Paymentus Holdings, Inc. Q3 FY2025 earnings call

• Paymentus delivered strong Q3 results with growth exceeding expectations in key areas, including year-over-year growth in revenue, contribution profit, and adjusted EBITDA.
• The customer mix shifted towards enterprise and larger mid-market clients, leading to significant growth in revenue and contribution profit per transaction, demonstrating vertical expansion strategy.
• The company experienced strong operating leverage, achieving a record quarterly adjusted EBITDA margin and an incremental adjusted EBITDA margin in excess of 60%.
• Onboarding activities were phenomenal, with substantial bookings and a strong backlog, including onboarding of large enterprises across multiple verticals.
• Leveraged partnership ecosystem, adding new channel partners in various industries while focusing on onboarding enhancements and face-to-face client engagement.

Revenue for the third quarter was $310.7 million, representing a 34.2% year-over-year increase. Contribution profit was $98.3 million, up 22.8% year-over-year. Adjusted EBITDA was $35.9 million, a 45.9% year-over-year increase with a record quarterly adjusted EBITDA margin of 36.5%. The revenue growth was driven by factors such as successful launch of new billers, increased same-store sales from existing billers, early launch of large enterprise customers, and higher activity on the Instant Payment Network. Contribution profit per transaction improved to $0.54, up from $0.52 in the prior year period.

• For the fourth quarter 2025, revenues are expected to be in the range of $307 million to $312 million, contribution profit to range from $99 million to $101 million, and adjusted EBITDA to be $34 million to $36 million.
• For full year 2025, revenues are expected to be in the range of $1.173 billion to $1.178 billion, contribution profit in the range of $378 million to $380 million, and adjusted EBITDA to range from $132 million to $134 million. These represent increases from previous guidance, reflecting strong visibility and growth prospects.

Q: John Davis asked about onboarding a new B2B customer in a new vertical and broader B2B opportunities.

A: Dushyant Sharma responded that B2B is an area where they've developed platform capabilities, and the horizontal approach of the platform allows entry into new verticals. The client showed interest, and the opportunity is sizable with customers using more services than anticipated.

Q: Tien-Tsin Huang inquired about visibility and enterprise pipeline.

A: Sanjay Kalra stated visibility is high with a great backlog and pipeline, and the past implementations are helping with growth. Dushyant Sharma added that large enterprises are excited about Paymentus as they see it as a partner for solving payment and customer experience issues, moving beyond legacy service providers.

Q: Craig Maurer asked about sizing the key factors driving revenue increase and continuation into future.

A: Sanjay Kalra mentioned the factors in order of priority are successful launch of new billers, same-store sales, early launch of large enterprise customers, and IPN network, and these benefits are expected to continue into Q4 and early next year.

Q: Will Nance asked about agentic commerce and technical hurdles.

A: Dushyant Sharma said AI has been part of their strategy for years, and they are positioned to play a big role in agentic service commerce, with the platform designed to be a service commerce platform where work starts after a sale, and they are investing towards this model.