Paymentus Holdings, Inc. 2026 Q2 Earnings Call

Please go ahead. Thank you, operator.

Good afternoon. Welcome. Thank you for joining the webcast to review our second quarter 2026 results. Our earnings results documents are available on the investor relations section of the paymentus.com website. They include the earnings presentation that we'll make reference to during this webcast. This webcast is being recorded. I hope everyone's had a chance to review those documents. Our founder and CEO, Dushyant Sharma, will make some opening comments before Sanjay Kalra, our CFO, discusses the details of the second quarter and our guidance. Following our prepared remarks, we'll take questions. Let me remind you that our remarks today may include forward-looking statements within the meaning of federal securities laws and the Private Securities Litigation Reform Act of 1995.

These statements are based on management's current expectations and beliefs and involve a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For a detailed discussion of these risk factors, please refer to our most recent Form 10-K and Form 10-Q filings with the Securities and Exchange Commission. We will also refer to non-GAAP financial measures during the webcast. Information about non-GAAP financial measures, including reconciliations to U.S. GAAP, can also be found in our earnings materials that are available on our website. Finally, the company assumes no obligation to update any forward-looking statements made today, whether as a result of new information, future events, or otherwise. With that, I'd like to turn the webcast over to Dushyant Sharma.

Dushyant? Thanks, David. Paymentus delivered another strong quarter.

We posted record revenue representing 28.8% year-over-year growth. This in turn drove 26.3% growth in contribution profit and a phenomenal growth of 54% adjusted EBITDA. Considering our year-to-date results, our exceptional Q2 bookings, and substantial backlog, we believe we are well on track to meet our 2026 financial goals and our longer-term targets. If you take a step back and look at our performance over five years or more, we are well ahead of our previously discussed long-term CAGR model of 20% top line and 25% adjusted EBITDA growth at midpoint of our range.

In fact, we are so far ahead of our CAGR model that if we apply to our 2020 revenue and adjusted EBITDA as the starting point of this decade, the projected results for 2029, meaning end of this decade, would be approximately the same as our current revised guidance for 2026 that Sanjay will cover shortly. Meaning we have achieved a decade's worth of 20% compounded annual growth as a scaled public company three years ahead of schedule. Isn't that amazing. Very proud of the team. This excellent fiscal outperformance has been achieved despite macroeconomic challenges, unprecedented inflation, quarterly variability, diversification of customer segments, including enterprise, expanding verticals, including in B2B, onboarding billions of dollars of total contract value, while at the same time bringing patented products to market and redefining the future of service commerce.

As exciting as this feat is, what is even more exciting is that we are strategically better positioned now with bigger TAM and a market that is moving in our direction than we were even a few years ago. The groundwork for the success we are experiencing was actually laid out years earlier. Likewise, the foundation we are setting now will pay dividends for years to come. In sum, we believe we are building a long-term compounded growth business, and it's important context to share because despite our size, scale, and phenomenal success to date, I believe we are just getting started, and I'm just as excited, if not more now, about the next five years as I was a few years ago when we announced our CAGR model. This is in part due to what we announced last quarter regarding our place in the AI economy.

With Billeo, our AI native service commerce suite announcement, we have set a foundation for Paymentus to become a premium AI and software company, in addition to a premium sophisticated billing and payment company. Let me elaborate further. With the growth of AI, we see billers and businesses in the service economy becoming increasingly concerned with AI disintermediation risk. This is something we anticipated over five years ago. We believe that clients will start relying on Paymentus for more of their AI infrastructure and service application needs beyond the customer engagement, billing, and payments alone. Due to our patented BillWallet, Billeo, and other AI patents, our product capabilities, leading technology platform, years of experience in dealing with sensitive data while managing client-based data sovereignty, we believe clients will want Paymentus to manage their AI workflows and data security needs.

As a result, we have been building these capabilities, including our Billeo AI infrastructure and Commerce Suite. Let me elaborate with a few examples. Our Billeo AI360 intelligence engine will replace our internal use third-party BI tool as we love the level of sophistication and simplicity it offers. We are already receiving positive feedback from clients and prospects on this. Second, we will be augmenting our human service center with Billeo Agentic service suite using Paymentus' own AI cloud infrastructure while maintaining client data sovereignty. Third, we have created intelligent data vault using Billeo AI360 pipeline for clients to store data that can be used by Billeo to build agentic workflows. Fourth, we have built one of the world's finest and most configurable transactional billing and reconciliation engine as part of the Billeo Commerce Suite.

All of these are a subset of examples that are part of Billeo Commerce Suite. This also shows our preparation to date for the future. We believe clients and prospects alike will continue to reward Paymentus' foresight and innovation while at the same time benefiting from the elimination of the disintermediation risk with BillWallet and Billeo. As a reminder, BillWallet is a unique instrument preserving service provider and customer identity along with payment credentials to allow all interactions to be secure along with Billeo that powers intelligent interactions. Both of these innovations vastly improve the customer journey and payment experience while bringing billers and service providers closer to their customers without the fear of disintermediation. Along these lines, we recently participated in a study with Payments Intelligence regarding the importance to customers of the billing and payment experience from their service providers and billers.

The study revealed the chasm that we already knew existed between the service providers and their customers. One of the key findings of this study was that customers in today's service economy largely consider billing experience as the new brand experience. Customers' billing and payment experiences greatly impact the strength and length of their provider relationships and also help to determine critical payment behaviors. The study also revealed that a majority of consumers judge overall service quality through their billing experience. Therefore, the customer experience and payment journey is an extremely important factor for billers in terms of brand appeal and loyalty, in addition to affecting their cash flows. Aside from customer loyalty, the study also projected that hundreds of billions of USD in annual recurring revenue is exposed to payment delays.

That's because customers who are dissatisfied with the billing experience or find the process too difficult simply choose to delay their payments. Overdue payments aren't actually just an affordability issue. They are a customer satisfaction issue as well. The study also revealed that the most dissatisfied customer cohort is the fastest-growing segment of the service economy, specifically the youngest customers. This is a key point and why service provider need to care about this, because this segment is not just the youngest or the fastest-growing, it will also potentially have the longest tenure with the provider. What these customers experience now will shape their provider loyalty and payment patterns for decades. Paymentus' mission is to close the satisfaction gap. Our customers realize that the providers who close the gap first will obtain a loyalty advantage that compounds over a lengthy period of time.

Our results show how successful we have been in doing this and that this momentum is continuing. In other words, we believe the market continues to move in our direction. Let me review our Second quarter results in more detail. Second quarter revenue was a record $360.7 million, an increase of 28.8% year-over-year. At the same time, contribution profit was $118.1 million, up 26.3% year-over-year. Adjusted EBITDA was $48.8 million in the quarter, representing 54% growth year-over-year and a 41.3% margin. Once again, a majority of our year-over-year growth in contribution profit fell to our bottom line. We exceeded the Rule of 40 for the quarter, coming in at 68 compared to 56 in Q2 of last year and 64 last quarter. This reflects our team's solid execution and our focus on delivering consistent revenue growth alongside high-quality earnings.