Paymentus Holdings, Inc.

Good day and welcome to the fourth quarter and full year 2025 Paymentus Earnings Conference call. This call is being recorded. All participants are currently in a listen-only mode. There will be an opportunity to ask questions following management's prepared remarks. If you'd like to ask a question, please press star followed by one on your telephone keypad. At this time, I will now turn the call over to David Hanover, Investor Relations. Please go ahead.

Robert Marlayson, Thank you operator good afternoon, welcome and thank you for joining the webcast to review our fourth quarter and full year 2025 results. Robert Marlayson, Are initially documents are available on the investor relations section of the payment this.com website. Robert Marlayson, They include the earnings presentation that will make reference to during this webcast this webcast is being recorded. Robert Marlayson, Hope everyone's had a chance to review those documents our founder and CEO to shot Sharma. We'll make some opening comments before Sanjay Kalra, our CFO, discusses the details of the fourth quarter and full year and our guidance. Following our prepared remarks, we'll take questions. Let me just remind you that we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and we refer to non-GAAP financial measures during the webcast. Forward-looking statements are based on management's current expectations and assumptions that are subject to risks and uncertainties. Factors that may cause our actual results to differ materially from expectations are detailed in our earnings materials and our SEC filings that are available on both the SEC and our websites. Information about non-GAAP financial measures, including reconciliations to US GAAP, can also be found on our earnings materials that are available on the website. With that, I'd like to turn the webcast over to Dushan Sharma. Dushan?

Thanks, David. We had a phenomenal fourth quarter. and fully at 2025. We are looking forward to a great 2026 and feeling even better about our business beyond that, based on the durability of our growth algorithm and the broad spectrum of our innovation framework. Now that we have been public for about five years, I will provide additional color on how we are feeling about the next five. 2025 was a significant milestone year for us, where for the first time we delivered top line revenue exceeding a billion dollars. I think that's particularly inspiring because if you recall, we exited 2023 with just over $600 million of top line revenue. And if you look back just five years ago to our IPO, we had a little over $300 million of revenue for 2020. So that would imply 100% revenue growth over three years. And if you then put over 2025 top line of $1.2 billion against over 2023 revenue, that's another instance of 100% revenue growth, but this time in just two years. This was done despite the backdrop of unprecedented inflation and other macroeconomic factors. In other words, We have quadrupled our business in the last five years, far ahead of our long-term CAGR model of 20% top line growth. And if I go back 10 years, we have grown the business 25 times. The reason I'm sharing this context is because I believe this type of growth is possible due to our innovative DNA and thoughtful execution of a long-term business strategy. In the process of achieving this scale and strategic position, I want to point out the level of disruption already caused by Paymentus to the status quo of legacy infrastructure through our ever-growing innovation footprint. At our inception, the vast majority of all digital bill payments occurred through old-school banks' bill pay. And today, vintage bank bill pay represents a fraction of the overall bill payment volume. At the same time, what is now deemed as legacy infrastructure of in-house and third-party biller direct solutions used to be considered large and thriving bill payment solutions. This change is not an accident. This was a result of a carefully crafted long-term business strategy. executed with focus on long-term shareholder value creation by first creating customer value through an ever-growing customer value proposition. So as you're now observing some discomfort with the broader FinTech landscape where increasingly more sophisticated buyers are rejecting a strategic complacence of their service providers or not accepting niche-y business models, Paymentus, on the other hand, is getting even more excited, as that is not a surprise to us. We see this as a great opportunity for further disruption, just as we saw at our inception. Compounding our excitement is the advent of Gen AI that is further challenging the old-school software business models. We believe the world is moving more towards us. As a result, despite being a large-scale billion-dollar company, it is my distinct belief that we are still just getting started and the larger value will be created from here on out. I believe we are strategically better positioned now than we were even just a few years ago. We have a state-of-the-art platform, innovative DNA, and a broad-based innovation footprint. We have a diverse, large, existing and growing client base. We serve a large portion of U.S. households and businesses using our platform, which is becoming increasingly more pervasive. Furthermore, the industry appears ripe for further disruption. And as a result, I believe we have a big market opportunity and our best is yet to come. But of course, as we all know, The talk is cheap. We'll still have to keep our heads down, execute, and perform as we have done in the past. With that backdrop, I'm also looking forward to this year. Our initial revenue guidance of 2026, which Sanjay will cover shortly, is over $1.4 billion in revenue at the top end, which we believe we can deliver without signing any new clients. And our story is not complete without talking about profitability and margin expansion at the same time as you are delivering this top line growth. For example, we generated $125 million of free cash flow in 2025 and exited with over $320 million of cash without any debt. In addition, for 2026, we are expecting adjusted EBITDA of $167 million at top end of our guidance, which also implies a non-GAAP net income of over $100 million, which is exciting in itself. With that, let me go into our quarterly business update. Paymentus reported both fourth quarter and full year 2025 results that surpassed our expectations. Furthermore, Paymentus ended the year with a strong bookings and backlog, which gives us a strong visibility as we head into 2026. What makes me even more excited is that we were able to achieve this year over year growth, even with the strong results we reported in the fourth quarter of 2024. Our team continues to demonstrate solid execution when it comes to onboarding activities. Additionally, While we expected to see growth from the rising portion of large enterprise customers, the beneficial impact we saw in Q4 was even greater than we had originally anticipated. Also, as our customer mix is shifting more towards enterprise and larger mid-market clients, our revenue and contribution profit per transaction has continued to grow substantially. I'm also pleased with the growth in our adjusted EBITDA, which was 46.3% year over year. I think these results display the tremendous operating leverage we have in our business. They also show how we understand the economics and profitability of each piece of new business we bring in, including the large enterprise billers we signed up in the second half of 2025. In addition, our results clearly highlight our capacity to manage and calibrate our business to meet or exceed our long term CAGR model. We have consistently shown our ability to achieve this, even if we experience variability and noise of our secondary metrics from quarter to quarter. Now let's briefly recap our fourth quarter and full year 2025 results. Fourth quarter revenue was a record $330.5 million, an increase of 28.1% year-over-year. At the same time, contribution profit was $106.9 million, up 24% year-over-year. Adjusted EBITDA was a record $39.9 million for the quarter, representing a 37.3% margin and 46.3% growth year-over-year. Similar to the past quarters, the majority of our year-over-year growth in contribution profit fell to our bottom line. And once again, we exceeded the rule of 40 for the quarter, coming in at 61 versus 59 last quarter. This reflects our team's solid execution and our focus on delivering consistent revenue growth alongside high-quality earnings. For the full year 2025, revenue increased 37.3 percent year-over-year to reach $1.2 billion. Contribution profit for the full year was $386.3 million, a year-over-year increase of 23.8%. Adjusted EBITDA was $137.4 million, representing a 35.6% margin and a 45.9% growth year-over-year. Now I'll review our fourth quarter business highlights and accomplishments. In terms of bookings, we had a very strong quarter and finished the year with a significant backlog. As I mentioned earlier, during the quarter we saw particular strength in the large enterprise segment of the market. These large enterprise customers continue to represent a growing component of our client base. We also continue to expand and diversify our customer base by signing clients in several industry verticals, including utilities, telecommunications, government agencies, educational institutions, banking, property management, healthcare, and insurance, among others. As a reminder, we handle both consumer and business payments for our clients and serve B2C and B2B clients and handle both inbound and outbound payment workflows based on the sophisticated platform we have created. Complementing this, we signed additional channel partners in various industry verticals to deepen our partner ecosystem. These verticals include consumer finance and utilities. In addition, onboarding of a substantial backlog remains a priority for us. During the fourth quarter, we onboarded several large enterprises, We also onboarded clients throughout multiple verticals, including insurance, utilities, government agencies, telecommunications, and healthcare. Now I'll turn it over to Sanjay to review our financial results in more detail.