BUSINESS COMBINATION

9 Months Ended

Sep. 30, 2024

BUSINESS COMBINATION

BUSINESS COMBINATION

NOTE 3 – BUSINESS COMBINATION

On August 5, 2024, Payoneer acquired 100% of the outstanding equity of Skuad Pte. Ltd. (“Skuad”) and its subsidiaries, a global workforce and payroll management company. The acquisition accelerates Payoneer’s strategy to deliver a comprehensive and integrated financial stack for SMBs that operate globally. The transaction was accounted for in accordance with ASC 805, “Business Combinations”, using the acquisition method of accounting with Payoneer as the acquirer.

The following table summarizes the fair value of the consideration transferred:

Cash	$	61,099
Contingent consideration		5,283
Extinguishment of pre-existing receivable		1,000
Settlement of unvested acquiree stock-based compensation awards		315
Total	$	67,697

Cash transferred was funded with cash on hand.

The contingent consideration was in the form of a $9,709 earn-out subject to meeting certain performance criteria such as revenue and volume for eighteen months post-close, and achievement of certain business goals within twelve months post-close. The fair value of the contingent consideration recognized on the acquisition date of $5,283 was estimated using estimates of probability of each outcome and the Option Pricing Model (“OPM”), except for with respect to the integration plan target, which is not exposed to systemic risk. Refer to Note 7 below for details on changes in the fair value of the contingent consideration since acquisition.

NOTE 3 – BUSINESS COMBINATION (continued):

The consideration transferred included settlement of a receivable on Payoneer's books, related to commercial payments activities that occurred prior to the closing of the business combination with Skuad, which is now an intercompany relationship eliminated in consolidation. No gain or loss was recognized on settlement.

The settlement of unvested acquiree stock-based compensation awards relates to unvested Skuad stock options which were cancelled upon acquisition and either replaced with Payoneer Restricted Stock Units (“RSUs”) or not replaced and settled in cash. Replacement awards included 90,000 RSUs which were measured at fair value based on the grant date share price. Additionally, the Company committed to grant 1,870,577 RSUs valued at $10,364, which are subject to ratable quarterly vesting contingent on future services and continued employment of the Skuad founder and shall be expensed over a remaining service period of up to three years.

The following table summarizes the recognized amounts of identifiable assets acquired and liabilities assumed:

Cash and cash equivalents and restricted deposits	$	3,875
Customer funds		9,005
Accounts receivable		4,294
Tax indemnification asset		1,240
Customer relationships intangible asset		6,683
Developed technology intangible asset		2,354
Other assets		1,499
Trade payables		(1,514)
Outstanding operating balances		(9,005)
Deferred tax liabilities, net		(1,373)
Uncertain tax positions		(1,240)
Other payables		(4,326)
Total identifiable net assets	$	11,492
Goodwill	$	56,205
Total	$	67,697

The excess of the purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill and is primarily attributable to the significant synergies expected to arise from the acquisition, including enhancement of Payoneer’s comprehensive and integrated financial stack. We do not expect goodwill to be deductible for income tax purposes.

Payoneer recognized an indemnification asset in the amount of $1,240 related to uncertain tax positions of the acquiree. Payoneer is fully indemnified by the sellers for the full amount of the position.

Due to Skuad’s insignificant size relative to the Company, Payoneer is not providing supplemental pro forma financial information for the current and prior reporting periods. During the three and nine months ended September 30, 2024, Payoneer incurred acquisition-related costs of $2,940 and $4,693, respectively, which were included in general and administrative expenses on the condensed consolidated statements of comprehensive income.

The allocation of the purchase price for this acquisition has been prepared on a preliminary basis and changes to the allocation to certain assets, liabilities, and tax estimates may occur as additional information becomes available throughout the measurement period, which will not exceed 12 months from the date of the acquisition.