Paymentus (PAY) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited Q1 2024 financial statements show strong year-over-year growth in revenue, net income, and operating cash flow Condensed Consolidated Balance Sheets Total assets increased to $514.0 million by March 31, 2024, with a slight decrease in liabilities and growth in equity Balance Sheet Highlights (in thousands) | Balance Sheet Highlights (in thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $180,138 | $179,361 | | Capitalized internal-use software, net | $61,767 | $58,787 | | Total assets | $513,975 | $504,863 | | Liabilities & Equity | | | | Total liabilities | $74,591 | $75,247 | | Total stockholders' equity | $439,384 | $429,616 | Condensed Consolidated Statements of Operations and Comprehensive Income Q1 2024 saw revenue grow 24.6% to $184.9 million, with net income significantly increasing to $7.2 million Income Statement (in thousands, except EPS) | Income Statement (in thousands, except EPS) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue | $184,875 | $148,328 | | Gross Profit | $52,725 | $40,078 | | Income (loss) from operations | $8,343 | $(984) | | Net Income | $7,226 | $704 | | Diluted EPS | $0.06 | $0.01 | Condensed Consolidated Statements of Cash Flows Operating cash flow more than doubled to $11.0 million in Q1 2024, driven by higher net income Cash Flow Summary (in thousands) | Cash Flow Summary (in thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $10,954 | $4,763 | | Net cash used in investing activities | $(9,513) | $(8,286) | | Net cash used in financing activities | $(406) | $(1,122) | | Net increase (decrease) in cash | $957 | $(4,662) | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, revenue disaggregation, capitalized software costs, and unrecognized stock-based compensation - Payment transaction processing revenue was $182.8 million for Q1 2024, up from $146.4 million in Q1 2023, with the United States accounting for $181.3 million of total revenue in Q1 2024[38] - The company capitalized $9.3 million in software development costs in Q1 2024, an increase from $8.1 million in Q1 2023[46] - As of March 31, 2024, $38.5 million of total unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 3.8 years[63] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong Q1 2024 performance to transaction volume growth and pricing, with significant improvements in non-GAAP metrics Key Metrics | Key Metrics | Q1 2024 | Q1 2023 | % Growth | | :--- | :--- | :--- | :--- | | Transactions processed (in millions) | 135.3 | 108.5 | 24.7% | Non-GAAP Financials (in thousands) | Non-GAAP Financials (in thousands) | Q1 2024 | Q1 2023 | % Growth | | :--- | :--- | :--- | :--- | | Contribution Profit | $69,367 | $53,531 | 29.6% | | Adjusted Gross Profit | $57,634 | $43,690 | 31.9% | | Adjusted EBITDA | $19,813 | $8,414 | 135.5% | | Free Cash Flow | $1,562 | $(3,523) | n/m | - Revenue growth was driven by an increase in transactions from new and existing billers, along with pricing improvements related to inflation management[92] - The company believes there is a reasonable possibility that within the next 12 months, sufficient positive evidence may allow for the release of a significant portion of the valuation allowance on its deferred tax assets[109] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk exposures, including interest rate, foreign currency, and inflation risks, were reported - There have been no material changes in the company's market risk exposures since the end of the last fiscal year[114] Item 4. Controls and Procedures Disclosure controls and procedures were deemed ineffective due to material weaknesses in internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2024, due to material weaknesses in internal control[115] - Material weaknesses identified include a lack of sufficient trained accounting professionals and ineffective IT general controls related to program change management and user access[116] - The company has implemented several remediation measures, including hiring experienced personnel and updating system controls, but testing of operating effectiveness is still ongoing[116][117] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings or aware of any pending actions - As of the filing date, the company is not involved in any material legal proceedings[121] Item 1A. Risk Factors No material changes to previously disclosed risk factors were reported for the current quarter - No material changes to risk factors were reported for the quarter[122] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the reporting period - None[123] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated a Rule 10b5-1 trading plan during the quarter[126]