Paymentus (PAY) - 2023 Q4 - Annual Results

Financial Highlights Fourth Quarter 2023 Financial and Business Highlights In the fourth quarter of 2023, Paymentus demonstrated strong year-over-year growth, with revenue increasing by 24.7% to $164.8 million, driven by a 28.4% rise in transaction volume. Adjusted EBITDA saw a significant surge of 95.4% to $19.9 million, representing a 30.0% margin of contribution profit. Net income was $9.4 million, a substantial improvement from the prior year Q4 2023 Key Financial Metrics (YoY) | Metric | Q4 2023 | Q4 2022 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $164.8M | $132.2M | +24.7% | | Gross Profit | $49.5M | $41.1M | +20.3% | | Contribution Profit | $66.3M | $54.1M | +22.7% | | Adjusted EBITDA | $19.9M | $10.2M | +95.4% | | Net Income | $9.4M | $1.0M | +875% | | GAAP EPS (Diluted) | $0.07 | $0.01 | +600% | | Non-GAAP EPS (Diluted) | $0.11 | $0.04 | +175% | | Transactions Processed | 124.8M | 97.2M | +28.4% | Full Year 2023 Financial and Business Highlights For the full year 2023, Paymentus reported a 23.6% increase in revenue to $614.5 million, fueled by a 24.9% growth in transactions. The company achieved a significant turnaround in profitability, with net income reaching $22.3 million compared to a net loss in 2022. Adjusted EBITDA more than doubled, growing 103.1% to $58.1 million Full Year 2023 Key Financial Metrics (YoY) | Metric | Full Year 2023 | Full Year 2022 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $614.5M | $497.0M | +23.6% | | Gross Profit | $182.3M | $149.7M | +21.8% | | Contribution Profit | $240.9M | $201.3M | +19.7% | | Adjusted EBITDA | $58.1M | $28.6M | +103.1% | | Net Income (Loss) | $22.3M | ($0.5M) | N/A | | GAAP EPS (Diluted) | $0.18 | $0.00 | N/A | | Non-GAAP EPS (Diluted) | $0.32 | $0.12 | +166.7% | | Transactions Processed | 458.2M | 366.9M | +24.9% | Financial Guidance Financial Guidance for 2024 Paymentus has issued its financial outlook for the first quarter and the full fiscal year of 2024. The company anticipates continued growth in revenue, contribution profit, and adjusted EBITDA. However, it does not provide a reconciliation for its forward-looking non-GAAP measures due to the uncertainty of certain financial items Financial Guidance for 2024 | Metric | First Quarter 2024 | Fiscal-Year 2024 | | :--- | :--- | :--- | | Revenue | $170M - $176M | $720M - $744M | | Contribution Profit | $64M - $66M | $274M - $288M | | Adjusted EBITDA | $15M - $17M | $65M - $75M | - The company does not reconcile its forward-looking guidance for non-GAAP measures like Adjusted EBITDA and Contribution Profit, citing that certain financial information is not available and cannot be reasonably estimated[7][14] Use and Definitions of Non-GAAP Financial Measures This section details the non-GAAP financial measures used by Paymentus to supplement its GAAP-based financial reporting. The company believes these measures, including adjusted gross profit, contribution profit, adjusted EBITDA, and non-GAAP net income, provide a fuller understanding of its consolidated financial performance and help in projecting future results. It provides specific definitions for each metric, clarifying what adjustments are made to the corresponding GAAP measures - Paymentus uses non-GAAP measures to help management and the board understand financial performance, project future performance, and evaluate business strategies[15][23] - Adjusted gross profit: Gross profit adjusted for stock-based compensation and amortization of certain intangible assets[16] - Contribution profit: Gross profit plus other cost of revenue (which excludes interchange and assessment fees). This metric is used to measure funds available for operations[17] - Adjusted EBITDA: Net income adjusted for interest, taxes, D&A, stock-based compensation, and certain nonrecurring expenses[18] - Non-GAAP net income & EPS: Net income and EPS excluding items like stock-based compensation (starting Q2 2023) and amortization of acquisition-related intangibles[21] - Free cash flow: Net cash from operating activities less capital expenditures and capitalized internal-use software development costs[22] Consolidated Financial Statements Consolidated Statements of Operations and Comprehensive Income For the year ended December 31, 2023, Paymentus reported revenues of $614.5 million, a 23.6% increase from 2022. The company achieved a significant turnaround in profitability, recording a net income of $22.3 million, compared to a net loss of $0.5 million in the previous year. This improvement was driven by higher gross profit and effective management of operating expenses Full Year Statement of Operations Highlights (in thousands) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Revenue | $614,490 | $497,001 | | Gross Profit | $182,342 | $149,678 | | Income (Loss) from Operations | $18,093 | ($2,976) | | Net Income (Loss) | $22,322 | ($513) | | Diluted EPS | $0.18 | $0.00 | Consolidated Balance Sheets As of December 31, 2023, Paymentus's balance sheet showed total assets of $504.9 million, up from $461.5 million at the end of 2022. The increase was primarily driven by higher cash and cash equivalents and capitalized software costs. Total liabilities rose to $75.2 million, while total stockholders' equity increased to $429.6 million, reflecting the year's net income Balance Sheet Highlights (in thousands) | Line Item | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $179,361 | $147,334 | | Total Current Assets | $270,348 | $228,961 | | Total Assets | $504,863 | $461,539 | | Total Current Liabilities | $62,788 | $51,496 | | Total Liabilities | $75,247 | $64,360 | | Total Stockholders' Equity | $429,616 | $397,179 | Consolidated Statements of Cash Flows For the full year 2023, Paymentus generated $68.8 million in net cash from operating activities, a significant increase from $19.9 million in 2022. Cash used in investing activities remained stable at approximately $34.3 million. The company's cash and cash equivalents, including restricted cash, increased by $33.5 million during the year, ending at $183.2 million Statement of Cash Flows Highlights (in thousands) | Line Item | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $68,828 | $19,867 | | Net cash used in investing activities | ($34,299) | ($34,560) | | Net cash (used in) provided by financing activities | ($1,195) | ($37,283) | | Net increase in cash, cash equivalents and Restricted cash | $33,510 | ($52,144) | | Cash, cash equivalents and Restricted cash end of period | $183,195 | $149,685 | GAAP to Non-GAAP Reconciliations Adjusted Gross Profit Reconciliation This table reconciles GAAP Gross Profit to Non-GAAP Adjusted Gross Profit. For the full year 2023, Adjusted Gross Profit was $199.2 million, compared to $161.8 million in 2022. The adjustments primarily consist of adding back amortization of capitalized software and acquisition-related intangibles Adjusted Gross Profit Reconciliation (in thousands) | Line Item | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Gross profit | $182,342 | $149,678 | | Amortization of capitalized software development costs | $13,341 | $8,763 | | Amortization of acquisition-related intangibles | $3,314 | $3,314 | | Adjusted gross profit | $199,153 | $161,755 | Contribution Profit Reconciliation This table reconciles GAAP Gross Profit to Contribution Profit by adding back 'other cost of revenue'. For the full year 2023, Contribution Profit increased to $240.9 million from $201.3 million in 2022, representing a 19.7% year-over-year growth Contribution Profit Reconciliation (in thousands) | Line Item | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Gross profit | $182,342 | $149,678 | | Plus: other cost of revenue | $58,606 | $51,622 | | Contribution profit | $240,948 | $201,300 | Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation This section reconciles GAAP Net Income to Adjusted EBITDA. For the full year 2023, Adjusted EBITDA more than doubled to $58.1 million from $28.6 million in 2022. The Adjusted EBITDA margin, calculated as a percentage of contribution profit, improved significantly from 14.2% in 2022 to 24.1% in 2023 Adjusted EBITDA Reconciliation (in thousands) | Line Item | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net income (loss) — GAAP | $22,322 | ($513) | | Adjustments (Interest, Taxes, D&A, Stock Comp, etc.) | $35,761 | $29,105 | | Adjusted EBITDA | $58,083 | $28,592 | | Adjusted EBITDA margin | 24.1% | 14.2% | Non-GAAP Net Income & Non-GAAP EPS Reconciliation This section reconciles GAAP Net Income to Non-GAAP Net Income, using a revised methodology that excludes stock-based compensation and amortization of acquisition-related intangibles. For the full year 2023, Non-GAAP Net Income was $40.1 million, resulting in a Non-GAAP Diluted EPS of $0.32, up from $0.12 in 2022 - The company revised its methodology for calculating Non-GAAP Net Income and EPS to also exclude stock-based compensation, effective from Q2 2023. Prior periods have been recast for comparability[21][40] Non-GAAP Net Income & EPS Reconciliation (Revised Methodology) | Line Item | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net income (loss) — GAAP | $22,322K | ($513K) | | Stock-based compensation | $9,390K | $6,736K | | Amortization of acquisition-related intangibles | $8,380K | $8,028K | | Non-GAAP net income | $40,092K | $14,816K | | Non-GAAP earnings per share — diluted | $0.32 | $0.12 | Free Cash Flow Reconciliation This table reconciles Net Cash Provided by Operating Activities to Free Cash Flow. In 2023, Paymentus generated $34.5 million in free cash flow, a significant positive shift from a cash usage of $11.4 million in 2022. The improvement was driven by higher cash from operations Free Cash Flow Reconciliation (in thousands) | Line Item | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $68,828 | $19,867 | | Purchases of property and equipment and software | ($600) | ($1,257) | | Capitalized software development costs | ($33,699) | ($29,763) | | Free cash flow | $34,529 | ($11,433) |