Paymentus Holdings, Inc.

Previous wording

As a leading provider of cloud-based bill payment technology and solutions, we deliver our next-generation product suite through a modern technology stack to a broad and diverse base of business and financial institution clients. Our platform was used by approximately 53 million consumers and businesses globally in December 2025 to pay their bills, move money 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, business-to-business (B2B) 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.

Current wording

As a leading provider of cloud-native billing, payment, disbursement and AI-enabled Service Commerce solutions, we deliver our next-generation product suite through a modern technology stack to a broad and diverse base of business and financial institution clients. Our platform was used by approximately 53 million consumers and businesses globally in December 2025 to pay their bills, move money 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, business-to-business (B2B) 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 (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, 2026 as compared to the same periods in 2025 was primarily driven by new biller implementations and increased transactions from both new and 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 (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, 2026 as compared to the same periods in 2025 was primarily driven by new biller implementations and increased transactions from both new and existing billers.

Previous wording

We continued to operate in an environment of elevated macroeconomic uncertainty during the second quarter of 2026. Although inflation has moderated from prior periods, our cost structure and consumer spending patterns remain impacted by persistent pricing pressures, impending tariffs, and evolving trade policies. Furthermore, heightened geopolitical instability, particularly the ongoing conflict in Iran, has exacerbated volatility in global energy markets. Broader uncertainties relating to interest rate trajectories and these geopolitical tensions continue to affect our overall operating environment.

Current wording

We continued to operate in an environment of elevated macroeconomic uncertainty during the third quarter of 2026. Although inflation has moderated from prior periods, our cost structure and consumer spending patterns remain impacted by persistent pricing pressures, tariffs and evolving trade policies. Furthermore, heightened geopolitical instability, particularly the ongoing conflict involving Iran, has exacerbated volatility in global energy markets. Broader uncertainties relating to interest rate trajectories and these geopolitical tensions continue to affect our overall operating environment.

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, assessment and other network 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 channel used by consumers, which is the primary determinant of the amount of interchange, assessment and other network fees. We use contribution profit to measure the amount available to fund our operations after interchange, assessment and other network 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, assessment and other network fees in the presentation of contribution profit because we believe their inclusion is less directly reflective of our operating performance as we do not control the payment channel used by consumers, which is the primary determinant of the amount of interchange, assessment and other network fees. We use contribution profit to measure the amount available to fund our operations after interchange, assessment and other network 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

We also urge you to review the reconciliation of these non-GAAP financial measures included below. To properly and prudently evaluate our business, we encourage you to review the condensed consolidated financial statements and related notes included elsewhere in this report and to not rely on any single financial measure to evaluate our business.

Current wording

We also urge you to review the reconciliation of these non-GAAP financial measures included below. To properly and prudently evaluate our business, we encourage you to review the condensed consolidated financial statements and related notes included elsewhere in this report and not to rely on any single financial measure to evaluate our business.

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, 2026 increased approximately 26.3% and 25.7%, as compared to the same periods in 2025. The increase was driven by growth in transaction count and volume driven from both new and 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 nine months ended September 30, 2026 increased approximately 20.6% and 23.9%, as compared to the same periods in 2025. The increase was driven by growth in transaction counts and volumes driven from both new and existing billers and financial institutions.

Previous wording

Adjusted gross profit for the three and six months ended June 30, 2026 increased 28.6% and 28.0%, as compared to the same periods in 2025. 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. Adjusted gross profit improved in line with contribution profit. Adjusted gross profit as a percentage of contribution profit increased due to realization of economies of scale.

Current wording

Adjusted gross profit for the three and nine months ended September 30, 2026 increased 23.1% and 26.2%, as compared to the same periods in 2025. Adjusted gross profit is driven primarily by the same factors that impact gross profit, except that it excludes the amortization and stock-based compensation recorded in cost of revenue. For the three and nine months ended September 30, 2026, compared to the same periods in 2025, adjusted gross profit growth exceeded contribution profit growth, and adjusted gross profit increased as a percentage of contribution profit, reflecting the realization of economies of scale.

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 54.0% and 47.9% in the three and six months ended June 30, 2026, as compared to the same periods in 2025. The increase was primarily attributable to higher revenues driven by 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 38.6% and 44.5% in the three and nine months ended September 30, 2026, as compared to the same periods in 2025. The increase was primarily attributable to higher revenues driven by 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 June 30, 2026, as compared to the same period in 2025, was primarily driven by higher cash generated from operations, reflecting stronger operating performance and improved conversion of working capital into cash, partially offset by higher capitalized internal-use software development costs.

Current wording

The increase in free cash flow for the three months ended September 30, 2026, as compared to the same period in 2025, was primarily driven by higher cash generated from operations, reflecting stronger operating performance and improved conversion of working capital into cash.

Previous wording

Research and development expenses remained relatively consistent compared to the prior-year period. Higher employee-related costs were largely offset by lower amortization and stock-based compensation expenses.

Current wording

Research and development expenses remained relatively consistent compared to the prior-year period. Higher employee-related costs, including stock-based compensation, as well as higher cloud computing services expense were largely offset by lower amortization expense.

Previous wording

The increase in sales and marketing expenses was primarily driven by higher agency and sales commission costs and higher employee-related costs, including stock-based compensation, partially offset by lower amortization expense.

Current wording

The increase in sales and marketing expenses was primarily driven by higher employee-related costs, including stock-based compensation, and higher agency and sales commission costs, partially offset by lower amortization expense.

Previous wording

The increase in general and administrative expenses was primarily driven by higher stock-based compensation and employee-related costs, as well as higher lease expense and insurance premiums. These increases were partially offset by lower professional and legal fees.

Current wording

The decrease in general and administrative expenses was primarily driven by lower employee-related costs, as well as professional and legal services costs. These decreases were partially offset by higher lease expense, insurance premiums and depreciation charges.

Previous wording

The change in provision for income taxes as well as the increase in the Company's effective tax rate, which was 28.3% for the six months ended June 30, 2026, as compared to 21.2% for the same period in the prior year, were primarily due to increased executive stock-based compensation in 2026 and more significant excess tax benefits on stock-based compensation in 2025.

Current wording

The change in provision for income taxes as well as the increase in the Company's effective tax rate, which was 25.4% for the three months ended September 30, 2026, as compared to 21.5% for the same period in the prior year, was primarily due to higher nondeductible executive stock-based compensation in 2026 and greater net discrete tax benefits recognized in 2025, primarily related to R&D tax credits.

Previous wording

Comparison of the Six Months Ended June 30, 2026 and 2025

Current wording

Comparison of the Nine Months Ended September 30, 2026 and 2025

Previous wording

Sales and marketing expenses increased primarily due to higher reseller commissions and employee-related costs, including benefits. These increases were partially offset by lower stock-based compensation and amortization expense.

Current wording

Sales and marketing expenses increased primarily due to higher agency commissions and employee-related costs, including benefits. These increases were partially offset by lower amortization expense.

Previous wording

General and administrative expenses increased primarily due to higher stock-based compensation, as well as higher employee-related costs, lease expense, and insurance premiums. These increases were partially offset by lower professional and legal services costs.

Current wording

General and administrative expenses increased primarily due to higher stock-based compensation, as well as higher lease expense and insurance premiums. These increases were partially offset by lower employee-related costs, professional and legal services costs.

Previous wording

The change in provision for income taxes as well as the increase in the Company's effective tax rate, which was 28.3% for the three months ended June 30, 2026, as compared to 19.9% for the same period in the prior year, were primarily due to increased executive stock-based compensation in 2026 and more significant excess tax benefits on stock-based compensation in 2025.

Current wording

The change in provision for income taxes as well as the increase in the Company's effective tax rate, which was 27.2% for the nine months ended September 30, 2026, as compared to 21.3% for the same period in the prior year, was primarily due to higher nondeductible executive stock-based compensation in 2026 and greater discrete tax benefits recognized in 2025, including excess tax benefits from stock-based compensation and R&D tax credits.

Previous wording

As of June 30, 2026, we had $377.7 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. Our principal uses of cash are funding operations, which primarily consist of employee-related costs, payments to third parties to fulfill our payment transactions and payments to sales and marketing partners. Although this is subject to change based on market opportunities or changing priorities, we currently do not have any material planned capital expenditures or acquisitions in the next 12 months.

Current wording

As of September 30, 2026, we had $407.6 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. Our principal uses of cash are funding operations, which primarily consist of employee-related costs, payments to third parties to fulfill our payment transactions and payments to sales and marketing partners. Although this is subject to change based on market opportunities or changing priorities, we currently do not have any material planned capital expenditures or acquisitions in the next 12 months.

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, 2026 was $79.3 million. Net income was $46.4 million, adjusted for non-cash charges of $34.1 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. These amounts were offset by $1.2 million of net cash outflows resulting from 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, 2026 was $122.9 million. Net income was $73.9 million, adjusted for non-cash charges of $52.0 million, consisting primarily of depreciation and amortization, stock-based compensation, amortization of capitalized contract acquisition costs and warrant cost, and non-cash lease expense. These amounts were offset by $2.9 million of net cash outflows resulting from changes in our operating assets and liabilities.

Previous wording

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 $30.0 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. Changes in our operating assets and liabilities provided an additional $23.4 million of cash.

Current wording

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, and non-cash lease expense. Changes in our operating assets and liabilities provided an additional $18.4 million of cash.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2026 consisted of $19.2 million of capitalized internal-use software development costs and $0.2 million of purchases of property and equipment, partially offset by a $0.9 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, 2026 consisted of $28.6 million of capitalized internal-use software development costs and $0.4 million of purchases of property and equipment, partially offset by a $0.9 million cash inflow from the 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, partially offset by a $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, 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 the net change in interest-bearing deposits.

Previous wording

Net cash used in financing activities for the six months ended June 30, 2026 consisted primarily of $5.4 million of payments of taxes withheld on net settled vesting of restricted stock units.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2026 consisted of $9.4 million of payments of taxes withheld on net-settled vesting of restricted stock units and $0.2 million payments on finance leases, which was offset by $0.2 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, 2025 consisted primarily 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.