PAYA - Earnings call transcript Q3 2021

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Operator

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

Third 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 third to welcome Good earnings Paya call.

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

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

a section Investor described just XXXX have presentation. of I the information the all quarter find Paya’s including website, third can Relations supplemental You on

Renzulli. are on CFO, the Jeff call joining CEO, and Paya’s us Now today Hack; Glenn

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

Jeff Hack

that adjusted to grew the adjusted and to results solid $XX.X growth revenue XX%. review year-over-year the and as volume in results you, card Matt. a led same delivered us for And XX%. year continue KPIs. our These $XX performance XX% Payment the quarter. we that growth Gross highlights grew by the and these financial growth XX% we I'm review as discuss of from medium morning the quarter to we And markets by total and XX% and of everyone. verticals results in good financial from driven XX% key us you serve. third record leverage the We volume expectation. our XXXX volume million quarter and Paya’s the grew confidence to full $XX.X review today, growth Thank ACH demonstrate joining and Thank the across EBITDA to contribution what in XXXX business period ACH and grew of EBITDA quarter's and going term. Glenn Paragon. revenue as compared gives now XX% well million. card growth billion will over underpins and in see to was profit in full to growth $XX growth XX% inherent million, Total drivers a

within enhancing software clients. company of clients. offices find recently our is administrative vertical. attract focused offering software partnership to on the ISVs their new recently payment partners processes Paragon some announced First we engine enabling construction new and the our front with core ability bXb the and within back operational and building are while To providing industry, our within commerce acceptance their and find a and growing great partners and software leading We’ve

payments acceptance business highlighting software. results leading allows pay. expanding a while Paya for as to recently reporting provider broader customer new a wins partnership where of our not payment with and a customer integrated Paya’s partnered to cloud-based payment enable recently our combined only a support, a also giving E-invoicing and By ERP holistic all happens focused wide business the to reference ISPs the new another uses. progression types, I the reporting useful launching it a partnership Orpheus the we addressable are ACH, focus ACH who to while reconciliation to both to customer a Orpheus integrated of are its of set BXB an experience Key is The variety on platforms solutions processes. while across end provider text Salesforce including vertical. and This our comes ISPs with the partnership Paya that and solutions can [ph], industries for and in win coming Encompass offering early take. government in analytic as within to we standing of growth large payment Technologies, of ecosystem, centralized while forward support invoicing market, allowing Orpheus their quickly the full application approach drivers Salesforce diverse a We offering via merchants Salesforce bring front the business payment but to helps within great leverage be payment into front thought view data also such end expanding features pre-integrated distribution are payment detailed management capabilities of vertical. enable seeing agnostic industry. Encompass beverage requirement, digital scaled of signed functionality, and within operating with platform able and through payment flexibility and on and leading and would were in our highlight Also We’ve that our embedding partnership not our the option. This within suite worth on months. look card enable currently and We're up

this continue existing Mississippi, southern inorganic the United both momentum natural we markets to look the partner, that and such government seeing solutions progression integrated vertical stage municipalities continuous especially software we're signed see, that within invest serve. to strong. means. And Paya government verticals organic it's competitive our in multiple through as the this And a of and innovation large the further and set that solutions resources for The software to -- these all while located in including Win future our contracts and into Specifically, with win. positioning, our products new growing through commerce our primarily across Texas. market enhances channel Florida, in the Tennessee is great Payas growth, remains integrated are enables wins led States, we'll our in and we've quarter addressable expands to

robust meet our of the developing to we key our solution Connect growing enhancements and Our delivering added flagship building our on e-invoicing enhancements to Paya needs offerings growth. core deeply software Sage. remains Notably, of customers, to improving we provide integrations delivered The and key our focus value including partners, integrated our with is and is and a partners which vital to customers payments integrated office part back future efficiency. Acumatica data

of order customers strengthen with the release to and customer partners interfaces, functionality support user the our efficient such, portals As as experience they reporting grow. and we modern, new providing useful facing in and

payment no customer a targeted of onto the improved which secure disruption disrupting including enable of of market which provides demand Paya’s Payas without be from for transition Payas market, partners of a platform and partners This providers experience little implementation ensuring supports to encrypted partners valued render legacy to all highly days customers or in large today's quickly middle with critical partners software unavailable conversions, to and payment their or migrations migration Unlike Our transfer seamlessly. can and to acceptance, of service, migrate continuation solutions quickly to enabled new Paya card services their launch weeks, and and data. period operations. experience. seamless is platform ACH import the able existing or day-to-day functionality

key Paya’s Officer. customer vertically team. has of tailored Gartner joined may customer In execution vertical us forward as and her recently Shepard our a sales, you Chief and success. record and strategies engagement as we're is high at on well Insurity track Michele As software and to at growth this the additions excited Vertafore Michelle we have as marketing announced of and Paya. recall, companies recently thinking Commercial Michele role, success across development leadership focused to some

accelerating complements to leadership integrated development, Additionally, and to have excited we and leadership technology priorities both our commerce On the includes Devarasetty welcomed solutions. efforts distribution focused and our continues deep Officer. M&A our expanding top focused in Chief as the payment. addressable a product allocation, order Balaji record with remain at we're not ongoing an well integrated growing at our us capital us leadership growth in through people platform of Balaji of organic on Balaji Strategic to and Michele while fast through scale priority on business. innovation is our our solutions Balaji’s changed. our and have investment digital recently into extend enabling extend organic continued to be say, growth profile for and as track We Technology our and expand innovative payments market large both here market. expertise Needless to businesses. the to leading commerce Paya Paya

in through in across In and we updates growth continued over to that, remains With momentum to our the with growth. to to serve. and of robust, markets acquisition demonstrate our opportunities continue continued with engage pipeline teams the Our proactively Payas opportunities recent summary, verticals Glenn? walk and turn end financials. investments accelerate coupled I'll you talent our markets, Glenn technology it high further these

Glenn Renzulli

good And Thanks, Jeff. morning, everyone.

of in government with card verticals two ACH revenue Paragon. ACH was million and XX% strength integrated up million was quarter, good transactions from third solutions see year-over-year the Total saw momentum an last of the revenue XX% ACH primary revenue the our to $XX.X otherwise seeing ACH. XX%. with ACH. BXB contribution year-over-years. by parts of currently revenue incremental we're momentum across key combined business grew government growing volume up our from Card was the In Integrated within million, and in Much X% continue that we verticals, volume revenue XX through grew XX%. is Total in payment billion, XX% the Payment business growing quarter $XX.X in both specifically led our the and $XX.X of strong with was and attracted Solutions We services XX%, an BXB the increase and continued growth. headwinds increase $XX.X volume year. in quarter versus the

attribute of healthcare the is We lower First the in to know, payment medical of variant you as latter volume. expected vertical, COVID-XX which the indexed procedures. half saw We the slowdown in slightly rise elective Delta to than primarily QX. our

or procedures. delayed consumers elective As deferred

solutions of see implementation certain and is the key delayed item, timing partners to and periods. This the launch our implementation in expect the one Second, move forward of in the coming we quarter. slightly a primarily

with the prior from $XX.X million points solutions XXX million gross up the profit up For basis was gross quarter year. XX% profit margin of year-over-year $XX.X XX%. XX.X%. Integrated Expanding was of gross

was up quarter the we Solutions Specific growing million partner $XX.X While indicator Integrated a is our Payment of XX%. to our much trajectory Services certain partners faster which of gross faster profit scale great saw for of and a long-term the forecast, than health business. leading

given diluted it was partner, volume, into share compared However, component for high prior particularly this higher growth the gross revenue tiers larger as revenue quarter. move on they based to share modestly to margin

a impacted In margin. gross quarter to addition, full our a consolidated had slight impact Paragon

our Paragon public performance acquisition operating which by Our financial declined was of expenses gross third XX% as expansion continue investment, Adjusted Adjusted segment. private are XX as layer as $XX.X solid quarter ACH our payment company was EBITDA ACH Adjusted we to while points for company business basis our versus margin applicable to large the the of in differentiator were primary margin be accelerated saw year-over-year quarter operating XXXX. and Paya. to up in we to a $XX.X of EBITA prior came well within Driven at and continues related in. full a the the driver million some tech costs, key in year. growth year-over-year services see increase in quarter strong expenses strength XX.X%. not million a which

year largely in quarter. tax million loss tax the net million how change the the versus net by for was quarter in year, prior $X.X of liabilities income was $X.X driven accrued. are Finally, in income Adjusted GAAP method a net for in $X million

a approximately million our organic through $XXX inclusive and cash end of the approximately positioned the at diluted by both and not in million provided as quarter $XXX we our At on that cash opportunities with activities X.X finally, outstanding Regarding have slightly million accelerate shares well our the thresholds. means. million met of leverage third million. Net in $X $XXX balance debt, total is was growth, the the quarter share we our was at liquidity of the inorganic ratio and And third focus the issuance below of operating quarter as sheet, approximately shares $XXX count X.X quarter, end million end had gross yet net earn-out in to times.

third X.X shares includes retire figure public issued that were this million quarter private outstanding Additionally, warrants. and in to our the

As in public former our no private these actions, capital longer warrants have we a been have result warrants and trading. or of delisted from public our any structure,

of illustrative end the Our supplemental earnings morning the of this contains our presentation walkthrough at count quarter. an provided updated share

Turning to for XXXX. our updated year full guidance the

are We of revenue XX%. gross range our $XXX We're reaffirming to our margin range million. reaffirming million guidance to $XXX of profit XX% also

As range $XX the our year, we expectations to adjusted of to EBITDA full million. year move towards $XX a the refining we end XXXX are of million

for current reflects guidance our the updated expectations the year. of balance Our

not the impacts on COVID-XX of turn morning. Jeff? year. the developments monitor call. the may As that remarks business remainder the final to my the Jeff over this to for a prepared I'll or to we That close have call back the point, and up may continue potential concludes

Jeff Hack

Thank you, Glenn.

talent the for capabilities the expanding continue at trajectory ready our Paya the penetration customers, results see taking our ACH to M&A of adding accelerate our that we that operator, With while take the near strategic in growth actions are will we addressable wins term are competitive the we're exceptional to strong, and remains Our and while innovation, positioning opportunities extend and questions. quarter market. enhance verticals which and we new see, key we existing in to through continued growth operate markets we strengthen confident reflect

Operator

[Operator first William comes instructions] Blair. Bob Our from with Napoli question

Your line open. is

Bob Napoli

Glenn, Matt. Thank you. Jeff, morning, Good

I about momentum targets feel in So you you look the ability is and think business just your what to how about that term, the Jeff, longer and as at and business, achieve next the do XXXX how's the -- care, but I Are -- the it confidence? you anything call you had else mean, COVID, health concerning? rest How's your previously? the anything, obviously, out and So out goals you set momentum? seeing of

Jeff Hack

expectations for the changed. that accelerate would What thanks which doing hasn't to to we further, morning. momentum view question, ourselves really technology. the can boils I in talent of Bob. down same is strategy, Good Yes, our and and say business, everything Same

the say So of ago. changed, business, focused the competitive very execution. But a on the what's the year look flow in new what's the business, environment pipeline, like has And so momentum let's versus like? pipeline the

appreciate has we exists. said And the the competitively all But So is in like and I you business, pipeline. intensive. which The different we segments very as feel course. avenues good about this. the very operate people to market. competition, importantly, competitive market municipal you Everyone think on focused before, middle environment not are core of And we've BXB as of of

about and good our momentum, feel hand. we we good feel So about competitive

Bob Napoli

Go it. back queue. Thank you. Appreciate in

Operator

from David ISI. Our with comes question next Togut Evercore

is line Your open.

David Togut

a for OpEx fast faster some company pressure, a But Can given expenses, payout growing bit little margins, year-over-year, Thank nine called higher grew you public and both morning. you for fourth revenue. margin your revenue much. client. very out from And quarter you adjusted XXXX, XX% outlook PPT than good additional about the talk of

for So EBITDA how gross think XXXX? should and about for we and XQ outlook the margin

Glenn Renzulli

and Hey, David, EBITDA costs, have Glenn. I just y-o-y. XXs it X about question. the reminder, high just been this for public for XX% Yes, XX% right? we've -- would think quarter company before. Thanks is up But the look, we another said

And success seeing much large some quarter, year-over-year obviously well. they continue with some little year. Paragon get at hit a in question So had to, us quarter expected. will lot their margin they an that's this part partner, look little from incentive this had That this but we quarter, parts Yes, the which fourth had full we bit margin. from the fourth payout -- not from which year, one perspective, a the which bonuses, as we as reason which even was impact gross as of them gave one, also with take quarter of the we've into of we you're growth impacting higher a as incentive quarter, a two get we than for not starts impact I'll into the next into least. as quarter this out we expansion definitely a

Look, -- get we're public out from and that impact our cost medium there. then environment as we're when we as certainly that a spaces. QX, call quarter coming investment we So be see technology like little for do perspective inflation you to tough here. also of from in aid see well. gross said, We play quarter. our for up not little then the through comes forecast gross where a some a little impact can others, into guidance year-over-year OpEx do kind a very account exact about some full of And margin bit. Jeff you year of costs had, it QX well it with believe and different a sales. comes not in it's growth below exactly. a we from And a from in an probably perspective. margin. us gross bit from perspective of yes, a initiatives obviously, -- we some that's we're pricing again But of the that And some cost term give in that us hit kind and we margin have as going kind because and yes, And back bit above fourth We're number will difficult the We focused there. the But kind items to there that a we, much perspective. this as then of as objectives it's yes, perspective, on washed through a lot think of company the out from seen And hiring obviously,

don't see trend, So, as to need right at drastic technology any we same to the in market time, as go-to side the we're to line top growth money going we work much above but going. that put increases and keep

So, not probably that. different OpEx But from not more planning we're less where couple comment going moment working the from or too quarter on the we're slight at perspective from trending 'XX, book SG&A up last perspective, on to that too much than tick a much here. been for see we've fourth our quarters we'll

David Togut

Understood.

to Just clarify.

revenue you called to in you've that model, think So your when of the medium growth XXXX? model, changes and hiring think cost intact about out term given growth in costs, we about the inflation, when and EBITDA you long is term terms or the technology see model

Glenn Renzulli

we speak Yes, about go Jeff. -- ahead

Jeff Hack

Go ahead Glenn.

Glenn Renzulli

really was say, I can with year I we cover because just 'XX the to here, current that done the quickly speak to as from gave our just to I just but then medium we planning It not guidance. we're And doesn't to a think perspective, well. differ message cycle. we're our with from going going speak term not way,

David Togut

Got it.

Jeff Hack

medium add point, just when out as 'XX. at this and in set we objectives same a summer, we I'll as coming are out of David out that for this, were then laid those early originally last exactly you and the all term our again public company,

David Togut

you. thank clear, Very

client? Just Can early quantify QX or onboarding you that XXXX? the from quick impact us either revenue in delayed as the have a the to when visibility client new you for on final question. mean, will convert do I of

Glenn Renzulli

give to? David, happy you. Jeff, to up there. it's is Glenn want color a Do you again, this little Yes, to

Jeff Hack

Glenn. ahead, Go

Glenn Renzulli

we're say, with going this partner already. so success was having to I

this a binary perspective, installed their from item, like some different software starting zero, we're instances different base get a of have with They So them. traction some to is versions. or not

out various of that to base continue we they So versions have their there. install through the work

continue you you'd also you but an relationship hope. side, as specifically of them, there's component moving component, a a continue little municipality with have these is bit This from to going merchant far on standpoint, some which than lot But to have forward. partner like the work -- great one integration we itself. in as and the projects the longer then take long government a one So that have

of had certainly the like quarter. path it specifics some question, comment your as far the We're the But this as in the quarter. impact answer some not it look next as as we strong, the the there. at see And have to impact yes, the dollars, is for we day, relationship to item still a is positive end going few do did quarters. So, but

that sure the layering in, all I'm not I as Jeff, if far comments. As had but

Jeff Hack

work okay. David, strength. partners. to I is would just Takes them it they if few add this and time. I've following to once for long a And months have signing large terrific the to an the you incredibly you that's them, it of new takes, get stride, are lot Because a and if get said longer full takes underlying customers full before, with

David Togut

much. Very Thank clear. you very

Operator

you. Thank

from with question John Raymond comes next James. Our Davis

Your line is open.

John Davis

guys. Good morning,

wanted call from revenue out core? their Paragon, impacts Just to and TPG the

Glenn Renzulli

line is say about Hey not JD, XX% was organic. growth this this probably; our Glenn. I'll top revenue

So that impact the will give you of a sense two. those of

John Davis

leads my Okay, next great. of question. That into kind

that I then of And think in think wanted we're guy especially up called want higher, and And health So I good confirm your to to be see revenue organic to caused shaping on basis pickup seasonality in your to and a fourth the impacts Delta, obviously, is make a I correct. XQ, dollar quarter should you seasonality, assume would think think that any growth business? for care I XQ the just but versus you about business, in do some organic slightly going decelerate, sure that. maybe XQ from out XQ in also any maybe, growth that's understand comments a we just on lot

Jeff Hack

I'll one. that pick Yes,

the I that of we we that quarter. twice so year, also, aware, sequentially one end which do, just yes, a you're pricing happens the But tick right, quarter, those a the QX First. a perspective, And year. do of think, have fourth should of we up as we slight in some how is in see actions some from initiatives

on And feel fourth the of for the message a the midpoint quarter. revenue kind we a So tick is of slight year. comfortable up we'll But guidance guidance saying, I margin the in perspective, from gross the think the see

John Davis

you just hit you or margins, decline Okay, in margin integrated on in gross saw same margins, but the the nice talk the kind services at margins, and a to basis. of time, pickup then you payment gross on the

payment So to than to is recall, that bit that’d the was that going a we I the able just highest be Should services higher and it in lower? expect been sustainable think it's XX% Payment So of just before Services? forward? was I kind integrated think little highest ever Just be helpful?

Glenn Renzulli

Yes, sure.

So around think yeah, Services margin, no, I at Payment mean levels. those the gross we it's sustaining

So if a level but to an see it’s tough I think know from tick up around. feel it feel but ended an that And, about that accelerates yes, QX we don't should I will kind in perspective. integrated QX to where quarter-to-quarter, good that it call -- perspective, good from again, the we here, of we each currently from from integrated

John Davis

Okay. Jeff. quick for bigger one then two a just picture last And

similar from from any or issues your seen chain of a year. perspective? potentially into your things heard and going you some next partners supply are some First, I've any of peers

guys. to just So hurdle biggest up. kind point this more rationalize? comment I'm little M&A then what's hang active a focus just Thanks talk But to Like, at call evaluations on about a acquisition the a Jeff, bit the where there. front? -- of starting pipeline being biggest going bit the to curious from little you what's the maybe, it And

Jeff Hack

is This Jeff. JD. morning, Good Great.

we supply a nothing So chain, say observed we I say, pattern. would that anecdotes, defines first would but on have

to much there. add So not

as pipeline the early the differentiated or that verticals same, that's exactly chain. and from is deals into in anything of broadens pipeline, value acquisition and deepness our verticals, stages our adjacent conversations if couple technology, terms One, In with a and things. great, always, later the proprietary cultivation are or they to existing distribution objectives sub-verticals, various strong the criteria widens

In valuations valuations. but there there's margin, choose particular features, the criteria. out we our areas examples impact pattern have based if to on do neither. your I Certainly, build not maybe on thinking, call And where not if that them comment would category been a of might certain are few a technology have there any would a meet the broad terms probably our acquired about proprietary of that, we before whereas in

John Davis

Appreciate color. guys. Thanks the

Operator

Thank you.

question Tim Credit next with Suisse. from Our comes Chiodo

Your open. line is

Timothy Chiodo

taking thanks retention. the on Great, is lot Mine a for question.

follow-up that Not volume in just was the metric? quick and disclose that I direction. then you did around on? can general did when So right XX%. metric. but And seasonality, one, you or if talk volume the the that’s sales say we that you it that what's the just just from timeframe retention slight think go metric. retention context, kind any of clearly time of we Actually, slides part growth big that bit about your a about next last little curious, it's that Or think is of on the I uptick of there's year retention, around a which type in at algorithm, same-store And the can a touch

Jeff Hack

obviously kindly it our period, great very great customers, numbers solutions. insensitive. move So price bit time while it's any of given retention a that leveraging Tim, tiny we or up key algorithm, the and out, And core integrated in are down isn't have a pointed our might terrific. as And you the they sticky, It's very once is business. growth you part end partners to see

great So, the them improve them, to on intend further. in margin general, some these to perhaps we find maintain think KPIs are and ways and

Timothy Chiodo

excellent. Okay,

Glenn Renzulli

And to…

Timothy Chiodo

please. Go ahead,

Glenn Renzulli

I was come The just time is a year. period it's yes XX%. going typically, the about on to,

think normalize trying stable, bit look is volume perspective a at too we're over we doesn't which pretty the But what us the move from year-over-year running to I a XX-month our the attrition a net integrated. the strength for We're from XX% look, same-store. moment. of much it for And really little perspective. is business, rolling perspective, So part of do at is,

and from page. kind not trying growth, sales any outside on the any we're that's take why the of of squiggly lines So to a benefit kind same-store

question. So retentions, from running pricing number have And a above And obviously, retention with do you well, volume another revenue from number initiatives perspective. much and a then get, net that perspective. that's the you

Timothy Chiodo

able fully parts there Yes, of our But ramping across last the Not it's and of clients, and to absolute is look directionally? expected of were giving revenue respect year, a just know be XXXX give kind an as different be overview, some I would what at an next moving seasonality the not numbers, we with but QX QX just you time guidance. also models, year that year? again, that would from of the this this basis to volume

Jeff Hack

is you've at dollars, look, in we've that QX typically in way. it Yes, lowest constant and seen said looking our number what past, the our quarter,

and then QX slight up because of then little no and below, we tends to a sometimes dollars typically. QX QX the ramp growth just And period. -- tends about QX, That's, bit same So sequential summer assumed. again, in of the bump constant get as QX, with a to slightly then be to

Timothy Chiodo

kind And a we how QX, little bit that might you. excellent. and Thank really that's helpful. of think then Okay, from etcetera. impact there, this But about delayed implementation

Operator

Our with Heckman next question comes from Peter Da Davidson.

is line Your open.

Peter Heckman

back unusual reference that what in the Thanks quarter. the Do good my doesn't Hey, that about? the that not, added you you on it the prepared it taking in remarks? was item net Glenn morning. income? call. appear in for tax proforma If And

Glenn Renzulli

question. the Yes, no, for thanks

XXXX. of that So your kind methodologies you to the the than on. a forecasted the more adjustment which in using then we from and of it a method. of kind year-to-date first And to forecasted the methodology calculate year, larger this can get two One provision a to that thought is quarter, move was accurate tax we for there's methodology, method that little we half QX year-to-date just tax perspective, were because a was

think amount, versus that right about quarterly. you when it, the to look at So year-to-date

way to look And expense, the probably a that for current expense at QX, bit sense tax million which more in probably year. the for should you the for little the that's tax think accurate year then And give tax full XXXX. under I the tax be impact a will for expense. a

Peter Heckman

just to about a EBITDA looked an bit next And bump contribute revenue certainly to can Paragon XX% ramp Okay, margins do year? and like And that's we still and their more back little so just and maybe more integration, meaningfully think the perspective. helpful. to contributed that then EBITDA and overall expect we going the when or a they their up Paragon on acquisitions

Jeff Hack

good Yes, so, the would yes. say its I answer Jeff. morning, is Pete

part integral an the existing customers, about pipeline It'll with of terms customer’s be to it Paragon of because in of strategic has financial become solutions such of and business. meeting of feel measure terms existing pleased And great we the very attribution but isolation, the great new are integration. We our about growth we Paragon pace feel customer's of objectives. integrated acquisition, harder our it in in

Peter Heckman

you. thank Okay,

Operator

Jeffrey next Andrew comes Our Truist from with question Securities.

line open. Your is

Andrew Jeffrey

withstanding like of manufacturing customer. big markets, morning, good not here taking vertical the But kind moving timing encouraging a I you to in specific BXB. hear Appreciate are going it that momentum business, could the speak question, wonder lots on parts forward if strong. maybe wonder sounds you the about mix. construction And I Hi, just Jeff and your guys. for are what of in to implications

elevated continued what recognizing for but know you grows the means that of gross think else could of sort profile And suggests that we maybe margin BXB yield, this just business. about it in signed kind of as the all of I'm see equal sort means think to I overall that direction, last of that for trying to trend customer your going big rate fast, ACH we’re right of end So what year? a profitability at growth, the

Jeff Hack

of supply you things, distribution, thanks each momentum to of Good morning, Jeff, outline, Andrew. BXB on. the It's the growth we question. the and so whether first for chain, all, of categories it's and logistics, manage manufacturing, couple A so attractive

the time spend specifically, want how the all key of So, and of we BXB don't and software understanding attractive growth maximize that integrated categories of on guys very a sensitivity. continues these inside understand it we payments we I of is do. just power are the mentioned, you But what it of of of categories, understand to mix, awareness to the model level build. business And for lot

is into a and penetration ACH COVID transactions. momentum more we with operate virtual the larger it importantly, more etcetera, card, to that, commercial of the card, pleased distributed obviously, common to for companion alongside, broadly, thanks ticket expand as see becoming to are we And there. workforce, it typically far Some very

that for growth this maximize comes is of And it key business. the call out a lot So growth ACH both on are card not of the I to the instead think card of levers TAM? big alongside

Andrew Jeffrey

gravitate it it's I like time, to guess but characterization? business. remittance expect card Okay so, BXB today, sounds over ACH centric, might we more toward still a an Is that reasonable

Jeff Hack

No.

say very underlying hundreds XXXXs the for And displacing I dollars, another one great it for not cards for It's is think of growth is would smaller category. ACH of the in tickets, about common transactions dollars. and larger Andrew, So them it there differently.

tandem, toggling importantly, unified investments, in boarding, them. both operate the maximizing of commercially, than rather penetrating and category underwriting, and growth technically at made the Paya, they big single reporting. we've common So in between And

you one So accepting prevalence much believe, we another. for people to there of both methods who expect higher alongside be should are a payment

Andrew Jeffrey

for Do differentiate vertical think helpful. right, your All be your driver ISV ultimately of enhancer Connect greater in a e-invoicing Or of in functionality? of this connect about you investments. you yield how for to in new business then, mentioned quarter. you as drive more in of you. Thank And you you think partners Is some it that's also I a super some that terms I that Paya think as a particular markets? can

Jeff Hack

Yes, great question. no, Andrew,

absolutely and first So business, Connect, tailored. importantly, driver very a modern, then based it Paya of winning of new flexible, cloud all, vertically

so use times have specific important very segments. those that in the words different can the many said to before, cases experience vertical that I you tailor So

is core would and you're the obviously, firm, part is, enhancer, not terms I the maximizing your am that. about a you value in price stronger whole. your say And prop yield of leverage of growth, able is prop, talking what What not would your maximizing prop. to wide value yield enhance prop, in value all are in terms yield I growth your the capability yield talking being I I'm terms but your of of maximizing in know, value reporting, to the firm analytics a maximizing the data whole, as more of about to being the live as for But say it prop, the value terms a So a enhancer.

of we frankly, the prop. value of as that, So the foundation think

Andrew Jeffrey

you. thank Okay,

Operator

question open. Vafi, Joseph with Canaccord Our from your is comes next line

Joseph Vafi

morning. guys, Hey, good

been a But lot you the few more a know there's in good mentioned partner questions I Just good southeast traction. here. a here follow-ups of in lead most already public services some where

at the partners to you a sections be country? looking in is working look relative for you And those of service? country, would the in other ISV other have then follow-up. parts other that If Or of the public probably couple of parts countries, other I

Jeff Hack

Yes. morning, Good Joseph.

So the does partner municipalities to you're nationwide. serve referring

So is that obviously, a Paya. for great partner

to different who We on are the different segments obviously focus et partners, market, other geographies, cetera. broader -- may always of talking

Joseph Vafi

turn bring you down mentioned partner’s Okay. without eliminating time ability And app of that on in like a think do sounds So to How capability? any then, for apps in your advantage Jeff, pretty functionality. the period know kind not or for your some the I competitive you it of payments, to payment marketplace? of is good

Jeff Hack

question. great a it's Yes,

business to view to migration. which is candid, poured But we're of of to of maturity also technical very key that, it is operational first then just and differentiator and accomplish. at the and client sometimes proud not hard obviously, capability, Paya. the support a think, through the as we in is that And a itself overlooked. often be all, out that So And that was I call of

of more will companies alternatives providers, some more existing like legacy believe, Paya. and integrated become the And even for explore this more so differentiated important capability, to modern payments as relationships I

Joseph Vafi

look then kind for the into of partner at And often of and partners Thanks that extra your that I and through who's distribution your into know point, get much, one called distribution to integrated your Right. another layer? this you that's out do see you Salesforce, if network integrated you kind a how across lot. boost you partner extra much larger a potential ISD of

Jeff Hack

question. Great Thanks.

to offer described I integrations is is backs, ad know, more are getting bigger Because you also help a we and of ad our even our there tools effect add backs, think better. integrations, you which the are you you strategy to more backs, And we as flywheel these investments get your customers and scope more perfectly, grow made, capabilities, you you've already getting your widen here. as you faster. leverage ad

Joseph Vafi

Thanks, Jeff.

Jeff Hack

Thanks, Joseph.

Operator

next Northland Grondahl Our from comes with Securities. question Mike

Your open. line is

Mike Grondahl

Hey, or have guys. expansion other It just like new a quick in sales. call a Any of the leader Hey, out? to sounds you adjustments question. Salesforce

Jeff Hack

This question. Jeff. great great, is Yes,

ability to our accelerate even talent So help incredible us I we to things company some one leaders proud most to attract -- of the and am our is further. of, this growth

technical your call, as your So broadly can of and discussed Balaji on speaking, foundation innovation the and imagine I Michelle the you business. are go-to-market this

big looking growth talent are area to we pockets are Beyond growth. our the always to great point in in people item, and business. that, But we always the all great say wouldn't of I for the that any one support is to looking support next for areas

Mike Grondahl

Fair.

you. Thank Okay.

Operator

Cantor Our open. line next Fitzgerald, with question Cantor your is from with Josh Siegler, Fitzgeral comes

Josh Siegler

Hi, taking for good thanks question. And my morning.

as we did your move ticket And how Firstly, expectations trend in what are average Q? into three size XQ?

Jeff Hack

years, Yes, few so average quarters. the has few ticket sizes, trended up last overall

I parts, parts few positive one. there. to, or two a One continue think we'll So is there. trend ACH a we've seen And is,

some just and well, seen the from growth a And others So ACH as from same-store of is off that the their then environment, economic have higher ticket. then an based revenue growth general at just and growth macro typically perspective us good, benefit we've inflationary that. model spread that's and

high hit think of a we've will there. that Really, factors thanks are some So, there. you And a color change, make to kind right feel end we years? for guidance seen the comfortable question. few what good the of driving yes trend out? don't good That's Great that's the And, as more now. then going look of to last and

QX, You in care of those one matters, know, we It's talked things right. about item the where it's, health the vertical right,

which early those date, surprises quarter some you too to in the But macro we as upside months, we'll So go environment at No provide We upside. is the settle you does. the XX rest the we'll when to I’ll kind see see out make the tell it some live, where always implementations in moment. two there. year. that delayed could a good. for what we, really October, the exit of X some But settled spoke really of difference. Windows when then And within helps. know, the goes on see of where we Could obviously, that next be

Josh Siegler

Great, thank much. you very

Operator

your Faucette comes open. Our Morgan Stanley, James is with line next question from

James Faucette

at like you volatility really into you deals. both what much. been Thank the looking I at to you guys finding question terms the to good have miss always we, capital go valuation a said was market of honest, very Wanted or how acquisition I of your lots address in think coming kind in and it, landscape, be answer, lot of generally. but back you to been obviously you you're But of, there's

terms So, what are you pipeline thinking about of to in ability and etcetera? convert

Jeff Hack

Yes, good question. morning, Very James. important

deals one broadening the interested quickly. we pipeline. over that landscape, And our changed pipeline, landscape get about view period at companies that has in and come bringing by I the are relationships of to into good Paya Others not and are And of better time. we of feel mean, our So nurture at remember, kind kinds continue very of we some to all. a

good. would focused we earlier, we And reiterate category. I that undeniable that pattern, To that the valuations, drawn there's we appreciate comment are which would And very lot of but feel I'll on we declare something are be. great capital on these nothing a is said few as should categories. very a think been I speaking, important, that’s into obviously very broadly scratchers, all So I because is of head a growth it's the examples

probably broadly are Paya speaking, not financially have whereas purchased are strong of those both. we needs, strategically. can of on a good But position finally, in, the are beauties get And technology do there will course, some might feel is And few then building categories capabilities. valuations that valuations where being accretive otherwise we is the those and drawn incremental there. the done deals our financial unreasonable, it's of ability Paya the to fill that of is features that we if one that to choose So about margin, a to surprise capital we at

James Faucette

looking capital now And Got are it? is of think you our primary about that kind what you be should more it. other Got then capital use acquisitions how of at right more and or thinking potentially, uses generally? allocation broadly around you your

Jeff Hack

has reiterate I'm this, to capital our I changed. you want framework James, asked. allocation not Yes, glad

enthusiastically. Our this organic drive that business technology is core primary priorities and capital the high Paya. as business. of to that in also we two do will allocation we investments part growth believe companion a do that and and you organic The investments out, what is that, typically ROI will And that boils to down we of unchanged the of pointed in be people or as are the to M&A. All growth we strategy

We of buyers. are as very us we I proud the disciplined, success but the enthusiastic would today. characterize deals done have

James Faucette

this That's Got great. your morning. for Thanks time it. it. Got

Operator

Thank you.

is comes Our Bob from with Napoli open. your line Blair, William question next

Bob Napoli

follow partner, is? you hoping what get customer out across mix the the bring to, average some maybe on, the I have to color for a during thanks the in maybe as revenue, what Do guys was Hi, quarter like up, can average we doing called affecting of you you we growth the adding How should and some what’s $XXX,XXX know, year think we in see that I partnerships like a customers that customers? the the bring, think company? How revenue, and I.e. about, don't about effecting. Paragon, is

Jeff Hack

a great Yeah, that’s question.

partnerships come down it simply, boil in, So sizes. all let try shapes and to me is new

software you can the and offer what you and like early their contribution own and trajectory their up what that partner comers growth large. growth trajectory, not revenue is be is. they have partner, may But So as of who on an

is the can and we are of first or may be of middle. partner, predictable then And In if players. faster. end in that we more come established lot and other their partners larger, integration businesses case, the that partner, are The their not there is may spectrum integration first on a not knowable,

of Thanks, like enthusiasm. is manage a partnerships million the don't per at relatively them feel sizes, some we give will continue us potential and equal could customers to give we we to partner of understanding different like, we pursue revenue in better with get and you and size, better some over power like average So is that they companies with for? have fuel something that, for year give, any eight dollars just there

Jeff Hack

Bob, nothing specify But incremental some on some to this point. we so let at give thought Yeah point. that disclosure

customers, come would of be number with we so like be to really that would could Okay, think, up or appreciated be, I helpful.

Glenn Renzulli

over strong businesses, the we XXX,XXX, as partners. now capabilities end who a talk of I'll is, point, you our merchants, integrated roster you sometimes listen, are across Yes, payments give broader leveraging as known about

communicate we So update that is to number time time. and a probably should that from

Bob Napoli

growth Okay, obviously but rate the the focus current rate And and question. to bringing XX% are organic that Last from know, and does you the accelerate in sales, you. the is organic in growth levels? I you take you're talent, that? growth growth, quarter, more how it from confident could thank accelerating on, do

Jeff Hack

take, bit it it does takes what little of So, a everything.

the pointed to terrific, right, marketing So categories, for the continuous I'll call obviously, are having pull you up those of what notch solutions, the and right salespeople those all improvement. business. by out, to supported continue levers line to talent, of a And all as profile is growth great top technical engine, just are foundational our all and intention,

Bob Napoli

it. got Alright,

Operator

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

Jeff Hack

this you, Thanks, everybody thank quarter. joining operator. us Great, for

color. the dialog hear I in the think you can from

We And with forward with you. of Paya pleased are all making. very look the we the continuing is progress dialogue to

a have day. great So thanks and

Operator

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

You may disconnect. now

Paya (PAYA) 5 Nov 212021 Q3 Earnings call transcript