Good morning, everybody. My name's Madison Suhr. I'm the payments and fintech analyst here at Raymond James. I'm happy to be joined by Paymentus Founder and CEO, Dushyant Sharma.
Thank you.
CFO, Sanjay Kalra. great to be here, guys. Thank you.
Thank you for having us.
Absolutely. I wanted to kick things off, you know, for those in the audience that are less familiar with Paymentus, can you just give a high-level overview of the business, what you guys do, and the customers you serve?
Sure. Sure. We are a cloud-based bill payment service provider for non-discretionary essential household billing service providers like utilities, government entities, insurance, telecommunications, and others. Basically, you can think of all the bills you have to pay, you can go down the line, we service those companies who send those bills to you. We started the company a couple of decades ago now, actually, and at the time when we were starting the business, majority of the bills used to be paid from the bank sites. You'd go to your bank and make the payment from the bank, and the banks will send the money to the billers. We saw a great opportunity that is highly inefficient model. Now sitting here right now, that model has been disrupted.
What used to be 75% of those payments being at the bank now is happening from the biller side directly. Since we are a leading provider of the services to the billing companies, we had a lot to do with it. We, as a result of the disruption we have caused in the industry, we have grown rapidly over the years. At the time of IPO, we were a $300 million company in 2020, and we have quadrupled the business in the last five years. Despite our success in doing $1.2 billion of revenue last year, we have only captured a fraction of the market share. It's a multi-billion dollar, multi-trillion dollar spend, and we have only captured a fraction of that.
We are very excited about the future. Our CAGR model is 20% top line growth and 20%-30% Adjusted EBITDA dollar growth. We believe this is a very attractive investment.
Okay. Yeah. You, you kinda hinted on it, but the financial profile has been quite impressive here. You just wrapped up 2025 with a 37% increase in gross revenue, 46% Adjusted EBITDA growth. Can you just highlight what's been driving the really strong momentum in the business and, you know, what's translated to such strong financial results?
Sure. I think the fundamental principle behind our success is our value proposition to our clients. It is fundamentally based on two principles. How can we make the customer experience better for our clients' customers, billing companies' customers? How do we do it in such a way that it is making it easier and more efficient for our clients to serve their customers at a lower cost? There are so many unwieldy and inefficient processes that exist in the process of creating bills and then receiving payments and so on. Sorry. I need to pull it up. Sorry. Is it good? Okay, thank you. Lost my train of thought.
On the financial profile or some of the momentum.
Yes. Basically, the value proposition, the twofold. As a result, customers find Paymentus platform, which is holistic, comprehensive. With one integration with Paymentus platform, you're able to serve all of your customer body, whether they're making physical payments to you, or they're making digital payments to you, whether they're making vocal payments, they're calling you, or doing automated systems. With one integration, Paymentus is able to handle it all. We have 1,000, multi-thousand billing companies on our platform, and we feel like we're just getting started.
Okay. That's great. I wanted to transition a little bit to AI. It's obviously the kind of hottest topic here at not only the conference, but in the market. I think you had a really interesting quote last quarter. You called Paymentus-
Mm-hmm
...the central nervous system for revenue collection. Can you just elaborate on that a little bit? Just as you think about AI, you know, what are some of the risks you're assessing, but also what are the opportunities?
I mean, if you think about it, if you're a large billing company, billing sending out multi-million bills a month, you need to collect those payments, you have to assess all the payment channels you're receiving those payments from. 5, 10, 15, 20 years ago, your own website, your own phone systems were very small minority. The billing companies will think of that as an alternative system. The majority of the payments were, and unfortunately still are, coming through checks and manual payments and so on, and coming from banks. What has transpired over the years is because of Paymentus platform, billing companies have been able to take lot of the inefficiencies out and also redeploy the resources. They no longer need to serve so many customer calls.
They, and what used to be few percentage points of payments coming in through the digital channels is now significant portion of their payments are coming to Paymentus platform. As a result, we are sort of the central nervous system for the billing companies, and we are the, for the revenue collection. If you are sitting in that particular seat, you have opportunity to be able to serve other areas because of all the different executives you deal with. On a regular basis in the company. We get exposed to a lot of opportunities, and what we are seeing is our platform, which already serves not only inbound payments but outbound payment, not only serves consumers, but also serves businesses, and have B2B workflows built in, allows us to look at all of those capabilities.
AI actually makes it a lot easier for us to get into all of those areas. On top of that, we believe because Paymentus has been AI-centric company for a long period of time, we have always looked at AI as an technology which will be very helpful. We are already using that internally for our efficiencies, whether it's customer engagement, whether it is our own engineering talent and so on, using it in a assistive manner. We are also seeing opportunities where Paymentus could be the AI platform for the customers we serve. We are very excited about the future.
Okay. I wanna transition here to kind of the market opportunity. I mean, utilities is a big part, but maybe just help investors understand kind of the breakdown of revenue by vertical. You know, I know utilities is the largest, but what other areas are in there that you serve?
Well, utilities is approximately 50% of our revenue, and the remaining 50% is comprised of multiple other verticals.
Okay.
Healthcare is one, insurance being one, telecom is there.
Mm-hmm.
public sector there, B2B, taxes, government.
Okay.
Consumer finance.
Okay.
We are actually entering into more and more verticals which we were not present earlier.
Mm-hmm.
We are seeing a lot of opportunities, in fact, multiple verticals we have not even explored yet, but now we are seeing opportunities to touch them and get into it more. As of now, we have not distributed the split quantitatively other than utilities 50%, but I think the breadth is enormous for where the company can go.
Okay. That's great. Then, you know, you guys have, you know, touched on it briefly, but you've taken a tremendous amount of share over the last few years. I mean, can you just touch on how your specific market share has evolved within bill pay over the last few years? Then just who are you winning the share against, and how much room is there to kinda sustain, you know, that 20% CAGR top line growth you talked about?
If you think about from the outset, we actually what we believe has proven out to be a great strategy actually, in terms of our go-to market. We initially said we're gonna go after mid-market, which is largely underserved, but it was also another reason for that. People. It's very hard to make money in a smaller customer on a per unit basis unless you have it all your act, your entire act together. We felt that if we can actually serve that customer community, especially in the utilities market, especially in the lower end of the market, if we can make money there, it would be very difficult for Paymentus to be displaced in the long term. We will actually build a very sustainable growth engine.
That theory has been proven out over the years. We were able to go from utilities to the larger end of the utilities. We were able to go to the government sector, multi-division government sector, then multiple division insurance companies, large enterprises now. As a result, what we are seeing is that the entirety of the consumer bill payment segment is available to us. We can service the entire market. The primary reason I say that is we didn't think that in-house enterprise solutions would be replaced by Paymentus as quickly as we are doing them now. What has happened over the years is the platform itself, which is crowdsourced by our clients, is telling us exactly all the capabilities they need in our platform.
The platform itself has become so powerful that no organization can actually replicate it. As a result, even the largest organizations which have in-house solutions and floors of programmers, it's not easy to rebuild all of the capabilities we have. It's not about the software program and the algorithm. It's about all the capabilities, all the functional footprint we have, all the rails we have created. It's, it's very large footprint, and as a result, what we are seeing is that we are able to get to a entirety of that market segment, even the larger in-house solutions. Lately what we are seeing is that even the verticals we thought, like B2B is a different segment altogether, we don't even count it in our TAM right now. We have clients running.
We have clients, B2B clients running. We serve, they collect billions of dollars on our pay on our platform. It's a big opportunity for Paymentus, and we believe that as we have done in the past, we have grown, as I shared on the public call, the last 10 years, we grew 25 times, last 5 years, four times. I think we can sustain the momentum of our CAGR model for a long period of time.
Okay. Maybe touch on the competitive set. I mean, who are you typically displacing? A lot of those in-house solutions and then within different verticals, are you seeing different competitors? Has this evolved at all, or has it generally been kinda the same competitive set over the last several years?
What I would say is actually, there are two types of maybe three types of competitors. One is, competitive solutions, if you will. One is in-house, which is we are excited about that, no question. The second one is, legacy service providers who have date of birth older than us. They, these service providers, nothing wrong with them. The challenge is they have stayed the same, and their platforms have become dated. It's not easy to go ahead and tell your customers that I'm going to buy a company, and I'm gonna replace your solutions when they already know Paymentus has a better solution out there. It's a very difficult situation for them.
The third set of competitor would be a service provider that has date of birth younger than us but has a very similar model, where they bought companies, and they're struggling to piece them together. Platform purity was not important to them. It wasn't like how Paymentus has built the platform. We built the platform ground up with the thesis that our customers need to crowdsource the functionality, and all of the capability could be serviced in one platform, one code base. It's very hard to do to maintain the platform purity over the period we have done. Now you can see we have scaled the business over last several years, we have scaled the business as well as we have, but our employee count has not changed, and our cost structure has not changed proportional to that.
Okay. You've hinted at it a little bit here on enterprise. It's been an area you guys have seen a lot of strength. You've called it out several quarters as driving upside relative to what you guys thought. What's enabling such strong success in this move up market for you guys?
I think it's frankly the platform, and the ecosystem we have created, which allows the organizations to take a look at. Well, previously, what used to happen is the CIO, CTOs, and CSOs of the large enterprises would be sitting on the other side of the table. Now they're sitting on the same side of the table with us because they have plenty of other issues to deal with, which is happening through disruption in their own markets. If they can get the platform Paymentus has created, which used to be viewed as outsourced third-party service provider, is now more like, because of the capabilities we have built, you have all the control. It's not like you're giving the control up by outsourcing your payment capabilities and your customer engagement capabilities to Paymentus.
You actually have more capabilities, more control than you have from your own internal IT teams. You're able to do that more cost effectively. I think it's a no-brainer in most cases. We are very excited about that opportunity. That's what is driving the success. We are sitting on the same side of the table with the technology executives of these large organizations.
Okay. Is there any big differences in the financial aspects, whether you're signing, you know, a smaller type customer versus moving up to enterprise? Anything investors should keep in mind as that mix shift kind of continues to shift to enterprise?
It varies, customer by customer, I would say. Definitely, as you would expect, the larger the customer, they would expect, you know, better pricing, but at the same time, the company is growing at a pace that the scale we have achieved, we've got a lot of operating leverage.
Yeah.
We take the right advantage of it, and we calibrate our business well. We want to make sure whichever new customer we are acquiring and getting them launched, that would be financially accretive to the company.
Yeah.
Not only the top line, definitely the bottom line because of the operating leverage. We calibrate, and we see what makes sense for the longer term.
Okay. You know, we touched on it about moving into different verticals. You mentioned utilities is 50% roughly of revenue. As we think about a lot of those other verticals, is there, you know, one or two that really excite you, where you feel like you can go in and capture a lot of incremental share here?
I think, frankly, we did this analysis recently. All of our verticals are doing well, including our core utilities and insurance and so on. All of the verticals are doing well. The way we are organized, each of the team which is working on a given vertical, their performance is measured based on the success of that particular vertical, not anything else. I think the way it is set up is conducive,
Mm.
to all verticals doing well.
Okay. I did wanna ask on B2B. You know, it can mean a lot of different things to a lot of different people. It's obviously a huge category here. You've seen success there as well. You called out some signings and ramps that are maybe going a little bit quicker than you thought. Can you just, you know, help investors understand what exactly you're doing within B2B and why you see it as such an attractive market?
Yeah, I think, we are tackling B2B in a very similar way we tackled all of the other verticals. In our minds, we take a look at where the inefficiencies are and where the biggest cost structure is. A lot of these B2B legacy providers, they have lot of manual processes, even though they are selling technology services, no different than what the banks were doing. Banks were selling to the customers way back when we were starting out, that you're making digital payment, in the back, they were writing checks, sending checks. They had their service providers would have scores of CSRs who are answering phone, "Where is my payment?" They still do. The B2B is very similar.
It appears to the customer that they're signing with a B2B company, they're taking care of all the technology and so on, but there's still a lot of manual processes, check process and so on. We are coming at it from a total different world where we, on a per bill basis, let's say if your utility bill is $100, and you're having 5 million bills you're sending out, we just don't have a opportunity to have a lot of manual processes in the way. We just can't make money that way.
As a result, when we are approaching customers who are billing thousands of dollars or tens of thousands of dollars, our model doesn't change because our focus is the same of efficiencies, and we didn't have the luxury of being inefficient. That's why we believe that we'll be successful. Having said that B2B is just another vertical. It's not like we are saying to our investors, "Well, we'll take our EBITDA, and we'll lower it, and we are gonna invest in B2B, and we'll tell you a few years later how did it work out.
Mm-hmm.
That's not the way we are operating the business.
Okay, great. Before we get into more of the financial questions, I did wanna ask on IPN briefly. Can you just give an overview of what IPN is and then just how that business is performing?
Sure. IPN is Instant Payment Network. We believed that the old adage that regardless of how good you are, you're not gonna get them all. Meaning, regardless of how good the Paymentus platform is, not every customer is gonna make a payment coming to the website of the billing company, regardless of how good the customer experience is. They may still go, with their coffee in their hands and go to the utilities office and have the conversation, then make the payment. They may still are shopping at a retailer store and make a payment there.
We felt that for Paymentus to be long-term successful service provider to our clients, billing clients, we need to offer them an ability with one integration, all channels, all access points, all customer cohorts are covered regardless of what their technology know-how is. That's what we have created, what we call as Instant Payment Network. It is so ingrained as part of our system at this point that, lot of the billing companies, they look at that and say, "Well, regardless of how many years we spend, we won't be able to build that, let alone the platform.
That's why Paymentus is the choice. If you now put the counters on the bank side of it, the old legacy model I described, now banks themselves can now have access to real-time payments to the thousands of billing companies we have already built using IPN. We've become a very attractive solution to the banks who are consistently losing market share to somehow stabilize, giving Paymentus in the process an opportunity to have economies on both sides of the transaction. We are very, very excited about that.
Okay, great. you know, moving on to some of the financial stuff here. You guys have a target out there for a roughly 20% gross revenue CAGR model. can you just help investors unpack that growth algorithm to get to that 20%? How much is NRR versus new signings? Within NRR, is it expansion with existing customers, pricing? Just what are the kind of key components to get in there?
Yeah. We haven't quantified that breakup, but at the same time, we've shared the sequence from order of priority, if I say. You know, the biggest growth vector we have is the new implementations which happen every year. Given our bookings are very strong and our pipeline is very big, and we are seeing a lot of good traction in getting more and more clients, especially more enterprise clients more recently. We are seeing the new implementations as number one growth vector. The second would be the same-store sales, which is existing billers, how they are ramping up, and how their subscribers are ramping up. If they are being successful, we inherently are being successful. At the same time, the data tailwinds which are coming, converting a lot of manual invoicing to digital, I think that's also happening. That's the second.
Third and fourth, there are like IPN. We discussed IPN is not actually a separate segment for us or a separate vector. It's ingrained into our entire business now. IPN is also helping overall. Yes, pricing and other things do become a part of the business and they also contribute.
Okay. With the existing customers, I think you guys have talked about you could essentially double the size of the business just with your existing customers. Can you just double-click on that? How do you continue to improve your wallet share with your existing customers over time here?
I think since we are the digital service provider for the billing companies we serve, majority of the growth would be by converting a lot of the payments which are happening through paper means, converting them to digital.
Okay.
That's what we are doing, and we are actually set up a CAS team, what we call as Customer Adoption Success Team, which is focused on delivering more from our existing customers. We are pleased with what we are seeing in that, but there's more to come there. It's a big focus of ours. The reason we make that statement is for investors to know that this is a phenomenal business. And I say that not because I started it or I'm running the company right now and so on. I say it because we look at so many different companies, you know, with our success, and we get hit with almost every single book you can imagine.
It's not easy to find a company like Paymentus. It's very tough to. If I may take a little segue there.
Yeah.
If you think about our guidance philosophy, which Sanjay will can describe even more in detail, where we are saying we can sign, we can deliver the top end of the guidance without signing any new clients. Why do we do that? The reason we do that is I actually, if I may say it little bit more plainly, I feel bad for the investors in the public markets because you're chasing every single trend, every single story, and I see that if you basically didn't have the sell button and you only had buy button, you might make more money in the long term.
what can I tell as an operator to the investor, as an investment community that, "Hey, your investment is generally okay with Paymentus because to the extent I can control it from the operational aspect of it, that I can deliver this kind of revenue without signing any new client.
Having better sleep from Paymentus point of view, you might have other investments and so on, but that's the primary reason for it. It doesn't mean that's all we will do, as our CAGR model has been-
Mm-hmm
... higher over the years.
That's helpful color. I think that philosophy has really served you guys well. I did wanna transition to the 2026 guide. You know, obviously could provide some color on your guidance philosophy as well, but I would say if there was one thing investors are maybe picking at a little bit after last quarter, it's the gross revenue outlook.
Mm.
You know, 17%, obviously very strong, but a little bit below that 20% CAGR model. Just any color on kinda why you're starting it out slightly below and, obviously, you know, you can also touch on the guidance philosophy as well.
Sure. No, I understand. I'll start by saying that, you know, as we are capturing our market share and actually disrupting the market, and the pace at which we are disrupting is very good, we could experience some periods where you will see this kind of a growth rate. It might appear that we're coming from 37% growth, and now we're going to 17%, hey, is this revenue slowing down? It could be a perception looking at the math and the numbers. However, first of all, I'll start by saying that CAGR model which we have of 20%, that inherently incorporates situations like this.
Mm-hmm.
CAGR model means at times you could be less than 20%, at times you could be more. If you look at past periods of our trends, we are far ahead of 20%.
Yeah.
Let me elaborate more. We are entering enterprise customers and launching them and implementing them, and they are all not getting launched on January 1.
Yeah.
Okay? They are getting launched intra-year.
Mm-hmm.
Those, they are so massive because the growth is so massive, doing a comparison for a full year when some of them are launched in Q3, some launch in Q2, some launch in Q4, it may throw us into a situation that the volatility appears little, tough the way it's appearing right now.
Mm-hmm.
At the same time, what Dushyant just mentioned, the top end of the guidance does not incorporate any new customers which could be win and go live. That further amplifies this math, especially at the beginning of the year. I think as time passes by, and as the customers go live, and as the same-store sales go up, and as we see this progress, I think over time these things should dissipate.
Mm-hmm.
Overall, you'll see a very good CAGR. In quarter to quarter, things could definitely change. At the beginning of the year, things could look little different. Overall, I think if you look at the history and the trends, we've executed really well. I will end this question by actually saying that at the end of 2025, the momentum is no different than the way we ended 2024. Backlog is very strong. Backlog is too much diverse, actually, than before.
Yeah.
As we are saying, we are entering into more verticals. The pipeline is also very strong. We always have a prudent view. We don't count the eggs before they hatch.
Mm-hmm.
We want to be successful rather than being chasing for numbers.
Okay. That's very helpful, and I know we're getting close.
Yeah. I may actually just add one quick point to that looking at the year philosophy, I was mentioning this, Sanjay, actually last night that, in a lighter moment that it will be great for a retail store that how many customers showed up this morning, how many people, how many this month? Is the company going up or down?
In a situation like where we are signing multi-year contracts with customers which are going to be growing over a period of time, you just can't look at annual calendar as the way, because if the number would have been the, some of the customers instead of going live sooner, as they did, they went a little bit later, our eyes will make us feel that company actually has a relatively stable growth rate versus now it looks like going down. Your eyes are deceiving you in that way.
I did wanna touch briefly just on capital allocation here. Very strong balance sheet. You have about $320 million of cash, no debt, generating ample free cash flow. I mean, how are you guys thinking about capital allocation?
Well, we remain committed to the growth organically.
Mm-hmm.
We've got a huge TAM, a huge pipeline, and we want to chase that and convert that to bookings and be and enjoy our own success at this point in time. We wanna keep ample cash for spending in sales and marketing, ample cash for using in working capital if needed.
Mm-hmm.
I would say as a secondary objective, we could also look for alternatives which are available in the market like M&A, but that's definitely not on the top of mind. If something comes across the table which makes sense and has a good ROI, we could use that for that as well.
Okay. Sounds good. We'll leave it there. Thank you so much for being here.
Thank you.
Thank you so much for having us here. Thank you.