PAYA - Earnings call transcript Q1 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen and welcome to the Paya Holdings Inc.

First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. Investor Paya. of Head Humphries, Relations at Matt

You may begin.

Matt Humphries

the quarter XXXX morning, and conference first to welcome Good earnings Paya call.

filed this at assumptions, with based Before we forward-looking reflect call. everyone X-K we will of SEC refer statements press as Company's our today Paya statements business be any about objectives the Form statements. earnings Please well expectations that remind undertake the release today beliefs, disclosure current information the statements update on that to occur strategies, made today's discussion business, statement for and to financial begin, will after the contain growth and let guidance, made of obligation expectations and current our me or call. as to end and this will no events forward-looking including that our reflect discussed on All forward-looking the the other

specific You cause the can the call Factors call, we that results March In that the of X-K with XX-K the the SEC. in during today's financial section learn in actual filed also differ Risk the press release. discuss of could and financial SEC via periodic Company's subsequent in our more is materially X, on the discussion earnings Company This reports Also Form available files performance. from information certain about filed risk with factors non-GAAP XXXX to supplemental the the measures GAAP and will the webcast. our reconciliations non-GAAP to are SEC. provided with

note, XXXX to section the section Investor described just supplemental the Investor have first of website. quarter I the presentation information the all a find Paya Paya's Please website. posted can Relations Relations of we've You in

the on Paya's Jeff Glenn call CFO, and Renzulli. us today CEO, Joining Hack; are

we over remarks, call to prepared the Jeff. will turn call to questions. the With let that, open me their your Following

Jeff Hack

quarter our as playbook XXXX our our recently growth us attractive marks to fourth morning, Payment follows you, announced payment Thank a Thank our complement financial joining Paragon providers as discuss acquisition acquisition of M&A Matt, you and everyone. we powerful which Paragon serving of for strategy. of verticals, first acquisition, organic today and good strategic integrated The in results executing Solutions. our

unique with begin Tempe, then Paya's our to primarily a quarterly turn a focuses discussion based Paya the transaction, $X.X to complement partner-centric payment Paragon in high Let's Arizona, solutions a provider these Paragon growing has and billion. non-profit partners we'll that Paragon in verticals. and highly unique which existing Paragon that on omni-channel distribution payment payment the and robust a brings results. Paya's solution and some capabilities is on verticals. platform, to healthcare additive of a integrated acquisition. the volume model, offering, including needs Paragon serving is a been a ACH agnostic Paya, XXXX. mix, partners makes distribution since Similar Annual approximately this of has card-not-present And one importantly, terrific

strong and additional verticals. within partners, future continue position to opportunities to allows told, penetration brand the expand further Paya's deliver Paragon capabilities verticals, are key these Given double-digit of a talent to these of attractive ISV and very very and verticals Paragon still to ISV rate. base, highly continue to the strengthen will expand Paragon's grow Paya providing attractive us an culture. relationship, underpenetrated annual while our and elevate and in acquisition have our payments solid With serves of we All partnership Paya The positioning perspective and non-profit the are existing understanding capabilities, primarily roster business long-standing an acquisition at drive higher growth. us they healthcare integrated rates as to a from model, growing

sales but into on existing we're as growth. details reinvesting returns. past at naturally synergies to cover financial in the and to and suffice accelerate marketing, to the Paragon Going will and accelerate have focused to the say, Paya's infrastructure leverage we're transactions, delivering allow scale, highly excited Glenn will capabilities business we which forward, back the and growth about while Paragon's accretive shortly, will this look transaction visible

the efforts completed capacity integration underway, accretive remain pipeline progress Combining we're same and making transaction M&A further growth the Our March this solid strategy. strong. well additional strategic a the time, weeks capital ago. our raise strategic deals flexibility the despite successful have few pipeline short with on we to accelerate to we are actionable for our the XX, accomplish closing At near-term and

let's the strong key related XX.X%. Paya's $X.X X% billion, verticals growth volume XX% even card Payment and driven proprietary by primarily Total solid integrated government. worth XXXX. strength noting margins XX% growth by solution growth ACH one in led led impressive, XX% by given revenue saw to points and was rates even notable momentum EBITDA is to quarter Adjusted grew volume, grew day strong first the our results. Now volume with It in QX the million, grew adjusted with our in card in business. business strong in less versus while We period review first EBITDA more impacts. XX.X% XXXX quarter BXB in $XX.X a that XXX that basis million, quarter year-over-year to growth and $XX.X minimal ACH are expanded pandemic to year-over-year

want recent have partners to with services I we the clients. our value-added Now product to highlights on some focus delivering and you innovation share our that of

increase card-not-present deepening our payments card-present preferred that enhance transactions advanced Sage's supporting US Sage's, features that As the new Sage into software and suite. while integration we released productivity, XXX both Sage solutions, user partner, and Intacct

new the enhanced users, automation XXX collection card, for e-invoicing customer reconciliation and ACH for Sage allowing introduced further portals for of we capabilities Specifically, process and payments.

to The how they via as with our partners in for delivering approach boarding EMV take and a in features modern and Paya live flexibility enhanced accelerate while engage end partners And [ph] at delivered new satisfaction to a portal, off the we which Connect featuring higher more to also customers. with our also giving can offering tools efficient focus and This experience, of user. our By turnkey pride new approach municipal want Sage flagship payments, a delivered solutions innovation and and ourselves great continues cloud solution quarter. our we boarding solution their speed built on in tailored hardware intuitive went to Intacct such, market. citizen-facing partners. enhanced monetizing And our to hallmark our solution complexity. to also of streamlined optionality, experience this We the Paya merchant level offers compliance finally, and in continued users, reduces EMV capabilities differentiate customer their UI an serves solution. setup Paya's We our delivering be a

financials partners' accelerating just in new accelerating and actions foundation dedicated various are penetration well-known and stages focusing of wins campaigns non-profit Recently, levels one these these long-established and we partner currently of While signed. implementation. incumbents key These a partners, XXXX. scaled customer our driving and vertical, of through government adoption in over go-to-market within co-marketing first finally, also noteworthy will Glenn additional with these the over it years, We've continued to resources engagement while of growth integration against we production. as vital suites. a improvements as few And and our you to in penetration, of features in to had on lay software select further as the clients numerous our our that Glenn? investments. deepening that, with base. month for efforts In walk launched to the on next partner, newer campaigns for the threefold detail saw number remain within recent our cover new with increase we wins some the well are return on deliver partners With in outlook essential some deepening partners' our focus I'll our turn more we

Glenn Renzulli

good and Thanks, Jeff, everyone. morning,

pleased prior our an growing we're year-over-year. seeing quarter was billion, of first up the financial first the with results in momentum in stated, the year. up X% quarter Card Total XX%. volume $X.X also we're volumes XX% increase versus growth and business. transactions with ACH ACH the quarter, in volume payment the XX.X% accelerated As

verticals. in we and Importantly, saw BXB government strong our growth

margin the last given year. Total our had year. Our ISV is as versus ACH of up From of million, volume by a a XX% performance the of reference, XX.X% we point services XXX million, benefit basis and quarter and within $XX.X a year. was segment basis was basis services increase with $XX.X day our in in profit with million with broad continuing was million the Solutions the strength a last expanding vertical. And to our for up million, year-over-year, QX in $XX.X revenue quarter revenue gross was period expanding contribution was Gross profit growth Services points. profit one versus combined quarter same driven margin expansion of Payment year-over-year, driven an in government business revenue Integrated by XXX our solutions, points Payment gross XX% $XX.X $XX.X channel Solutions Payment led gross full ACH up to up XX.X% less volume typically notable quarter lowest our points million, perspective, quarter gross with positive ACH mix. large XX% up margin XX.X%, margin XX.X%, $XX.X gross from from the Integrated year-over-year conversion. favorable gross of drive up by was of XX.X%, TPG to XX% segment. with was XXX

in quarter as $XX.X while support as layering our on expected, talent we incremental future in expenses focused million, operating First company public costs. to adjusted out at came growth building

we public to expenses as step second our expenses expect certain related costs. company to to well see operating due Paragon up the quarter, For acquisition moderately incremental as

XXXX XX.X% were continues XXX back XX.X% also expanded the million, Adjusted points to Adjusted the we quarter leverage business certain operating temporarily expenses grow COVID. to as EBITDA see due over to scale. in continue was reduced as margin to $XX.X We up expect in in favorable basis in our EBITDA prior layer year. that to

a $X.X in $X.X the $X Adjusted Finally, GAAP income loss million million the was for net net versus prior year. quarter quarter. the of was for million income

statement balance the of our had leverage the $XXX a cash of and of gross flows, debt, with we net of cash ratio and million X.XX. end million at first quarter, $XXX sheet Regarding of

end cash the the completed Paragon, position subsequent to that primary the in Our quarter. proceeds the from cash offering equity excludes of for reflects March, but paid was

raised pursue March equity balance sheet $XXX accretive strengthening us and net more flexibility our M&A. fees, of giving million we the offering, further With to

a You finally, that shares in have X.X strategy should strategic focus earn-out continue was key cash the Net on activities not shares expect as our growth quarter inclusive outstanding, operating the million met million. share of thresholds. approximately our million end count yet first XXX.X quarter at And by the issuing to of $X was provided pillar to forward. M&A us going of

earnings to structure. supplemental provided detail the count on as Our an at at additional equity our various share capital our share walk-through provide contains end morning of in presentation as the this price of quarter illustrative well order levels

Turning excitement recently acquisition our details Solutions. Paragon to and on want the announced Jeff's to transaction. financial provide some echo of I Payment

closing million, million, the $XX $X.X objectives. $XX.X at upon stock comprised million half achievement Class future $X cash First, in A was cash that the is growth certain of in common is and half of Also, earn-out consideration payable of an in to total consisting there of and paid million place up stock.

we from XXXX, million-dollar Paragon. revenue full expect year contribution a For high-single-digit

net the expect adjusted also We to EBITDA to in be XXXX. neutral transaction

solid progress with making Paragon synergies, are against. highly be visible accretive expect to which We already we

transaction the As million contribute expect such, for fully XXXX, in EBITDA. approximately we adjusted to synergized $X.X

XXXX Turning now guidance. financial full year revised our to

and total a are Paragon by driven raising incremental contribution. to $XXX to the combination year-over-year of XX% million, revenue $XXX the at We overall our growth performance million business midpoint, range reflecting

Jeff? and I'll Jeff ranges gross That this Our prepared prior margin close turn adjusted the back from my to over out. unchanged remarks. guidance. call remain EBITDA concludes to

Jeff Hack

off the accomplished you, a a Thank have and time. in of Glenn. year note short on strong We've much started period

new us the delivering financial to ahead. growth excited seek to continued our complement against Once in to and organic pleased operator, we're attractive our we out growth terrific I'm questions. again, with in our thank to our continue We're you to quickly maximize opportunities existing joining from further acquisition our partners creation. reinforce software and you the to and that markets. today. our inorganic order that, support your ability our our Paragon, While should remain about appreciate and ready With opportunities recent We execute to value on performance and reminded of expect us support, for high-growth initiatives, employees, both end shareholders our profile we're colleagues committed take focused of Paragon,

Operator

Robert of Napoli from Instructions] [Operator William question the from first Blair. comes Our line

Your line is now open.

Robert Napoli

other your any then nearly I many you see you a notable as any through the the I'm affected was and give trended I acceleration business know into if could wondering acceleration? have did - items by related Jeff, trends was on you as April, and quarter like out in color pandemic, the could call - - little how but not companies or to you seen economic business,

Jeff Hack

you. you - to to take to want thank Rob want and Glenn, through trends Glenn, speak - the Good we'll the morning, you quarter?

Glenn Renzulli

do This Happy Yes, that. did. Sure. Glenn, to we is Bob. certainly

I kind last we coming - year, you quarter. of QX that think, a out important right. note of said, our saw the it's was like But better others to good than great trough momentum

business, saw saw then good the north So trends. April, And actually, XX% card in we of March was highest quarter year-over-year. our volume for the in month and

obviously did year, have last we - aids were we which impact then. right, So

see XX%-plus growth in the month good second to in continue of start with kind year-over-year of April. a to the We card a quarter

Robert Napoli

Great.

you and BXB Appreciate you. Any out verticals out that. Thank Okay. in that government And as stood of the for you? called particular sub segment areas then there the segment strength.

Glenn Renzulli

board, Yes, manufacturing are Yes, think I great. of look, the of on I our continuing ones by Glenn. to and supplier seems side, when going certainly business BXB see like it's everything part some no, helping is the on, hardware is - in spend think things contractor the the you that's, on that of sure. macro take side going side, I well. equipment This the improving one that. The the acceleration. as to Happy aided think, about some that right, construction think housing across which That's the is

we which momentum. some - that's probably components, But that of other larger the partners the as helps. far also at the area, as have moment The really strong highlights in one

Robert Napoli

transaction. partner, just makes that would? of - transactions at then front. an last the partner hunting the it looking you're that mean that integration, you ground, and low-risk if Paragon Is Thank I a I are And guess, many on easy you. M&A question being a Is related? the key

Jeff Hack

bases, those Bob, this are existing of type, The nice, of are is terrific It's you question. that within will, it not good a Jeff. partner even That's and opportunities makes some good majority if pipeline a we but pursue vast enthusiastically. very better. there a the transaction obviously

of the integration their the their their obviously, quality make you understand understand the understand business, how and really the you If quality most view, of to an of of asset. solutions, point team from

are the they do So in present some the and there of majority certainly the not pipeline, pipeline. but

Robert Napoli

Thank Appreciate you. it.

Operator

you. Thank

comes Evercore question from of line Togut next David Our the ISI. from

open. Your line is now

David Togut

guide, Thank you. that anywhere be in Paragon and from contribution Good XXXX is high-single-digit acquisition, revenue $X morning. million? revenue any If the we change $X anticipated exclude million recognizing could between your there million high-single-digit the

Glenn Renzulli

is just No, guidance is the Glenn. Yes. and question. doing David. our what good This That's No, acquisition. the change. Thanks, from no impact of layering essentially reiterating we're in kind

David Togut

the growth the adjust fourth changing of rate, apples-to-apples in any rate change the And on volume, we in words, apples-to-apples either take other that. XXXX, in or for QX quarter of an XXXX all? is there at if basis take XX% is for Thanks ACH then versus

Glenn Renzulli

Yes. is in No, year-over-year. both question. take rate Yes, good again. for the Glenn sequentially card Thanks. improved and This quarter,

card in So slight did a for we there perspective, QX. from sequentially quarter to pretty we think huge it from side, encouraging. And stability see a you it large ACH was spread but spread, uptick because a pricing the lift us, QX about much on wasn't didn't when really a see which

see of it well. the as number So spread overall you in kind

David Togut

from positive the the months? to suite Is we partnership over revenue think Great. next potential materially revenue And accounting should about that outlook? the XX contribution then how

Jeff Hack

Jeff. David, So it's

as post fact we've layer the this, you about not at speak first to that of would for generally, totality think on or I the quarters say, you I as to quickly the respectively and So quarter partner. one individual deals can will contribution of us hear three talked in. some the know that the - have announced, can take depending we any larger ramp them, signing, deals two in look nature,

David Togut

finally, stand Jeff, near-term the out? any out terms just called specific Any of closure acquisitions, likely in And you acquisition of that specific call-outs pipeline. strength, Understood. in verticals

Jeff Hack

Yes.

David. It's of So Jeff A question, great again. couple things.

is of itself strong. all, pipeline the very First

pipeline, leg And much in term. about the near the a the that of I pipeline in next Within it say how actionable is feels that as strong time. is would as has long

pipeline actual So good.

gamut always then it In meet payments It it integrated strikes assets runs software size. of there's terms the in on obviously, capabilities runs the runs And unique traditional as well. of payments. terrific, some that present the are the gamut, the There that pipeline. categories, some of deeper really gamut

So the I and strength. good, quantity excited I opportunity is were in we good, can't point actionability quality the focused getting that it it good, And the the is finding across is really the are done. pipeline the right is If next anything board and fuller. to wish and on very

David Togut

one Glenn your Any But economic in call-outs Understood. strength economic call-outs terms more of of and see called construction. even behavior of final there towards in business? quick shift with you Actually, volume? BXB, a With out consumer one. especially changing terms card-present reopening, reopening? any seeing online you Are that you just in are

Jeff Hack

mix let remind the I already speak item card-not-present. today folks volume is But itself. to So our Glenn I'll would XX% card that

of also present, a So than middle remind rather market our to example, market in the cycle. really simple by would paying it's that not even it's And you, driven just if activity a the within majority person. geared card to pick business-to-business of bill, business types I is utility

the margin, our on a So driver but overall, of reopening? are consumer momentum. we physical of it's a primary are We not beneficiary

David Togut

Yes.

much. so thanks Okay,

Operator

Thank you.

James. line from John Davis of Raymond question next from Our the comes

Your line now is open.

John Davis

couple Paragon. how I just under on like is follow-ups off with Paya? wanted guys apologize and morning, growth but look that maybe growth start it a a growing Glenn, for Hey, guys. Jeff and I business what today or you I that for expectations to give of it, missed thanks. could Good fast rate if did is

Glenn Renzulli

it John. ISV on is this Yes, feature some growing partner that, going We bring They But is sets really nice us. be the Glenn. disclose and relationships didn't to for a side. area

commercial we're to confident a was can confident team well. coming we're can into that. we in as there and They accelerate really that kind we're we growing have it - tap that So strong look, Paya, of looking to pretty

it. to give think but So we're you don't growth we we're excited exact can think it the - us. I nicely going And number, we're about for grow

John Davis

Okay. upside? your on synergy the the million, And way of or would cost is of $X.X well be you're And think sort you've on revenue that integration. then any then I side, kind said is on already all synergies

So would would of slip little a talk assume year? so you Because it and some any into before synergies year those just synergies chance could about maybe business bit be the breakeven? just Or to helpful. upside this this get unprofitable I was that

Glenn Renzulli

Glenn Yes. answer That's they're yes, primarily is again. a cost question. on This the side. The is good

the be might there layering high your this to visibility, question yes, it's year, a I is impact And right? good I about think So year. that news think, this about

make in in this it. year, half we - and line don't into of kind - next trying mean sight to from have a numbers, those So year's get perspective. be confident sure to the where line the going a the to be will process strong. through for visibility see synergy of get But a But We're highly to we're is in too conservative synergies. we're again, second it time good we what that's aggressive and we we'll and get

John Davis

another one Okay. maybe for Great. Glenn. then you, And

Just growth. organic

to the to guide, it's of the XX% quarter. that your of think the up needs I kind for in XX% math is to rest step roughly suggest My to year. get about

think so on I'm average. And about, just trying to

comps in get So XQ? your of we for I these of about which actually than kind laying competitors. think of think difficult, how cadence the growth more XQ should Because most organic is different after through your acquisitions

Glenn Renzulli

good we Yes. momentum, quarter No, want that. But we said, so in think to the be like the there. already with right? good shown It's Look, far, quarter, early careful so so some I good has question. second

here, also some biannual our We that as some will place nice of well actions in have pricing take lift. provide so April that

in, one We throughout right, have government our layering the larger our partner, government of year. partners,

see So we're good momentum well. some going to as there

going well, continue low to see a So We've the as which yes, to QX about being talked seasonal step each quarter, the up. we're sequential. helps quarter on

feel our good we have put of So kind still line and where a good into of sight guidance. we about

John Davis

higher-level specifically, Jeff, some I a little Okay. for last different me. it's a the than And of really some verticals, larger may important then in which I maybe of think be bit other about think is If peers. question. public ACH, one this your

and replacing think lot offering, lot of where So of just ACH but competitively education. I legacy, of of people these like kind you're because ACH government talk about a your think, - that's how winning ACH, share differentiated you're a some verticals that in checks

which understand in want it I verticals your up play? the you just ACH and sets in So to offering how competitively

Jeff Hack

Yes. This Thanks, Jeff a great John. again. is That's question.

ACH of ways. different two think So in

So think all always the talk the of franchise, first our middle I all, of average ticket market understand about. we larger verticals breadth in you

existing Because customer existing folks, widening on are never of as serve integration hunting prime and for for monetize integration as to partner larger customer be cost-effective an the more you're that their net tickets well needs, ground. ACH to ability and allowing them payments. bolt-on of So both the a to basically going many the to That is solve those the into needs card.

the of ACH, card. companion So think that integrated to as integrated

lot are as you important, be way? not So the to a continues strong. than there mean, people integration, expect. the and as we that's stronger that why who even prime John, in That be either of but people but place or a to add companion to solution, card, as ACH, folks I have works. bunch expected and model zone how to ACH classic a stand-alone might it maybe are they do understand there and ask, then you same as a hunting very always that that want is what integration. a continue adoption And to start into reasons card secondarily, Well, that same curve why just would folks of might a today tune would and to in not

momentum, that the that it's if just physical were so of all is have might very for acceptor. ticket, ACH skewed really you lot reason and there's you invoiced And stand-alone And a to mentioned, showing been you check. a still card large this physical never

were on You just paper.

from movement part who are as opposed nice as folks So adopting ACH on its broader to a offer. own of

a decision acceptance good sides on card both very view, ago big years in very the from solutions were So ecosystem. point put a we of think I when the couple alongside asked momentum tech to or about building Connect Paya of And made ACH full coin. this a we stack capabilities of you is

So of friction funding. can flexible boarding, the enhanced you out take you reporting you have have portals,

technology all them ACH the the been to same or we available is have great offered card a has should being Paya. is acceptor the an that's And big think that So of for that differentiator frankly on side. idea offered

Operator

Thank you.

comes Grondahl line the Mike Northland of Our next question Securities. from from

is line open. Your now

Mike Grondahl

And your times or describe new Thanks updates guys. with some marketing force co-marketing quick do you One, the talked out? Hey, secondly, client, questions. the any you you morning. of got to process? call then engagement kind client you said marketing about X that that to good non-profit of and you kind sign-ups. when sales Could Two this of that that

Jeff Hack

Two Jeff good Mike, Hey, questions. again. it's Great.

enhancements and get say the marketing at far, one our in our before, further first which is existing obvious content, partners. given, of tailwind. And biggest By the many, the in of heard biggest really the Paya installed at of opportunity that offers, talent So the beyond is marketing embed efforts on solutions you've way continual our resources many partners. you penetration single your the me the the the is times to tools, marketing co-marketing, base

tall So In how game cases, think we, stand some all partner the gets of to that's fact, a drive calendar and to calendar, adoption. about do attention marketing classic their campaigns, we by about stuff in ground drive that. the marketing understand think that within that kind partner incentives,

So year on and is and basics start again, major out called over partner partner engagement. partner. strong in the the your second but I acquisition, things. and will couple [ph] of, those importantly, speak be - we remind Paragon over very And of sales playbook. will like you it And we the operating is into the a of a reason bread sales our marketing. When plow To that butter that force, things do to acquisition growth synergies. really That question is kind we we of to executing there no back by updates always

of value a So talent. dialogue very prop a was and client it's it benefits fact on of not-for-profit, or relates who salespeople, the one that now carry the through to Paragon, really and is brought we way inherited that sales deal. the have as some to amazing in big And can is Paragon Paya, obviously, operating in with understand healthcare experienced strength particular the similar

a - talent of is on and I one things it. big the of about it's sales So other the part Paragon, of quality lot excited mean, both of things talent, a I'm

Mike Grondahl

Great. you. Thank

Operator

Thank you.

from Our Craig the question line comes Autonomous Research. of next from Maurer

now Your open. line is

Craig Maurer

now the I your old lot wanted integrated help which Thanks. that morning. is a good business. question right to you ask Yes, gives ACH segmenting you're business the disclosing story. way a to business, impression volume. is integrated And of going payments about your the isn't line I way you're the outgrowing know your

if tell versus could look if wondering integrated I integrated segment, you would what business the in ACH was non-integrated you integrated included So the us like? growth in

Glenn Renzulli

about. of components supplement. I excited our what they're there's you ACH, I non-integrated kind to Craig. break you're think growth we've the Yes, don't disclosed think the going question, kind of correct, out in more we're services that. for is This in business, that, kind underlying good of a it's No, Glenn. look, which than the Thank The ACH think integrated Yes. combination. we're traditional. we've both I disclosed and Yes, supplement payment of or of some And other

Craig Maurer

Thanks. Okay.

Jeff Hack

add There's it you most to art, would thing the the no to think just slice and yields If and mentioned segmenting way, make a guys on. dice it. prior we other one then on have this is combined had way perfect it in me segments. we're the let call, and having science Is Craig, sliced trouble right, I - with I useful. said,

that So better methods, cetera. we with And way try et this it itself. overlapping business you card payment in the to want a in Certainly, to and of is chunk give we guys the confused biggest our didn't integrated did any understanding. of way

to to the was all of So helpful intention be to you. try

I The and characteristics. great segment services has line growth strong point about It is, top also the is, also it in very the second margins. the growing thing story would to and observe has payment

it's segment a is very a right? of also segment, It question also has and a bad growing growing, growing nicely not is strong and a and segment very margin fast So good margins. great and another that

Craig Maurer

just ACH and flowing I'm the I through there's that. pie that understand and integrated is good making point connect little portion a I a there. of know is No, it's that misleading because

So, but thank you.

Operator

you. Thank

line from Joseph Canaccord. from of comes Vafi question Next

Your line is now open.

Joseph Vafi

Hey, guys. Good morning.

strong. pretty little on bit, was margin which focus Just I gross a think maybe

mix. lot And you as about a talking think, but well. there ACH, ACH out few I things on Glenn, then called favorable we're a

So just margin. gross outlook on

implication doing this, ACH then some grow I attractive a follow-up. And driver also margin? maybe have government you're quick for to if the as think like well. then an there what's of I partner but perhaps gross large continues is payment increases, yours services here And price that

Glenn Renzulli

This Yes. Yes, Glenn. is Thanks, that's Joe. right. no,

we trends growth gross good than our gross about higher really margin to ACH seeing a A previously, is blended. rate we're few in there. drivers talked think margin. favorable at I One, the

favorable had margin gross acquisition our to as TPG The kind well of helps. more that average. compared So

mix that yes, So as in really well. really that's And again, not in then, comes this in much also good seen a quarter we've much QX, I've mentioned really in a of helped not where play QX. without, before, into much initiatives not pricing, pricing the quarter -

little point, also your So bit. that to will margins a help

good we're So margins. yes, feeling about gross

see there, a to we're get lot feeling be we're conservative ourselves, ahead of not and trend our are going think and drivers but underlying trying I to that is too good guidance the good stick. and in of

Joseph Vafi

Paragon then gross if Okay. about margin, And what -

Glenn Renzulli

below Yes, question. are Paragon our No, good margins blended average. gross Yes. slightly

to to on continued good another just we're that's guidance, of we're impact not basis. reason a being kind careful point where with year-over-year trend it kind of So but seeing sure the the make would

Joseph Vafi

Sure. in some then deals like the anything it forward? in larger How moving nice for large pipeline out here look does sales pipeline a the Company's your feather there? know I And government partner does this guys. a was Thanks maybe of year. win for the sound lot, those cap

Jeff Hack

This you. is thank Yes, Jeff. Joe,

pipeline as larger So for chunky. deals, imagine, you are would they the

will once them, much are they and right, I more say will But would forever, them them. We have I working are - about longer. as take they think, you systematic you know, be we and large. have identifying those And you

pleased So how equally those with successfully we're very to at prosecute building, that and ability opportunities. are is we pipeline our pleased

okay. it obviously, takes itself, in and to that's So longer them the P&L for manifest

opportunity and well, as well. each builds right? it. understand about more embrace you And excited the get to easier is The of to very course, on it of as previous successes do, it we're others the those So

Joseph Vafi

Thanks, Jeff. Great. Yes.

Operator

Thank you.

next Davidson. Our comes Peter Heckmann of question from from line the

Your line is now open.

Peter Heckmann

good have normally maybe of check that there between year anything year considering thought that but we my I'd been just Any in think timing be last have been trying Hey, in I last tax the have there should questions is? or to answered, in seasonality. that seasonality it second won't wasn't about last of Most be quarter changed year may the in this just and payments, morning. payments, year may

Glenn Renzulli

No, good question.

I is one quarter one less mentioned, quarter. day we the headline the this year's largest versus right, business last think

slightly Good a been tax on the More without that question have growth little the muted higher impact. would bit. statements. that So

the of level, lot property, drive looking a a if of deferral spent don't terms should is our most in haven't enough the municipal variance. which, tax for year-over-year but not business, benefit of think, We deferral. much time to of substantial QX, in at It have a probably Most have payments, But any little that I kind that. are our there's at of any really of component tax part, of however, payments. bit

not impact much probably there. So

Peter Heckmann

Okay.

your ballpark, the don't second on the of for you of down right to just in the on read quarterly cadence then is I for quarter want the the the the year? kind through based I too thinking about, EBITDA And given the pin guess, But layout Okay. business year, the rest hard of numbers. of consensus again,

Glenn Renzulli

question. Yes, Yes. No, good look, QX up jumps seasonally.

that seasonal and is that's kind that, numbers matches that when of We QX. about right, in right, So the good trend of in kind flow. you the the think about feel jump larger embedded

the no, yes, I in are So line. numbers think

cost around really With we the the for of the comment - right. things is travel, right. COVID think call did like side, things I out some

us, the You in layered to on do really, all getting get is bit, road for back a back little net the increasing momentum on have positive of and side, there. really travel commercial right? And which starting us even a

about We impact. little layering excited going really that you that Obviously, uptick as of company layered think prior about is quarters when bit cost. And that. the have I think we're in things have So in on year-over-year But right? costs, getting of well comparisons. still of Paragon the have some year an a in those a couple - public to

So maybe that's would last the give the on probably last think be yes, the can best look, And then - point I - gross I it. but commentary margin.

good looking think I we're there.

So is on picked think, I the on offset up any side, going to be gross profit. cost

Peter Heckmann

Good I Thank you. Yes. you. to got hear.

Operator

Thank you.

of Credit Suisse. line comes question next Our the Chiodo from Timothy from

open. now is line Your

Timothy Chiodo

Maybe call just On opportunity. ACH, a the time Good you could morning. a little good you. spent lot of digging into we Thank today, bit. so that on talk

core might your is card opportunity I that your internally your some what of You is, guys know the you materials. of think ACH? there great TAM When you it about think laying opportunity what in on have multiplier verticals, the for within done harder a some from presentation on opportunity? out the a job you then of that away mentioned guys is it, number won be quick bigger larger thing have And of talk you you how much follow-up to put deals but a when that I the that some on, about incumbents. a

Jeff Hack

Hey, And Tim, question. great Thanks. that's it's Jeff. a

about we ACH. Here's how think

today think physical will, there. far smaller right cardable of and that the I this. portion start reports are that of physical of The electronic the for of that smaller. paper The TAM of you check, dollars much you payments trillions is much, half, tens you by if know are

payments larger, perspective, sizes a is suitable. ACH middle where So and the volume markets because get you from is know, ACH in this we ticket play, as more

processing, through is capturing back-end not the it's experience opportunity. order also integrated it through the importantly, both that that is the management, times so but course, many accounting than the of to and value reconciliation. And larger way And then, on commodity facilitates front-end the the card

are is of invest is be from and on So obviously, been and to as get-go, you excited, pace of differentiated. our by the headroom, can that. tell, we great it. tons more incredibly in capabilities We But unknown. see this adoption, and we excited will we've heavily consistent the continue we couldn't And

Timothy Chiodo

differentiating just larger Thank acquirers. Excellent. And prepared how you away around follow-up Maybe your helped to that - the were, it some RFP during put of about, little you and guess, win partners you that that life you. in that of factors that mentioned was could process was were then the bring you - how just came Okay. there want what from few that a merchant that, I the you that recent remarks were terms some more a of - the on what business? like

Jeff Hack

question. Tim, Yes, great

competitive are partners payments. are to is, of our adopters. first to first-time integrate as about And we notion [ph] by now seals as know, first-time adopters newer So opposed you the definition, many talking

competitive with of over of we of trends enhancements Lack themes, partnership. two two seals on and or in again. support So hear pace technology the continuing the that over

for not people the And they granted, elsewhere. but the They pace. do second years, get wander eyes then is may experience. So keep a XXX up, and customer them is, signed few over take partners

what So before, their a of our to if basic technology base. have the the customer you've its say that integration this their understanding management, incident have it's nature heard at software, mean end change I to joint with you most and the user and management, integration Tim, is, by me level commitment partner, support is

it's And service. so

been low So penetration. is somebody result net about for they've a the is we and years, very swapping and provider, a have get basically, it when the call at talking few out they

together So these percent which single-digit software XXs companies we out how why hear a disappointing penetrating penetration, it solutions to support are three often to going work result. you're then penetration a or will doing single-digit take of time, to after partner back which and into the is and about move And you XXs the this. years' is figure ultimately the

as and opposed in of you prevail is on demonstrating, In So support the model would is pitch that what on you the are themes support other software customer the the respective this very [ph] of your the things processing. you This solutions, think similar. end, not suite tailoring really right. is to referenceable of prevail traditional merchant the as book, commodity

Timothy Chiodo

That's we're Great. to Thank looking That it Jeff. you much, for. absolutely life. brings exactly so what Yes.

So thanks and questions. I time, the the for appreciate

Jeff Hack

question, for Thanks the Tim.

Operator

Thank you.

Blair. Our from comes Bob line William of the Napoli question next from

open. now is line Your

Robert Napoli

you solution was base. important that knowing tool biggest onboarding in penetration thank penetration if that of the merchant the is follow-up the upfront I Hi, opportunity an for out that the had wondering rate. and question. Jeff, installed your new you called improving is

Jeff Hack

Bob. Great question,

want in ways. to I two So this answer

important make very is because specific experience of boarding it partners' are deployed the enhancements our is, more ecosystem first The we inside the natural.

as like the separate services software other itself. frankly, - that feel event cross-selling from So are a of providing it doesn't sale much they or

deal. to about Flexible, partner enhancements they so it. relevant that to So it's that way, is are by big and the our so a each we're consume frankly, look. the it partners, and very way helped excited how want inform the And us, recent they would

again, few want a quarters. But what point call, you'll me one. about say And to So again a on point quarters. talk this that's boarding then few to in everybody I do two, in hear

It and this So those business. continuous and for tailoring investment boarding is grails the is a the one the of in of verticals. flexibility cases use holy unique and experiences,

or we very exciting want So real more as our will of event lives, of if for to we item a a a less boarding terms Running think I of in the don't what this of mean. you growth an rest do capability being you I BAU at [ph]. living, the in end business our a know investing single, for like state, part be

Robert Napoli

of helpful. put the you. you the rate? is really on much growth April, average? Glenn, was Thank - take called the to was on that the higher than improvement in How eye upward card pretty popping. XX% That's rate going card in The out, blended Yes. month that pressure take April

Glenn Renzulli

Yes. No, question. good

versus basis. versus know, know card opposite. think ACH priced won't. It's ACH the a answer right? you I the point actually in on on is no, it XX And rate XXs level rate, the basis tran the usually no, favorable is per But basis. a much You're more you the take talking take as spread

more some have in of as favorable economics. well. And have we again, our We layering pricing initiatives

So we any the don't have spreads quarter. concern about second in

Robert Napoli

No.

would - upside - as that upside on think I my is put is that, spread question put that

Glenn Renzulli

Yes. Exactly.

Robert Napoli

quarter? Yes, then you integrated should solutions in yes. integrated solutions, in payment growth second And see sequential versus the sequential the growth the services in stronger

Glenn Renzulli

Yes.

Robert Napoli

Yes.

you. Okay, it. Thank Appreciate great.

Operator

questions. like remarks. further turn back you. Thank I'm over to call At the to no time, Hack this showing would closing for Jeff I

Jeff Hack

you. Friday Great. this pleased Very Thank everybody, you, for be early morning. to us and with joining on operator, thanks,

can and the belts. well I organic transaction we strategic, very remarks, we're progress making, as, our another under great are from proud growth both the in obviously, as tell you efforts our with pleased accretive think

for speaking those step that see in and soon. you since trying more. really to first a exceeding objectives And clearly our setting forward you last talking way meeting we in or been we you again be to the always And every of about guys again the pleased consistency quarter. to to objectives we've what saying out summer and hopefully, will hear We began look

Operator

concludes This for Thank participating. call. today's you conference

disconnect. may You now

Paya (PAYA) 9 May 212021 Q1 Earnings call transcript