Paymentus Holdings, Inc.

Good day and welcome to PayManta's third quarter 2023 earnings call. This call is being recorded and all participants are currently in a listen-only mode. There will be an opportunity to ask questions following management's prepared remarks. If you would like to ask a question, press star 1 on your telephone keypad. At this time, I will now turn the call over to David Hanover, Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to Paymentus' third quarter 2023 earnings call. Joining me on the call today is Dushant Sharma, our founder and CEO, and Sanjay Khara, our CFO. Following our prepared remarks, we'll 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 the supplemental slides accompanying this presentation will be available on our company's website under the investor relations link at ir.paymentis.com. Statements made on this webcast 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 expectation or intent regarding our financial results and guidance. The impact of and our ability to address continued economic uncertainty and inflation are market opportunities, business strategies, implementation timing, product enhancements, 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 to differ materially from those set forth in such statements, including the risks and uncertainties set forth under the captioned special note regarding forward-looking statements and risk factors in our annual report on Form 10-K for the year ended December 31st, 2022, and our subsequent quarterly reports on Form 10-Q, including our Form 10-Q for the quarter ended September 30, 2023, which we expect to file with the SEC shortly, and elsewhere in our other filings with the SEC. We encourage you to review these detailed forward-looking statements, 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, non-GAAP operating expenses, adjusted EBITDA, adjusted EBITDA margin, and non-GAAP net income and earnings per share. These non-GAAP financial measures, which we believe are useful in measuring our performance and liquidity, should be considered in addition to and 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 of the most directly comparable GAAP measures in our earnings press release issued today and the supplemental slides for this webcast, 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. Dushant?

Thank you, David. In the third quarter of 2023, Paymentus again delivered outstanding business results with a strong growth in revenue, contribution profit, and adjusted EBITDA. Third quarter revenue increased 18.9% on a year-over-year basis to $152.4 million. Adjusted EBITDA, which is a significant financial metric for us, finished well ahead of our expectations at $15.5 million, a 93.9% year-over-year increase. Contribution profit was $61.5 million, growing 20.3% year-over-year. we added $10.4 million in contribution profit over the same period last year, while dropping over $7.5 million of that to adjusted EBITDA. So similar to Q2, the majority of incremental contribution profit dollars we generated dropped to the bottom line. We believe this is important and demonstrates our ability to expand our operating leverage without sacrificing growth or innovation. This has been our operating strategy throughout 2023. Our updated guidance for Q4 and full year 2023, which Sanjay will cover shortly, reflects the continued execution of this strategy and our expectation that a significant portion of our incremental contribution profit will drop to the bottom line in the fourth quarter on a year over year basis. Our goal is to deliver high quality earnings with solid top line growth. We are proud of what we have accomplished already in this regard, and we expect to continue executing on this strategy, which we believe is extremely effective in today's macro environment where many things are beyond our control, such as interest rates or geopolitical events. Now I'll review some of our key third quarter business highlights and accomplishments. We exited the third quarter with a strong bookings backlog and are very pleased with the year over year growth we have achieved so far in 2023. Given the strength of our backlog, we feel good about the remainder of 2023 and we believe we are well positioned for 2024 in our ability to deliver top line and adjusted EBITDA dollars growth. We believe the key reason for our continued momentum is the strength of our technology platform, competitive differentiation with diverse financial product, FinTech products, and ever expanding instant payment network, or IPN ecosystem, which enables our clients to participate in a broad and diverse ecosystem by merely integrating onto our platform. We believe our instant payment net ecosystem continues to be attractive to financial institutions as well because it allows them to modernize their legacy bill pay experience with minimal difficulty or expense. On the topic of our strong sales momentum, we signed several large clients during the quarter. For example, we signed two large insurance companies who will use our platform and the instant payment network ecosystem to receive payments from various channels from the consumer and business policy holders. We also signed a large consumer finance business for managing their loan payments across all channels. And we also signed a large credit union to manage their online bill payments using our instant payment network. We believe this opens up further upsell and incremental revenue opportunities for us with similar clients to handle their loan repayments in addition to bill payments. Among various other clients across multiple verticals, we signed a large government agency for managing their payments on our platform. We also remain focused on onboarding our strong backlog in order to drive continued growth. We are making targeted investments in this area and believe these investments, as well as the improving post-pandemic environment that allows for a more in-person, collaborative process continues to help us in accomplishing this goal. In terms of our implementation progress, we launched several large clients during the quarter across various verticals, including a wholesale business-to-business entity, a healthcare company, a large utility, and multiple insurance companies, financial institutions, and government agencies. Complementing this, We also added new partners to our growing partner ecosystem in various business verticals. These include an education technology company and a healthcare company to assist with expansion of our platform in these industry verticals, along with several partners in the municipal and the utility space. In summary, we reported excellent results for the third quarter, once again demonstrating our ability to expand our operating leverage without sacrificing our continued growth. We continue to have solid sales momentum and remain focused on onboarding our strong backlog. Now let me turn it over to Sanjay to review our financial results in greater detail.