Paymentus Holdings, Inc. Q3 FY2024 earnings call

• Dushyant Sharma noted a phenomenal third quarter with full year 2024 shaping up well, and they are raising full year 2024 guidance. Long-term CAGR targets are 20% topline revenue growth and 20%-30% adjusted EBITDA growth.
• Third quarter financials: revenue up 51.9%, contribution profit up 30.1%, adjusted EBITDA up 58.2%. Driven by increased same-store sales, launch of new billers, and early launch of large enterprise customers.
• Booking activities: strong bookings across various industries like insurance, government services, etc., positioning well for 2025 and beyond.
• Onboarding activities: faster onboarding of large clients originally slated for 2025, reducing risk for 2025 execution and providing strategic benefits such as enhanced marketing, IPN ecosystem strength, and margin expansion opportunities.

In the third quarter of 2024, Paymentus saw revenue grow 51.9% year-over-year to $231.6 million. Contribution profit increased by 30.1% to $80 million, and adjusted EBITDA grew 58.2% to $24.6 million. The number of transactions processed was 155.3 million, up 34.6% year-over-year, with an average price per transaction of $1.49, up from $1.32 the previous year. Contribution margin for the third quarter was 34.5%, and contribution profit per transaction was $0.52, similar to the prior year.

• Full year 2024 guidance raised: revenue expected $829 million to $834 million, contribution profit $305 million to $307 million, adjusted EBITDA $89 million to $91 million.
• Fourth quarter 2024 guidance: revenue $215 million to $220 million, contribution profit $79 million to $81 million, adjusted EBITDA $22 million to $24 million.

• Variables outside control like average payment amount or payment mix can affect contribution profit quarter-to-quarter.
• Larger enterprise customers may request volume discounts, which could impact margins, though operating leverage offsets this to some extent.

Q: Dave Koning asked about network fees mix and Q4 guidance.

A: Sanjay Kalra said Q3 had higher network fees due to large enterprise customers, but long-term strategy aims to convert interchange into revenue. Q4 guidance is prudent, considering risks and seasonality.

Q: Tien-Tsin Huang asked about faster go-lives of larger clients.

A: Dushyant Sharma said it's a combo of post-pandemic interactions, in-person engagements, and technological advancements in onboarding processes.

Q: John Davis asked about revenue growth acceleration and long-term margins.

A: Sanjay Kalra mentioned profitable growth is the mode, with economies of scale and future opportunities to improve margins, but guidance remains disciplined.

Q: Darrin Peller asked about IPN and go-to-market.

A: Dushyant Sharma said IPN is a multi-sided network with competitive moat, and go-to-market is broad, scalable to any vertical.

Q: Matt O'Neill asked about parsing growth vectors.

A: Sanjay Kalra said large early implementations of customers originally for 2025 de-risk 2025 and positively impact adjusted EBITDA margin, with same-store sales improving over time.

Q: Andrew Bauch asked about larger customers and future use cases.

A: Dushyant Sharma said larger customers are exciting, with platform evolving to handle complex workflows, and longer-term opportunities include payouts and monetizing interchange into revenue.