United States securities and exchange commission logo
March 12, 2021
Dushyant Sharma
Chairman, President and Chief Executive Officer
Paymentus Holdings, Inc.
18390 NE 68th St.
Redmond, WA 98052
Re: Paymentus Holdings,
Inc.
Draft Registration
Statement on Form S-1
Submitted February
12, 2021
CIK No. 0001841156
Dear Mr. Sharma:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1 Submitted February 12, 2021
Prospectus Summary, page 1
1. Please revise the
summary to describe how Accel-KKR and your founder acquired their
shares as well as any
payments or compensation that any of your principal equity holders,
directors or executive
officers received or will receive in connection with the offering.
Also, please disclose
your founder's current role in the company. In addition, though we
note the final bullet
of the Risk Factor Summary on page 8, please revise the prospectus
summary to more
prominently disclose that your certificate of incorporation will not
require Accel-KKR or
its affiliates, or any of their respective directors, partners,
principals, officers,
members, managers or employees, including any who serve as your
officers, to renounce
corporate opportunities. Your revised disclosure should explain the
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significance to investors of this provision, particularly in light of
the voting control to be
held by the Class B holders.
The Offering, page 10
2. You indicate that part of the proceeds of this offering will be used
to repurchase Series A
Preferred Shares. On page F-20, you state that at December 31, 2019
the Series A
Preferred Shares had accumulated dividends of $26.9 million. Please
tell us, and revise
your disclosure here and in Use of Proceeds on page 55, if
appropriate, to indicate whether
these accumulated dividends will be paid as part of this repurchase.
If these dividends will
not be declared and paid, please tell us how the repurchase valuation
considers the total
accumulated dividends.
Certain of our key performance indicators are subject to inherent challenges,
page 22
3. Your disclosure in this risk factor appears to suggest that you rely
on multiple key
performance indicators. However, your disclosure elsewhere in the
prospectus, including
at page 64 under "Key Performance Indicators and Non-GAAP Measures,"
indicates that
transactions processed is the sole KPI. Please revise to reconcile.
We depend upon several third-party service providers, page 22
4. Please expand your discussion of the material terms of your agreement
with Paypal's
Braintree and other material third-party service providers. In this
regard, we note your
disclosure that the agreements impose significant security, compliance
and operational
obligations on you. Also, please file these material agreements as
exhibits with your next
amendment, if required pursuant to Item 601(b)(10) of Regulation S-K.
Market, Industry and Other Data, page 54
5. We note that the prospectus includes market and industry data derived
from publications,
surveys, and reports, including a report from Aite Group. If any of
these publications,
surveys, or reports were commissioned by you for use in connection
with the registration
statement, please file consents of such third parties pursuant to Rule
436 of the Securities
Act as exhibits to your registration statement or tell us why you
believe you are not
required to do so.
Capitalization, page 57
6. Please discuss the specific adjustments being made on a pro forma
basis to give effect to
the filing of your amended and restated certificate of incorporation.
Factors Affecting Our Performance, page 63
7. Revise to disclose the number of your billers as of December 31, 2019,
with a view to
understanding your historical acquisition rate.
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Management's Discussion and Analysis of Financial Condition and Results of
Operations
Key Performance Indicators and Non-GAAP Measures, page 64
8. Please tell us why you believe the revenue less network fees non-GAAP
measure does not
substitute individually-tailored recognition and measurement methods
for those of GAAP.
Refer to Question 100.04 of the Non-GAAP Financial Measures
Compliance and
Disclosure Interpretations.
Liquidity and Capital Resources
Historical Cash Flows, page 69
9. Please revise your discussion of your operating cash flows to describe
the underlying
reasons for material changes between periods in quantitative and
qualitative terms. Refer
to Item 303 of Regulation S-K.
Business, page 75
10. We note that the prospectus relies on the use of several terms that
may be unfamiliar to
investors. Please consider providing a glossary or defining at first
usage terms that are not
commonly understood by non-industry participants. We note, as
examples, the terms such
as "single code base architecture," "single base code with no
versioning," "omnichannel
payment," "CIS and ERP systems," "modern clustering," and "load
balancing."
11. Refer to the last full paragraph on page 75. Please explain, where
appropriate, whether
there is a minimum investment necessary in order for your clients to
achieve efficiencies
from the use of your platform. In this regard, the extent to which the
benefits of your
platform are lost or limited for customers that continue to use legacy
components is not
clear. Revise your risk factors, as applicable.
12. Please revise here to clarify how your relationships with your
strategic partners and your
IPN partners differ. In this regard, please succinctly describe how
your referral networks
operates as compared to your embedded solutions and explain the
benefits to your partners
and their customers, including whether the fees you charge to partners
as compared to
other billers differs. Please file any material agreements with your
strategic and IPN
partners as exhibits as applicable pursuant to Item 601(b)(10) of
Regulation S-K.
Our Company, page 76
13. We note your disclosure in the paragraph immediately preceding the
graphic on page 76
states that you capture increasing amounts of transaction data and
leverage your analytics
engine to deliver actionable behavioral insights to your billers and
partners. Similarly, in
the paragraph immediately following the graphic, you state that your
rich data set
enhances your artificial intelligence and machine learning
capabilities. Please expand
your discussion here and elsewhere in the prospectus as appropriate,
including at page 83
where you discuss your large and proprietary data asset, to clarify
how data collection is
used to improve your products and marketing efforts. While we note
your disclosure in the
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Paymentus Holdings, Inc.
March 12, 2021
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last full paragraph at page 79 about the ability of AI to predict the
answers to frequently
asked questions, it is not fully evident how AI and ML are used
elsewhere in your
business. Please revise to describe in greater detail, providing
examples where useful to
investors. In addition, please disclose the circumstances under which
collected data is
shared or sold to third parties.
Our Growth Strategies, page 83
14. Please revise to more fully describe your strategy for expansion into
new channels,
industry verticals, and international markets. Rather than providing
generalized
disclosure, please explain what your goals are, how you intend to
achieve them, as well as
your anticipated costs and timing. Please also revise your risk
factors at page 18 and 25,
and elsewhere as appropriate, to discuss the specific risks associated
with these strategies.
Stockholders Agreement, page 118
15. Clarify whether you will know and disclose the terms of the amended
and restated
stockholders agreement before the completion of this offering.
Consolidated Financial Statements
Consolidated Statement of Operations, page F-4
16. Please tell us your GAAP basis for deducting the total accumulated
dividends on your
Series A Preferred Stock, as opposed to the dividends accumulated for
the period, in
arriving at your net loss attributable to common stock for the year
ended December 31,
2019. Refer to ASC 260-10-45-11.
Notes to Consolidated Financial Statements
2. Basis of Presentation and Summary of Significant Accounting Policies
Segment Information, page F-8
17. Information regarding your Canada and India operating segments can be
treated in one of
the manners described in ASC 280-10-50-12 thru 50-15, but cannot be
combined with
your United States reportable segment, unless the aggregation criteria
in ASC 280-10-50-
11 are met. Please present your United States reportable segment
information separately
or explain how the aggregation criteria have been met.
3. Revenue, page F-14
18. We note your disclosure on page 65 that fees are generated as a
percentage of transaction
value or a specified fee per transaction, with the actual fees dependent
on payment type,
FirstName LastNameDushyant Sharma
payment channel or industry vertical. Please tell us what consideration
was given to
Comapany NamePaymentus
presenting Holdings,
disaggregation Inc. on one or all of these bases.
Refer to ASCs 606-10-
of revenue
March 50-5 and 606-10-55-89
12, 2021 Page 4 to 55-91.
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FirstName
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Holdings, Inc.
Comapany
March NamePaymentus Holdings, Inc.
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You may contact Amy Geddes at 202-551-3304 or Rufus Decker at
202-551-3769 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Daniel Morris at 202-551-3314 or Mara Ransom at 202-551-3264 with any
other
questions.
Sincerely,
Division of Corporation
Finance
Office of Trade &
Services