- Earnings call transcript Q3 2022

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Operator

Good day, and welcome to Paymentus' Third Quarter 2022 Earnings Call. This call is being recorded. All participants are currently in a listen-only mode. There will be opportunity for questions following management's prepared remarks. At this time, I would like to hand the call over to Paul Seamon, Interim Chief Financial Officer for some introductory comments. ahead. go Please

Paul Seamon

afternoon, earnings Good to third Paymentus' Thank and XXXX call. quarter you. welcome

on are Joining Founder call the me today and Dushyant CEO. our Sharma,

Following prepared remarks, take our we'll questions.

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

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

filings expect the the disclosures. on which with Form these the September encourage file to Harbor We other elsewhere review XX-Q risk detailed SEC with quarterly to ended you and in XXXX, quarter our Safe factor and report SEC. Our for XX, shortly we

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

Dushyant Sharma

Paul. you, Thank

continue quarter quarter. pipeline, the well to we for year We the bookings Based solid over are recurring into expect new in expect than million to performance our third million, and In momentum on of we $XXX pleased beyond. booked previous year. higher is new the about annualized bookings the XXXX which also XX% exceed and our $XX current our revenue, with total

four this expect contract time. rates, retention for a revenue As to average historically organically our terms long our a to of high and reminder, continuation years, the we generally grow assuming five

-- Our year. transactions compared contribution profit of the increase a to increased last driven in same over period XX% $XX.X year million XX% by same

as IPN business, well. XX.X% grew payment, products, notwithstanding points five margin QX from areas of base which QX, includes and in bank in XX.X% bill our percentage over namely adjusted in continued our related other the emerging EBITDA bill investments Our our to payment

and the utility, a including real show and continue platform breadth club, implementations the an estate which and of addressable a significant functionality the municipal a clients, market. company, timeshare During expanding reach several completed quarter, vertical of to we our large vacation

also within can engagement. Baltimore, wide quarters, of was with a couple as a strong announced. publicly implemented and which the of client This city be completed completed quickly implementation city enterprise with large a deployments client We relatively launched shows deployment wide that our

accelerate to match continue work We our motivate to clients timelines to to pace.

quarter, the a channels. Additionally, payment payment of acceptance joined in that capability large the expanded newer methods over coverage and we IPN for expanded utility of

and bringing and methods We newer IPN, additional more accompanying is consumer transactions. are payment seeing these adoption which enabled by more demand channels and for

important believe but aspects offer we foundation report our who are increasing not Paymentus ever most I'm payments, One our SMB to great services our of platform receiving fully for innovative businesses, payees, is IPN to including reach. that utilizing happy IPN yet. X that's crossed million of the to to these the has which our over continue payees

During we the union of implementation with in assets opportunities. billion generating the interest product quarter, is Center, which believe new we a our Bill and $X from other on companies larger completed flagship credit attracting

last Bill to over and IPN we that into bank are continue bookings our year, up result, XXXX. a As Center trend significantly expect

I'm originated As interchange excited Bill there our be our to ability profitable about no currently the reminder, long Central and a continue of results with term transactions. to deliver proud IPN any for growth. is associated quarter and

which the $XXX $XXX million in of as million, anticipated, economic revenue we of years rate XXXX, faced for doubling are revenue $XXX rate challenges I during over to in company spite said In of new rates, to downturn, revenue. last public. to with relatively run now rate we COVID run a higher us a of as and business two sales, crossed earlier, and over million have our about revenue, And close expected bring we interest to our we period implemented a two is context, Just million inflationary run in ago, years of fully added expect have over we XXXX going was short $XXX were XXXX, have million out time. prior since $XXX

more to pass share business We details we'll build a about strategy that, me With to and XXXX. our are Paul. on working in larger let significantly

Paul Seamon

Dushyant. Thanks

year. includes to comparable quarter directly financial the increased to which XX.X% little expectations. a increase today's release of transaction $X.XX, same GAAP Please Contribution supplemental a the quarter. Contribution non-GAAP in Revenue we in financial a measures. processed slides measure. of press of the an was most reminder, over non-GAAP reconciliation million, million which past the quarters was XX.X three over and than in anticipated. last year we profit was with period $XX.X the third our In refer for was increase our $XXX.X QX the XX.X% transactions, XX.X% profit discussion per million, a As tables last to consistent items stronger

purchase inflation some see increased but benefits of million which for quarter and quarter, measures represented are starting $X.X XX.X% pricing average other in Adjusted actions the margin. in EBITDA a XX.X% announced, profit $X.X management third of adjusted experience implemented million We the continue to gross to million. quarter. was the we've to the Adjusted $XX.X on the or our EBITDA expense

Our driven increase growth compensation. we million EBITDA to pressure believe stock Due with additional staffing Overall, last QX $X.X Direct acquisitions. XXXX identified in rose year of expenses was based investments expenses the as expenses as period by The from last from XXXX for amortization assets from our operating same well acquisition $XX.X million the operating higher to for off We on here. to term total the we invest Biller focus longer trade on our from this a growth, initiatives, in business term continue and current IPN our ecosystem fuel is as the which in puts materially to Operating in worthwhile market. our expand margins. the is long related addressable reported year. of associated intangible and and

team, XXXX and to increase hiring. Specifically to partnerships a opportunity, and corporate capture Sales decrease increased third sales market an marketing compensation. the $XX.X expense G&A continued R&D in $X.X in sizable continued from to in quarter expansion based of $X.X driven to costs Payveris experienced the million the to increased million $X.X insurance acquisition, and and by adding employee control effort million stock our expense due We related million.

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

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

Now turning to outlook. our XXXX full year

with of million We range are $XXX outlook revenue the $XXX million. XXXX our reiterating to

Our growth. contribution year, to maintained guidance the million between has profit $XXX and for million XX$ which approximately $XXX is XX%

million Our the of to $XX.X to be range XX% EBITDA an $XX million, to XX%. with margin outlook of adjusted adjusted EBITDA continues in

around our well Our assumptions inflation, pressure. continued current wage as ongoing guidance as reflects

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

a closer we on book pre rate. with associated more intangibles of to amortization the the to break tax on the we could the are due even income, variation acquisitions, our see However, tax

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

Dushyant Sharma

To who basis our With of investments, that the consider of in million have XXXX, a the our product business us Paul. for the come. for acceleration very doubled this clients. this materially implemented fact hard bookings thank we very accelerating operator excited provides hope fully in like higher. rate by over years. context the and to years also now I And Especially for $XXX And in team services about to just tirelessly you are just I'll you we're I IPN. why profitability EBITDA would our to IPN Thanks, turn two that when our confidence our of and we serve to and our fact continued gives growth getting questions. demand expectation call the related over the is very in set our started. It our that close, exciting, worked of run and growth already exemplified on is almost

Operator

of Thank first Raymond line with you. John from the [Operator Davis question Instructions] The James. is

is line now Your open.

John Davis

Hey, guys. Thanks, afternoon.

impressive shot the margins. Just

longer help called control focusing out on to margins about? This guys that you XX% Maybe getting really how ramp. And and quarter, just you kind margin think you longer expense XX% about us the think you of back term of to kind has about have understand talked how that getting term or profitability.

Paul Seamon

Thanks, John.

that investments look, because the the is I our what than materially are to here. focus already the products. reporting profitable and that we or higher the our and is we some in remains to core And business in making frankly, fact think of ways highlight of than all, we subdued EBITDA are IPN reason first than other that more wanted

confident get deliver to financial able very be margins have start back So feel to we will talked as about. to the results, our we we that investments more of type results,

new all on -- we this very in we're -- Additionally, -- we're are about are we all that our control the making investments, being tough sure very focused very making expenses expense we market and are making. judicious

plan to we over more I So, think time our that period and quarter as of talk well. next we'll about a get there in

John Davis

this Okay. And then, see nice upside quarter. to the

Just quarter? of reiterated is stuff the timing kind conservative? we so any guide Or just fourth fell in shifts quarter this view that the guide,

Paul Seamon

still see, and I can implementation, think adjustment fourth the broad, primary -- three pricing itself. got reasons look range you inflation the the inflation quarter that factors; our and based for we as on is are,

So, if in the things to mid And part it end the of be range. some don't, the in in will fall to be if of our the range. could of them favor, high low mid we

conservative that's be based we So, on to range factors. are consider guide, guide these that a the think I I pursuing wouldn't

John Davis

IPN. top can't line. it and can size the in And you about growing think one I be if us curious material nicely, helpful? there, you sizing that'd me maybe help if to it's be quickly. last know but Okay. bottom just the Or you help with talk could for when Any

Dushyant Sharma

we'll our next -- We is look, are it provide but growing. year, guidance

right faster I products to overall as related expecting of now. about, you've start pay headwind so start And are -- We some have EBITDA also even I growing as be already much to able are XXXX the stipulated that to talked than it off than overcome they earlier, is I will as a said that doing be mean, growth rate towards more investment IPN to think our IPN and we here. our as margin the

John Davis

Okay. Appreciate the Thanks, color. guys.

Dushyant Sharma

Thank you.

Operator

your Thank The Baird. with you next line the question. is question from of for Dave Koning

open. now is line Your

Dave Koning

terms about Thanks. quarter the two. adding progression seasonal guys. I through a guess I get bit right, in cause QX. think would would And like something naturally a there the little first that and good Hey, little of off end John's normally is top that And year? my I QX a sequential revenue on each billers question, the sequential other gross in it's guidance. Even just Yes. fall that to and guess implies like because just keep Yes,

Dushyant Sharma

in I own, all, and first are and think it working there different the believe QX paid Well, or it the still its more some factors, a I holidays have to, based hours, of a able quarters has, able how the during lot tends role there lot bills other not going, the implementations on how on are, will we during to this. the of the to us are than are them a of mean, how But weekdays quarter. QX are of that the plays other of factors many be produce are for year, and

of I the about, to inflation. that relate talked itself the couple other and points and the So, the inflation pricing

Dave Koning

going even market. the kind year with the at mean, one can has get as basically? then, as comes pattern, I guess continue IPN grown out? that in as can revenue, nice now? you And inflation the inflation your fast continues, you have And Okay. to trend, fees I network Do gross contribution least the that you forward all of profit see If especially your leveraged through

Dushyant Sharma

interchange Yes. with. mean, is which it pretty has there's by, no look, associated I IPN is neither interesting factor, affected because a

inflation no there's impact So that way.

side ability we due a inflation. on our interchange IPN benefit. if additional based to pricing cost already. have to there's And we But on that just anything, do no So is do net But the rising. that adjust the

of over our in we I a material talk, that remarks, about we back and think, said the IPN way that Because understood I give reflect little want see now about we I XXXX. to how is a IPN payees, that behind color dimension the more have be bit on businesses. to million So SMB in, earlier the And contributor as talk not lot are see and we'll you will if become growing, IPN talk I, starts just access as a mentioned to Paul we it to business. we a to you what them prepared but

to are So truly for they're payees can IPN are receiving from able to. able effect, due effectively. base, network these start money especially them of offering services, us, now otherwise where be we those to we us, more a we think we Because and we payments pick products wouldn't given sending target

absolutely, So to your But as you're IPN but monetize get we'll and more set differently, source factor. it's an about IPN IPN more of is about point our of the the if products ability part to bigger then that. that, becomes than revenue. one services us just to becomes less otherwise -- visible, It's talking of also specifically does is of address bigger a business, interchange talk

Dave Koning

Yes. you. guys. Great. Thanks, Got

Operator

additional closing for waiting team There are any questions time. back management you further There question. this I'll the are [Operator now currently register. your the for turn Thank no questions remarks. no Instructions]. call at

Dushyant Sharma

Well, forward time. Thank to thank look your you appreciate you. it. you later. for Really And to speaking

Operator

conference Thank the concludes That your for call. you participation.

may You disconnect lines. your now

Paymentus (PAY) 10 Nov 222022 Q3 Earnings call transcript