Paymentus Holdings, Inc.
For the period ended Mar 31, 2025. Filed May 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
PAY$33.47+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0000950170-24-125544
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0000950170-25-064979
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 89 previous paragraphs and 73 current paragraphs.
46 unchanged; 25 reworded; 2 added; 12 removed; 6 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
Economic uncertainty increased meaningfully in the first quarter of 2025, driven by growing concerns around new or evolving trade and tariff policies, geopolitical tensions, inflationary pressures, and the interest rate outlook. These factors have introduced a significant level of uncertainty to the economic outlook for the remainder of the year. The risk of a recession or tighter credit markets could lead certain customers to scale back spending, adopt lower-cost payment methods, or suspend operations. These shifts may adversely impact our performance through the rest of 2025.
Current report
Additionally, elevated inflation could negatively affect our results due to the time lag between inflationary impacts and our ability to adjust pricing strategies. We are closely monitoring these trends and will take further action as needed to maintain operational resilience, while continuing to adapt our financial and operational approach in response to evolving macroeconomic conditions.
Removed paragraphs (12)
Previous report
Inflationary pressures have moderated, with price increases occurring at a reduced pace, and current expectations indicate further deceleration in inflation. However, economic uncertainty persists and may continue to present challenges to our performance for the remainder of 2024 and into 2025. While inflationary conditions have stabilized, elevated costs, particularly in the utility sector, and higher interchange fees remain impactful. We are proactively adjusting pricing to mitigate these pressures; however, the timing of our adjustments typically lags the inflationary effects experienced by our clients. We will remain vigilant in monitoring the economic landscape and will implement further pricing adjustments as necessary to address ongoing market dynamics.
Previous report
n/m - not meaningful
Previous report
For the three months ended September 30, 2024, the Company’s effective tax rate was 0.03%, lower than the 11.41% in the same period of 2023. The primary driver for the lower rate in 2024 was the release of a valuation allowance on U.S. deferred tax assets, while the 2023 rate was influenced by a full valuation allowance. Additionally, in 2024, the Company recognized discrete benefits related to stock-based compensation and finalized research and development credit claims, further lowering the effective tax rate.
Previous report
Revenue
Previous report
Research and Development Expenses
Previous report
The increase in research and development expenses was primarily due to increased amortization of capitalized internal-use software development costs and an increase in employee-related costs, including an increase in stock-based compensation.
Previous report
Sales and Marketing Expenses
Previous report
The increase in sales and marketing expenses was primarily due to increased employee-related costs as a result of increased hiring, including higher stock-based compensation expenses, and reseller commissions including amortization of warrants.
Previous report
General and Administrative Expenses
Previous report
Interest income, net
Previous report
The increase in interest income, net was a result of higher cash balances held with banks for the nine months ended September 30, 2024 compared to the same period in 2023, together with increases in the Federal Reserve rates.
Reworded paragraphs (25)
Previous wording
We are a leading provider of cloud-based bill payment technology and solutions. We deliver our next-generation product suite through a modern technology stack to more than 2,200 biller business and financial institution clients. Our platform was used by approximately 34 million consumers and businesses in North America in December 2023 to pay their bills, make money movements and engage with our clients. We serve billers of all sizes that primarily provide non-discretionary services across a variety of industry verticals, including utilities, financial services, insurance, government, telecommunications, real estate management, healthcare and education. We also serve financial institutions by providing them with a modern platform that their customers use for bill payment, account-to-account transfers and person-to-person transfers. By powering this comprehensive network of billers and financial institutions, each with their own set of bill payment requirements, we believe we have created an enviable feedback loop that enables us to continuously drive innovation, grow our business and uniquely improve the electronic bill payment experience for participants in the bill payment ecosystem.
Current wording
We are a leading provider of cloud-based bill payment technology and solutions. We deliver our next-generation product suite through a modern technology stack to more than 2,500 biller business and financial institution clients. Our platform was used by approximately 46 million consumers and businesses globally in December 2024 to pay their bills, make money movements and engage with our clients. We serve billers of all sizes that primarily provide non-discretionary services across a variety of industry verticals, including utilities, financial services, insurance, government, telecommunications, real estate management, education, consumer finance, healthcare and small business. We also serve financial institutions by providing them with a modern platform that their customers use for bill payment, account-to-account transfers and person-to-person transfers. By powering this comprehensive network of billers and financial institutions, each with their own set of bill payment requirements, we believe we have created an enviable feedback loop that enables us to continuously drive innovation, grow our business and uniquely improve the electronic bill payment experience for participants in the bill payment ecosystem.
Previous wording
We define transactions processed as the number of revenue generating payment transactions, such as checks, credit card and debit card transactions, automated clearing house, or ACH, items and emerging payment types, which are initiated and generally processed through our platform during a period. The number of transactions also includes account-to-account and person-to-person transfers. The increase in the number of transactions processed during the three and nine months ended September 30, 2024 as compared to the same periods in 2023 was primarily driven by the addition of new billers and financial institutions and increased transactions from our existing billers and financial institutions.
Current wording
We define transactions processed as the number of revenue generating payment transactions, such as checks, credit card and debit card transactions, automated clearing house, or ACH, items and emerging payment types, which are initiated and generally processed through our platform during a period. The number of transactions also includes account-to-account and person-to-person transfers. The number of transactions processed during the three months ended March 31, 2025 increased approximately 28.0% as compared to the same period in 2024. The increase was primarily driven by the addition of new billers and increased transactions from our existing billers.
Previous wording
The discussion below includes a number of forward-looking statements regarding our future performance. For a discussion of important factors, including the continuing development of our business and other factors which could cause actual results to differ materially from matters referred to below, see the discussions under “Risk Factors” and “Special Note Regarding Forward-Looking Statements” herein and in our Form 10-K for the year ended December 31, 2023 or, the "2023 Form 10-K".
Current wording
The discussion below includes a number of forward-looking statements regarding our future performance. For a discussion of important factors, including the continuing development of our business and other factors which could cause actual results to differ materially from matters referred to below, see the discussions under “Risk Factors” and “Special Note Regarding Forward-Looking Statements” herein and in the 2024 Form 10-K.
Previous wording
We calculate adjusted EBITDA as net income before interest income, net, other income (expense), depreciation and amortization of acquisition-related intangible assets and capitalized software development costs, and income taxes, adjusted to exclude the effects of foreign exchange gains (losses), stock-based compensation expense and certain nonrecurring expenses that management believes are not indicative of ongoing operations.
Current wording
We calculate adjusted EBITDA as net income before interest income (expense), net, other income (expense), depreciation and amortization of acquisition-related intangible assets and capitalized software development costs, and income taxes, adjusted to exclude the effects of net foreign exchange gain (loss), stock-based compensation expense and certain nonrecurring expenses that management believes are not indicative of ongoing operations.
Previous wording
We use non-GAAP measures to supplement financial information presented on a GAAP basis. We believe that excluding certain items from our GAAP results allows management and our board of directors to more fully understand our consolidated financial performance from period to period and helps management project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP measures provide our investors with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period-to-period comparisons. In particular, we exclude interchange and assessment fees in the presentation of contribution profit because we believe inclusion is less directly reflective of our operating performance as we do not control the payment product or channel used by consumers, which is the primary determinant of the amount of interchange and assessment fees. We use contribution profit to measure the amount available to fund our operations after interchange and assessment fees, which are directly linked to the number of transactions we process and thus our revenue and gross profit. There are limitations to the use of the non-GAAP measures presented in this report. Our non-GAAP measures may not be comparable to similarly titled measures of other companies; other companies, including companies in our industry, may calculate non-GAAP measures differently than we do, limiting the usefulness of those measures for comparative purposes. These non-GAAP measures should not be considered in isolation from or as a substitute for financial measures prepared in accordance with GAAP.
Current wording
We use non-GAAP measures to supplement financial information presented on a GAAP basis. We believe that excluding certain items from our GAAP results allows management and our board of directors to more fully understand our consolidated financial performance from period to period and helps management project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP measures provide our investors with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period-to-period comparisons. In particular, we exclude interchange and assessment fees in the presentation of contribution profit because we believe inclusion is less directly reflective of our operating performance as we do not control the payment method or channel used by consumers, which is the primary determinant of the amount of interchange and assessment fees. We use contribution profit to measure the amount available to fund our operations after interchange and assessment fees, which are directly linked to the number of transactions we process and thus our revenue and gross profit. There are limitations to the use of the non-GAAP measures presented in this report. Our non-GAAP measures may not be comparable to similarly titled measures of other companies; other companies, including companies in our industry, may calculate non-GAAP measures differently than we do, limiting the usefulness of those measures for comparative purposes. These non-GAAP measures should not be considered in isolation from or as a substitute for financial measures prepared in accordance with GAAP.
Previous wording
In general, contribution profit is driven by the number of transactions we process offset by network fees associated with processing those transactions. The amount of contribution profit per transaction may vary due to a variety of factors substantially outside of our control, including client size, type and industry as well as whether the client is a biller, financial institution or other partner. Contribution profit for the three and nine months ended September 30, 2024 increased approximately 30.1%, and 29.3%, respectively, as compared to the same periods in 2023. The increase was primarily driven by growth in transaction count and volume driven by the addition of new billers and financial institutions and increased transactions from our existing billers and financial institutions.
Current wording
In general, contribution profit is driven by the number of transactions we process offset by network fees associated with processing those transactions. The amount of contribution profit per transaction may vary due to a variety of factors substantially outside of our control, including client size, type and industry as well as whether the client is a biller, financial institution or other partner. Contribution profit for the three months ended March 31, 2025 increased approximately 26.3%, as compared to the same period in 2024. The increase was primarily driven by growth in transaction count and volume driven by the addition of new billers and financial institutions and increased transactions from our existing billers and financial institutions.
Previous wording
Adjusted gross profit for the three and nine months ended September 30, 2024 increased 29.1% and 29.6%, respectively, as compared to the same periods in 2023. Adjusted gross profit improved in line with contribution profit. Adjusted gross profit as a percentage of contribution profit remained consistent for the three and nine months ended September 30, 2024. Adjusted gross profit is driven primarily by the same factors that impact gross profit with the exception of excluding the amortization and stock-based compensation recorded in cost of revenue. The increase in amortization was driven by additional capitalization of software costs.
Current wording
Adjusted gross profit for the three months ended March 31, 2025 increased 25.9%, as compared to the same period in 2024. Adjusted gross profit improved in line with contribution profit. Adjusted gross profit as a percentage of contribution profit decreased modestly, as a result of changes in customer mix resulting primarily from the addition of large, high-volume enterprise billers with lower margins in our biller mix. This decline was partially offset the realization of economies of scale. Adjusted gross profit is driven primarily by the same factors that impact gross profit with the exception of excluding the amortization and stock-based compensation recorded in cost of revenue. The increase in amortization was driven by additional capitalization of software development costs.
Previous wording
Adjusted EBITDA is a measure of profitability and generally is expected to move in line with revenue, contribution profit, gross profit and adjusted gross profit. Adjusted EBITDA increased 58.2% and 75.4% in the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023. The increase was primarily driven by growth in transaction count and volume driven by the addition of new billers and financial institutions and increased transactions from our existing billers and financial institutions and the implementation of certain cost improvement measures.
Current wording
Adjusted EBITDA is a measure of profitability and generally is expected to move in line with revenue, contribution profit, gross profit and adjusted gross profit. Adjusted EBITDA increased 51.3% in the three months ended March 31, 2025, as compared to the same period in 2024. The increase was primarily driven by growth in transaction count and volume driven by the addition of new billers and financial institutions and increased transactions from our existing billers and financial institutions.
Previous wording
The decrease in free cash flow for the three and nine months ended September 30, 2024, as compared to the same periods in 2023, was primarily due to decreases in cash generated from operations.
Current wording
The increase in free cash flow for the three months ended March 31, 2025 was primarily driven by higher cash generated from operations.
Previous wording
(2) Other income (expense) includes a remeasurement adjustment relating to the purchase price of a prior acquisition.
Current wording
(2) Other income for the three months ended March 31, 2024 includes a remeasurement adjustment relating to the purchase price of a prior acquisition.
Previous wording
The increase in revenue was primarily driven by an increase in the number of transactions processed, which was driven by the implementation of new billers, the early launch of certain large enterprise billers and increased transactions from our existing billers.
Current wording
The increase in revenue was primarily driven by an increase in the number of transactions processed, which was driven by the implementation of new billers and increased transactions from our existing billers.
Previous wording
Gross margin experienced a slight decrease, driven by changes in customer mix resulting primarily from the addition of large, high-volume enterprise billers with lower margins in our biller mix. This decline was partially offset by cost improvement initiatives and the realization of economies of scale.
Current wording
Gross margin decreased due to changes in customer mix resulting primarily from the addition of large, high-volume enterprise billers with lower margins in our biller mix. This decline was partially offset by the realization of economies of scale.
Previous wording
The increase in research and development expenses was primarily due to increased amortization of capitalized internal-use software development costs and an increase in employee-related costs, including an increase in stock-based compensation expenses.
Current wording
The increase in research and development expenses was primarily due to increases in cloud computing services expenses due to higher utilization of cloud-based infrastructure and increased data processing demands, amortization of capitalized internal-use software development costs and employee-related costs, including benefits due to increased headcount and merit increases in annual compensation.
Previous wording
The increase in sales and marketing expenses was primarily due to increased employee-related costs as a result of increased hiring, including higher stock-based compensation expenses, and reseller commissions including amortization of warrants.
Current wording
The increase in sales and marketing expenses was primarily due to an increase in reseller commissions, including amortization of warrants.
Previous wording
The marginal increase in general and administrative expenses was primarily due to increases in professional fees, legal fees and lease expenses, which were offset by lower cost of insurance premiums of certain business policies.
Current wording
The marginal increase in general and administrative expenses was primarily due to increases in professional fees and legal fees, which were offset by lower cost of insurance premiums of certain business policies.
Previous wording
The increase in interest income, net was a result of higher cash balances held with banks for the three months ended September 30, 2024 compared to the same period in 2023.
Current wording
The changes in interest income, net was a result of higher cash balances held with banks, offset by lower interest rate.
Previous wording
The change in provision for income taxes as well as the increase in the Company's effective tax rate, which was 17.6% for the nine months ended September 30, 2024 as compared to 7.2% for the same period in the prior year, was primarily due to an increase in income before income taxes as well as the results of permanent differences for disallowed stock-based compensation pursuant to IRC Section 162(m) and state taxes, offset by the release of the valuation allowance. In 2023, it was primarily the result of near break-even pre-tax income from operations, state taxes, the impact of the full valuation allowance and other permanent adjustments in addition to a return to provision benefit recorded in connection with a change in estimate of costs required to be capitalized under IRC Section 174.
Current wording
The change in provision for income taxes as well as the decrease in the Company's effective tax rate, which was 22.4% for the three months ended March 31, 2025 as compared to 32.8% for the same period in the prior year, was primarily the result of permanent differences for disallowed stock-based compensation pursuant to IRC Section 162(m), state taxes and discrete benefits for excess tax benefits on stock-based compensation. In 2024, it was primarily the result of permanent differences for disallowed compensation pursuant to IRC Section 162(m), state taxes and the impact of the full valuation allowance that has since been released.
Previous wording
As of September 30, 2024, we had $187.5 million of unrestricted cash and cash equivalents. We believe that existing unrestricted cash and cash equivalents will be sufficient to support our working capital and capital expenditure requirements for at least the next 12 months. Since inception, we have financed operations primarily through the sale of equity securities and revenue from payment transaction fees and subscriptions. Our principal uses of cash are funding operations and capital expenditures.
Current wording
As of March 31, 2025, we had $245.8 million of unrestricted cash and cash equivalents. We believe that existing unrestricted cash and cash equivalents will be sufficient to support our working capital and capital expenditure requirements for at least the next 12 months. Since inception, we have financed operations primarily through the sale of equity securities and revenue from payment transaction fees and subscriptions. Our principal uses of cash are funding operations and capital expenditures.
Previous wording
Our primary source of operating cash is revenue from payment transaction fees. Our primary uses of operating cash are personnel-related costs, payments to third parties to fulfill our payment transactions and payments to sales and marketing partners. Net cash provided by operating activities for the nine months ended September 30, 2024 was $35.7 million. Net income was $31.0 million, adjusted for non-cash charges of $38.0 million consisting primarily of depreciation and amortization, stock-based compensation, amortization of contract assets and non-cash lease expense, which contributed positively to cash provided from operating activities. This was decreased by net cash outflows of $33.3 million for changes in our operating assets and liabilities.
Current wording
Our primary source of operating cash is revenue from payment transaction fees. Our primary uses of operating cash are personnel-related costs, payments to third parties to fulfill our payment transactions and payments to sales and marketing partners. Net cash provided by operating activities for the three months ended March 31, 2025 was $50.4 million. Net income was $13.8 million, adjusted for non-cash charges of $15.8 million, consisting primarily of depreciation and amortization, stock-based compensation, amortization of capitalized contract acquisition costs and warrant cost, non-cash lease expense and provision for expected credit losses and credit adjustments, which contributed positively to cash provided from operating activities. This was additionally supported by net cash inflows of $20.9 million provided by changes in our operating assets and liabilities.
Previous wording
Net cash provided by operating activities for the nine months ended September 30, 2023 was $44.4 million. Net income was $12.9 million, adjusted for non-cash charges of $32.9 million consisting primarily of depreciation and amortization, stock-based compensation, amortization of contract assets and non-cash lease expense, which contributed positively to cash provided from operating activities. This was decreased by net cash outflows of $1.4 million for changes in our operating assets and liabilities.
Current wording
Net cash provided by operating activities for the three months ended March 31, 2024 was $11.0 million. Net income was $7.2 million, adjusted for non-cash charges of $13.2 million consisting primarily of depreciation and amortization, stock-based compensation, amortization of capitalized contract acquisition costs and warrant cost, non-cash lease expense and provision for expected credit losses and credit adjustments, which contributed positively to cash provided from operating activities. This was offset by net cash outflows of $9.5 million due to changes in our operating assets and liabilities.
Previous wording
Net cash used in investing activities for the nine months ended September 30, 2024 consisted of $27.2 million of capitalized software development costs and $0.4 million of purchases of property and equipment.
Current wording
Net cash used in investing activities for the three months ended March 31, 2025 consisted of $9.3 million of capitalized internal-use software development costs and $0.1 million of purchases of property and equipment, offset by $1.1 million cash inflow from net change in interest-bearing deposits.
Previous wording
Net cash used in investing activities for the nine months ended September 30, 2023 consisted of $25.3 million of capitalized internal-use software development costs and $0.5 million of purchases of property and equipment.
Current wording
Net cash used in investing activities for the three months ended March 31, 2024 consisted of $9.3 million of capitalized internal-use software development costs, $0.1 million of purchases of property and equipment and $0.1 million from net change in interest-bearing deposits.
Previous wording
Net cash used in financing activities for the nine months ended September 30, 2023 consisted of $1.7 million of payments on other financing obligations, $0.1 million of payments on finance leases and $0.4 million of proceeds from exercise of stock-based awards by employees.
Current wording
Net cash used in financing activities for the three months ended March 31, 2025 consisted of $1.9 million of payments of taxes withheld on net settled vesting of restricted stock units, which was offset by $0.1 million of proceeds from the exercise of stock-based awards by employees.
Previous wording
Net cash used in financing activities for the nine months ended September 30, 2024 consisted of $0.6 million of settlement of holdback liability relating to a prior acquisition, which was offset by $0.2 million of proceeds from exercise of stock-based awards by employees.
Current wording
Net cash used in financing activities for the three months ended March 31, 2024 consisted of $0.5 million of settlement of holdback liability relating to a prior acquisition, which was offset by $0.1 million of proceeds from the exercise of stock-based awards by employees.
Previous wording
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our significant accounting policies are described in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies” to our consolidated financial statements included in our 2023 Form 10-K. There have been no material changes in our critical accounting policies and estimates since December 31, 2023.
Current wording
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our significant accounting policies are described in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies” to our consolidated financial statements included in our 2024 Form 10-K. Except for those disclosed in Note 2 "Summary of Significant Accounting Policies" of this Quarterly Report on Form 10-Q, there have been no material changes in our critical accounting policies and estimates since December 31, 2024.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
Gross margin decreased due to changes in customer mix resulting primarily from the addition of large high volume enterprise billers with lower margins to our customer base.
Previous report — wording carried elsewhere
The marginal decrease in general and administrative expenses was primarily due to lower cost of insurance premiums of certain business policies and stock-based compensation expenses, which were offset by an increase in legal fees.
Previous report — wording carried elsewhere
Comparison of the Nine Months Ended September 30, 2024 and 2023
Previous report — wording carried elsewhere
The increase in revenue was primarily driven by an increase in the number of transactions processed, which was driven by the implementation of new billers and increased transactions from our existing billers. Revenue increase was also driven by pricing improvements.
Previous report — wording carried elsewhere
Cost of Revenue, Gross Profit and Gross Margin
Previous report — wording carried elsewhere
The increase in cost of revenue was driven by the increase in revenue and transactions processed, as it consists primarily of interchange fees and processor costs, as well as other direct costs associated with making our platform available to our billers.