4 performance. Customer adds continued the new partnerships and customer adoption of higher value services such as B2B AP/AR, Working Capital, and Payoneer Commercial Card. To illustrate the impact of some of these higher value services, fourth quarter volume for B2B AP/AR grew by over 75% year-over-year and represented approximately 11% of total volume for the quarter compared to 7% of total volume in the. Keep in mind that B2B AP/AR has a higher than average take rate because we often collect revenues on funds coming in as well as on funds going out.
The take rate is usually 1.5x . Thus, B2B AP/AR is already in the mid-teens%. The continued growth of higher value services, high growth markets, and non-volume-based services helped drive the Q4 take rate to 86 basis points, a significant increase from 68 basis points in Q3. As expected, it was a holiday season mix shift to e-commerce and large sellers with lower price dip from the 90 basis points we reported in Q3 2021. In the fourth quarter, volume increased 16% year-over-year to $16 billion. We had good quarter-over-quarter growth in e-commerce during the holiday season, but changes in consumer purchasing behavior and lingering supply chain disruptions that impacted e-commerce businesses weighed on our year-over-year volume growth. Over the last two years, our fourth quarter volume grew at a 34% compounded annual growth rate.
Nevertheless, revenue continues to grow faster than volume based on the positive higher value services and customer segments. Thus, volume growth alone is not fully reflective of the overall. Q4 transaction costs were $28 million, representing 20% of revenues, a significant improvement from 25%. The improvement is driven by ongoing benefits from operating leverage derived from our unique scale and improved risk. Q4 revenues less transaction costs increased 57% year-over-year, representing an increase of over 500 basis points from the same period one year ago. Q4 total operating loss decreased 143% from Q4 2020. We made the most significant investments we've ever made. We continue to invest for future scale, particularly in R&D and sales and marketing to drive future growth. Excluding stock-based compensation, Q4 total operating expenses increased 28% over Q4 2020.
$2 million as compared to a loss of $1 million in the fourth quarter of last year. Net loss for Q4 was $19 million or a loss of $0.06 per weighted average basic share outstanding of 340 million. I'd like to note that we have updated our detailed share count, which addresses the current basic and all equity awards, contingent shares, and related restrictions or exercise prices as the case may be. Cash equivalents of $466 million. There is an additional $4 billion customer funds on our year-end balance sheet, more than half of which are held in interest-bearing accounts. Interest on these funds is recorded as revenues. While not meaningful in a low interest rate environment, we could see upside if interest rates rise. Full year 2021. This strong quarter capped off a very successful year.
Revenue for the full year grew 37% to $407 million. Revenue less transaction costs for the full year grew 50% to $372 million, and Adjusted EBITDA was $28 million. Now, turning to our outlook for 2022. Our revenue in the range of $576 million-$586 million, which would reflect year-over-year growth. However, given the rapidly changing situation and uncertainty in Ukraine, we felt it was important to adjust our guidance to bookend the possible impact to our results. As Scott mentioned, Russia and Belarus combined represent less than 3% of our revenues, and together with Ukraine, are slightly less than 10% of revenues.
All to generate approximately $46 million of revenue during the remaining 10 months. We have taken a conservative approach and reduced our guidance range revenues by $46 million of the expected revenues for the remainder of the year. The result is revenue in the range of $530 million-$540 million, which would reflect year-over-year growth of 12%-14%. If we exclude Ukraine, Russia, and Belarus, we expect the rest of our global business to grow 22%-24%. Our initial outlook is modeled based on revenue growth being driven approximately equally by volume growth over 2021. Adoption of higher value services such as B2B AP/AR, Payoneer Commercial Card, and Merchant Services to support a higher take rate.
Our volume expectations include assumptions about the current macro-inflationary pressures, residual supply chain issues, and evolving consumer behavior. We expect transaction costs to be approximately 22% of revenue. Benefits from the ongoing scaling of the platform, which will be slightly offset by higher borrowing costs as well as new costs related to our growing Merchant Services business. Our stellar 2021 results for our customers at scale and sell new higher value services. As a result of this success, we are continuing with our investments in 2022. These investments are focused on go-to-market, mainly adding more sales resources and R&D, mainly focused on our higher value services such as B2B AP/AR, Payoneer Commercial Card, and Merchant Services, and our ability to further differentiate our platform.
In our initial outlook, we forecasted Adjusted EBITDA to be breakeven or slightly positive for the year, reflecting the increased investments that I just mentioned. Our approach has been, and will continue to be focused on making the right long-term decisions to build a much larger scale business. While these investments will impact near-term profitability, our demonstrated operating position model positions us to achieve our long-term growth and profitability targets. The situation in Ukraine is fluid and evolving quickly. We have not yet updated any meaningful changes to our investment plans. The Adjusted EBITDA ranges shown in the table assume our current investment plans are unchanged. Adjusted EBITDA guidance to negative $35 million. In conclusion, Q4 terrific year for Payoneer.
Our ability to execute throughout 2021 and perform despite supply chain reinforces our confidence to invest aggressively to build a much larger platform and to be the go-to partner for the future of digital commerce. Our fortunate situation in Ukraine. Our management team is highly experienced and always manages for the long term. We have built a global business with a diverse and resilient set of customers who understand the digital commerce needed over time. Our guidance demonstrates our ability to even in a downside case scenario in a generation event.
We have never lost our entrepreneurial spirit nor our confidence in the growth of global commerce. As such, we plan to use a combination of organic, inorganic, and partnering opportunities to drive sustainable and profitable long-term growth. On behalf of Scott and myself and the rest of the Payoneer management team, we thank you all for the continued interest and support. We are now happy to answer any questions you may have. Operator, please open the line.
The first question is from the line of Josh Siegler with Cantor Fitzgerald.
Hi, this is Keith Padnon for Josh. Thank you for taking our questions. As far as Ukraine exposure, is there any single exposure or is it diversified across a bunch of platforms?
Yeah, it's diversified across market segments, across services that we provide, vertical markets and different cross-border payment channels that folks are selling into. It's a market that there's a fair amount of digital services being provided, but also a fair amount of e-commerce businesses that are being managed out of there. In addition, it's also fairly active, well. Fairly diverse, very, very digitally forward market, and pretty broad-based.
Transparency there. On a separate note, how are you guys viewing the current acquisition market? Has there been any shifts in your capital allocation?
No, I mean, to consistently focus on opportunities to bring more value to more customers around the world, we continue to be focused on making the kind of small to medium size range, as opposed to large, bring more value to our customers. The market continues to evolve in a variety of different directions. Overall, we've been pretty consistent in what we're.
Okay, great. Thank you very much.
Thank you.
Thank you, Mr. Siegler. The next question is from the line of Will Nance with Goldman Sachs.
Hey, guys. Good afternoon. Obviously very nice quarter. Just wondering if you could talk through what you're seeing on the e-commerce side as it relates to e-commerce normalization and supply chain issues. I think that had been an issue in the past couple of quarters. Volume seemed to come in a bit ahead of expectations this quarter. I guess how did it play out this quarter, and are you factoring any additional disruption to global supply chains in the guidance that you're providing as a result of everything that's going on?
Hi, Will. In general, what we've seen is a bit of a moderating of supply chain and logistics issues, so normal based on what we continue to hear in the market. We've seen kind of larger e-commerce brands that are public, you know, they've reported generally strong two-year numbers, but challenging comps year-over-year. That's pretty consistent with what we've in general been seeing. We again, as of now, have been seeing again some challenges, but certainly moderated from where things were in the middle part of last year. Looking forward, we're expecting the current trends to continue with again general more moderate growth and also logistics issues.
Got it. That's helpful. Appreciate it. I guess, as a follow-up, I'm wondering. I appreciate the color on the take rates there. I'm just wondering if maybe to dig a little bit deeper on the total pie of higher margin revenue. You take B2B and then a lot of your other initiatives, you know, financing, et cetera. You know, what percentage of total revenue is that contributing today and over a longer period of time, you know, where do you think that goes to when you kind of model out the cross-sell to the existing customer base?
B2B is by quite a bit the biggest contributor there. We haven't disclosed what the rest represent, but B2B overall is larger than. We really see just being at the very beginning here of the opportunities. You know, when we look at something like the Commercial Card, you know, which we touched on, I mean, we're not even, you know, getting to 1% of the volume in the business with the penetration that we've had so far. Opportunity ahead for us, and these higher value services over time, we think will have the potential to be larger than the rest of the businesses, as we sit here now. We're very enthusiastic about where we're going.
You know, each one of these is a large addressable market opportunity, and we happen to be in a wanna bring some really great value to a global set of digital businesses and very positive feedback and tremendous opportunity ahead.
Got it. Appreciate all the color, guys. Thanks again for taking the questions.
Thank you.
Thank you, Mr. Nance. The next question is from the line of Mayank Tandon with Needham & Company. You may proceed.
Hey, good evening. This is actually Sam Salvas on for Mayank tonight. Congrats on the results and thanks for the color relating to the Russia/Ukraine situation. I just wanted to touch on the Walmart partnership. It's been a few months since you guys announced the partnership, and I was just wondering if you could talk about how things have progressed since then and maybe how they've progressed compared to your expectations. Thanks.
Yeah. Thanks, Sam. In general, things are progressing along the lines of what we expected. We typically don't disclose anything specific about any particular partners. You know, in general, we're really excited about the opportunity to collaborate with Walmart. We're getting very positive feedback from customers, and we're looking forward to continuing to build on the momentum that's been growing as we go through.
Got it. Thanks for that. Just a quick follow-up. You guys have mostly grown, you know, the business organically so far and have mentioned the interest in pursuing M&A, and you just mentioned maybe we could expect a little bit of inorganic growth in 2022. Could you just talk a little bit about what the appetite is for M&A today and what some potential areas of interest might be?
Yeah. We are focused on the so much opportunity and so much need among our customers and our go-to-market of really engaging with and listening to our customers. They have opportunities and challenges on Payoneer to help them actually pursue the opportunities and address a long list of opportunities that we think can really be very useful to help digital businesses globally succeed and grow. You'll see us focusing on some of the kinds of areas that we've touched on. Again, these big areas for us like B2B AP/AR and Merchant Services and Working Capital and card and looking at the vertical markets like e-commerce. I mean, all of these are kind of broad categories more than they are specific products.
We think there's a lot of opportunity to buy software, services and capabilities that we can bring to our customers that fit within this kind of very broad framework of these very large market opportunities that actually can really help them grow. We're focused on buying something, again, it would be more of a product driven approach, and something that we could globalize where there aren't that many companies that we would be able to buy that are already global. It's something where we think we can plug a really great value proposition into our global infrastructure and our global sales and customer teams as well.
Got it. Thanks. That's super helpful.
Thank you.
Thank you, Mr. Tandon. The next question is with William Blair. You may proceed.
Thank you. Good afternoon, Mike, Scott. Nice fourth, you know, all the best on the, you know, Russia-Ukraine. Tough for everybody. Just on the B2B AP/AR revenue, I guess you get it's 11% of volume up from 10% last quarter. Higher ups maybe is 18% of total revenue in that range.
What I just mentioned on the call was that we're, you know, we kind of put it as mid-teens, so.
I mean, how much has that affected? I mean, which pieces of that business are growing faster? The Commercial Card, how many days yet? I think you just rolled beginning of last year.
Yeah.
What are the pieces making that up, and how should we think about value-added services?
Thanks. There are main components to what we offer there. One is a self-serve capability for their customers to use our platform and request payments. That tends to be used by customers that are on average a bit smaller. We have another part of that service which is enabling our customers to bill their customers and use us kind of like they had bank accounts around the world and a set of capabilities to get paid. That tends to be geared towards larger customers. Those are the two main parts of B2B AP/AR. When we talk about B2B AP/AR, it's not included in those numbers.
A way to think about it would be that one of our customers that's using us for B2B AP/AR use case there is they're using us on the receivable side. They get paid $20,000 into the account. They then might use the Payoneer Commercial Card to pay a supplier or pay a SaaS subscription and essentially use the balance that came with that. Those are essentially two different complementary parts of our overall set of services, each one of which act forward opportunity. But those are numbers that we keep separate.
Okay. Those are growing. I mean, that's growing close to 100%. Is that the way to think about that? The next-
You say that. Sorry. The card?
With a combination, looks like its growth of the revenue of close to 100% in the fourth quarter.
We're expecting B2B AP/AR to continue to grow at strong double-digit growth rates well into the future. Commercial Card is sufficiently small still that it will grow faster than that for a little while here. We think with both we're really just scratching the surface of very large opportunities. As a result, we think we've got quite a bit of room to run here at very attractive growth rates.
Thanks. Just lastly, what new markets are you investing in Latin America? Where are you seeing real material volume in new markets, fast growth markets?
Yeah. We're seeing over 50% growth in markets in Latin America, in Southeast Asia, in South Asia, Middle East and North Africa, and in some other places as well. We really are seeing just a lot of enthusiasm around the world. The kind of move to digital and the focus among entrepreneurs around the world, recognizing that digital channels create an opportunity for them to really build global businesses, has been accelerating. We've got great teams that we've been putting on the ground with strong leadership locally in these markets and building really robust teams on the ground. That's an important area of investment for us in the 2020s in many of those markets.
Thank you. Appreciate it.
Thank you. The next question is from the line of Mike Grondahl with Northland Securities. You may proceed.
Hey, good afternoon, Scott and Michael. 47% revenue growth was very nice. Two questions. You guys mentioned sort of strong new customer acquisitions. Can you give us a growth rate on that, quantify that a little bit? And then secondly, just any high-level comments on kind of the China-related business and how that trended?
Yep. In terms of new acquisition, we had a terrific year, a record year for us, overall. Actually our 2021 new customer cohort was about 50% larger than the 2020 cohort, just to give you a sense, and I think more than double from 2019. We continue to build strong momentum on the customer acquisition side, and we're doing that while retaining strong customer acquisition costs and economics and strong payback periods. We're very excited about that. On China, I think what you'll see is that the percentage ticked down overall as a percentage of the overall business, but we continue to have growth and opportunity there, and it continues to perform well.
Not calling out China when we talk about some of the fast growth markets, I mean, it's a bigger market for us and continuing to grow, and we continue to be very excited about opportunities there. We're seeing more greenfield, and we're kind of earlier in some of the ramp cycles in some of these other markets.
Mike, we do have in our 10-K.
Got it. Okay.
We do have breakout for China.
Okay, thanks.
Thank you, Mike.
Thank you, Mr. Grondahl. The next question is a question from the line of Ashwin Shirvaikar with Citi. You may proceed.
Thank you. Scott, Mike, good to hear from you guys. Can I start with asking about how you expect sort of the cadence in the year to kind of play out the next four quarters from a volume revenue and also investment perspective? On that investment angle, when you say you haven't decided whether or not to proceed with all your investments, just a clarification, were there any specific regional investments that you were thinking of that you're now or were those or were you thinking of maybe not making investments just because you have uncertainty in the business?
Maybe I'll start and then I'll let Scott go a little deeper on the investment side. Ashwin, good to speak with you. From a volume standpoint, we would expect to see a pickup as we go throughout the year, actually. We hope to see year-over-year growth rates increase as we go through the year. You know, a lot of the thinking about the cadence on investment is really a long-term approach because a lot of the investments we're making will affect years to come.
I think the comments Scott made about the higher value services really having traction. We're able to prove that and show that even for the earlier stage initiatives really gives us a lot of confidence to now be more aggressive and grab that opportunity. We feel that we've really proven ourselves in 2021. We've demonstrated our ability to execute and really in terms of making the investments to continue to build out, and not only from a product standpoint, from a geographic standpoint, that these are really critical to building the scale platform that we really think we can achieve in the coming years. It's been a strategy we've had since day one. We're consistent with that strategy.
I think what we try to clarify in our approach, and we think it's a conservative approach in terms of how we handle the situation in Ukraine, is to at this point not make any adjustments from an investment perspective, keep them, you know, stay the course. Our approach at this point is to continue to stay the course, but to evaluate the changes in the broader market and have the flexibility over time. Again, we're long-term thinkers. We've been as a team working together through, you know, many cycles, and we've seen, you know, much throughout our careers. We're patient, but we're also methodical in our thinking and we don't rush to any decisions. We think we have the right strategy.
We think we've been able to see where we're getting the traction in businesses and investing in those businesses that have models or businesses that we can model out with confidence. We're super excited to make these investments because we see this as, you know, clear to us at least, that there's a great return on making these investments, and so we wanna continue, you know, continue down that path.
Yeah. Just to add a couple of very brief points on top, you know, again, you know, as we go through the year, the investments will likely ramp. A lot of the investments involve hiring. We've also needed to, you know, increase the capacity on hiring as we look to bring more people on this year. That also is something, you know, kind of hiring and building the hiring machine is something that's part of the early part of the year as well, again, with a strong focus on both sales resources and R&D capacity as well. Again, just to amplify what Michael said, I mean, we are as enthusiastic as ever about our long-term opportunity, about our long-term target business model, about the.
We have more conviction than ever in the investments that we've made and have the opportunity to continue to make. As of now, we're continuing to move forward. As Michael said, I mean, you know, we've managed the business in an EBITDA positive way since 2012. We've done that through a variety of twists and turns and ups and downs, and we think we've got a really good formula here for investing for the long term and doing it in a thoughtful and responsible way. As Michael said, we'll continue to monitor the situation, but as of now, we remain very, very excited overall about the opportunities ahead and are continuing to push forward.
Got it. And the second question I had was, just if you don't mind stepping back a bit and kind of talking about take rate, because you've mentioned a couple of times, you know, higher value services and so on, which should result, I think, in an improvement in the take rate. Mix may also help, is my suspicion. Certain of the types of things that went away during the pandemic potentially come back. Can you just talk about some of these factors and what you expect with regards to take rate? Thank you.
Yeah. Ashwin, you're correct that these higher value services definitely help support increasing take rate. We do expect, as we mentioned, that you know, and our focus is on really continuing to drive revenue growth, and that's coming from a combination, almost an equal combination of volume growth and take rate improvement over last year. You know, as we grow, obviously the mix shift makes a difference as we look at travel, which actually would have a lower take rate than average continue to grow. That would mitigate some of the you know, positives that we get from the higher value services.
All in all, the net benefit will be we are expecting a net increase in 2022 take rate over 2021 take rate, driven by those higher value services.
One other note just to add is as we add more sales resources, you know, we've touched on before that our customer base is a mix of smaller customers that are self-serve and larger customers that our sales teams work with, and that those larger customers typically have lower take rates than the average, and the smaller ones have higher take rates than the average. As we add more sales resources that bring on more customers that on average are larger, that has again another dimension of a mix shift that contributes also to take rate. Our sales teams are also focused on selling in higher value services, but on some of the core payment services that can have a negative effect on the blended take rate as well.
All of that blends together, as Michael said, in take rate growth. There are again, puts and takes within that.
Understood. Thank you both for that.
Thanks, Ash. Thanks.
Thank you, Mr. Shirvaikar. The next question is a question from the line of Andrew Hummel with WestPark Capital. You may proceed.
Hey, guys. Thanks for taking my question. I just wanted to follow up a little bit on the Russia-Ukraine situation. You know, I appreciate the conservatism I think from a revenue perspective and you know kind of pulling that all out of the forecast. Just wanted to see. You know, are you guys still seeing money flowing you know through the platform in some of those areas? I mean, do you expect that to continue if that's the case. I mean, I guess I'm just trying to gauge you know the level of conservatism that pulling it all out implies.
Thanks, Andrew. A couple of points. First, you know, just to avoid any confusion at all, you know, we're absolutely fully complying with all sanctions, obligations, and so everything that we need to do, we're doing, and we have a large team focused on that and it's something that we do quite well. Second, what I would say is that there's quite a bit of. It's a pretty fluid situation right now. We are continuing to see activity.
We also, you know, when we look forward, you know, part of what's interesting and one of the major trends of digitalization and frankly something that we've talked about more just as collectively, coming out of COVID is actually kind of where people work is actually more fluid than ever. So there's quite a range of outcomes here. We are seeing folks that are moving. We are seeing folks that are looking for support and help and we are seeing folks that wanna continue to work. Actually, I mean, we're even hearing that from people that are developers that, you know, need to fill their time with something other than worry. There's all kinds of things that are happening at this point.
Again, it's a very, very challenging, very fluid situation. Again, really impossible to predict anything with great accuracy here. We remain for many, many reasons, quite hopeful for folks. From a business perspective, we think it's appropriate to again take the conservative approach here.
Okay. Got it. That makes sense. That's really helpful. You know, just one other question around, you know, some of these other marketplaces that you guys have outside of the e-com base. You know, I think from a broader market perspective, you know, I think it's easier to kinda peg e-com to broader market trends. Can you just talk through some of the verticals that maybe you're seeing the most strength in some of those other marketplaces? How should we think about that broader bucket of customers growing from a long-term perspective?
Even how should we think about it maybe relative to what you guys are seeing, you know, in the e-com marketplace side? Thanks.
Yeah, that's actually one of the more exciting parts of who we are and what we do. I think, you know, 2020 really amplified our e-commerce strength, and 2021 really amplified the strength of other vertical markets. Remote work and freelancing and global service providers, again, there's just a tremendous growth in the number of people around the world working across borders in a variety of different models. All of that ends up translating into some set of services that are needed by both the company or people buying the services as well as those providing them.
There's a range of models from sole traders, you know, working consistently to sole traders working in as freelancers, to agencies and companies that are getting larger and are quite organized. Social platforms are growing quite significantly, and so that's a trend that I'm sure anybody with kids is quite aware of these days. It's something where this whole realm of content creation and actually how that starts to blend with e-commerce is becoming quite interesting. That's an area that we are seeing a lot of activity and a lot of opportunity around the world. Same thing with distance learning, although, you know, albeit a little bit smaller. Travel, again, there's a variety of different verticals that are actually quite interesting, quite exciting that are developing.
We again, we're super bullish about just in general, the evolution of digital commerce across a variety of different models. It's really, really global. Most of the companies that are participating are keen to be global, and they look for global partners that are credible and trustworthy and really can help them plug into one place and cover the world. We're seeing it across, again, a very, very wide range of geographies and vertical markets. Great. Thanks guys, really appreciate it.
Thank you, Mr. Hummel. The next question is a follow-up question from the line of Bob Napoli with William Blair. Please proceed.
Thank you. Just wanted to get a handle on the interest income and how you're managing costs. You have $4.4 billion of customer funds on the balance sheet at the end of the year. How much of that is investable? How do you invest it? And how should we think about interest income as the Fed moves rates up?
As I mentioned earlier, it's upside. You know, our focus is to really make sure we protect our customers' funds. At the same time, as we mentioned, more than half of the funds that are customer funds are interest earning. We're still in a low interest rate environment. You know, I would, Bob, I'd definitely put it as upside if you know, the Fed starts raising and the rates go up, we'll be a beneficiary of that. You know, we don't wanna get into the game of trying to guess you know, how many hikes there are gonna be in the year. We'll leave that as that. There is upside. We're not. We don't bet on that in building our models.
There'll be, you know, potentially, incremental upside if rates move up.
Right. If they raise rates 100 basis points, what is that $4 million of revenue? Or is that-
No.
A good way to think about it 'cause
Happy to get another.
I'm not asking you to guess. I mean $40 million. Sorry, $40 million if they raise 1%, right?
Well, if you earned it on the full-
Half a basis, so $22 million.
If you earned it on the full amount. So again, we don't have all the funds we use. Those funds are, you know, going through the myriad of banks that we have in our platform. So they're not all, you know, in interest earning accounts. Our focus is making sure the funds get to where they need to be as quickly as they can and as safely as possible. Nevertheless, there is room to benefit from an increasing rate environment. You know, we actually do have interest income broken out in the 10-K, so you can see where it was last year and
Right.
Do the calculation.
You don't have any rate hikes in your guidance, is what at this point.
In our expectations, we have a slight increase in interest income, but it's-
Okay.
Not anything we
All right. Just a quick big picture question. You guys have so much momentum with your higher value services. I'm just curious, you know, why were those not rolled out like five years ago? Was there a technology evolution that, you know, I mean, it seems like you have, you know, that these are businesses that you could've rolled out several years ago earlier.
You know, what I would say is, first of all, you know, financial services, it's not easy. I mean, you have to get a lot of things right. You have to get value proposition right. You have to get regulation and compliance right. You have to get risk management right. There's a lot that comes along with it. You know, for a long time, you know, we invested first and foremost to actually get a global infrastructure in place and to solidify, you know, something that's, you know, frankly it's not that easy to build and manage a global payment platform and acquire customers all over the world and then support those customers.
For us, you know, these have been logical extensions of what we're doing as we listen to customers and we've actually been a leader and really have pioneered in many of the areas that we have that we talked about and are opening up. For us, it's something that we are excited about what we're doing, and we think we have already a nice amount of breadth to what we offer. Actually our customers really do value the breadth of services we provide already today. We focus on delivering quality for our customers, and it's something that we actually really look to continue to invest to do.
We're again excited about where we are, excited about where we're going, and we're getting very positive feedback from our customers as we do.
I would just add to that, Bob. I think you hit on really a key theme, which is that we've created a foundation now in terms of our reach and scale and our, you know, compliance and regulatory know-how. That really the goal now is to continue to drive more product delivery, product creation and delivery through those channels. I think, you know, this reflects why we're aggressively investing now because we're building that global go-to-market team to get those products out, and we're also continuing to invest in the platform to develop products even faster and wider, to get out. Again, I think we have a proven formula, and now it's, you know, putting more gas in the machine.
Great. Thanks. Good to see the momentum there.
Thank you, Bob.
Thank you, Mr. Napoli. The next question is a follow-up question from the line of Will Nance with Goldman Sachs. You may proceed.
Hey, guys. Thanks for squeezing me in here at the end. This is, I think, a very quick one, but I just wanted to clarify on the guidance, assuming we're trying to model to the guidance that fully strips out Ukraine, Belarus and Russia. There's a note that says that assumes an approximately equal contribution from volume and higher take rates. I'm just wondering if you can drill down a little bit into that, just given we're gonna wanna put the Russia, Ukraine, Belarus impact through volumes. Could you expand a little bit on just what the volume impact is? And you know, it's roughly 13% revenue growth at the midpoint. Is that? Are we thinking like, you know, 6% volume growth and the rest by take rate?
I just wanna understand, that comment and how to kind of put that through the model.
We built our initial outlook with the assumption that volume growth rate, you know, you can interpret that if revenue is growing 22%-24%, you would take half of that growth rate in terms of the volume growth rate, and then the rest would be from the change in take rate, 2022 over 2021. You know, in general, we also mentioned that if you take out Ukraine, Belarus and Russia, and look at the residual, the remaining countries, the growth rate continues to stay where we had an initial outlook. Basically meaning that those countries were growing at a similar overall growth rate.
You know, at this point, you know, I think it'd be fair to just use that as your methodology.
Got it. All right. Thanks. Standby.
Sure, Will. Thank you.
Thank you, Mr. Nance. That concludes the conference. Over to the management team for closing remarks.
Great. Thank you everybody as always for joining and for asking thoughtful questions. We look forward to talking soon and wish everybody lots of health.
Thank you, everybody.
That concludes today's Payoneer fourth quarter 2021 earnings call. Thank you for your participation. You may now disconnect your line.