Paymentus Holdings, Inc.
For the period ended Jun 30, 2025. Filed Aug 5, 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.
Jun 30, 2025 · Filed Aug 5, 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 2025-03-31; filed 2025-05-07.
0000950170-25-064979
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-05.
0000950170-25-102218
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 73 previous paragraphs and 90 current paragraphs.
50 unchanged; 21 reworded; 12 added; 2 removed; 0 previous and 7 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 (12)
Current report
Significant economic uncertainty is expected to persist through the remainder of 2025, driven by concerns over trade policies, geopolitical tensions, stubborn inflation, and the interest rate outlook. For our business, these pressures may influence consumer payment patterns in competing ways. An economic slowdown could reduce our revenue per transaction and overall volume should consumers switch to lower-cost payment methods or defer payments. Conversely, a higher frequency of partial payments could increase our total transaction count, providing a potential offset. The net effect of these variables on our transaction-based revenues remains the key uncertainty for our financial performance.
Current report
22.3% and 24.2%, respectively, as compared to the same periods in 2024. The increase was driven by growth in transaction count and volume driven from both new and existing billers and financial institutions.
Current report
The increase in cost of revenue corresponds with higher revenue and transaction volumes, as it consists primarily of variable interchange fees and processor costs.
Current report
Revenue
Current report
The increase in cost of revenue was directly attributable to higher revenue and transaction volumes, as these costs are predominantly variable and consist mainly of interchange and processor fees.
Current report
Gross margin compression resulted from a customer mix shift toward high-volume enterprise billers with lower margins. This effect was partially mitigated by benefits from economies of scale.
Current report
Research and Development Expenses
Current report
Research and development expenses increased primarily due to an increase in employee-related costs, including benefits, driven by increased headcount, higher stock based compensation and increases in annual compensation, a rise in cloud computing services expenses, reflecting higher utilization of our cloud-based infrastructure and increased data processing demands, and an increase in the amortization of capitalized internal-use software development costs.
Current report
Sales and Marketing Expenses
Current report
General and Administrative Expenses
Current report
Interest income, net
Removed paragraphs (2)
Previous 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.
Previous report
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.
Reworded paragraphs (21)
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 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.
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 increase in number of transactions processed during the three and six months ended June 30, 2025 as compared to the same periods in 2024 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 the 2024 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. Further, we are currently analyzing the provisions of the One Big Beautiful Bill Act and assessing its potential effects on our business, financial condition, results of operations, and cash flows.
Previous wording
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.
Current wording
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 macroeconomic trends and will take further action as needed to maintain operational resilience, while continuing to adapt our financial and operational approach in response to the evolving economic landscape.
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 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.
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 and six months ended June 30, 2025 increased approximately
Previous 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.
Current wording
Adjusted gross profit for the three and six months ended June 30, 2025 increased 21.7% and 23.7%, respectively, as compared to the same periods 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 by 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
(2) Other income for the three months ended March 31, 2024 includes a remeasurement adjustment relating to the purchase price of a prior acquisition.
Current wording
(1) Other income for the six months ended June 30, 2024 includes a remeasurement adjustment relating to the purchase price of a prior acquisition.
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 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.
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 40.7% and 45.6% in the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024. The increase was primarily attributable to higher revenues generated from growth in transaction volumes from both new and existing billers and financial institutions. The rate of growth in Adjusted EBITDA exceeded the rate of growth in both contribution profit and adjusted gross profit, reflecting the operating leverage inherent in our business, as certain operating expenses are largely fixed and did not increase in proportion to the growth in revenue.
Previous wording
The increase in free cash flow for the three months ended March 31, 2025 was primarily driven by higher cash generated from operations.
Current wording
The increase in free cash flow for the three and six months ended June 30, 2025, as compared to the same periods in 2024, was primarily driven by higher cash generated from operations.
Previous wording
(1) Other income consists of a remeasurement adjustment relating to the purchase price of a prior acquisition.
Current wording
(2) Other income for the six months ended June 30, 2024 includes a remeasurement adjustment relating to the purchase price of a prior acquisition.
Previous 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.
Current wording
Gross margin decreased due to a shift in customer mix towards new, high-volume enterprise billers with lower margins. This impact was partially offset by improved economies of scale.
Previous 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.
Current wording
Research and development expenses increased primarily due to an increase in employee-related costs, including benefits, driven by increased headcount, higher stock based compensation and increases in annual compensation, a rise in cloud computing services expenses, reflecting higher utilization of our cloud-based infrastructure and increased data processing demands, and an increase in the amortization of capitalized internal-use software development costs.
Previous wording
The changes in interest income, net was a result of higher cash balances held with banks, offset by lower interest rate.
Current wording
The changes in interest income, net was mainly due to higher cash balances held with banks, offset by lower interest rate.
Previous 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.
Current wording
The change in provision for income taxes as well as the decrease in our effective tax rate, which was 19.9% for the three months ended June 30, 2025 as compared to 24.9% for the same period in the prior year and the difference between our effective tax rate and the U.S. federal statutory rate of 21% in the above periods, was primarily the result of permanent differences for disallowed compensation pursuant to IRC Section 162(m), state taxes, discrete benefits for excess tax benefits on stock-based compensation and prior year Canadian research and development credit claims. In 2024, it was primarily the result of permanent differences for disallowed stock-based compensation pursuant to IRC Section 162(m), state taxes and the impact of the full valuation allowance.
Previous 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.
Current wording
The 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
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.
Current wording
As of June 30, 2025, we had $266.4 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 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.
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 six months ended June 30, 2025 was $81.9 million. Net income was $28.5 million, adjusted for non-cash charges of $33.2 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 additionally supported by net cash inflows of $20.2 million provided by changes in our operating assets and liabilities.
Previous 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.
Current wording
Net cash provided by operating activities for the six months ended June 30, 2024 was $29.0 million. Net income was $16.6 million, adjusted for non-cash charges of $27.5 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 $15.1 million due to changes in our operating assets and liabilities.
Previous 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.
Current wording
Net cash used in investing activities for the six months ended June 30, 2025 consisted of $18.2 million of capitalized internal-use software development costs and $0.2 million of purchases of property and equipment, offset by $0.6 million cash inflow from net change in interest-bearing deposits.
Previous 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.
Current wording
Net cash used in investing activities for the six months ended June 30, 2024 consisted of $18.4 million of capitalized internal-use software development costs, $0.3 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 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.
Current wording
Net cash used in financing activities for the six months ended June 30, 2025 consisted of $3.8 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 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.
Current wording
Net cash used in financing activities for the six months ended June 30, 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.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
The increase in revenue was primarily driven by an increase in the number of transactions processed, which was driven by both the implementation of new billers and increased transactions from our existing billers.
Current report — wording carried from elsewhere
The increase in general and administrative expenses was primarily due to increases in professional fees, legal fees and insurance premiums of certain business policies.
Current report — wording carried from elsewhere
Comparison of the Six Months Ended June 30, 2025 and 2024
Current report — wording carried from elsewhere
Cost of Revenue, Gross Profit and Gross Margin
Current report — wording carried from elsewhere
The increase in sales and marketing expenses was primarily due to an increase in reseller commissions, including amortization of warrants.
Current report — wording carried from elsewhere
Interest income, net was stable as higher cash balances held with banks were offset by lower interest rates.
Current report — wording carried from elsewhere
The change in provision for income taxes as well as the decrease in our effective tax rate, which was 21.2% for the six months ended June 30, 2025 as compared to 28.6% for the same period in the prior year and the difference between our effective tax rate and the U.S. federal statutory rate of 21% in the above periods, was primarily the result of permanent differences for disallowed compensation pursuant to IRC Section 162(m), state taxes, discrete benefits for excess tax benefits on stock-based compensation and prior year Canadian research and development credit claims. In 2024, it was primarily the result of permanent differences for disallowed stock-based compensation pursuant to IRC Section 162(m), state taxes and the impact of the full valuation allowance.