Paymentus Holdings, Inc.

Hey, and welcome to Paymentus' fourth quarter and full year 2021 earnings call. This call is being recorded. All participants are currently in a listen-only mode. There will be an opportunity for your questions following management's prepared remarks. If you would like to ask a question, please put star 1 on your telephone keypad. At this time, I would like to hand the call over to Paul Tiemann, VP Finance and Strategy, for some introductory comments. Please go ahead.

Thank you. Good afternoon and welcome to PayMensis' fourth quarter and full year 2021 earnings call. Joining me on the call today are Dushant Sharma, our founder and CEO, and Matt Parson, our CFO. Following our prepared remarks, we will take questions. Our press release was issued after the close of Market Today and is posted on our website, where this call is being simultaneously webcast. The webcast replay of this call and supplemental slides accompanying this presentation will be available on our company's website under the investor relations link at ir.finances.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 in similar phrases that denote future expectation or intent regarding our financial results, our market opportunity, business strategies, impact from acquisitions, and other matters. These forward-looking statements speak as of today, and we undertake no obligation to update them. 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 captions, special note regarding forward-looking statements, and risk factors, and our quarterly report on Form 10-Q for the quarter ended September 30th, 2021, which we filed with the SEC on November 10th, 2021, and our annual report on Form 10-K for the year ended December 31st, 2021, which we expect to file with the SEC in early March 2022, and elsewhere in our filings with the SEC. we encourage you to review these detailed safe harbor and risk factor disclosures. In addition, during today's call, we will discuss certain non-GAAP financial measures, specifically contribution profit, adjusted gross profit, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP financial measures. These non-GAAP financial measures, which we believe are useful in measuring Paymentus' performance and liquidity, should be considered in addition to not a substitute for or an isolation from GAAP results. We encourage you to review additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP measures in our earnings press release issued today, and supplemental slides, each 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. Look, 2021 was a great year. We accomplished many things that we believe position us well for a strong 2022 and beyond. But before I talk about 2022, let me discuss our Q4 performance first. We closed out our first year as a public company on a high note. Our contribution profit grew 36% in Q4 to $45.3 million. Our transaction volume grew 54% to over 83 million transactions in the quarter. And in 2021, we also increased our number of clients to over 1,700, including billers and financial institutions. And from a user's standpoint, we saw 21 million consumers and businesses use our platform in the month of December 2021. Our payment volume for the full year jumped 68% to over $63 billion. To provide an additional context, it took us 15 years to get to $30 billion in annual payment volume. And we have added more than that in just the last two years. It is pretty remarkable. And as you can see from these numbers, our core strategy of building a network and gaining market share is paying off handsomely. As reflected in our 2022 guidance, we expect continued demand for our platform and the ecosystem, which we believe provides significant momentum for 2022 and beyond. Let me now discuss our expectations for 2022. Based on our current visibility, we believe 2022 will be another year of a strong growth and profitability. We are expecting full-year contribution profit growth to be between 29% and 30%, and adjusted EBITDA margin to be between 14% and 16%. And we feel great about our prospects for 2022, primarily because of the work we have already done during 2021, which we believe has set a great foundation for our 2022 performance. Let me walk you through a few of these items. First, we established a significant partnership with JPMorgan Chase to jointly sell our solution to the biller market. Both teams continue to be excited about the partnership and the momentum we are seeing. Second, we closed two acquisitions, which has strengthened our presence in the financial services market that allows us to begin monetizing payments through the bank channel. And I'm sure you're wondering about the integration. It's going very well. Third, we launched our instant payment network, or IPN, with several of the largest companies in the world, and when combined with nearly 300 financial institutions on our platform, we believe it is a tough combination to beat. And as you know, IPN is unique to Paymentus. Fourth, we signed and implemented a number of key clients that we expect to serve for years to come. We also finished migrations of a large insurance company, a large real estate e-commerce website, and a top 15 U.S. mortgage servicing company. All went live in 2021, each displacing legacy systems. These are among the over 50 clients, billers, and financial institutions that we onboarded in the quarter. Fifth, we have signed additional partnerships, including a new telecom partnership in the fourth quarter that we expect to help grow our biller base and corresponding revenues. In October 2021, we launched an IPN-powered app called Bill Center that modernizes bill payments for banks and credit unions. It has been very well received in the market with several clients signed in the fourth quarter. Bill Center provides consumers with a 360-degree view across all bills. It offers more payment choices with debit, credit, and digital wallet options, and it delivers immediate notification of payment from the biller to the banks and financial institutions. With IPN and BillCenter, consumers have more choice and flexibility about how they pay and when they pay. Finally, our addressable market opportunity is big, and despite our scale, we believe we're just getting started. As a testament to our momentum and leadership position, In a recent comprehensive review of many BillerDirect vendors by IT Nova Rica Group, a leading financial services advisory and research firm, Paymentus was named as the industry's best-in-class vendor. IT Nova Rica reached this conclusion after numerous capability deep dives, feature functionality comparisons, client reference calls, product demos, and due to our innovative BillerDirect platform and our excellence in Biller service and support. As a reminder, our platform and the IPN ecosystem exist to create a flywheel effect where our objective remains to, A, sign as many billers as possible, B, constantly grow the digital payment volume, C, expand IPN reach to as many partners and financial institutions as possible, and D, generate a warm lead list of all billers that are outside of our biller direct platform but process through our IPN network and therefore add them to our sales pipelines. We have done a tremendous amount of work in 2021, including all of the exciting accomplishments I listed. And as a result, we believe we are more drivers of future revenue than we have ever had before. We believe these revenue drivers, combined with our highly visible model, provide attractive upside potential for 2020 and beyond. Our 2022 guidance doesn't change, but hopefully this gives you an understanding as to why we feel good about 2022 and beyond. Many of you are new to Payment as a Story, so let me take a moment to describe how we think about our business. Our strategy is centered around capital efficient long-term growth. We view ourselves as a custodian of your capital, and we take this role very seriously. As a public company, it is never lost on us, in fact, I personally think about it every day, that our long-term performance also impacts children's education plans, family retirement accounts, and vacation funds. Therefore, we will continue to be a responsible executor of our business strategy as we aggressively pursue profitable growth irrespective of the market conditions. Let me now touch quickly on the nature of bill payment market and the industries we serve. If Christopher Bullock's famous line was spoken today, it would likely say something like, it's impossible to be sure of anything except debt, taxes, and bills. We all have bills, and they have to be paid, whether there is a financial crisis or a pandemic. The majority of our clients are recurring services businesses, such as utilities, government, financial services, and insurance companies. Due to the non-discretionary nature of these businesses, they aren't affected like other businesses, by supply chain issues and geopolitical events. We believe this gives us tremendous stability as we execute on our long-term strategy for accelerating the total addressable market through innovative offerings. This is one of the many reasons why we feel confident about our ability to execute and deliver long-term sustainable growth. And before I pass the call over to Matt, let me also touch on inflation for a moment. Our pricing and contracts are structured such that either our pricing increases automatically or we can adjust our pricing if our clients increase their fees to their customers. Therefore, we have protection to maintain margins. This notion is not new at all and has been in our agreements for over a decade now. And I also want to remind you that one reason we grew through the financial crisis way back when and through the pandemic was because people still had to pay their bills. With that, let me pass the call to Matt. Matt?