Portrait Weekly Winners & Losers: ANGI & PAYO
Examining PAYO's Guidance Suspension & ANGI's Profitability Surge
Welcome to this week’s edition of the Portrait Weekly Winners & Losers. This week, we’ll take a look at Angi Inc. (ANGI) and Payoneer Global (PAYO).
This week, both Angi and Payoneer Global saw their stocks react with sharp surprises to earnings. While Angi beat expectations with improved customer offerings and AI-powered products, Payoneer struggled as it suspended guidance. Let’s dive into each company’s recent earnings.
PAYO
For its Q1 2025 earnings, PAYO reported EPS of $0.05, compared to consensus expectations for $0.09. More importantly, however, the company suspended forward guidance, worrying investors as to the company’s future.
What happened?
Like many companies, PAYO is struggling with tariffs, as the company cited “the rapidly evolving global macro and trade environment” for justification of suspending guidance.
PAYO's Stock Weakness: Analysis of May 7, 2025 Decline and Forward Outlook
Payoneer Global (NASDAQ: PAYO) experienced a severe market reaction on May 7, 2025, with shares plunging 18-20% in pre-market trading. This significant decline was triggered by a combination of disappointing financial results and, more critically, the suspension of forward guidance.
Earnings Miss and Growth Deceleration
The company reported Q1 2025 earnings per share (EPS) of $0.05, substantially missing consensus estimates of $0.09—representing a 44% shortfall. While revenue of $246.6 million marginally exceeded analyst expectations of $244.5 million, the year-over-year growth rate of 8% marked a dramatic deceleration compared to the 16-19% growth rates delivered in previous quarters. This growth slowdown raised immediate concerns about Payoneer's ability to maintain its expansion trajectory.
Guidance Suspension and Macro Uncertainty
The most alarming development—and likely the primary driver of the stock's collapse—was management's decision to suspend full-year 2025 financial guidance. The company cited "the rapidly evolving global macro and trade environment" as the justification for withdrawing its outlook. This unexpected move signaled to investors that Payoneer was facing substantial uncertainty that prevented it from confidently forecasting its near-term performance.
Tariff-Related Headwinds
Specifically, Payoneer identified emerging tariff-related challenges as a key concern, projecting a potential $50 million revenue impact for 2025 due to these external pressures. This revelation was particularly troubling given that just three months earlier, during the February 2025 earnings call, management had expressed confidence that "in most moderate tariff scenarios... we don't expect any material impact to our business" (Payoneer Global Inc., Q4 2024 Earnings Call, Feb 27, 2025). The rapid deterioration in outlook suggested either a significant change in the external environment or that management had previously underestimated the potential impact of trade tensions.
What signs were there, in hindsight?
Looking back at the past 6-12 months, we learn that take rate compression and executive departures warned of incoming trouble, beyond headline financial deterioration.
Warning Signs Over the Past 6-12 Months
Several indicators over the preceding 6-12 months suggested potential challenges for Payoneer, though the severity of the May 7th announcement appears to have caught the market by surprise.
Decelerating Revenue Growth Trajectory
Payoneer's revenue growth had been showing signs of moderation before the Q1 2025 results. While the company reported strong Q4 2024 revenue of $262 million (up 17% year-over-year), management's 2025 guidance implied a step down to mid-teens growth (PAYO 8-K 02/27/25 Earnings Release). This projected deceleration should have raised questions about the sustainability of Payoneer's growth model.
Margin Pressure and Rising Transaction Costs
Transaction costs as a percentage of revenue had been steadily increasing:
14.7% in 2023
15.6% in 2024
16.5% in Q4 2024
~18.0% projected for 2025
(PAYO 8-K 02/27/25 Earnings Release)
This consistent upward trend in transaction costs signaled deteriorating economics in Payoneer's payment processing operations. The company attributed this to "business mix shift" toward higher-cost segments, but the persistent nature of this trend suggested structural challenges rather than temporary factors.
Take Rate Compression
Payoneer's overall take rate (revenue as a percentage of volume) had been declining:
126 basis points in 2023
122 basis points in 2024
116 basis points in Q4 2024
(PAYO 8-K 02/27/25 Earnings Release)
This downward pressure on take rates indicated increasing competitive intensity or changes in business mix that were unfavorable to Payoneer's revenue model.
Executive Departure
In May 2024, Payoneer announced that COO Arnon Kraft would depart on June 30, 2024, though he would remain employed in a non-executive capacity through March 31, 2025 (PAYO 8-K 05/27/24 Departure of Directors or Certain Officers; Ele...). While executive transitions are not uncommon, the departure of a key operational leader could have been an early warning sign of internal challenges.
Who else might be impacted, and what next?
From Portrait, we learn that cross-border payment providers and payment processors with significant international exposure could suffer from similar macro headwinds to global trade.
Other Companies and Sectors Potentially Affected
The challenges facing Payoneer have implications for several related sectors and companies with similar exposure to cross-border commerce and global trade dynamics.
Cross-Border Payment Providers
Companies specializing in international money transfers and cross-border payments face similar exposure to trade policy shifts and tariff implementations. These include:
● Wise (formerly TransferWise)
● Remitly
● Flywire
● Western Union
● MoneyGram
These companies share Payoneer's vulnerability to disruptions in global trade flows and regulatory changes affecting cross-border transactions (Web - Research - PAYO).
Fintech and Payment Processors
Broader payment processors with significant international exposure could also experience headwinds from the same macro factors affecting Payoneer:
● Adyen
● Worldline
● Stripe
● PayPal
● Block (formerly Square)
Goldman Sachs had already noted in October 2024 that Q3 earnings for payments technology companies were expected to be "volatile following uncertainty faced by several firms in the space" (News - October 2024 - PAYO).
Global SMB Platforms
Platforms serving small and medium-sized businesses with international operations could face similar challenges:
● Shopify
● Global-e
● BigCommerce
● Alibaba.com
These companies facilitate cross-border commerce for SMBs and could be impacted by the same tariff and trade policy shifts affecting Payoneer's customer base.
Looking ahead, the market will be focusing on Payoneer’s ability to navigate macro headwinds and regain forecasting ability in its business.
Key Debates and Concerns Going Forward
Payoneer's stock decline and guidance suspension raise several critical questions and debates for investors considering the company's future prospects.
Visibility and Forecasting Challenges
The suspension of guidance raises fundamental questions about Payoneer's ability to forecast its business with reasonable accuracy. Investors will be focused on when and if management can restore guidance, and what level of visibility they can provide into future performance. The company's credibility has been damaged by the rapid shift from expressing confidence about tariff impacts in February to suspending guidance due to those same factors in May (Web - Research - PAYO, Payoneer Global Inc., Q4 2024 Earnings Call, Feb 27, 2025).
Tariff Impact Magnitude and Duration
A central debate concerns the true impact of tariff-related headwinds on Payoneer's business. The company signaled a potential $50 million revenue impact for 2025, but questions remain about whether this represents a worst-case scenario or just the beginning of a more prolonged challenge (Web - Research - PAYO). The duration of these headwinds is equally uncertain—are they temporary disruptions that businesses will adapt to, or do they represent a structural shift in global trade patterns?
Growth Reacceleration Potential
Payoneer's revenue growth has decelerated from 18% in 2023-2024 to just 8% in Q1 2025 (Web - Research - PAYO, PAYO 8-K 02/27/25 Earnings Release). A key question is whether the company can reaccelerate growth despite external pressures. Management had previously highlighted B2B volume growth (37% in Q4 2024) and merchant services (114% in Q4 2024) as growth drivers, but these may not be sufficient to offset challenges in the larger marketplace business (PAYO 8-K 02/27/25 Earnings Release).
Cost Structure Flexibility
With revenue growth slowing and transaction costs rising, Payoneer's ability to manage its cost structure becomes critical. The company had projected adjusted EBITDA of $255-265 million for 2025 before suspending guidance (PAYO 8-K 02/27/25 Earnings Release). Investors will be watching closely to see if Payoneer can adjust its operating expenses to defend margins amid slower growth.
ANGI
After years of sharp decline, investors applauded Angi’s most recent earnings as the company showed signs of turning around profitability.
What happened?
With Portrait, we learn that Angi’s results impressed investors as the company underwent a strategic transformation, focusing on improving customer experience (flipping net promoter score to positive). With initial strength in profit margins, investors are hoping the company will continue its positive momentum.
Analysis of ANGI's Recent Stock Strength
Drivers of May 7th, 2025 Stock Reaction
ANGI's stock experienced significant positive momentum on May 7th, 2025, surging 12.89% in pre-market trading following the release of its Q1 2025 earnings report (News - May 2025 - ANGI). This strong market reaction was driven by several key factors that signaled a potential turning point for the company:
1. Dramatic Profitability Improvement
Despite a 19.5% year-over-year revenue decline to $245.9 million, ANGI delivered exceptional bottom-line improvement with:
Operating income of $20.0 million, up 636% from $2.7 million in Q1 2024
Net earnings of $15.1 million compared to a net loss of $1.6 million in Q1 2024
Diluted earnings per share of $0.30 versus a loss of $0.03 in Q1 2024 (ANGI 8-K 05/06/25 Earnings Release)
This dramatic profitability improvement demonstrated that ANGI's strategic shift toward quality over quantity was bearing fruit, with the company successfully optimizing its operations despite lower revenue.
2. Strategic Transformation Initiatives
The market responded positively to several strategic initiatives that ANGI implemented in Q1 2025:
Full Implementation of Homeowner Choice: ANGI completed the rollout of "homeowner choice" across its domestic segment, ensuring consumers are connected only with pros they specifically select rather than being automatically matched. This change has significantly improved user experience metrics, with homeowner Net Promoter Score (NPS) approaching positive territory for the first time since tracking began, up from below negative 30 two years ago (Angi Inc., Q1 2025 Earnings Call, May 07, 2025).
Sales Force Consolidation: ANGI consolidated its sales forces into a single unified organization with an integrated set of product offerings, streamlining operations and reducing costs (ANGI 8-K 05/06/25 Earnings Release).
New Metrics Framework: ANGI introduced a new metrics framework focused on "Active Pros" rather than "Transacting Pros," signaling a shift toward measuring sustainable engagement rather than just transactions (ANGI 10-Q Q1 2025).
3. Capital Return Commitment
The announcement of a new 5.0 million share repurchase authorization on May 5, 2025 (ANGI 8-K 05/06/25 Earnings Release) demonstrated management's confidence in the company's future and commitment to returning capital to shareholders. This followed significant share repurchase activity in early 2025, with the company buying back 2.3 million shares for $32.0 million between February and May 2025.
What signs were there, in hindsight?
Looking through the past 6-12 months, we learn Angi already implemented strategic leadership changes and focused on improving the customer experience.
Clues from the Past 6-12 Months
Looking back at the past 6-12 months, several developments provided early indicators of ANGI's potential for improved performance:
1. Strategic Leadership Changes
A series of leadership changes positioned ANGI for its turnaround:
Jeff Kip's Appointment as CEO: In April 2024, Jeff Kip was appointed CEO, succeeding Joey Levin (ANGI 8-K 05/07/24 Regulation FD Disclosure). Kip had previously demonstrated success running ANGI's international businesses, which had been consistently outperforming the domestic segments.
Joey Levin as Executive Chairman: On January 13, 2025, IAC announced that Joey Levin would become Executive Chairman of ANGI upon completion of the spin-off (ANGI 8-K 01/10/25 Unregistered Sales of Equity Securities). This ensured continuity of leadership and strategic vision.
Bailey Carson as COO: In October 2024, Bailey Carson was appointed COO to oversee sales, customer care, and operations functions (ANGI 8-K 10/14/24 Departure of Directors or Certain Officers; Ele...), strengthening the executive team.
2. Improving Financial Trajectory Throughout 2024
Throughout 2024, ANGI showed consistent improvement in profitability metrics despite revenue declines:
Q2 2024: Operating income improved by $25 million to $9.2 million, and Adjusted EBITDA increased 115% to $42.2 million (ANGI 8-K 08/06/24 Regulation FD Disclosure).
Q3 2024: Operating income improved by $16 million to $7.8 million, and Adjusted EBITDA increased 27% to $35.4 million (ANGI 8-K 11/11/24 Regulation FD Disclosure).
Full Year 2024: Operating income reached $22 million, an increase of $48 million from 2023, while Adjusted EBITDA grew 23% to $145 million (ANGI 8-K 02/11/25 Earnings Release).
This consistent improvement in profitability despite revenue headwinds demonstrated management's ability to execute on its strategy of prioritizing quality over quantity.
3. IAC Spin-Off Announcement and Execution
The announcement and subsequent execution of ANGI's spin-off from IAC represented a significant vote of confidence in the company's standalone prospects:
Initial Consideration: On November 11, 2024, IAC announced it was considering a spin-off of its 85% stake in ANGI (ANGI 8-K 11/11/24 Regulation FD Disclosure).
Formal Approval: On January 13, 2025, IAC's board approved the plan to spin off IAC's full stake in ANGI to IAC shareholders (ANGI 8-K 01/10/25 Unregistered Sales of Equity Securities).
Reverse Stock Split: On March 24, 2025, ANGI implemented a 1-for-10 reverse stock split to prepare for the spin-off (ANGI 8-K 03/24/25 Material Modification to Rights of Security Hol...).
Spin-Off Completion: On March 31, 2025, IAC completed the spin-off, distributing all ANGI shares to IAC shareholders (ANGI 8-K 03/26/25 Material Modification to Rights of Security Hol...).
The spin-off provided ANGI with greater strategic flexibility, a more liquid currency for potential M&A, and the ability to focus exclusively on its core business without competing for resources within IAC's portfolio.
4. Strategic Focus on "Jobs Done Well"
Throughout 2024, ANGI's management consistently emphasized its focus on "jobs done well" as the key metric for success:
In the Q2 2024 earnings call, Jeff Kip described "jobs done well" as the situation where "homeowner hires a pro, pro pays for the lead, job gets done with a 4 or 5 rating" (Angi Inc., IAC Inc., Q2 2024 Earnings Call, Aug 07, 2024).
By Q3 2024, management reported that the "jobs done well rate has grown about 30% in the last year" (Angi Inc., IAC Inc., Q3 2024 Earnings Call, Nov 12, 2024).
This focus on quality over quantity was reflected in improved metrics such as pro retention and homeowner NPS, which increased by almost 60% year-over-year in Q3 2024 (Angi Inc., IAC Inc., Q3 2024 Earnings Call, Nov 12, 2024).
Who else might be impacted, and what next?
With Angi improving its competitive positioning, we learn that other companies in the home improvement space may see increased competition.
Companies and Sectors Potentially Affected
ANGI's strategic shifts and improving performance have implications for several companies and sectors:
1. Direct Competitors in Home Services Marketplace
Thumbtack: As a direct competitor in the home services marketplace, Thumbtack may face increased competitive pressure from a more focused and financially stronger ANGI.
TaskRabbit: Owned by IKEA, TaskRabbit's home services offerings compete directly with ANGI's Services segment and may need to respond to ANGI's quality-focused approach.
Porch.com: Another public company in the home services space that may need to adapt to ANGI's strategic shifts.
2. Broader Home Improvement Sector
Home Depot (HD) and Lowe's (LOW): These retailers offer installation services that compete with ANGI's offerings. ANGI's improved matching and quality focus could impact their service businesses.
Wayfair (W): As Wayfair expands into installation services for furniture and home goods, ANGI's platform improvements could affect their competitive positioning.
Williams-Sonoma (WSM): Their installation services for kitchen and home products could face competition from a strengthened ANGI.
3. Digital Marketplace Platforms
Upwork (UPWK) and Fiverr (FVRR): While focused on different service categories, these marketplace platforms may be influenced by ANGI's strategic approach to quality metrics and matching algorithms.
Etsy (ETSY): As Etsy expands into services adjacent to its product marketplace, ANGI's experience in service matching could provide valuable lessons.
4. Real Estate Services
Zillow Group (Z): Zillow's home services recommendations and partnerships could be affected by ANGI's improved platform and professional network.
Redfin (RDFN): Their concierge service for home improvements before selling could face competition from ANGI's quality-focused approach.
Opendoor Technologies (OPEN): Their renovation services for homes could be impacted by ANGI's improved professional network.
Taking a forward view, ANGI’s ability to succeed depends on its ability to return to revenue growth and continue to deliver quality service.
Key Debates and Concerns Going Forward
Despite the positive market reaction, several key debates and concerns remain for ANGI:
1. Revenue Growth Trajectory
The most significant concern for ANGI is its path back to revenue growth:
Q1 2025 revenue declined 19.5% year-over-year to $245.9 million (ANGI 8-K 05/06/25 Earnings Release).
Management expects revenue declines to continue throughout 2025 before returning to growth in 2026 (Angi Inc., Q1 2025 Earnings Call, May 07, 2025).
The key debate is whether ANGI can successfully transition from optimizing profitability to driving sustainable growth while maintaining its improved margins.
2. Effectiveness of Homeowner Choice Strategy
ANGI's full implementation of homeowner choice represents a significant strategic bet:
Management reports that homeowner NPS is "double digits better when they choose the pro than when they're auto-matched" and pros win leads 60% more often when chosen versus automated matching (Angi Inc., IAC Inc., Q4 2024 Earnings Call, Feb 12, 2025).
However, this change has contributed to significant declines in service requests (down 19% year-over-year in Q1 2025) and leads (down 20% year-over-year) (ANGI 8-K 05/06/25 Earnings Release).
The debate centers on whether the quality improvements will ultimately drive enough increased engagement and retention to offset the volume declines.
3. Pro Network Dynamics
ANGI faces challenges in balancing pro acquisition and retention:
Average Monthly Active Pros declined 14% year-over-year to 134,000 in Q1 2025 (ANGI 8-K 05/06/25 Earnings Release).
Acquired Pros declined 41% year-over-year to 24,000 in Q1 2025 (ANGI 8-K 05/06/25 Earnings Release).
However, retention rates have improved significantly, with base cohort retention up 8% and newer cohort retention up 16% (ANGI 8-K 05/06/25 Earnings Release).
The key question is whether ANGI can stabilize and eventually grow its pro network while maintaining the quality improvements that have driven better retention.
To dive further into ANGI, PAYO, or any other public company, head over to Portrait!