UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40429

Paymentus Holdings, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	45-3188251
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
11605 North Community House Road, Suite 300 Charlotte, NC	28277
(Address of principal executive offices)	(Zip Code)

(888) 440-4826

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share	PAY	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 1, 2023, the registrant had 20,390,502 shares of Class A Common Stock, $0.0001 par value per share and 103,306,842 shares of Class B Common Stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
	Special Note Regarding Forward-Looking Statements	3
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations and Comprehensive Income	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
Signatures		29

2

Special Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q for the quarterly period ended September 30, 2023 (“Quarterly Report”) contains forward-looking statements within the meaning of the federal securities laws, such as those under the headings “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations,” which statements involve substantial risks and uncertainties. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this report include statements about:

•our ability to effectively manage our growth and expand our operations;

•our ability to further attract, retain and expand our biller, financial institutions, partner and consumer base;

•our ability to timely implement and recognize revenue from new customers;

•our expectations regarding our revenue, expenses and other operating results;

•the impact of widespread health issues on our operating results, liquidity and financial condition and on our employees, billers, financial institutions, partners, consumers and other key stakeholders;

•our market opportunity and anticipated trends in our business and industry;

•our ability to remain competitive as we continue to scale our business;

•our ability to develop new product features and enhance our platform;

•our ability to hire and retain experienced and talented employees as we grow our business;

•general economic conditions, including inflation, and their impact on us, consumer demand, average bill amounts and interchange fees;

•the impact of disruptions or instability in the financial services industry, or perceived or actual liquidity constraints at financial institutions, on our ability or the ability of our customers and vendors to meet operating expense requirements or to satisfy financial or other obligations;

•our ability to realize the anticipated benefits of past or future acquisitions or strategic investments in complementary companies, products or technologies and our ability to manage the potential business disruption and diversion of management attention caused by such acquisitions;

•our ability to maintain and enhance our brand;

•our ability to integrate, manage and keep our information systems secure;

•our plan to expand into new channels and industry verticals across different markets;

•our international expansion plans and ability to expand internationally; and

•those factors described in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022 and our subsequent Quarterly Reports on Form 10-Q, and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this report.

You should not place undue reliance on our forward-looking statements as predictions of future events. We have based the forward-looking statements primarily on our current expectations and projections about future events and trends that we believe may affect our business, operating results, financial condition and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

3

Neither we nor any other person assumes responsibility for the ultimate outcome of any of these forward-looking statements. Moreover, the forward-looking statements made in this report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this report to reflect events or circumstances after the date of this report or to reflect new information or the occurrence of unanticipated events, except as required by law.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

Certain Definitions

In this report, unless the context requires otherwise, all references to “we,” “our,” “us,” “Paymentus,” and the “Company” refer to Paymentus Holdings, Inc., and where appropriate its consolidated subsidiaries.

4

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

PAYMENTUS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

	September 30,		December 31,
	2023		2022
Assets
Current assets
Cash and cash equivalents	$	162,062	$	147,334
Restricted cash and cash equivalents		4,830		2,351
Accounts and other receivables, net of allowance for expected credit losses of $234 and $370, respectively		74,851		67,789
Income tax receivable		1,910		1,493
Prepaid expenses and other current assets		11,415		9,994
Total current assets		255,068		228,961
Property and equipment, net		1,676		1,823
Capitalized internal-use software development costs, net		56,488		46,032
Intangible assets, net		29,179		36,017
Goodwill		131,852		131,851
Operating lease right-of-use assets		9,596		9,561
Deferred tax asset		117		116
Other long-term assets		5,365		7,178
Total assets	$	489,341	$	461,539
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	33,450	$	29,232
Accrued liabilities		18,759		15,809
Current portion of operating lease liabilities		1,669		1,462
Contract liabilities		5,633		4,358
Income tax payable		23		635
Total current liabilities		59,534		51,496
Deferred tax liability		957		680
Operating lease liabilities, less current portion		8,420		8,608
Contract liabilities, less current portion		2,782		2,826
Finance leases and other finance obligations, net of current portion		200		750
Total liabilities		71,893		64,360
Stockholders’ equity
Preferred stock, $0.0001 par value per share, 5,000,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; none issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		—		—
Class A common stock, $0.0001 par value per share, 883,950,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; 20,385,106 and 19,934,331 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		2		2
Class B common stock, $0.0001 par value per share, 111,050,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; 103,306,842 shares issued and outstanding as of September 30, 2023 and December 31, 2022		10		10
Additional paid-in capital		375,094		367,767
Accumulated other comprehensive income (loss)		—		(22	)
Retained earnings		42,342		29,422
Total stockholders’ equity		417,448		397,179
Total liabilities and stockholders' equity	$	489,341	$	461,539

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

PAYMENTUS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except share and per share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenue	$	152,423		$	128,152		$	449,690		$	364,825
Cost of revenue		105,513			90,295			316,840			256,286
Gross profit		46,910			37,857			132,850			108,539
Operating expenses
Research and development		11,035			10,350			33,595			30,925
Sales and marketing		21,481			19,048			63,344			53,089
General and administrative		9,083			9,376			26,958			29,038
Total operating expenses		41,599			38,774			123,897			113,052
Income (loss) from operations		5,311			(917	)		8,953			(4,513	)
Other income (expense)
Interest income, net		1,905			504			5,003			594
Foreign exchange (loss) gain		(17	)		(28	)		(32	)		52
Income (loss) before income taxes		7,199			(441	)		13,924			(3,867	)
(Provision for) benefit from income taxes		(822	)		(296	)		(1,004	)		2,397
Net income (loss)	$	6,377		$	(737	)	$	12,920		$	(1,470	)
Net income (loss) per share
Basic	$	0.05		$	(0.01	)	$	0.10		$	(0.01	)
Diluted	$	0.05		$	(0.01	)	$	0.10		$	(0.01	)
Weighted-average number of shares used to compute net income per share
Basic		123,620,260			122,740,982			123,430,652			121,765,509
Diluted		125,639,879			122,740,982			124,457,360			121,765,509
Comprehensive income
Net income (loss)		6,377			(737	)		12,920			(1,470	)
Foreign currency translation adjustments, net of tax		(64	)		(86	)		22			(235	)
Comprehensive income (loss)	$	6,313		$	(823	)	$	12,942		$	(1,705	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

PAYMENTUS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)

					Additional				Other			Total
	Common Stock				Paid-In		Retained		Comprehensive			Stockholders’
	Shares		Amount		Capital		Earnings		Income (Loss)			Equity
Balances at December 31, 2022		123,241,173	$	12		367,767	$	29,422	$	(22	)	$	397,179
Stock-based compensation		—		—		2,159		—		—			2,159
Issuance of Class A common stock for stock-based awards		104,991		—		5		—		—			5
Other comprehensive income (loss)		—		—		—		—		(7	)		(7	)
Net income		—		—		—		704		—			704
Balances at March 31, 2023		123,346,164	$	12		369,931	$	30,126	$	(29	)	$	400,040
Stock-based compensation		—		—		2,276		—		—			2,276
Issuance of Class A common stock for stock-based awards		160,625		—		196		—		—			196
Other comprehensive income (loss)		—		—		—		—		93			93
Net income		—		—		—		5,839		—			5,839
Balances at June 30, 2023		123,506,789	$	12		372,403	$	35,965	$	64		$	408,444
Stock-based compensation		—		—		2,456		—		—			2,456
Issuance of Class A common stock for stock-based awards		185,159		—		235		—		—			235
Other comprehensive income (loss)		—		—		—		—		(64	)		(64	)
Net income		—		—		—		6,377		—			6,377
Balances at September 30, 2023		123,691,948	$	12		375,094	$	42,342	$	—		$	417,448

7

					Additional					Other			Total
	Common Stock				Paid-In		Retained			Comprehensive			Stockholders’
	Shares		Amount		Capital		Earnings			Income (Loss)			Equity
Balances at December 31, 2021		120,639,161	$	12	$	356,017	$	29,935		$	168		$	386,132
Stock-based compensation		—		—		1,276		—			—			1,276
Issuance of Class A common stock for stock-based awards		412,222		—		13		—			—			13
Other comprehensive income (loss)		—		—		—		—			(45	)		(45	)
Net income		—		—		—		1,718			—			1,718
Balances at March 31, 2022		121,051,383	$	12	$	357,306	$	31,653		$	123		$	389,094
Stock-based compensation		—		—		1,344		—			—			1,344
Issuance of Class A common stock for stock-based awards		1,568,761		—		289		—			—			289
Other comprehensive income (loss)		—		—		—		—			(104	)		(104	)
Net loss		—		—		—		(2,451	)		—			(2,451	)
Balances at June 30, 2022		122,620,144	$	12	$	358,939	$	29,202		$	19		$	388,172
Issuance of warrant		—		—		3,478		—			—			3,478
Change in estimate of warrants expected to vest		—		—		46		—			—			46
Stock-based compensation		—		—		2,002		—			—			2,002
Issuance of Class A common stock for stock-based awards		369,758		—		1,167		—			—			1,167
Other comprehensive income (loss)		—		—		—		—			(86	)		(86	)
Net loss		—		—		—		(737	)		—			(737	)
Balances at September 30, 2022		122,989,902	$	12	$	365,632	$	28,465		$	(67	)	$	394,042

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8

PAYMENTUS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2023			2022
Cash flows from operating activities
Net income (loss)	$	12,920		$	(1,470	)
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		22,314			17,518
Deferred income taxes		278			(3,331	)
Stock-based compensation		6,891			4,622
Non-cash lease expense		1,346			1,703
Amortization of contract asset		2,197			1,347
Provision for expected credit losses		(122	)		219
Change in operating assets and liabilities
Accounts and other receivables		(6,941	)		(19,143	)
Prepaid expenses and other current and long-term assets		(1,797	)		(854	)
Accounts payable		4,279			2,975
Accrued liabilities		4,188			2,390
Operating lease liabilities		(1,364	)		(1,398	)
Contract liabilities		1,232			80
Income taxes receivable, net of payable		(1,034	)		485
Net cash provided by operating activities		44,387			5,143
Cash flows from investing activities
Other intangible assets acquired		—			(248	)
Purchases of property and equipment		(511	)		(1,163	)
Capitalized internal-use software development costs		(25,339	)		(22,257	)
Net cash used in investing activities		(25,850	)		(23,668	)
Cash flows from financing activities
Proceeds from exercise of stock-based awards		435			1,469
Financial institution funds in-transit		—			44,158
Payments on other financing obligations		(1,709	)		(2,486	)
Payments on finance leases		(102	)		(201	)
Net cash (used in) provided by financing activities		(1,376