Paymentus Holdings, Inc.
For the period ended Sep 30, 2025. Filed Nov 4, 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.
Sep 30, 2025 · Filed Nov 4, 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 2025-06-30; filed 2025-08-05.
0000950170-25-102218
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-04.
0001193125-25-262925
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 90 previous paragraphs and 92 current paragraphs.
60 unchanged; 27 reworded; 5 added; 2 removed; 1 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 (5)
Current report
We continued to navigate significant economic uncertainty in the third quarter of 2025, a trend we expect to persist. Elevated inflation is the primary factor influencing consumer spending habits and increasing our own interchange and processing costs. Additional concerns stem from ongoing geopolitical tensions, the interest rate environment, and potential changes in trade policies.
Current report
Additionally, elevated inflation presents a challenge due to the inherent time lag between experiencing cost impacts and fully implementing necessary pricing adjustments, which could potentially affect our near-term results. We actively monitor these dynamic conditions and are prepared to adjust our financial and operational approaches to ensure continued resilience.
Current report
The provision for income taxes and the effective tax rate increased to 21.5% for three months ended September 30, 2025, from 0.03% in the prior year period. The 21.5% effective tax rate was in line with the U.S. federal statutory rate of 21%. The primary factors driving both the change from the prior year and the difference from the federal statutory rate in the current period were: (1) permanent differences relating to disallowed compensation under Internal Revenue Code ("IRC") Section 162(m), (2) the impact of state taxes, (3) discrete tax benefits from excess tax deductions on stock-based compensation, and (4) the finalization of prior year Canadian and U.S. research and development (R&D) credit claims during the period.
Current report
The effective tax rate of 0.03% in the three months ended September 30, 2024, was primarily attributable to a single, non-recurring event: the determination to release a valuation allowance previously recorded against deferred tax assets in the U.S., which was due to the positive change in available evidence regarding the realizability of those assets.
Current report
The lower effective tax rate of 17.6% recorded in the comparative 2024 period was principally attributable to a significant, non-recurring tax event related to the determination to release a valuation allowance previously established against certain deferred tax assets in the U.S., which was due to the positive change in available evidence regarding the realizability of those assets.
Removed paragraphs (2)
Previous 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 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 report
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.
Reworded paragraphs (27)
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 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.
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 nine months ended September 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. 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.
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
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 wording
These macroeconomic pressures, particularly inflation, could affect consumer payment patterns in counteracting ways. On one hand, consumers facing economic strain might switch to lower-cost payment options or delay payments, which could reduce our average revenue per transaction and overall volume. On the other hand, a higher frequency of partial payments could increase our total transaction count, offering a potential offset. The net effect of these variables on our transaction revenues and financial performance remains uncertain.
Previous wording
We calculate contribution profit as gross profit plus other cost of revenue. Other cost of revenue equals cost of revenue less interchange and assessment fees paid by us to our payment processors.
Current wording
We calculate contribution profit as gross profit plus other cost of revenue. Other cost of revenue equals cost of revenue less interchange, assessment and other network fees paid by us to our payment processors.
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 six months ended June 30, 2025 increased approximately
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 nine months ended September 30, 2025 increased approximately 22.8% and 23.7%, 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.
Previous 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.
Current wording
Adjusted gross profit for the three and nine months ended September 30, 2025 increased 22.5% and 23.3%, 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 slightly, 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
(1) Other income for the six months ended June 30, 2024 includes a remeasurement adjustment relating to the purchase price of a prior acquisition.
Current wording
(1) Other income for the nine months ended September 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 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.
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 45.9% and 45.7% in the three and nine months ended September 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 and six months ended June 30, 2025, as compared to the same periods in 2024, was primarily driven by higher cash generated from operations.
Current wording
The increase in free cash flow for the three and nine months ended September 30, 2025, as compared to the same periods in 2024, was primarily driven by higher cash generated from operations.
Previous 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.
Current wording
(2) Other income for the nine months ended September 30, 2024 includes a remeasurement adjustment relating to the purchase price of a prior acquisition.
Previous wording
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 wording
The increase in cost of revenue corresponds with higher revenue and transaction volumes, as it consists primarily of interchange fees and processor costs.
Previous 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.
Current wording
Research and development expenses increased primarily due to an increase in employee-related costs, including benefits, driven by increased headcount 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 increase in sales and marketing expenses was primarily due to an increase in reseller commissions, including amortization of warrants.
Current wording
The decrease in sales and marketing expenses was primarily due to a decrease in employee-related costs offset by reseller commissions, including amortization of warrants.
Previous 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.
Current wording
The increase in general and administrative expenses was primarily due to increased employee-related costs, including stock-based compensation, professional and legal fees and insurance premiums of certain business policies.
Previous wording
The changes in interest income, net was mainly due to higher cash balances held with banks, offset by lower interest rate.
Current wording
The change in interest income, net was mainly due to higher cash balances held with banks, offset by lower interest rates.
Previous wording
Comparison of the Six Months Ended June 30, 2025 and 2024
Current wording
Comparison of the Nine Months Ended September 30, 2025 and 2024
Previous 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.
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, an increase in the amortization of capitalized internal-use software development costs and an increase in expenses related to third-party software and technology licenses.
Previous wording
The increase in sales and marketing expenses was primarily due to an increase in reseller commissions, including amortization of warrants.
Current wording
The increase in sales and marketing expenses was primarily due to increases in reseller commissions, including amortization of warrants, and marketing and advertising expenses, which were offset by lower employee-related costs.
Previous wording
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 wording
The increase in general and administrative expenses was primarily due to increases in employee-related costs, including higher stock-based compensation, professional and legal fees and insurance premiums of certain business policies.
Previous 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.
Current wording
For the nine months ended September 30, 2025, the effective tax rate increased to 21.3% compared to 17.6% in the prior year period. The 21.3% rate for the current period was in line with the U.S. federal statutory rate of 21%. The change in the provision for income taxes and the variance from the federal statutory rate were primarily driven by a combination of factors, including (1) permanent differences for disallowed compensation pursuant to IRC Section 162(m), (2) the impact of state taxes, (3) discrete benefits recognized for excess tax deductions on stock-based compensation, and (4) the finalization of prior year Canadian and U.S. R&D credit claims during the period.
Previous 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.
Current wording
As of September 30, 2025, we had $287.9 million of unrestricted cash and cash equivalents. We believe that existing unrestricted cash and cash equivalents will be sufficient to support our working capital, capital expenditure requirements, and other commitments described in Note 8, 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 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.
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 nine months ended September 30, 2025 was $117.0 million. Net income was $46.3 million, adjusted for non-cash charges of $52.4 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, which contributed positively to cash provided from operating activities. This was additionally supported by net cash inflows of $18.4 million provided by changes in our operating assets and liabilities.
Previous 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.
Current wording
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 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 $33.3 million due to changes in our operating assets and liabilities.
Previous 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.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2025 consisted of $27.4 million of capitalized internal-use software development costs, $0.3 million of purchases of property and equipment and $0.1 million cash outflow from net change in interest-bearing deposits.
Previous 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.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2024 consisted of $27.2 million of capitalized internal-use software development costs and $0.4 million of purchases of property and equipment.
Previous 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.
Current wording
Net cash used in financing activities for the nine months ended September 30, 2025 consisted of $7.2 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 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.
Current 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 the exercise of stock-based awards by employees.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.