Good afternoon, everyone. I am Rayna Kumar, and I lead FinTech Equity Research here at Oppenheimer. Today I am fortunate to have Paymentus management with us, including CEO Dushyant Sharma, as well as Chief Financial Officer Sanjay Kalra. Thanks for joining us today. Thank you, Rayna, for having us here. Great. I'm going to start out with my questions. However, we do want to make this as interactive as possible, so feel free to type in any questions you have for Dushyant or Sanjay in the panelist Q&A, and I will be happy to read out any questions out loud. To start out with, second quarter revenue was up 42%, transactions increased 25%. You mentioned you feel confident about Paymentus's ability to be a multi-billion dollar revenue company. Can you talk about which verticals are you seeing the strongest momentum and where you see the most untapped opportunity? Thank you for the question. I think from our perspective, what's actually working extremely well for us is the way we designed our platform. We designed our platform to be vertical agnostic, so this horizontally scalable platform, as well as we believe that no customer of any size should be too large or too small for the platform. The reason we were doing that and the reason we designed it that way was because a typical household has a number of bills, it's 10, 12, 15, and they continue to rise. Long term, we believe that the company that has the ability to serve all of those bills, or a vast majority of those bills, is going to be a very desirable platform. What's playing out right now is actually exactly that. We started with the hardest vertical to succeed in, which is utilities. You have three or four areas there. You have water, electricity, gas, and waste, and sewer services, and so on. If you take those aside and you go into insurance and other government services as well, like paying for your taxes and your insurance, your home insurance, auto insurance, life insurance, and then you go into further other verticals that is your telephone and so on. Basically, the entirety of our business is focused on the non-discretionary side of the economy, the bills you have to pay, you need to pay to continue to move forward in your life. In terms of all of, as a result of all of this, I think we are seeing tremendous opportunities in all of the verticals. We are not seeing any, in fact, all of the verticals, including our core vertical, utility and government services and so on, continue to do extremely well for us. We find ourselves in a very fortunate situation. Understood. That's very helpful. Can you expand upon what's driving your success with large enterprise customers? As you continue to scale your business, are you able to offer more attractive economics to these customers while still generating strong operating leverage? I think if I may actually start with the operating leverage piece first, that is fundamental to the design of our business, like the way we have designed our business, the way we have designed our business model. We want, we have demonstrated that we can continue to grow the business, continue to maintain our innovation framework while increasing our margins through the strong operating leverage. That strong operating leverage allows us to serve a vast variety of customers, including the largest clients, where on a per unit basis, the margins may move around, but overall, the profitability from those accounts is very, very impactful. What's driving our growth in the enterprise sector is, frankly, all of the hard work we have put into our platform. We adopted a very different philosophy right from the beginning, which was platform purity was important to us. Having one code base was important to us. It was important that all of our clients are able to consume the same platform, same services, and our platform should have the functionality and the capability that we can address all of the needs of our clients through configurations, not customizations. The old legacy infrastructure we used to exist was very custom built, highly customized for each client. If a client requires new requirements, now you're having to reopen the code and go through months and months of cycle of custom development, if not years. Clients are tired of that. Whether that service provider is internal, in-house service provider, or external legacy third party, they want change. They want change at the speed of light or its speed of business. They want an ability to be able to meet the requirements, whether they're regulatory or business needs, and their platforms to react that way. That's what is driving our success. Understood. You discussed some of this on your earnings, but can you explain in a bit more detail on how agentic AI has a potential to fuel future revenue growth for Paymentus? Yeah, I mean, Rayna, that's one of the things we wanted to call out. We felt that our investors need to know that in very simple terms, that Paymentus is as excited as it can be, or any business can be, about AI revolution. The primary drivers are for any company to be successful within an enterprise, to be able to modernize using agentic AI, there are a few fundamental principles. First is, can you handle my this is any organization will ask you the same question. Can you handle my data? Can you handle my data securely? Can you handle my data in a way that if you're improving the processes and the decision-making capabilities for my organization, that growth, that secret algorithm is not somehow transported to my competitors? I'm a large business and I'm operating, I used AI and AI models, and all of a sudden I use my data to train the AI model, and now my competitor is getting better. Some of those things which are fundamental to any business, Paymentus already does them and does really well. We know how to handle and separate and securely manage a client's data resources and data lakes while managing thousands more on the same platform. On top of that, how do we handle the security, the complexity of the workflows, and all of those things we already do extremely well. We do all of this while only charging on a per transaction basis. From our perspective, we are ripe for success because as the software seems to be losing a little bit of its luster because of the AI involvement now in the business processes, we are as excited as we can be. How we will start to help our clients, and obviously I want to make sure that our investors know that we are already using AI for productivity purposes, and you can see expanding margins and so on. You're already seeing some impact of that in our business, and you have been seeing that for a while, expanding margins. Externally, what we're saying is we're going to start with improving the customer experiences using AI, and then we will dovetail that into improving the internal processes for the organizations we serve. Our main goal will remain that we want to do more and more business and serve more and more of our clients using our infrastructure, which will be AI-powered. Understood. That's very helpful detail. What's your view on the competitive dynamics in the space, and how do you think you're differentiating your Instant Payment Network to maintain an edge? Yeah, I mean, I think overall, not just obviously our proprietary network, Instant Payment Network is big and is unique, but more than that, I think the overall infrastructure, the platform, as I talked about a little bit earlier, the way we have designed our platform, all functionality, the capability of the platform we have built is now uniquely differentiated. Customers are, and after using it for years, customers are enjoying and are becoming pretty strong promoters for us as we are growing our customer base. Overall, the platform, the ecosystem we have built, the Instant Payment Network you've called out, all of that actually is unique in two ways. One is that it is offering differentiated capability which you otherwise won't be able to get that easily. Even a large organization is not going to be able to build Paymentus regardless of how many floors of programmers and engineers you have. It has taken us years to build all of those capabilities where you can implement complex workflows without programming. That's one part. The second part is all the rails we have put in place for the Paymentus platform to be universally available to all of your customers. Instant Payment Network is a way for a given business, a billing company, to reach all of their customers, not just the ones which are interacting directly on our platform. If you're walking into a retail store making a cash payment, that payment should take place in real time using our platform. You're going to a bank site to make a payment, that payment could take place using our platform. This Instant Payment Network uniquely positions us to be able to serve 100% of a given customer base, not just the ones who are coming to our platform directly. Got it. Okay, that's helpful. Just as a reminder, if anyone has any questions for Dushyant or Sanjay, feel free to type them in and happy to read them out loud. In the meantime, what macroeconomic trends do you think pose the biggest risk to your continued strength in volume and revenue growth? What levers do you have to hedge against a negative macro environment? I know you did talk heavily about just being focused on non-discretionary spending, but just want to know what do you think is most at risk in a negative macro environment? I think we are actually in a different frame of mind where we are rather excited because of the way the positioning of the business is, where you rightly pointed out, about serving the non-discretionary side of the U.S. economy puts us in a very fortunate situation where we are actually able to deliver good results and somewhat insulated from all the macroeconomic environments. We have dealt with various economic events over the tenure of our business in 2008- 2012. In 2012, we had COVID, obviously, inflationary challenges we all dealt with, and we continue to grow the business. I think we have a proven ability at this point that the business is built around a very specific need the businesses have, which is we have provided the service, and the services we are providing are very important to a typical household, and we need to get paid. Who can help us get those monies in the door quickly and efficiently without losing our shirt and collecting? That's what we are doing. That's what we are providing. We find ourselves in a very fortunate situation. Rayna, if I may just add that the diversity we have seen over the years by expanding into multiple verticals has kind of reduced our risk from macroeconomic challenges. If you go years back when the company was more focused only on utilities, I would say we were more prone to economic impacts of inflation and whatnot. Given we have moved and we've kind of diversified into many verticals, including financial services, insurance, government, telecommunications, healthcare, and whatnot, our platform is agnostic to any business. As far as we keep on diversifying, that's one thing which is helping us shield the economic challenges in a better way. At the same time, the scale which we have achieved of the company has given us immense immunity towards dealing with these challenges. These things still impact us, but not to that extent that they used to. I think both these things have really helped us become more stable and project our durability of revenue and even be able to guide kind of our long-term model, which we talk about. Despite knowing the economic challenges, we are confident talking about it. I think that speaks to the fact that these things are not as impactful to us as maybe to other companies who are not into the kind of verticals we are in. Understood. Okay, that's really helpful. Appreciate the color. If you guys could discuss your customer acquisition strategy, and I know on your earnings, you discussed Paymentus's ability to replace broad-based legacy infrastructure within an enterprise. What's the strategy to get those customers to move off of that infrastructure over to Paymentus? I think as you can see, we have referred to that in our calls, and frankly, it is actually being well received by our clients because they all look at our transcripts as well. The main thing which is helping us is that during the COVID period, we had to become very, very good at understanding how we can onboard the customers without actually being on site, especially the large ones. We made a lot of enhancements into our platform, the processes, and so on. Now when the COVID is sort of well behind us, at least from its major impact, and we are back to being able to meet our clients face to face, it has actually created a little bit of a tailwind for us. We are able to whiteboard solutions, use the tools we have built over the years to quickly onboard the clients, or at least demonstrate how quickly we can migrate the data. Since we have been doing it for a while, we have done it, and in very complex, diverse verticals, it becomes very comforting for the clients. You're absolutely right. It's a very important undertaking for any organization. To replace the legacy infrastructure with Paymentus, they take it very seriously, but they become very comfortable, not just looking at our public discourse on this topic, and they can see through the numbers themselves, but also because of what we're able to demonstrate to them. We handhold the entire process. They can see exactly how well we have architected our onboarding solution. All the instrumentation is driven to make it easy for them to onboard on us without having to do a lot of changes on their end. That is what is driving, actually ends up being a catalyzing event for us because of what we have built on the onboarding engineering side. Understood. Moving on to your partnership ecosystem, who are your primary channel partners, and how do the economics compare when acquiring transactions through the partnership ecosystem versus your own direct go-to-market strategy? I think that is one of our key strengths of our business. Our go-to-market strategy, which used to be focused directly reaching out to the clients, we were able to successfully take our time to choose the right partnership strategy, which was neutral from a financial impact perspective for both economically, but also from a growth perspective, the efficiency of getting the deals done. Based on that strategy, we decided various channel strategies. For example, we said, why can't the folks who we are giving business to from a payment processing perspective also help us grow our business as they encounter similar situations where the Paymentus platform could be useful? Likewise, bank partners, similarly, software vendors, and all of the other vendors that are part of the lifecycle of a given organization's delivery. We are partnering with them at an increasing pace, and our partnership ecosystem is very strong. Frankly, the way it is working is there is no frustration which typically exists, the dichotomy, if you will. On one side you have the direct strategy, and on the other side you have the partnership strategy. We have been able to find the right balance between the two and work hand in hand together in many cases. That partnership remains a very strong go-to-market strategy for us, complementing our direct go-to-market strategy. Understood. Took your incremental adjusted EBITDA margin, it was 54%. What's driving your increase in incremental margins, and how sustainable do you think that is? Let me answer the last part first. It is sustainable, and it is sustainable for a long term, we believe. Given the operating leverage on the business is high, and it's coming to light only now as we are scaling the business. The scale will definitely highlight it more and more as we progress and move forward, not only to more verticals, but as our platform gets used more and more, we will see that coming to light. That's the best part about this business model. Incremental adjusted EBITDA margins, you've seen the trends for the past few quarters, and that's definitely going in line with the way the business growth is coming in. We don't need to spend as much for whether it's sales and marketing, whether it's R&D or G&A. As much as the contribution profit or gross margin comes into play, when they fall, the majority of them fall to the bottom line instead of us spending all the money. We do at times make decisions to spend on sales and marketing given the operating leverage is high, and we might want to use the strong pipeline in front of us to convert to bookings, and that's the right investment for the company. We at times do make those decisions, and as our shared business model, we recalibrate our expenses based on how the margins are coming in. We would take those opportunities at times for the right reasons. Overall, in the longer term to model the business, I think it's reasonable to assume that longer term the margins will get better. Our long-term model is in play in terms of we believe the long-term CAGR, 20% top line growth, i.e., gross revenue, and the bottom line adjusted EBITDA dollars to grow between 20% and 30%. That is we are very confident about. Understood. Okay, that's good insight. Can you talk a little bit about your capital allocation strategy and what M&A opportunities you're seeing out there? Yeah, so in terms of capital allocation, our priorities remain unchanged since some time, and we want to focus more on organic growth. We are sitting on a very decent amount of cash on our balance sheet, and total working capital is approximately approaching $300 million. We feel very good about our balance sheet strength, and we would like to use that or keep it available for working capital needs, which would be needed to grow our business organically, given we've got a very strong pipeline and the total addressable market itself, which we operate in, and the kind of the growth we have experienced in the past few years. We want to keep marching on that path, keeping our long-term model in sight. We think at times for scaling the business, you might need cash, and that's the right investment for us, and that's the right place for us to spend the cash in and keep the capital available for. In the meantime, we are also growing cash, and if the working capital needs don't need that cash, we might keep that cash as an approach to look at any M&A. That's definitely not on the cards. There's nothing in play, and there's nothing which we are targeting for. That's only in case we want to do something at some point and some interesting opportunity comes into play. There's nothing which we really need to fill in our gaps in the roadmap, whether it's for any product features or any particular verticals. I think we are self-sufficient in terms of our technology platform. It's more of an opportunistic view rather than a needs view for the company on M&A. Got it. Okay, helpful. As you look at the business for the next one to two years, what are you both excited about the most and what also keeps you up at night? I think when you're running a 24/7 business, you're always on in some ways. The business is a 24/7 business. What keeps you up at night to make sure that business continues to 24/7 and runs well? In terms of the opportunities, what is exciting, I think we feel like that we are at a perfect inflection point. We have a sizable market opportunity, in fact, huge market opportunity. There are trillions of dollars here. This is not like a traditional payment solution. This is actually a platform where businesses are running their entire lifecycle of customer engagement and billing and payments on our platform. It ends up being very additive. With each bill you're adding, your platform is learning, you are learning, but also you're getting revenue and through operating leverage profitability. We feel like that we have built a scale and infrastructure, and the market has opened up and it has moved in our direction. As a result, the next couple of years, we are looking forward to not only deliver on our CAGR model, but also continue to set the foundation for Paymentus to be a very successful business for years to come even after that. Sanjay, you want to add? I'll say from my perspective, the best part about this business is the visibility we have and the durability of the growth we have seen and the durability we have today. It just keeps on getting better and better as we proceed from one quarter to the next. The operating leverage on the business is coming to light as we are scaling. I think from a risk profile perspective, given the strong total addressable market and pipeline we have and the strong bookings and backlog growth we have seen, especially the cash generating ability we have in the business, it's just very exciting, and it's not easy to find in today's market. We remain very excited about the times to come and prosper much better from where we are. Great. We only have a few minutes left. Is there anything I didn't ask you, Dushyant or Sanjay, that you would like to highlight to investors? Sanjay? I just shared my view as well, and I say we remain excited about the growth opportunities in front of us, especially Q2, which we just exited. We are exiting at a very good situation on our balance sheet, on our backlog, on our line of sight, and our operating leverage. We feel great that we have a strong platform which can cover a lot of non-discretionary services across a variety of verticals. Our backbone is dependent on a lot of business and a lot of bills getting paid. As more and more bills are going to get paid and as more and more bills are going to get digitalized, as not only technology advances, but as a new generation starts to come on paying more bills, more digitally than manual bills, I think there is an inherent growth, inherent leverage in this business automatically built. We feel very excited, and we are looking for our next steps in the business. Great. Okay, Dushyant, Sanjay, thanks for joining us today, and to everyone else listening, thanks for listening. If you have any questions, feel free to reach out to me. Have a great day.