Q3 2023 Paymentus Holdings Inc Earnings Call

Speaker 1: day and welcome to paymanta's third quarter 2023.

Good day and welcome to pay matches third quarter 2023 earnings call.

Speaker 1: This call is being recorded and all participants are currently in a listen only mode. There will be an opportunity to ask questions.

This call is being recorded and all participants are currently in a listen only mode.

There'll be an opportunity to ask questions following management's prepared remarks.

If you would like to ask a question press star one on your telephone keypad.

Speaker 1: At this time, I will now turn the call over to David Hanover.

At this time I will now turn the call over to David Hanover Investor Relations. Please go ahead.

Speaker 2: Thank you. Good afternoon and welcome to payment this third quarter.

Thank you good afternoon, and welcome to payment this third quarter.

Speaker 2: joining me on the call today is Dushant Sharma, our founder and CEO , and Sanjay Khara, our CEO .

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Joining me on the call today is <unk> Sharma.

Our founder and CEO and Sanjay Kalra our CFO.

Following our prepared remarks, we'll take questions.

Speaker 2: Our press release was issued after the close of market today and it's posted on our website where this call is being simultaneously web.

Our press release was issued after the close of market today and is posted on our website, where this call is being simultaneously webcast.

Speaker 2: The webcast replay of this call and the supplemental slide to accompanying this presentation will be available on our company's website under the Investor Relations link at ir.paymentus.com.

A webcast replay of this call and the supplemental slides accompanying this presentation will be available on our company's web site under the Investor Relations link.

IR dot payments with Dot com.

Speaker 2: Statements made on this webcast include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Statements made on this webcast include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Speaker 2: Forward-looking statements use words such as will, believe, expect, anticipate, and similar phrases that denote future expectation or intent regarding our financial results and guidance. The impact of and our ability to address continued economic uncertainty and inflation, our market opportunities, business strategies, implementation timing, product enhancements, impacts from acquisition facing

Forward looking statements use words, such as will believe expect anticipate and similar phrases.

Future expectation or intent regarding our financial results and guidance the impact of and our ability to address the continued economic uncertainty in inflation or market opportunities business strategies implementation timing.

Product enhancements impact from acquisitions and other matters.

Speaker 2: forward-looking statements speak as of today and we undertake no obligations in contributing to the final updates

These forward looking statements speak as of today, and we undertake no obligation to update them.

Speaker 2: statements are subject to risk, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such a way that may cause actual results.

These statements are subject to risks uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements, including the risks and uncertainties set forth under the captions special note regarding forward looking statements and risk factors in our annual report on Form 10-K for the year ended December 31, 2022, and our subsequent.

Speaker 2: including the risks and uncertainties set forth under the captions, special note regarding forward-looking statements and risk factors in our annual report on Form 10-K for the year ended December 31st, 2022, and our subsequent quarterly reports on Form 10-Q , including our Form 10-Q for the quarter ended September 30, 2023, which we expect to file with the SEC shortly, and elsewhere in our other filings with the SEC.

Quarterly reports on Form 10-Q, including our Form 10-Q for the quarter ended September 32023, which we expect to file with the SEC shortly and elsewhere in our other filings with the SEC.

Speaker 2: We encourage you to review these detailed forward-looking statements, safe harbor, and risk factor disclosures.

We encourage you to review these detailed forward looking statement safe Harbor and risk factor disclosures.

Speaker 2: In addition, during today's call, we will discuss certain non-GAAP financial measures, specifically contribution profit, adjusted gross profit, non-GAAP operating...

In addition, during today's call, we will discuss certain non-GAAP financial measures specifically contribution profit adjusted gross profit non-GAAP operating expenses adjusted EBITDA, adjusted EBITDA margin and non-GAAP net income and earnings per share.

Speaker 2: adjusted EBITDA, adjusted EBITDA margin, and non-dafinite income and earnings per share.

Speaker 2: non- GAAP financial measures which we believe are useful in measuring our performance and liquidity should be considered in addition to and not as a substitute for or an isolation from gap results.

non-GAAP financial measures, which we believe are useful in measuring our performance and liquidity should be considered in addition to and not as a substitute for or in isolation from GAAP results.

Speaker 2: I encourage you to review additional disclosures regarding these non- GAAP measures , including reconciliation of the most directly comparable GAAP measures in our earnings press release issue today, and the supplementable slides for this webcast, each available on the Investor Relations page where we're

We encourage you to review additional disclosures regarding these non-GAAP measures, including reconciliations of the most directly comparable GAAP measures in our earnings press release issued today and the supplemental slides for this webcast each available on the Investor Relations page of our website.

Speaker 2: With that, I'd like to turn the call over to Dishon Sharma, our founder and CEO . Dishon?

With that I'd like to turn the call over to Sean Sharma, our founder and CEO shot.

Thank you David.

In the third quarter of 223 payment.

Speaker 3: payment has again delivered outstanding business results with a strong growth in revenue, contribution profit, and adjusted EBITDA.

Payment has again delivered outstanding business is also the strong growth in revenue contribution profit and adjusted EBITDA.

Speaker 3: Third quarter revenue increased 18.9% on a year-over-year basis to 152.7% on a year-over-year basis.

Third quarter revenue increased 18, 9% on a year over year basis.

Two $152 4 million.

Speaker 3: Adjusted EBITDA which is a significant financial metric for us, finished well ahead of our expectations at $15.5 million, a 93.9%

Adjusted EBITDA, which is a significant financial metric for US finished well ahead of our expectations at $15 $5 million.

A 93, 9% year over year increase.

Speaker 3: Contribution profit was $61.5 million, growing 20.3% year over year.

Contribution profit was $61 5 million growing 23% year over year.

Speaker 3: In Q3, we added $10.4 million in contribution profit over the same period last year, while dropping over $7.5 million of that to adjusted EBITDA.

In Q3, we added $10 $4 million in contribution profit over the same period last year.

While dropping over seven $5 million of that good adjusted EBITDA.

Speaker 3: So similar to Q2, the majority of incremental contribution profit dollars, we generated dropped to the bottom line.

So similar to Q2.

Jewelry of incremental contribution profit dollars, we generated dropped to the bottom line.

We believe this is important and demonstration of our ability to expand our operating leverage without sacrificing growth or innovation.

Speaker 3: We believe this is important and demonstrates our ability to expand our operating leverage without sacrificing growth or innovation. This has been our operating

This is being able to operating strategy to our country 'twenty three.

Speaker 3: Our updated guidance for Q4 and full year 2023, which Sanjay will cover shortly, reflects the continued execution of this strategy.

Our updated guidance for Q4, and full year 2023, which Sanjay will cover shortly reflects the continued execution of this strategy.

Speaker 3: and our expectation that a significant portion of our incremental contribution profit will drop to the bottom line in the fourth quarter on a year over year base.

And our expectation that a significant portion of our incremental contribution profit will drop to the bottom line in the fourth quarter on a year over year basis.

Speaker 3: Our goal is to deliver high quality earnings with solid top-line growth.

Our goal is to deliver high quality earnings with solid top line growth.

Speaker 3: We are proud of what we have accomplished already in this regard and we expect to continue executing on this strategy.

We are proud of what we have accomplished already in.

In this regard and we expect to continue executing on this strategy.

Speaker 3: which we believe is extremely effective in today's macro environment where many things are beyond our control such as interest rates or geopolitical...

Which we believe is extremely effective in today's macro environment. There are many things that are beyond our control such as interest rates or geopolitical events.

Now I'll review some of our key third quarter business highlights and accomplishments.

Speaker 3: Now I'll review some of our key third quarter business highlights and accomplish

Speaker 3: We exited the third quarter with strong bookings backlog and are very pleased with the year over your growth. We have achieved so far in 2020.

We exited the third quarter with the strong bookings backlog and are very pleased with the year over year growth. We have achieved so far in <unk> III.

Speaker 3: given the strength of our backlog, we feel good about the remainder of 2023, and we believe we are well positioned.

Given the strength of our backlog we feel good about the remainder of 2023, and we believe we are well positioned.

Speaker 3: for 2024 in our ability to deliver top line and adjusted EBDA dollars growth.

For 2024, and our ability to deliver top line and adjusted EBITDA growth.

Speaker 3: We believe that key reason for our continued momentum is the strength of our technology platform, comparative differentiation with diverse financial product, FinTech product.

We believe the key reason for our continued momentum is the strength of our technology platform competitive differentiation with <unk>.

<unk> financial product Fintech products.

Speaker 3: and ever-expanding instant payment network, or IPN ecosystem, which enables our clients to participate in a broad and diverse ecosystem by merely integrating onto our platform.

And ever expanding instant payment network.

IP and ecosystem, which enables our clients to participate in a broad and diverse ecosystem by merely integrating onto the platform.

Speaker 3: We believe our instant payment net ecosystem.

We believe our instant payment ecosystem.

Speaker 3: Continues to be attractive to financial institutions as well because it allows them to modernize their legacy built-up experience with minimal difficulty or expense.

Continues to be attractive to financial institutions as well because it allows them to modernize their legacy built experience with minimal difficulty or expense.

Speaker 3: On the topic of our strong sales momentum, we signed several large clients during the quarter. For example, we signed two large insurance companies who will use our platform.

On the topic off of our strong sales momentum we signed several large clients during the quarter. For example, we signed two large insurance companies, who will use our platform.

Speaker 3: and the Instant Payment Network ecosystem to receive payments from various channels from the consumer and business policy holder.

And the instant payment network ecosystem due.

To receive payments from various channels from the consumer and business policyholders.

Speaker 3: We also signed a large consumer finance business for managing their loan payments across all channels.

We also signed a large consumer finance business for managing the loan payments across all channels.

Speaker 3: And we also signed a large credit union to manage their online bill payments using our instant payment net.

And we also signed a large credit union to manage their online bill payments using over instant payment network.

Speaker 3: We believe this opens up further upsell and incremental revenue opportunities for us.

We believe this opens up further upsell and incremental revenue opportunities for us.

Speaker 3: with similar clients to handle their loan repayments in addition to bill payments.

With similar clients to handle their loan repayments in addition to bill payments.

Speaker 3: Among various other clients across multiple verticals, we signed a large government agency for managing their payments on our platform.

Among various other clients across multiple verticals, we signed a large government agency for managing their payments on our platform.

Speaker 3: We also remain focused on boarding our strong backlog in order to drive continued growth.

We also remain focused on on boarding of a strong backlog in order to drive continued growth.

Speaker 3: We are making targeted investments in this area and believe these investments, as well as the improving post pandemic environment that allows for a more in-person collaborative process continues to help us in accomplishing this goal.

We are making targeted investments in this area and believe these investments as well as the improving post pandemic environment that allows for a more in person collab.

Collaborative process.

To help us in accomplishing this goal.

Speaker 3: In terms of implementation progress, we launched several large clients during the quarter across various verticals, including a wholesale business to business.

In terms of our implementation progress we launched several large clients during the quarter.

Various verticals.

During our wholesale business to business.

Speaker 3: entity, a healthcare company, a large utility.

Entity, a healthcare company a large utility.

Speaker 3: and multiple insurance companies, financial institutions and government agents.

And multiple insurance companies financial institutions and government agencies.

Speaker 3: Complimenting this, we also added new partners to our growing partner ecosystem in various business particles. These include

Complementing. This we also added new partners to our growing partner ecosystem in videos business verticals.

These include an education technology company.

Speaker 3: and a healthcare company to assist with expansion of our platform in these industry, worthy.

In a healthcare company.

To assist with expansion of our platform in these industry verticals, along with several partners in the municipal and the utility space.

Speaker 3: along with several partners in the municipal and the utility space.

Speaker 3: In summary, we reported excellent results for the third quarter. Once again, demonstrating our ability to expand our operating leverage without sacrificing our continued growth.

In summary, we reported excellent results for the third quarter once again, demonstrating our ability to expand our operating leverage without sacrificing our continued growth.

Speaker 3: We continue to have solid sales momentum and remain focused on boarding our strong pack.

We continue to have solid sales momentum and remain focused on on boarding of a strong backlog.

Speaker 3: Now let me turn it over to Stunget to review our financial results in greater detail.

Now, let me turn it over to Sanjay to review of our financial results in greater detail.

Thank you Chuck and thank you all for joining us today.

Speaker 3: Before I discuss our quarterly results and outlook, I'd like to remind everyone that the financial results I'll be referring to include non-GAAP financial measures.

Before I discuss our quarterly results and outlook I'd like to remind everyone that the financial results I'll be referring to include non-GAAP financial measures.

Speaker 3: As David mentioned earlier, our Q3 Presse Lee's and earnings presentation includes reconcilations of the non-gab financial measures discussed on the score to the corresponding GAAP measures . Both of these.

As David mentioned earlier, our Q3 press release and earnings presentation includes reconciliations of the non-GAAP financial measures discussed on this call to their corresponding GAAP measures.

Both of these are available on our website.

Speaker 3: Turning to slide five for the third quarter of 2023.

Turning to slide five for the third quarter of 2023.

Speaker 3: We delivered excellent financial results. We believe these results demonstrate the resiliency and strength of our business, which continues to perform well despite present macroeconomic concerns.

We delivered excellent financial results.

I believe these results demonstrate the resiliency and strength of our business, which continues to perform well despite present macroeconomic concerns.

Speaker 3: Our third quarter results included revenue of 152.4 million, contribution profit of 61.5 million, and adjust the db.org.

Our third quarter results included revenue of $152 4 million contribution profit of $61 5 million.

And adjusted EBITDA was $15 5 million.

Speaker 3: As the shant noted, contribution profit and adjusted EBDA came in higher than expected. And I'll discuss that in

As the shelf noted contribution profit and adjusted EBITDA came in higher than expected.

And I'll discuss that in more detail in a bit.

Speaker 3: We also continue to experience solid business momentum in the third quarter. This enabled us to exit the quarter with a robust backlog while strengthening our cash position.

We also continue to experience solid business momentum in the third quarter. This enabled us to exit the quarter with a robust backlog, while strengthening our cash position.

Speaker 3: Based on our strong performance this quarter, the positive business trends the Shant mentioned earlier and our expectations for the remainder of 2023.

Based on our strong performance this quarter the positive business trends, the <unk> mentioned earlier and our expectations for the remainder of 2023.

Speaker 3: We are raising our full year 2023 revenue, contribution profit and adjusted to be the guidance which I talk about shortly. Now let's review over.

We are raising our full year 2023 revenue contribution profit.

I said EBITDA guidance, which I'll talk about shortly.

Now, let's review, our third quarter financials in more detail.

Okay.

Speaker 3: The number of transactions they meant as process grew to 115.4 million in the third quarter. Up 25.2% year-over.

The number of transactions momentous process grew $215 4 million in the third quarter.

Up 25, 2% year over year.

Speaker 3: As I mentioned earlier, Q3 revenue was 152.4 million up 18.9% year over year. This growth was largely driven by increased transactions from existing billers, the launch of new billers, and increased activity in our instant payment network or IPN business.

As I mentioned earlier due to the Q3 revenue was $152 4 million.

Up 18, 9% year over year. This growth was largely driven by increased transactions from existing builders the launch of new bidders and increased activity in our instant payment network or IBM business.

Speaker 3: Third, go out of 2023 contribution profit increased to 61.5 million. Up 20.3% year over year and ahead of our expectations.

Third quarter 2023 contribution profit increased to $61 5 million.

<unk>, 3% year over year and ahead of our expectations.

Speaker 3: This year, over-ear increase reflects higher transactions from existing billers and the launch of new billers that I mentioned earlier.

Okay.

This year over year increase reflects higher transactions from existing builders and the launch of new builders that I mentioned earlier.

Speaker 3: Contribution margin was 40.3% for the third quarter compared to 39.9% in the prior year period.

Contribution margin was 43% for the third quarter compared to 39, 9% in the prior year period.

Speaker 3: as previously noted contribution profit in the third quarter surpassed our expectations.

As previously noted contribution profit in the third quarter surpassed our expectations.

This outperformance was primarily due to two factors.

Speaker 3: First, we saw some improvement in the energy services consumer price index or CPI during the quarter that we didn't originally anticipate.

First we saw some improvement in the energy services consumer price index.

Our CPI during the quarter that we didn't originally anticipate.

Speaker 3: Second, we experience some favorable unexpected sea'snality from several newly implemented billers.

Second we experienced some favorable unexpected seasonality from several newly implemented builders.

Speaker 3: We expected to see the favorable seasonal pillar activity in the fourth quarter. But it occurred...

We expected to see the favorable seasonal weather activity in the fourth quarter.

But it occurred a quarter earlier than expected.

Speaker 3: Contribution profit per transaction for the quarter was 53 cents, which was modestly down by 3.6% from 55 cents in the prior year period. Primarily due to billar mix and payment method mix from newly launched billar.

Contribution profit per transaction for the quarter was 53.

Which was modestly down by three 6% from 55 in the prior year period.

Similarly, due to better mix and payment method mix from newly launched builders.

Yeah.

Speaker 3: As we stated in the past, variables outside our control, such as an increase in average payment amount, changes in the payment mix, biller mix, CPI and card network fees, et cetera, can significantly influence contribution profit on a quarterly and per-transaction basis.

As you stated in the past variables outside our control such as an increase in average payment amount changes in the payment mix builder mix.

And garden network fees et cetera, again significantly influenced contribution profit on a quarterly and per transaction basis.

Speaker 3: I just said gross profit was 51.3 million for the third quarter. Up 24.9% year over year.

Adjusted gross profit was $51 3 million for the third quarter up 24, 9% year over year.

Speaker 3: Year-over-year adjusted growth profit growth exceeded contribution profit growth, primarily due to economies of scale of processing cost.

Year over year, adjusted gross profit growth exceeded contribution profit growth, primarily due to economies of scale of processing costs.

Speaker 3: Non-gab operating expenses increased to 37.9 million up 8.9% year-over.

non-GAAP operating expenses increased to $37 9 million up eight 9% year over year.

Speaker 3: The increase was primarily due to higher sales and marketing expenses. As we continue to focus resources on the execution of our go-to-market strategy.

The increase was primarily due to higher sales and marketing expenses as we continue to focus resources on the execution of our go to market strategy.

Speaker 3: At just CDB, therefore the third quarter was 15.5 million or 25.3% of contribution profit. Up, 93.9% compared to 8 million or 15.7% of contribution profit in the prior year.

Adjusted EBITDA for the third quarter was $15 5 million or 25, 3% of contribution profit.

Up 93, 9% compared to $8 million or 15, 7% of contribution profit in the prior year.

Speaker 3: This strong quarterly performance compared to the guidance we had provided in August was driven by four key factors.

This strong quarterly performance compared to the guidance. We had provided in August was driven by four key factors.

Speaker 3: First, we benefited from some level of deflation of CPI energy services index during the third quarter. Something...

First we benefited from some level of deflation of CPI energy services index during the third quarter.

Something we could not anticipate.

Speaker 3: Second, as noted earlier, we experienced increased contribution profit due to some unexpected seasonality from several recently implemented billers.

Second as noted earlier, we experienced increased contribution profit due to some unexpected seasonality from several recently implemented builders.

Speaker 3: Third, as I just mentioned, our processing costs improved due to economies of scale.

Third as I, just mentioned of our processing costs improved due to economies of scale.

And for.

Speaker 3: expected hiring progress slower than we originally planned in the quarter. Resulting in lower operating expense.

Expected hirings progress slower than we originally planned in the quarter, resulting in lower operating expenses.

Speaker 3: Even taking into account these unexpected variables which benefited us, I believe our strong edges CDB the margin demonstrates the inherent operating leverage we have in the business. And our ability to adapt to changing market conditions as we continue to grow.

Even taking into account these unexpected valuables, which benefited us I believe our strong adjusted EBITDA margin demonstrates the inherent operating leverage we have in the business and our ability to adapt to changing market conditions as we continue to grow.

Speaker 3: Other income was 1.9 million during the third quarter, reflecting increase interest income from over bank deposits and effective cash management.

Other income was $1 $9 million during the third quarter, reflecting increased interest income from bank deposits and effective cash management.

Speaker 3: Non-Gap Net Income was 10.9 million or 9 cents per share compared to non-Gap Net Income of 3.8 million or 3 cents per share in the prior years video

non-GAAP net income was $10 9 million or <unk> <unk> per share compared to non-GAAP net income of $3 8 million or <unk> <unk> per share in the prior year period.

Speaker 3: Now I'll discuss our balance sheet and liquidity position on slide 6.

Now I'll discuss our balance sheet and liquidity position on slide six.

Speaker 3: We ended Q3 with gas and gas equivalent of 166.9 million compared to 162.5 million at the end of Q220.

We ended Q3 with cash and gas equally and so $166 9 million compared to $162 5 million at the end of 'twenty three.

Speaker 3: The 4.4 million dollar increase is primarily comprised of 13.1 million of cash generated from operations.

The $4 4 million dollar increase is primarily comprised of $13 1 million of cash generated from operations.

Speaker 3: Offset by 8.9 million user investing activities. Primarily internal-used capitalized software used to drive growth and innovation. The company does not-

Offset by $8 9 million used in investing activities, primarily internal used capitalized software used to drive growth and innovation.

The company does not currently have any debt.

Speaker 3: Our free cash flow generated during the quarter was 4.3 million.

Our free cash flow generated during the quarter was $4 3 million.

Speaker 3: Our day's sales outstanding end of Q3 was 45 days compared to 41 days at Q2 23 within our expected range.

Our days sales outstanding at the end of Q3 was 45 days compared to 41 days at Q2, 'twenty three within our expected range.

Speaker 3: Working capital at the end of Q3 was approximately $196 million, an increase of approximately $6 million from the end of Q2 2020.

Working capital at the end of Q3 was approximately $196 million.

An increase of approximately $6 million from the end of Q2 2003.

Speaker 3: We had 125.6 million diluted shares outstanding as of September 30th, 23, compared to 124 million diluted shares outstanding at the end of Q220.

We had $125 6 million diluted shares outstanding as of September 32003, compared to 124 million diluted shares outstanding at the end of Q2 2003.

Speaker 3: The increase was largely due to improved average stock price during the quarter and to some extent due to the investing of employee risk-pick-starch units and the exercise of stock-up.

The increase was largely due to improved average stock price during the quarter and to some extent due to vesting of employee restricted stock units and the exercise of stock options.

Speaker 3: Now I'll turn to our guidance for full year 2023 and Q4 2023 on slide 7.

Now I'll turn to our guidance for full year 2023, and Q4 2023 on slide seven.

Speaker 3: Given the considerable progress we have already made in 2023 and our expectations for the remainder of the year.

Given the considerable progress we have already made in 2023 and our expectations for the remainder of the year.

Speaker 3: For the full year 2023, as reflected on the left side of the slide, we now expect revenue in the range of 624.5 to 608.5 million up from the midpoint of our previous guidance.

For the full year 2023 as reflected on the left side of the slide.

We now expect revenue in the range of $604 five to $608 5 million.

Up from the midpoint of our previous guidance.

Speaker 3: Contribution profit in the range of $235 to $237 million up at the midpoint versus prior guidance.

Contribution profit in the range of $235 million to $237 million up at the midpoint versus prior guidance.

Speaker 3: and HSCDBDA in the range of 50 to 52 million, representing a 17% increase at the midpoint versus our prior guidance.

And adjusted EBITDA in the range of $50 million to $52 million, representing a 17% increase at the midpoint versus our prior guidance.

Speaker 3: As reflected on the right side of the slide, for Q423, we now expect revenues in the range of 155 to 159 million. Up from...

As reflected on the right side of the slide four Q4 'twenty three we now expect revenues in the range of $155 million to $159 million.

Up from our prior guidance.

Speaker 3: Contribution profit in the range of 60.5 to 62.5 million with a narrower range than before due to better than expected seasonality benefits we realized in Q3 from newly implemented billers.

Contribution profit in the range of 65 to $62 5 million with a narrower range than before due to better than expected seasonality benefits, we realized in Q3 from newly implemented builders.

Speaker 3: We had originally expected those benefits to occur in Q4.

We had originally expected those benefits to occur in Q4.

Speaker 3: Adjusted EBITDA in the range of $12 million to $14 million, representing an 18% increase at the midpoint versus our previous guidance.

Adjusted EBITDA in the range of 12 million to $14 million, representing an 18% increase at the midpoint versus our previous guidance.

Speaker 3: In summary, we reported exceptional third quarter results. During 2023, we have continued to build on our solid momentum with strong revenue, contribution profit, at just CDB DA and bookings growth, which enabled us to end the...

In summary, we reported exceptional third quarter results. During 2023, we have continued to build on our solid momentum with strong revenue contribution profit adjusted EBITDA and bookings growth.

Which enabled us to.

To end the third quarter with a solid backlog.

Speaker 3: As a result, we have strong visibility and believe we have positioned ourselves well for the fourth quarter of 2023 as the last into the next year.

As a result, we have strong visibility and believe we have positioned ourselves well for the fourth quarter of 2023 as the lead into the next year.

Speaker 3: Thank you everyone for your attention today and now I'll turn it back to the shan for final remarks before we open up the call for questions.

Yeah.

Thank you everyone for your attention today and now I'll turn it back to <unk> for final remarks, before we open up the call for questions.

Thanks Andrea.

Speaker 3: In closing, we are very pleased with our third quarter result.

In closing we are very pleased with our third quarter results.

Speaker 3: and are very excited about the long-term value we are creating in the business and for our stockholders. We're also very...

And are very excited about the long term value, we are creating in the business and for our stockholders.

We're also very proud that over last couple of years.

Speaker 3: We have consistently demonstrated that A, we can grow revenue while still expanding margins.

We have consistently demonstrated that we can grow revenue, while still expanding margins.

Speaker 3: We can achieve this growth and sustain our sales momentum, even in a challenging macro environment.

B <unk>.

We can achieve this growth and sustain our sales momentum even in a challenging macro environment.

And see.

Speaker 3: We have built a world-class team that knows how to come together and operate the business and still deliver these great results while navigating through difficult market conditions. To that end,

We have built a world class team that knows how to come together and operate the business and still deliver these great results, while navigating through difficult market conditions.

To that end I want to thank my team for all their efforts.

Speaker 3: That concludes our prepared remarks. I will now open the line up for questions.

That concludes our prepared remarks, I will now open the lineup for questions.

Thank you.

Speaker 1: If you would like to ask a question, please press star, follow by one, or your telephone keypad. To remove your question...

If you would like to ask a question. Please press star followed by one on your telephone keypad.

Jeremy If your question press star followed by chance.

Speaker 1: And if you are using a speakerphone, please pick up your handset before asking your question.

And if you are using a speakerphone. Please pick up your handset before asking your question.

Our first question today comes from John Davis with Raymond James. Please proceed.

Speaker 4: Hey, good afternoon guys. Once again, lots of margin up side, I think last quarter, margins were about 900 basis points. EBITDA margins, that is a head of.

Hey, good afternoon guys.

Again lots of margin upside I think last quarter margins were up 900 basis points EBITDA margins that is ahead of you.

Speaker 4: your guide or expectation this quarter about 800 and we're looking like we're gonna exit this year, oh sorry, of about 21% margins or 22 for the full year. So just, to Sean, how should we think about the normalize?

Your guide our expectation this quarter about 800, and we're looking like we're going to exit this year.

Sorry about 21% margins are 22 for the full year. So just to Sean how should we think about the normalized.

Speaker 4: kind of margin expansion of this business and the long-term margin profile given the significant outperformance year to date.

Margin expansion of this business and the long term margin profile, given the significant outperformance year to date.

Speaker 3: Hi John , this is Sanjay. Thanks for the question. You know Q3 was a great quarter for us as as we just pointed today, you know having 25.3% and yes Q4 guidance We are a little bit softer than what we saw in Q3

Hi, John This is Sanjay thanks for the question.

Q3 was a great quarter for us as we just appointed today, having 25, 3% and yes, Q4 guidance, we are little bit softer than what we saw in Q3 and definitely prudent prevails on our thinking based on how the macro economic conditions are prevailing.

Speaker 3: And you know, definitely prudence prevails on our thinking based on how the macro economic conditions are prevailing.

Speaker 3: I would say how to look going forward, you know, at this point while we are not giving any guidance for next year, but I think to share how to think about the modeling going forward on our margins.

I would say how to look going forward.

At this point, while we are not giving any guidance for next year, but I think to share how to think about the modeling going forward on our margins.

Speaker 3: I think I'll start with, you know, let's talk about the two primary factors in our modeling, going forward, which will cover your answer as well. So if you give me a minute, primary factors are revenue and EBITDA margin dollars. We expect over revenue, IE the top line, to grow by 20% annual.

I think I'll start with.

Let's talk about the two primary factors in our modeling going forward, which will cover your answer as well. So if you give me a minute primary factors our revenue and EBITDA margin dollars. We expect overall revenue I E. The topline to grow by 20% annually.

Speaker 3: And then we expect our adjusted EBDA dollars to grow somewhere between 20% and 30% annually. So say 25% midpoint. So that's our driving factor, these two top factors. And then the second factor is in the middle which have a role to play, but not so significant, just like contribution property and op-ex. But to answer your question for modeling going forward, expect that annually EBDA dollars will be up by approximately 25%.

And then we expect our adjusted EBITDA dollars to grow somewhere between 20, and 30% annually. So say, 25% midpoint. So that's over driving factor. These two top factors and then the secondary factors in the middle which have a role to play but not so significant just like contribution profit in opex, but.

To answer your question for modeling going forward expect that annually EBITDA dollars will be up by approximately 25%.

And yes, I would also point out that sorry.

Speaker 3: Sorry, I just like to add, you know, thinking of quarters at this point is difficult as, you know, there's variability among the quarters. Some quarters could be softer than the others. Some quarter could be aggressive deadly others. And it all depends on the mix of the billers. You know, there are multiple billers going live at different points in time. So quarter to quarter comparison at times becomes tough, especially like in Q4, you might see. But overall for the whole year, that would be our goal to deliver the envelope.

I'd just like to add you know thinking of quarters. At this point is difficult as you know there is variability among the quarters some quarters could be softer than the others. Some quarters will be aggressive deadly items and it all depends on the mix of the builders.

Multiple bidders going live at different points in time, so quarter to quarter comparison at times becomes tough, especially like in Q4, you might see but overall for the whole year that would be our goal to deliver the annual numbers.

Speaker 4: Okay, great enough. Super helpful Sanjay. And then just the backlog and we mentioned is very strong and I think several times.

Okay, Great No. That's super helpful. Sanjay and then just the backlog that you mentioned is very strong I think several times.

Speaker 4: Is there any kind of metrics that we can think about or what kind of backlog growth you need to sustain that 20% top line or contribution profit growth? Just help us maybe contextualize the comments of strong backlog and why it gives you so much confidence in any detail there, be helpful.

Are there any kind of metrics that we can think about or what kind of backlog growth you need to sustain that 20% topline.

Contribution profit growth just help us maybe contextualize the comment of strong backlog and why it gives you so much confidence.

Detail there would be helpful.

Speaker 3: John , I would say that the confidence we are getting to discuss and share our long-term model of 20% revenue growth is coming from the backlog we have to-

John I would say that the confidence we are getting to discuss and share our long term model of 20% revenue growth is coming from the backlog we have today.

Speaker 4: Okay, fair enough, and I'll say one last one then for the shot. Just update on IPN, obviously you called out an addition in this quarter, any update on size of what percentage of revenue it contributes today, or when you think that that may become profitable, just say anything to help us think about IPN, where you are today, where you thought maybe you would be during the IPN.

Okay fair enough and I'll sneak one last one then for Sean just update on ITN.

Obviously, you called out.

In addition, this quarter.

Any update on size or what percentage of revenue cost reached today or when you think that that business may become profitable just anything to help us think about ITN, where are you on a day, where you thought maybe you would be.

During the IPO just seeing up there.

Speaker 3: I think IPN actually is doing really well and actually growing well. And we plan to turn this into a profitable business soon, maybe even next year we'll try. And in terms of the size, we're not disclosing it yet. We'll probably take a look at what metrics we can share. But at the high level, what I could explain is,

I think IP and actually is.

It is.

Doing really well and actually growing well and we.

We plan to.

Turn this into a profitable business.

Soon.

Maybe even next year, we'll try it.

In terms of the size, we're not disclosing it yet we will probably take a look at what metrics, we can share but at a high level, what I could I could explain is.

Speaker 3: If you think about the point I was trying to make in the prepared remarks is

If you think about the point I was trying to make in the prepared remarks is.

Speaker 3: If I'm a billing company and if I can do one integration with one platform which gives me industry leading capabilities in terms of the channels on my own ecosystem, but in addition, it gets me into diverse capabilities and reach to my customers, whether it's on a app of my choice or it's my bank of my choice, or even in a tail-to-tale store of my choice.

If I'm a billing company and if I can do one integration with one platform, which gives me industry leading.

Capabilities in terms of the channels.

On my own ecosystem, but in addition, it gets me into diverse capabilities and reach to our customers whether it's on a app of my choice My bank of my choice.

Or even in a tailored store of my choice.

Speaker 3: It's pretty remarkable how big that is from a, even just from a bill or acquisition standpoint. If you put the other side of it from a financial institution standpoint or any other participant in the ecosystem, if you want to reach to a bill or community of all sizes, different verticals.

It's pretty it's pretty remarkable how big that is from and even just from a biller acquisition standpoint, and if you put the other side of it from a financial institution standpoint, or any other participants in the ecosystem. If you want to reach.

Bill or community.

Of all sizes different verticals.

Speaker 3: you could get that just with one integration. So I think we're very excited about the future of IPN, not only in terms of its own product capability, but in terms of what it all means for all of our financial institutions, as well as bill or clients. So here is magnesium bricks make up the tat with you.

You could get there just with one integration. So I think we're very excited about the future of IP in Norton.

Not only in terms of its own product capability, but.

In terms of what it all means for all of our.

All of our.

Financial institutions as well as biller clients.

Okay. Appreciate all the color.

Thank you John.

Speaker 1: Our next question today comes from Dave Kohn and Wolf Bayard. Please proceed.

Our next question today comes from Dave Koning with Baird.

Speaker 5: Yeah, yeah, here you guys thanks so much.

Please proceed.

Yes, hey, guys. Thanks, so much.

Speaker 5: And I guess my first question, when we kind of look at the cadence of this year, and really even some of the other years, Q1 usually has a big step up sequentially, and then the rest of the quarters sequentially grow, you know, let's say low to mid single digits or something around there. Is that going to be normal into next year given the backlog and just the kind of normalized pace that we normally see?

And I guess my first question when we kind of look at the cadence of this year.

And really even some of the other years Q1, usually is a big step up sequentially.

And then the rest of the quarters sequentially grow.

Say low to mid single digits or something around there.

Is that is that going to be normal into next year, given the backlog and just the kind of normalized pace that we normally see.

Okay.

Speaker 5: Dave, if I just may clarify, please, is it about the revenue contribution profit transactions? Because it's an interesting dynamic among all. So if you can please clarify, I would appreciate it. Yeah, that's a great question. I mean, on the gross revenue line, usually Q1 is a really big quarter and then it's a little more stable the rest of the year.

David If I just may clarify please is it about the revenue contribution profit transactions because it's an interesting dynamic on the mall. So if you can please clarify we'd appreciate it yeah.

Yeah, No that's a great question.

I mean on the gross revenue line, usually Q1 is a really big quarter and that is a little more stable the rest of the year sequentially.

Speaker 3: I think it would be, hey Dev, the shan, I would say it really is quarter to quarter. It's very hard to predict. I mean, some quarters are better than others in terms of which clients go live. So I would look at it that way. We will provide our guidance and in February , we'll also provide our keyword guidance. So at that.

Yes, I think it will be hey, David.

I would say it really is quarter to quarter, it's very hard to predict.

Some quarters are better than others in terms of which clients go live.

So I wouldn't I wouldn't look at it that way, we will provide our guidance.

In February we will also provide our Q1 guidance. So at that point, we'll take a look at it but it's an interesting question actually.

Speaker 3: We'll take a look at it, but it's an interesting question actually about it varies

But it varies quarter to quarter and if I may just add.

Speaker 3: And if I may just add, you know, the historical trends, definitely they could be a way to model the business, but I would say that as we are diversifying our business into multiple other verticals.

Historical trends definitely there.

It would be a way to model the business, but I would say that as we are diversifying our business into multiple other verticals, which has its own interesting seasonality and which we actually just experienced this quarter.

Speaker 3: which has its own interesting seasonality and which we actually just experienced this quarter, in Q3 or CP game in higher, which originally a piece of it we were expecting in Q4. And that's all happening as we are diversifying more.

In Q3, our CB gaming higher which originally a piece of it we were expecting in Q4 and that's all happening as we are diversifying more. So this diversification is not only giving us scale, but it is slightly also modifying over previous trends, we have observed hence quarterly forecasting at this point I think using the loss.

Speaker 3: So this diversification is not only giving a scale, but it's slightly also modifying our previous trends we have observed.

Speaker 3: Hence, quarterly forecasting at this point, I think using the last trends would be similar, but please be aware that our diversification might slightly change from what we have seen in the past.

Trends would be similar but please be aware that our diversification might slightly changed from what we have seen in the past.

Speaker 5: Yeah, gotcha. Okay, thanks for that. And maybe just my follow up for many quarters in a row, network fees have been like 59 to 60% of gross revenue, other than Q1 this year, which you called out, because of high utility inflation, et cetera, but we're very steady 59 to 60%. You're guiding, I think, at the midpoint to like 61% in Q4.

Yes got you okay. Thanks for that and maybe just my follow up for many quarters in a row network fees have been like 59% to 60%.

Gross revenue other than Q1, this year, which you called out because of high utility inflation et cetera, but it's been very steady 59% to 60% Youre guiding I think at the midpoint to like 61% in Q4.

Speaker 5: And, you know, just maybe thinking through utility inflation has come down a ton. You know, how should that number be going forward or why it, why is it maybe up sequentially in Q4?

And just maybe thinking through utility inflation has come down a ton.

How should that number be going forward or why why is it may be up sequentially in Q4.

Speaker 3: Yeah, again, I'll say, you know, a contribution profit, which basically is the revenue less than network fees. You know, that's, I mean, these are, there are a lot of variables outside our control, which go into contribution profit or you can say it goes into network fees.

Yes, Dave again, I'll say contribution profit, which basically is the revenue less the network fees.

That's I mean these are there are a lot of variables outside our control there's going to contribution profit or you can say it goes into network fees such as increase in the average payment amount of changes in the payment mix better mix in CPI card network. So it's not.

Speaker 3: In such as increase in the average payment amount changes in the payment mix.

Speaker 3: Biller Mix and CPI card network piece. So it's not, it's the only metric, which is I would say the most difficult to forecast. And especially talking about the trends, what you could see there, they could vary. And as we're adding more billers, the large size billers especially, that also is adding little bit more complexity, if I say, to estimating the network.

Only metric, which is I would say the most difficult to forecast and especially talking about the trends what you could see there. They could vary as we are adding more builders. The large size builders, especially that also is adding a little bit more complexity, if I say to estimating the network fee, but if you take a step back.

Speaker 3: But if we take a step back and look overall what's happening, over transactions, over.

Look overall, what's happening our.

Our transactions overall are growing.

Speaker 3: If the macro starts helping us the way it has helped in Q3, I think overall you will see the trend which you are expecting. IE the network fees overall were first transaction to go down, but again, that is the expectation based on what we are seeing. I still always point to these variables which are outside of a control, which could impact quarter over quarter variability. Hence, we are very comfortable talking about how the whole year would shape up, which is exactly what I just mentioned.

If the macro is starts helping us the way it has helped in Q3.

Overall, you will see the trend, which you are expecting.

He then network fees overall workforce transaction to go down, but again that is the expectation based on what we are seeing.

I still always blind to these variables, which are outside of our control, which could impact quarter over quarter variability. Hence we are very comfortable talking about how the whole year will shape up which is exactly what I just mentioned to John.

Speaker 3: You know, and that's the way we think about our long term model the top line and the bottom line You beat that now when you go inside the P and L IE the network fees the contribution profit operating expenses All these can be managed and I would say calibrated in a manner So that they do not impact over primary Matrix, which is the top line and you beat that so for example, let me just share if the net per fee starts coming in higher

And Thats the way, we think about our long term model the topline and Bottomline EBITDA now when you go inside the P&L I E. The network fees. The contribution profit the operating expenses. All of these can be managed and I will say calibrated in a manner. So that they do not impact our primary.

Metrics, which is the topline and EBITDA. So for example, let me just share <unk> starts coming in higher we could manage the opex in a way so that our EBITDA dollars is not affected.

Speaker 3: We could manage the op-ex in a way so that our EBDA dollars is not effective.

Speaker 3: vice versa also works, you know, if the network is coming low and we see more benefit, we can start spending more money on the right objectives, for example, sales and marketing. So it's all the right financial planning and the strategic direction of the company which we are trying to achieve, but managing a single metric and understanding that and forecasting that it's becoming a little difficult, I would say, given the business is scaling and diversifying. I hope that helps provide some color to your answers. And if...

As a result of our <unk> network is becoming low and we are seeing more benefit we can start spending more money on the right objectives. For example, sales and marketing. So it's all of the right financial planning and the strategic direction of the company, which we are trying to achieve but managing a single metric and understanding that and forecasting that is becoming.

A little difficult I would say given the business is scaling and diversifying I hope that helps provide some color to your answer.

Yes, that's great.

Speaker 3: If I may add to that, actually.

If I may add to that.

Speaker 3: You know, we might be approaching over 20th anniversary here and we have been operating the business for a while. I think contribution profit is a very important element of the business, but as you have seen this year and my message to the investors would be

Sure.

Yes.

We might be approaching our <unk> anniversary here and we have been operating the business for a while I think.

Provision profit is very important.

The element of the business, but as you have seen.

This year in my message to the investors would be.

Speaker 3: Look at the top line as the as the as the parameter, if you will, of our how fast we are capturing the market share, which is the growth of the business and our EBITDA margins. And we as a team, as you have done for over a decade now, we know how to manage the business to still deliver the shareholder value and drop to the bottom line as we see things changing and as we have demonstrated.

Look at the topline as the as the.

As a batter meter if you will of our.

How fast we are recapturing the market share.

Which is a growth of the business and our EBITDA margins and we as a team as you have done for over a decade now.

We know how to manage that.

Business to still deliver the shareholder value and drop to the bottom line as we see things changing as we have demonstrated.

Speaker 3: that we can raise pricing and so on if the macro requires us to. So just want to put that out there.

We can raise pricing and so on.

If the macro requires us to so just wanted to put that out there.

Yeah, Thanks, guys I appreciate it.

Thank you for your question.

Speaker 1: As a reminder, it is star one to ask a question and star two to remain.

As a reminder, it is star one to ask a question star two to remove.

Speaker 1: Our next question comes from Will Nance with Goldman Sachs. Please proceed.

Our next question comes from will Nance with Goldman Sachs. Please proceed.

Speaker 4: Hey guys, good evening. I guess I just wanted to follow up a little bit on some of the seasonality impacts that you were talking about. It sounds like some stuff kind of moved around between Q4 and Q3. It does sound like it's kind of impacting the prior question, like the outlook between revenue and contribution profit in the 4th quarter as well.

Hey, guys good evening.

I guess I just wanted to follow up a little bit on some of the seasonality impacts that you were talking about it sounds like some stuff got kind of moved around between Q4 and Q3. It does sound like it's kind of impacting.

The prior question like the outlook between revenue and contribution profit in the fourth quarter as well.

Speaker 4: Maybe could you double click a little bit on what it was that got pulled forward into this quarter? Or what was the, it sounded like it was a new vertical?

Maybe you could could you double click a little bit on what it was that got that got pulled forward into this quarter or what was it sounded like it was a new vertical and I guess is there a gross versus net dynamic there because it does seem like there's a pretty big divergence between growth and contribution profit as we look out into the fourth quarter.

Speaker 4: And I guess is there a growth versus net dynamic there? Because it does seem like there's a pretty big divergence between growth and contribution profit as we look out of the fourth quarter. And so maybe it's worth double-quaking a little bit on some of those seasonality things that you've been alluded to.

So.

Maybe it's worth double clicking a little bit on some of the seasonality things that you've been alluding to.

Speaker 6: Sure Will, great question. I would say that there was a cohort of billers which went live earlier this year and they are from a few mixed verticals I would say, primarily from the government. But they were live earlier this year, went live and then we were not exactly sure that seasonality would come in Q3 or Q4.

Sure Great question.

I would say that there's a cohort of pillars, which went live earlier this year and they are from.

Few mixed verticals I would say are primarily from the government, but they were they were live earlier. This year went live and then we were not exactly sure that seasonality will come in Q3 or in Q4.

Speaker 6: And when we were guiding just three months ago, we guided for both the quarters Q3 and Q4. And we took a prudent approach that, you know, most likely these billers, these nullity impact mainly for the net contribution profit.

And when we were guiding just three months ago, we guided for both the quarter excuse me in Q4, and we took a prudent approach that most likely these builders seasonality impact mainly for the net contribution profit would be beneficial to us only in Q4 not in Q3, there was some likely chance but not.

Speaker 6: would be beneficial to us only in Q4 not in Q2.

Speaker 6: There was some likely chance, but not material. What actually happened was we saw the seasonality pick up more in Q3. And so I think we are actually glad it happened because for the entire year that removed the risk of Q4 and we already have it in Q3 and that's behind us. Hence you see a million dollar move from Q4 to Q3 at midpoint of our contribution profit.

Material, what actually happened was we saw the seasonality pick up more in Q3, and so I think we agree we are actually glad it happened because for the entire year that removed the risk of Q4, and we already have it in Q3, and that's behind us and Youll see a $1 million move.

From Q4 to Q3 at midpoint of our contribution profit.

Speaker 6: But that said, regardless of this move, I would say for the full year contribution profit is up by 60 basis points from the previous guidance versus now.

But that said regardless of this move I would say for the full year contribution profit is up by 60 basis points from the previous guidance versus now and even regardless of that move I would highlight that adjusted EBITDA dollars are up by 18% in Q4 now versus what we have.

Speaker 6: And even regardless of that move, I would highlight that adjust to the beat that dollars are up by 18% in Q4.

Speaker 6: Now versus what we guided earlier and 17% of the whole year. So, but to answer your question specifically, will

I did earlier and 17% for the whole year, so but to answer your question specifically.

Speaker 6: For a profit standpoint, yes, that shifted more from Q4 to Q3. But if you look at the top line from a revenue standpoint,

From a profit standpoint, yes that shifted more from Q4 to Q3, but if you look at the top line from a revenue standpoint, you won't see that very clearly because in revenue. We also saw some softness and as became at mid point and that was primarily because the CPI index like CPI index benefited on contribute.

Speaker 6: You won't see that very clearly, because in revenue, we also saw some softness and as became a midpoint. And that was primarily because the CPI index.

Speaker 6: like CPI index benefited on contribution profit, but not so much on the revenue. As there are some variable billers, IE the billers whom we charge them with variable costs or interchange, if that goes down that reduces the revenue a little bit. Although that was forecasted, it was a part of our guidance, but just to explain the difference between gross and net to your specific question.

Profit, but not so much on the revenue as there are some valuable dealers Aida bidders won't be charged them with variable costs are entergy, if that goes down that reduces the revenue a little bit although that was forecasted it was a part of our guidance, but just to explain the difference between gross and net to your specific question.

Speaker 4: That's super helpful. I appreciate all that detail. And, you know, just, I think you mentioned in the press release and in the prayer remarks about, you know, the confidence and the visibility you guys have into next year that stands out, you know, I don't know a lot of other management teams talking about the visibility that they have, it kind of speaks to the model. But just, I guess, how does this kind of inform your, you know, desires to kind of lean into investments in the platform and

Got it that's super helpful. I appreciate all that detail.

I think you mentioned in the press release and in the remarks about the confidence and the visibility you guys have into next year that stands out.

I don't know a lot of other management teams talking about the visibility that they have it kind of speaks to the model, but I guess, how does this kind of how does this kind of inform your desire to kind of lean into investments in the platform and obviously EBITDA. This year I think it sounds like 90% this quarter. So it's growing a lot faster than 25% right now so just.

Speaker 5: You know, obviously, even though this year, I think it's up like 90% this quarter. So it's growing a lot faster than 25% right now. So just how are you thinking about opportunities to invest, given the degree of visibility you have?

How are you thinking about opportunities to invest given the degree of visibility you have.

Speaker 3: Thank you, Oval, for the kind words and mean a lot. We as a management team.

Thank you all for the kind words and.

Many a lot.

We as a as a management team.

Speaker 3: We are very focused on continuing to make strategic investments in growing the business and growing the product portfolio and the functionality to make sure that we remain innovative and our existing customers and prospective customers continue to find home in looking at us as a leading platform.

We are very focused on continuing to make strategic investments in.

In growing the business and growing the.

Product portfolio and the functionality to make sure that we remain innovative and our customer existing customers and prospective customers continue to find home.

In looking at us as a leading platform.

Speaker 3: So that will continue to occur. And in terms of the EBITDA growth this year and going forward as Sanjay mentioned, that remains a lot not stopped. 22 to 30% EBITDA dollars growth year over year.

So.

That will continue to occur.

And.

In terms of.

The EBITDA growth this year and going forward as Sanjay mentioned that remains our north star, 20%, 30% EBITDA.

Speaker 3: what we are focused on right now, based on the sort of like, and we will provide color in the next quarter based once we finish the year. But as I was sharing earlier in the year, that to deliver the high end, the top end of our guidance, we really didn't need to sign any new clients in 20, based on the back of we already had in 2022.

Growth year over year.

What.

What we are focused on right now based on the sort of like.

And we will provide color in the next quarter based once we finished the year, where as I was sharing earlier in the year that too.

To deliver the high end the top end of our guidance, we really didn't need to sign any new clients.

In 'twenty.

Based on the backlog, we already had in 2022.

Speaker 7: That dynamic or the way we have architected our business is actually very helpful as we can turn the dial on all packs and different opportunities we see, whether sales and marketing or product and so on. So we feel very good about where we are for this year. Obviously guidance for next year will come later, but we feel we are feeling good where we are sitting right now. Oh, I appreciate you guys taking my questions.

That dynamic or the way we have architected a our business is actually very helpful. As we can we can turn the dial on opex and different opportunities, we see of other sales and marketing or product and so on so we feel very good about where we are for this year, obviously guidance for next year will come.

Later, but we are feeling good where we're sitting right now.

Got it I appreciate you guys, taking my questions and nice quarter.

Course.

Thank you.

The next question comes from Rebecca <unk> with Citigroup.

Please proceed.

Speaker 8: Hi, thank you for the similar question. You mentioned a lot of several large billers this quarter. It sounds like some were implemented sooner than expected. Why are we not raising the outlook for the top line a little bit more? Is it because we are being conservative or audio anything else we might be missing?

Hi, Thank you for taking my question.

In addition, the launch of several large builders this quarter. Thanks.

Some were implemented.

Why are we not raising the outlook for the top line a little bit more is it the case, we're being conservative or are there anything else we might be missing.

Speaker 3: First of all, Rebecca, thank you for the question.

First of all.

Rebecca Thank you for the question.

Speaker 3: I think we're raising the guidance by a decent number, but this will continue on as you know, with some pillars which went live.

I think racing.

<unk>.

The guidance by a decent number.

But.

This will continue on as you know.

Speaker 3: they were expected to go live in the quarter. And what we're expecting in Q4 is something similar, but the combination of the success in Q3 and the go lives in Q4 is what's driving our race for the quarter and the year on the top.

<unk>, which went live.

There was expected to go live in the quarter and what we were expecting in Q4 is something similar.

But the combination of the success in Q3 and the go lives in Q4 is what is driving our rates for the for the quarter and the year on the topline, yes, if I may add.

Speaker 6: Yeah, and if I may add Rebecca, these billers where we saw a slight shift in the seasonality quarter, these billers specifically have been implemented earlier in the year, and but they were expected to have a spike in seasonality only in one particular quarter. So it's not that the implementation happened in Q2.

Rebecca These builders, where we saw a slight shift in the seasonality quarter. These pillars, specifically have been implemented earlier in the year.

And but they are expected to have a spike in seasonality only in one particular quarter. So it's not that the implementations happen in Q3 implementations are on track on what we envisioned for each quarter actually including Q4.

Speaker 6: Implementations are on track on what we envisioned for each quarter including Q4. It is not about the implementation timeline but that is mainly about the seasonality in which quarter is going to spike. That estimation was Q4 earlier and it proved to be Q3.

So it's not about the implementation timeline, but that's mainly about the seasonality in which quarter is going to spike and that estimation was Q4 earlier and it proved to be Q3.

Speaker 6: That said, the revenue guidance is up for the year over year. We are more than 20% this year in 23 at midpoint compared to last year, 22 and actually that's in a line with our long term business model, which I just shared that we want to grow over top line with 20%. Yes, it could be slightly over 20 or slightly at 20, but I think we are feeling good about where we are. And again, to point out that

That said the revenue guidance is up for the year over year, we are more than 20%. This year in 2003 at midpoint compared to last year 'twenty, two and actually that's in line with our long term business model, which I just shared that we want to grow our top line by 20%, yes, it could be slightly over 20, a slight slightly at <unk>, but I think.

We are feeling good about where we are and again to point out that.

Speaker 6: while revenue growth is what it is, our focus also is to drop it to the bottom line to the maximum we can. I.e., we are focused on profitable growth and not just growth. So I just want to be very clear on that approach we are adopting and how strategically we are managing our business. That's helpful. Thank you.

<unk> revenue growth is what it is our focus also is to drop to the bottom line to the Mexico only again I E. We are focused on profitable growth.

And not just growth. So I just wanted to be very clear on that approach, we are adopting and how strategically we are managing our business.

That's helpful. Thank you.

Thank you Robyn.

Our next question comes from Matt O'neill with Ft Partners. Please proceed.

Speaker 9: Yeah, hi, good evening, gentlemen. Thank you for taking my call. A lot of great questions already asked and answered and appreciate the outlook for 24.

Yeah, Hi, good evening gentlemen, thank you for taking my call a lot of great questions already asked and answered and I appreciate the outlook for 2004.

Speaker 9: Nice to see the transactions coming in above expectations. Just a little bit curious if you could dig into the dynamics impacting the RPT a little bit and maybe just remind the group like what the moving parts were. It was a little bit below. I think where consensus was at and I think I might have missed it if it was from some mixed shift or a new larger pillar on the platform if you wouldn't mind just addressing that. Thank you.

Nice to see the transactions coming in above expectations, just a little bit curious if you could dig into the dynamics impacting the RPT a little bit maybe just remind the group like what the moving parts, where it was a little bit below I think where consensus was at and I think I might've missed it if it was from <unk>.

Shafter, a new larger seller on the platform. If you wouldn't mind just addressing that thank you.

Speaker 10: Hey Matt, how are you doing? I'm for week one here. You said What was the question about if you wouldn't mind actually just just want to make sure we get it right? Oh

Hey, Matt how are you doing.

We continue you said.

What was the question about if you wouldn't mind actually just just wanted to make sure we get it right.

Oh, yes, sorry can you guys hear me more clearly announced that better.

Speaker 6: Yeah, you mentioned something RPT. Can you explain what you mean?

Yes, you mentioned something RPT can you explain what that what you mean.

Speaker 9: Yeah, I was just asking about the revenue per transaction came in a little bit below. I believe work consensus had implied. So it was great seeing transaction growth outperform. So just curious if there was like a mixed dynamic or maybe I missed what sort of drove the RPT a little bit lower than work consensus was that.

Yes, I was just asking about the revenue per transaction came in a little bit below I believe our consensus had implied it was great seeing transaction growth outperformed. So just curious if there was like a mixed dynamic or maybe I missed what sort of drove the RPT, a little bit lower than where consensus on that.

Speaker 6: Yeah, Matt, I would say that, you know, Biller Mix is the answer for the Revenue Per Transaction or CB Per Transaction. There are so many variables playing in our business that I think the part transaction metric is now actually becoming a byproduct of our business, rather than a strategic force that's helping to drive the business.

Yes, Matt I would say that Gino biller mix.

Is the answer for the transaction revenue per transaction RCB per transaction. There are so many variables playing in our business that I think the par transaction metric is now actually becoming a byproduct of our business.

Rather than a strategic force, that's helping to drive the business.

Speaker 6: Generally, I would say transactions growth eventually means increasing revenue and scale resulting in more profitable.

Generally I will say transactions growth eventually mean increasing revenue.

And scale, resulting in more profitability. However, looking at our business per transaction is not becoming an effective way or as a means to forecast our business. So it maybe a penny more or less than the prior quarter.

Speaker 6: However, looking at our business per transaction is not becoming an effective way, or as a means to full cast of a business.

Speaker 6: So, you know, it may be a penny more or less than the prior quarter, you know, or maybe two pennies, but that is not really dictating any strategic decisions or direction of...

Or maybe <unk>, but that is not really dictating any strategic decisions or direction of the business. So answer to your specific question is the better mix.

Speaker 6: So answer to your specific question is, is the billar mix, you know, as the number of transactions are up and we have added large number of billars, you might see the revenue per transaction going down, maybe a penny or two, but that is not going to ultimately determine. What I want to say is that's not the right, I think becoming a right metric to forecast going forward.

As the number of transactions are up and we have added a large number of bidders you might see revenue per transaction going down maybe a penny or two but that is not going to ultimately determine.

What I want to say, that's not the right I think becoming a REIT metric to forecast going forward.

Speaker 9: Yep, that makes a lot of sense. I appreciate that. Yeah, I think focus on transaction growth is the key. Thank you. That's right.

Yes that makes a lot of sense I appreciate that yes, I think focused on transaction growth.

Okay.

Thank you.

Right.

Thank you all for your questions.

Speaker 1: Very current in all questions waiting at this time. So I will pass the conference back to the management team for any further remarks.

There are currently no questions waiting at this time, so I'll pass the conference back to the management team for any further remarks.

Speaker 3: Well, thank you everyone for joining today. Have a great week. Thank you. Thank you all. Bye.

Well. Thank you everyone for joining today have a great week. Thank you. Thank you all bye.

Speaker 1: that will conclude today's conference call. Thank you all for your participation. You may now disconnect your lives.

That will conclude today's conference call.

Thank you all for your participation you may now disconnect your line.