Group 1 - TimesSquare Capital Management's "U.S. Small Cap Growth Strategy" reported a gross return of 11.28% and a net return of 11.02% for Q2 2025, compared to the Russell 2000 Growth Index's return of 11.97% [1] - The fund's top five holdings were highlighted, indicating strong performance in the second quarter driven by global economic activity [1] - Paymentus Holdings, Inc. (NYSE:PAY) experienced a one-month return of -12.15% but gained 54.10% over the last 52 weeks, closing at $32.90 per share with a market capitalization of $4.121 billion on September 11, 2025 [2] Group 2 - Paymentus Holdings, Inc. advanced 25% during the quarter, reporting strong performance and raised guidance, with solid new business bookings, backlog, and pipeline [3] - In Q2 2025, Paymentus reported revenue of $280.1 million, a 41.9% year-over-year increase, and contribution profit of $93.5 million, up 22.3% [4] - The number of hedge funds holding Paymentus increased from 21 to 26 in the second quarter of 2025, indicating growing interest [4]

Core Insights - The market opportunity for bill presentment in the U.S. has expanded since the company's IPO, with revenue growth from $300 million to over $1.1 billion [1] - The company serves the nondiscretionary segment of the U.S. economy, which has positively impacted its growth trajectory [1] Industry Trends - The design of the company's platform is intended to meet current market demands, allowing for scalability across various verticals [2] - There is a shift in customer preferences from purpose-built solutions for specific verticals to more versatile horizontal solutions [2]

Summary of Paymentus Conference Call Company Overview - **Company**: Paymentus - **Industry**: Bill payment and presentment solutions - **Market Position**: Grew from $300 million at IPO to over $1.1 billion currently, indicating significant market capture and growth potential [2][4] Core Industry Insights - **Market Opportunity**: The U.S. bill presentment market is large and growing, with Paymentus capturing only about 3.5% to 4% of the total market, which was approximately $16 to $17 billion in payments last year [9][10] - **Non-Discretionary Nature**: Paymentus operates in a non-discretionary segment of the economy, focusing on essential bills like utilities, which are less sensitive to economic fluctuations [25][26] Key Business Strategies - **Platform Design**: Paymentus has designed its platform to be scalable and adaptable across various verticals, allowing for a unified code base that enhances customer experience and operational efficiency [3][4] - **Customer-Centric Approach**: The company emphasizes understanding customer needs and maintaining a customer-centric culture, which has been integral to its success [15][16] - **Expansion Across Verticals**: Paymentus has expanded into multiple sectors including utilities, insurance, government services, healthcare, telecom, and education, with utilities still representing close to 50% of its business [21][23] Financial Performance - **Operating Leverage**: The company has demonstrated improved operating leverage, with an incremental adjusted EBITDA margin of over 50% in recent quarters, allowing for increased investment in sales and marketing [19][20] - **Growth Metrics**: Paymentus aims for a top-line growth of 20% CAGR and bottom-line growth of 20% to 30% CAGR, with strong visibility into future performance based on current contracts and backlog [47][34] Competitive Landscape - **Complexity of Bill Payment**: Paymentus differentiates itself by addressing the complexities of bill payment, which involves unique business rules and integration challenges that competitors may not effectively manage [39][40] - **Instant Payment Network (IPN)**: The IPN is a critical component of Paymentus's strategy, allowing billing companies to reach customers through various channels, enhancing payment accessibility [43][44] Macro Environment Considerations - **Resilience to Economic Changes**: Paymentus's focus on essential services makes it less vulnerable to macroeconomic fluctuations, with a strong emphasis on customer support during inflationary periods [25][26][27] Future Outlook - **Pipeline Strength**: The company reports a strong pipeline with a mix of small, medium, and large enterprise customers, providing confidence for future growth [33][34] - **Capital Allocation**: Paymentus prioritizes organic growth and is open to opportunistic M&A, although there are no current plans for acquisitions [54][55] Additional Insights - **Digitalization Trend**: The shift towards digital payment methods is expected to drive revenue growth as manual payment methods decline [30][31] - **Agentic AI Potential**: Paymentus sees potential in leveraging Agentic AI for both internal efficiencies and enhancing customer experiences [52][53] This summary encapsulates the key points discussed during the Paymentus conference call, highlighting the company's growth trajectory, market opportunities, strategic initiatives, and financial performance.

Paymentus (PAY) Conference Summary Company Overview - **Company Name**: Paymentus - **Industry**: FinTech, Bill Payment Services - **Founded**: IPO in 2021 - **CEO**: Dushant Sharma - **CFO**: Sanjay Khalra - **Core Business**: Cloud-based bill payment service platform for non-discretionary billing companies, including utilities, insurance, government services, consumer finance, telecom, and healthcare [3][5][6] Key Financial Metrics - **Recent Revenue Guidance**: Midpoint guidance exceeds $1,000,000,000 [3] - **Transactions Processed**: Approximately 175,000,000 transactions last quarter [3] - **Market Share**: Currently holds about 3.5% of the total addressable market (TAM) [17] - **Growth in Market Share**: Increased from approximately 2.8% in 2023 [18] - **Total Bills Paid Annually in the US**: Approximately 16 to 17 billion [17] Growth Drivers - **Strong Demand Across Verticals**: Growth observed in utilities (50% of revenue), insurance, government, banking, and healthcare [5][21] - **Enterprise Customer Acquisition**: Significant traction with large enterprise customers alongside growth in non-enterprise customers [21][24] - **Same Store Sales Growth**: Expansion within existing enterprise clients as they modernize their operations [27] - **Backlog and Bookings**: Strong backlog and consistent bookings performance provide visibility for future growth [19][26] Competitive Advantages - **Omni-channel Platform**: Designed to serve all customer sizes and verticals, allowing billing companies to communicate across various channels [9][10] - **Integration and Cost Model**: Simplified integration process with a pay-per-transaction model aligns interests with clients [10][12] - **AI Integration**: Early commitment to AI enhances customer engagement and operational efficiency, positioning Paymentus favorably in the evolving market [34][37] Market Position and Future Outlook - **Long-term Growth Potential**: Significant runway for growth as the company captures more market share and expands its customer base [20][49] - **Focus on Organic Growth**: Prioritizing organic growth over M&A, with a focus on expanding the sales team and capturing more of the TAM [39][40] - **Financial Health**: Strong balance sheet and cash flow, with a commitment to profitable growth [28][51] Regulatory Environment - **Current Regulatory Climate**: No significant concerns regarding regulatory changes; considered an essential service during COVID-19 [47] - **Positive Economic Indicators**: Potential benefits from decreasing energy prices under the current administration [48] Conclusion - **Future Goals**: Anticipation of continued growth and expansion in market share, with a focus on maintaining strong financial performance and customer satisfaction [49][50]

Summary of Paymentus Conference Call Company Overview - **Company**: Paymentus - **Industry**: Fintech, Payment Processing Key Points Financial Performance - **Q2 Revenue Growth**: Revenue increased by 42% year-over-year [3] - **Transaction Volume**: Transactions rose by 25% [4] Business Model and Strategy - **Platform Design**: Paymentus has a vertically agnostic, horizontally scalable platform designed to serve a wide range of customers, regardless of size [4][5] - **Focus on Nondiscretionary Spending**: The company targets essential bills, which positions it favorably against economic downturns [6][19] - **Operating Leverage**: Strong operating leverage allows for margin improvement while serving large enterprise customers [7][31] Market Opportunities - **Verticals with Strong Momentum**: Key verticals include utilities, insurance, government services, and telecommunications, all showing strong growth [5][6] - **AI Integration**: The introduction of AgenTiC AI is expected to enhance customer experience and internal processes, driving future revenue growth [10][12] Competitive Advantage - **Unique Instant Payment Network**: Paymentus offers a proprietary network that allows businesses to reach all customers, not just those on its platform [13][16] - **Customer Acquisition Strategy**: The company has improved its onboarding process, making it easier for clients to transition from legacy systems [23][24] Macroeconomic Resilience - **Diversification**: Expanding into multiple verticals has reduced the company's exposure to macroeconomic risks [21][22] - **Historical Resilience**: Paymentus has successfully navigated past economic challenges, including the 2008 financial crisis and COVID-19 [19][20] Financial Outlook - **Sustainable Margins**: Incremental adjusted EBITDA margin is at 54%, with expectations for continued improvement [31] - **Long-term Growth Projections**: The company anticipates a 20% CAGR in top-line growth and 30% growth in adjusted EBITDA over the long term [34] Capital Allocation and M&A Strategy - **Focus on Organic Growth**: Paymentus prioritizes organic growth and maintains a strong balance sheet with approximately $300 million in working capital [35][36] - **Opportunistic M&A**: While not actively pursuing M&A, the company remains open to opportunities that may arise [36][37] Future Outlook - **Market Potential**: The company sees a significant market opportunity, with trillions of dollars in potential revenue as digital payments continue to grow [40][41] - **Excitement for Growth**: Management expresses confidence in the company's ability to capitalize on its market position and operational strengths [42][44] Additional Insights - **Customer-Centric Approach**: Paymentus emphasizes the importance of customer satisfaction and adaptability in its service offerings [9][25] - **Technological Advancements**: The company is committed to leveraging technology to enhance its platform and service delivery [11][12] This summary encapsulates the key insights from the Paymentus conference call, highlighting the company's financial performance, strategic initiatives, market opportunities, and future outlook.

Core Points - The results of PayPoint Plc's Annual General Meeting (AGM) held on August 6, 2025, were announced, detailing the voting outcomes for various resolutions [2][4]. Voting Results Summary - Resolution 1: The annual report and accounts for the year ended March 31, 2025, received 49,707,068 votes in favor (99.94%) and 29,622 votes against (0.06%), with a total of 49,736,690 votes cast [2]. - Resolution 2: The directors' remuneration report was approved with 47,975,960 votes for (95.81%) and 2,098,763 against (4.19%) [2]. - Resolution 3: A final dividend of 19.6 pence per ordinary share was declared with 50,062,646 votes for (99.96%) and 21,994 against (0.04%) [2]. - Resolutions 4 to 10 involved the re-election of directors, with varying levels of support, notably Rakesh Sharma receiving 49,010,522 votes for (97.88%) and Ben Wishart receiving 47,242,732 votes for (94.35%) [2][3]. - Resolution 11 confirmed the re-appointment of PricewaterhouseCoopers LLP as auditor with 49,963,206 votes for (99.77%) [2]. - Resolution 12 authorized directors to determine the auditor's remuneration with 50,062,486 votes for (99.97%) [2]. - Resolutions 13 to 18 included authorizations for political donations, share allotments, and market purchases, with significant support ranging from 94.09% to 99.97% [2][3]. Independent Directors Voting - Resolutions 7 to 10 required separate counting of votes from independent shareholders due to the controlling shareholder's significant voting rights. Rakesh Sharma received 32,871,415 votes for (96.87%) from independent shareholders [2][3]. Total Voting Rights - The total voting rights of the Company on the day of the AGM were 69,852,648 [4].

Core Insights - PayPoint Plc reported an encouraging start to the financial year, with confidence in achieving a £100 million EBITDA target and long-term growth goals through FY28 [2][5] Group and Divisional Highlights - Group net revenue increased by 7.5% to £42.2 million compared to £39.2 million in Q1 FY25, driven by strong performances in E-commerce, Payments and Banking, and Love2shop divisions [5] - Shopping divisional net revenue rose by 0.6% to £16.5 million, with service fee net revenue increasing by 7.8% to £5.7 million due to growth in PayPoint One/Mini sites [6] - E-commerce divisional net revenue surged by 20.8% to £5.1 million, with parcel transactions growing by 19.4% to 38.2 million [7] - Payments and Banking divisional net revenue increased by 4.9% to £12.8 million [7] - Love2shop divisional net revenue grew by 21.7% to £7.8 million [8] Growth Initiatives - The company signed a new 3-year agreement with InPost/Yodel to enhance parcel delivery services and is preparing for increased parcel volumes through a partnership with Royal Mail [3] - In Open Banking and Digital payments, new contracts were secured with Thirteen Group and the Department for Work and Pensions, contributing to a growing business pipeline [3] - Local Banking initiatives are set to launch consumer deposits with the first High Street Bank in August 2025 [3] Financial Performance - The Group's net corporate debt as of 30 June 2025 was £109.6 million, an increase from £97.4 million as of 31 March 2025 [11] - The Board declared an increased final dividend of 19.6 pence per share, up from 19.2 pence per share in the previous year [12] - An enhanced share buyback program commenced on 1 July 2025, aiming to return at least £30 million per annum to shareholders [13][14] Market Conditions - The company is actively monitoring consumer uncertainty and cautious behavior in various markets, maintaining tight cost discipline while executing growth plans [4]

Core Insights - Paymentus reported strong revenue growth in Q2 2025, generating $280.1 million in GAAP revenue, exceeding analyst expectations by $17.8 million, and reflecting a year-over-year increase of 41.9% [1][2] - The company achieved a non-GAAP diluted EPS of $0.15, surpassing the expected $0.14, and adjusted EBITDA rose to $31.7 million, although profit growth was slower due to a shift towards lower-margin enterprise clients [1][2] Financial Performance - Q2 2025 financial metrics included: - Non-GAAP diluted EPS of $0.15, up 50% from $0.10 in Q2 2024 [2] - GAAP revenue of $280.1 million, a 41.9% increase from $197.4 million in Q2 2024 [2] - Contribution profit of $93.5 million, up 22.2% year-over-year [2] - Adjusted EBITDA of $31.7 million, a 40.9% increase from $22.5 million in Q2 2024 [2] - Free cash flow increased by 155.7% year-over-year to $22.5 million [2] Business Overview - Paymentus provides electronic billing and payment solutions, focusing on flexibility and security through its cloud-native platform [3] - The company emphasizes technological innovation, including AI and machine learning, to enhance platform adaptability and scalability [4] Market Dynamics - Paymentus serves over 2,500 billers and financial institutions, processing 175.8 million transactions, a 25.2% increase from the previous year [5] - Revenue growth is driven by new client onboarding and increased adoption in sectors such as utilities, telecom, and financial services [5] Profitability Trends - Despite revenue growth, profit margins did not keep pace, with contribution profit and gross profit each growing approximately 22% year-over-year [6] - Contribution margin declined to 31.8% from 37.5% in the prior year due to a shift towards large enterprise clients that negotiate volume discounts [6] Technological Edge - The company highlights its proprietary Instant Payment Network™ (IPN) as a central hub for billing, payment, and reconciliation, enhancing its market reach [7] - Paymentus focuses on product innovation, integrating advanced APIs and partnerships to broaden its ecosystem and support future growth [9] Financial Outlook - Management raised guidance for Q3 2025, expecting revenue between $278 million and $282 million, and full-year revenue guidance set at $1,123 million to $1,132 million [10] - Current guidance reflects a 24.2% revenue growth rate, exceeding the company's long-term growth targets of 20% annual revenue growth [10] Strategic Focus - The company aims to manage operating expenses and calibrate future investments based on contribution profit trajectory, while continuing to win large billers [11]

Core Viewpoint - Paymentus reported quarterly earnings of $0.15 per share, exceeding the Zacks Consensus Estimate of $0.14 per share, and showing an increase from $0.12 per share a year ago, representing an earnings surprise of +7.14% [1][2] Financial Performance - The company achieved revenues of $280.08 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 8.58%, compared to $197.42 million in the same quarter last year [2] - Paymentus has consistently exceeded consensus EPS estimates over the last four quarters [2] Stock Performance - Paymentus shares have declined approximately 13.4% since the beginning of the year, while the S&P 500 has gained 6.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.14 on revenues of $267 million, and for the current fiscal year, it is $0.57 on revenues of $1.08 billion [7] - The trend of estimate revisions for Paymentus was mixed prior to the earnings release, which may change following the recent results [6] Industry Context - The Financial Transaction Services industry, to which Paymentus belongs, is currently ranked in the bottom 41% of over 250 Zacks industries, suggesting potential challenges ahead [8]

[Special Note Regarding Forward-Looking Statements](index=3&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section warns that forward-looking statements involve risks and uncertainties, and actual results may differ materially from projections - This report contains forward-looking statements that involve substantial risks and uncertainties, which may cause actual results to differ materially from historical results or future projections. Investors should not place undue reliance on these statements as predictions of future events[6](index=6&type=chunk)[8](index=8&type=chunk)[10](index=10&type=chunk) - Key areas covered by forward-looking statements include the company's ability to manage growth, attract and retain customers, implement new customers, expectations for revenue and operating results, cybersecurity impact, market opportunity, competitiveness, product development, employee retention, general economic conditions (inflation, trade policies), financial services industry stability, benefits of acquisitions, brand maintenance, international expansion, and factors described in 'Risk Factors' and 'Management's Discussion and Analysis'[9](index=9&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements for Paymentus Holdings, Inc., including the Balance Sheets, Statements of Operations and Comprehensive Income, Statements of Stockholders' Equity, and Statements of Cash Flows, along with their accompanying notes. These statements provide a snapshot of the company's financial position, performance, and cash flows for the periods ended June 30, 2025, and December 31, 2024 (for balance sheet), and for the three and six months ended June 30, 2025 and 2024 (for income and cash flow statements) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | (In thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | **Assets** | | | | Cash and cash equivalents | $266,422 | $205,900 | | Total current assets | $380,926 | $345,641 | | Capitalized internal-use software development costs, net | $69,053 | $67,375 | | Intangible assets, net | $14,809 | $19,076 | | Goodwill | $131,836 | $131,815 | | Total assets | $609,523 | $576,247 | | **Liabilities** | | | | Total current liabilities | $83,479 | $81,550 | | Total liabilities | $92,824 | $90,651 | | **Stockholders' Equity** | | | | Total stockholders' equity | $516,699 | $485,596 | | Total liabilities and stockholders' equity | $609,523 | $576,247 | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $280,077 | $197,422 | $555,312 | $382,297 | | Cost of revenue | $208,600 | $138,671 | $417,811 | $270,821 | | Gross profit | $71,477 | $58,751 | $137,501 | $111,476 | | Total operating expenses | $55,555 | $48,515 | $105,890 | $92,897 | | Income from operations | $15,922 | $10,236 | $31,611 | $18,579 | | Net income | $14,707 | $9,364 | $28,520 | $16,590 | | Net income per share - Basic | $0.12 | $0.08 | $0.23 | $0.13 | | Net income per share - Diluted | $0.11 | $0.07 | $0.22 | $0.13 | | Comprehensive income | $14,770 | $9,324 | $28,529 | $16,508 | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) | (In thousands) | Dec 31, 2024 | Mar 31, 2025 | June 30, 2025 | | :------------------------------------ | :----------- | :----------- | :------------ | | Total Stockholders' Equity | $485,596 | $500,395 | $516,699 | | **Changes (Q1 2025):** | | | | | Stock-based compensation | | $2,932 | | | Net income | | $13,813 | | | **Changes (Q2 2025):** | | | | | Stock-based compensation | | | $3,315 | | Net income | | | $14,707 | | (In thousands) | Dec 31, 2023 | Mar 31, 2024 | June 30, 2024 | | :------------------------------------ | :----------- | :----------- | :------------ | | Total Stockholders' Equity | $429,616 | $439,384 | $451,627 | | **Changes (Q1 2024):** | | | | | Stock-based compensation | | $2,484 | | | Net income | | $7,226 | | | **Changes (Q2 2024):** | | | | | Stock-based compensation | | | $2,882 | | Net income | | | $9,364 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $81,920 | $28,984 | | Net cash used in investing activities | $(17,708) | $(18,789) | | Net cash used in financing activities | $(3,673) | $(369) | | Effect of exchange rate changes on Cash and cash equivalents and Restricted cash | $95 | $(141) | | Net increase in cash, cash equivalents and Restricted cash | $60,634 | $9,685 | | Cash and cash equivalents and Restricted cash at the beginning of period | $209,411 | $183,195 | | Cash and cash equivalents and Restricted cash at the end of period | $270,045 | $192,880 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Organization and Description of Business](index=10&type=section&id=1.%20Organization%20and%20Description%20of%20Business) - Paymentus Holdings, Inc. provides electronic bill presentment and payment services, enterprise customer communication, and self-service revenue management through a SaaS, secure, omni-channel technology platform. The platform supports various payment types (credit/debit cards, eChecks, digital wallets) and channels (online, mobile, IVR, call center, chatbot, voice-based assistants)[25](index=25&type=chunk) [2. Basis of Presentation and Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) - The unaudited interim condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules for interim reporting, and should be read with the 2024 Form 10-K. Management's estimates are based on historical experience and reasonable assumptions, with actual results potentially differing[26](index=26&type=chunk)[27](index=27&type=chunk)[29](index=29&type=chunk) - The Company changed its reporting segment structure to a single operating and reportable segment effective January 1, 2025, based on the CODM's review of consolidated financial information for resource allocation and performance assessment. Previously, there were three operating segments with one reportable segment[32](index=32&type=chunk)[33](index=33&type=chunk) - Custodial accounts, holding **$128.9 million** as of June 30, 2025, are not included in the Company's balance sheets as Paymentus has no legal ownership or control over these funds[30](index=30&type=chunk) - The Company is evaluating ASU 2024-03, 'Disaggregation of Income Statement Expenses,' effective for fiscal 2027, which requires additional disclosures of expenses by nature[40](index=40&type=chunk) [3. Revenue, Performance Obligations and Contract Balances](index=13&type=section&id=3.%20Revenue%2C%20Performance%20Obligations%20and%20Contract%20Balances) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Payment transaction processing revenue | $278,080 | $193,564 | $551,360 | $376,316 | | Other revenue | $1,997 | $3,858 | $3,952 | $5,981 | | Total revenue | $280,077 | $197,422 | $555,312 | $382,297 | | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue from United States | $275,417 | $193,483 | $546,096 | $374,784 | | Revenue from Other | $4,660 | $3,939 | $9,216 | $7,513 | | Total revenue | $280,077 | $197,422 | $555,312 | $382,297 | - As of June 30, 2025, the Company has **$6.4 million** in remaining performance obligations, with over **75%** expected to be recognized within the next two years. Contractual rights for future minimum guarantees amount to **$54.1 million** through 2029[42](index=42&type=chunk)[43](index=43&type=chunk) | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Current | $3,771 | $2,937 | | Non-current | $2,666 | $2,783 | | Total contract liabilities | $6,437 | $5,720 | [4. Property and Equipment, Net](index=14&type=section&id=4.%20Property%20and%20Equipment%2C%20Net) | (In thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Computer equipment | $6,467 | $6,178 | | Furniture and fixtures | $1,832 | $1,724 | | Leasehold improvements | $387 | $375 | | Total property and equipment | $8,686 | $8,277 | | Less: Accumulated depreciation | $(7,646) | $(7,120) | | Property and equipment, net | $1,040 | $1,157 | | (In thousands) | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | United States | $361 | $450 | | Other | $679 | $707 | | Total | $1,040 | $1,157 | [5. Goodwill, Internal-use Software Development Costs and Intangible Assets](index=14&type=section&id=5.%20Goodwill%2C%20Internal-use%20Software%20Development%20Costs%20and%20Intangible%20Assets) - Goodwill reporting units were realigned into a single reporting unit, consistent with the change in segment structure. Changes in goodwill carrying amount during the three and six months ended June 30, 2025, were due to foreign currency translation adjustments[47](index=47&type=chunk) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Capitalized internal-use software development costs | $8,900 | $9,100 | $18,300 | $18,400 | | Amortization expense (Cost of revenue) | $5,517 | $4,366 | $11,155 | $8,395 | | Amortization expense (Research and development) | $2,672 | $2,373 | $5,460 | $4,655 | | Total Amortization expense | $8,189 | $6,739 | $16,615 | $13,050 | | (In thousands) | June 30, 2025 Net Carrying Amount | December 31, 2024 Net Carrying Amount | | :-------------------- | :-------------------------------- | :------------------------------------ | | Technology | $1,009 | $3,123 | | Customer relationship | $13,622 | $15,257 | | Software and license | $0 | $8 | | Trademark | $178 | $688 | | Total | $14,809 | $19,076 | | Years Ending December 31, | Future Expected Amortization Expense (in thousands) | | :-------------------------- | :-------------------------------------------------- | | 2025 | $2,822 | | 2026 | $3,269 | | 2027 | $3,269 | | 2028 | $3,269 | | 2029 | $2,180 | | Total | $14,809 | [6. Prepaid expenses and other assets](index=15&type=section&id=6.%20Prepaid%20expenses%20and%20other%20assets) | (In thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Prepaid expenses | $5,362 | $6,584 | | Contract acquisition costs | $5,223 | $6,657 | | Other assets | $1,927 | $2,832 | | Total prepaid expenses and other assets | $12,512 | $16,073 | [7. Accrued and Other Liabilities](index=16&type=section&id=7.%20Accrued%20and%20Other%20Liabilities) | (In thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Payroll and employee-related expenses | $11,030 | $16,650 | | Other accrued expenses | $9,335 | $8,095 | | Other liabilities | $5,395 | $1,717 | | Total accrued and other liabilities | $25,760 | $26,462 | [8. Commitments and Contingencies](index=16&type=section&id=8.%20Commitments%20and%20Contingencies) - The Company is involved in various claims and legal proceedings in the ordinary course of business. As of June 30, 2025, no current claims or legal proceedings are expected to have a material adverse effect on financial position, results of operations, or cash flows, beyond estimated liabilities already recorded[54](index=54&type=chunk) - Paymentus enters into indemnification provisions with business partners, investors, contractors, customers, officers, directors, and employees, seeking to limit its exposure in commercial contracts[55](index=55&type=chunk) [9. Equity](index=16&type=section&id=9.%20Equity) - As of June 30, 2025, all **509,370** warrant shares from the May 2021 agreement with JPMC (exercise price **$18.38**) were vested and exercisable. Additionally, **175,904** warrant shares from the August 2022 agreement (exercise price **$10.10**) were vested and exercisable, with the remaining **513,382** shares subject to commercial milestones through December 31, 2026[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) [10. Stock-Based Compensation](index=18&type=section&id=10.%20Stock-Based%20Compensation) - The 2021 Equity Incentive Plan had approximately **26.4 million** shares available for grant as of June 30, 2025, following an annual increase of approximately **5.0 million** shares on January 1, 2025[60](index=60&type=chunk) | (In thousands, except per share amounts) | Options Outstanding at Dec 31, 2024 | Options Exercised | Options Forfeited | Options Outstanding at June 30, 2025 | | :--------------------------------------- | :---------------------------------- | :---------------- | :---------------- | :--------------------------------- | | Options | 3,534,103 | (61,976) | (7,667) | 3,464,460 | | Weighted-Average Exercise Price per Share | $8.47 | $1.46 | $0.28 | $8.61 | | Weighted-Average Remaining Contractual Life (years) | 4.26 | | | 3.81 | | Aggregate Intrinsic Value | $85,525 | | | $83,620 | - Unrecognized compensation cost for unvested stock options was **$0.1 million** as of June 30, 2025, expected to be recognized over **0.5 years**[62](index=62&type=chunk) | (In thousands, except per share amounts) | RSUs Awarded and Unvested at Dec 31, 2024 | Awards Granted | Awards Vested | Awards Forfeited | RSUs Awarded and Unvested at June 30, 2025 | | :--------------------------------------- | :---------------------------------------- | :------------- | :------------ | :--------------- | :----------------------------------------- | | RSUs | 2,096,168 | 605,306 | (486,019) | (40,967) | 2,174,488 | | Weighted Average Grant Date Fair Value | $16.01 | $29.39 | $16.56 | $17.17 | $19.59 | - Unrecognized compensation cost for unvested RSUs was **$39.9 million** as of June 30, 2025, expected to be recognized over **3.7 years**[65](index=65&type=chunk) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total stock-based compensation | $5,288 | $3,323 | $8,833 | $6,256 | [11. Income Taxes](index=19&type=section&id=11.%20Income%20Taxes) | Effective Tax Rate | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Effective Tax Rate | 19.9% | 24.9% | 21.2% | 28.6% | - The effective tax rate differences from the U.S. federal statutory rate of **21%** are primarily due to permanent differences for disallowed stock-based compensation (IRC Section 162(m)), state taxes, and discrete benefits for excess tax benefits on stock-based compensation and prior year Canadian R&D credit claims[67](index=67&type=chunk) - The Company forecasts an estimated effective tax rate of **27%** for 2025, excluding discrete benefits, mainly due to state taxes and non-deductible compensation[68](index=68&type=chunk) - The recently enacted H.R. 1, 'The One Big Beautiful Bill Act' (OBBBA), includes significant changes to corporate taxation, such as increased deductions for capital spending and expensing of domestic R&D costs. The Company is evaluating its potential impact[69](index=69&type=chunk) [12. Net Income per Share Attributable to Common Stock](index=19&type=section&id=12.%20Net%20Income%20per%20Share%20Attributable%20to%20Common%20Stock) - Basic net income per share is calculated by dividing net income by the weighted-average common shares outstanding. Diluted net income per share includes the dilutive effect of stock options, RSUs, and warrants using the treasury stock method, excluding anti-dilutive shares[70](index=70&type=chunk)[71](index=71&type=chunk) | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $14,707 | $9,364 | $28,520 | $16,590 | | Weighted-average shares of common stock — basic | 125,077,964 | 124,264,789 | 125,066,334 | 124,106,046 | | Dilutive effect of stock options | 2,584,773 | 2,167,559 | 2,551,462 | 2,157,147 | | Dilutive effect of RSUs | 1,016,437 | 709,580 | 1,018,724 | 721,860 | | Dilutive effect of warrants | 351,365 | 110,438 | 331,287 | 89,868 | | Weighted-average shares of common stock — diluted | 129,030,539 | 127,252,366 | 128,967,807 | 127,074,921 | | Net income per share - Basic | $0.12 | $0.08 | $0.23 | $0.13 | | Net income per share - Diluted | $0.11 | $0.07 | $0.22 | $0.13 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Paymentus's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the same periods in 2024. It covers the company's business overview, transaction volumes, key factors affecting operating results (including economic trends and non-GAAP measures), detailed analysis of revenue and expenses, liquidity, and critical accounting policies [Overview](index=21&type=section&id=Overview) - Paymentus is a leading provider of cloud-based bill payment technology and solutions, serving over **2,500** biller businesses and financial institution clients. Its platform was used by approximately **46 million** consumers and businesses globally in December 2024 for bill payments and money movements[74](index=74&type=chunk) - The company's SaaS platform, built on a single code base, offers easy-to-use, flexible, and secure electronic bill payment experiences across omni-channels, enabling rapid deployment of new features and helping billers collect revenue faster and more profitably[75](index=75&type=chunk) [Transactions Processed](index=21&type=section&id=Transactions%20Processed) | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Growth | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Growth | | :---------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Transactions processed | 175.8 | 140.4 | 25.2% | 349.0 | 275.7 | 26.6% | - The increase in transactions processed was primarily driven by the addition of new billers and increased transactions from existing billers[76](index=76&type=chunk) [Other Key Factors and Trends Affecting Our Operating Results](index=21&type=section&id=Other%20Key%20Factors%20and%20Trends%20Affecting%20Our%20Operating%20Results) [Impact of Economic and Inflationary Trends](index=21&type=section&id=Impact%20of%20Economic%20and%20Inflationary%20Trends) - Economic uncertainty, driven by trade policies, geopolitical tensions, inflation, and interest rates, is expected to persist through 2025. An economic slowdown could reduce revenue per transaction and overall volume if consumers switch to lower-cost payment methods or defer payments[78](index=78&type=chunk) - Conversely, a higher frequency of partial payments could increase total transaction count, potentially offsetting negative impacts. Elevated inflation could negatively affect results due to the lag in adjusting pricing strategies[78](index=78&type=chunk)[79](index=79&type=chunk) [Non-GAAP Measures](index=22&type=section&id=Non-GAAP%20Measures) - Paymentus uses non-GAAP measures like contribution profit, adjusted gross profit, adjusted EBITDA, and free cash flow to supplement GAAP results, providing management and investors with a clearer understanding of consolidated financial performance and facilitating period-to-period comparisons[80](index=80&type=chunk)[85](index=85&type=chunk) - Interchange and assessment fees are excluded from contribution profit as they are less reflective of operating performance and are largely outside the company's control[85](index=85&type=chunk) [Contribution Profit](index=22&type=section&id=Contribution%20Profit) - Contribution profit is calculated as gross profit plus other cost of revenue (cost of revenue less interchange and assessment fees). It measures the amount available to fund operations after network fees[81](index=81&type=chunk)[85](index=85&type=chunk) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross profit | $71,477 | $58,751 | $137,501 | $111,476 | | Plus: other cost of revenue | $22,051 | $17,730 | $43,669 | $34,372 | | Contribution profit | $93,528 | $76,481 | $181,170 | $145,848 | - Contribution profit increased by approximately **22.3%** for the three months and **24.2%** for the six months ended June 30, 2025, driven by growth in transaction count and volume from new and existing billers and financial institutions[87](index=87&type=chunk) [Adjusted Gross Profit](index=22&type=section&id=Adjusted%20Gross%20Profit) - Adjusted gross profit is gross profit adjusted for non-cash items, primarily stock-based compensation and amortization of acquisition-related intangible assets and capitalized software development costs[82](index=82&type=chunk) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross profit | $71,477 | $58,751 | $137,501 | $111,476 | | Stock-based compensation | $83 | $66 | $149 | $117 | | Amortization of capitalized software development costs | $5,517 | $4,366 | $11,155 | $8,395 | | Amortization of acquisition-related intangibles | $829 | $827 | $1,657 | $1,657 | | Adjusted gross profit | $77,906 | $64,010 | $150,462 | $121,645 | - Adjusted gross profit increased by **21.7%** for the three months and **23.7%** for the six months ended June 30, 2025. The percentage decreased modestly due to a shift in customer mix towards large, high-volume enterprise billers with lower margins, partially offset by economies of scale[88](index=88&type=chunk) [Adjusted EBITDA](index=23&type=section&id=Adjusted%20EBITDA) - Adjusted EBITDA is calculated as net income before interest, other income/expense, depreciation, amortization of acquisition-related intangibles and capitalized software, and income taxes, further adjusted for foreign exchange gains/losses, stock-based compensation, and certain nonrecurring expenses[83](index=83&type=chunk) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income — GAAP | $14,707 | $9,364 | $28,520 | $16,590 | | EBITDA | $26,516 | $19,244 | $52,995 | $36,142 | | Adjustments (Foreign exchange gain, Stock-based compensation) | $5,177 | $3,284 | $8,672 | $6,199 | | Adjusted EBITDA | $31,693 | $22,528 | $61,667 | $42,341 | - Adjusted EBITDA increased by **40.7%** for the three months and **45.6%** for the six months ended June 30, 2025, primarily due to higher revenues from transaction volume growth and operating leverage[90](index=90&type=chunk) [Free Cash Flow](index=24&type=section&id=Free%20Cash%20Flow) - Free cash flow is calculated as net cash provided by (used in) operating activities less capital expenditures, other intangible assets acquired, and capitalized internal-use software development costs[84](index=84&type=chunk) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $31,479 | $18,030 | $81,920 | $28,984 | | Purchases of property and equipment | $(116) | $(188) | $(176) | $(304) | | Capitalized internal-use software development costs | $(8,888) | $(9,086) | $(18,166) | $(18,362) | | Free cash flow | $22,475 | $8,756 | $63,578 | $10,318 | - Free cash flow increased significantly for both the three and six months ended June 30, 2025, primarily driven by higher cash generated from operations[91](index=91&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) [Comparison of the Three Months Ended June 30, 2025 and 2024](index=25&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) | (In thousands) | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Revenue | $280,077 | $197,422 | $82,655 | 41.9% | | Cost of revenue | $208,600 | $138,671 | $69,929 | 50.4% | | Gross profit | $71,477 | $58,751 | $12,726 | 21.7% | | Gross margin | 25.5% | 29.8% | | | | Research and development | $15,231 | $12,535 | $2,696 | 21.5% | | Sales and marketing | $29,610 | $26,766 | $2,844 | 10.6% | | General and administrative | $10,714 | $9,214 | $1,500 | 16.3% | | Total operating expenses | $55,555 | $48,515 | $7,040 | 14.5% | | Income from operations | $15,922 | $10,236 | $5,686 | 55.5% | | Interest income, net | $2,336 | $2,194 | $142 | 6.5% | | Other income | $111 | $39 | $72 | n/m | | Income before income taxes | $18,369 | $12,469 | $5,900 | 47.3% | | Provision for income taxes | $(3,662) | $(3,105) | $(557) | 17.9% | | Net income | $14,707 | $9,364 | $5,343 | 57.1% | - Revenue increased by **41.9%** due to higher transaction volumes from new and existing billers. Cost of revenue rose by **50.4%** in line with revenue and transaction volumes, primarily due to variable interchange fees and processor costs[95](index=95&type=chunk)[96](index=96&type=chunk) - Gross margin decreased from **29.8%** to **25.5%** due to a customer mix shift towards new, high-volume enterprise billers with lower margins, partially offset by economies of scale[96](index=96&type=chunk) - Operating expenses increased across R&D (employee costs, cloud services, software amortization), Sales & Marketing (reseller commissions, warrant amortization), and G&A (professional fees, legal fees, insurance premiums)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk) - Net income increased by **57.1%** to **$14.7 million**, and the effective tax rate decreased to **19.9%** from **24.9%**, influenced by permanent differences for disallowed compensation, state taxes, and discrete benefits[92](index=92&type=chunk)[101](index=101&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=26&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) | (In thousands) | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Revenue | $555,312 | $382,297 | $173,015 | 45.3% | | Cost of revenue | $417,811 | $270,821 | $146,990 | 54.3% | | Gross profit | $137,501 | $111,476 | $26,025 | 23.3% | | Gross margin | 24.8% | 29.2% | | | | Research and development | $30,332 | $24,586 | $5,746 | 23.4% | | Sales and marketing | $55,661 | $50,005 | $5,656 | 11.3% | | General and administrative | $19,897 | $18,306 | $1,591 | 8.7% | | Total operating expenses | $105,890 | $92,897 | $12,993 | 14.0% | | Income from operations | $31,611 | $18,579 | $13,032 | 70.1% | | Interest income, net | $4,398 | $4,380 | $18 | 0.4% | | Other income | $161 | $270 | $(109) | (40.4)% | | Income before income taxes | $36,170 | $23,229 | $12,941 | 55.7% | | Provision for income taxes | $(7,650) | $(6,639) | $(1,011) | 15.2% | | Net income | $28,520 | $16,590 | $11,930 | 71.9% | - Revenue increased by **45.3%** due to new biller implementations and increased transactions from existing billers. Cost of revenue increased by **54.3%** due to higher transaction volumes and variable fees[103](index=103&type=chunk)[104](index=104&type=chunk) - Gross margin decreased from **29.2%** to **24.8%** due to a customer mix shift towards lower-margin, high-volume enterprise billers, partially offset by economies of scale[104](index=104&type=chunk) - Operating expenses increased across R&D (employee costs, cloud services, software amortization), Sales & Marketing (reseller commissions, warrant amortization), and G&A (professional and legal fees, offset by lower insurance premiums)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - Net income increased by **71.9%** to **$28.5 million**, and the effective tax rate decreased to **21.2%** from **28.6%**, influenced by similar factors as the three-month period[92](index=92&type=chunk)[109](index=109&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) [Sources and Uses of Funds](index=26&type=section&id=Sources%20and%20Uses%20of%20Funds) - As of June 30, 2025, Paymentus had **$266.4 million** in unrestricted cash and cash equivalents, which management believes is sufficient for working capital and capital expenditure requirements for at least the next **12 months**[110](index=110&type=chunk) - Historically, operations have been financed through equity sales and revenue from payment transaction fees and subscriptions. Principal uses of cash are funding operations and capital expenditures[110](index=110&type=chunk) - The company may explore additional financing, but there is no assurance of availability on acceptable terms. Inability to raise capital could adversely affect business objectives, and new financing could dilute existing stockholders or impose restrictive covenants[111](index=111&type=chunk)[112](index=112&type=chunk) [Historical Cash Flows](index=27&type=section&id=Historical%20Cash%20Flows) | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) Operating activities | $81,920 | $28,984 | | Net cash used in Investing activities | $(17,708) | $(18,789) | | Net cash used in Financing activities | $(3,673) | $(369) | | Effects of foreign exchange on cash | $95 | $(141) | | Net increase in cash, cash equivalents and restricted cash | $60,634 | $9,685 | [Net Cash Provided by Operating Activities](index=27&type=section&id=Net%20Cash%20Provided%20by%20Operating%20Activities) - Net cash provided by operating activities for the six months ended June 30, 2025, was **$81.9 million**, driven by **$28.5 million** net income, **$33.2 million** in non-cash charges, and **$20.2 million** in net cash inflows from changes in operating assets and liabilities[115](index=115&type=chunk) - For the six months ended June 30, 2024, net cash provided by operating activities was **$29.0 million**, from **$16.6 million** net income and **$27.5 million** in non-cash charges, offset by **$15.1 million** net cash outflows from changes in operating assets and liabilities[116](index=116&type=chunk) [Net Cash Used in Investing Activities](index=27&type=section&id=Net%20Cash%20Used%20in%20Investing%20Activities) - Net cash used in investing activities for the six months ended June 30, 2025, was **$17.7 million**, primarily due to **$18.2 million** in capitalized internal-use software development costs and **$0.2 million** in property and equipment purchases, partially offset by **$0.6 million** from interest-bearing deposits[117](index=117&type=chunk) - For the six months ended June 30, 2024, net cash used was **$18.8 million**, mainly from **$18.4 million** in capitalized internal-use software development costs and **$0.3 million** in property and equipment purchases[118](index=118&type=chunk) [Net Cash Used in Financing Activities](index=27&type=section&id=Net%20Cash%20Used%20in%20Financing%20Activities) - Net cash used in financing activities for the six months ended June 30, 2025, was **$3.7 million**, primarily due to **$3.8 million** in tax payments withheld on net settled restricted stock units, partially offset by **$0.1 million** from stock-based award exercises[119](index=119&type=chunk) - For the six months ended June 30, 2024, net cash used was **$0.4 million**, mainly from **$0.5 million** in settlement of holdback liability related to a prior acquisition, partially offset by **$0.1 million** from stock-based award exercises[120](index=120&type=chunk) [Critical Accounting Policies and Estimates](index=27&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - The preparation of financial statements requires management to make estimates and assumptions affecting reported amounts. No material changes to critical accounting policies and estimates have occurred since December 31, 2024, except for those disclosed in Note 2[121](index=121&type=chunk) [Recent Accounting Pronouncements](index=28&type=section&id=Recent%20Accounting%20Pronouncements) - Refer to Note 2, 'Basis of Presentation and Summary of Significant Accounting Policies,' for a full description of recent accounting pronouncements, including adoption dates and effects on condensed consolidated financial statements[122](index=122&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in Paymentus's exposure to market risk since December 31, 2024. Details on interest rate, foreign currency exchange, and inflation risks are available in the 2024 Form 10-K - No material changes in market risk exposure since December 31, 2024. For details on interest rate, foreign currency exchange, and inflation risks, refer to the 2024 Form 10-K[123](index=123&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of Paymentus's disclosure controls and procedures and internal control over financial reporting. Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, and there were no material changes in internal control over financial reporting during the quarter [Evaluation of Disclosure Controls and Procedures](index=28&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level[125](index=125&type=chunk) [Changes in Internal Control over Financial Reporting](index=28&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There were no material changes in internal control over financial reporting during the three months ended June 30, 2025[126](index=126&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=28&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) - Management acknowledges that no control system can prevent or detect all errors and fraud, providing only reasonable, not absolute, assurance. Controls may become inadequate over time due to changing conditions or deteriorating compliance[127](index=127&type=chunk) [PART II. OTHER INFORMATION](index=29&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) Paymentus is not currently party to any material legal proceedings and is unaware of any pending or threatened legal actions that could have a material adverse effect on its business, operating results, cash flows, or financial condition, beyond those referred to in Note 8 of the condensed consolidated financial statements - The Company is not currently involved in any material legal proceedings and is unaware of any pending or threatened legal actions that could materially adversely affect its business, operating results, cash flows, or financial condition, except as noted in Note 8[129](index=129&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in Item 1A of the Company's 2024 Form 10-K - No material changes to risk factors previously disclosed in the 2024 Form 10-K[130](index=130&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds during the reporting period - None[131](index=131&type=chunk) [Item 3. Defaults Upon Senior Securities](index=29&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[132](index=132&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Paymentus Holdings, Inc. - Not Applicable[133](index=133&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20Other%20Information) During the quarter ended June 30, 2025, none of the Company's directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[134](index=134&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, equity incentive plan agreements, insider trading policy, and certifications from the principal executive and financial officers - Exhibits include Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Form of Restricted Stock Unit Agreement, Insider Trading Policy, and Certifications of Principal Executive and Financial Officers (31.1, 31.2, 32.1, 32.2)[135](index=135&type=chunk) [Signatures](index=31&type=section&id=Signatures) This section provides the official signatures certifying the accuracy and completeness of the report - The report was signed on August 4, 2025, by Dushyant Sharma, Chairman, President and Chief Executive Officer, and Sanjay Kalra, Senior Vice President and Chief Financial Officer[140](index=140&type=chunk)