Paymentus Holdings, Inc. Q2 FY2025 earnings call

• Paymentus delivered a strong quarter with results exceeding expectations in key areas, including substantial bookings and a strong backlog.
• Strong visibility into 2026 due to bookings, large enterprise wins, and onboarding of backlog.
• Believes in becoming a multibillion-dollar revenue company through organic growth, driven by agentic AI potential, platform capabilities, and ability to scale.
• Second quarter business highlights include strong bookings, diversity in vertical signings, and continued growth in partnership ecosystem with onboarding of clients across multiple verticals.

Revenue for the second quarter was $280.1 million, an increase of 41.9% year-over-year. Contribution profit was $93.5 million, up 22.3% year-over-year. Adjusted EBITDA was $31.7 million, a 40.7% year-over-year increase, representing a 33.9% adjusted EBITDA margin. Revenue contribution from various segments like large enterprise, different verticals (utilities, government agencies, etc.) was highlighted, with strength in large enterprise segment and diverse vertical signings.

• For Q3 2025, revenue expected to be in the range of $278 million to $282 million.
• Full year 2025 guidance revised: revenue $1.123 billion to $1.132 billion (29.3% to 29.9% growth), contribution profit $369 million to $373 million (18.9% to 19.6% growth), adjusted EBITDA $123 million to $127 million (32.7% to 34.8% growth).

• Factors that may cause actual results to materially differ from expectations are detailed in earnings materials and SEC filings. Seasonality and uncertainties in working capital and pipeline conversion could impact performance.

Q: Look at historical seasonality and Q3 guidance.

A: Seasonality exists, and Q3 guidance is flat due to not seeing full 4 quarters of large enterprise billers launched in Q3 last year and same-store sales offsetting.

Q: Concern about bad debt expense.

A: Bad debt expense is small, just writing off old amounts, insignificant in view.

Q: Sustainability of operating leverage.

A: Operating leverage is good, with high incremental margins, and will continue to spend to convert pipeline, expecting operating leverage to remain strong.

Q: Thoughts on becoming multibillion revenue company.

A: Committed to CAGR model but sees potential due to market trends and AI, believing in organic growth without significant M&A.

Q: Free cash flow comments.

A: Cash flow is strong, generated $64M in 6 months, but cash flow is hard to forecast with factors like working capital and DSO.

Q: AI and agentic AI comments.

A: AI is seen as a multidimensional play to help clients in various areas, additive to current business.

Q: Hiring plans disaggregation.

A: Hiring is focused on converting pipeline to bookings, with more focus on sales, maintaining balance between growth and technical strengths.

Q: Incremental EBITDA margin.

A: Incremental margins are positive, and longer-term margins are expected to improve as the company grows.