Paymentus Holdings, Inc.

Good day and welcome to Paymentus' second quarter earnings call. This call is being recorded. All participants are currently in a listen-only mode. The floor will be open for your questions following management's prepared remarks. If you would like to register a question, please press star followed by one on your telephone keypads. At this time, I would like to hand the call over to Paul Seaman, VP of Finance and Strategy, for some introductory comments. Please go ahead.

Thank you. Good afternoon and welcome to Paymentus' second quarter 2021 earnings call, our first as a public company. Joining me on the call today are Dushant Sharma, our founder and CEO, and Matt Farson, our CFO. Following our prepared remarks, we will take questions. Our press release was issued after close of market today and is posted on our website where this call is being simultaneously webcast. The webcast replay of this call will be available on our company website under the investor relations link at ir.paymentsys.com. Statements made on this call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements use words such as will, believe, expect, anticipate, and similar phrases that denote future expectations or intents regarding our financial results, business strategies, impact from acquisitions, and other matters. These statements are subject to risks, uncertainties, and assumptions that may cause actual results that differ materially from those set forth in such statements, including the risks and uncertainties set forth under the caption risk factors, in our final perspective filed with the SEC on May 26, 2021, and our quarterly report on Form 10-Q for the quarter ended June 30, 2021, which we expect to file with the SEC on August 11, 2021, and elsewhere in our filings with the SEC. In addition, during today's call, we will discuss non-GAAP financial measures, specifically contribution profit, adjusted gross profit, and adjusted EBITDA, our non-GAAP financial measures. These non-GAAP financial measures, which we believe are useful performance and liquidity, should be considered in addition to, not as a substitute for, or in isolation from GAAP results. We encourage you to review additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results. And our earnings press release issued today and available on the investor relations page of our website. With that, I'd like to turn the call over to Dushant Sharma, our founder and CEO.

Thank you, Paul, and thank you everyone for joining our call today. I'm very excited, and it's my pleasure to talk to you for our first earnings call as a public company. I'd like to thank you for your support and trusting us with your capital. I'm also grateful for our clients and partners who put their faith in us every single day. I'd also like to thank each of my colleagues at Paymentus who work very hard to operate our 24-7 business and drive the execution of our strategy. We are very proud of you. Thank you. I'm very pleased with our second quarter results, the progress we have made on IPN, including the signing of definitive agreements to acquire Payveris and Finnovera. That puts us at the heart of the bill payment ecosystem for financial institutions of all sizes. Before covering our second quarter highlights and talking more about each of these exciting items, I would like to provide a summary of our business for those who aren't familiar with Paymentus. I founded Paymentus to power the next generation ecosystem for electrical payments by simplifying them for both consumers and billers and with the eye to do the same for financial institutions and consumer platforms. We took a very deliberate approach to our strategy over the years in three different horizons. During the first horizon, we built a NetGen platform and targeted middle market billers with it. In the second horizon, we moved the market and expanded the functionality of our product. With the recent introduction of our instant payment network, we entered our third horizon, which allows us to put all pieces in place to create a modern payment ecosystem. The IPN leverages our biller network and extends it outside of those billers to financial institutions, retailers, and technology companies that can access payments for their customers. In essence, IPN creates a paradigm shift in the bill payment industry and creates a multi-sided network effect for our business. Our objective is to be the central modern age bill payment ecosystem for the entire payments industry, including banks, credit unions, and other financial institutions. To that effect, we have taken a major step towards strengthening our IPN presence in the financial institutions market this week as we are pleased to announce that we have signed a definitive agreement to acquire Payvaris. Payvaris is a modern money movement platform for banks and credit unions. What that means is that any customer of a bank on Payvaris platform can pay any bills from the bank, including the largest billers to smallest businesses like their lawyers, accountants, send money to anyone in the U.S. using their person-to-person transfer capabilities, and move money between their own accounts, bank accounts, across multiple financial institutions using their account-to-account transfer capabilities. Payveris serves over 265 financial institutions. What this means to Payveris is, this transaction means to Payveris is that it provides a unique offering for financial institutions when combined with Paymentus' unique instant payment network and therefore accelerates Payveris' customer acquisition strategy. And what this means to Paymentus is that this allows us to accelerate our IP and strategy for banks by having nearly 300 financial institutions join our network. In addition to that opportunity, there is another equally exciting opportunity where each of these nearly 300 FIs can be direct billers on our platform, which will add to our existing base of direct billers. In addition to agreeing to acquire Payveris, we have also signed an agreement to acquire Finovera, a technology provider that aggregates consumers' bills, including pasta statements, in one place. This is a platform that is already being utilized by Payveris and many other financial institutions. We believe the combination of Finnovera and Payveris with our IPN will solidify our offering for financial institutions as we provide a robust coverage of billers, whether they are currently utilizing Paymentus platform or not. This will continue to allow our sales team to prioritize biller outreach for direct onboarding on our platform based on the bill volumes. We anticipate that both of these acquisitions will close by end of Q3 and have been considered in the outlook that Mac will share shortly. On our core Horizon 1 and Horizon 2 strategies, we continue to execute very successfully. Our second quarter performance was strong. Revenue grew 30% over the same period in 2020 to $93.5 million. Q2 contribution profit grew 25% to $37.4 million. Adjusted gross profit in the quarter, $30.1 million, which was a 24% increase over Q2 of last year. And the transaction process grew over 39% year over year. Matt will provide more color on the financials shortly. We continue to execute on all three strategic horizons I described earlier. From the first horizon, the small to medium billers continue to be a focus of ours, and we completed a multitude of implementations in the quarter. As an example, we implemented a mid-size public utility in Arizona, resulting in an improved customer experience and access to new payment methods. The utility was very pleased with our product and implementation process and have asked us to implement other departments in the city. In the second quarter, we also continued to build on our more than 350 integrations by adding new partners, including completing an integration with a leading provider of software to mid-sized telecommunication companies. Going forward, Paymentus will be the preferred provider of payments to their clients. In the second horizon, which targets larger, more diverse billers, We implemented several new billers, including a large auto finance company. And we also continue to make progress in our partnership with UPS, adding them to our platform in the U.S. this quarter. The U.S. is in addition to other countries around the world already live for UPS on our platform. We are excited about this partnership and how we, both UPS and Paymentus, can co-create a leading experience for our business clients. Beyond new implementations, we also have the opportunity to expand at existing clients. This growth occurs as clients migrate additional divisions to acquire companies and convert them to us or by adding new payment types and features such as AutoPay. Beyond new implementations, we also have the opportunity to expand at existing clients. Two examples of expansion are a large utility with over 2 million customers which added advanced payment methods like PayPal to provide their customers with more choices. and a top five utility which moved its AutoPay payments to Paymentus to improve its customers' experience by combining one-time and recurring payments on the Paymentus platform. In addition to new sales and the same store sales expansion, we completed several Q renewals, including extending our relationship with the leading provider of insurance to the jewelry industry. Through the addition of IPN, we added our third horizon with the focus of building out our partner network. IPN expands our reach beyond billers to FIs, technology partners, and retailers who originate transactions that we process. PayPal, one of our founding IPN partners, continues to focus on introducing enhanced bill payment functionality across its platform. We're also very excited about IPN across other IPN partners, and especially our extended reach to nearly 300 financial institutions with the PayPal risk transaction. In summary, I'm very pleased with the financial results of this quarter and the progress we have made through the acquisition of Paveris and Finobera to move closer to our original long-term vision to be the ecosystem for consumers, billers, financial institutions, and partners. With that, I will turn the call over to Matt to talk more about our financial results. Matt?