Q3 2022 Paymentus Holdings Inc Earnings Call

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The first question is from the line of John Davis with Raymond James Your line is now open.

Yes.

Hey, good afternoon, thanks, guys.

Just the shot impressive margins. This quarter are you kind of called out.

Control and really focusing on profitability.

Maybe just help us kind of understand how you're thinking about the longer term margin ramp in.

How are you thinking about getting back or getting to that 25% to 30% longer term margins that you guys have talked about.

Thanks, Jonathan I think look.

Our focus remains.

That first of all the reason we wanted to highlight the fact that of our core businesses already.

More profitable then.

Or in some ways the EBITDA subdued because of the investments, we're making into IP and other products.

And frankly is materially higher than that.

What we're reporting here, so we feel very confident that as our investments.

Our to deliver more results financial results, we will be able to get.

Back to the type of margins that we have talked about.

Additionally, we are making.

Theyre very focused on expense control and making sure that we are in this tough market.

A very being very judicious about all of our investments all new expenses, we are making so we.

We plan to get there I think.

Over a period of time, and we'll talk more about that in our next quarter as well.

Okay, and then nice to see the upside this quarter just reiterated the guide any kind of timing shifts stuff that fell in this quarter or should we just view the fourth quarter guide is.

<unk>.

Sure.

I think.

Our range for the fourth quarter is still that broad as you can see in primary reasons are.

There are three factors implementation.

The pricing adjustment based on inflation inflation itself.

So.

If things fall in our favor we could be in the mid to high end of the range.

Some of them don't it'll be in the low to mid part of the range. So.

I will consider that.

The guide to be.

A conservative guide I think thats the range.

We are pursuing based on these factors.

Okay, and then last one for me quickly and any help on sizing and helping size ITN or maybe if you can talk about when you think it could be material.

Top and bottom line.

I know, it's growing nicely, but just curious if you can help us with sizing there that would be helpful.

Well look.

We've provided our guidance next year, but it is growing.

We're expecting <unk> to be growing.

Much faster than our overall growth rate.

As stipulated here.

And it is that <unk> and.

Some other related products.

Our up have a headwind towards of our EBIT margin as you've talked about.

And then also.

Start to.

Okay. As I said earlier, I think we will be able to overcome that.

Let's start to pay off even more so than they are already doing right now.

Okay I appreciate all the color thanks, guys.

Thank you. Thank you for your question.

The next question is from the line of Dave Koning with Baird. Your line is now open.

Yes.

Yeah, Hey, guys, thanks, and good quarter too.

And I guess my first question I guess, it's a little like Johns in terms of the gross revenue guidance, even the top end implies a sequential fall off a little bit in Q4.

And is there something seasonal about Q4 that would cause that right because I would normally think that the builders just keep adding on to each other and naturally just get sequential progression through the year.

Well I mean.

Sure.

Yes.

First of all there are different factors I think.

Q4 on its own.

It has.

Believe it or not.

Lora business still paid during the working hours in the weekdays and Q4 tends to have lot more holidays than some of the other quarters of the year.

These are all in this but.

The other factors are.

Based on how the implementations are going and how.

How we will be able to how many of them are able to produce for us during the quarter.

So a couple of the other points I talked about.

The inflation itself and the pricing related to the inflation.

Okay and then.

One nice trend I mean, your contribution profit off of year has grown at least as fast as your gross revenue even with the inflation kind of in the market do you see do you see going forward.

If inflation continues can you can you continue to have that pattern, especially as the IPM comes on I guess network fees get get leverage basically.

Yes, I mean look IPM has it pretty interesting.

Factors, which is neither it is affected by.

Because theres no interchange associated with it so there's no inflation.

In fact that way so if anything we do have the ability to adjust and we're pricing based on inflation and we do that.

On the IPO side already.

But that is.

Just a.

A net benefit but there is no there is no additional cost due to due to interchange rising so we.

We see that IP and it starts to become a material contributor to <unk>.

Our business.

And IP and I think.

We will talk upon arrival.

<unk>.

As mentioned in our prepared remarks, we will talk more about that in 2023.

We want to talk little bit about give you the color.

Behind how we see IP and growing.

Not just the way.

The dimension it is understood to be in but.

If you reflect back on what I said earlier that we now have access to 1 million fees.

And a lot of them on SMB businesses. So for US, we think of IV IP and truly a network effect, where we can take.

Yes.

These days, we are sending payments due to now start offering them products and services, we otherwise wouldn't be able to do because.

And especially given they are receiving money from us.

We are able to target those base more effectively so said differently IP in.

To us is bigger than just the.

One source of revenue.

It's also an ability to.

Sure.

Monetize more of the product and services then.

Otherwise.

It's visible, but we'll talk more about that but.

To make that too.

Specifically address your point you are talking about is that absolutely if <unk> becomes <unk>.

<unk> becomes a bigger part of our business.

Interchange does get.

Less of a factor.

Yes got you great. Thanks, guys.

Okay.

Thank you for your question.

There are currently no further questions registered so as a reminder, it is star wondering your telephone keypad.

Yeah.

There are no additional questions waiting at this time I will now turn the call back to management team for any closing remarks.

Well. Thank you for your time really appreciate it and look forward to speaking to you.

Later thank.

Thank you.

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