PAY - Earnings call transcript Q2 2022 | Paymentus Holdings, Inc.

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Operator

Good day, and welcome to Paymentus' Second Quarter 2022 Earnings Call. This call is being recorded [Operator Instructions]. At this time, I would like to hand the call over to Paul Seamon, Vice President, Financial and Strategy for some introductory comments. Please go ahead.

Paul Seamon

Thank you. to Quarter welcome Earnings and afternoon, Paymentus' XXXX Second Call. Good

are on Parson, our the me Dushyant our call Matt Joining and today Sharma, CEO; Founder CFO. and

questions. our Following we'll take remarks, prepared

Web close Our supplemental this of on press slides website, call this webcast accompanying webcast. site ir.paymentus.com. this being where will issued include under call Investor XXXX. our replay be presentation release the at on after of available our market and Relations this Private is Reform within was Statements statements today company's made the posted Securities webcast on forward-looking simultaneously link The is of the and Act the the meaning Litigation of

in the set to in results to those cause regarding uncertainties we XXXX. filed such which XXXX, and opportunities, annual actual the our subject forward-looking denote materially SEC to and future forward-looking or matters. set our from statements, note use for report March These and ended guidance. assumptions impact business timing, results from we regarding risk may impacts words no The Xrd, implementation expectation December XX, our differ as and and as acquisitions market financial statements statements forth the product are other with continued statements, factors uncertainties on them. today These risks, undertake year inflation, Form expect, such speak and that XX-K strategy, economic on that risks including anticipate uncertainty of under statements special enhancements, believe, of the intent update and Forward-looking phrases will, obligation and forth similar captions,

with to harbor disclosures. early the XX-Q Form quarter in to safe we XXXX, June our the and elsewhere SEC August and in SEC. on We filings risk you the detailed review which with encourage ended report these quarterly file XX, XXXX for Our expect factor

adjusted With non-GAAP disclosures contribution Relations considered measures, non-GAAP additional we our to to gross with and in slides to, adjusted these the today encourage turn and and not GAAP which to addition discuss isolation directly press our financial available for reconciliations a measures, like EBITDA issued today's believe the in profit, addition, substitute non-GAAP in review GAAP our in page the most our financial website be regarding results. or our margin financial will profit, measures EBITDA useful during for including call, I'd non-GAAP we should measures, are of Sharma, in CEO. measuring specifically and liquidity, are each SEC. the certain from filings In that, this release Investor adjusted We call supplemental over on the These webcast, comparable Founder earnings with Dushyant as and performance measures. you

Dushyant Sharma

the quarter, Thanks, grew increased Paul. or We revenue $XXX transactions. a in by well performed increase quarter believe in driven to XX.X% the momentum with the million $XX.X in and XX.X% second million. both sales business profit in million, The Contribution $XX.X XX.X% to revenues.

including headwinds, business our is and later remain deals delays about more session, XX This the to period continue with signings fundamental we same last will over Notwithstanding bringing believe than and strong engine economic signings than this more of more excited we implementation resilient. year-to-date again seeing versus year. XXX. higher to the total challenging sales is which In our business these prepared Our XX% be inflation, pressures these of results the client-based prospects. quarter, of the why illustrate and operations current about long-term around spite environment, remarks. are we number in inflationary the We talk

largest complexity utilities the handle us the the drive implementations forward is a the implementation the client country. country of quarter. selected across client the implementation of number success We stories to in One in the This and of example footprint and continue implementation. to very nationwide a of serves had large one

we We the in was billion also support. completed credit quarter with top a the migration XX $XX union of client A municipality over with a implemented in large JPMorgan assets. third

to continue assets services we on move market, this IPN As banking third our up $XX over our billion is with client in financial launched platform.

As for recognizing utilities pricing billing Also and Pacesetter for payments affected payment the XXXX its banking Paymentus enterprise for leadership we the from quarter, company not you know, a received Awards bill user model in group, interchange. the is large in innovation. by software

payments the and are We strength exemplifies product proud believe it our innovation. and of of billing and award this

care integration health providers payment the care the with also along vertical quarter the completed one records leading with of product. our functionality to for health We in advanced of electronic adding

live we the A Although Implementation few a quarter, our had availability. solid primarily XXXX we not times. of financial are difficult our slated of stressed go the onboarding back QX were us. areas in client-based client one which we difficult of Due slowdowns, primary this been to resource climate is on deployments, to is half IT these these without full seeing due impacted guidance. economic the have of larger originally believe year lack to by XXXX out economic performance and and changing impact we are

beating believe to normal better meeting specifically we like it time I with in be guidance economic XXXX. to it climate these relate clients, implementation I'd make existing or would for However, lines, that clear

details a and delays considering clients cover If are particularly of not he that business financial revised these financial we long-term delayed discusses from these are merely guidance. benefits results view significant, Matt? Matt to quarters, do, you take will especially not the the as our anticipated future the lost. as

Matt Parson

Dushyant. Thanks,

revenue than Contribution faster representing Consistent and led from over tables directly non-GAAP transactions. which quarter, quarter, we a the million, which XX.X% year. a a discussion In resulted profit BXB increase with with primarily IPN last increase due press is BXB quarters, transactions Payveris for driven the transactions, transaction Please was per Direct and two the over period year. to IPN, last was in in of growth XX.X% quarters our supplemental processed financial Transaction transaction and mix was increase our $XX.X a several past second profit with transactions. Biller contribution last a revenue transactions same of includes the specifically XX.X million The XX.X% slides a an $XXX a Contribution today's volume revenue, release which the refer by of interchange, in grew tailwinds profit the consistent million. reminder, to items increased of to comparable expectations. without to measures. measure. little non-GAAP $X.XX, financial and was QX As reconciliation GAAP the most

seen multiple fluctuations impact these areas payment even Historically, in control contribution on our past, a like in basis. a average payments things As times year on outside the we basis. or profit we quarter-to-quarter said mix full out can have

same gross in given and very Operating million Finovera, with intangible period of Adjusted for expenses primarily However, ongoing the million. uncertainty, represents additional expected million back we in for the the EBITDA identified year million compensation. increased expenses which due second these was well was as EBITDA monitor $XX.X or $XX.X was which rose economic year. adjusted the a quarter, the amortization of to by million from from assets softer operating than and $X closely XXXX QX in Adjusted to the operating in a the will expenses Payveris $XX.X the staffing driven little to the XX.X% last things associated half increase investments last stock-based $X.X we of wage continue year. profit margin, from to quarter Overall, as inflation. acquisitions XX.X%

investment Sales Specifically marketing R&D capture team, second driven and increased million. quarter by increased an the $XX.X corporate experienced of in an compensation. $X.X $X.X million, of via the expense the We sizable acquisition, stock-based cost million expansion market in Payveris increase and the increase acquisition, G&A XXXX insurance sales our our in public $X.X of opportunity to infrastructure. continued partnerships in to expense from adding in company multifold increases million ongoing and

for net EPS and loss GAAP the net was was Non-GAAP for quarter. X $X.X and $X.XX. was Our negative EPS QX $XXX,XXX loss non-GAAP was million

certain $XXX.X quarter to of At a million we and stock approximately shares end, June due increased XXX.X common As of operating we sheet. timing acquisitions. primarily cash as of cash decreased payments well due of outstanding. equivalents million Cash to had customer the our for XXXX, XX, the balance expenses had as

with to our turning Now guidance we into comfortable QX, the full gave. XXXX were we year outlook. Coming

uncertain price million. Dushyant As able revenue adjustments, and net and implementation profit to of elongated is But impact onboarding into environment of for by shifted same. recognition our million of $X this terms dollars. inflationary with the XXXX times mentioned half created quarters remaining it to outlook has recapture the also We couple bit contribution also of a a $X with earlier, some revenue TCV not of which XXXX of Based changing we're contract It's impact. range process, revenue is but already takes $XXX $XXX million. time our for our economic We're the specifically recognize year, profit of these to guidance to to broadened on changing ongoing timing inflation. to factors, $XXX million the in million to is potential XX% approximately the $XXX due just this The to were contribution economic the compressed between million for slower-than-expected second inflationary We implementation XX% be million uncertainty, future has of range the and the approximately the which lost. some on and the environment growth.

stretched go expectation out our the QX was points run implementation, our told year, add QX you that client large basis call live rate. of year. XXX in in our to this we would new some Just would context provide win client then about revenue on this last It that a to

client rescheduled live to go However, has that now XXXX. to

associated done loss It's XXXX. recognizing be large was with clients. this one We revenue later expecting we have other of to revenue start To than in also starting originally has expect clear, anticipated, same. we and aren't the these simply that any implementation

have impact QX a with delays We margin contribution the fact combined expect to these is seasonally. on that a lower quarter QX, bigger

to little anticipate we contribution profit no result, QX. a As over growth sequential

million an million adjusted range of Our outlook now to with XX%. adjusted XX% $XX EBITDA margin in EBITDA $XX the is of to

levels wage current putting ongoing to pressure seeing is short-term some our due the on EBITDA are which We pressure margins. inflation, also in of our workforce

seeing efforts. momentum, after sales sales we and current investments make the in addition, marketing to In expect our additional

meet current on our guidance. about potential increased be spectrum assumptions given and economic increasing continued to the inflation our our our range in also uncertainty. To guidance view delays clear could provide implementations expected widened impact a to guidance, ability pressure, scenarios reflects of around further some better for the Our we wage

in We finish year out. laid expect the we've to the ranges

anticipate Finally, last full as effective XX%. quarter, rate to we be year we around our would said tax

the the more income, tax to book could on rate. with intangibles amortization on However, pretax associated closer due variation the the we our acquisition, of to we breakeven are see

the rate. closing call impact now In addition, the Dushyant to to turn over from for stock-based the I'll comments. some tax permanent benefit continues compensation back

Dushyant Sharma

Thanks, Matt.

Before about taking like a same-store in the we I'd spend experienced talking questions, quarter the economy. to growth sales. the time bit more little solid In

we saw believe For growth profit example, of quarter close bit to would inflation in the unusual it. been little compared XX% We contribution utilities, weather business better can have XXXX. a without to growth though, level of second

of will with and closely of responsible our for to We increase majority between to near have the flexibility over our we our for clients this profitability keeping as in term investing growth to a ways medium to to working by continue The outside while seen. people We rate growth manage recently look the increases some at our related. the term. through maintain average environment are balance transaction philosophy vast the make interchange provide when plan continuing changes expenses by future have contracts

we questions. contract million, not this is whether get value, related ours, our going business why for believe market business been or or on XXXX the is a we of Therefore TCV, $XXX climate based quarter have paid, end continues, these the that in. excited insurance up have and since like hiring it opportunities. any flexibility a bottom concern to client delays where the delays a tax bills to is, we are we we they guidance. of and water, remain the total strong, sales especially look, or the are to big like quarter, And economic X,XXX continue momentum But for is I is fundamental about the our conditions our And in good the long the clients. the thank don't live commitment remainder call for to and serve I'd their lower future. turn and time, in the over for of now in that, I'll So With add over pause magnitude over the That's line is employees to to operator year to XXXX.

Operator

[Operator Instructions] The line with first SMBC. question comes of Andrew Bauch from the

Andrew Bauch

of push 'XX. maximize about in to financial the than commentary from client for may solution your that receipt difficulty. the where it I to others. an Just into of trying trying see quarter this way could are consumers to I square was any helpful. of large collections in environment mean that would But the it that I be customers part decided first think additional about the need color more made time, amount is you it your a be facing

Dushyant Sharma

observing that Andrew, aspect first finding that to this due the that's of point. signings is difficulty as implementation trend happening be all, inflationary having strong. you post-pandemic are resources. if into operational frankly, good see IT from to is when in a And environment, we're continues is question. clients play can Actually, What's great comes it the our of what bookings,

one In to and almost talking me a and implemented fact, number I going and talking please Head to they he remains every mentioned are that how with, our about so to on. thinking was Sales about topic. it and this get they're client of

able nature then -- of on this, When client they hey, going implementation the recognize of it the -- some to you're and the are our delayed lot the a couple a that you the side. a comes down nature of the quarters size, the value But when implementing. because overcome the contract struggling. entire declines where going unfortunately we're point configurability our day because challenges start It's we if term, testing, because to support, customer of about again, some not takes open configurable of live. from of mentioned. size in be have total of we our So that's on And period highly contracts go still be group to aggregate us ease of they we the value talked you of the the clients they those which about It platform. are require the contract and always say by over allow starts to to

So what really do from perspective, any? to going you that's on. that add want is Matt,

Matt Parson

question. ones key at to talking the point, part. most what for I'd and others. large really the Because clients going out Dushyant valid we're last are small prepared is say just it's your certain good at the seeing remarks very and struggle pointed point the I in point is large part very limited about which medium-sized we've was just live, that least clients some this still in and think, too. Dushyant And organizations, seen it's than large more

Andrew Bauch

And XXX of the is is potential have think you those of could sense kind then of sales maybe insight more I experiencing in? would I clients those be the that on been relatively on you the in traditional what that sizing a BXB up? to of the you And Are side? deals make just Is guys still verticals the pipeline strong deals? us mean, year-to-date, a indicative And sound. give closed kind additional comment that

Dushyant Sharma

to Actually, vertical. be than the historically historical diverse lot tend new more a signings our

we estate, real enterprises. Government well of factor commercial now. to customers as And entities tend customers have then So obviously, bread a be have verticals. our we in and in the implementations butter big

more there. is some than well obviously, BXB it as So and diverse --

Matt Parson

space. focus spans them. internally as very a the teams in It on we're also was are at as I great And question. multiple large lot we've And on the it being enterprise and space your both and of the continuing the having the then times, SMB of part focused wise, still size as that think said mean second both well I we're SMB success space to large still seeing success honestly. spectrum we've then of got

success the side spanning small so And so we've on large. year of the signing spectrum really seen far to this the

Operator

question James. next from Davis Raymond is with John the of The line

John Davis

-- obviously, some XX, I points, I just we on and some per as talking about differences the to flat in impact when do trying XX, when Just thought basis bit costs want start far inflation relatively in you transaction the price would you're have to timing talked of and lag, kind what notice minus understand, the a days' little that to was XX to a on P&L. your be of interchange think basis? raise give your inflation IPO, as

So kind like just curious delay of inflation. that price looks raise what to to ability timing offset for your

Dushyant Sharma

clients We us long-term relationship, are and many actually our a partnerships, very are we surgical and clients we in long have are been partners our with approaching period of view clients because our for of these these time. how long-term

contractually, are perspective, being XX, us, are we what And the is they're always we time the -- surgical standpoint, whole this. how days our contractual right the are the have very to takes but it much about, this, changes we that from the understanding of XX we a talked with just is from top because at to make at as with pretty us the dealing it. looking not you and time with very are So to talk is economy -- but very clients empathetic dealing we seeing clients now about end

a But So it that have we does traction to have and the XX, ability case. your typical take assumption correct that make generally be changes, than do we would is XX better days.

John Davis

minute, on longer-term and inflation. then touch some push to talk profitability. maybe kind little profitability. about a headwinds from on, the want just wanted a just wage I of then I bit And Obviously, near-term out for

long term. maybe business. you talk profitability is back how medium of you the ramp to about think about back pre-IPO, margin this a to over the that, If go mid-XXs just the EBITDA And kind

Dushyant Sharma

is, and as Matt our the in market. what remains that's well, that think And seeing momentum our our now, I goal. the jump remains -- we in tremendous are but right let goal, I'll that

look So in a the here. can trying to lean we're growth to more even to take to aggressive continue more marketing and go from perspective accelerate a we sales at, in

to add is we'll anything. So in to continue Matt, in that to be look But want do margin profile. long-term EBITDA at perspective our coming years that. is you

Matt Parson

on say under there's to medium- about same kind like for in this been think ultimately, we be We there wouldn't to kind obviously I talked little in the and prepared year, how our mantra our any business. a be front. what profitability bit And of given we it achieve was. we'd as growth want and change where around is are mantra overall But the in continues and the to still we in things long-term about philosophy view of remarks. the and that leverage

I think because it's an to growth that profitability. simply between trade-off we're making -- extra the the management continual points of of the and and of point, couple extra cost reevaluation constraining -- of future profitability an Dushyant's point, growth team sure not of

kind So sum by business. the in nothing view to fundamentally it -- signings. our of world but business think in mean has I I medium- to the just changed is long-term or as evidenced strong still up, mantra the

we're executing And still accordingly. so

Operator

the next from Wells Jeff The with of Fargo. question is line Cantwell

Jeff Cantwell

the have kind incident? again, there back of And the and circle which follow-up an then phrase be that is until why be, that the not XXXX you're we others. to the already few wanted on for would speak timing isolated question would I way because question in I answering this because to guess it that I was pushback hear be talking months the about next we'll the can I'd

try work we our that. through to have And to way so

far XXXX. detail around So give little discussing little can more just as comfort and I us curious back get you're a in was as revenue if what pushing a you on

Dushyant Sharma

the been. on we implementation climate very, is longer is making some understandable. overall to get from And than the very sentiment capabilities are client which of taking support, dealing The readiness of First because a than tie And of by is that to just launched. very have the their about just is And usually live. are the economic little the year, clients get required to do investments bit. a guidance our required at engaged. the do efforts, on. their just historically and little ever clients to whatever is getting they job. great That is so as two perfectly that The that the a One if that is to QA you're maintained speaking, our But and We other me which platform, platform. question, our platform the question getting I And this customers with they itself very technology let customers back are fractional the resources the are we for have stretching just guide, reason earlier. with. perspectives. I would IT live of environment better all, fractional be get have to little a been actually good over are mean a I they we we're reasonable talk actually. test them time mean that it are I years. of in team bit relative support is is today the challenge support talking machine couple we all it live to in, aside the line. shared want We and fine about, would our declines There

we an which already this on for them impact, scenario some meaning couple factoring -- were clients delays, made So of were of year. counting an actually we that it's in. interesting other were But

Matt Parson

and assume amount would when look on client at the the you assume of think case go I don't history scenario our I'll is just as it, add, that of and best live. through an Dushyant things as course, depending go for size we would go course, right some we on of expect. planning client modeling We, typically, live they various and buffer of

I that large the of with referenced at very call. large we were very they particular in was time. we same referred kind the call on the two and these were hit on two think the challenge The

levels is year, the what slated so of assumed rest delay. of of buffer the these were kind And And back think two that I guidance, for year. the think biggest as or appropriate in ones we've into of of are we appropriate, the half the and our again we look

you as on within do the So Andrew's to want yes, I revised on earlier But the markets fully in the is -- to I that demand it earlier, say question are are for the the said to we'll product like very point we expect Jeff actually right land that for remains think just call, because actually, and the others I a range. we platform ours. strong that conditions

once the they to the make However, business a which get it priorities launched, need other from support decision still might executives on. their IT and partners going be

And some just are right them now stretched are because of climate in. we of the

Jeff Cantwell

if follow-up. one And ask I can

expectations contribution I financial example, guidance right would On going we're minds on to factors just to in sure of clear I'm year, on swing end upper to the it now the right trying just what that of get your drive the feel What stands outlook how in want but make the Same range? lower for be a I'd for guess question, with that the set this now. you of think own are would factors drive this would the be I factors end to forward. all your would to like it level it And profit. as that. the range? depends ask revenue, what for the to

Dushyant Sharma

at in to closer if operating and hold that and assumptions some of we all if go-lives. we'll then are have of the able be our the If and -- which two top in all if and I be they mean environment bottom are or I planning Then adjustments them we go terms client about, true to talked don't making. the they they have and think inflationary live line. as we'll been we three, being to think I are and of we make end there

Matt Parson

agree I Yes, that.

pricing I about implementation based the think our lives, of as ranges, timing what ability main go think lives that's go of in profile the continued with on the situations factors to inflation. seeing and certain we're two kind we improve

Operator

Baird. Dave line from question The with of next the is Koning

Dave Koning

ask a I can numbers maybe And question.

guess I collectively that and going have clients out coming next an this you the Does are total is on? corollary wins were that wound X% good of about come if Just the in same, about said just year year, outsized of think And to will the be rates the these of they you'll delayed expected be get revenue? that you year, QX. mean mean just to this your X% does they still plus that to full that I growth normal are impact

Matt Parson

on the basis on was revenue then XXX i.e., So first rate, question, it growth of year. our last QX points

just So concept the your right correct. the make to multiplier number is but is sure

it last quite was not revenue was other client growth that at And in as then The rate ballpark. but points large, point on was basis same it XXX that year.

one-way helped next On our that also not helped sort you that negatives previous I the definitely that numbers year, kind -- offset take negatives. positives we what other things other well. there's of during good mentioned some some was we'll think versus guide when next the on another of that see. think have this been have which appropriate. math we've of We'll time a have the some raises happened also the you just There's remarks, the is It's I is when is seen good prepared the been what -- point, So guide if guidance year because move. the give momentum we've in as of in also do that I offset business, year our the these

in are not revenue the XXXX think pushing lost. is they as we I and said,

gone have year. do that it them point, it been live expect the would 'XX. your and from It to live revenue raw perspective, had already to start dollar come in So anyway, in number getting we a would later have this --

So basis, But point, your to it a not XXXX. impact necessarily into has it's an new there. on revenue percentage

think but give way I So is in guidance we'll at times appropriate, it said, the thinking about like right direction. I the XXXX the our you're

Dave Koning

fee then second wages higher very because the think One a to two pay to network just basically, one, contribution inflation, expenses. has inflation I a pay things, hurts profit, the that network the right? very, And Those main the think are But fees. you impact right, impacts. saying you're is this two volume is I was clear, but two has

Dushyant Sharma

some the we partner clients contracts That's that, already already. as discuss we mentioned, Matt That's one to the process for which are correct. which, of us shared in our to correct. with -- and our earlier, And as talk clients our in solve already to allow and cases

Operator

[Operator additional Instructions] this are time. closing to remarks. questions management it I back There will the for team no at pass

Dushyant Sharma

quarter, a time. have your Thank We you appreciate much. so great you Really forward summer. with and look next to speaking

Operator

Thank That concludes today's conference you. call.

disconnect may lines. your You now

Paymentus (PAY) 7 Aug 222022 Q2 Earnings call transcript